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

Calculate the amount of gross profit, Samuel Construction Company engaged i...

Samuel Construction Company engaged in a contract to construct a building on 1 July 2011 with completion of the contract by the 30 June 2014.  The contract price amounted to a tota

Ledger accounting system, Q. Is it possible to execute fca in the deficienc...

Q. Is it possible to execute fca in the deficiency of a general ledger accounting system ? Ans. Yes. FCA can be executed for whichever solid waste management system and whi

Limitations of cost accounting, LIMITATIONS OF COST ACCOUNTING Cost Acc...

LIMITATIONS OF COST ACCOUNTING Cost Accounting similar to additional branches of accountancy is not an precise science although is an art which was developed throughout theorie

What is the breakeven unit variable cost, Early customers at Graffiti Week ...

Early customers at Graffiti Week balk at the price for Moondoggie Reserve. The marketing department at DFW, Jolene, conducts some research that suggests Stanislaus county residents

What does the cost principle, What does the cost principle mean for a compa...

What does the cost principle mean for a company's income statement?

Relevant costs and decision-making, Relevant Costs and Decision-Making ...

Relevant Costs and Decision-Making The relevance of costs will depend upon the purpose for that they are being utilized. Relevance is related to future decisions. The relevanc

Prepare a schedule of cost of goods manufactured, The Pacific Manufacturing...

The Pacific Manufacturing Company operates a job-order costing system and applies overhead cost to jobs on the basis of direct labor cost. Its predetermined overhead rate was based

Features of effective cost center framework, Features of Effective Cost Cen...

Features of Effective Cost Center Framework During the establishing cost centers, an organization must consider the given points as: a) Clear definition about the cost cent

Evaluate the expected earning, During his career in the energy industry, T-...

During his career in the energy industry, T-Bone McAdams has accumulated $5,000,000 in "surplus savings" that he is planning to donate to his college alma mater, Oklahoma A&M, in

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