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Question: statement of comprehensive income for the year ended 30 june...

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Statement of Comprehensive Income for the year ended 30 June 2020 [Extract]

 

 

Gross Profit                                                                         2,600,000

Expenses:

Administration expenses                      400,000

Salaries                                                  320,000

Long-service leave                                  40,000

Warranty expenses                                 80,000

Depreciation – plant                              300,000

Insurance                                                 40,000                  1,180,000

Profit before tax                                                                   1,420,000

 

 

Assets and Liabilities as disclosed in the Statement of Financial Position as at 30 June 2020 [Extract]

                                                                                                                            

 

ASSETS

Cash                                                                                            120,000

Inventory                                                                                     320,000

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

 

 

LIABILITIES

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

 

 

 

Additional Information

 

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.

 

 

Required:

 Prepare a tax reconciliation (that is, determine Robinson Ltd’s taxable income). 5 marks 

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