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Hi Sir, could you please assist on this question if my working is correct or not.
At 1 January 20X5, Carbon Co had a credit balance on its income tax account of $2,300,000.
For the year ended 31 December 20X5, Carbon Co estimated that its income tax liability to
be $2,400,000. During 20X5, the income tax liability for the previous year was settled at
$2,350,000.
What was the income tax charge in the statement of profit or loss for the year ended
31 December 20X5?1 January 20X5 – Credit Balance in Tax expenses $2,300,000.
Payment made:
Dr Tax Payable $2,350,000.
Dr Tax Expense $ 50 000
Cr Cash $2,300,000Estimated :
Dr Tax Expenses $2,400,000
Cr Tax Payable $2,400,000Tax Payable
Cash 2,300,000. ll Expense 2400 000
B c/f 50 000Tax Expense
Payable 50 000 ll
Payable 2400 000 SPL 2350 000I don’t know why you are spending time writing all these entries, because in the exam you would not need them – all you would need would be the final expense in the SOPL and/or the amount owing in the SOFP.
The expense in the SOPL will be the 2,400,000 estimated liability for the current year plus the 50,000 that had been under-accrued in the previous year. So a total expense of 2,450,000.
The amount showing as owing in the SOFP will be the 2,400,000 estimated for the current year.
okay, Mr John, i manage to get it and pass the exam!
Thank you for your assistant and notes
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