The following represents an extract from the Statement of Financial Position of the assets and liabilities of Henderson Limited for the years ending 30 June 2020 and 2019.

Assets	2020 $	2019 $
Cash	80 000	70 000
Accounts receivable	38 000	32 000
Allowance for doubtful debts	(4 000)	(3 200)
Inventory	42 000	36 000
Dividend receivable	8 000	7 500
Deferred tax asset	?	6 800
Development costs	40 000	40 000
Less: Accumulated amortisation	(10 000)	(5 000)
Plant and equipment	120 000	80 000
Less: Accumulated depreciation	(27 000)	(12 000)
Liabilities
Accounts payable	25 000	23 000
Interest payable	5 500	4 300
Deferred tax liability	?	13 240
Bank loan	40 000	40 000
Provision for annual leave	22 000	23 500

Additional Information:

1. Bad debts are deductible for tax purposes when they are written off.
2. Dividend revenue is assessable for tax purposes when the cash is received.
3. Tax deduction on interest is claimed when payments is made.
4. Tax deduction on developments is claimed at time of payment.
5. Henderson Limited purchased new plant and equipment on 1 January 2020. The accounting and tax depreciation rates of plant and equipment are 15% and 20% respectively.
6. Annual leave is deductible when the payments are made.
7. The taxable income of Henderson Limited for the year ended 30 June 2020 is $54,000.
8. The current tax rate is 30%.

Required:

Prepare the deferred tax worksheet for Henderson Limited for the year ended 30 June 2020 and prepare the journal entries to record movements in the deferred tax accounts.

Calculate the amount of income tax expense recognized in the income statement for the year ended 2020

Answer rating: 100% (QA)

Deferred tax worksheet DTA DTL Allowance for doubtful debts 4000... View the full answer