Eehan Pty Ltd is a membership organisation and holds fund in trust for operating a local charity
Question:
Eehan Pty Ltd is a membership organisation and holds fund in trust for operating a local charity in Tasmania. Zeehan Pty Ltd has prepared its adjusted trial balance for the year ended 30 June 2031. It has yet to determine its 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:
TABLE 1
2031 | 2030 | |
Cash | 61200 | 81600 |
Account receivables | 564400 | 522240 |
Allowance for doubtful debt | (34000) | (21760) |
Supplies | 456280 | 396440 |
Dividend receivables | 23800 | 10200 |
Prepaid rent | 16320 | 19040 |
Machineries | 2040000 | 2040000 |
Accumulated depreciation- machinery | (612000) | (408000) |
Deferred tax assets | 93,636 | |
Account payable | 490960 | 508640 |
Membership fee in advance | 19040 | 25160 |
Provision for sick leave | 435200 | 238000 |
Deferred tax liability | 192372 |
Table 2
2031 | |
Accounting profit | 1169600 |
Export incentive grant income | 39440 |
Membership fee revenue | 333200 |
Dividend income | 142800 |
Sick leave expenses | 197200 |
Bad and doubtful debt expenses | 28560 |
Depreciation expenses- machinery | 204000 |
Rent expenses | 155040 |
Entertainment expenses | 26520 |
Additional information:
• Zeehan Pty Ltd recouped a tax loss of $27,200 in this financial year
• A deferred tax asset was previously recognised in relation to this tax loss
• The entertainment expenses paid by Zeehan during the year are not deductible
• Machinery assets are depreciated using straight-line at 10% p.a. with no residual
• Machinery – tax depreciation rate is 25% p.a., straight-line with no residual
• The export incentive grant income relates to its international sales. The grant received from the Commonwealth Government is not taxable.
• The tax rate is 30%
Required:
1. Analyse the data and information presented above and show the supporting calculations required for values included in the two tax worksheets.
2. Prepare the current tax worksheet to calculate the current tax liability for the year ended 30 June 2031.
3. Prepare the deferred tax worksheet to calculate the movements in deferred tax accounts for the year ended 30 June 2031.
4. Provide the journal entries that arise from these tax worksheets.
5. Briefly explain how the items that arise from these journal entries will be reported in the financial statements for the year ended 30 June 2031 (no word limit).
