CROWN Pty Ltd (‘the company’) recorded the following transactions during the 2021 tax year: - 1 July 2020 – The company had an opening balance of $50,750 (credit) - 8 August 2020 – The company received an unfranked dividend of $52,000 - 2 January 2021 – The company paid an income tax instalment of $21,000 to the ATO - 1 June 2021 – The company paid a fully franked dividend of $52,000 Required: Answer the following questions: (a) What is the closing balance of CROWN Pty Ltd’s franking account on 30 June 2021? Explain your calculations. (b) What would be the impact on the company’s franking account if CROWN Pty Ltd paid a dividend of $70,000 that was franked to 70% on 20 June 2021?
CROWN Pty Ltd (‘the company’) recorded the following transactions during the 2021 tax year:
- 1 July 2020 – The company had an opening balance of $50,750 (credit)
- 8 August 2020 – The company received an unfranked dividend of $52,000
- 2 January 2021 – The company paid an income tax instalment of $21,000 to the ATO
- 1 June 2021 – The company paid a fully franked dividend of $52,000
Required:
Answer the following questions:
(a) What is the closing balance of CROWN Pty Ltd’s franking account on 30 June 2021? Explain your calculations.
(b) What would be the impact on the company’s franking account if CROWN Pty Ltd paid a dividend of $70,000 that was franked to 70% on 20 June 2021?
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