Question 4: Income tax Total Marks 25) Summarised Statement of Profit/Loss before Tax and balances extracted from the Statement of Financial Position for Tia Limited for the period ending 30 June 2019 are given below Note 1,500,000 Statement of Profit or Loss 30 June 2019 Sales Revenue Less Expenses Salary expense Administration expense Warranties expense Bad and Doubtful debts expense Depreciation expense Entertainment expense 678,000 100,000 22,000 30,000 40,000 10,000 (880,000) 620,000 | Profit before tax Balance Sheet Extract 30 June 2019 Assets Trade receivables (net) Equipment (net) Liabilities Warranty Provision 160,000 220,000 36,000 Additional information Note 1 Sales revenue is taxed at the time sales are made Note 2 Administration expenses are tax deductible when incurred Note 3 Warranty repair costs are tax deductible when carried out. The opening balance of the warranty provision as at 1 July 2018 was $28.000. Note 4 An allowance for doubtful debts of $25,000 is made at 30 June 2019. The opening balance of the allowance for doubtful debts as at 1 July 2018 was $12,000. For tax purposes only bad debts are deductible. Note 5 50% of the Entertainment expense is deductible for tax Note 6 The equipment was purchased on 1 July 2017 at a cost of $200,000. The asset has a useful life of five years and no residual value. Straight-line depreciation is used. For tax purposes the asset is depreciated over four 1 years Note 7 As at 1 July 2018, total (gross) deductible temporary differences were 1 $40,000 and total (gross) taxable temporary differences were $10,000 Note 8 i The tax rate is 28% Required 1. Prepare the current tax worksheet as at 31.06.2019 (Show necessary workings). (Marks 15) 2. Prepare the deferred tax worksheet and any necessary journal entries to adjust the deferred tax accounts (Show necessary workings). (Marks 10) Click or tap here to enter text