Question 1ai

On 6 April 2012, Richard Feast, aged 43, commenced in self-employment, running a restaurant. Richard’s statement of profit or loss for the year ended 5 April 2013 is as follows:
Note £ £
Gross profit 73,440
Motor expenses 1 7,660
Property expenses 2 16,200
Repairs and renewals 3 6,420
Other expenses 4 10,960
Net profit

Note 1 – Motor expenses

Motor expenses are as follows:

Cost of running Richard’s motor car 4,710
Cost of running a motor car used by the restaurant’s chef 2,670
Parking fines incurred by Richard 280


Richard’s motor car is used 70% for private journeys, and the chef’s motor car is used 20% for private journeys.

Note 2 – Property expenses
Richard lives in an apartment which is situated above the restaurant, and one-fifth of the total property expenses of £16,200 relate to this apartment.

Note 3 – Repairs and renewals
Repairs and renewals are as follows:

Decorating the restaurant 5,100
Decorating the apartment 1,320


The property was in a usable state when it was purchased.

Note 4 – Other expenses
The figure of £10,960 for other expenses includes legal fees of £2,590 in connection with the purchase of the restaurant property. The remaining expenses are all allowable.

Note - The capital allowances figure that can be deducted from operating profits is £3,780

Calculate Richard Feast’s tax adjusted trading profit for the year ended 5 April 2013.

1. Your computation should commence with the net profit figure of £32,200, and should list all of the items referred to in notes (1) to (4), indicating by the use of zero (0) any items which do not require adjustment.

2. In answering this part of the question you are not expected to take account of any of the information provided in parts (b), (c) or (d) below. (7 marks)

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