On January 10, 2012, you started your new job as controller for Bordessa Corporation, a Canadian-controlled private corporation with a December 31 year-end. On your first day, the president and owner-manager of the company has asked you to follow up on some personal and corporate tax concerns that he has.
(1) The company is the exclusive Canadian manufacturer and distributor of menswear designed by a famous U.S. designer and pays the designer a royalty equal to 10% of sales each quarter. Royalty payments are due one month after each quarter end (i.e., on April 30, July 31, October 31, and January 31). The company's financial statements show a 2011 royalty expense of $60,000. The financial statements also show the amount of royalties payable at the company's December 31, 2011 year-end to be $20,000 (the comparable number for December 31, 2010 is $10,000). According to the company's 2011 cheque register, however, only $45,000 has been paid to the menswear designer and only $5,000
has been paid to the CRA. The president wants to know how much the company should remit when it makes its January 31, 2012 payment to make up for unpaid royalties and withholding taxes it owes in respect of 2011.