Hi I would like to ask about income for this situation?

Is the fine amount 10,000 and club member 5,000 does not include in the expense?

Is the loss from selling the equipment included in the expense?

Revenues Motorcycle and Parts Sales	$450,000
Expenses Purchase of inventory, parts, and supplies (Note 1)	$135,000
Golf club dues (Note 2)	5,000
Fines and penalties (Note 3)	10,000
Insurance (Note 4)	5,000
General office expenses	3,000
Home Office expenses (Note 5)	3,012
Salaries	58,000
Employer contributions to CPP and EI	3,960
Depreciation (Note 6)	41,928
Loss on sale of equipment (note 6)	8,250
Truck expenses (Note 7)	5,700
Total Expenses	$278,850
Net Income for accounting purposes	$171,150

Note 1: The opening inventory on January 1, 2021 was $15,000. The closing inventory on December 31, 2021 was $35,000.

Note 2: James joined the local golf club to find new customers. The membership cost was $5,000 for the year.

Note 3: In 2020 the business was sued for selling branded motorcycle parts without proper authorization from the brand owner. In early 2021, James reached an out-of-court settlement with the brand owner which provides that James will pay a penalty of $10,000 for pre-2021 transactions that were completed without proper authorization, in exchange for the brand owner dropping the charges against him. The penalty was paid January 1, 2021. The agreement also provided that James would enter into a new distributorship agreement with the brand owner effective January 1, 2021 - see Note 7 below for further details under "Intangible Assets".

Intangible Assets: On January 1, 2021, James signed a new 25-year distributorship agreement with the owner of a well-known motorcycle brand. James paid $100,000 to obtain the 25-year license, which is effective January 1, 2021 and expires on December 31, 2045

Answer rating: 100% (QA)

1 Revenues 450000 Cost of Goods Sold Opening Inventory 15000 Add Purchases 135000 COGA for sale 1500... View the full answer