Question: statement of comprehensive income for the year ended 30 june...
Statement of Comprehensive Income for the year ended 30 June 2020 [Extract]
Gross Profit 2,600,000
Administration expenses 400,000
Long-service leave 40,000
Warranty expenses 80,000
Depreciation – plant 300,000
Insurance 40,000 1,180,000
Assets and Liabilities as disclosed in the Statement of Financial Position as at 30 June 2020 [Extract]
Accounts receivable 360,000
Prepaid insurance 16,000
Plant - cost 1,200,000
Less Accumulated depreciation 300,000 900,000
Total Assets 1,716,000
Accounts payable 200,000
Provision for warranty expenses 60,000
Loan payable 616,000
Provision for long service leave 40,000
Total liabilities 916,000
Net Assets 800,000
1. The plant is depreciated over four (4) years for accounting purposes, but over three (3) years for taxation purposes.
2. All administration and salaries expenses incurred have been paid at year end.
3. Amounts received from sales, including those on credit terms, are taxed at the time the sale is made.
4. Insurance was initially prepaid to the amount of $56,000. At year end, the unused component of the prepaid insurance amounted to $16,000. Actual amounts paid are allowed as a tax deduction.
5. Warranty expenses were accrued and at year end, actual payments of $20,000 were made (leaving an accrued balance of $60,000). Deductions for tax purposes are only available when the amounts are paid, and not as they are accrued.
6. None of the long service leave expense has actually been paid. It is not deductible until it is actually paid.
7. The tax rate is 30 per cent.
Prepare a tax reconciliation (that is, determine Robinson Ltd’s taxable income). 5 marks