Corporate accounting

The chief financial officer of Lost Weekend Ltd has asked you to calculate the taxable income and prepare the journal entry for the current tax liability in each of the following four cases. Case 1 Case 2 Case 3 Case 4 Accounting profit (loss) $40 000 $20 000 $5 000 $(10 000 ) After debiting as expense: Goodwill impairment loss* 6 000 8 000 Entertainment costs" 6 000 7 000 Donation to political party* 1 000 3 000 Depreciation expense - plant 4 000 2 000 10 000 2 000 Long-service leave expense 600 600 600 200 For tax purposes: Tax depreciation for plant 8 000 4 000 20 000 4 000 Long-service leave paid 2 400 "These items are non-deductible for tax purposes. Assume a tax rate of 30%