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The following data applies to the company XYZ: Profit before tax for the year to 30 June 2020 - $200,000 Taxable income for the year

The following data applies to the company XYZ:

  • Profit before tax for the year to 30 June 2020 - $200,000
  • Taxable income for the year to 30 June 2020 - $ 450,000
  • Deferred tax liability 1 July 2019 - $105,000
  • Deferred tax Asset 1 July 2019 - $64,000
  • Taxable temporary differences on 30 June 2020 - $320,000
  • Deductible temporary differences at 30 June 2020 - $210,000

Assume the corporate tax is 40%.

Select the right calculations for the required tax components and related journal entries:

Income tax expense for the year ended 30 June 2020, credited to Current Tax Liability would be:

Answer 1Choose...Dr Deferred Tax Liability-3,750 Cr Income Tax Expense- 1,250 Cr Deferred Tax Asset-2,500$128,000Dr Deferred Tax Liability -3,750 Cr Income Tax Expense- 2,500 Cr Deferred Tax Asset-1,250Dr Deferred Tax Asset- 20,000 Dr Income Tax Expense- 3,000 Cr Deferred Tax Liability-23,000$95,750$23,000$15,000$116,750There is no enough information.$52,650$20,000$180,000$27,500

Deferred tax liability (Before adjusting to opening balance) as of 30th June 2020 would be:

Answer 2Choose...Dr Deferred Tax Liability-3,750 Cr Income Tax Expense- 1,250 Cr Deferred Tax Asset-2,500$128,000Dr Deferred Tax Liability -3,750 Cr Income Tax Expense- 2,500 Cr Deferred Tax Asset-1,250Dr Deferred Tax Asset- 20,000 Dr Income Tax Expense- 3,000 Cr Deferred Tax Liability-23,000$95,750$23,000$15,000$116,750There is no enough information.$52,650$20,000$180,000$27,500

Increase in deferred tax asset for the year ended 30th June 2020 would be:

Answer 3Choose...Dr Deferred Tax Liability-3,750 Cr Income Tax Expense- 1,250 Cr Deferred Tax Asset-2,500$128,000Dr Deferred Tax Liability -3,750 Cr Income Tax Expense- 2,500 Cr Deferred Tax Asset-1,250Dr Deferred Tax Asset- 20,000 Dr Income Tax Expense- 3,000 Cr Deferred Tax Liability-23,000$95,750$23,000$15,000$116,750There is no enough information.$52,650$20,000$180,000$27,500

Journal entry to record deferred tax for the year ended 30th June 2020?

Answer 4

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