Question
The profit before tax, as reported in the statement of profit or loss and other comprehensive income of Mackay Ltd for the year ended 30
The profit before tax, as reported in the statement of profit or loss and other comprehensive income of Mackay Ltd for the year ended 30 June 2018, amounted to $60 000, including the following revenue and expense items:
Rent revenue | $3 000 |
Bad debts expense | 6 000 |
Depreciation of plant | 5 000 |
Annual leave expense | 3 000 |
Entertainment costs (non-deductible) | 1 800 |
Depreciation of buildings (non-deductible) | 800 |
The statement of financial position of the company at 30 June 2018 showed the following net assets.
| 2018 | 2017 |
Assets |
|
|
Cash | 8 000 | 8 500 |
Inventories | 17 000 | 15 500 |
Receivables | 50 000 | 48 000 |
Allowance for doubtful debts | (5 500) | (4 000) |
Office supplies | 2 500 | 2 200 |
Plant | 50 000 | 50 000 |
Accumulated depreciation | (26 000) | (21 000) |
Buildings | 30 000 | 30 000 |
Accumulated depreciation | (14 800) | (14 000) |
Goodwill (net) | 7 000 | 7 000 |
Deferred tax asset | ? | 4 050 |
Liabilities |
|
|
Accounts payable | 29 000 | 26 000 |
Provision for long service leave | 6 000 | 4 500 |
Provision for annual leave | 4 000 | 3 000 |
Rent received in advance | 2 500 | 2 000 |
Deferred tax liability | ? | 3 150 |
Additional information
(a) Accumulated depreciation of plant for tax purposes was $31 500 at 30 June 2017, and depreciation for tax purposes for the year ended 30 June 2018 amounted to $7500.
(b) The tax rate is 30%.
Required:
Prepare a current tax worksheet and the journal entry to recognise the companys current tax liability as at 30 June 2018. Also provide workings for allowance for doubtful debts, provision for annual leave, provision for long service leave and rent received in advance.
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