The following is the summarized internal profit and loss account of XBP Ltd after its first year of trading:
£ Sales 1,800,000
Cost of sales (850,000)
Distribution costs (250,000)
Administration expenses (190,000)
Depreciation of equipment (22,000)*
Depreciation of IT equipment (38,000)* *Already included in either distribution costs or administration expenses above.
Other information: Original cost of equipment 140,000 Original cost of IT equipment 160,000 Corporation tax (i.e. company taxation) is charged at 20% of the taxable profit. Initial writing down allowances are: 25% as regards equipment 50% as regards IT equipment Included in the distribution costs is £28,000 which is deemed non-allowable.
TASK Calculate XBP Ltd’s total taxable profit AND the total tax charge for the year.
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