Prepare the current tax worksheet

Reference no: EM131618294 , Length: word count:1200

Exercise - Share issues, options, statement of changes in equity

On 30 June 2016, the equity accounts of Crayfish Ltd consisted of:

120 000 ordinary shares, issued at $2.50 each,	$300 000
fully paid Options (80 000 at 50c each)*	40 000
General reserve	30 000
Forfeited shares reserve	2 000
Retained earnings	75 000

* The options were exercisable between 1 May 2017 and 31 May 2017. Each option allowed the holder to buy one ordinary share for $3 each.

Additional information

The following transactions and events occurred during the year ended 30 June 2017:

The final 6c per share dividend for the year ended 30 June 2016 was paid on 27 September 2016. Shareholder approval to pay the dividend had been obtained at the annual general meeting on 20 September.
On 1 October, the directors issued a prospectus offering 40? 000 ordinary shares at an issue price of $2.80, payable $2 on application and 80c as a future call. The closing date for application was 31 October 2016. The share issue was underwritten by Support Stockbrokers for a fee of $2500, payable on 15 November 2016.
By 31 October 2016, applications for 50? 000 shares had been received.
On 5 November 2016, the directors allotted the shares pro rata, with applicants receiving 80% of their requested shares. The company's constitution allows excess application monies to be retained and used to offset future calls payable.
On 15 November 2016, the underwriting fee was paid.
On 31 December 2016, the directors announced an interim dividend of 3c per share payable in cash on 1 February.
To raise funds for expansion, the directors sold a parcel of 80? 000 ordinary shares to Iron Jays Finance on 28 April 2017 at an issue price of $2.90 per share.
By 31 May 2017, the holders of 65? 000 options had indicated that they wished to purchase shares. On 2 June 2017, 65? 000 ordinary shares were issued with monies being payable by 21 June. Options not exercised duly lapsed.
All outstanding monies were received with respect to shares issued to option holders.
Profit for the year was $69? 420. On 30 June 2017, the directors decided to: transfer $30? 000 to the general reserve And declare a final 5c per share dividend. Shareholder approval for this dividend will be sought at the annual general meeting in September 2017.

Required

1. Prepare general journal entries, including any closing entries required, to record the above transactions.

Exercise - Shares, options, dividends and reserve transfers

The equity of Raw Prawn Ltd at 30 June 2016 consisted of:

400 000 ordinary 'A' shares issued at $2.00, fully paid	$800 000
300 000 ordinary 'B' shares issued at $2.00, called to $1.20	360 000
50 000 6% preference shares issued at $1.50, fully paid	75 000
Share options issued at 60c, fully paid	24 000
Retained earnings	318 000

The options were exercisable before 28 February 2017. Each option entitled the holder to acquire two ordinary 'C' shares at $1.80 per share, the amount payable on notification to exercise the option.

The following transactions occurred during the year ended 30 June 2017.

2016 -

Sept. 15 - The preference dividend and the final ordinary dividend of 16c per fully paid share, both declared on 30 June 2016, were paid. The directors do not need any other party to authorise the payment of dividends.
Nov. 1 - A one-for-five renounceable rights offer was made to ordinary 'A' shareholders at an issue price of $1.90 per share. The expiry date on the offer was 30 November 2016. The issue was underwritten at a commission of $3000.
Nov. 30 - Holders of 320? 000 shares accepted the rights offer, paying the required price per share, with the renounced rights being taken up by the underwriter. Ordinary 'A' shares were duly issued.
Dec. 10 - Money due from the underwriter was received.

2017 -

Jan. 10 - The directors transferred $35? 000 from retained earnings to a general reserve.
Feb. 28 - As a result of options being exercised, 70? 000 ordinary 'C' shares were issued. Unexercised options lapsed.
Apr. 30 - The directors made a call on the ordinary 'B' shares for 80c per share. Call money was payable by 31 May.
May 31 - All call money was received except for that due on 15? 000 shares.
June 18 - Shares on which the final call was unpaid were forfeited.
June 26 - Forfeited shares were reissued, credited as paid to $2, for $1.80 per share, the balance of the forfeited shares account being refundable to the former shareholders.
June 27 - Refund paid to former holders of forfeited shares.
June 30 - The directors declared a 20c per share final dividend to be paid on 15 September 2017.

Required

1. Prepare general journal entries to record the above transactions.

2. Prepare the equity section of the statement of financial position as at 30 June 2017.

Exercise - Current and deferred tax

The accounting profit before tax for the year ended 30 June 2016 for Quamby Ltd amounted to $18 500 and included:

Depreciation - motor vehicle (25%)	$ 4 500
Depreciation - equipment (20%)	20 000
Rent revenue	16 000
Royalty revenue (non-taxable)	5 000
Doubtful debts expense	2 300
Entertainment expense (non-deductible)	1 500
Proceeds on sale of equipment	19 000
Carrying amount of equipment sold	18 000
Annual leave expense	5 000

The draft statement of financial position at 30 June 2016 contained the following assets and liabilities.

	2016	2015
Assets
Cash	$ 11 500	$ 9 500
Receivables	12 000	14 000
Allowance for doubtful debts	(3 000)	(2 500)
Inventories	19 000	21 500
Rent receivable	2 800	2 400
Motor vehicle	18 000	18 000
Accumulated depreciation - motor vehicle	(15 750)	(11 250)
Equipment	100 000	130 000
Accumulated depreciation - equipment	(60 000)	(52 000)
Deferred tax asset	?	6 450
		136 100
Liabilities
Accounts payable	15 655	21 500
Provision for annual leave	4 500	6 000
Current tax liability	?	7 600
Deferred tax liability	?	2 745
		37 845

Additional information

(a) The company can claim a deduction of $15 000 (15%) for depreciation on equipment, but the motor vehicle is fully depreciated for tax purposes.

(b) The equipment sold during the year had been purchased for $30 000 2 years before the date of sale.

Required

1. Prepare the current tax worksheet and the journal entry to recognise the current tax as at 30 June 2016.

2. Prepare the deferred tax worksheet and any necessary journal entries to adjust deferred tax accounts.

Assignment Files -

https://www.dropbox.com/s/x4udcu46hnhadsd/Assignment%20Files.rar?dl=0

Reference no: EM131618294

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Reviews

len1618294

8/29/2017 7:04:37 AM

Total 1200 words needed. Message from student: Hey buddy can you do this assignment? Description - Provide a summary of a business story from the current business press that involves a firm or an industry responding to global economy pressures, in one or two paragraphs, and then analyse its strategic significance, in a global setting, using theory to support your argument i.e. the resource-based view, competitive forces view, diversification etc.

8/29/2017 7:04:29 AM

Resources - The Sources of Information file attached here provides slides setting out information to help you locate an appropriate article for Task 1. You will also see a summary of my comments on articles people have proposed for Task 1 in the attached pdf file (List of suitable articles). This formative feedback is to provide guidance on issues to consider when selecting an article and conducting the analysis. You may also use one of the articles I have indicated will be suitable if you are still not able to find an article. You will not be adversely affected by analysing the same event as someone else.

8/29/2017 7:04:21 AM

Also attached is a file containing screen shots for those not familiar with how to access USC Library databases which are relevant for research on companies, industries and countries for this course. In addition, I would encourage you to familiarise yourself generally with the information about using the library under the "Library Services" tab to the left. Finally, two analyses submitted for Task 1 in previous years are attached as a guide. The Jolibee Foods paper provides an example of an extremely well done analysis. Note - you may not use the article that these two examples drew on for your own Task 1.

8/29/2017 7:04:14 AM

Assessment Criteria - Quality of analysis, including appropriate and insightful application of relevant frameworks and concepts. Level of analysis in terms of demonstrated understanding of key issues, interrelationships and implications. Quality of argument – e.g. logical links clear, cohesiveness, use of qualitative and quantitative data to support arguments, integration of argument. Communication skills – e.g. clarity, professional presentation.

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