Manitoba Pty Ltd manufactures and sells Manita Herbal Teabags as a healthy product. The company

is based in South Coast, KwaZuluNatal, has a December financial year end and applies International

Financial Reporting Standards.

The draft results of operations for the year ended December is shown below:

R

Sales

Rent income

Dividend income

Profit on sale of vehicle

Cost of sales

Depreciation

Interest on expense

Other expenses

Dividends declared June

Profit for the period

Retained earnings: January

Retained earnings: December

Additional information:

The deferred tax balance at the beginning of the year was Rdebit whereas the deferred

tax balance at the end of the year is Rdebit

Other expenses are allocated to the entitys core functions as follows:

Administration:

Distribution:

Other:

All amounts are considered material

The normal tax rate is and

The inclusion rate for purposes of capital gains is

The following balances have been extracted from the closing balances appeared in the trial balance

at December :

Expenses prepaid R

Rent income received in advance R

Rent income received in advance at December R

Income received in advance is taxed in the year of receipt.

Expenses prepaid at December totalled R Expenses prepaid are deductible for

tax purposes in the year in which they are paid.

Other than the processing of provisional tax payments made during which totalled R no

other journal entries have yet been processed regarding tax expense.

The tax assessment for the year was received during August It reflected an amount

of R for the assessed normal tax on taxable profit for

The total tax expense in the statement of comprehensive income in was disclosed as

R which was made up of current normal tax of R and deferred normal tax of

R No journal entries have yet been processed to take into account any adjustments

that may be necessary.

A vehicle with a carrying amount of R and tax base of R was sold during

Its original cost was R The base cost of this asset is R

Wear and tear of R was granted as a deduction in by the tax authorities.

There are no other differences between accounting profit and taxable profit other than those

evident from the information given.

There are no components of other comprehensive income.

REQUIRED:

QUESTION MARKS

In accordance with IAS Income tax:

a Prepare all the journal entries relating to the manufacturing of Manitoba Pty Ltd for the year

ended December

NB: Show calculations

b Prepare the Statement of Profit or Loss and Other Comprehensive Income of Manitoba Pty Ltd

for the year ended December

c Prepare the tax expense note to be included in the annual financial statement of Manotoba Pty

Ltd for the year ended December in accordance with, International Financial Reporting

Standards and Companies Act of