Practice Exam 1 blank - 1 Practice Exam 1 Question 1(20...

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1 Practice Exam 1 Question 1 (20 marks) Accounting profit before income tax for the year ended 30 June 2002 of Kenneth Ltd amounted to $380,000. This accounting profit included the following accounting expenses: $ Depreciation of plant 30 000 Long-service leave 40 000 Holiday pay 30 000 Doubtful debts 55 000 Entertainment costs 12 000 Depreciation of buildings 5 000 Taxable income for the year ended 30 June 2002 was $470,000. The Statements of Financial Position of the company at 30 June 2001 and 2002 showed the net assets of the company as follows: 2001 $ 2002 $ Assets Cash 73 000 $ 82 000 Prepaid expense 63,000 50,000 Inventory 127 000 158 000 Receivables 430 000 585 000 Allowance for doubtful debts (20 000) (40 000) Plant 350 000 350 000 Accumulated depreciation – plant (79 000) (109 000) Buildings 100 000 100 000 Accumulated depreciation – buildings (25 000) (30 000) Deferred tax asset 28 000 ? Liabilities Accounts Payable 247 000 265 000 Provision for long-service leave 30 000 50 000 Provision for holiday pay 20 000 30 000 Deferred tax liability 8 000 ? Additional information Accumulated depreciation on plant at 30 June 2001 for tax purposes was $99,000. Tax depreciation for plant for the year ended 30 June 2002 was $60,000. Accumulated depreciation on the buildings for tax purposes as at 30 June 2002 was $20,000 the income tax rate is 30%.
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