Question 1 On 30 June 2020, the equity of Peninsula Ltd consisted of:- 250,000 ordinary shares, issued at $3 $750,000 100,000 10% redeemable preference shares, issued at $4 $400,000 General reserve $160,000 $285,000 Retained earnings On 31 December 2020, an ordinary interim cash dividend of 30c per share was declared and paid. To fund the redemption of the preference shares, on 16 January 2021 the directors issued a prospectus offering 150,000 ordinary shares at an issue price of $3.50, payable $2 on application and $1.50 on allotment. The closing date for applications was 15 February. By 15 February, applications had been received for 160,000 shares. On 25 February, the directors allotted the shares. The company's constitution allows excess application money to be retained and used to offset other money payable. By 15 March, all allotment money had been received, and underwriter's commission of $9,500 was paid. On 31 March, the preference shares were redeemed at a 5% premium, and cheques were sent to preference shareholders on 4 April. On 30 June, the directors decided to make a 1-for-6 bonus issue out of retained earnings. The bonus shares were valued at $3.10 each. 520 2 Required Prepare the journal entries to record the transactions of Peninsula Ltd for the events outlined above. Ignore preference share dividend payments. Narrations are required. Show all workings and calculations. Questloh 2 The financial statements of Main Ridge Ltd for the year ended 30 June 2020 showed a profit before tax of $255,000, including the following items of income and expense: e -Entertainment expenses - Fines and penalties - Impairment of goodwill - Depreciation expense - Plant - Bad debts expense - Annual leave expense- Warranty expense - Rent expense $3,000 $1,500 $22,000 $50,000 $12,600 $8,500 $6,1004 $10,000 . Additional Information for 30 June 2020: The tax deduction for plant depreciation was $75,000. Annual leave costs of $21,000 had been paid during the current year. The balance in the Allowance for Doubtful Debts account at 30 June 2019 was $18,500, and at 30 June 2020 the balance in the account was $16,700.- The balance of the Provision for Warranty account at 30 June 2019 was $9,200, and at 30 June 2020 the balance in the account was $11,400. The balance of the Prepaid Rent account at 30 June 2019 was $25,000, and the balance in the account at 30 June 2020 was $30,000.- In the year ended 30 June 2019, the company recorded a tax loss. At 1 July 2019, carry forward tax losses amounted to $24,400. The company recognised a deferred tax asset in respect of these tax losses at 30 June 2019. The tax rate is 30%. Required Prepare the complete current tax worksheet, and the applicable current tax journal entries required by Main Ridge Ltd, for the year ended 30 June 2020. Show all workings and calculations. [ [ [ The balance sheets of Red Hill Ltd showed the net assets of the company at 30 June 2019 and 30 June 2020 as follows: + 2020 2019 Assets Cash 75,000 45,000 Inventory 46,000 60,000 Receivables 120,000 100,000 Allowance for doubtful debts (20,000) (12,000) Plant 200,000 200,000 Accumulated depreciation-plant (40,000) (10,000) Buildings 300,000 300,000 Accumulated depreciation-buildings (90,000) (30,000) Goodwill 30,000 30,000 Accumulated impairment- goodwill (8,000) (3,000) Deferred tax asset ? 4,000 Liabilities Payables Dividend payable Provision for long service leave Deferred tax liability 135,000 50,000 45,000 165,000 45,000 27,000 5,000 ? Additional information: (i) The depreciation rate for plant is 10% for accounting purposes. The carrying amount of plant for tax purposes at 30 June 2020 was $155,000.- Buildings and goodwill are not deductible for tax purposes. + The corporate tax rate is 30%. (ii) (iii) Required Complete the deferred tax worksheet and provide the journal entry to record the adjustment to the deferred tax asset and the deferred tax liability accounts for the year ended 30 June 2020. Do not offset the deferred tax accounts. Narrations are required. Note: Use the worksheet format provided on the following page. You can copy and paste this format into your word document. Question 1 On 30 June 2020, the equity of Peninsula Ltd consisted of:- 250,000 ordinary shares, issued at $3 $750,000 100,000 10% redeemable preference shares, issued at $4 $400,000 General reserve $160,000 $285,000 Retained earnings On 31 December 2020, an ordinary interim cash dividend of 30c per share was declared and paid. To fund the redemption of the preference shares, on 16 January 2021 the directors issued a prospectus offering 150,000 ordinary shares at an issue price of $3.50, payable $2 on application and $1.50 on allotment. The closing date for applications was 15 February. By 15 February, applications had been received for 160,000 shares. On 25 February, the directors allotted the shares. The company's constitution allows excess application money to be retained and used to offset other money payable. By 15 March, all allotment money had been received, and underwriter's commission of $9,500 was paid. On 31 March, the preference shares were redeemed at a 5% premium, and cheques were sent to preference shareholders on 4 April. On 30 June, the directors decided to make a 1-for-6 bonus issue out of retained earnings. The bonus shares were valued at $3.10 each. 520 2 Required Prepare the journal entries to record the transactions of Peninsula Ltd for the events outlined above. Ignore preference share dividend payments. Narrations are required. Show all workings and calculations. Questloh 2 The financial statements of Main Ridge Ltd for the year ended 30 June 2020 showed a profit before tax of $255,000, including the following items of income and expense: e -Entertainment expenses - Fines and penalties - Impairment of goodwill - Depreciation expense - Plant - Bad debts expense - Annual leave expense- Warranty expense - Rent expense $3,000 $1,500 $22,000 $50,000 $12,600 $8,500 $6,1004 $10,000 . Additional Information for 30 June 2020: The tax deduction for plant depreciation was $75,000. Annual leave costs of $21,000 had been paid during the current year. The balance in the Allowance for Doubtful Debts account at 30 June 2019 was $18,500, and at 30 June 2020 the balance in the account was $16,700.- The balance of the Provision for Warranty account at 30 June 2019 was $9,200, and at 30 June 2020 the balance in the account was $11,400. The balance of the Prepaid Rent account at 30 June 2019 was $25,000, and the balance in the account at 30 June 2020 was $30,000.- In the year ended 30 June 2019, the company recorded a tax loss. At 1 July 2019, carry forward tax losses amounted to $24,400. The company recognised a deferred tax asset in respect of these tax losses at 30 June 2019. The tax rate is 30%. Required Prepare the complete current tax worksheet, and the applicable current tax journal entries required by Main Ridge Ltd, for the year ended 30 June 2020. Show all workings and calculations. [ [ [ The balance sheets of Red Hill Ltd showed the net assets of the company at 30 June 2019 and 30 June 2020 as follows: + 2020 2019 Assets Cash 75,000 45,000 Inventory 46,000 60,000 Receivables 120,000 100,000 Allowance for doubtful debts (20,000) (12,000) Plant 200,000 200,000 Accumulated depreciation-plant (40,000) (10,000) Buildings 300,000 300,000 Accumulated depreciation-buildings (90,000) (30,000) Goodwill 30,000 30,000 Accumulated impairment- goodwill (8,000) (3,000) Deferred tax asset ? 4,000 Liabilities Payables Dividend payable Provision for long service leave Deferred tax liability 135,000 50,000 45,000 165,000 45,000 27,000 5,000 ? Additional information: (i) The depreciation rate for plant is 10% for accounting purposes. The carrying amount of plant for tax purposes at 30 June 2020 was $155,000.- Buildings and goodwill are not deductible for tax purposes. + The corporate tax rate is 30%. (ii) (iii) Required Complete the deferred tax worksheet and provide the journal entry to record the adjustment to the deferred tax asset and the deferred tax liability accounts for the year ended 30 June 2020. Do not offset the deferred tax accounts. Narrations are required. Note: Use the worksheet format provided on the following page. You can copy and paste this format into your word document