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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
| Assets | $000 | Liabilities and owner’s equity | $000 |
| Prepayments | 20 | Provision for Annual Leave | 90 |
| Accounts Receivable | 360 | Loan | 320 |
| Allowance for Bad Debts | (40) | Share Capital | 1,600 |
| Inventory | 600 | Retained Earnings | 330 |
| Plant and Equipment | 1,800 | ||
| Accum Depreciation | (400) | ||
| 2,340 | 2,340 |
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:
- Calculate the current tax liability at 30 June 2019. (4 marks)
- Calculate the amount of deferred tax assets/liabilities at 30 June 2019. (3 marks)
- Journal entry to record income tax for the year. (3 marks)
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