Prepare the deferred tax worksheet

Assignment Help Taxation

Reference no: EM133083299

CURRENT AND DEFERRED TAX

The accounting profit before tax for the year ended 30 June 2013 for Quamby Ltd amounted to $18500 and included:


Depreciation - motor vehicle (25%)	$4500
Depreciation - equipment 120%)	20	000
Rent revenue	16	000
Royalty revenue (nomtaxablel	5	000
Doubtful debts expense	2	300
Entertainment expense (non deductible)	1	500
Proceeds on sale of equipment	19	000
Carrying amount of equipment sold	18	000
Annual leave expense	5	000

The draft statement of financial position at 30 lune 2013 contained the following assets and liabilities:

Assets Cash Receivables Allowance for doubtful debts Inventory Rent receivable Motor vehicle Accumulated depreciation - motor vehicle	2013 $ 11 500 12 000 (3 000) 19000 2 800 18 000 (15 750)	2012 $9 500 14000 (2 500) 21 500 2 400 18000 (11250)
Equipment	100000	130 000
Accumulated depreciation - equipment	(60000)	(52000)
Deferred tax asset	?	6 450
		136 100
Liabilities
Accounts payable	15 655	21 500
Provision for annual leave	4 500	6 000
Current tax liability	?	7 600
Deferred tax liability	1	2 745
		37 845

Additional information

(a)The company can claim a deduction of $15000 (15%) for depreciation on equipment, but the motor vehicle is hilly depreciated for tax purposes.

(b)The equipment sold during the year had been purchased for $30000 2 years before the date of sale. (c) The company tax rate is 30%.

Required

Question 1. Prepare the current tax worksheet and the journal entry to recognise the current tax as at 30 lune 2013.

Question 2. Prepare the deferred tax worksheet and any necessary journal entries to adjust deferred tax accounts.

Reference no: EM133083299

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