In the current year ending 30 th June 20X9 Challenger Ltd has recorded an accounting profit of $947,500 The following information is extracted from Challengers 20X9 financial statements As at 30 t h June 20X9 20X8 20X9 Assets Inventories 145,000 167,000 Accounts receivables 420,000 350,000 Allowance for doubtful debts (21,000) (16,000) Prepaid insurance 25,000 22,000 Equipment 600,000 600,000 Accumulated depreciation (60,000) (120,000) Intangible asset 300,000 300,000 Accumulated amortisation (120,000) (180,000) Goodwill 140,000 140,000 Accumulated impairment (2,000) (5,000) Liabilities Service revenue received in advance 17,000 12,500 Warranty payable 35,000 40,000 Provision for long service leave 28,000 35,000 Additional information is given below The value of Inventory purchased in this year is $600,000 The deduction is allowed when inventory is sold Bad debts are deductible when they are written off $25,000 had been written off as bad debts during the year The amounts paid for insurance were claimed as deductions $23,000 was paid for insurance during the year The equipment is depreciated on a straight line basis over 10 years for accounting purpose and diminishing value method is adopted for taxation purpose with applied 20 depreciate rate The equipment is not expected to have any residual value Equipment was purchased in July 20X7 There have been no disposals of equipment during 20X8 and 20X9 The intangible asset shown in the balance sheet had been internally developed three years ago The development cost was deducted when the cost was incurred Cash is received in advance before the services are rendered Income from the services is taxed when cash is received The cash received in the year 20X9 is $9,000 Impairment of goodwill is not deductible Warranty expense is not deductible until cash is actually paid The cost incurred in the year 20X9 for the warranty claims was $60,000 $20,000, paid for the long service leave, is deductible when it is paid There are no other items that cause differences between accounting profit and taxable profit Required (Please label your responses as 1), 2) ) 1) Calculate the amount of taxable profit for the year 20X9 (12 14) Note You are required to identify the items that need to be adjusted and to show the workings for each adjustment 2) Assume that Challenger Ltds taxable loss for 20X8 was $80, 000 and that the recognition criteria was satisfied in 20X8 The tax profit for 20X9 is assumed to be $1,000,000 The tax rate is 30 Prepare a journal entry to record the recoupment of the tax loss and the current tax payable for 20X9 (2 14)

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In the current year ending 30 th June 20X9 Challenger Ltd has recorded an accounting profit of $947,500. The following information is extracted from Challengers

In the current year ending 30^th June 20X9 Challenger Ltd has recorded an accounting profit of $947,500. The following information is extracted from Challengers 20X9 financial statements:

As at 30^t^h June 20X9	20X8	20X9
Assets
Inventories	145,000	167,000
Accounts receivables	420,000	350,000
Allowance for doubtful debts	(21,000)	(16,000)
Prepaid insurance	25,000	22,000
Equipment	600,000	600,000
Accumulated depreciation	(60,000)	(120,000)
Intangible asset	300,000	300,000
Accumulated amortisation	(120,000)	(180,000)
Goodwill	140,000	140,000
Accumulated impairment	(2,000)	(5,000)
Liabilities
Service revenue received in advance	17,000	12,500
Warranty payable	35,000	40,000
Provision for long service leave	28,000	35,000

Additional information is given below:

The value of Inventory purchased in this year is $600,000. The deduction is allowed when inventory is sold.
Bad debts are deductible when they are written off. $25,000 had been written off as bad debts during the year.
The amounts paid for insurance were claimed as deductions. $23,000 was paid for insurance during the year.
The equipment is depreciated on a straight-line basis over 10 years for accounting purpose and diminishing-value method is adopted for taxation purpose with applied 20% depreciate rate. The equipment is not expected to have any residual value. Equipment was purchased in July 20X7. There have been no disposals of equipment during 20X8 and 20X9.
The intangible asset shown in the balance sheet had been internally developed three years ago. The development cost was deducted when the cost was incurred.
Cash is received in advance before the services are rendered. Income from the services is taxed when cash is received. The cash received in the year 20X9 is $9,000
Impairment of goodwill is not deductible.
Warranty expense is not deductible until cash is actually paid. The cost incurred in the year 20X9 for the warranty claims was $60,000.
$20,000, paid for the long service leave, is deductible when it is paid.
There are no other items that cause differences between accounting profit and taxable profit.

Required: (Please label your responses as 1), 2).)

1) Calculate the amount of taxable profit for the year 20X9. (12/14)

Note: You are required to identify the items that need to be adjusted and to show the workings for each adjustment.

2) Assume that Challenger Ltds taxable loss for 20X8 was $80, 000 and that the recognition criteria was satisfied in 20X8. The tax profit for 20X9 is assumed to be $1,000,000. The tax rate is 30%. Prepare a journal entry to record the recoupment of the tax loss and the current tax payable for 20X9. (2/14)