Additional information:

1. A tax deduction for development costs on 125% of the amount spent during the year is

available under the Tax Act. The profit reflects the amount of development costs

amortised in the current period.

2. A tax deduction of $10,000 (10%) can be claimed on equipment.

3. The motor vehicle is depreciated at 25% for tax purposes.

4. The equipment sold on 1 July 2019 cost $20,000 when it was purchased 3 years before

the date of sale.

5. Deductions are only available for annual leave when amounts are paid and not as they

are accrued.

6. Actual amounts paid for insurance are allowed as a tax deduction.

7. No deduction is allowed for taxation purposes in relation to entertainment, fines, and

penalties.

8. Rent revenue and interest are taxable when amounts are received.

9. Depreciation of buildings is not allowed as a tax deduction.

10. The deferred tax asset (DTA) balance at 30 June 2019 comprised:

a) DTAs relating to temporary differences: $10,110

b) DTAs relating to carried forward tax losses: $13,950

11. No journal entries related to deferred tax have been recorded for the year ended 2020.

Assume the tax balances at 30 June 2019 are correct.

12. The tax rate is 30%.

Required:

1. Prepare the current tax worksheet to calculate the current tax liability for the year

ended 30 June 2020 (show all working). (15 marks)

2. Prepare the deferred tax worksheet to calculate the deferred tax asset and liability

balances and adjustments for the year ended 30 June 2020.

Include all accounts and net balances where appropriate. (13 marks)

3. Prepare the journal entries to recognise the current tax liability, deferred tax assets,

and liabilities at 30 June 2020. (2 marks)

Jamie Ltd's profit before tax for the year ended 30 June 2020 was $172,400. Included in this profit are the following items of income and expense: Amortisation of development costs $12,000 Carrying amount of equipment sold 11,000 Depreciation - building (6%) 15,000 Depreciation - equipment (15%) 15,000 Depreciation - motor vehicle (20%) 5,800 Doubtful debts expense 1,700 Employee benefits expense 1 7,000 Entertainment expense 3,500 Fines and penalties 4,400 Goodwill impairment 2,000 Insurance expense 1,400 Interest revenue 800 Proceeds on sale of equipment & 19,000 Rent revenue 15,000 Royalty revenue (exempt income) 2 3,000 Warranty expense 7,000At 30 June, the company's draft statements of financial position showed the following balances: 2020 2019 Assets Cash $14,300 $10,200 Accounts receivable 18,000 22,000 Allowance for doubtful debts (2,000) (3, 500) Inventories 33,000 43,500 Interest receivable 800 1,200 Prepaid Insurance 4,000 4,200 Rent receivable 3,900 3,700 Development costs 48,000 SOF (E Accumulated amortisation (12,000) Motor vehicle 29,000 29,000 Accumulated depreciation (23,200) (17,400) Equipment 100,000 120,000 Accumulated depreciation (60,000) (54,000) Buildings 250,000 250,000 Accumulated depreciation (90,000) (75,000) Deferred tax asset 24,060 Goodwill 12,000 12,000 Goodwill - accumulated impairment losses (5,000) (3,000) Liabilities Accounts payable 27,000 24,500 Current tax liability 7,600 Provision for employee benefits 12,500 8,000 Provision for warranties 8,700 4,200 Mortgage loan 160,000 150,000 Deferred tax liability 4,275