Tilly's Tiles and Bathroom Fittings is an established company that has been in operation for a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Tilly's Tiles and Bathroom Fittings is an established company that has been in operation for a number of years. They have just reached the end of their financial year, and their chief accountant has fallen sick. You are asked to step into the role and provide assistance. Specifically, your help is needed with the implementation of AASB 112. The CEO would like for you to determine the current tax liability, and the deferred tax assets and liabilities. The chief accountant has a fixed template which the company has been using for years. Because your work will need to be read the company accounting system that helps prepare the final financial report you will need to stick with this template. Below is all the relevant information that the accountant prepared before they fell sick. Assets Cash at Bank Accounts receivable Allowance for doubtful debts Inventory Prepaid rent Machines AcDepn - Machines Deferred tax asset Land Total Assets Liabilities Accounts payable Allowance for warranties Wages due Provision for staff leave Revenue received in advance ATO Creditor Bank loan Deferred tax liability Total liabilitites Equity Balance sheet as at 30/6/2022 Shareholder capital Retained profits Total Equity 856,000 1,153,380 (80,700) 931,840 22,670 3,580,000 (790,800) 73,020 2,755,210 621,200 89,600 9,570 72,100 229,376 2,361,782 2,742,980 474,803 8,500,620 3,383,628 3,217,782 Income Product Sales Service revenue Less cost of goods sold Gross Profit Income Statement for the financial year ended 30/6/2022 $ Less operating expenses Wages expense Leave entitlements expense Warranties expense Bad & doubtful debt expense Fines & penalties Legal costs Rent expense Interest expense Depreciation - Machine Income tax expense Net profit 7,168,000 2,828,000 2,499,000 288,350 358,400 358,400 105,340 63,200 136,040 165,300 395,400 9,996,000 3,727,360 6,268,640 4,369,430 1,899,210 Accounting Policies and Additional information: ➤ The company tax rate is 30%. Tilly's reports using the Australian financial year ending 30 June. > There was a nil opening balance for unpaid employee entitlements (i.e. Wages due, and Provision for staff leave). On average, staff only took 3 weeks of leave entitlement. The total leave bill paid was $144,200. > The opening balance for Prepaid rent was zero as on 1 July 2021, Tilly's Tiles & Bathroom Fittings moved into a new premises and paid 14 months of rent in advance. ➤ All sales are assessable income at point of sale. The opening balance of allowance for doubtful debts was $61,000. ➤ This is the first year they offered warranties, therefore the opening balance of provisions for warranties was $0. Tax law allows a deduction when customers make a claim. > A quirk of tax law means Tilly's Tiles & Bathroom Fittings has a 2021 carry forward tax loss of $243,400 despite their retained profits. > Tilly's Tiles & Bathroom Fittings is on an upward trajectory and is expected to make significant future profits. > The machinery was bought 2 year(s) ago. For accounting purposes, the machinery is depreciated on a straight-line basis over 9 years. ➤ For taxation purposes, the machinery is depreciated on a straight-line basis over 7 year(s). ➤ The machine has an expected residual value of $21,400. F ➤ Supply chain shortages means that Tilly's now asks customsers to pay in advance since 1 Jan 2022. Before this, no customer has ever prepaid. > All fines, penalties, and legal expenses are paid when incurred, however only legal fees are deductable. ➤ Ignore GST and Superannuation. All other expenses not discussed are paid when incurred. Reconciliation of accounting profit to taxable income Accounting profit Add back non-deductable expenses Less non-assessable income Plus assessable income items Less dedactable outgoings Taxable result for current year Less carry forward tax loss Taxable Income Tax payable Journal Entry Date Account Dr $ Deferred tax worksheet Assets Liabilities Cash at Bank Acc Rec (net of DD) Inventory Prepaid rent Machines (net of AcDepn) Land Accounts payable Allowance for warranties Wages due Provision for staff leave Revenue received in advance ATO Creditor Bank loan Total Temp Differences Less prior period amount Change for the period Adjustments: Deferred tax liability Deferred tax asset Journal Entry Date Account Carrying Amount Dr Tax Base TTD POTA DTD Reconciliation of accounting profit to taxable income Accounting profit Add back non-deductable expenses Less non-assessable income Plus assessable income items Less dedactable outgoings Taxable result for current year Less carry forward tax loss Taxable Income Tax payable Journal Entry Date Account Dr $ Deferred tax worksheet Assets Liabilities Cash at Bank Acc Rec (net of DD) Inventory Prepaid rent Machines (net of AcDepn) Land Accounts payable Allowance for warranties Wages due Provision for staff leave Revenue received in advance ATO Creditor Bank loan Total Temp Differences Less prior period amount Change for the period Adjustments: Deferred tax liability Deferred tax asset Journal Entry Date Account Carrying Amount Dr Tax Base TTD POTA DTD Tilly's Tiles and Bathroom Fittings is an established company that has been in operation for a number of years. They have just reached the end of their financial year, and their chief accountant has fallen sick. You are asked to step into the role and provide assistance. Specifically, your help is needed with the implementation of AASB 112. The CEO would like for you to determine the current tax liability, and the deferred tax assets and liabilities. The chief accountant has a fixed template which the company has been using for years. Because your work will need to be read the company accounting system that helps prepare the final financial report you will need to stick with this template. Below is all the relevant information that the accountant prepared before they fell sick. Assets Cash at Bank Accounts receivable Allowance for doubtful debts Inventory Prepaid rent Machines AcDepn - Machines Deferred tax asset Land Total Assets Liabilities Accounts payable Allowance for warranties Wages due Provision for staff leave Revenue received in advance ATO Creditor Bank loan Deferred tax liability Total liabilitites Equity Balance sheet as at 30/6/2022 Shareholder capital Retained profits Total Equity 856,000 1,153,380 (80,700) 931,840 22,670 3,580,000 (790,800) 73,020 2,755,210 621,200 89,600 9,570 72,100 229,376 2,361,782 2,742,980 474,803 8,500,620 3,383,628 3,217,782 Income Product Sales Service revenue Less cost of goods sold Gross Profit Income Statement for the financial year ended 30/6/2022 $ Less operating expenses Wages expense Leave entitlements expense Warranties expense Bad & doubtful debt expense Fines & penalties Legal costs Rent expense Interest expense Depreciation - Machine Income tax expense Net profit 7,168,000 2,828,000 2,499,000 288,350 358,400 358,400 105,340 63,200 136,040 165,300 395,400 9,996,000 3,727,360 6,268,640 4,369,430 1,899,210 Accounting Policies and Additional information: ➤ The company tax rate is 30%. Tilly's reports using the Australian financial year ending 30 June. > There was a nil opening balance for unpaid employee entitlements (i.e. Wages due, and Provision for staff leave). On average, staff only took 3 weeks of leave entitlement. The total leave bill paid was $144,200. > The opening balance for Prepaid rent was zero as on 1 July 2021, Tilly's Tiles & Bathroom Fittings moved into a new premises and paid 14 months of rent in advance. ➤ All sales are assessable income at point of sale. The opening balance of allowance for doubtful debts was $61,000. ➤ This is the first year they offered warranties, therefore the opening balance of provisions for warranties was $0. Tax law allows a deduction when customers make a claim. > A quirk of tax law means Tilly's Tiles & Bathroom Fittings has a 2021 carry forward tax loss of $243,400 despite their retained profits. > Tilly's Tiles & Bathroom Fittings is on an upward trajectory and is expected to make significant future profits. > The machinery was bought 2 year(s) ago. For accounting purposes, the machinery is depreciated on a straight-line basis over 9 years. ➤ For taxation purposes, the machinery is depreciated on a straight-line basis over 7 year(s). ➤ The machine has an expected residual value of $21,400. F ➤ Supply chain shortages means that Tilly's now asks customsers to pay in advance since 1 Jan 2022. Before this, no customer has ever prepaid. > All fines, penalties, and legal expenses are paid when incurred, however only legal fees are deductable. ➤ Ignore GST and Superannuation. All other expenses not discussed are paid when incurred. Reconciliation of accounting profit to taxable income Accounting profit Add back non-deductable expenses Less non-assessable income Plus assessable income items Less dedactable outgoings Taxable result for current year Less carry forward tax loss Taxable Income Tax payable Journal Entry Date Account Dr $ Deferred tax worksheet Assets Liabilities Cash at Bank Acc Rec (net of DD) Inventory Prepaid rent Machines (net of AcDepn) Land Accounts payable Allowance for warranties Wages due Provision for staff leave Revenue received in advance ATO Creditor Bank loan Total Temp Differences Less prior period amount Change for the period Adjustments: Deferred tax liability Deferred tax asset Journal Entry Date Account Carrying Amount Dr Tax Base TTD POTA DTD Reconciliation of accounting profit to taxable income Accounting profit Add back non-deductable expenses Less non-assessable income Plus assessable income items Less dedactable outgoings Taxable result for current year Less carry forward tax loss Taxable Income Tax payable Journal Entry Date Account Dr $ Deferred tax worksheet Assets Liabilities Cash at Bank Acc Rec (net of DD) Inventory Prepaid rent Machines (net of AcDepn) Land Accounts payable Allowance for warranties Wages due Provision for staff leave Revenue received in advance ATO Creditor Bank loan Total Temp Differences Less prior period amount Change for the period Adjustments: Deferred tax liability Deferred tax asset Journal Entry Date Account Carrying Amount Dr Tax Base TTD POTA DTD
Expert Answer:
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
Students also viewed these general management questions
-
The Datametrix Corporation has been in operation for one full year (2010). Financial statements are shown below. Sales are expected to grow at a 30 percent annual rate for each of the next three...
-
A project has been in operation for 5 years, yielding the following annual cash flows Year Cash Flow 0.................-$103,000 1....................102,700 2....................-87,000...
-
The Biometrix Corporation has been in operation for one full year (2010). Financial statements follow. Biometrixs management is interested in determining the value of the venture as of the end of...
-
Consider a lottery L1 = [0.5, A; 0.5, L2], where U(A) = 4, and L2 = [0.5, X; 0.5, Y] is a lottery, and U(X) = 4, U(Y) = 8. What is the utility of the the first lottery, U(L1)?
-
On January 1, 2014, Alter Company had Accounts Receivable $154,000; Notes Receivable of $12,000; and Allowance for Doubtful Accounts of $13,200. The note receivable is from Hartwig Company. It is a...
-
Classify the type of probability as logical, empirical, or judgmental. 1. Pr (China will win the most gold medals in the 2020 Olympics) 2. Pr (a person who smokes two packs of cigarettes each day has...
-
How are costs of assets that benefit a firm for more than one year allocated? (a) Depreciation. (b) Depletion and amortization. (c) Costs are divided by service lives of assets and allocated to...
-
Felter Company produced and sold 50,000 units of product and is operating at 70% of plant capacity. Unit information about its product is as follows: The company received a proposal from a foreign...
-
Additional information about the company follows: a. Rims require $16 in direct materials per unit, and Posts require $12. b. The direct labor wage rate is $15 per hour. c. Rims are more complex to...
-
Julie and Gordon Stephens have been tenants for two years at 17 Acacia Avenue Elksville, which they rent from Ace Lettings. Living with them are their 19-year-old son Bill, their 5-year-old daughter...
-
4 5 B-Good, Inc. has accounts receivable at September 30 of $1,000,000. At September 30, Allowance for Doubtful Accounts has a credit balance (prior to adjustment) of * 2,250 T 4 The Company uses the...
-
Netflix has been the leader in video-streaming services in the United States since their entry in 2007, outpacing their nearest rival Disney+ and all other competitors. But Netflix has also had a...
-
Question 23 Answer saved Marked out of 1.00 P Flag question Previous page Type here to search A Motor vehicle was purchased on June 1, 2012 for $400 000. It was expected to last for Four years....
-
How do you define deviance , norms , and values ? Give an example of each concept.
-
A collaborative environment can be invigorating and refreshing. This culture also can trickle down to the classroom level where students can benefit too. What are your thoughts?
-
How to test the existence of Heteroskedasticity in the linear regression model? State the Breusch-Pagan test and White test. How to obtain the feasible generalized least square estimator? Explain...
-
Suppose Google stock is currently $1043 a share. Suppose these are the options prices at different strikes for December 18, 2023: Calls Puts Strike $ 1030 $ 50.11 $ 31.32 $ 1035 $ 47.21 $ ...
-
The figure shows a bolted lap joint that uses SAE grade 8 bolts. The members are made of cold-drawn AISI 1040 steel. Find the safe tensile shear load F that can be applied to this connection if the...
-
The Weber Corporation uses the retail inventory method to estimate its inventory balances. The following information is available on June 30: Required 1. Compute the inventory on June 30 using the...
-
The following information is extracted from the bank statement and the accounting records of the Sun Corporation for the month of July 2007: 1. Cash balance from books, July 31 .......... $1,967.35...
-
Describe the effects on a companys financial statements of recognizing revenue at the time of sale, during production, and at the time of cash receipt.
-
Using the data in BE2.2, journalize the transactions. Identify and explain steps in recording process. BE2.2 Transactions for Thorn Consulting for the month of June are presented below. Identify the...
-
Kochi Services was formed on May 1, 2025. The following transactions took place during the first month (amounts in thousands). Transactions on May 1: 1. Rahul Shah invested 40,000 cash in the company...
-
Explain how a ledger and posting help in the recording process.
Study smarter with the SolutionInn App