The accounting records of Hariharah provide income statement data for the current year: Total revenues: 1,000,000...

 

Transcribed Image Text:

The accounting records of Hariharah provide income statement data for the current year: Total revenues: 1,000,000 Total expenses: 810,000 Profit before Income tax: 190,000 Total expenses of Hariharah include depreciation of $50,000 calculated under the straight-line method. In calculating taxable income on the tax return, Rhyme Timber uses the reducing-balance (RB) method. RB depreciation was $80,000 for the current year. The company income tax rate is 30%. Complete the following: A. Using the information above, prepare the journal entry in respect of income tax for the current year. (3 marks available) B. Provide the journal entries to account for the events below. (9 marks available) • In the current year, Hariharah Ltd invites public to subscribe for 10 million shares at $2.00 per share. Applications for shares close on 15 July, with $1.00 being paid on application and a further $1.00 being payable within one month of allotment. A By 15 July applications have been received for 11 million shares, and it is decided that all subscribers will receive shares on a pro rata basis, with any excess paid on application to be offset against the amount due on allotment. The shares are allotted on 20 July. . Subsequently, holders of 1 million shares fail to make their payments due on allotment by 20 August. On 31 August the 1 million shares are forfeited and auctioned as fully paid. An amount of $1.50 is received for each share sold. The accounting records of Hariharah provide income statement data for the current year: Total revenues: 1,000,000 Total expenses: 810,000 Profit before Income tax: 190,000 Total expenses of Hariharah include depreciation of $50,000 calculated under the straight-line method. In calculating taxable income on the tax return, Rhyme Timber uses the reducing-balance (RB) method. RB depreciation was $80,000 for the current year. The company income tax rate is 30%. Complete the following: A. Using the information above, prepare the journal entry in respect of income tax for the current year. (3 marks available) B. Provide the journal entries to account for the events below. (9 marks available) • In the current year, Hariharah Ltd invites public to subscribe for 10 million shares at $2.00 per share. Applications for shares close on 15 July, with $1.00 being paid on application and a further $1.00 being payable within one month of allotment. A By 15 July applications have been received for 11 million shares, and it is decided that all subscribers will receive shares on a pro rata basis, with any excess paid on application to be offset against the amount due on allotment. The shares are allotted on 20 July. . Subsequently, holders of 1 million shares fail to make their payments due on allotment by 20 August. On 31 August the 1 million shares are forfeited and auctioned as fully paid. An amount of $1.50 is received for each share sold.

Answer rating: 100% (QA)

ANSWER Required Journal entries was recorded in above steps ... View the full answer