SydMel Ltd commences operations on 1 July 2020. One year later, on 30 June 2021, the entity prepares its first statement of comprehensive income and its first statement of financial position. The statements are prepared before considering taxation. The following information is available. Statement of Profit or Loss and other Comprehensive Income For the year ended 30 June 2021 Gross Profit $500,000 Salaries expenses (220,000) Rent expense (53,000) Long service leave expenses (51,000) Depreciation expense - Plant (30,000) Bad debt expense (20,000) Accounting Profit Before Tax $126,000 The Statement of Financial Position (Extract/partial) As at 30 June 2021 Assets: Cash $153,000 Inventories 199,000 Account receivables (net) 179,000 Prepaid rent 51,000 Plant 150,000 Accumulated depreciation - plant (30,000) 702,000 Liabilities: Revenue received in advance 53,000 Accounts payable 92,000 Loan payable 210,000 Provision for long service leave 48,000 $403,000 Additional information The company tax rate is assumed to be 30%. All salaries have been paid as at year end and are deductible for tax purposes. None of the long service leave expense has actually been paid. It is not deductible for tax purposes until it is actually paid. Rent was paid in advance on 1 July 2021. Actual amounts paid are allowed as a tax deduction. Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. No bad debts were written off. The revenue received in advance is included in the taxable income. The machinery is depreciated on a straight-line basis over 5 years for accounting purposes, but over 3 years for taxation purposes. The machinery is not expected to have any residual value. Required: Prepare the current tax worksheet and the journal entry to recognise Current Tax Liability (CTL) at 30 June 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

SydMel Ltd commences operations on 1 July 2020. One year later, on 30 June 2021, the entity prepares its first statement of comprehensive income and its first statement of financial position. The statements are prepared before considering taxation. The following information is available.

Statement of Profit or Loss and other Comprehensive Income For the year ended 30 June 2021
Gross Profit	$500,000
Salaries expenses	(220,000)
Rent expense	(53,000)
Long service leave expenses	(51,000)
Depreciation expense - Plant	(30,000)
Bad debt expense	(20,000)
Accounting Profit Before Tax	$126,000

The Statement of Financial Position (Extract/partial) As at 30 June 2021
Assets:
Cash	$153,000
Inventories	199,000
Account receivables (net)	179,000
Prepaid rent	51,000
Plant	150,000
Accumulated depreciation - plant	(30,000)
	702,000
Liabilities:
Revenue received in advance	53,000
Accounts payable	92,000
Loan payable	210,000
Provision for long service leave	48,000
	$403,000

Additional information

The company tax rate is assumed to be 30%.
All salaries have been paid as at year end and are deductible for tax purposes.
None of the long service leave expense has actually been paid. It is not deductible for tax purposes until it is actually paid.
Rent was paid in advance on 1 July 2021. Actual amounts paid are allowed as a tax deduction.
Amounts received from sales, including those on credit terms, are taxed at the time the sale is made. No bad debts were written off.
The revenue received in advance is included in the taxable income.
The machinery is depreciated on a straight-line basis over 5 years for accounting purposes, but over 3 years for taxation purposes. The machinery is not expected to have any residual value.

Required:

Prepare the current tax worksheet and the journal entry to recognise Current Tax Liability (CTL) at 30 June 2021.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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