Question 2 30 Marks Stuart Ltd commences its operations on 1 July 2019. One year after the commencement of its operations (30 June 2020) the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2020. The statements are prepared before considering taxation. The following information is available. Stuart Ltd Statement of Comprehensive Income for the year ended 30 June 2020 Sales revenue Cost of Goods Sold Gross Profit 10,250,000 4,650,000 I 5,600,000 Expenses: Salaries and wages Selling expense Administrative expenses Provision for doubtful debts Warranty expenses Long service leave Depreciation expense - Plant Insurance 1.050,000 35.000 700.000 175.000 210,000 350,000 560.000 230.000 Accounting profil for the year 33102000 2.290.000 63% Stuart Ltd Assets and Liabilities as discosed in the Statement of Financial Position for the yemended 30 June 2020 5 Assets Cash and cash equivalent 160,000 Accounts receivables (net) 525,000 Inventory 700.000 Prepaid insurance 70,000 Plant-cost 2.800,000 Lex - Accumulated depreciation 560.000 2.240,000 Land 2.150.000 Total assets 6.845.000 Liabilities Accounts payables Provision for warranty expenses Provision for long service leave Bank loan payable Total liabilities Net arves 560,000 120.000 170,000 100.000 2.250.000 1.995.000 Other information All Selling, administration and salaries and wages expenses incurred have been paid as at yearend. Stuart Ltd has some land which cost $2,300,000 and which has been revalued to its fair value ol$3.1507000 Insurance was initially prepaid to the amount of $300,000. At the year-end, the unused component of the prepaid insurance amounted to $70,000. Actual amounts paidate allowed as a tax deduction The amount of $180.000 long service leave expense has been paid, The plant is depreciated over 5 years for accounting purposes, but over 4 years for taxation purposes Warranty expens were accred S210,000 and at the year end actual payments of $90,000 had been madering of accrued balance of $120,0001. Dedations for a purposes are only table when the contre paid and not as they accrueda Amounts received from sales, including those on credit temu, ale taxed at the time of the ale hade The taxate per Required Computer that income recordsheet 5.5 Mars Get the Taliban thenextrace th 23 Mark Permain the la 25. Mat Note: Copy the excel spreadsheet and paste on the word documenti Stuart Ltd Taxation Worksheet as at 30 June 2020 Item Carrying amount Tax Rate Tax Expanse Deductable Temporary Difference Taxable Temporary Difference S Revaluation Surplus Tax Payne 5 Assets Cash Accounts receivables et Prepaid insurance Inventory Plant net Land Liabilities Accounts payables Provision for long service leave Provision for warranty Bank loan payahla Neramets Temporary diresse fear Movement for the Teflected Taxon lakable Income tax adjustment Question 2 30 Marks Stuart Ltd commences its operations on 1 July 2019. One year after the commencement of its operations (30 June 2020) the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2020. The statements are prepared before considering taxation. The following information is available, Stuart Ltd Statement of Comprehensive Income for the year ended 30 June 2020 S Sales revenue 10,250,000 Cost of Goods Sold 4,650,000 Gross Profit 5,600,000 Expenses: Salaries and wages Selling expense Administrative expenses Provision for doubtful debts Warranty expenses Long service leave Depreciation expense - Plant Insurance 1,050,000 35,000 700,000 175,000 210,000 350,000 560,000 230.000 Accounting profit for the year 3.310.000 2.290.000 Stuart Ltd Assets and Liabilities as disclosed in the Statement of Financial Position for the year ended 30 June 2020 $ Assets Cash and cash equivalent 160,000 Accounts reccivables (net) 525.000 Inventory 700,000 Prepaid insurance 70,000 Plant-cost 2,800,000 Less- Accumulated depreciation 560,000 2,240,000 Land 3.150.000 Total assets 6.845.000 Liabilities Accounts payables Provision for warranty expenses Provision for long service leave Bank loan payable Total liabilities Net assets 560,000 120,000 170,000 1.400.000 2.250.000 4.595,000 Other information: All selling, administration, and salaries and wages expenses incurred have been paid as at year-end. Stuart Ltd has some land which cost $2,300,000 and which has been revalued to its fair value of $3,150,000. Insurance was initially prepaid to the amount of $300,000. At the year-end, the unused component of the prepaid insurance amounted to $70,000. Actual amounts paid are allowed as a tax deduction The amount of $180,000 long service leave expense has been paid. The plant is depreciated over 5 years for accounting purposes, but over 4 years for taxation purposes. Warranty expenses were accrued $210,000 and, at the year-end actual payments of $90,000 had been made leaving of accrued balance of $120,000). Deductions for tax purposes are only available when the amounts are paid and not as they accrued. Amounts received from sales, including those on credit terms, are taxed at the time of the sale is made The tax rate is 30 per cent. . Required: 0 (11) Compute the taxable income or loss. (using excel spreadsheet) 5.5 Marks Complete the Taxation Worksheet on the next page in accordance with AASB 112 Income Taxes. (using excel spreadsheet) 21 Marks Prepare the applicable journal entries at 30 June 2020 to account for tax using the balance sheet method. 3.5 Marks (iii) Note: Copy the excel spreadsheets and paste on the word document. Stuart Ltd Taxation Worksheet as at 30 June 2020 Item Tax Base Tax Expense Tax Payable Carrying amount Deductable Temporary Difference S Taxable Temporary Difference $ Revaluation Surplus $ S $ $ $ Assets Cash Accounts receivables (net) Prepaid insurance Inventory Plant-net Land Liabilities Accounts payables Provision for long service leave Provision for warranty Bank loan payable Net assets Temporary difference for year Loss carried forward Movement for the period Tax effected at 30% Tax on taxable income Income tax adjustment 6 Required: (0) (ii) Compute the taxable income or loss. (using excel spreadsheet). 5.5 Marks Complete the Taxation Worksheet on the next page in accordance with AASB 112 Income Taxes. (using excel spreadsheet). 21 Marks Prepare the applicable journal entries at 30 June 2020 to account for tax using the balance sheet method. 3.5 Marks