The income statement that has been prepared by Margo Ltd.'s accountant for the 2022 taxation year...

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The income statement that has been prepared by Margo Ltd.'s accountant for the 2022 taxation year ending December 31, 2022, is as follows: Sales revenue Cost of goods sold (Note 1) Gross profit Operating expenses: Salaries and wages Rents $925,000 ( 717,000) $208,000 ($40,200) ( 22,200) Property taxes (Note 2) ( 8,800) Amortization expense ( 35,600) Write-down of goodwill (Note 3) ( 1,700) Charitable donations Legal fees (Note 5) ( 19,800) ( 2,220) Bad debt expense (Note 6) ( 7,100) Warranty provision (Note 7) ( 5,500) Social club membership fees (Note 8) ( 7,210) Other operating expenses ( 39,870) Operating income ( 190,200) $ 17,800 Other revenues (expenses): Gain on sale of investments (Note 9) $ 9,500 Interest revenue 2,110 Interest on late income tax instalments ( 1,020) Investment counsellor fees 500) Foreign interest income (Note 10) Dividends from taxable Canadian corporations Income before taxes 1,530 3,000 14,620 $ 32,420 Notes and Other Information: 1. The calculation of cost of goods sold was based on an opening inventory of $225,000 and a clos- ing inventory of $198,600. In addition, the closing inventory was reduced by $15,000 for a reserve for future declines in value. This is the first year the company has used an inventory reserve. The income statement that has been prepared by Margo Ltd.'s accountant for the 2022 taxation year ending December 31, 2022, is as follows: Sales revenue Cost of goods sold (Note 1) Gross profit Operating expenses: Salaries and wages Rents $925,000 ( 717,000) $208,000 ($40,200) ( 22,200) Property taxes (Note 2) ( 8,800) Amortization expense ( 35,600) Write-down of goodwill (Note 3) ( 1,700) Charitable donations Legal fees (Note 5) ( 19,800) ( 2,220) Bad debt expense (Note 6) ( 7,100) Warranty provision (Note 7) ( 5,500) Social club membership fees (Note 8) ( 7,210) Other operating expenses ( 39,870) Operating income ( 190,200) $ 17,800 Other revenues (expenses): Gain on sale of investments (Note 9) $ 9,500 Interest revenue 2,110 Interest on late income tax instalments ( 1,020) Investment counsellor fees 500) Foreign interest income (Note 10) Dividends from taxable Canadian corporations Income before taxes 1,530 3,000 14,620 $ 32,420 Notes and Other Information: 1. The calculation of cost of goods sold was based on an opening inventory of $225,000 and a clos- ing inventory of $198,600. In addition, the closing inventory was reduced by $15,000 for a reserve for future declines in value. This is the first year the company has used an inventory reserve.

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