Following information is provided by National CompanyLimited for the year ended

ID: 2662278 • Letter: F

Question

Following information is provided by National CompanyLimited for the year ended June 30, 2009. You are required tocompute the taxable income and tax payable.

Profit and Loss Account

Administration Expenses

Rs. 1,372,000

Gross Profit

Rs. 4,602,000

Rents and rates

87,000

Dividend

47,500

Auditor’s Fee

34,000

Bad debts recovered

4,000

Interest on long-term loans

247,500

Income tax refund

14,000

Fire insurance premium

48,000

Legal charges

93,700

Contribution to Provident Fund

72,800

Vehicles repairs & maintenance

188,200

Underwriting commission

14,500

Reserve for taxation

393,000

Bad debts

11,000

Depreciation

190,000

Stationary expenses

40,000

Net profit

1,875,800

Rs. 4,667,500

Notes:

1 Administration expenses include a sum of Rs.127,000 which is in respect of salaries paid for supervision ofexpansion program of plant

2 Rent and rates include a sum of Rs. 36,000representing custom duty on import of machinery

3 Legal charges include a sum of Rs. 12,000 paidto an Income Tax Practitioner for contesting an appeal beforeAppellate Tribunal

4 Provident Fund is recognized by Income TaxAuthorities

5 Deputy Commissioner of Income Tax accepts Rs.8,000 as bad debts

6 Bad Debts recovered were originally allowed byDeputy Commissioner of Income Tax

7 Dividend is received from power project companyprivatized by WAPDA