Practical Question 1 Accounting for Income Tax Current Tax Worksheet - 9 Marks

The profit before tax, as reported in the Statement of Profit or Loss and Other Comprehensive Income of Peach Ltd for the year ended 30 June 2020, amounted to $50,000 including the following revenue and expense items:

	June 2020
	$
Rent revenue	5,500
Bad debts expense	5,500
Depreciation expense - plant	6,500
Annual Leave Expense	4,500
Warranty Expense	4,000
Fines and Penalties (non-deductible)	3,500
Depreciation expense - buildings (non-deductible)	12,500
Government grant (exempt from tax)	15,000

Additional information:

1. The deduction for depreciation for tax purposes is double the accounting depreciation.
2. Bad debts written off for the year are $6,500.
3. Rent revenue is receivable in advance and is taxed when received. Total cash receipts for rent are $10,000 during the year.
4. No annual leave was paid during the year.
5. Warranty repair payments of $5,000 were made during the year.

Required

Prepare the current tax worksheet and the journal entry to recognise the current tax liability at 30 June 2020. (9 marks)

tax rate 30%