PART A: Prepare a current tax worksheet (10 MARKS)

You are required to account for income tax for the year ending 30 June 2021.

Relevant information is as follows:

Accounting profit before tax $ 150,000

Bad debt expense $ 12,000

Bad debt written-off $ 7,000

Depreciation expense $ 20,000

Depreciation allowed for tax $ 30,000

Corporate tax rate 30%

Required: Prepare the current tax worksheet and the current tax journal entry for 30.6.21.

PART B: Prepare income tax adjustment for the following items (5 MARKS)

1. ABC Limited accrued $20,000 for warranty expense in the year ended 30 June 2021. This item will not be tax deductible until it is paid. If the company tax rate is 30%. What is the tax effect adjustment entry on 30 June 2021? (2 MARKS)

2. The following information was extracted from the financial records of ABC Limited: equipment purchased on 1 July 2020 for $100 000 (accounting depreciation 20% straight line; tax depreciation 30% straight line). If the company tax rate is 30%, what is the deferred tax adjustment entry that will be recorded by ABC Limited at 30 June 2021 ? (3 MARKS)