Duncan Ltd. is a Canadian-controlled private corporation owned by Mr. William Duncan. Mr. Duncan purchased all shares of Duncan Ltd. on July 1 of the prior year for $500,000 in an arm's length transaction. Duncan Ltd. manufactures fabrics and will continue with its June 30 year end. The following is Duncan Ltd.'s income statement for the period of July 1 to June 30 of the current year.
Duncan Ltd. Statement of Income
For the period July 1 to June 30

Notes:
(a) Legal fees include $15,000 of estimated fees for a threatened lawsuit against the company.
(b) Accounting fees include a $10,000 cost to reorganize the share capital of the company. This amount is not deductible because it is a cumulative eligible expenditure. However, a deductible claim for cumulative eligible capital of $525 is permitted.
(c) Advertising expenses include a $10,000 payment to a television station in the United States for commercials promoting the company's products to the Vancouver market.
(d) Interest expense includes $5,000 of interest paid to the CRA for late instalments.
(e) Capital cost allowance deductible under paragraph 20(l)(a) is $14,210.
(f) On July 31 in the current fiscal year, Duncan Ltd. paid $30,000 to an agent for services to raise financing. The amount is included in the advertising expense.
(g) An $80,000 bonus is included in salary and wages. The amount will be paid on January 15, next year.
(h) Included in the cost of goods sold is $50,000 incurred for the purpose of earning exempt income.
(i) On January 1 of the current year, Duncan Ltd. paid $100,000 to one of its tenants to cancel a rental lease agreement because Duncan Ltd. required the space for its own business operations.
The amount has been included in the rent expense figure. The lease of property commenced on
January 1 and had five years remaining at that time.
REQUIRED
Compute Duncan Ltd.'s income from a business for tax purposes for the year ended June 30.

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Gross revenue Cost of goods sold Gross profit Expenses: $6,000,000 (4,000,000) 2,000,000 Accounting and legal Advertising Personal expense of Mr. Duncan Bad debts Business taxes and licenses Amortization Interest Meals and entertainment Rent and lease Office Salaries and wages 60,000 100,000 30,000 20,000 10,000 80,000 90,000 40,000 220,000 10,000 600,000 (1,260,000) Net income per financial statements $ 740,000