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Thomastown Ltd commences its operations on 1 July 2020. One year after the commencement of its operations (30 June 2021) the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2021. The statements are prepared before considering taxation. The following information is available. Thomastown Ltd Statement of Comprehensive Income for the year ended 30 June 2021

$

Gross Profit 13,440,000

Expenses:

Administrative expenses 1,411,200

Salaries 1,008,000

Provision for doubtful debts 336,000

Long service leave 672,000

Warranty expenses 403,200

Depreciation expense Machinery 536,000

Depreciation expense Building 160,000

Insurance 369,600

4,986,000

Accounting profit for the year 8,454,000

Thomastown Ltd Assets and Liabilities as disclosed in the Statement of Financial Position for the year ended 30 June 2021

$ $

Assets

Cash

272,000

Account Receivables (net)

1,008,000

Inventory

1,540,800

Prepaid insurance

138,400

Machinery cost 5,360,000

Less accumulated depreciation 536,000

4,824,000

Building - cost 4,000,000

Less accumulated depreciation 160,000

3,840,000

Total assets

11,623,200

Liabilities

Payables

1,075,200

Provision for long service leave

235,200

Provision for warranty expenses

268,800

Bank loan

2,600,000

Total liabilities

4,179,200

Net assets

7,444,000

0ther information: -All administration and salaries expenses incurred have been paid as at year-end. -Insurance was initially prepaid to the amount of $508,000. At the year-end, the unused component of the prepaid insurance amounted to $138,400. -Actual amounts paid are allowed as a tax deduction. -The amount of $436,800 long service leave expense has been paid. -The machinery is depreciated over 10 years for accounting purposes, but over 8 years for taxation purposes. -The building is depreciated over 25 years for accounting purposes, but over 20 years for taxation purposes. -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 of $134,400 had been made (leaving of accrued balance of $268,800). -Deductions for tax purposes are only available when the amounts are paid and not as they accrued. -The tax rate is 30 per cent.

Required: -Compute the taxable income or loss. (using excel spreadsheet) -Complete the Taxation Worksheet in accordance with AASB 112 Income Taxes. (using excel spreadsheet) -Prepare the applicable journal entries at 30 June 2021 to account for tax using the balance sheet method. 7 Marks

2:44 20 85% Thomastown Ltd commences its operations on July 2020. One year after the commencement of its operations (30 June 2021) the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2021. The statements are prepared before considering taxation. The following information is available Thomastown Ltd Statement of Comprehensive Income for the year ended 30 June 2021 s Gross Profit 13,440,000 1,411,200 1,008,000 336,000 Expenses Administrative expenses Salaries Provision for doubtful debts Long service leave Warranty expenses Depreciation expense - Machinery Depreciation expense - Building Insurance 672,000 403.200 536,000 160,000 269.GOO 4.98.6.000 Accounting profit for the year 8,454,000 Thomastown Ltd Assets and Liabilities as disclosed in the Statement of Financial Position for the year ended 30 June 2021 S Assets 272.000 Cash Account Receivables (net) 1,000,000 Inventory 1,540,800 138,400 Prepaid insurance Machinery-cost Les accumulated depreciation 5.360,000 536.000 4,824,000 Building - cost Less accumulated depreciation 4,000,000 160.00 3.8140.000 Total assets 11.622 200 Llabilities Payables 1,075,200 Provision for long service leave Provision for warranty expenses Bank loan 235.200 268,800 2,600,000 Total liabilities 4.179.200 Ner assets 7.444,000 Other information