Reference no: EM132588560
Jordana is self employed in the T shirt distribution business, the following is Jordana's income statement, for the calendar year ending December 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)
Net Income per financial statements 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 instalment 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 transaction, the sale of Disney rights were 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:
Question 1: Jordana has asked you to calculate her income from a business for tax purposes, before CCA, for the calendar year ending Dec 31.