prepare financial report for corporate entities

TAFE Ltd. has provided you with its unadjusted trial balance for the year ended 30 June from which you are required to: (a) Prepare the profit and loss account for the year showing adjustments (b) Prepare the retained profits account showing adjustments (c) Prepare a Trial Balance at 30 June (after adjustments.) (Calculations for all adjustments should be shown) Adjustments to be made to Profit and Loss Investment assets are to be impaired by 50% of their carrying amount Goodwill was brought to account during the year as a result of a business combination resulting in the acquisition of the Franchise. The business combination has been valued at $225,000 with the recoverable amount of the Franchise valued at $190,000. Taxation information: Company tax rate is 30%. The loss on sale of assets are to be treated as a permanent difference for taxation purposes as are impaiments in investment assets and goodwill Temporary differences were identified in the following asset and liability amounts. Carrying Amount Tax Base Trade debtors $24,000 $25,000 Allowance for doubt. debts ($1,000) $0 Plant & machinery $60,000 $60,000 Accumulated depreciation - plant & machinery ($12,000) ($18,000) Employee benefits payable $18,000 $0 Adjustments to be made to Retained Profits. Provide for a final dividend of $0.06 per share payable in the following year. Reduce the Dividend Reserve by $15,000 Create a General Reserve of $10,000 . . TAFE Uld. Trial Balance as at 30 June Details After Adjustments Debit Credit $ $ Accrued interest on deposits Plant & machinery Accumulated depreciation - plant & machinery Investments (purchased for long-term gain) Accumulated impairment - Investments Trade debtors Allowance for doubt. debts Cash in hand Stock (30 June Deposits at call Franchise Goodwill Buidings (director's valuation) Land (at cost Prer interest expense Trade creditors Debenture loan (due in 5 years) Mortgage Employee benefits payable Cash at bank Income tax payable Ordinary shares ($1 each) Dividend reserve Asset revaluation reserve Service income Credit Sales Cost of goods sold Advertising Auditors fees Depreciation expense - Plant & Machinery Directors fees Doubtful debts Employee benefits Insurances Interest on loans Interest on deposits Lease payments Loss on sale of assets Repairs Wages Income tax expense Retained profits 1 July Interim dividend Before Adjustments Debit Credit $ $ 5,000 60,000 12,000 40,000 10,000 25,000 1,000 1,000 63,000 17,500 200,000 50,000 400,000 600,000 15 500 34,500 150,000 75,000 18,000 67,500 12,500 605,500 100,000 100,000 400,000 600,000 450,000 10,000 20,000 12,000 12,000 1,000 18.000 13,000 25,000 2.000 9,000 41000 8.000 48,000 50,000 41.000 35,000 2,229,000 2,229,000 Debits Credits Balance 5 Business name: Date Details General Ledger (Extract) Profit & Loss Retained Profits Business name: CALCULATION OF INCOME ADJUSTMENTS AT 30 JUNE Profit (loss) before tax ADJUSTED FOR PERMANENT TAXATION DIFFERENCES (Non-deductible expenses or non-assessable income) ADJUSTED ACCOUNTING PROFIT ADJUSTED FOR OVER/UNDERSTATED TAX DIFFERENCES (a) Overstated Tax Deductible Expenses (b) Understated Tax Deductible Expenses X 30% TAXABLE INCOME Multiplied by the company tax rate Equals Income Tax Payable Less PAYG Tax expensed EQUALS INCOME TAX PAYABLE ADJUSTMENT TOTAL DEFERRED TAX ASSET ADJUSTMENT TOTAL DEFERRED TAX LIABILITY ADJUSTMENT INCOME TAX EXPENSE ADJUSTMENT CR DR CR DR Deferred Taxation Adjustment Calculations: Balance Machinery valuations Depreciation at start Carrying amount Less Tax base amount DEFERRED TAX LIABILITY Balance at end X 30%- Debtors valuations Balance at start Bad Debts Doubtful Debts Balance at end Carrying amount Less Tax base amount DEFERRED TAX ASSET X 30%- Balance At start Leave expensed Leave paid Balance At end Leave liability valuations Carrying amount Less Tax base amount DEFERRED TAX ASSET X 30% Business name: Trial Balance (after appropriation of profits) As at 30 June Account name Debit $ Credit $