Ken Gray runs a small proprietorship (Ken's Fish) that specializes in fishing gear. He has provided...

Transcribed Image Text:

Ken Gray runs a small proprietorship (Ken's Fish) that specializes in fishing gear. He has provided you with the following information: Sales $150,000 Cost of goods sold* 80,000 Advertising in a local paper 1,000 Advertising in a small American newspaper directed at the Canadians living in that city 2,000 Meals and entertainment 10,000 Property taxes on a vacant piece of land adjacent to the business that earns no income 2,500 Golf course fees for Ken 1,500 Cost of one convention held on a cruise ship in the Mediterranean Sea sponsored by The Canadian Fisherman's Association 2,000 (*All inventory is valued at market value.) Required: A) Calculate the net income for tax purposes for Ken's Fish. B) Explain why any items have been omitted. C) Briefly discuss how your answer in A) would change if Ken had valued his inventory at cost. Ken Gray runs a small proprietorship (Ken's Fish) that specializes in fishing gear. He has provided you with the following information: Sales $150,000 Cost of goods sold* 80,000 Advertising in a local paper 1,000 Advertising in a small American newspaper directed at the Canadians living in that city 2,000 Meals and entertainment 10,000 Property taxes on a vacant piece of land adjacent to the business that earns no income 2,500 Golf course fees for Ken 1,500 Cost of one convention held on a cruise ship in the Mediterranean Sea sponsored by The Canadian Fisherman's Association 2,000 (*All inventory is valued at market value.) Required: A) Calculate the net income for tax purposes for Ken's Fish. B) Explain why any items have been omitted. C) Briefly discuss how your answer in A) would change if Ken had valued his inventory at cost.

Answer rating: 100% (QA)

Ken can claim a deduction of 35000 as Bad debts Ken can claim a deduction of 1000 as an advertising ... View the full answer