Reference no: EM132727240

The financial statement of Jane's preschool for the year ended 30 June 2020 shows the following balances.

Cash                        10 000

Accounts receivable           25 000

Allowance for doubtful debts (3 000)

Inventories                        34 500

Interest receivable                5 500

Prepaid Insurance                 4 200

Plant                                   180 000

Accumulated depreciation - Plant    (45 000)

Accounts payable                         35 500

Provision for long service leave               44 800

You are also supplied with the following adjustments.

1. The tax rate is 30%.
2. The tax depreciation rate for plant is 15% p.a. using the straight-line method while the accounting tax rate uses 20% p.a. The plant was purchased on 1 April 2019.
3. The company has $16 000 in tax losses carried forward from the previous year. A deferred tax asset was recognised for these losses. Taxation legislation allows such losses to be offset against future taxable profit.
4. The opening balance for deferred tax asset is $11 040, while the opening balance for deferred tax liability is $2 300

Requirements:

Problem a) Complete the deferred tax worksheet.

Problem b) The journal entries for relevant current and deferred tax accounts.