Thomastown Ltd commences its operations on 1 July 2020. One year after the commencement of its operations (30 June 2021) the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2021. The statements are prepared before considering taxation. The following information is available. Thomastown Ltd Statement of Comprehensive Income for the year ended 30 June 2021 $ Gross Profit 13,440,000 Expenses: Administrative expenses Salaries 1,411,200 1,008,000 Provision for doubtful debts 336,000 672,000 403,200 Long service leave Warranty expenses Depreciation expense - Machinery Depreciation expense - Building 536,000 160.000 Insurance 369.600 4.986.000 Accounting profit the year 8,454,000 4 Thomastown Ltd Assets and Liabilities as disclosed in the Statement of Financial Position for the year ended 30 June 2021 S Assets Cash 272,000 Account Receivables (net) 1,008,000 1,540,800 138,400 Inventory Prepaid insurance Machinery -cost Less accumulated depreciation 5,360,000 536.000 4,824,000 4,000,000 Building - cost Less accumulated depreciation - 160.000 3,840,000 11.623,200 Total assets Liabilities 1.075,200 Payables Provision for long service leave 235,200 Provision for warranty expenses 268,800 Bank loan 2,600,000 Total liabilities 4.179.200 Net assets 7.444.000 Other information: All administration and salaries expenses incurred have been paid as at year-end. Insurance was initially prepaid to the amount of $508,000. At the year-end, the unused component of the prepaid insurance amounted to $138,400. Actual amounts paid are allowed as a tax deduction. The amount of $436,800 long service leave expense has been paid. The machinery is depreciated over 10 years for accounting purposes, but over 8 years for taxation purposes. The building is depreciated over 25 years for accounting purposes, but over 20 years Thomastown Ltd Assets and Liabilities as disclosed in the Statement of Financial Position for the year ended 30 June 2021 S S Assets Cash 272,000 Account Receivables (net) 1,008,000 1,540,800 Inventory Prepaid insurance 138,400 5,360,000 Machinery - cost Less accumulated depreciation 536.000 4,824,000 Building - cost 4,000,000 Less accumulated depreciation - 160.000 3,840,000 Total assets 11,623,200 Liabilities Payables 1,075,200 Provision for long service leave 235,200 Provision for warranty expenses 268,800 Bank loan 2,600,000 Total liabilities 4.179.200 Net assets 7,444,000 Other information: All administration and salaries expenses incurred have been paid as at year-end. Insurance was initially prepaid to the amount of $508,000. At the year-end, the component of prepaid insurance amoun 8,400. Actual amounts paid are allowed as a tax deduction. The amount of $436,800 long service leave expense has been paid. 5 The machinery is depreciated over 10 years for accounting purposes, but over 8 years for taxation purposes. The building is depreciated over 25 years for accounting purposes, but over 20 years for taxation purposes. Amounts received from sales, including those on credit terms, are taxed at the time of the sale is made. Warranty expenses were accrued and, at the year-end, actual payments of $134,400 had been made (leaving of accrued balance of $268,800). Deductions for tax purposes are only available when the amounts are paid and not as they accrued. The tax rate is 30 per cent. Required: (i) (ii) Compute the taxable income or loss. (using excel spreadsheet) Complete the Taxation Worksheet in accordance with AASB 112 Income Taxes. (using excel spreadsheet) Prepare the applicable journal entries at 30 June 2021 to account for tax using the balance sheet method. (iii) Note: Copy the excel spreadsheets and paste on the word document. Thomastown Ltd Taxation Worksheet as at 30 June 2021 Item Tax Base Tax Expense Carrying amount Deductable Temporary Difference Taxable Temporary Difference Tax Payable $ $ $ $ $ $ Thomastown Ltd commences its operations on 1 July 2020. One year after the commencement of its operations (30 June 2021) the entity presents its first Statement of Comprehensive Income and Statement of Financial Position on 30 June 2021. The statements are prepared before considering taxation. The following information is available. Thomastown Ltd Statement of Comprehensive Income for the year ended 30 June 2021 $ Gross Profit 13,440,000 Expenses: Administrative expenses Salaries 1,411,200 1,008,000 Provision for doubtful debts 336,000 672,000 403,200 Long service leave Warranty expenses Depreciation expense - Machinery Depreciation expense - Building 536,000 160.000 Insurance 369.600 4.986.000 Accounting profit the year 8,454,000 4 Thomastown Ltd Assets and Liabilities as disclosed in the Statement of Financial Position for the year ended 30 June 2021 S Assets Cash 272,000 Account Receivables (net) 1,008,000 1,540,800 138,400 Inventory Prepaid insurance Machinery -cost Less accumulated depreciation 5,360,000 536.000 4,824,000 4,000,000 Building - cost Less accumulated depreciation - 160.000 3,840,000 11.623,200 Total assets Liabilities 1.075,200 Payables Provision for long service leave 235,200 Provision for warranty expenses 268,800 Bank loan 2,600,000 Total liabilities 4.179.200 Net assets 7.444.000 Other information: All administration and salaries expenses incurred have been paid as at year-end. Insurance was initially prepaid to the amount of $508,000. At the year-end, the unused component of the prepaid insurance amounted to $138,400. Actual amounts paid are allowed as a tax deduction. The amount of $436,800 long service leave expense has been paid. The machinery is depreciated over 10 years for accounting purposes, but over 8 years for taxation purposes. The building is depreciated over 25 years for accounting purposes, but over 20 years Thomastown Ltd Assets and Liabilities as disclosed in the Statement of Financial Position for the year ended 30 June 2021 S S Assets Cash 272,000 Account Receivables (net) 1,008,000 1,540,800 Inventory Prepaid insurance 138,400 5,360,000 Machinery - cost Less accumulated depreciation 536.000 4,824,000 Building - cost 4,000,000 Less accumulated depreciation - 160.000 3,840,000 Total assets 11,623,200 Liabilities Payables 1,075,200 Provision for long service leave 235,200 Provision for warranty expenses 268,800 Bank loan 2,600,000 Total liabilities 4.179.200 Net assets 7,444,000 Other information: All administration and salaries expenses incurred have been paid as at year-end. Insurance was initially prepaid to the amount of $508,000. At the year-end, the component of prepaid insurance amoun 8,400. Actual amounts paid are allowed as a tax deduction. The amount of $436,800 long service leave expense has been paid. 5 The machinery is depreciated over 10 years for accounting purposes, but over 8 years for taxation purposes. The building is depreciated over 25 years for accounting purposes, but over 20 years for taxation purposes. Amounts received from sales, including those on credit terms, are taxed at the time of the sale is made. Warranty expenses were accrued and, at the year-end, actual payments of $134,400 had been made (leaving of accrued balance of $268,800). Deductions for tax purposes are only available when the amounts are paid and not as they accrued. The tax rate is 30 per cent. Required: (i) (ii) Compute the taxable income or loss. (using excel spreadsheet) Complete the Taxation Worksheet in accordance with AASB 112 Income Taxes. (using excel spreadsheet) Prepare the applicable journal entries at 30 June 2021 to account for tax using the balance sheet method. (iii) Note: Copy the excel spreadsheets and paste on the word document. Thomastown Ltd Taxation Worksheet as at 30 June 2021 Item Tax Base Tax Expense Carrying amount Deductable Temporary Difference Taxable Temporary Difference Tax Payable $ $ $ $ $ $