Ah Huat is a sole proprietor who runs a provision shop business.
The following is the Profit or Loss account for financial year ended 31 December 2017:
| $ | $ | |
| Gross profit from trading | 135,166 | |
| Add: Other Income | ||
| ‐ POSB interest | 1,300 | |
| ‐ Profit on disposal of refrigerator | 50 | |
| 1,350 | ||
| Less: Expenses | ||
| Salaries ‐ Employees | 12,000 | |
| ‐ Self | 12,000 | |
| Rental | 36,000 | |
| Depreciation | 5,550 | |
| Utilities | 2,353 | |
| Telephone charges | 1,438 | |
| Insurance premiums | 3,211 | |
| Replacement of shop fittings | 240 | |
| Perishable goods thrown away | 774 | |
| Accountancy fees | 750 | |
| Transportation | 4,360 | |
| Cash shortage | 106 | |
| ‐78,782 | ||
| 57,734 | ||
| Notes to the accounts: | ||
| a) Telephone charges ‐ $1,438 | $ | |
| Private calls | 536 | |
| Business calls | 902 | |
| 1438 | ||
| b) Insurance premiums ‐ $3,211 | $ | |
| Fire insurance | 1544 | |
| Insurance on business goods | 903 | |
| Ah Huat’s life insurance | 764 | |
| 3211 | ||
| c) Transportation ‐ $4,360 | $ | |
| MRT, buses and taxi fares | 951 | |
| Maintenance of delivery van | 3409 | |
| 4360 |
d) Petty cash shortage ‐ $106
This is the difference between the actual cash takings and the total shown on the cash register Ah Huat discovers that the money has been misappropriated by one of his employees.
Calculate Ah Huat’s chargeable income for Year of Assessment (YA) 2018. He is entitled to personal reliefs of $5,000. The capital allowances claimed for YA 2018 is $6,545.
(6 marks)
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