Mr. Andrew Taylor is a Canadian resident and owns E Ltd., which carries on an automobile...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Mr. Andrew Taylor is a Canadian resident and owns E Ltd., which carries on an automobile parts wholesale distribution business. The fiscal period of E Ltd. is the 12 month period ending December 31, 2019. Mr. Taylor has provided the following information in respect to E Ltd. for the year: SALES Cost of sales Opening inventory Purchases Closing inventory (Note 1) Accounting and legal fees (Note 2) Advertising and promotion (Note 3) Insurance REQUIRED: Interest and bank charges Business taxes and licences Bad debts (Note 4) Office expenses Travelling expenses (Note 5) Rent (Note 6) Employees' wages (Note 7) Drawings by shareholder Conventions (Note 8) Transportation and delivery expenses Note 5: The travelling expenses includes salesman's travelling expenses, as follows: Automobile allowance i $70,000 630.000 700,000 (75.000) Note 1: The inventory is valued at the lower of cost or market value. However, on December 31st of the year, Mr. Taylor arbitrarily reduced the closing inventory by $50,000. Note 2: Legal fees include an amount of $400 paid to E Ltd.'s lawyer in respect to Mr. Taylor's personal residence. Note 3: The advertising and promotion expense includes expenditures of $6,000 for meals and beverages. Note 4: The $13,000 amount represents the increase in the reserve for doubtful accounts as follows: Prior year reserve for doubtful debts Current year reserve for doubtful debts $22,000 35,000 $13.000 Difference $0.60 per km x 30,000 business km (assume the amount paid is reasonable from the employee perspective Meals consumed by an employee while he was outside the Vancouver area Hotel expenses Convention 1 Convention expenses Meals. Convention 2 Convention expenses, including meals for 4 days Convention 3 Convention expenses Meals $ 18,000 3,200 1.800 $23.000 Note 6: ELtd.'s business is located in a leased warehouse. The lease expired in the year. The owner paid E Ltd. $5,000 as an inducement to renew the lease. This amount is not included in sales and was not deducted from the rent expense. Note 7: Employee wages include bonuses of $9,000. The bonus was paid on August 12th of the following year. Note 8: Mr. Taylor attended three conventions during the year. These were all related to the automobile parts industry and took place in Eastern Canada. The costs incurred during these conventions break down as follows: $1,100,000 $ 2,000 800 $ 2.800 $ 4,060 625,000 $ 1,200 300 $ 1.500 6,000 24,000 2,200 3,500 800 13,000 1,400 23.000 50,000 142,000 90,000 8,360 75,000 Comment on any adjustment required to calculate net income for tax purposes including items contained in Notes 1 to 8. Briefly state your reasons. Mr. Andrew Taylor is a Canadian resident and owns E Ltd., which carries on an automobile parts wholesale distribution business. The fiscal period of E Ltd. is the 12 month period ending December 31, 2019. Mr. Taylor has provided the following information in respect to E Ltd. for the year: SALES Cost of sales Opening inventory Purchases Closing inventory (Note 1) Accounting and legal fees (Note 2) Advertising and promotion (Note 3) Insurance REQUIRED: Interest and bank charges Business taxes and licences Bad debts (Note 4) Office expenses Travelling expenses (Note 5) Rent (Note 6) Employees' wages (Note 7) Drawings by shareholder Conventions (Note 8) Transportation and delivery expenses Note 5: The travelling expenses includes salesman's travelling expenses, as follows: Automobile allowance i $70,000 630.000 700,000 (75.000) Note 1: The inventory is valued at the lower of cost or market value. However, on December 31st of the year, Mr. Taylor arbitrarily reduced the closing inventory by $50,000. Note 2: Legal fees include an amount of $400 paid to E Ltd.'s lawyer in respect to Mr. Taylor's personal residence. Note 3: The advertising and promotion expense includes expenditures of $6,000 for meals and beverages. Note 4: The $13,000 amount represents the increase in the reserve for doubtful accounts as follows: Prior year reserve for doubtful debts Current year reserve for doubtful debts $22,000 35,000 $13.000 Difference $0.60 per km x 30,000 business km (assume the amount paid is reasonable from the employee perspective Meals consumed by an employee while he was outside the Vancouver area Hotel expenses Convention 1 Convention expenses Meals. Convention 2 Convention expenses, including meals for 4 days Convention 3 Convention expenses Meals $ 18,000 3,200 1.800 $23.000 Note 6: ELtd.'s business is located in a leased warehouse. The lease expired in the year. The owner paid E Ltd. $5,000 as an inducement to renew the lease. This amount is not included in sales and was not deducted from the rent expense. Note 7: Employee wages include bonuses of $9,000. The bonus was paid on August 12th of the following year. Note 8: Mr. Taylor attended three conventions during the year. These were all related to the automobile parts industry and took place in Eastern Canada. The costs incurred during these conventions break down as follows: $1,100,000 $ 2,000 800 $ 2.800 $ 4,060 625,000 $ 1,200 300 $ 1.500 6,000 24,000 2,200 3,500 800 13,000 1,400 23.000 50,000 142,000 90,000 8,360 75,000 Comment on any adjustment required to calculate net income for tax purposes including items contained in Notes 1 to 8. Briefly state your reasons.
Expert Answer:
Answer rating: 100% (QA)
Profit Loss Statement of E Ltd for year ended 31122019 Less A Less B PARTICULARS Sales Cost of ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
Students also viewed these accounting questions
-
A City Administration has provided the following information related to their activity related to government funds. You are required to: (5 marks) Statement of Revenues, Expenditure, and Changes in...
-
Alpha Company has provided the following information for its only product, Alp, for the year 2021. Sales (1,000 televisions) $1,000,000 Cost of goods sold (only variable costs) 521582 Store manager's...
-
Stone has provided the following information on its available-for-sale securities: Amortized cost as of 12/31/X1 ..................... $170,000 Unrealized gain as of 12/31/X1...
-
A double-ended queue or deque (pronounced "deck") is a collection that is a combination of a stack and a queue. Write a class Deque that uses a linked list to implement the following API: public...
-
Explain the hybrid method of accounting.
-
Standby equipment and servicing equipments are A. Ignored B. Accounted for as current assets C. Accounted for as fixed assets
-
Taylor, Thomas and Trevor are partners in the consulting firm of Taylor and Associates. The balance sheet of the partnership as at 31 March 2025 is shown below. It was agreed that all profits would...
-
1. Evaluate the overall performance and financial structure of Pearson Air Conditioning & Service. 2. What are the strengths and weaknesses in this firms management of accounts receivable and...
-
a) Investment in real estate is one of the booming business in Kenya today and most of companies and wealthy individuals have been venturing into the business. Understanding on the rights of real...
-
(a) A disk of mass M and radius R is held up by a massless string, as shown in Fig. The surface of the disk is frictionless. What is the tension in the string? What is the normal force per unit...
-
Give the most precise big O notation of the following functions. Justify your responses 30n2 15n0.7 1) f(n) 2) f(n) sin(n) 3) f(n) 4) f(n) 5) f(n) 6) f(n) (2logn + vn). (log(n3)log (log n)) 100Vn ...
-
Metagenomics is aimed at a. determining the complete genome sequence of newly identified microorganisms. b. mapping the genes on chromosomes of newly identified microorganisms. c. determining the...
-
Some drugs that inhibit HIV proliferation are inhibitors of HIV protease. Explain how these drugs would help to stop the spread of HIV.
-
Experimentally, when an E. coli bacterium already has a prophage integrated into its chromosome, another phage cannot usually infect the cell and establish the lysogenic or lytic cycle. Based on...
-
What is a common feature found in all viruses? a. An envelope b. DNA c. Nucleic acid surrounded by a protein capsid d. All of the above are common features.
-
The purpose of site-directed mutagenesis and CRISPR-Cas technology is to a. determine if a protein binds to a DNA segment. b. determine the sequence of a segment of DNA. c. alter the sequence of a...
-
Gerta Franklin's trip to buy a pair of cowboy boots had been frustrating the 30-mile drive had yielded no boots. The selection available in her size was sparse, but, more important she had been...
-
Design an experiment to demonstrate that RNA transcripts are synthesized in the nucleus of eukaryotes and are subsequently transported to the cytoplasm.
-
The Fanta Company presents you with the following account balances taken from its December 31, 2007 adjusted trial balance: Inventory, January 1, 2007 ............. $ 43,000 Selling expenses...
-
Under what conditions would you expect to see Allowance for Repairs in a companys balance sheet?
-
How is revenue recognized for real estate sales?
-
The latent heat of vaporization per unit mass of a pure substance at a given temperature, \(\lambda\), is defined as the difference in enthalpy between the saturated vapor and saturated liquid at the...
-
Calculate the absolute humidity, relative saturation, and dew-point temperature of a mixture of benzene-nitrogen at a pressure of \(1.5 \mathrm{bar}\) and temperature of \(320 \mathrm{~K}\) if the...
-
It is desired to dehumidify \(1.2 \mathrm{~m}^{3} / \mathrm{s}\) of air, available at \(311 \mathrm{~K}\) with a wet-bulb temperature of \(303 \mathrm{~K}\), to a wet-bulb temperature of \(288...
Study smarter with the SolutionInn App