Deferred Tax worksheet-Financial Accounting

You are required to submit your assignment as a word file using 1.5 line spacing, size 12, Times New Roman font.


You can use excel for tables/workings/statements however these then need to be inserted into your Word document as a picture:

  1. select the section of text cells you want to copy from excel, click Ctrl + C (to copy the section)
  2. go to your word document and right click your mouse button, under paste Options go to the 4th icon (Picture U) and click on it
  • This will insert your excel section


Please find the instructions for Part 2 of the assignment over the page.























Simpson Ltd was established on 1 July 2019 with share capital totalling $132,000.


One year later at 30 June 2020 the trial balance of the company was as follows:


Account Debit Credit
Cash 24,000  
Accounts receivable 37,500  
Allowance for doubtful debts   200
Interest receivable 100  
Inventory 20,000  
Prepaid insurance 300  
Machinery (at cost) 79,000  
Accumulated depreciation – Machinery   5,900
Vehicles 11,000  
Accumulated depreciation – Vehicles   100
Goodwill 45,000  
Accumulated impairment loss   300
Investments 25,000  
Accounts payable   15,000
Rent payable   6,000
Provision for annual leave   1,800
Provision for services warranties   600
Share capital   132,000
Sales revenue   650,000
Interest revenue   500
Dividend revenue   300
Exempt income   400
Capital profit on sale of land   700
Cost of sales 175,000  
Depreciation 6,000  
Goodwill impairment loss 300  
Salaries & wages 120,000  
Annual leave 1,800  
Rent 72,000  
Insurance 1,200  
Entertainment 400  
Fines and penalties 100  
Fringe benefits tax 200  
Warranty expense 600  
Doubtful debts 200  
Other expenses 194,100
TOTAL 813,800 813,800



Additional information:

  1. For tax purposes, depreciation on machinery is $14,000 and for vehicles $300, for the year ended 30 June 2020.
  2. Doubtful debts, annual leave and service warranties are expensed in the year ending 30 June 2020 but are not tax deductible for tax purposes until paid.
  3. Simpson Ltd has accrued annual leave entitlements of $1,800 in calculating net profit for the year ended 30 June 2020.
  4. Service warranty expense is only deductible as a tax deduction when claimed by customers.
  5. The company accrues doubtful debts expense as soon as it appears on a customer’s account as uncollectible. However, the bad debt is not allowable as a tax deduction until all avenues to collect the account have been exhausted.
  6. The tax rate is 30% and taxable income is $79,500.



  1. Complete a deferred tax worksheet.
  2. Complete the general journal entry to account for income tax.
  3. Complete a statement of comprehensive income for the year ended 30 June 2020 (follow format in textbook on page 650 – 9th edition, showing one year only).
  4. Prepare a balance sheet at 30 June 2020 (follow format in textbook on page 181 – 9th edition, showing one year only).
  5. Discuss whether you think the deferred tax assets and liabilities are assets and liabilities in relation to the definitions contained in the conceptual framework (reference your written work to support your arguments). Maximum 300 words.