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The accounting profit before tax of Archie Ltd for the year ended 30 June 2020...

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Accounting

The accounting profit before tax of Archie Ltd for the year ended 30 June 2020 was $8,000 and included the following income and expense items: interest revenue $35,000, depreciation expense plant $7,000.

A draft statement of financial position as at 30 June 2020 revealed the following: interest receivable $15,000 (30 June 2019 $10,000), plant $70,000 (30 June 2019 $70,000). For tax purposes, plant is depreciated at 20% straight-line. The company tax rate is 30%.

For the year ended 30 June 2020 the current tax journal entry is:

Select one:

a.

DR Deferred tax asset 4,000 CR Income tax expense (current) 4,000

b.

DR Income tax expense (current) 1,200 CR Current tax liability 1,200

c.

DR Income tax expense (current) 1,800 CR Current tax liability 1,800

d.

DR Deferred tax asset 1,200 CR Income tax expense (current) 1,200

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