Question

Gold Star Ltd began operations on 1 July 2019. On that date the company purchased several non-current assets, details of which follow:

	Vehicles	Equipment	Furniture
Cost	$88,000	$190,000	$48,000
Depreciation rate:
Accounting	25%	25%	25%
Tax	40%	30%	50%
Method	Reducing Balance	Straight-line	Straight-line
Residual	10%	Zero	Zero

Additional information:

1. Insurance of $19,000 was paid for during the year. Of this amount, $13,200 is prepaid for next year.
2. The rent expense for the current year is $17,600, of which $4,600 was paid in cash. The balance was classified for accounting purposes as rent payable.
3. Employee Entitlements (Annual, Sck and Long Service Leave) totalling $8,000 were provided for during the year. No payments were made.

4. For year ended 30 June 2020 the profit before income tax was $47,500

5. Tax rate is 30%.

Question 1 Current Tax Schedule

Calculate taxable income and current tax liability using the schedule entitled “Current Tax Worksheet”. Provide the journal entry to record current tax liability. Exclude journal narrations.

Question 2 Deferred Tax Schedule

Complete the schedule entitled “Deferred Tax Worksheet” showing the calculation of deferred tax liabilities and deferred tax assets for the year ended 30 June 2020. Note that not all cells will be required to be filled. Provide journal entries to record deferred tax assets and/or deferred tax liabilities (if any). Do not offset deferred tax assets against deferred tax liabilities. Exclude journal narrations.

Answer 1