5. XYZ Pty Ltd had the following transactions relevant to its franking account during the year ended 30 June 2021. It pays tax at the rate of 30%.On the 1st July 2020 its franking account balance was $10,000On 10 July 2020 it paid a dividend of $50,000 franked to 70% to its shareholdersOn the 30th July it paid Company Income Tax of $60,000.On 1 August 2020 it paid a dividend of $50,000 franked to 50% to its shareholders.Then on 1 March 2021 it paid a dividend of $30,000 franked to 90% to its shareholders.Required:Only advise on the consequences for XYZ Pty Limited NOT its shareholders.

Franking = Amount Franked×%Franked×Tax%/(1-tax%)]

Answered: Required: Only advise on the…

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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5. XYZ Pty Ltd had the following transactions relevant to its franking account during the year ended 30 June 2021. It pays tax at the rate of 30%.

On the 1st July 2020 its franking account balance was $10,000
On 10 July 2020 it paid a dividend of $50,000 franked to 70% to its shareholders
On the 30th July it paid Company Income Tax of $60,000.
On 1 August 2020 it paid a dividend of $50,000 franked to 50% to its shareholders.
Then on 1 March 2021 it paid a dividend of $30,000 franked to 90% to its shareholders.

Required:

Only advise on the consequences for XYZ Pty Limited NOT its shareholders.

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