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Apple Ltds profit before tax for the year ended 30 June 2021 was $75,000. Included in this profit are the following items of income and

Apple Ltds profit before tax for the year ended 30 June 2021 was $75,000. Included in this profit are the following items of income and expense:

Annual leave expense $3,000
Bad debts expense 6,000
Depreciation expense - buildings (non-deductible) 800
Depreciation expense - plant 5,000
Entertainment costs (non-deductible) 1,800
Long service leave expense 1,500
Rent revenue 3,000
Royalty revenue (exempt)

4,000

The assets and liabilities at 30 June 2021 and 30 June 2020 were:

2021 2020
Assets
Cash 8,000 8,500
Accounts receivable 50,000 48,000
Allowance for doubtful debts (5,500) (4,000)
Inventory 17,000 15,500
Office supplies 2,500 2,200
Plant 50,000 50,000
Accumulated depreciation plant (26,000) (21,000)
Buildings 30,000 30,000
Accumulated depreciation buildings (14,800) (14,000)
Goodwill (net) 7,000 7,000
Deferred tax asset ? 4,050
Liabilities
Accounts payable 29,000 26,000
Provision for long service leave 6,000 4,500
Provision for annual leave 4,000 3,000
Rent received in advance 2,500 2,000
Deferred tax liability ? 5,150

Additional information:

  1. The tax rate is 30%.
  2. Buildings are depreciated in the accounting records but no deduction is allowed for tax purposes.
  3. Accumulated depreciation of plant for tax purposes was $31,500 at 30 June 2020, and depreciation for tax purposes for the year ended 30 June 2021 amounted to $7,500.
  4. The deferred tax asset (DTA) balance at 30 June 2020 comprised: i) DTAs relating to temporary differences: $3,150 ii) DTAs relating to carried forward tax losses: $2,000
  5. No journal entries related to deferred tax have been recorded for the year ended 2021. Assume the tax balances at 30 June 2020 are correct.

Required:

  1. Prepare the current tax worksheet to calculate the current tax liability for the year ended 30 June 2021 (show all working, including t-accounts where appropriate). (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 2021. 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 2021. (2 marks)

    Apple Ltds profit before tax for the year ended 30 June 2021 was $75,000. Included in this profit are the following items of income and expense:

    Annual leave expense $3,000
    Bad debts expense 6,000
    Depreciation expense - buildings (non-deductible) 800
    Depreciation expense - plant 5,000
    Entertainment costs (non-deductible) 1,800
    Long service leave expense 1,500
    Rent revenue 3,000
    Royalty revenue (exempt)

    4,000

    The assets and liabilities at 30 June 2021 and 30 June 2020 were:

    2021 2020
    Assets
    Cash 8,000 8,500
    Accounts receivable 50,000 48,000
    Allowance for doubtful debts (5,500) (4,000)
    Inventory 17,000 15,500
    Office supplies 2,500 2,200
    Plant 50,000 50,000
    Accumulated depreciation plant (26,000) (21,000)
    Buildings 30,000 30,000
    Accumulated depreciation buildings (14,800) (14,000)
    Goodwill (net) 7,000 7,000
    Deferred tax asset ? 4,050
    Liabilities
    Accounts payable 29,000 26,000
    Provision for long service leave 6,000 4,500
    Provision for annual leave 4,000 3,000
    Rent received in advance 2,500 2,000
    Deferred tax liability ? 5,150

    Additional information:

  4. The tax rate is 30%.
  5. Buildings are depreciated in the accounting records but no deduction is allowed for tax purposes.
  6. Accumulated depreciation of plant for tax purposes was $31,500 at 30 June 2020, and depreciation for tax purposes for the year ended 30 June 2021 amounted to $7,500.
  7. The deferred tax asset (DTA) balance at 30 June 2020 comprised: i) DTAs relating to temporary differences: $3,150 ii) DTAs relating to carried forward tax losses: $2,000
  8. No journal entries related to deferred tax have been recorded for the year ended 2021. Assume the tax balances at 30 June 2020 are correct. Required: Prepare the current tax worksheet to calculate the current tax liability for the year ended 30 June 2021 (show all working, including t-accounts where appropriate). (15 marks)Prepare the deferred tax worksheet to calculate the deferred tax asset and liability balances and adjustments for the year ended 30 June 2021.Include all accounts and net balances where appropriate. (13 marks)Prepare the journal entries to recognise the current tax liability, deferred tax assets, and liabilities at 30 June 2021. (2 marks)

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