QUESTION 4: TAX EFFECT ACCOUNTING Ambrose Ltd began operations on 1 July 2014. The draft accounts of Ambrose Ltd for the year ended 30 June 2015 showed a profit before tax of $88,960, and included the following items of income and expenses Gain on sale of plant Bad debts expense Insurance expense Annual leave expense Depreciation expense-equipment 12,000 32,400 51,600 58,000 56,000 Ambrose Ltd's draft balance sheet as at 30 June 2015 included the following assets and liabilities Assets Accounts receivable Allowance for doubtful debts Prepaid insurance Equipment Accumulated depreciation 384,000 (27,200) 13,600 560,000 (128,000) Deferred tax asset Liabilities Provision for annual leave Current tax liability Deferred tax liability 52,800 Additional Information: The gain on sale of equipment for tax purposes was $32,000 .Bad debt written off was $26,000 Annual leave paid was $44,000 Insurance paid was S42,800 The tax annual deduction for the depreciation was $81,000 Accumulated depreciation for tax purposes was $161,000 as at 30 June 2015 Assume a tax rate of 30% Required: (a) Complete the worksheet to determine taxable income for Ambrose Ltd for the year (b) Provide the jounal entry to record the current tax liability as at 30 June 2015 ending 30 June 2015 (8 marks) (2 marks) QUESTION 4: TAX EFFECT ACCOUNTING Ambrose Ltd began operations on 1 July 2014. The draft accounts of Ambrose Ltd for the year ended 30 June 2015 showed a profit before tax of $88,960, and included the following items of income and expenses Gain on sale of plant Bad debts expense Insurance expense Annual leave expense Depreciation expense-equipment 12,000 32,400 51,600 58,000 56,000 Ambrose Ltd's draft balance sheet as at 30 June 2015 included the following assets and liabilities Assets Accounts receivable Allowance for doubtful debts Prepaid insurance Equipment Accumulated depreciation 384,000 (27,200) 13,600 560,000 (128,000) Deferred tax asset Liabilities Provision for annual leave Current tax liability Deferred tax liability 52,800 Additional Information: The gain on sale of equipment for tax purposes was $32,000 .Bad debt written off was $26,000 Annual leave paid was $44,000 Insurance paid was S42,800 The tax annual deduction for the depreciation was $81,000 Accumulated depreciation for tax purposes was $161,000 as at 30 June 2015 Assume a tax rate of 30% Required: (a) Complete the worksheet to determine taxable income for Ambrose Ltd for the year (b) Provide the jounal entry to record the current tax liability as at 30 June 2015 ending 30 June 2015 (8 marks) (2 marks)