Question

Loftus et al (2023) Exercise 13.5 Amended The following information was extracted from records of Nawa Ltd for the year ended 30 June 2024. NAWA LTD Statement of financial position (extract) as at 30 June 2024 Assets Accounts receivable $ 50 000 Allowance for doubtful debts (5 000 ) $ 45 000 Motor vehicles 250 000 Accumulated depreciation — motor vehicles (50 000 ) 200 000 Liabilities Interest payable 5 000 Additional information • The accumulated tax depreciation for motor vehicles at 30 June 2024 was $100 000. • As at 30 June 2023, the balance in the deferred tax asset was $2,000 and the balance in the deferred tax liability was $8,000. • The income tax rate is 30%. Required: Prepare a deferred tax worksheet for Nawa Ltd and the end of year deferred tax journal entry required to bring the deferred tax accounts to their ending balances as at 30 June 2024.

Answer 1

To create the T-account balance sheet for the bank, the assets including reserves of $50, government bonds of $70, and loans of $500 are listed on one side, with the total liabilities of deposits of $400 on the other. The net worth, which balances the T-account, is calculated to be $220.

Step-by-step explanation:

To set up a T-account balance sheet for the bank, we need to list the bank's assets on the left side of the 'T' and the liabilities on the right side. The net worth will also be included on the liabilities side of the account to balance the total. Here's how the T-account for the bank would look:

Bank's T-Account Balance Sheet

Assets

• Reserves: $50
• Government Bonds: $70
• Loans: $500

Liabilities

• Deposits: $400

Net Worth: (Assets - Liabilities)

The total assets are Reserves ($50) + Government Bonds ($70) + Loans ($500) = $620. The total liabilities are just the Deposits, which are $400. The bank's net worth is calculated as Total Assets - Total Liabilities = $620 - $400 = $220.