Calculation of Current Tax Liability (CTL)

SydMel Ltd commences operations on 1 July 2020. One year later, on 30 June 2021, the entity prepares its first statement of comprehensive income and its first statement of financial position. The statements are prepared before considering taxation. The following information is available.

Statement of Profit or Loss and other Comprehensive Income For the year ended 30 June 2021
Gross Profit	$610,000
Salaries expenses	(210,000)
Rent expense	(53,000)
Long service leave expenses	(51,000)
Depreciation expense - Plant	(30,000)
Bad debt expense	(18,000)
Accounting Profit Before Tax	$248,000

The Statement of Financial Position (Extract/partial) As at 30 June 2021
Assets:
Cash	$152,000
Inventories	198,000
Account receivables (net)	178,000
Prepaid rent	51,000
Plant	150,000
Accumulated depreciation - plant	(30,000)
	699,000
Liabilities:
Revenue received in advance	53,000
Accounts payable	90,000
Loan payable	210,000
Provision for long service leave	51,000
	$404,000

Additional information

• The company tax rate is assumed to be 30%.
• All salaries have been paid as at year end and are deductible for tax purposes.
• None of the long service leave expense has actually been paid. It is not deductible for tax purposes until it is actually paid.
• Rent was paid in advance on 1 July 2020. Actual amounts paid are allowed as a tax deduction.
• Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. No bad debts were written off.
• The revenue received in advance is included in the taxable income.
• The machinery is depreciated on a straight-line basis over 5 years for accounting purposes, but over 4 years for taxation purposes. The machinery is not expected to have any residual value.

Required

Prepare the current tax worksheet and the journal entry to recognise current tax at 30 June 2021.

Answer Template for CTL:

SydMel Ltd

Current Tax Worksheet

(for year ended 30 June 2021)

	$	$
Accounting profit before tax
Add:
Deduct:
Taxable Income
Current Tax payable @ 30%

Workings:

Rent paid: XX

Depreciation of machinery for tax purposes: XX

The entry to recognise current tax is:

Date	Description		Dr $	Cr $