ABC Pty Ltd recorded an accounting profit before tax of $500,000 for the year ended 30 June 2020. Included in the accounting profit were the following items of revenue and expense.

• Entertainment expenses (non-deductible) for $20,000
• Depreciation expense - Motor vehicle (12.5% p.a., straight-line) for $35,000
• Rent revenue for $40,000
• Penalties and fines for $5,000

For tax purposes the following applied

• Depreciation expense - Motor vehicle (25%)
• Rent received for $50,000
• Income tax rate (30%)

Required

A. Use a current tax worksheet to calculate the current tax liability for the year ended 30 June 2020.(6 Marks)

B. Prepare the adjusting journal entry. (1.5 Marks)