The following balance appeared in the ledger of Khathutshelo Ltd at the end of the 20.18 financial
Question:
The following balance appeared in the ledger of Khathutshelo Ltd at the end of the 20.18 financial year:
31 December 20.18
Current tax payable - SARS R2 000 credit
Additional Information:
20.18 Tax assessment:
On 14 February 20.19, the company received the assessment form from the South African Revenue Service (SARS) for the 20.18 tax year. The assessment showed a tax liability of R48 000 (compared to the company’s estimate of R45 000). A cheque for R5 000 was paid to the SARS on 10 April 20.19.
The only entry made for this item was:
10 April 20.19:
Dr SARS account R5 000
Cr Bank account R5 000
20.19 Provisional tax payments:
The first provisional payment of R30 000 for the 20.19 financial year was made on 30 June 20.19, while the second provisional payment of R31 000 was made on 31 December 20.19.
20.19 Estimated taxable income:
Taxable income for the year ended 31 December 20.19 was estimated at R240 000 by the accountant. No entry has yet been made for taxation for the current year.
The income tax rate has always been 28%.
Dividends:
On 1 December 20.19, the directors of Khathutshelo Ltd announced the final ordinary share dividend for the financial year. On that date (1 December 20.19), ordinary shareholders were given the option to receive a cash dividend of 25 cents per share or capitalisation shares on the basis of 1 new ordinary share for every 10 ordinary shares held.
When the cash dividend/capitalisation share election closed on 22 December 20.19, holders of 100 000 ordinary shares had elected to receive a cash dividend. The cash dividend will be paid on 5 January 20.20 and capitalisation share certificates were issued and mailed to shareholders. No dividends were declared for the financial year ended 31 December 20.18.
No entries were made in the records of the company. The dividend tax is levied at 20% of the dividend to be distributed to the shareholders.
REQUIRED:
6.1 Prepare the “Income tax expense-note” from the Statement of Comprehensive income of Khathutshelo Ltd for the year ended 31 December 20.19
6.2 Prepare the “Income tax expense-note” from the Statement of Comprehensive income of Khathutshelo Ltd for the year ended 31 December 20.19
Expert Answer:
Answer A Income tax expense for the year ended 31 December 2019 Current tax Tax paya... View the full answer
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett
