You are a senior accountant in a second-tier accounting firm. Your client, Banksia Ltd, has prepared its adjusted trial balance for the year ended 30 June 2035. Your manager has asked you to assist the client to determine the income tax expense for the year and the tax assets and liabilities that arise from the transactions and events of the year.

The following tables provide relevant information from the adjusted trial balance:

TABLE 12035 Accounting Profit1,140,000.00 Annual Leave Expenses186,000.00 Depreciation Expenses - equipment 60,000.00 Depreciation expenses - motor vehicles105,000.00 Doubtful debts expenses570,000.00 impairment - Goodwill54,000.00 Entertainment Expenses36,000.00 Interest Revenue15,000.00 Long Service leave expenses6,000.00 TABLE 22035 2034 Assets (alphabetic order) Accounts receivable1,755,000.001,290,000.00Allowance for doubtful debts-54,000.00-39,000.00Cash27,000.00230,400.00Deferred tax asset 41,400.00Equipment1,500,000.001,500,000.00Accumulated depreciation - equipment-120,000.00-60,000.00Goodwill264,000.00264,000.00Accumulated depreciation - goodwill-54,000.000.00Interest receivable1,200.001,500.00Inventories474,000.00381,000.00Motor Vehicles1,050,000.001,050,000.00Accumulated Depreciation - motor vehicles-210,000.00-105,000.00 Liabilities (alphabetic order) Accounts payable795,000.00741,000.00Annual leave provision180,000.0090,000.00Deferred tax liability 31,950.00Long service leave provision15,000.009,000.00

Additional information:

• The following items are not deductible for tax purposes:
  • Entertainment expense
  • Impairment of goodwill
  • Motor vehicle assets:
    • Accounting depreciation is at 10% p.a., straight-line, with no residual
    • Tax purposes: depreciation is at 20% p.a., straight-line, with no residual
  • The tax rate is 30%

Required:

1. Prepare the current tax worksheet to calculate the current tax liability for the year ended 30 June 2035. Provide all supporting calculations.
2. Prepare the deferred tax worksheet to calculate the movements in deferred tax accounts for the year ended 30 June 2035. Provide all supporting calculations.
3. Provide the journal entries that arise from these tax worksheets for the year ended 30 June 2035.