I was required to prepare the applicable Journal Entries at 30 June 2020 to account for tax using

the Balance Sheet Method, is this correct?

All information is in the question provided, if you see there is both the revenue and expenses that calculate profit and loss and then the statement of financial position follows Providing the carrying amount of the assets, the additional information underneath provides information regarding the revaluation of the land. Image provided shows the DEFERRED TAX WORK SHEET which I was required to calculate using the given information and the provide the journal entries. ALL INFORMATION IS THERE, I would like someone to check my journal entries.

(Update) this is all the other information but it has been put into the deferred tax worksheet.

Penguin Ltd began operations on 1 July 2019. One year after operations, the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2020. However, the statements were prepared for internal purposes, but income tax calculations were ignored. Accounting profit before income tax for the year 30 June 2020 of Penguin Ltd amounted to $2,720,000, including the following revenue and expenses.

Revenue:

Sales 11,760,000

Expenses:

Other expenses 198,000

Rent 74,000

Wages and Salaries 720,000

Cost of sales 6,450,000

Administrative expenses 529,200

Doubtful debts 13,000

Long service leave 252,000

Warranty expenses 151,200

Depreciation Plant & Machinery 201,000

Depreciation Equipment 232,000

Depreciation expense Furnitures and Fixtures 50,000

Insurance Expenses 138,600

Entertainment costs 44,000

Accounting profit for the year $2,720,000

Happy Assets and Liabilities as disclosed in the Statement of Financial Position for the year ended 30 June 2017 $ $

Assets

Cash and cash equivalents 102,000

Inventory 502,800

Receivables (net) 378,000

Prepaid insurance 51,900

Plant cost 2,010,000

Less accumulated depreciation 201,000

1,809,000

Equipment cost 1,160,000

Less accumulated depreciation 232,000

928, 000

Furnitures and fixture cost 600,000

Less accumulated depreciation 50,000

550, 000

Land 2,268,000

Total assets 6,589,700

Liabilities

Payables 403,200

Rent 50,000

Provision for warranty expenses 100,800

Loan payable 1,008,000

Provision for long service leave 56,000

Total liabilities 1,650,200

Net assets 4,939,500

Other information:

The Plants & Machinery are depreciated over 10 over 8 years for taxation purposes. The useful life of computers is 4 years for the tax purposes and 5 years for accounting purposes. Therefore, there is a temporary difference between accounting and taxation depreciation for Plant & Machinery, and Equipment.

All administration, wages and other expenses incurred have been paid as at year- end.

Penguin Ltd has some land which cost $1,470,000 and which has been re-valued to its fair value of $2,268,000.

Entertainment expenses and depreciation of furniture and fixtures are not allowed as deductions for income tax.

The amount of $163,800 long service leave expense has been paid.

Insurance was initially prepaid to the amount of $190,500. Actual amounts paid are

allowed as a tax deduction.

Amounts received from sales, including those on credit terms, are taxed at the time

of the sale is made.

Warranty expenses were accrued and, at the year-end, actual payments were made

of $50,400. Deductions for tax purposes are only available when the amounts are

paid and not as they accrued.

The tax rate is 30 per cent.

The journal entry for the period of 30 June 2019 DR CR 816000 Income Tax Expense Income Tax Payable 816000 (to recognise the tax expense pertaining to taxable profit) 239400 Income tax expense (OCI) (deferred) Deferred tax liability (to recognise the tax implications of the revaluation of land) 239400 Revaluation surplus 239400 Income tax expense (OCI) (deferred) 239400 (to reduce the amount of the revaluation surplus so that only the net (after tax) effect of the revaluation is recognised within equity 64,260 Deferred Tax Asset Deferred Tax Liability Income tax expense (deferred) 47,595 34065 (to recognise the tax implications of the temporary differences other than the revaluation) Deferred tax liability Deferred tax asset (to offset the deferred tax asset against the deferred tax liability) 64,260 64,260 Carrying amount Tax base $ Deductible temporary difference Taxable temporary differences Income tax expense Revaluation Surplus Current tax payable $ $ $ $ $ $ Assets Cash -138,600 Inventory Accounts receivable Prepaid insurance Plant-net Equipment-net Furnitures and fixtures-net Land 102,000 502,800 378,000 51,900 1,809,000 928,000 550,000 2,268,000 6,589,700 102,000 502,800 378,000 190,500 1,758,750 870,000 550,000 1,470,000 5,822,050 -138,600 50,250 50,250 58,000 798,000 798,000 Liabilities 50,400 403,200 1,008,000 50,400 163,800 50,000 1,675,400 4,146,650 50,400 -75,600 Account payable 403,200 Loan payable 1,008,000 Provision for warranty 100,800 Provision for long service le 88,200 Rent payable 50,000 1,650,200 Net asset 4,939,500 Temporary differences at period end less Prior period amounts Movement for the period Tax effected at 30% Tax on taxable income, 30% x $2,720,000 Income tax adjustments -75,600 -214,200 nil -214,200 -64260 956,650 nil 956,650 286995 -113,550 nil -113,550 -34065 798,000 nil 798,000 239400 816000 -64,260 286,995 781935 1244070 239400 CTP DTA DTL ITE The journal entry for the period of 30 June 2019 The journal entry for the period of 30 June 2019 DR CR 816000 Income Tax Expense Income Tax Payable 816000 (to recognise the tax expense pertaining to taxable profit) 239400 Income tax expense (OCI) (deferred) Deferred tax liability (to recognise the tax implications of the revaluation of land) 239400 Revaluation surplus 239400 Income tax expense (OCI) (deferred) 239400 (to reduce the amount of the revaluation surplus so that only the net (after tax) effect of the revaluation is recognised within equity 64,260 Deferred Tax Asset Deferred Tax Liability Income tax expense (deferred) 47,595 34065 (to recognise the tax implications of the temporary differences other than the revaluation) Deferred tax liability Deferred tax asset (to offset the deferred tax asset against the deferred tax liability) 64,260 64,260 Carrying amount Tax base $ Deductible temporary difference Taxable temporary differences Income tax expense Revaluation Surplus Current tax payable $ $ $ $ $ $ Assets Cash -138,600 Inventory Accounts receivable Prepaid insurance Plant-net Equipment-net Furnitures and fixtures-net Land 102,000 502,800 378,000 51,900 1,809,000 928,000 550,000 2,268,000 6,589,700 102,000 502,800 378,000 190,500 1,758,750 870,000 550,000 1,470,000 5,822,050 -138,600 50,250 50,250 58,000 798,000 798,000 Liabilities 50,400 403,200 1,008,000 50,400 163,800 50,000 1,675,400 4,146,650 50,400 -75,600 Account payable 403,200 Loan payable 1,008,000 Provision for warranty 100,800 Provision for long service le 88,200 Rent payable 50,000 1,650,200 Net asset 4,939,500 Temporary differences at period end less Prior period amounts Movement for the period Tax effected at 30% Tax on taxable income, 30% x $2,720,000 Income tax adjustments -75,600 -214,200 nil -214,200 -64260 956,650 nil 956,650 286995 -113,550 nil -113,550 -34065 798,000 nil 798,000 239400 816000 -64,260 286,995 781935 1244070 239400 CTP DTA DTL ITE The journal entry for the period of 30 June 2019