The accounting profit before tax of Raffles Ltd for the year ended 30 June 2019 was $1,250,000 and included the following items of income and expense:

Government grant

Rent revenue

Political donations

Bad debts expense Depreciation of plant Insurance expense

Long service leave expense Warranty expense

$ 50,000 80,000 20,000 7,500 280,000 24,000 40,000 30,000

The draft statements of financial position at 30 June 2019 and 30 June 2018 included the following assets and liabilities:

2019 2018 $$

Accounts Receivable

Allowance for doubtful debts

Prepaid insurance

Plant 2,800,000

485,000 (80,000) 12,000 2,800,000 (100,000) 25,000 80,000 26,000 21,000 48,000

Accumulated depreciation - plant Deferred tax asset

Rent received in advance Provision for Warranty

Long service leave payable Deferred tax liability

Additional information:

(380,000) ? 100,000 30,000 14,000 ?

1. For accounting purposes, the plant is depreciated at 10% straight line. For tax purposes, the plant is depreciated at 20% straight line.
2. The tax rate is 30%.

Required:

1. a)Calculate the taxable income and hence the current tax liability for Raffles Ltd. (11 marks)
2. b)Using the general journal, record the current tax liability for Raffles Ltd. as at 30 June 2019.
3. (2 marks)
4. c)Usinganappropriateworksheet,calculatethebalancedayadjustmentsto
5. deferred tax asset and deferred tax liability accounts as at 30 June 2019.
6. (12 marks)
7. d)Using the general journal, record the adjustments to deferred tax asset and deferred tax liability accounts as at 30 June 2019.
8. (2 marks)