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28 February 2015, at a profit mark up of 25% on cost price. On 28 February 2015 inventories to the value of R100 000(atcost to P Ltd) were still on hand. The company tax rate is 28%. Total sales from S Ltd to P Ltd for the current reporting period amounted to R200 000. Which is the correct tax implication on unrealized profit? Select one: a. Dr Deferred tax (S)SFP R5 600, Cr Income Tax expense (S) P/L R5 600 b. Dr Deferred tax (S) SFP R7 000, Cr Income tax expense (S) P/L R 7 000 c. Dr Income tax expense(S) P/L R5 600, Cr Deferred tax (S) SFP R5 600 d. Dr Income tax expense (S) P/L R2 800, Cr Deferred tax (S) R2 800

28 February 2015, at a profit mark up of 25% on cost price. On 28 February 2015 inventories to the value of R100 000(atcost to P Ltd) were still on hand. The company tax rate is 28%. Total sales from S Ltd to P Ltd for the current reporting period amounted to R200 000. Which is the correct tax implication on unrealized profit? Select one: a. Dr Deferred tax (S)SFP R5 600, Cr Income Tax expense (S) P/L R5 600 b. Dr Deferred tax (S) SFP R7 000, Cr Income tax expense (S) P/L R 7 000 c. Dr Income tax expense(S) P/L R5 600, Cr Deferred tax (S) SFP R5 600 d. Dr Income tax expense (S) P/L R2 800, Cr Deferred tax (S) R2 800

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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28 February 2015, at a profit mark up of 25% on cost price. On 28 February 2015 inventories to the value of R100 000(atcost to P Ltd) were still on hand. The company tax rate is 28%.
Total sales from S Ltd to P Ltd for the current reporting period amounted to R200 000.
Which is the correct tax implication on unrealized profit?
Select one:
a.
Dr Deferred tax (S)SFP R5 600, Cr Income Tax expense (S) P/L R5 600
b.
Dr Deferred tax (S) SFP R7 000, Cr Income tax expense (S) P/L R 7 000
c.
Dr Income tax expense(S) P/L R5 600, Cr Deferred tax (S) SFP R5 600
d.
Dr Income tax expense (S) P/L R2 800, Cr Deferred tax (S) R2 800 

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