Financial Statements - practice assessment 2- Task 1.5b

jazzies123

Hey Guys
Can anyone help me please? the question reads:
Carlisle ltd is preparing its financial statements for year ending 30th June X1. the trail balance shows the following information in regards to tax
Tax payable 1 july X0 = 16700
tax paid during the year ending 30 june X1 = 14900
the final agreed corporation tax liability in respect of the profit for the year ending 30 June X0 has been settled in full. The estimated corporation tax liability based upon the profits for the year ending 30 June X1 us £17,300. What is the tax charge that will be shown in the company's profit and loss?

the answer is £15500 but im unsure how to get this

thanks in advance!!

dnewton1989

Hi @jazzies123

Tax Payable is £16,700
Tax Paid is £14,900

A difference of £1,800

Estimated Tax Liability is £17,300

£17,300 less £1,800 = £15,500

It say's the agreed corporation tax bill in respect of the profits for year ended 20 June 20X0 has been settled in full.

Therefore we need to take out the £1,800 as it has been accounted for as the tax bill was paid in full.

Hope this makes sense

Cheers

jazzies123

Thanks dnewton1989!!! clearly explained!