Week 9 - Question 4 (10 marks)
A. You are provided with the following information form the accounts of BBS Ltd for the year ending 30 June 2019
Cash Sales |
950 000 |
Cost of Goods Sold |
35 000 |
Amount received in advance for services to be performed in August 2019 |
9 500 |
Rent expenses for year ended 30 June 2019 |
9 000 |
Rent Prepaid for two months to 31 August 2019 |
1 200 |
Doubtful debts expenses |
1 200 |
Amount provided in 2019 for employees’ long-service leave entitlements |
5 000 |
Goodwill impairment expenses |
7 000 |
Required:
Calculate the taxable profit and accounting profit for the year ending 30 June 2019.
B. GYV Ltd has the following deferred tax balances as at 30 June 2019.
Deferred tax asset $9 00 000
Deferred tax liability $7 00 000
The above balances were calculated when the tax rate, was 20 per cent. On 1 December 2019 the government raises the corporate tax rate to 25 per cent.
Required:
Provide the journal entries to adjust the carry-forward balances of the deferred tax asset and deferred tax liability.
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