Homework SourseI have a Question How do i get part a journal entries Income
I have a Question, How do i get part a journal entries, Income tax expense for (25580) and deferred tax asset for (3750). Page 3 & 4 are the solutions.
CCT 20002 INTERMEDIATE FINANCIAL ACCOUNTING-TUTORIAL IN-CLASS EXERCISES TOPIC: ACCOUNTING FOR INCOME TAX Question Kilcoy Ltd has determined its accounting profit before tax for the year ended 30 June 2017 to be $256 700. Included in this profit are the items of revenue and expense shown below Royalty revenue (non-taxable exempt 8 000 ncome) Proceeds on sale of building Entertainment expense Depreciation expense- buildings Depreciation expense-plant Carrying amount of building sold Doubtful debts expense Annual leave expense Insurance expense Development expense 75 000 1 700 7 600 22 500 70 000 4 100 46 000 4 200 15 000 The company\'s draft statement of financial position at 30 June 2017 showed the following assets and liabilities: Assets Cash Accounts receivable Less: Allowance for doubtful debts Inventories Prepaid insurancc Land Buildings Less: Accumulated depreciation Plant Less: Accumulated depreciation Deferred tax asset (opening balancc) 2 500 S 21 500 (4 10017 400 31 600 4 500 75 000 170 000 (59 500)110 500 150 000 500 82 500 9 600 333 600 Liabilities Accounts payable Provision for annual leave Deferred tax liability (opening balance) Loan 25 000 10 000 6 000 140 000 Additional information (a) Quarterly income tax instalments paid during the year were: 28 October 2016 28 January 2017 28 April 2017 $18 000 17 500 18 000 with the final balance due on 28 July 2017 (b) The tax depreciation rate for plant (which cost $150 000 3 years ago) is 20% Depreciation on buildings is not deductible for taxation purposes. (c) The building sold during the year had cost $100 000 when acquired 6 years ago. The company depreciates buildings at 5% p.a., straight-line. Any gain (loss) on sale ofSolution
Answer to part 1:
Particulars
Amount ($)
Amount ($)
Accounting profit before tax
256,700.00
Add: Expenditures disallowed and revenues considered
Carrying amount of building sold is not allowed
70,000.00
entertainment expense is not allowed as deduction
1,700.00
Profit on sale of building
5,000.00
Doubtful debt expenses not allowed
4,100.00
Depreciation on building
7,600.00
Depreciation on plant
22,500.00
Actual payment of Annual leave is only allowed
46,000.00
Actual payment of Insurance is only allowed
4,200.00
Development expenses not spent
15,000.00
176,100.00
432,800.00
Less: Expenditures allowed and revenues disallowed
Royalty revenue as it is exempt
8,000.00
Proceeds on sales of building as it is capital transaction
75,000.00
Depreciation on plant
19,200.00
Annual leave payment
52,000.00
insurance payment
3,700.00
Bad debts written of is allowed
3,500.00
161,400.00
Assessable profit
271,400.00
Current tax at 30th June, 2017
Particulars
Amount ($)
Assessable profit
271,400.00
Tax rate
0.30
Current tax expense
81,420.00
Journal entry:
Particulars
Debit ($)
Credit ($)
Profit and loss account ------Dr.
81,420.00
To, Provision for Income tax
81,420.00
(Being the provision for current tax expenses made in the books of accounts)
Answer to part 2:
Particulars
Debit ($)
Credit ($)
Profit and loss account ------Dr.
81,420.00
To, Provision for Income tax
81,420.00
(Being the provision for current tax expenses made in the books of accounts)
Journal entries
Particulars
Debit ($)
Credit ($)
Deferred tax asset A/c ------Dr.
2,910.00
To, Income tax expense
2,910.00
(Being deferred tax asset recognized)
| Particulars | Amount ($) | Amount ($) |
| Accounting profit before tax | 256,700.00 | |
| Add: Expenditures disallowed and revenues considered | ||
| Carrying amount of building sold is not allowed | 70,000.00 | |
| entertainment expense is not allowed as deduction | 1,700.00 | |
| Profit on sale of building | 5,000.00 | |
| Doubtful debt expenses not allowed | 4,100.00 | |
| Depreciation on building | 7,600.00 | |
| Depreciation on plant | 22,500.00 | |
| Actual payment of Annual leave is only allowed | 46,000.00 | |
| Actual payment of Insurance is only allowed | 4,200.00 | |
| Development expenses not spent | 15,000.00 | |
| 176,100.00 | ||
| 432,800.00 | ||
| Less: Expenditures allowed and revenues disallowed | ||
| Royalty revenue as it is exempt | 8,000.00 | |
| Proceeds on sales of building as it is capital transaction | 75,000.00 | |
| Depreciation on plant | 19,200.00 | |
| Annual leave payment | 52,000.00 | |
| insurance payment | 3,700.00 | |
| Bad debts written of is allowed | 3,500.00 | |
| 161,400.00 | ||
| Assessable profit | 271,400.00 | |
| Current tax at 30th June, 2017 | ||
| Particulars | Amount ($) | |
| Assessable profit | 271,400.00 | |
| Tax rate | 0.30 | |
| Current tax expense | 81,420.00 |
