The financial statements of Sparky Ltd for the year ended 30 June 2016 report a profit...

  

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The financial statements of Sparky Ltd for the year ended 30 June 2016 report a profit before tax of $7 000. Included in the profit are the following items of income and expense: Government grant 8 000 Rent revenue 13 000 Bad debts expense 6 100 Interest expense 25 000 Insurance expense 17 900 Depreciation expense - vehicle 8 000 Long service leave expense 18 500 An extract of the comparative statement of financial position for 30 June 2016 is below: 2016 2015 $ $ Accounts receivable 82 000 79 000 Allowance for doubtful debts (9 000) (11 000) Prepaid insurance 9 100 8 500 Rent receivable 35 000 30 000 Vehicle 80 000 80 000 Accumulated depreciation – vehicle (24 000) (16 000) Interest payable 21 000 25 000 Provision for long service leave 12 400 16 000 Additional information: • The tax deduction for depreciation on vehicle for 30 June 2016 is $16 000. Accumulated depreciation on vehicle for tax purposes at 30 June 2015 was $32 000. • On 1 July 2015 the Deferred Tax Asset had a balance of $13 400 and the Deferred Tax Liability had a balance of $12 500. • The tax rate is 30% Required a) Prepare the current tax worksheet for the year ended 30 June 2016 and record the journal entry needed for current tax. b) Prepare the deferred tax worksheet using the worksheet provided on the last page of this exam, and record the journal entry to adjust the deferred tax liability and the deferred tax asset as at 30 June 2016. The financial statements of Sparky Ltd for the year ended 30 June 2016 report a profit before tax of $7 000. Included in the profit are the following items of income and expense: Government grant 8 000 Rent revenue 13 000 Bad debts expense 6 100 Interest expense 25 000 Insurance expense 17 900 Depreciation expense - vehicle 8 000 Long service leave expense 18 500 An extract of the comparative statement of financial position for 30 June 2016 is below: 2016 2015 $ $ Accounts receivable 82 000 79 000 Allowance for doubtful debts (9 000) (11 000) Prepaid insurance 9 100 8 500 Rent receivable 35 000 30 000 Vehicle 80 000 80 000 Accumulated depreciation – vehicle (24 000) (16 000) Interest payable 21 000 25 000 Provision for long service leave 12 400 16 000 Additional information: • The tax deduction for depreciation on vehicle for 30 June 2016 is $16 000. Accumulated depreciation on vehicle for tax purposes at 30 June 2015 was $32 000. • On 1 July 2015 the Deferred Tax Asset had a balance of $13 400 and the Deferred Tax Liability had a balance of $12 500. • The tax rate is 30% Required a) Prepare the current tax worksheet for the year ended 30 June 2016 and record the journal entry needed for current tax. b) Prepare the deferred tax worksheet using the worksheet provided on the last page of this exam, and record the journal entry to adjust the deferred tax liability and the deferred tax asset as at 30 June 2016.

Answer rating: 100% (QA)

a Current Tax worksheet for the year ended 30 June 2016 Pretax accounting income 7000 L... View the full answer