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directors of Total Engineering Company Limited presented the following Profit and Loss Account for the year ended 31stDecember 2004.

	Sh
Revenues	30,780,000
Sales	50,000
Interest on Government Securities (Gross)	30,830,000
Expenses:
Purchases	24,000,000
Wages	2,320,000
Carriage inwards	370,000
Rent	300,000
Insurance	190,000
Trade expenses	100,000
Repairs building	300,000
Machinery	56,000
Advertising	254,000
Legal charges	80,000
Audit fees	70,000
Depreciation	3,017,000
Provision for doubtful debts	104,000
Debenture interest	600,000
Interim dividend	400,000
Proposed dividend	731,300
	32,892,300
Net Loss	2,062,300

The following additional information is provided:

1. Purchases returns and sales returns were Sh. 500,000 and Sh. 700,000 respectively.

These were left out while preparing trial balance.

2. Trade expenses include an amount of Sh. 60,000 travel expenses to Korea for the Director as part of the National Chamber of Commerce and industry promotion tour.

3. Repairs to machinery include small loose tools written off by Sh. 10,000.

4. Bad debts which are specifically bad are Sh. 74,000.

5. Capital allowances have been agreed at Sh. 2,000,000.

Required:

a) Taxable profits for the year of income 2004.

b) Tax payable if any for 2004. Comment on the results (CPA).

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