Super Sweet Limited (SSL), a Canadian controlled private corporation, is a producer and distributor of lollipops...

  

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Super Sweet Limited (SSL), a Canadian controlled private corporation, is a producer and distributor of lollipops and other sweet treats. The income statement of SSL for the fiscal year ended December 31, 2020 reflected net income of $450,000. The following items were included in the determination of this net income for accounting purposes: QUESTION 3: 20 MARKS (44 minutes) $ 65,000 8,000 15,000 90,000 2,000 1,500 Income tax expense.. Charitable donations paid. Golf club membership fees paid... Management bonus expense (see (a) below). Interest and penalties paid under the Income Tax Act.... Legal fees to draft an agreement to purchase equipment... Legal fees to defend against lawsuit by customer. . Legal and appraisal costs related to obtaining bank loan. . Premiums paid for term insurance (see (b) below).. Premiums paid for group insurance policy for the employees.. Landscaping costs paid .. Bad debt expense (see (c) below) Theft by an accounting clerk ... Inventory reserve for estimated obsolescence.. Meals and entertainment expense (see (d) below). Sponsor local minor basketball team... Amortization of capital assets (see (e) below) Gain on sale of capital assets. .. Additional information: 7,500 3,000 2,500 8,500 5,000 8,000 2,000 9,000 18,000 1,100 27,500 ..... ...... ...... ........ 9,000 ...... a The management bonus accrued atm a, The management bonus accrued at year end was paid was paid August 31, 2021. Additional information: b. The term insurance is on the life of the president and SSL is the beneficiary. c. The bad debt expense reflected on the income statement exceeds the actual bad debts incurred during the year by $2500. Therefore, a reserve for an allowance for doubtful accounts has been accrued for this amount. d. Meals & entertainment expense includes $5,000 related to the cost of the annual Holiday party held for all employees and a guest. e. The maximum capital cost allowance deduction available totals $35,000. Required: Prepare a reconciliation of net income for accounting purposes to net income from business for income tax purposes, assuming you wish to minimize this figure. Where the full amount of any item listed above is not included in your reconciliation, provide a brief explanation. Show all explanations, calculations and state any reasonable assumptions you deem necessary for full marks. Super Sweet Limited (SSL), a Canadian controlled private corporation, is a producer and distributor of lollipops and other sweet treats. The income statement of SSL for the fiscal year ended December 31, 2020 reflected net income of $450,000. The following items were included in the determination of this net income for accounting purposes: QUESTION 3: 20 MARKS (44 minutes) $ 65,000 8,000 15,000 90,000 2,000 1,500 Income tax expense.. Charitable donations paid. Golf club membership fees paid... Management bonus expense (see (a) below). Interest and penalties paid under the Income Tax Act.... Legal fees to draft an agreement to purchase equipment... Legal fees to defend against lawsuit by customer. . Legal and appraisal costs related to obtaining bank loan. . Premiums paid for term insurance (see (b) below).. Premiums paid for group insurance policy for the employees.. Landscaping costs paid .. Bad debt expense (see (c) below) Theft by an accounting clerk ... Inventory reserve for estimated obsolescence.. Meals and entertainment expense (see (d) below). Sponsor local minor basketball team... Amortization of capital assets (see (e) below) Gain on sale of capital assets. .. Additional information: 7,500 3,000 2,500 8,500 5,000 8,000 2,000 9,000 18,000 1,100 27,500 ..... ...... ...... ........ 9,000 ...... a The management bonus accrued atm a, The management bonus accrued at year end was paid was paid August 31, 2021. Additional information: b. The term insurance is on the life of the president and SSL is the beneficiary. c. The bad debt expense reflected on the income statement exceeds the actual bad debts incurred during the year by $2500. Therefore, a reserve for an allowance for doubtful accounts has been accrued for this amount. d. Meals & entertainment expense includes $5,000 related to the cost of the annual Holiday party held for all employees and a guest. e. The maximum capital cost allowance deduction available totals $35,000. Required: Prepare a reconciliation of net income for accounting purposes to net income from business for income tax purposes, assuming you wish to minimize this figure. Where the full amount of any item listed above is not included in your reconciliation, provide a brief explanation. Show all explanations, calculations and state any reasonable assumptions you deem necessary for full marks. Super Sweet Limited (SSL), a Canadian controlled private corporation, is a producer and distributor of lollipops and other sweet treats. The income statement of SSL for the fiscal year ended December 31, 2020 reflected net income of $450,000. The following items were included in the determination of this net income for accounting purposes: QUESTION 3: 20 MARKS (44 minutes) $ 65,000 8,000 15,000 90,000 2,000 1,500 Income tax expense.. Charitable donations paid. Golf club membership fees paid... Management bonus expense (see (a) below). Interest and penalties paid under the Income Tax Act.... Legal fees to draft an agreement to purchase equipment... Legal fees to defend against lawsuit by customer. . Legal and appraisal costs related to obtaining bank loan. . Premiums paid for term insurance (see (b) below).. Premiums paid for group insurance policy for the employees.. Landscaping costs paid .. Bad debt expense (see (c) below) Theft by an accounting clerk ... Inventory reserve for estimated obsolescence.. Meals and entertainment expense (see (d) below). Sponsor local minor basketball team... Amortization of capital assets (see (e) below) Gain on sale of capital assets. .. Additional information: 7,500 3,000 2,500 8,500 5,000 8,000 2,000 9,000 18,000 1,100 27,500 ..... ...... ...... ........ 9,000 ...... a The management bonus accrued atm a, The management bonus accrued at year end was paid was paid August 31, 2021. Additional information: b. The term insurance is on the life of the president and SSL is the beneficiary. c. The bad debt expense reflected on the income statement exceeds the actual bad debts incurred during the year by $2500. Therefore, a reserve for an allowance for doubtful accounts has been accrued for this amount. d. Meals & entertainment expense includes $5,000 related to the cost of the annual Holiday party held for all employees and a guest. e. The maximum capital cost allowance deduction available totals $35,000. Required: Prepare a reconciliation of net income for accounting purposes to net income from business for income tax purposes, assuming you wish to minimize this figure. Where the full amount of any item listed above is not included in your reconciliation, provide a brief explanation. Show all explanations, calculations and state any reasonable assumptions you deem necessary for full marks. Super Sweet Limited (SSL), a Canadian controlled private corporation, is a producer and distributor of lollipops and other sweet treats. The income statement of SSL for the fiscal year ended December 31, 2020 reflected net income of $450,000. The following items were included in the determination of this net income for accounting purposes: QUESTION 3: 20 MARKS (44 minutes) $ 65,000 8,000 15,000 90,000 2,000 1,500 Income tax expense.. Charitable donations paid. Golf club membership fees paid... Management bonus expense (see (a) below). Interest and penalties paid under the Income Tax Act.... Legal fees to draft an agreement to purchase equipment... Legal fees to defend against lawsuit by customer. . Legal and appraisal costs related to obtaining bank loan. . Premiums paid for term insurance (see (b) below).. Premiums paid for group insurance policy for the employees.. Landscaping costs paid .. Bad debt expense (see (c) below) Theft by an accounting clerk ... Inventory reserve for estimated obsolescence.. Meals and entertainment expense (see (d) below). Sponsor local minor basketball team... Amortization of capital assets (see (e) below) Gain on sale of capital assets. .. Additional information: 7,500 3,000 2,500 8,500 5,000 8,000 2,000 9,000 18,000 1,100 27,500 ..... ...... ...... ........ 9,000 ...... a The management bonus accrued atm a, The management bonus accrued at year end was paid was paid August 31, 2021. Additional information: b. The term insurance is on the life of the president and SSL is the beneficiary. c. The bad debt expense reflected on the income statement exceeds the actual bad debts incurred during the year by $2500. Therefore, a reserve for an allowance for doubtful accounts has been accrued for this amount. d. Meals & entertainment expense includes $5,000 related to the cost of the annual Holiday party held for all employees and a guest. e. The maximum capital cost allowance deduction available totals $35,000. Required: Prepare a reconciliation of net income for accounting purposes to net income from business for income tax purposes, assuming you wish to minimize this figure. Where the full amount of any item listed above is not included in your reconciliation, provide a brief explanation. Show all explanations, calculations and state any reasonable assumptions you deem necessary for full marks. Super Sweet Limited (SSL), a Canadian controlled private corporation, is a producer and distributor of lollipops and other sweet treats. The income statement of SSL for the fiscal year ended December 31, 2020 reflected net income of $450,000. The following items were included in the determination of this net income for accounting purposes: QUESTION 3: 20 MARKS (44 minutes) $ 65,000 8,000 15,000 90,000 2,000 1,500 Income tax expense.. Charitable donations paid. Golf club membership fees paid... Management bonus expense (see (a) below). Interest and penalties paid under the Income Tax Act.... Legal fees to draft an agreement to purchase equipment... Legal fees to defend against lawsuit by customer. . Legal and appraisal costs related to obtaining bank loan. . Premiums paid for term insurance (see (b) below).. Premiums paid for group insurance policy for the employees.. Landscaping costs paid .. Bad debt expense (see (c) below) Theft by an accounting clerk ... Inventory reserve for estimated obsolescence.. Meals and entertainment expense (see (d) below). Sponsor local minor basketball team... Amortization of capital assets (see (e) below) Gain on sale of capital assets. .. Additional information: 7,500 3,000 2,500 8,500 5,000 8,000 2,000 9,000 18,000 1,100 27,500 ..... ...... ...... ........ 9,000 ...... a The management bonus accrued atm a, The management bonus accrued at year end was paid was paid August 31, 2021. Additional information: b. The term insurance is on the life of the president and SSL is the beneficiary. c. The bad debt expense reflected on the income statement exceeds the actual bad debts incurred during the year by $2500. Therefore, a reserve for an allowance for doubtful accounts has been accrued for this amount. d. Meals & entertainment expense includes $5,000 related to the cost of the annual Holiday party held for all employees and a guest. e. The maximum capital cost allowance deduction available totals $35,000. Required: Prepare a reconciliation of net income for accounting purposes to net income from business for income tax purposes, assuming you wish to minimize this figure. Where the full amount of any item listed above is not included in your reconciliation, provide a brief explanation. Show all explanations, calculations and state any reasonable assumptions you deem necessary for full marks. Super Sweet Limited (SSL), a Canadian controlled private corporation, is a producer and distributor of lollipops and other sweet treats. The income statement of SSL for the fiscal year ended December 31, 2020 reflected net income of $450,000. The following items were included in the determination of this net income for accounting purposes: QUESTION 3: 20 MARKS (44 minutes) $ 65,000 8,000 15,000 90,000 2,000 1,500 Income tax expense.. Charitable donations paid. Golf club membership fees paid... Management bonus expense (see (a) below). Interest and penalties paid under the Income Tax Act.... Legal fees to draft an agreement to purchase equipment... Legal fees to defend against lawsuit by customer. . Legal and appraisal costs related to obtaining bank loan. . Premiums paid for term insurance (see (b) below).. Premiums paid for group insurance policy for the employees.. Landscaping costs paid .. Bad debt expense (see (c) below) Theft by an accounting clerk ... Inventory reserve for estimated obsolescence.. Meals and entertainment expense (see (d) below). Sponsor local minor basketball team... Amortization of capital assets (see (e) below) Gain on sale of capital assets. .. Additional information: 7,500 3,000 2,500 8,500 5,000 8,000 2,000 9,000 18,000 1,100 27,500 ..... ...... ...... ........ 9,000 ...... a The management bonus accrued atm a, The management bonus accrued at year end was paid was paid August 31, 2021. Additional information: b. The term insurance is on the life of the president and SSL is the beneficiary. c. The bad debt expense reflected on the income statement exceeds the actual bad debts incurred during the year by $2500. Therefore, a reserve for an allowance for doubtful accounts has been accrued for this amount. d. Meals & entertainment expense includes $5,000 related to the cost of the annual Holiday party held for all employees and a guest. e. The maximum capital cost allowance deduction available totals $35,000. Required: Prepare a reconciliation of net income for accounting purposes to net income from business for income tax purposes, assuming you wish to minimize this figure. Where the full amount of any item listed above is not included in your reconciliation, provide a brief explanation. Show all explanations, calculations and state any reasonable assumptions you deem necessary for full marks.