Question

# QUESTION 10 Wei Pty Ltd is a company that has a credit balance of \$10,000 in...

QUESTION 10

1. Wei Pty Ltd is a company that has a credit balance of \$10,000 in its franking account at 1 July 2019. It pays a PAYG instalment of \$21,000 in respect of income from the previous year on 19 July 2019.

It pays PAYG instalments in respect of income tax for the current year of:

• 20 October - \$19,000
• 20 January - \$18,500
• 20 April - \$20,500

On 21 April 2020, the company declares and pays a fully franked dividend of \$28,000 from profits.

Calculate the balance of the company’s franking account at 30 June 2020.

 \$68,000 \$77,000 \$12,000 \$56,000 \$89,000

We can calculate the desired result as follows:

 Particulars Debit Credit Opening Balance \$ 10,000 PAYG Installment from Previous years \$ 21,000 PAYG Installment on 20 October \$ 19,000 PAYG Installment on 20 January \$ 18,500 PAYG Installment on 20 April \$ 20,500 Fully Franked Dividend = 28,000 * (0.3/0.7) \$ 12,000 Total \$ 12,000 \$ 89,000

Closing Balance as on 30 June 2020 = 89,000 - 12,000

= \$ 77,000

So, the correct answer is option (b)

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