M1) Joan Myers is a designer for a clothing company named "Whitesnow Ltd" incorporated in Wakefield. The company is very successful due to the fashion clinic project set up by Joan in 2019. Joan is preparing all the information to her tax return for the current tax year. She knows you are a very successful accountant and asks for your professional advice. Joan emails you with the following information: • My gross salary for the tax year was £81,000 (income tax of £19,800 and national insurance contributions of £5,500 deducted under PAYE). During the year, I made the following contributions: I contributed 5% of my salary to a registered Occupational Pension Scheme, and my employer contributed a further 6%. • In 2019, when I was invited to set up the fashion clinic, my employer provided a laptop. I used the equipment both for work and for personal use at home. The equipment cost the company £2,400. • In addition, the company offers me the use of a mobile phone that I also use privately. The total cost to the company is £540 for the year, and approximately 50% of the usage is personal (non-business-related). • I am a single mother, and the company has a solid policy to support parenting. Therefore, the company's nursery is located in the company's main building, and I can go and see my baby often. I was told that the company's nursery costs £4,200 per child. • Furthermore, I use a company-provided motor car, which is available for private, nonbusiness use. The diesel-engine car had a list price of £27,000 when it was made available to me in August 2019, as a newly registered vehicle, with a CO2 emission rating of 132 g/km. Whitesnow Ltd obtained the car on a lease hire contract for which it pays £650 per month. During 2021/22, I drove 25,000 miles in total; 14,000 being business mileage. The car required repairs costing £1,800 during the year, and the company met this cost; as well as paying for the insurance (£490), Road Tax (£120), Automobile Association membership (£85), new tyres (£320), servicing (£350) and all the fuel I used – a cost of £2,600. When I went on holiday in 2021, I left the vehicle in the company's car park and gave the keys to my manager for safekeeping. The rules of the employer's car scheme require me to contribute £50 per month towards my private use of the car and £25 per month towards the fuel consumed on personal journeys. I made these payments. • In addition to my salary, I also received the following income: £ Dividends from UK companies 5,200 Premium Bond winnings 1,000 Building Society interest 720 Interest from an ISA 350 • I gave £420 to a charity during the year, completing a Gift Aid declaration. • In February, I also sold my shares in Suzuki plc (a listed company) for £22,000. I paid a commission on the sale of 2% of the proceeds. The shares were acquired in a single transaction in May 1999 for £2,200. 2.1 - As Joan receives several benefits in addition to her salary, please calculate the total value of Joan’s Benefit in Kind (BIK). 2.2 – Calculate Joan’s total Income Tax payable considering all the information provided above. 2.3 - Calculate the Capital gains Tax payable and the state the date by which any additional tax payments need to be made.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
M1)
Joan Myers is a designer for a clothing company named "Whitesnow Ltd" incorporated in Wakefield. The company is very successful due to the fashion clinic project set up by Joan in 2019. Joan is preparing all the information to her tax return for the current tax year. She knows you are a very successful accountant and asks for your professional advice. Joan emails you with the following information:
• My gross salary for the tax year was £81,000 (income tax of £19,800 and national insurance contributions of £5,500 deducted under PAYE). During the year, I made the following contributions: I contributed 5% of my salary to a registered Occupational Pension Scheme, and my employer contributed a further 6%.
• In 2019, when I was invited to set up the fashion clinic, my employer provided a laptop. I used the equipment both for work and for personal use at home. The equipment cost the company £2,400.
• In addition, the company offers me the use of a mobile phone that I also use privately. The total cost to the company is £540 for the year, and approximately 50% of the usage is personal (non-business-related).
• I am a single mother, and the company has a solid policy to support parenting. Therefore, the company's nursery is located in the company's main building, and I can go and see my baby often. I was told that the company's nursery costs £4,200 per child.
• Furthermore, I use a company-provided motor car, which is available for private, nonbusiness use. The diesel-engine car had a list price of £27,000 when it was made available to me in August 2019, as a newly registered vehicle, with a CO2 emission rating of 132 g/km. Whitesnow Ltd obtained the car on a lease hire contract for which it pays £650 per month. During 2021/22, I drove 25,000 miles in total; 14,000 being business mileage. The car required repairs costing £1,800 during the year, and the company met this cost; as well as paying for the insurance (£490), Road Tax (£120), Automobile Association membership (£85), new tyres (£320), servicing (£350) and all the fuel I used – a cost of £2,600. When I went on holiday in 2021, I left the vehicle in the company's car park and gave the keys to my manager for safekeeping. The rules of the employer's car scheme require me to contribute £50 per month towards my private use of the car and £25 per month towards the fuel consumed on personal journeys. I made these payments.
• In addition to my salary, I also received the following income:
£
Dividends from UK companies 5,200
Premium Bond winnings 1,000
Building Society interest 720
Interest from an ISA 350
• I gave £420 to a charity during the year, completing a Gift Aid declaration.
• In February, I also sold my shares in Suzuki plc (a listed company) for £22,000. I paid a commission on the sale of 2% of the proceeds. The shares were acquired in a single transaction in May 1999 for £2,200.
2.1 - As Joan receives several benefits in addition to her salary, please calculate the total value of Joan’s Benefit in Kind (BIK).
2.2 – Calculate Joan’s total Income Tax payable considering all the information provided above.
2.3 - Calculate the
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