Question 2 23 Marks Epping Ltd commences operations on 1 July 2019 and presents its first Statement of Comprehensive Income and an extract of first Statement of Financial Position on 30 June 2020. The statements are prepared before considering taxation. The following information is available. Statement of comprehensive income for the year ended 30 June 2020 Gross profit $1,200,000 Administration expenses (350,000) Salaries (250,000) Long-service leave (60,000) Warranty expenses (90,000) Depreciation expense - equipment (240,000) Doubtful debts expense (18,000) Rent (28,000) Accounting profit before tax $164,000 An extract of Assets and Liabilities as disclosed in the Statement of Financial Position as at 30 June 2020 ASSETS Cash at Bank 140,000 Inventory 320,000 Accounts receivable 252,000 Provision for doubtful debts 18,000 234,000 Prepaid rent 20,000 Equipment - cost 1,440,000 Less accumulated depreciation 240,000 1,200,000 Total Assets 1,914,000 LIABILITIES Accounts payable 650,000 Accrued Salaries 20,000 Provision for warranty expenses 50,000 Loan payable 600,000 Provision for long service leave 60,000 Total liabilities 1,380,000 Net Assets 534,000Additional Information 1. Thetax rate is 30 percent. 2. Rent was initially prepaid to the amount of $48,000. At year end, the unused component of the prepaid rent amounted to $20,000. Actual amounts paid are allowed as a tax deduction. 3. None of the long service leave expense has actually been paid Long service leave expense is not deductible until it is actually paid. 4. Warranty expenses are accrued and at year end, actual payments of $40,000 were made. Deductions for tax purposes are only available when the amounts are paid and not as they are accrued 5. Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. 6. There were no bad debt write-offs during the year. 7. The equipment is depreciated over six (6) years for accounting purposes, but over four (4) years for taxation purposes. 8. All administration and salaries expenses incurred have been paid with the exception of $20,000 accrued salarics as at year end. Salaries expense are only deductible when paid