Oscar Ltd made an accounting profit before tax of $40,000 for the year ended 30 June 2021.

Included in the accounting profit were the following items of expense: entertainment expense $8,000 and bad debts expense $14,000.

Oscar Ltd wrote off $10,000 in bad debts for the year ended 30 June 2021. The company income tax rate is 30%.

Oscar Ltd should record:

Select one:

a.

$12,000 credit for current tax liability.

b.

$15,600 credit for current tax liability.

c.

$13,200 debit for income tax expense.

d.

$18,600 debit for income tax expense.

The accounting profit before tax of Archie Ltd for the year ended 30 June 2020 was $8,000 and included the following income and expense items: interest revenue $35,000, depreciation expense plant $7,000.

A draft statement of financial position as at 30 June 2020 revealed the following: interest receivable $15,000 (30 June 2019 $10,000), plant $70,000 (30 June 2019 $70,000). For tax purposes, plant is depreciated at 20% straight-line. The company tax rate is 30%.

For the year ended 30 June 2020 the current tax journal entry is:

Select one:

a.

DR Deferred tax asset 1,200 CR Income tax expense (current) 1,200

b.

DR Income tax expense (current) 1,200 CR Current tax liability 1,200

c.

DR Income tax expense (current) 1,800 CR Current tax liability 1,800

d.

DR Deferred tax asset 4,000 CR Income tax expense (current) 4,000

Clear my choice

Katie Ltd had an accounting profit before tax for the year ended 30 June 2020 of $20,000. Included in the profit were the following items of income and expense: government grant $15,000, warranty expense $34,000 and insurance expense $17,000.

Katie Ltd calculated the following: warranty paid $48,000 and insurance paid $30,000. The company tax rate is 30%.

For the year ended 30 June 2020, the current tax journal entry is:

Select one:

a.

DR Deferred tax asset 2,100 CR Income tax expense (current) 2,100

b.

DR Income tax expense (current) 2,100 CR Deferred tax asset 2,100

c.

DR Deferred tax asset 6,600 CR Income tax expense (current) 6,600

d.

DR Income tax expense (current) 6,600 CR Deferred tax asset 6,600

Rosie Ltd had the following balances related to bad debts for the year ended 30 June 2021: Allowance for Doubtful Debts $31,500 (30 June 2020: $26,000), and bad debts expense $25,000. The company income tax rate is 30%.

The amount that Rosie Ltd can claim as a tax deduction for bad debts for 30 June 2021 is:

Select one:

a.

$25,000

b.

$30,500

c.

$5,850

d.

$19,500

When an entity receives a government grant it is treated as:

Select one:

a.

An asset for accounting purposes and is exempt income for taxation purposes.

b.

A revenue for accounting purposes and taxable income when the cash is received for taxation purposes.

c.

No difference for accounting purposes and taxation purposes.

d.

A revenue for accounting purposes and is exempt income for taxation purposes.