Calculate the current tax liability

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The accounting profit of Alpha Ltd for the year ended 30 June 2017 was $250 000. The following additional information is provided.

- Property plant and equipment: cost $500 000 on 1 July 2014. It is depreciated at 20% per annum straight-line with zero residual value for accounting purposes and 30% per annum straight-line for tax purposes.

- Accounts receivable: current balance is $200 000. The current balance of the allowance for doubtful debts is $2 000 debit (after writing off bad debts during the period of $5,000). The final balance of the allowance for doubtful debts is to be adjusted to represent 2% of the closing balance of accounts receivable.

- Provision for employee benefits: opening balance $100 000, closing balance $120 000, employee benefits expense $42 500. The tax rate is 30%.

Required:

a) Calculate the current tax liability for the year ending 30 June 2017.

b) Provide all general journal entries necessary to record deferred tax for Property plant and equipment and Provision for employee benefits for the year ending 30 June 2017.

Reference no: EM131711905

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