A resident company with a 30% company tax rate is owned by one resident individual. The company has an opening credit balance of $12,000 in its franking account as at 1^st of July 2020. Following are the transactions for the year:

• On 12 July 2020 a fully franked final dividend of $14,000 was paid to the shareholder;
• On 23 August 2020 the PAYG Instalment for June 2020 quarter of $22,000 was paid to the ATO;
• On 31 August 2020 a $42,000 cash dividend franked to 50% was paid to the shareholder;
• On 18 November 2020 the PAYG Instalment for September 2020 quarter of $22,000 was paid to the ATO;
• On 12 December 2020 the company received an income tax refund of $28,000 from the ATO for the 2020 tax return;
• On 21 February 2021 the PAYG Instalment for December 2020 quarter of $12000 was paid to the ATO;
• On 12 May 2021 the PAYG Instalment for March 2021 quarter of $12,000 was paid to the ATO;
• On 21 May 2021 the PAYG Withholding for the month of April 2021 of $42,000 for employee wages was paid to the ATO.
• On 15 June 2021 a fully franked interim dividend of $84,000 was proposed by the board to be paid to the shareholder.

Required:

You are required to prepare the company’s franking account for this income year and advise of any discrepancies you discover.

Answer rating: 100% (QA)

Step 1 A franking credit typically described as an imputation credit is a type of tax benefit given ... View the full answer