QUESTION 3

1. Question 2 (20 marks)

   You have been asked by the management of Corana Ltd Ltd to assist with the preparation of the income tax entries for the year ended 30 June 2020. The company reported a profit before tax for the year to 30 June 2020 of $600,000.

   Additional Information

   1) The profit for the year ended 30 June 2020 includes $10,000 in interest revenue. The amount of revenue received during the year was $20,000.

   2) The annual depreciation on Property, Plant and Equipment controlled by the company is $70,000. For tax purposes the depreciation expense is $100,000.

   3) During the year ended 30 June 2020, bad debt write-offs amounted to $15,000. The Doubtful Debts Expense for the year was $25,000.

   4) The company paid $50,000 in long service leave entitlements. The long-service leave expense recognised during the year was $36,000.

   5) The profit for the year includes a tax-exempt government grant worth $50,000.

   6 ) Entertainment expenses for the financial year amounted to $15,000.

   7) Parking and Other fines were equal to $10,000.

   8) The balance in Accrued Expenses account on 30 June 2020 is $6,000. The full balance pertains to deductible operating expenses incurred during the period.

   The corporate tax rate is 30%.

   Required

   1. Calculate the taxable income for the year ended 30 June 2020 for Corana Ltd (10 marks)
   2. Prepare the journal entry to account for current tax (no narration is required).