Rawson Traders Ltd commenced operations on the 1st of July 2022. He presented its first statement of
Question:
Rawson Traders Ltd commenced operations on the 1st of July 2022. He presented its first statement of profit and loss, other comprehensive income, and the first statement of position on the 30th of June 2023. The statements are prepared before considering taxation. The following information is available.
Statement of profit and loss and other comprehensive income for the year.
$ | $ | |
Revenue | 1,500,000 | |
Cost of sales | 770,000 | |
Gross profit | 730,000 | |
Expenses: | ||
Administrative expenses | 80,000 | |
Salaries | 200,000 | |
Long-Service Leave | 20,000 | |
Warranty expenses | 30,000 | |
Depreciation expense of Plant | 60,000 | |
Insurance | 20,000 | |
Total expenses | 410,000 | |
Accounting profit before tax | 320,000 |
Assets and liabilities as disclosed in the statement of financial position as at the 30th of June 2023.
Assets: | $ | $ |
Cash | 20,000 | |
Inventory | 100,000 | |
Accounts receivable | 120,000 | |
Less: Provision for doubtful debts | 20,000 | 100,000 |
Prepaid insurance | 15,000 | |
Plant Cost | 300,000 | |
Less: Accumulated Depreciation | 60,000 | 240,000 |
Total assets | 475,000 | |
Liabilities: | ||
Accounts Payable | 80,000 | |
Provision for warranty expenses | 25,000 | |
Salaries payable | 5,000 | |
Loan payable | 200,000 | |
Provision for long service leave expenses | 20,000 | |
Total liabilities | 330,000 | |
Net assets | 145,000 |
Additional Information:
All administration and salaries expenses incurred have been paid at year-end.
None of the long service leave expenses have been paid.
Warranty expenses were accrued, and at year-end, actual payments of $5,000 have been made.
Insurance was initially prepaid to $35,000.
Amounts received from sales, including those on credit terms, are taxed when the sale is made.
The plant is depreciated over five years for accounting purposes but over four years for taxation purposes.
The tax rate is 30 per cent.
Required:
1. Calculate the taxable income of Rawson Ltd for the year ending the 30th of June 2023.
2. Prepare the Journal entry to record the income tax payable for the year ending 30 June 2023.
3. Prepare the deferred tax worksheet for the 30th of June 2023.
4. Prepare the journal entries to record any deferred tax assets and liabilities at 30 June 2023.