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In the Eastern Cape, there is a chain of fitness studios called Always Active (Pty) Ltd. As of 31 December 2023, the current financial year-end, we are providing you with the following trial balance for Always Active (Pty) Ltd:

	Debit	Credit
Ordinary share capital	Rand	Rand
	150 000
Retained earnings		2 585 060
Long-term borrowings		350 000
Deferred tax liability (1 January 2023)		10 640
Trade payables		8 900
Income received in advance		66 500
Profit before dividend income and interest expense		2 530 000
Dividend income		12 000
Land (cost price)	1 200 000
Administration building (carrying amount)	1 128 000
Equipment (carrying amount)	1 580 000
Machinery (carrying amount)	1 690 000
Accounts receivable	12 500
Prepaid expenses	38 000
Current tax asset	5 600
Interest expense	35 000
Dividends	24 000
	5 713 100	5 713 100

Additional information:

• Profit before dividend income and interest expense has been correctly calculated and includes the following:

	Rand
Depreciation administration building	24 000
Depreciation equipment	740 000
Depreciation machinery	770 000
Donation to the 'Save the Elephant Fund'	25 000

• The 'Save the Elephant Fund' is not a recognised charity in terms of the Income Tax Act.
• No tax allowance is granted on the companys administration building.

• The tax bases and wear and tear allowances on the machinery and equipment are as follows:

	Tax base on 31 December 2023	Wear and tear allowance 2023
	Rand	Rand
Equipment	1 520 000	760 000
Machinery	1 600 000	800 000

• The income received in advance is taxed in the year of receipt and the prepaid expenses are deductible in the year of payment.
• The deferred tax balance on 31 December 2022 comprises taxable temporary differences on equipment and machinery amounting toR100 000 and a deductible temporary difference on income received in advance amounting to R62 000.
• The tax assessment for the December 2022 financial year end was received during 2023 and showed that the amount of the assessed tax on taxable profit was R6 250 less than the amount provided for current income tax in the 2022 financial year.
• There are no other differences between accounting profit and taxable profit other than those evident from the information provided.
• The income tax rate is 28%.

REQUIRED:

2.1) Prepare the general journal entries to be processed in Always Active (Pty) Ltds 31 December 2023 annual financial statements to account for current income tax, deferred tax, and the overprovision of current income tax.

Journal dates and narrations are not required. Round all answers to the nearest Rand. (Please specify these journals in a table format) (23 marks)

2.2) Prepare all the notes relating to tax expense and deferred tax in Always Active (Pty) Ltds 31 December 2023 annual financial statements so as to comply with the International Financial Reporting Standards.

The tax rate reconciliation should be presented in currency.

Accounting policies are not required.

Show all workings and refer to amounts where applicable. Round all answers to the nearest Rand.

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