Reference no: EM132557179

Final Exam Accounting for Income Tax

For the year ended 30 June 2020, Beauty Ltd calculated a taxable profit of $20,000. However, in the previous year Beauty Ltd had a tax loss of $8,000 that allowed them to reduce the 30 June 2020 taxable profit to $12,000.

An extract from the 30 June 2020 Statement of Financial Position revealed the following balances:

Prepaid insurance $3,000, Buildings $400,000, Accumulated depreciation - buildings $300,000, Revenue in advance $25,000.

Additional information: The accumulated depreciation for tax purposes for buildings for the year ended 30 June 2020 is $375,000. The 30 June 2019 balances for deferred tax accounts were $8,500 for deferred tax asset and $25,000 for deferred tax liability. The tax rate is 30%.

Required:

Question a) Prepare the current tax journal entry for the year ended 30 June 2020 for Beauty Ltd.

Question b) Complete the deferred tax worksheet and prepare the deferred tax journal entry for the year ended 30 June 2020 for Beauty Ltd.