Reference no: EM132782604
Hoping You Pass Ltd commences operations on 1 July 2018 and presents its first statement of profit and loss and other comprehensive income and first statement of financial position on 30 June 2019. The statements are prepared before considering taxation. The following information is available:
Statement of profit or loss and other comprehensive income for the year ended 30 June 2019
Gross profit 730,000
Epenses
Administration expenses 80,000
Salaries 200,000
Long service leave 20,000
warranty expenses 30,000
depreciation expenses plant 80,000
insurance 20,000 430,000
Accounting profit before tax 300,000
Other comprehensive income Nil
Assets and liabilities as disclosed in the statement of financial positions as at 30 June 2019
Assets
Cash 20,000
Inventory 100,000
Accounts receivable 100,000
Prepaid insurance 10,000
Plant cost 400,000
Less:Accumulated depreciation 80,000 320,000
Total assets 550,000
Liabilities
Accounts payable 80,000
Provision for warranty expenses 20,000
Loan payable 200,000
Provision for long service leave expenses 20,000
Total Liabilities 320,000
Net assets 230,000
Other information
- All administration and salaries expenses incurred have been paid as at year end.
- None of the long service leave expense has actually been paid.
- Warranty expenses were accrued, and at year end, actual payments of $10 000 have been made (leaving an accrued balance of $20 000). Insurance was initially prepaid to the amount of $30 000.
- At year end, the unused component of the prepaid insurance amounted to $10 000.
- Amounts received from sales, including those on credit terms, are taxed at the time of sale is made
- The plant is depreciated over five years for accounting purposes, but over four years for taxation purposes.
- The tax rate is 30 per cent
Required:
Problem A. Compute the following for Hoping You Pass Ltd as at 30 June 2019:
Taxable Income
Deductible Temporary Differences
Temporary Differences
Current Tax Liability
Income Tax Expense
Problem b. Prepare journal entries for Hoping You Pass Ltd as at 30 June 2019 to account for tax in accordance with AASB 112