Corporate accounting bbac401 prepare a statement of profit

Question

Problem # 1

The trial balance of Simpsons Ltd at 30 June 2018 was as follows:

		Debit			Credit
	Share capital (ordinary shares issued at $2, fully paid) General reserve Retained earnings (1/7/17) Revaluation surplus Mortgage loan Bank overdraft (at call) 7% debentures Interest payable Accounts payable Dividend payable Current tax liability Provision for employee benefits Deferred tax liability Allowance for doubtful debts Accumulated depreciation - plant and equipment Accumulated impairment - goodwill Cash Accounts receivable Inventory Prepaid insurance		$       750 87 000 131 550 10 500			$  300 000 37 500 155 100 127 500 375 000 103 800 120 000 4 200 104 250 15 000 78 150 51 300 27 600 19 200 63 750 15 000
	Plant and equipment Land Buildings Goodwill Deferred tax asset Sales revenue Cost of sales Administrative expenses Other expenses Interest revenue Dividends revenue Income tax expense Dividends paid Dividends declared		333 750 330 000 570 000 157 500 14 700   675 000 397 500 15 000     75 600 30 000 15 000			1 237 500       3 750 5 250
			$2 843 850			$2 843 850

Additional information

(a) Administrative expenses for the year include interest expense of $43 050.

(b) All assets are carried at cost, except for land and buildings which are carried at valuation.

(c) During the year, 75 000 shares were issued at an issue price of $2 each, payable in full on application.

(d) On 30 June 2018, the directors revalued land and buildings. The revaluation was based on an independent valuation received from FJ Holden, Registered Valuer. The valuation was based on fair values. The carrying amounts of land and buildings before the revaluation were $292 500 and $525 000 respectively.

(e) The mortgage loan is repayable in annual instalments of $75 000 due on 1 March each year.

(f) The 7% debentures are to be redeemed on 31 March 2019. There is no plan to refinance these debentures in the future.

(g) The provision for employee benefits consists of:

Annual leave Long-service leave

$27 000 24 300

(h) No employee is eligible for long-service leave until 2022.

(i) The company tax rate is 30%.

Required

A. Prepare a statement of profit or loss and other comprehensive income for Simpsons Ltd for the year ended 30 June 2018, according to the requirements of AASB 101 (classify expenses by function).

B. Prepare a statement of financial position for Simpsons Ltd as at 30 June 2018 to comply with AASB 101.

C. Prepare a statement of changes in equity for Simpsons Ltd for the year ended 30 June 2018, according to the requirements of AASB 101.

Problem # 2

Killer Ltd has determined its accounting profit before tax for the year ended 30 June 2017 to be $263 000. Included in this profit are the following items.

Interest Receivable	1000
Annual leave expense	(45 000)
Depreciation expense - buildings	(8 000)
Depreciation expense - plant	(22 500)
Doubtful debts expense	(4 500)
Insurance expense	(7 000)

The company's draft balance sheet at 30 June 2017 showed the following:

Assets
Cash		$   1 500
Interest Receivable		1 000
Accounts receivable	$ 21 500
Less allowance for doubtful debts	(4 000)	17 500
Inventory		32 000
Prepaid insurance		4 500
Land		75 000
Buildings	170 000
Less Accumulated depreciation	(60 000)	110 000
Plant	150 000
Less Accumulated depreciation	(67 500)	82 500
Deferred tax assets as at 1 July 2016		10500
		334 500
Liabilities
Accounts payable		25 000
Provision for annual leave		10 000
Loan		140 000
Deferred tax liabilities as at 1 July 2016		10800
		$185 800

 

Additional information

a) The tax depreciation rate for plant (purchased 3 years ago for $150 000) is 20%.Buildings are depreciated over the same number of years for tax and accounting purposes.

b) During the year, the following cash amounts were paid:

Annual leave	$52 000
Insurance	6 500

Annual leave and insurance payments are only deductible for tax purposes when paid.

c) Bad debts of $2 500 were written off against the allowance for doubtful debts during the year. Bad debts are only deductible for tax purposes when written off.

d) The deferred tax balances at 30 June 2016 were:
a. Deferred tax assets $10,500
b. Deferred tax liabilities $10,800

e) The company tax rate is 30%.

Required

Complete the following for Killer Ltd for 30 June 2017:

1. Current Tax Worksheet (template provided)

2. Deferred Tax Worksheet (template provided)

3. Tax Journal Entries

Attachment:- Template.rar