Calculate the taxable profit, Cost Accounting

Assignment Help:

Gustav Ltd commenced operations on 1 July 2011 and presents its first statement of comprehensive income for the year ending 30 June 2012 and first statement of financial position as at 30 June 2012 as follows:

Gustav Ltd

Statement of Comprehensive Income for the year ending 30 June 2012

 

       $

Gross Profit

949 000

Less

 

Insurance Expense

26 000

Depreciation Expense - Plant

104 000

Long Service Leave Expense

26 000

Administration Expenses

104 000

Warranty Expense

39 000

Salaries Expense

260 000

Accounting Profit Before Tax

390 000

 

Additional Information

  • The tax rate is 30%.
  • None of the long service leave expense has actually been paid and it is not deductible until it is paid.
  • Amounts received from sales, including those on credit terms, are taxed at the time the sale is made.
  • The plant is depreciated over ten years for accounting purposes and over five years for accounting purposes. The original cost of the plant is $1 040 000.
  • Insurance was actually prepaid to the amount of $39 000. As at 30 June 2012 the balance of the prepaid insurance in the balance sheet amounted to $13 000.
  • All administration and salaries expenses incurred for the year have been paid as at year end.
  • Actual payments of $13 000 for warranty expenses were paid in the year ending 30 June 2012. Warranty expenses accrued in the balance sheet as at 30 June 2012 amounted to a total of $26 000. Deductions are available only when the amounts are paid and not as they are accrued.

Required

(i)  Calculate the taxable profit for the year ending 30 June 2012 showing all workings.

(ii)  Prepare the accounting for tax journal entry for the year ending 30 June 2012 to account for current tax consequences for the year.


Related Discussions:- Calculate the taxable profit

Manufacturing a/c, format of manufacturing,tradind,p/l a/c

format of manufacturing,tradind,p/l a/c

Determine profit in long-term, Determine Profit in Long-Term To demons...

Determine Profit in Long-Term To demonstrate the point about profit in the long-term, let us assume that a company sells and makes a single product.  There are no opening stoc

Identify the relevant per-unit costs, Bakers Bagels LLC produces and sells ...

Bakers Bagels LLC produces and sells 20 types of bagels by the dozen. Bagels are priced at $6.00 per dozen (or $0.50 each) and cost $.020 per unit to produce. The company is consid

Manufacturing cost, Use a selected company or your current work environment...

Use a selected company or your current work environment to identify at least one cost or expense that would fit under each of the following categories: • Variable • Fixed • Mixed •

Explain the respective roles of the securities, Explain the respective role...

Explain the respective roles of the Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) in the setting of accounting standards?

Variable cost, how variable cost help in decision making.with suitable exam...

how variable cost help in decision making.with suitable example

Material handling, Material Handling The objective is to ensure about ...

Material Handling The objective is to ensure about the goods are delivered to the right places at the right instance and in aright manner to ignore delays, unnecessary and con

Explain stock valuation, G. Mills was appointed a local agent for the High ...

G. Mills was appointed a local agent for the High Power Mobile Workshop Bolt (HPMW-B) on 1 April 2009. The HPMW-B is manufactured by Mobile Equipment Ltd (MEL). The company charges

Closing a factory , i have a factory and 87 employees . we have a closure p...

i have a factory and 87 employees . we have a closure plan in 12 months. what would be the charges?

Explain how individual items of costs will be traced, Glaser Health Product...

Glaser Health Products of Ranier Falls, Georgia, is organized functionally into three divisions: Operations, Sales, and Administrative. Purchasing, receiving, materials and product

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd