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Wentworth Ltd had the following revenue and expense items were included for the period ended 30 June 2021.
Sales
Cost of sales
Interest revenue
381,550
125,000
16 000
Doubtful debts expense
Depreciation expense - plant (15% straight-line)
Rent expense
Entertainment expense
Long service leave expense
9 200
33 750
27 800
8 900
12 000
The statement of financial position at 30 June 2021 included the following:
2021
2020
Cash
$ 14 000
$ 12 500
Accounts receivable
88 000
81 800
Allowance for doubtful debts
(10 000)
(8 200)
Inventories
72 100
63 300
Interest receivable
6 000
_
Prepaid rent
7 800
7 400
Plant
225 000
Accumulated depreciation - plant
(101 250)
(67 500)
Deferred tax asset
?
30 860
Accounts payable
76 200
78 600
Provision for long service leave
69 000
66 000
Deferred tax liability
3 720
Additional information
Required
1) Prepare the worksheets and journal entries to calculate and record the current tax liability and the movements in deferred tax accounts for the year ended 30 June 2021. In your answer include the following general ledger accounts: Interest receivable; Provision or long service leave; Allowance for doubtful debts; Prepaid rent; Deferred tax liability and Deferred tax asset.
2) Assume the company has $20 000 in tax losses carried forward from the previous year. Explain how the company would treat this tax loss assuming that taxation legislation allows such losses to be offset against future taxable profit
3) Discuss whether you think the deferred tax assets and liabilities are assets and liabilities in relation to the definitions contained in the conceptual framework
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