Question 3: McCombie, K (2023), Amended past question
For the year ended 30 June 2023, Lulu Ltd reported a profit before tax of $10,000. Included in the profit were the following income and expense items:
Interest revenue $50,000 Rent revenue $25,000 Bad debts expense $10,000 Depreciation expense – plant $21,000 Long service leave expense $20,000
The draft Statements of Financial Position of Lulu Ltd at 30 June 2023 and 30 June 2022 included the following assets and liabilities:
2023 2022 $ $ Accounts receivable 70,000 50,000 Allowance for doubtful debts (10,000) (5,000) Interest receivable 20,000 25,000 Plant 210,000 210,000 Accumulated depreciation – plant (63,000) (42,000) Rent revenue received in advance 8,000 4,000 Provision for long service leave 30,000 40,000 Additional information: • For accounting purposes plant is depreciated using the straight line method over 10 years. For tax purposes plant is depreciated using the straight line method over 3 years. • The company tax rate is 30%. Required: Prepare the current tax worksheet and the journal entry to recognise current tax at 30 June 2023.