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Client $1$ Shine Limited

Notes:

$(1)$ Interest income comprises: $

Interest on HK$ deposit with a bank in Hong Kong $32,000$

Interest on a loan advanced to a director $($Shine has advanced a low$-$interest rate

loan to a director to finance his acquisition of a residential property in the US$.$

The funds were remitted to his bank account in US$)$

Interest from overdue customers in Hong Kong

$28,000$

$12,500$

Total per accounts $72,500$

$(2)$ Compensation received comprises: $

Customer compensation $$ a retailer in Hong Kong terminated the distribution

contract during the year

$145,000$

Total per accounts $145,000$

Shine Limited $($Shine$),$ a Hong Kong$-$incorporated company, carrying on business in Hong Kong as a

wholesaler of mobile phones in Hong Kong. For the year ended $31$ March $2024,$ Shine$$s profit and loss account

contained the following details:

Notes $ $

Sales $16,000,000$

Cost of goods sold $(4,280,000)$

Gross profit $11,720,000$

Interest income

Compensation received

$(1)$

$(2)$

$72,500$

$145,000$

Dividend Income

$23,000$

$11,960,500$

Directors$$ fees $(180,000)$

Staff expenses $(3)(4,570,000)$

Rent and rates $(4)(843,300)$

Selling and marketing expenses $(5)(2,694,500)$

Interest expenses $(6)(105,000)$

Audit fee

$(98,200)$

Repairs and Maintenance $(7)(142,600)$

Depreciation

Bad debts

$(8)$

$(9)$

$(1,250,000)$

$(120,000)$

Miscellaneous expenses $($all deductible$)(82,500)$

Donations $(10)(30,000)(10,116,100)$

Net profit $1,844,400$

$3$

$(3)$ Staff expenses comprise: $

Salaries, commission, and bonuses $3,700,000$

Wages for the director$$s domestic helper $100,000$

Mandatory provident fund $($MPF$)$ regular contributions $250,000$

Annual company trip for staff to Bangkok $520,000$

Total per accounts $4,570,000$

$(4)$ Rent and rates comprise: $

Rent and rates for the director$$s quarters in Mid$-$levels

Rates for office in Central

$820,500$

$22,800$

Total per accounts $843,300$

$(5)$ Selling and marketing expenses comprise: $

Distribution and promotion costs $2,300,000$

Rebate commissions to distributor, KK Limited in Hong Kong

Rebate commissions to undisclosed agents

Penalties in speeding by a sales manager on a customer visit

$340,000$

$52,000$

$2,500$

Total per accounts $2,694,500$

$(6)$ Interest expenses comprise: $

Interest on a bank loan, secured by a personal guarantee from the company$$s

director

$65,000$

Overdraft interest in current account with the bank in Hong Kong

Interest on late settlement of accounts payable with a Japanese supplier

$25,000$

$15,000$

Total per accounts $105,000$

$(7)$ Repairs and Maintenance comprise: $

Brand new office curtains $32,000$

Refurbishment of showroom $85,000$

Repair of office cabinet $25,600$

Total per accounts $142,600$

$(8)$ The total depreciation charge for the year was $$1,250,000$ based on the book value of Shine$$s fixed

assets as at $31$ March $2024.$ During the year, the following additions were made:

Date Particulars

$21$ July $2023$ Purchased some office furniture for $$40,000.$

$1$ March $2024$ Purchased computer hardware and software for $$200,000.$

$(9)$ Bad debts were written off due to the bankruptcy of a customer.

$(10)$ Toby made the following donations during the year: $

UNICEF Hong Kong $($cash$)20,000$

Secondhand furniture to Oxfam Hong Kong $10,000$

Total per accounts $30,000$

$(11)$ The tax written down value brought forward in respect of the plant and machinery pools were:

$10\%-$ Nil

$20\%-$ $$880,000$

$30\%-$ $$1,100,000$

$(12)$ Shine owned a property which was used as the office in Central. The qualifying expenditure and written

down value in respect of the office property for commercial building allowance purposes was

$$2,700,000$ and $$700,000$ respectively.

Profits Tax Computation $2023/24$ for Shine Limited $($Client $1)$ showing its profits tax payable.

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