Jordana is self employed in the T shirt distribution business, the following is Jordanas income statement, for
Question:
Jordana is self employed in the T shirt distribution business, the following is Jordana’s income statement, for the calendar year ending December 31.
Statement of Income | ||
For the Year ended Dec 31 | ||
Gross Revenue | 60,000 | |
Cost of Goods sold | (10,000) | |
Gross Profit | 50,000 | |
Expenses: | ||
Accounting and Legal | 2,000 | |
Advertising | 800 | |
Golf Dues | 3,000 | |
Reasonable estimated bad debt expense | 2,000 | |
Business, taxes, and licenses | 1,000 | |
Amortization Expense | 8,000 | |
Cycle Safety Program | 1,200 | |
Interest | 7,800 | |
Meals & Entertainment | 4,000 | |
Rent and Lease | 2,200 | |
Office Rent | 1,000 | |
Salaries and Wages – Staff | 6,000 | (39,000) |
11,000 | ||
Notes
a) Legal fees include $500 of accrued fees for a pending lawsuit against Jordana for the sale of distasteful T shirts
b) Accounting fees include the purchase of $1,200 computerized cash register.
c) Interest expense includes $3,000 paid to the CRA for late installment interest
d) The Cycle Safety Program cost was for Jordana, who is an active environmentalist and rides her bicycle to work every day
e) Included in the cost of goods sold is $3,200 incurred for the purchase of shelving and lighting.
f) Due to the nature of the transaction, the sale of Disney rights was not included in the financial statements. Jordana actively trades rights for T-shirt logos. Net proceeds from the sale of the Disney rights were $15,000, and the cost of the logo rights was $6,800.
Required:
Jordana has asked you to calculate her income from a business for tax purposes, before CCA, for the calendar year ending Dec 31.
Taxation of Individuals 2017
ISBN: 9781259548666
8th edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver