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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:
- The tax rate is 30%.
- Buildings are depreciated in the accounting records but no deduction is allowed for tax purposes.
- 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.
- 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
- 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)
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:
- The tax rate is 30%.
- Buildings are depreciated in the accounting records but no deduction is allowed for tax purposes.
- 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.
- 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
- 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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