Answer Sheet

a) Calculation of Current Tax for the Year Ended June 30 2023

$ $

Accounting Profit Before Tax 600 000

Add:
Rent Revenue in Advance 25 000
Depreciation of Plant 50 000
Long-Service Leave Payable 45 000
Annual Leave Payable 30 000
Entertainment Cost 18 000
Depreciation of Building 8 000 231 000
Allowance for Doubtful Debts 55 000

831 000
Less:
Exempt Income 10 000
Depreciation of Plant 75 000
Office Supplies 15 000
Bad Debt Expense 60 000
Annual Leave Expense 30 000
Long Service Leave Expense 45 000 (235 000)

Taxable Income 596,000

Current Tax Liability = $596 000 X 30% 178 800

Bartle Limited Taxable Income for the year is, $596 000
Hence, the Current Tax Liability for Bartle Limited is, $178 800

Page 1 of 2
 b) Deferred Tax Worksheet.
Amounts in Dollars
Particulars Carrying Taxable Deductible Tax Base Taxable Deductible
Amount Amount Amount
Temporary Temporary
Difference Difference
Assets
Cash 80,000 0 0 80,000
Inventory 170,000 (170,000) 170,000 170,000
Receivables 445,000 0 55,000 500,000 55,000
(500 000 – 55 000)
Office supplies 25,000 0 0 25,000
Plant 240,000 (240,000) 110,000 110,000 130,000
(500 000 - 260 000)
Building 152,000 152,000 0 0 152,000
(300 000 – 148 000)
Goodwill 70,000 70,000 0 0 70,000

Liabilities
Trade payable 290,000 0 0 290,000
Long Service Leave 60,000 0 (60,000) 0 60,000
Payable
Annual Leave Payable 40,000 0 (40,000) 0 40,000
Rent Received in 25,000 0 0 0 25,000
Advance
Total Temporary 352,000 180,000
Difference
Less: Excluded items (222,000)
(Building & Goodwill)
(152 000 + 70 000)
Net Temporary
difference 130,000 180,000

Deferred Tax Liability: $130 000 x 30% = $39 000

Less: Beginning Balance: (38 100)
Current Year Adjustment: $900

Deferred Tax Asset: $180 000 x 30% = $54 000

Less: Beginning Balance: (40 500)
Current Year Adjustment: $13 500

c) Workings of Journal Entries Arising from the above.

Journal entries DR CR
Income Tax expense $178,800
Current tax liability $178,800

Income tax expense $900

Deferred tax liability $900

Deferred tax asset $13,500

Income tax expense $13,500

Page 2 of 2