You have been asked by the management of My Bag Ltd to assist with the preparation of the income tax entries for the year ended 30 June 2017. The company reported a profit before tax for the year to 30 June 2017 of $900 000. The company?s statements of financial position include assets and liabilities as follows:

(a) The company is entitled to claim a tax deduction of 125% on development costs when incurred.

(b) Interest revenue of $10 000 is included in the profit for the year to 30 June 2017.

(c) Expenses included in profit for the year to 30 June 2017 are as follows:

Parking and other fines $10 000

Depreciation expense for plant $70 000

Doubtful debts expense $25 000

Amortization of development asset $50 000

Long-service leave expense $36 000

(d) Accumulated depreciation on plant for tax purposes is $280 000 on 30 June 2017 and $180 000 on 30 June 2016. There have been no acquisitions or disposals of plant during the current year.

(e) The corporate tax rate is 30%.

Complete the current tax and deferred tax worksheets of My Bag Ltd and prepare the tax entries for 30 June 2017.

Transcribed Image Text:

Accounts receivable Allowance for doubtful debts Plant - at cost Accumulated depreciation Development asset - at cost Accumulated amortisation Interest receivable Provision for long-service leave Deferred tax asset Deferred tax liability 2017 $ 245 000 (20 000) 600 000 (190 000) 360 000 (130 000) 10 000 48 000 ? ? 2016 $ 200 000 (10 000) 600 000 (120 000) 200 000 (80 000) 20 000 62 000 21 600 60 000 Accounts receivable Allowance for doubtful debts Plant - at cost Accumulated depreciation Development asset - at cost Accumulated amortisation Interest receivable Provision for long-service leave Deferred tax asset Deferred tax liability 2017 $ 245 000 (20 000) 600 000 (190 000) 360 000 (130 000) 10 000 48 000 ? ? 2016 $ 200 000 (10 000) 600 000 (120 000) 200 000 (80 000) 20 000 62 000 21 600 60 000

Answer rating: 100% (QA)

Current Tax Worksheet For the year ended 30 June 2017 Accounting profit 900 000 Add Parking and othe... View the full answer