Week 9 - Question 4 (10 marks)

A. You are provided with the following information form the accounts of BBS Ltd for the year ending 30 June 2019

Cash Sales = 950 000 Cost of Goods Sold= 35 000 Amount received in advance for services to be performed in August 2019 = 9 500 Rent expenses for year ended 30 June 2019 = 9 000 Rent Prepaid for two months to 31 August 2019 =1 200 Doubtful debts expenses = 1 200 Amount provided in 2019 for employees long-service leave entitlements = 5 000 Goodwill impairment expenses = 7 000

Required: .Calculate the taxable profit and accounting profit for the year ending 30 June 2019.

B. GYV Ltd has the following deferred tax balances as at 30 June 2019.

Deferred tax asset = $9 00 000

Deferred tax liability = $7 00 000

The above balances were calculated when the tax rate, was 20 per cent. On 1 December 2019 the government raises the corporate tax rate to 25 per cent.

Required:

Provide the journal entries to adjust the carry-forward balances of the deferred tax asset and deferred tax liability.