Corner Pharmacy is a chemist shop. It provides no credit sales but accepts major
ID: 2334608 • Letter: C
Question
Corner Pharmacy is a chemist shop. It provides no credit sales but accepts major credit cards. It sells items off the shelf and the proprietor fills prescriptions for cash and for payments made under the Pharmaceutical Benefits Scheme [PBS]. Three (03) assistants are employed. The following financial data is provided: Cash sales --------------------------------$300,000 Credit card sales------------------------$150,000 Credit card reimbursements -----------$160,000 PBS: - Opening balance ---------------$25,000 - Closing balance ---------------$30,000 - Billings --------------------------$200,000 - Receipts ------------------------$195,000 Stock - Opening stock------------------------------$150,000 - Purchases-----------------------------------$500,000 - Closing stock -------------------------------$200,000 Salaries ----------------------------------------$60,000 Rent --------------------------------------------$50,000. Requirement. On the assumptions that an accrual basis applies and the cost of sales and other outlays are allowable deductions for tax purposes, calculate the pharmacy’s taxable income. Corner Pharmacy is a chemist shop. It provides no credit sales but accepts major credit cards. It sells items off the shelf and the proprietor fills prescriptions for cash and for payments made under the Pharmaceutical Benefits Scheme [PBS]. Three (03) assistants are employed. The following financial data is provided: Cash sales --------------------------------$300,000 Credit card sales------------------------$150,000 Credit card reimbursements -----------$160,000 PBS: - Opening balance ---------------$25,000 - Closing balance ---------------$30,000 - Billings --------------------------$200,000 - Receipts ------------------------$195,000 Stock - Opening stock------------------------------$150,000 - Purchases-----------------------------------$500,000 - Closing stock -------------------------------$200,000 Salaries ----------------------------------------$60,000 Rent --------------------------------------------$50,000. Requirement. On the assumptions that an accrual basis applies and the cost of sales and other outlays are allowable deductions for tax purposes, calculate the pharmacy’s taxable income. - Closing balance ---------------$30,000 - Billings --------------------------$200,000 - Receipts ------------------------$195,000 Stock - Opening stock------------------------------$150,000 - Purchases-----------------------------------$500,000 - Closing stock -------------------------------$200,000 Salaries ----------------------------------------$60,000 Rent --------------------------------------------$50,000. Requirement. On the assumptions that an accrual basis applies and the cost of sales and other outlays are allowable deductions for tax purposes, calculate the pharmacy’s taxable income.Explanation / Answer
Total Sales
Cash Sales
300000
Credit Card sales
150000
PBS Billing
200000
Total Sales
650000
Cost of sales
Opening Stock(1)
150000
Purchase(2)
500000
Closing stock (3)
200000
Cost of goods sold (1+2-3)
450000
Sales 1
650000
Cost of goods sold 2
-450000
Salaries 3
-60000
Rent 4
-50000
Total Taxable Income(1+2+3+4)
90000
Total Sales
Cash Sales
300000
Credit Card sales
150000
PBS Billing
200000
Total Sales
650000