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Mr.

Ali Azmat (a solo proprietor)


Extracts from Trail Balance
For the year ended. June 30, 2014

Rs. 000
Components
Group
A
Group
B
Group
C

Sales 40000 20000 22000 31500 35000 70000
Sales Returns --- 50 70 25 ---- ----
Cost of Sales 3000 400 10000 15500 20000 40000
Salaries 1000 2500 500 1200 1500 3600
Rent 5000 200 6000 1400 5000 15000
Wages 100 100 --- 1335 2000 1500
Utility Bills 1500 500 200 1100 2000 4600
Sales Promotional
Expenditures

500

Nil

Nil

200

1000

800
Payment for Foreign
Travel (private)

200

Nil

100

130

800

1600
Advertisement
Expenses

500

200

150

270

100

1550
School fee of
children

100

100

113

226

200

1000
Personal Motor
Repair

80

120

110

117

160

240
Depreciation of van
partially used in
business (1:1)

---

---

350

517

500

800
Amortization of
Patents

---

---

80

120

30

40
Impairment of
Goodwill

---

---

40

75

70

30
Amalgamation
Expenses

---

---

---

---

1000

1100




Adjustments for tax purposes:
Group - A
Q1.
a. House rent of Mr. Ali Azmat Rs. 100,000/- is also included in total amount of Rent, which is
not admissible for tax purpose.
b. Bill of Rs. 500,000/- in utilities is belong to Ali Azmats home, which is not admissible for tax
purpose.
c. following payments are not allowed from business as these payments are personal expenses
of the proprietor and income tax ordinance doesnt allow such kind of payments:
1. Foreign Travel
2. School Fee of Children
3. Repair of Personal Car

d. Commission payments to sales personnel of Rs. 100,000 have been paid without deduction
of tax under head Sales Promotional Expenses, which is not admissible for deduction.
Q2.
a. Ali withdrew goods worth Rs. 10,000/- for his domestic use, while this amount is
included in Cost of Sales.
b. Made payment of Rs. 5000 to house gardener and the amount entered in Business
Wages.
c. following payments are not allowed from business as these payments are personal
expenses of the proprietor and income tax ordinance doesnt allow such kind of
payments:
1. Foreign Travel
2. School Fee of Children
3. Repair of Personal Car

Group B
Q1.
a. House rent of Mr. Ali Azmat Rs. 200,000/- is also included in total amount of Rent, which is
not admissible for tax purpose.
b. Bill of Rs. 50,000/- in utilities is belong to Ali Azmats home, which is not admissible for tax
purpose.
c. following payments are not allowed from business as these payments are personal expenses
of the proprietor and income tax ordinance doesnt allow such kind of payments:
1. Foreign Travel
2. School Fee of Children
3. Repair of Personal Car

d. Income Tax Rules only admissible van depreciation of Rs. 150,000/-
e. Impairment of Good Will is admissible of Rs. 30,000/-

Q2.
a. Ali withdrew goods worth Rs. 10,000/- for his domestic use, while this amount is included
in Cost of Sales.
b. Made payment of Rs. 5000 to house gardener and the amount entered in Business Wages.
c. following payments are not allowed from business as these payments are personal
expenses of the proprietor and income tax ordinance doesnt allow such kind of
payments:
1. Foreign Travel
2. School Fee of Children
3. Repair of Personal Car

d. Income Tax Rules only admissible van depreciation of Rs. 250,000/-
e. Amortization of Patents is admissible of Rs. 90,000/-
f. Salaries of Rs. 200,000 has been paid without deduction. While Salaries of Rs. 100,000 is also
not admissible because Tax deducted from such amount is not deposited to FBR.




Group C

Q1.
a. House rent of Mr. Ali Azmat Rs. 200,000/- is also included in total amount of Rent, which is
not admissible for tax purpose.
b. Bill of Rs. 50,000/- in utilities is belong to Ali Azmats home, which is not admissible for tax
purpose.
c. following payments are not allowed from business as these payments are personal expenses
of the proprietor and income tax ordinance doesnt allow such kind of payments:
1. Foreign Travel
2. School Fee of Children
3. Repair of Personal Car

d. Income Tax Rules only admissible van depreciation of Rs. 150,000/-
e. Impairment of Good Will is admissible of Rs. 30,000/-
f. Income Tax Authorities allow deduction of Rs. 700,000/- with respect of amalgamation.
g. Commission payments to sales personnel of Rs. 100,000 have been paid without deduction of
tax under head Sales Promotional Expenses, which is not admissible for deduction.

Q2.
a. Ali withdrew goods worth Rs. 10,000/- for his domestic use, while this amount is included in
Cost of Sales.
b. Made payment of Rs. 5000 to house gardener and the amount entered in Business Wages.
c. following payments are not allowed from business as these payments are personal expenses
of the proprietor and income tax ordinance doesnt allow such kind of payments:
1. Foreign Travel
2. School Fee of Children
3. Repair of Personal Car

d. Income Tax Rules only admissible van depreciation of Rs. 250,000/-
e. Amortization of Patents is admissible of Rs. 90,000/-
f. Income Tax Authorities allow deduction of Rs. 500,000/- with respect of amalgamation.
g. Rent of Rs. 300,000 has been paid without deduction of Tax
h. Salaries of Rs. 600,000 are not admissible because Tax deducted from such amount is not
deposited to FBR.