Reference no: EM132672279

Conan Pty Ltd recorded an accounting profit before tax of $750,000 for the year ended 30 June 2020. Included in the accounting profit were the following items of revenue and expense.

• Entertainment expenses (non-deductible) for $50,000
• Depreciation expense - Motor vehicle (10% p.a., straight-line) for $45,000
• Rent revenue for $70,000
• Penalties and fines for $2,500
• Goodwill impairment for $40,000
• Long service leave expense for $10,000
• Annual leave expense for $20,000

For tax purposes the following applied

• Depreciation expense - Motor vehicle (20%)
• Rent received for $60,000
• Long service leave paid for $2,000
• Annual leave paid $12,500
• Income tax rate (30%)

Required

Problem A. Use a current tax worksheet to calculate the current tax liability for the year ended 30 June 2020.

Problem B. Prepare the adjusting journal entry.