Required: Question 2 20 Marks Navara Ltd commences operations on 1 July 2019. One year later, on 30 June 2020, Navara Ltd prepares its first statement of comprehensive income and its first statement of financial position. The statements are prepared before considering taxation. The following information is available. (a) Calculate Navara Ltd's taxable income for the year ended 30 June 2020. (4.5 Marks). (6) Complete the Deferred Tax Worksheet provided on page 5 in accordance with AASB 112: Income Taxes. [Copy the table provided in page 5 and paste it in your answer document to complete the Deferred Tax Worksheet]. (12.5 Marks). Statement of comprehensive income for the year ended 30 June 2020- Sales revenue $2.400.000 Cost of goods solde 1,400,000 Gross profit 1,000,000 Wages and salaries expense- (400,000 Doubtful debt expense (40,000 Insurance expensee (100,000 Long service leave expense- (100,000) - Depreciation expense - Plant- (60,000) Accounting profit before tax 300,000 (c) Prepare the applicable journal entries to record the tax adjustments as at 30 June 2020. (3 Marks). [4.5+12.5+3 = 20 Marks] Assets and Liabilities extracted from Statement of Financial Position as at 30 June 20204 Assets Cash $300,000 Accounts receivables (net) 360,000 Inventories 400,000 Prepaid insurance 100,000 Plant 300,000 Accumulated depreciation - Plant (60,000 Total Assets 1,400,000 Liabilities Accounts payable 200,000 Revenue received in advance 100,000 Loan payable 400,000 Provision for long service leave 100.000 Total Labilities 800,000 Net Assets 600.000 Additional information All wages and salaries have been paid as at year end and are deductible for tax purposes. None of the long service leave expense has actually been paid. It is not deductible for tax purposes until it is actually paid. The revenue received in advance is included in the taxable income. Insurance was initially prepaid to the amount of $200,000. At the year end the unused component of the prepaid insurance amounted $100,000. Actual amounts paid are allowed as a tax deduction Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. No bad debts were written off. The plant is depreciated on a straight-line basis over 5 years for accounting purposes, but over 3 years for taxation purposes. The plant is not expected to have any residual value. The company tax rate is assumed to be 30%. Question 2 (cont.) Required: Question 2 20 Marks Navara Ltd commences operations on 1 July 2019. One year later, on 30 June 2020, Navara Ltd prepares its first statement of comprehensive income and its first statement of financial position. The statements are prepared before considering taxation. The following information is available. (a) Calculate Navara Ltd's taxable income for the year ended 30 June 2020. (4.5 Marks). (6) Complete the Deferred Tax Worksheet provided on page 5 in accordance with AASB 112: Income Taxes. [Copy the table provided in page 5 and paste it in your answer document to complete the Deferred Tax Worksheet]. (12.5 Marks). Statement of comprehensive income for the year ended 30 June 2020- Sales revenue $2.400.000 Cost of goods solde 1,400,000 Gross profit 1,000,000 Wages and salaries expense- (400,000 Doubtful debt expense (40,000 Insurance expensee (100,000 Long service leave expense- (100,000) - Depreciation expense - Plant- (60,000) Accounting profit before tax 300,000 (c) Prepare the applicable journal entries to record the tax adjustments as at 30 June 2020. (3 Marks). [4.5+12.5+3 = 20 Marks] Assets and Liabilities extracted from Statement of Financial Position as at 30 June 20204 Assets Cash $300,000 Accounts receivables (net) 360,000 Inventories 400,000 Prepaid insurance 100,000 Plant 300,000 Accumulated depreciation - Plant (60,000 Total Assets 1,400,000 Liabilities Accounts payable 200,000 Revenue received in advance 100,000 Loan payable 400,000 Provision for long service leave 100.000 Total Labilities 800,000 Net Assets 600.000 Additional information All wages and salaries have been paid as at year end and are deductible for tax purposes. None of the long service leave expense has actually been paid. It is not deductible for tax purposes until it is actually paid. The revenue received in advance is included in the taxable income. Insurance was initially prepaid to the amount of $200,000. At the year end the unused component of the prepaid insurance amounted $100,000. Actual amounts paid are allowed as a tax deduction Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. No bad debts were written off. The plant is depreciated on a straight-line basis over 5 years for accounting purposes, but over 3 years for taxation purposes. The plant is not expected to have any residual value. The company tax rate is assumed to be 30%. Question 2 (cont.)