XYZ Inc is a Canadian Controlled private corporation. The company's controller has prepared an income statement for
Question:
XYZ Inc is a Canadian Controlled private corporation. The company's controller has
prepared an income statement for the year for the company(the amounts shown do not
include any applicable HST):
XYZ Inc.
Income Statement
For the Year Ended December31st,2023
Revenue:
Sales $900,000
Other revenue $29,000
Expenses:
Cost of sales $430,000
Salaries and wages $220,000
Amortization $14,000
Legal and accounting $10,000
Insurance $20,000
Lease on commercial building $50,000
Golf green fees $9,000
Meals and entertainment $8,000
Net income before taxes $168,000
Additional information(amounts exclude any applicable HST):
The depreciable assets currently on the balance sheet include a van, furniture and
fixtures, and small tools. The undepreciated capital cost(UCC)balances at the end of
the previous taxation year were $15,000(Class10.1),$8,000(Class8)and $0(Class
12).
During2023,new furniture and fixtures were acquired for $32,000.Old fixtures originally
costing $15,000were sold off for proceeds of $2,000.Small tools with an aggregate
cost of $4,500were sold off for proceeds of $1,000.For accounting purposes, the net
book values of the fixtures and small tools matched the sale proceeds, so there is no
gain or loss recognized in the income statement.
Other revenue consisted of interest on bonds($6,000),gain on the sale of short-term
marketable securities($20,000),and eligible dividends($3,000).
All of the expenses were incurred to earn the sales revenue.
XYZ is registered for HST and carries on commercial activity. XYZ operates in Ontario
where the HST rate is13%.XYZ is an annual filer and uses the general method for
determining its HST remittances.
Required
1)Determine XYZ's net income for tax purposes for2023.
2)Determine XYZ's HST remittance or refund for2023.
You must show all your work and provide a brief explanation for anything you've
intentionally omitted from the calculations. No marks will be given for unexplained
omissions.
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello