Question
The profit before tax, as reported in the Statement of Profit or Loss and Other Comprehensive Income of Diamond Ltd for the year ended 30
The profit before tax, as reported in the Statement of Profit or Loss and Other Comprehensive Income of Diamond Ltd for the year ended 30 June 2019, amounted to $50,000 including the following revenue and expense items.
| June 2019 |
---|---|
| $ |
Interest revenue | 4,000 |
Bad debts expense | 4,000 |
Depreciation expense - plant | 5,000 |
Annual Leave Expense | 3,000 |
Long service leave expense | 2,500 |
Fines and Penalties (non-deductible) | 600 |
Depreciation expense - buildings (non-deductible) | 1,000 |
Government grant (exempt from tax) | 3,000 |
The Statement of Financial Position of the company at 30 June 2019 showed the following assets and liabilities.
| 2019 | 2018 |
---|---|---|
Assets | $ | $ |
Cash | 7,000 | 5,500 |
Accounts receivables | 55,000 | 42,000 |
Allowance for doubtful debts | (6,500) | (3,000) |
Inventory | 17,000 | 15,500 |
Interest Receivable | 3,000 | 6,000 |
Plant | 70,000 | 70,000 |
Accumulated Depreciation - Plant | (36,000) | (31,000) |
Buildings | 40,000 | 40,000 |
Accumulated Depreciation Buildings | (16,000) | (15,000) |
Deferred Tax Asset | ? | 1,200 |
Liabilities |
|
|
Accounts Payable | 29,000 | 26,000 |
Provision for long service leave | 7,000 | 4,500 |
Provision for annual leave | 7,500 | 7,000 |
Deferred Tax Liability | ? | 2,500 |
Additional information
Accumulated depreciation of plant for tax purposes was $42,000 at 30 June 2019, and depreciation for tax purposes for the year ended 30 June 2019 amounted to $7,000.
The tax rate is 30%.
Required
- Prepare the current tax worksheet and the journal entry to recognise current tax at 30 June 2019.
- Prepare the deferred tax worksheet and journal entries to adjust deferred tax accounts as at 30 June 2019.
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