A. Grossery Limited is a wholesale grocery distributor formed in 20X4, with warehouses in several locations in southern Ontario. The company uses the liability method of tax allocation. In fiscal 20X4, the company had net income before tax of \(\$ 90,000\). The following items were included in the determination of net income:

a. Depreciation on buildings and equipment owned of \(\$ 50,000\). The assets' original cost was \(\$ 650,000\).

b. Pension expense of \(\$ 44,747\). Pension amounts paid were \(\$ 48,395\). There is a deferred pension asset on the balance sheet of \(\$ 3,648\) as a result.

c. Depreciation of capitalized leased assets and interest expense on the lease liability totalled \(\$ 14,300\); the assets' lease payments in \(20 \mathrm{X} 4\) amounted to \(\$ 21,000\).

In calculating the amount of income tax owed to the government in \(20 \mathrm{X} 4\), the following factors must be taken into account:

a. CCA amounts to \(\$ 80,000\) for \(20 \mathrm{X} 4\).

b. Pension costs are tax deductible at the time of funding.

c. The capitalized leases are taxed as operating leases. That is, cash lease costs are tax deductible and depreciation, interest, etc., recognized for accounting purposes are not tax deductible. Over time, cash payments will equal the total of these expenses, but the timing of expense recognition is different. The net accounting carrying value for lease related amounts at the end of \(20 \mathrm{X} 4\) was a net debit of \(\$ 6,700\). The tax basis was zero.

d. The tax rate is \(40 \%\).

e. Golf club dues of \(\$ 20,000\) are included in the net income of \(\$ 90,000\).

f. Tax instalment payments during the year amounted to \(75 \%\) of the payable amount.

Required:

Prepare the final sections of the statement of profit and loss for \(20 \mathrm{X} 4\), starting with income before tax. Clearly support your calculations of income tax and other amounts. Also show what would appear on the statement of financial position and statement of cash flows in relation to tax for \(20 \mathrm{X} 4\). Use the direct method in the operating activities section.