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CURRENT AND DEFERRED TAX
The accounting profit before tax for the year ended 30 June 2013 for Quamby Ltd amounted to $18500 and included:
Depreciation - motor vehicle (25%)
$4500
Depreciation - equipment 120%)
20
000
Rent revenue
16
Royalty revenue (nomtaxablel
5
Doubtful debts expense
2
300
Entertainment expense (non deductible)
1
500
Proceeds on sale of equipment
19
Carrying amount of equipment sold
18
Annual leave expense
The draft statement of financial position at 30 lune 2013 contained the following assets and liabilities:
Assets
Cash
Receivables
Allowance for doubtful debts
Inventory
Rent receivable
Motor vehicle
Accumulated depreciation - motor vehicle
2013
$ 11 500
12 000
(3 000)
19000
2 800
18 000
(15 750)
2012
$9 500
14000
(2 500)
21 500
2 400
18000
(11250)
Equipment
100000
130 000
Accumulated depreciation - equipment
(60000)
(52000)
Deferred tax asset
?
6 450
136 100
Liabilities
Accounts payable
15 655
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 $15000 (15%) for depreciation on equipment, but the motor vehicle is hilly depreciated for tax purposes.
(b)The equipment sold during the year had been purchased for $30000 2 years before the date of sale. (c) The company tax rate is 30%.
Required
Question 1. Prepare the current tax worksheet and the journal entry to recognise the current tax as at 30 lune 2013.
Question 2. Prepare the deferred tax worksheet and any necessary journal entries to adjust deferred tax accounts.
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