Assignment task: The following transactions were reported from the books of Daima Bank Ltd as at 31 December 2010.
Shs '000
Cash and balances with the Central Bank 7,903
Government securities 10,363
Deposits and balances due from banking institutions 2,354
Interest receivable 943
Loans and advances to customers 42,241
Property and equipment 6,573
Interest expense paid 1,678
Operating expenses 6,648
Bad debts expense 1,641
Income tax expenses paid 967
Total interest received in the year 8,749
Net fees and commission income 3,428
Foreign exchange income 799
Other operating income 26
Customer deposits 53,134
Deposits and balances due to banking institutions 29
Borrowed funds 3,539
Interest payable 3,332
Share capital 1,800
Share premium 52
Retained profits as at 1 January 2010 6,886
Interim dividend paid 463
Forward contracts and commitments 1,200
Liabilities for acceptances 500
Additional information:
- Proposed dividends as at 31 December 2010 amounted to Shs 1,389,000.
- Interest received included Shs 1,450,000(net) from government securities.
- Interest receivable was Shs 300,000 at the beginning of the year.
- Forex gains included Shs 200,000 that the management is certain that it will mature on January 2010
- Interest payable at the beginning of the year was Shs 400,000.
- Capital allowances were agreed at Shs 2.4M
- Bad debts expenses comprise of provisions of Shs 500,000
- The tax expenses paid relates to last financial year but was underpaid by Shs 400,000.
Required:
a) Tax liability of the bank for the year
b) A computation of installment tax and how it should be paid.