Reference no: EM131203534

Problem # 1

The trial balance of Black Hole Ltd at 30 June 2018 was as follows:

		Debit			Credit
	Share capital (ordinary shares issued at $2, fully paid) General reserve Retained earnings (balance as at 1/7/17) Revaluation surplus Mortgage loan Bank overdraft (at call) 7% debentures Interest payable Accounts payable Dividend payable Current tax liability Provision for employee benefits Deferred tax liability Allowance for doubtful debts Accumulated depreciation - plant and equipment Accumulated impairment - goodwill Cash Accounts receivable Inventory Prepaid insurance		$       500 58 000 87 700 7 000			$  200 000 25 000 128 400 85 000 250 000 69 200 80 000 2 800 69 500 10 000 52 100 34 200 18 400 12 800 42 500 10 000
	Plant and equipment Land Buildings Goodwill Deferred tax asset Sales revenue Cost of sales Administrative expenses Other expenses Interest revenue Dividends revenue Income tax expense Dividends paid Dividends declared Transfer to general reserve		222 500 220 000 380 000 105 000 9 800   450 000 265 000 10 000     50 400 20 000 10 000       25 000			825 000       2 500 3 500
			$1 920 900			$1 920 900

Additional information

(a) Administrative expenses for the year include interest expense of $28 700.

(b) All assets are carried at cost, except for land and buildings which are carried at valuation.

(c) During the year, 50 000 shares were issued at an issue price of $2 each, payable in full on application.

(d) There was a transfer of $25 000 to general reserve from retained earnings

(e) On 30 June 2018, the directors revalued land and buildings. The revaluation was based on an independent valuation received from FJ Holden, Registered Valuer. The valuation was based on fair values. The carrying amounts of land and buildings before the revaluation were $195 000 and $350 000 respectively.

(f) The mortgage loan is repayable in annual instalments of $50 000 due on 1 March each year.

(g) The 7% debentures are to be redeemed on 31 March 2019. There is no plan to refinance these debentures in the future.

(h) The provision for employee benefits consists of:

Annual leave Long-service leave

$18 000 16 200

(i) No employee is eligible for long-service leave until 2022.

(j) The company tax rate is 30%.

Required

A. Prepare a statement of profit or loss and other comprehensive income for Black Hole Ltd for the year ended 30 June 2018, according to the requirements of AASB 101 (classify expenses by function).

B. Prepare a statement of financial position for Black Hole Ltd as at 30 June 2018 to comply with AASB 101.

C. Prepare a statement of changes in equity for Black Hole Ltd for the year ended 30 June 2018, according to the requirements of AASB 101.

(Show all workings where necessary and explain fully if an item is omitted/not provided in the financial statements.)  

Problem #2

You have been asked by the management of My Bag Ltd to assist with the preparation of the income tax entries for the year ended 30 June 2017. The company reported a profit before tax for the year to 30 June 2017 of $900 000. The company's statements of financial position include assets and liabilities as follows:

	2017	2016
Accounts receivable	$ 245 000	$ 200 000
Allowance for doubtful debts	(20 000)	(10 000)
Plant - at cost	600 000	600 000
Accumulated depreciation	(190 000)	(120 000)
Interest receivable	10 000	20 000
Provision for long-service leave	48 000	62 000
Deferred tax asset	?	18 600
Deferred tax liability	?	20 000

(a) Interest revenue of $10 000 is included in the profit for the year to 30 June 2017 but interest received was $20 000.

(b) Expenses included in profit for the year to 30 June 2017 are as follows:
- parking and other fines of $10 000 but these were not deductible for tax purposes
- depreciation expense for plant of $70 000 but the tax depreciation was $100 000 for the year
- doubtful debts expense of $25 000 but bad debts written-off were $15 000
- long-service leave expense of $36 000 but long service leave paid was $50 000.

(c) Accumulated depreciation on plant for tax purposes is $280 000 on 30 June 2017 and $180 000 on 30 June 2016. There have been no acquisitions or disposals of plant during the current year.

(d) The corporate tax rate is 30%.

Required

Complete the following for My Bag Ltd for 30 June 2017:

1. Current Tax Worksheet (template provided)

2. Deferred Tax Worksheet (template provided)

3. Tax Journal Entries

(Show all workings where necessary)

Attachment:- Term - Question.rar