Question - The Profit and loss account of (Sole Trader) Quality Mechanical Services for the year ended 31/12/16 shows the following:
|
Sales
|
|
80 000
|
|
Less COGS
|
|
15 000
|
|
Gross profit
|
|
65 000
|
|
Less Expenses
|
|
|
|
Donations
|
1 500
|
|
|
Advertisements
|
390
|
|
|
Depreciation
|
5 000
|
|
|
Legal fees
|
500
|
|
|
Rent
|
100
|
|
|
Interest on overdraft
|
4 300
|
|
|
Insurance
|
5 600
|
|
|
Wages
|
4 330
|
|
|
Bank fee
|
700
|
22 420
|
|
Operating profit
|
|
42 580
|
|
ADD OTHER INCOME
|
|
|
|
Gain from sale of asset
|
|
4 100
|
|
Net profit
|
|
$46 680
|
Additional information:
Depreciation for tax purpose - $ 8000
Gain on sale for tax purpose - $ 1800
Loss carried forward (5 years) - $ 4 000
Tax paid in advance - $ 10 700
Donation was to approved charity
Legal fees was incurred to buy a building from ANZ bank
Required: Calculate the taxable income for Quality Mechanical Services as at 31/12/2016.