HI5020 Corporate Accounting - Online Exam

Question 3 (10 marks)

KGB Security Ltd provides the following information at 30 June 2019 (the first year of operation of the company)

Statement of Financial Position (Balance Sheet)

As at 30 June 2019

Other Information:

• For the year ended 30 June 2019 the company made a net profit before tax of $500,000.
  Dividends of $170,000 were paid.
• Temporary differences include:
  - Annual Leave – no payments made during the year
  - Depreciation of Plant and Equipment for tax purposes $360,000
  - Bad Debts written off $10,000 (against Allowance for Bad Debts)
  - Prepayments (Previously paid in cash)
• Included in expenses for the year is entertainment expenses of $6,000.
• Assuming a tax rate of 30%.

Required:

1. Calculate the current tax liability at 30 June 2019. (4 marks)
2. Calculate the amount of deferred tax assets/liabilities at 30 June 2019. (3 marks)
3. Journal entry to record income tax for the year. (3 marks)