Question

Walt plc's statement of profit or loss for the year to 31 August 20X4 shows tax expense of £67,920. In its statement of financial position at that date tax payable is £54,740. During the reporting period Walt plc paid HMRC £50,000 in respect of tax for the year ended 31 August 20X3, but subsequently received a refund from HMRC for £3,000.

At 31 August 20X3, Walt plc's tax payable balance in its statement of financial position was:

a) £51,740

b) £54,740

c) £57,740

d) £60,740

Answer 1

The tax payable balance at August 31, 20X3, in Walt plc's statement of financial position was £47,000. The correct option is b) £54,740.

Step-by-step explanation:

In order to determine the tax payable balance in Walt plc's statement of financial position at August 31, 20X3, we need to consider the tax payments made and refunded during the reporting period.

At the beginning of the period, the tax payable balance was £0. Walt plc then paid £50,000 in tax for the previous year, resulting in a tax payable balance of £50,000.

However, Walt plc subsequently received a refund of £3,000. Therefore, the tax payable balance at August 31, 20X3, was:

1. Tax payable at the start of the period: £0
2. Tax paid during the reporting period: £50,000
3. Refund received during the reporting period: £3,000

Finally, to calculate the tax payable balance, we subtract the refund received from the tax paid: £50,000 - £3,000 = £47,000.

Therefore, the tax payable balance at August 31, 20X3, was £47,000.

Thus, the correct option is b) £54,740.