Nana John is a self-employed as a hairdresser and lives in the UK. She has the following information available for the year ended 2021/22 Trading profit for the year ended 30 June 2021 Nana's statement of profit or loss for the year ended 30th June 2021 is as follows: Income Expenses Depreciation Motor Vehicle Professional fees Property expenses Purchases Other expenses Net profit Note 1 2 3 4 5 £ 2,635 2,200 1,650 12,900 4,700 16,550 £ 63,635 (40,635) 23,000 Nana John charges all the running expenses for her motor car to the business. During the year ended 30 June 2021 Nana drove a total of 8,000 miles of which 7,000 were for private journeys. The figure for professional fees includes £1,260 for legal fees in connection with the grant of a new five-year lease of parking spaces for customers' motor cars. Nana lives in a flat that is situated above her hairdressing studio and one-third of the total property expenses of £12,900 relate to this flat. During the year ended 30 June 2021 Nana took goods out of her hairdressing business for her personal use without paying for them and no entry has been made in the accounts to record this. The good costs £250 (an amount that has been deducted under purchases) and had a selling price of £450. The figure of other expenses of £16,550 include £480 for a fine in respect of health and safety regulations and £160 for trade subscription to Guild of small Hairdressers. Nana John uses her private telephone to make business telephone calls. The total cost of the private telephone for the year ended 30 June 2021 was £1200 and 20%
Nana John is a self-employed as a hairdresser and lives in the UK. She has the following information available for the year ended 2021/22 Trading profit for the year ended 30 June 2021 Nana's statement of profit or loss for the year ended 30th June 2021 is as follows: Income Expenses Depreciation Motor Vehicle Professional fees Property expenses Purchases Other expenses Net profit Note 1 2 3 4 5 £ 2,635 2,200 1,650 12,900 4,700 16,550 £ 63,635 (40,635) 23,000 Nana John charges all the running expenses for her motor car to the business. During the year ended 30 June 2021 Nana drove a total of 8,000 miles of which 7,000 were for private journeys. The figure for professional fees includes £1,260 for legal fees in connection with the grant of a new five-year lease of parking spaces for customers' motor cars. Nana lives in a flat that is situated above her hairdressing studio and one-third of the total property expenses of £12,900 relate to this flat. During the year ended 30 June 2021 Nana took goods out of her hairdressing business for her personal use without paying for them and no entry has been made in the accounts to record this. The good costs £250 (an amount that has been deducted under purchases) and had a selling price of £450. The figure of other expenses of £16,550 include £480 for a fine in respect of health and safety regulations and £160 for trade subscription to Guild of small Hairdressers. Nana John uses her private telephone to make business telephone calls. The total cost of the private telephone for the year ended 30 June 2021 was £1200 and 20%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 1
Nana John is a self-employed as a hairdresser and lives in the UK. She has the
following information available for the year ended 2021/22
Trading profit for the year ended 30 June 2021
Nana's statement of profit or loss for the year ended 30th June 2021 is as follows:
Income
Expenses
Depreciation
Motor Vehicle
Professional fees
Property expenses
Purchases
Other expenses
Net profit
Note
1
2
3
4
5
£
2,635
2,200
1,650
12,900
4,700
16,550
£
63,635
(40,635)
23,000
1. Nana John charges all the running expenses for her motor car to the business. During
the year ended 30 June 2021 Nana drove a total of 8,000 miles of which 7,000 were
for private journeys.
2. The figure for professional fees includes £1,260 for legal fees in connection with the
grant of a new five-year lease of parking spaces for customers' motor cars.
3. Nana lives in a flat that is situated above her hairdressing studio and one-third of the
total property expenses of £12,900 relate to this flat.
4. During the year ended 30 June 2021 Nana took goods out of her hairdressing
business for her personal use without paying for them and no entry has been made
in the accounts to record this. The good costs £250 (an amount that has been
deducted under purchases) and had a selling price of £450.
5. The figure of other expenses of £16,550 include £480 for a fine in respect of health
and safety regulations and £160 for trade subscription to Guild of small Hairdressers.
6. Nana John uses her private telephone to make business telephone calls. The total
cost of the private telephone for the year ended 30 June 2021 was £1200 and 20%
Transcribed Image Text:of this related to business telephone calls. The cost of the private telephone calls is
not included in the statement of profit or loss expenses of £40,635.
7. Capital allowances for the year ended 30 June 2021 are £810.
Other information
8. During the tax year 2021/22 Nana John received interest of £310 from an individual
savings accounts (ISA) and dividend of £1,200 from quoted company shareholdings.
Required:
(a) Calculate Nana John's tax adjusted trading profit for the year ended 30 June 2021
Note that your computation should commence with the net profit figure of £23,000 and
should list all of the items referred to in (1) to (8) indicating by the use of zero (0) any item
that do not require adjustment
(b) Calculate Nana John's income tax liability for the year 2021/22.
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