QUESTION $2$

$(25$ MARKS$)$

You are required to assist management with the income tax disclosures in the financial report. The accountant prepared the following notes for you:

The outstanding balance owed to SARS for current taxation, as reflected in the Statement of Financial Position as of $28$ February $2025,$ amounts to R$4835.$ According to the final tax assessment issued by SARS, the total income tax liability for the year $2024$ amounted to R$10155,$ payable by the company.

The income tax expense for the financial year $2025$ is R$14350,$ whereas for the year $2024,$ it amounts to R$9725.$

The profit before taxation for the year ended $28$ February $2025$ is R$56000.$

The total payments made to SARS during $2025$ amounted to R$13750,$ covering obligations for both the current and prior years of assessment.

During the $2025$ year of assessment, dividend income of R$13200$ was received from local companies.

The total dividends declared during $2025$ amounted to R$7550,$ subject to a dividend tax rate of $20\%,$ in accordance with applicable tax regulations.

A capital profit of R$12900$ was realized from the sale of specialised machinery during $2025.$ This profit, which constitutes a capital gain as defined in accordance with the SARS instruction notes. No assessed capital loss was carried forward. The capital inclusion rate for $2024$ is $80\%,$ which has remained unchanged from the previous year.

The income tax rate for $2025$ is set at $27\%$ on taxable profits and has remained unchanged for the past four years.

Required:

$2\mathrm{.}1$ Prepare the general journals for the financial years ended $28$

$(10$ Marks$)$

February $2024$ and $28$ February $2025$

$2\mathrm{.}2$ Prepare the income tax expense note in the financial

$(10$ Marks$)$ statements for the year of assessment ended $28$ February $2025.2\mathrm{.}3$ Prepare the extract of the Statement of Financial Position for

$(5$ Marks$)$

the year ended $28$ February $2025.$