Reference no: EM132821751

Paul 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:

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 for Machinery $5,900

Vehicles at cost $11,000

Accumulated depreciation for Vehicles $100

Goodwill $45,000

Accumulated impairment loss $300

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 $300

Exempt income $400

Capital profit on sale of land $700

Cost of sales $175,000

Depreciation $6,000

Goodwill impairment loss $300

Salaries and wages $120,000

Annual leave $1,800

Rent $72,000

Insurance $1,200

Entertainment $400

Fines and penalties $100

Fringe benefits tax $200

Warranty expense $600

Doubtful debts $200

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. Paul 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:

Question 1: How to calculate deferred tax worksheet.

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

Question 3: How to do a statement of comprehensive income for the year ended 30 June 2020.

Question 4: How to do a balance sheet at 30 June 2020.

Question 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.