SQ 3-6 Town Ltd commences operations on 1 July 2020. One year after the commencement of its operations (30 June 2021) the entity prepares the following information, showing both the carrying amounts for accounting purposes and the tax bases of the respective assets and liabilities. Carrving values Tar bases ($) 60 000 Assets Accounts receivable (net) Prepaid insurance Inventory Plant-net Land 45 000 16 000 35 000 444 000 600.000 35 000 370 000 600.000 Liabilities Accounts payable Provision for warranty Loan payable 55 000 55 000 18 000 250.000 250.000 Other information After adjusting for differences between tax rules and accounting rules, it is determined that the taxable income of Town Ltd is $550 000. Doubtful debts expense for the year was $15 000 and no debts have been written off. Insurance paid for the year was $22 000. An item of plant is purchased at a cost of $555 000 on 1 July 2020. For accounting purposes it is expected to have a life of five years: however, for taxation purposes it can be depreciated over three years. It is not expected to have any residual value. None of the amounts accrued in respect of warranty expenses has actually been paid. The tax rate is 30 per cent. Required: (a) Determine the amount of accounting profit before tax for the year ending 30 June 2021 and hence determine tax expense and tax payable. Calculation of Current Tax Consequences for Y/E 30 June 2021 ($'000) Accounting Profit before Tax } Tax Expense *30% =[] Temporary differences: D Depreciation Taxable income Tax payable 30%=[] (b) Complete the following tax effect worksheet and prepare journal entries for current and deferred tax consequences for the year ending 30 June 2016. Tax worksheet for Town Ltd at 30 June 2016 Carrying Tax Base (5'000) Amount Tax Expense Deductible Temporary Differences Taxable Temporary Differences Current Tax Payable $ $ $ $ Assets DUELE Liabilities SERVICE LEO Temporary differences at period end Less: Prior period amounts Movement for the period Tax affected @ 30% Tax on taxable income Income tax adjustments required Journals