Flaxton Ltd made an accounting profit before tax of $40 000 for the year ended 30 June 2021
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Flaxton Ltd made an accounting profit before tax of $40 000 for the year ended 30 June 2021

Part 3 -analysis and calculation 

Flaxton Ltd made an accounting profit before tax of $40 000 for the year ended 30 June 2021. Included in the accounting profit were the following items of revenue and expense.


For tax purposes the following applied.


Required

Calculate the current tax liability for the year ended 30 June 2021, and prepare the adjusting journal entry.

Explain your treatment of rent items in your answer to requirement 1.

Hint
Accounts and FinanceA tax liability refers to the total tax that is owned by an entity, corporation, or individual to a taxing authority such as the Internal Revenue Service. Tax liability is incurred when an income is earned and there is again made on the sale of an asset or when another taxable event takes place....
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