QUESTION 3 (30 Marks) The following are extracts from the draft financial accounts of Shopko Sdn Bhd for the year ended 31 March 2020. RM Income Turnover Cost of sales Gross Profit 727,000 (500,000) 227,000 Expenses Salaries and wages Impairment expense Annual leave expense Donation Office Rental Bad debts expense Audit fees expense Depreciation of leasehold land Depreciation of furniture & fittings Depreciation of office equipment Provision for Doubtful Debts Insurance Other expenses Total Expenses Loss before income tax (45,000) (15,000) (20,000) (7,000) (15,000) (12,000) (20,000) (40,000) (35,000) (20,000) (10,000) (9.000) (19,000) (267.000) (40,000) An extract of the financial position of Shopko Bhd at 31 March 2020 is as follows: 2020 RM 2019 RM 300,000 (35,000) 80,000 (20,000) 55.000 (10,000) Assets Leasehold Land Accumulated Depreciation Leasehold Land Furniture & Fittings Accumilated Depreciation Furniture & Fittings Office Equipment Accumulated depreciation Office Equipment Accumulated impairment Office Equipment Bank Trade Debtors Provision for Doubtful Debts Insurance Prepaid Inventory Provision for Stock Obsolensence Deferred Tax Asset 327,000 (60,000) 150,000 (55,000) 120.000 (30,000) (15,000) 40,000 90,000 (30,000) 16,000 111,000 (10,000) 26,000 100,000 (20,000) 104,000 (10,000) 3,000 573,000 664,000 142,000 14,000 10.000 6,000 10,000 Liabilities & Equity Trade Creditors Accruals Rent Payable Dividend proposed Employee benefits payable Deferred Tax Liability Share Capital Retained Earnings 15,000 8,000 ??? 500,000 (15,000) 664,000 7,000 500,000 40,000 573,000 Additional information: i) Accruals for the current financial year are in respect of audit fees ii) The depreciation for tax purposes for the current year and tax base of the office equipment and motor vehicles at 31 March 2020were as follows: Leasehold Land Furniture & Fittings Office equipment Tax Depreciation (RM) 31,000 34,000 Tax Base (RM) 60,000 70,000 The company's leasehold land does not qualify for capital allowance. iii) Donation expenses are not allowable as a tax deduction. iv) Impairment expense is not allowed as a tax deduction v) The company tax rate is 24%. vi) Shopko Bhd accounts for deferred tax using the full provision (Liability method). Required: a) Calculate the income tax liability for Shopko Bhd as at 31 March 2020 and prepare the journal entry to record the income tax payable. (12 marks) b) Prepare the deferred tax worksheet at 31 March 2020 to determine the deferred tax entries for the year. (15 marks) c) Record the journal entry for Deferred Tax Asset and Deferred Tax Liability for the current financial year. (3 marks) QUESTION 3 (30 Marks) The following are extracts from the draft financial accounts of Shopko Sdn Bhd for the year ended 31 March 2020. RM Income Turnover Cost of sales Gross Profit 727,000 (500,000) 227,000 Expenses Salaries and wages Impairment expense Annual leave expense Donation Office Rental Bad debts expense Audit fees expense Depreciation of leasehold land Depreciation of furniture & fittings Depreciation of office equipment Provision for Doubtful Debts Insurance Other expenses Total Expenses Loss before income tax (45,000) (15,000) (20,000) (7,000) (15,000) (12,000) (20,000) (40,000) (35,000) (20,000) (10,000) (9.000) (19,000) (267.000) (40,000) An extract of the financial position of Shopko Bhd at 31 March 2020 is as follows: 2020 RM 2019 RM 300,000 (35,000) 80,000 (20,000) 55.000 (10,000) Assets Leasehold Land Accumulated Depreciation Leasehold Land Furniture & Fittings Accumilated Depreciation Furniture & Fittings Office Equipment Accumulated depreciation Office Equipment Accumulated impairment Office Equipment Bank Trade Debtors Provision for Doubtful Debts Insurance Prepaid Inventory Provision for Stock Obsolensence Deferred Tax Asset 327,000 (60,000) 150,000 (55,000) 120.000 (30,000) (15,000) 40,000 90,000 (30,000) 16,000 111,000 (10,000) 26,000 100,000 (20,000) 104,000 (10,000) 3,000 573,000 664,000 142,000 14,000 10.000 6,000 10,000 Liabilities & Equity Trade Creditors Accruals Rent Payable Dividend proposed Employee benefits payable Deferred Tax Liability Share Capital Retained Earnings 15,000 8,000 ??? 500,000 (15,000) 664,000 7,000 500,000 40,000 573,000 Additional information: i) Accruals for the current financial year are in respect of audit fees ii) The depreciation for tax purposes for the current year and tax base of the office equipment and motor vehicles at 31 March 2020were as follows: Leasehold Land Furniture & Fittings Office equipment Tax Depreciation (RM) 31,000 34,000 Tax Base (RM) 60,000 70,000 The company's leasehold land does not qualify for capital allowance. iii) Donation expenses are not allowable as a tax deduction. iv) Impairment expense is not allowed as a tax deduction v) The company tax rate is 24%. vi) Shopko Bhd accounts for deferred tax using the full provision (Liability method). Required: a) Calculate the income tax liability for Shopko Bhd as at 31 March 2020 and prepare the journal entry to record the income tax payable. (12 marks) b) Prepare the deferred tax worksheet at 31 March 2020 to determine the deferred tax entries for the year. (15 marks) c) Record the journal entry for Deferred Tax Asset and Deferred Tax Liability for the current financial year