Greenzone Ltd runs a business providing environmental guidance. The company’s summarised statement of profit or loss for the year ended 31 March 2013 is as follows:
| Note | £ | £ |
|---|
| Gross profit | | | 404,550 |
| Operating expenses | | | |
| Depreciation | | 28,859 | |
| Repairs and renewals | 1 | 28,190 | |
| Other expenses | 2 | 107,801
| |
| | | (164,850) |
| Operating profit | | |
239,700
|
| Note 1 – Repairs and renewals | |
|---|
| Repairs and renewals are as follows: | |
| £ |
|---|
| Repainting the exterior of the company’s office building | 8,390 |
| Extending the office building in order to create a new reception area | 19,800 |
|
28,190
|
| Note 2 – Other expenses | |
|---|
| Other expenses are as follows: | |
| £ |
|---|
| Entertaining UK customers | 3,600 |
| Entertaining overseas customers | 1,840 |
| Political donations | 740 |
| Donation to a charity where Greenzone Ltd received free advertising in the charity’s newsletter. This was not a qualifying charitable donation | 430 |
| Gifts to customers (pens costing £30 each, not displaying Greenzone Ltd’s name) | 660 |
| Gifts to customers (clocks costing £65 each and displaying Greenzone Ltd’s name) | 910 |
| Balance of expenditure (all allowable) | 99,621 |
|
107,801
|
| Note 3 – Plant and machinery | |
|---|
| On 1 April 2012 the tax written down values of Greenzone Ltd’s plant and machinery were as follows: | |
| £ |
|---|
| Main pool | 48,150 |
| Special rate pool | 9,200 |
The following motor cars were purchased during the year ended 31 March 2013:
| Date of purchase | Cost
£ | CO2 emission rate |
|---|
| Motor car [1] | 10 April 2012 | 10,800 | 102 grams per kilometre |
| Motor car [2] | 10 June 2012 | 20,400 | 140 grams per kilometre |
The following motor cars were sold during the year ended 31 March 2013:
| Date of sale | Proceeds £ | Original cost £ |
|---|
| Motor car [3] | 8 March 2013 | 9,100 | 8,500 |
| Motor car [4] | 8 March 2013 | 12,400 | 18,900 |
The original cost of motor car [3] has previously been added to the main pool, and the original cost of motor car [4] has previously been added to the special rate pool.
Required:
Calculate Greenzone Ltd’s tax adjusted trading profit for the year ended 31 March 2013.
Note: Your computation should commence with the operating profit figure of £239,700, and should also list all of the items referred to in notes (1) and (2), indicating by the use of zero (0) any items that do not require adjustment. (10 marks)
Information needed for this question:
Working: Capital Allowances are £18,409