Deferred Tax; Financial Accounting. (Australia tax)

Look under part 2 assignment. 

You are required to submit your assignment as a word file using 1.5 line spacing, size 1

2

, Times New Roman font.

You can use excel for tables/workings/statements however these then need to be inserted into your Word document as a picture:

I) select the section of text cells you want to copy from excel, click Ctrl + C (to copy the section)

II) go to your word document and right click your mouse button, under paste Options go to the 4th icon (Picture U) and click on it

III) This will insert your excel section

Please find the instructions for Part 2 of the assignment over the page.

Simpson Ltd was established on 1 July 2019 with share capital totalling $

132,000

.

One year later at 30 June 2020 the trial balance of the company was as follows:

100

300

300

6,000

300

1,800

400

100

200

600

200

813,800

Account	Debit	Credit
Cash	24,000
Accounts receivable	37, 500
Allowance for doubtful debts			200
Interest receivable			100
Inventory	20,000
Prepaid insurance				300
Machinery (at cost)	79,000
Accumulated depreciation – Machinery	5,900
Vehicles	11,000
Accumulated depreciation – Vehicles
Goodwill	45,000
Accumulated impairment loss
Investments	25,000
Accounts payable	15,000
Rent payable		6,000
Provision for annual leave		1,800
Provision for services warranties		600
Share capital	132,000
Sales revenue	650,000
Interest revenue	500
Dividend revenue
Exempt income		400
Capital profit on sale of land	700
Cost of sales	175,000
Depreciation
Goodwill impairment loss
Salaries & wages	120,000
Annual leave
Rent	72,000
Insurance	1,200
Entertainment
Fines and penalties
Fringe benefits tax
Warranty expense
Doubtful debts
Other expenses	194,100
TOTAL		813,800

Additional information:

1. For tax purposes, depreciation on machinery is $14,000 and for vehicles $300, for the year ended 30 June 2020.

2. Doubtful debts, annual leave and service warranties are expensed in the year ending 30 June 2020 but are not tax deductible for tax purposes until paid.

3. Simpson Ltd has accrued annual leave entitlements of $1,800 in calculating net profit for the year ended 30 June 2020.

4. Service warranty expense is only deductible as a tax deduction when claimed by customers.

5. The company accrues doubtful debts expense as soon as it appears on a customer’s account as uncollectible. However, the bad debt is not allowable as a tax deduction until all avenues to collect the account have been exhausted.

6. The tax rate is 30% and taxable income is $79,500.

Required:

1. Complete a deferred tax worksheet.

2. Complete the general journal entry to account for income tax.

3. Complete a statement of comprehensive income for the year ended 30 June 2020 (follow format in textbook on page 650 – 9th edition, showing one year only).

4. Prepare a balance sheet at 30 June 2020 (follow format in textbook on page 181 – 9th edition, showing one year only).

5. Discuss whether you think the deferred tax assets and liabilities are assets and liabilities in relation to the definitions contained in the conceptual framework (reference your written work to support your arguments). Maximum 300 words.

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