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:

Additional information:

The following items are not deductible for tax purposes:

o Entertainment expense

o Impairment of goodwill

Equipment assets:

o Accounting depreciation is at 10% p.a., straight-line, with no residual

o 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.

TABLE 1 \begin{tabular}{|l|r|} \hline & \multicolumn{1}{|c|}{2035} \\ \hline Accounting profit & 1,140,000 \\ \hline Annual leave expense & 186,000 \\ \hline Depreciation expense - equipment & 60,000 \\ \hline Depreciation expense - motor vehicles & 105,000 \\ \hline Doubtful debts expense & 570,000 \\ \hline Impairment - Goodwill & 54,000 \\ \hline Entertainment expense & 36,000 \\ \hline Interest revenue & 15,000 \\ \hline Long service leave expense & 6,000 \\ \hline \end{tabular} TABLE 2 \begin{tabular}{|l|r|r|} \hline Assets (alphabetic order) & \multicolumn{1}{|c|}{2035} & \multicolumn{1}{|c|}{2034} \\ \hline Accounts receivable & 1,755,000 & 1,290,000 \\ \hline \multicolumn{1}{|c|}{ Allowance for doubtful debts } & (54,000) & (39,000) \\ \hline Cash & 27,000 & 230,400 \\ \hline Deferred tax asset & & 41,400 \\ \hline Equipment & 1,500,000 & 1,500,000 \\ \hline Accumulated depreciation - equipment & (120,000) & (60,000) \\ \hline Goodwill & 264,000 & 264,000 \\ \hline Accumulated impairment losses - goodwill & (54,000) & 0 \\ \hline Interest receivable & 1,200 & 1,500 \\ \hline Inventories & 474,000 & 381,000 \\ \hline Motor vehicles & 1,050,000 & 1,050,000 \\ \hline Accumulated depreciation - motor vehicles & (210,000) & (105,000) \\ \hline & & \\ \hline Liabilities (Alphabetic order) & & \\ \hline Accounts payable & 795,000 & 741,000 \\ \hline Annual leave provision & 180,000 & 90,000 \\ \hline Deferred tax liability & & 31,950 \\ \hline Long service leave provision & 15,000 & 9,000 \\ \hline \end{tabular}