Answer to Question #305508 in Accounting for COLESAW

Question

Question Ltd is a fintech company that grants unsecured loans to an individual. 

Her capital formations are:

Equity (10,000 shares @NGN10/ share) NGN 10 million

Debt (Non-current) NGN15M 

Current Debt NGN2M

Below are the events that occurred in the year that just ended.

1. Profit recorded was NGN18M
2. Depreciation calculated was (Annual Allowance NGN650) NGN1,000
3. Provision for loan write off (Actual write-off of NGN3M included) NGN8M 
4. Gain on disposal of asset (selling price NGN8) NGN3
5. There was an adjustment to authorized share capital by 9,000 units in the year. This was allotted based on the initial holding by equity holders.
6. Non-current Debt has been for over 12 Months

a. What would be the net cash and cash equivalent of Question Ltd for the year ended?

b. What would likely be the tax payable for the assessable year?

Answer 1

Net Cash= Cash Balance- Current Liabilities

Cash Balance= NGN10M+ NGN18M + NGN3+ NGN 90000= NGN 28,090,003

Current Liabilities= NGN 2M+ NGN 1000+ NGN8M+ NGN8= NGN 10,001,008

Net Cash = 28,090,003- 10,001,008= NGN18,001,008

Tax Payable= Assessable Income- Allowable Deductions

= NGN18,001,008- NGN15M

= NGN 3,001,008