Question 1: (Marks 15)

MyOwnWork Ltd commences operations on 1 July 2018 and presents its first statement of profit and loss and other comprehensive income and first statement of financial position on 30 June 2019. The statements are prepared before considering taxation. The following information is available:

Statement of profit or loss and other comprehensive income for the year ended 30 June 2019

Gross Profit

Expenses

Administration expenses

Salaries

Long-service Leave

Warranty expenses

Depreciation expense - plant

Insurance 20,000

Accounting profit before tax Other comprehensive income

730,000

430,000

300,000

Nil

80,000 200,000 20,000 30,000 80,000

Assets and liabilities as disclosed in the statemet of financial positions as at 30 June 2019

Assets

Cash

Inventory

Accounts receivable

Prepaid Insurance

Plant - cost

Less: Accumulated depreciation

Total assets

Liabilities

Accounts payable

Provision for warranty expenses

Loan payable

Provision for long service leave expenses Total liabilities

Net assets

Other information

400,000 80,000

20,000 100,000 100,000

10,000 320,000

550,000

80,000

20,000 200,000 20,000

320,000

230,000

• All administration and salaries expenses incurred have been paid as at year end.
• None of the long service leave expense has actually been paid.
• Warranty expenses were accrued, and at year end, actual payments of $10 000 have been
• made (leaving an accrued balance of $20 000).
• ACT 503 Corporate Accounting Assignment 1

Due Date: 11.59 pm Friday 12th May in Study Week 10

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• Insurance was initially prepaid to the amount of $30 000. At year end, the unused component of the prepaid insurance amounted to $10 000.
• Amounts received from sales, including those on credit terms, are taxed at the time of sale is made.
• The plant is depreciated over five years for accounting purposes, but over four years for taxation purposes.
• The tax rate is 30 per cent
• Required:
• Prepare Deferred Tax worksheet for MyOwnWork Ltd as at 30 June 2019 and provide the Journal entries to account for tax in accordance with AASB 112