#2) (17 Marks) You are the accountant for Wilson Sports and Recreation and the following financial information has been determined for the year ending December 31, 2017. Wilson Sports and Recreation Income and Expense Statement For the period ending December 31, 2017 Revenue: Sales Cost of Goods Sold Gross Profit Expenses: Selling Expenses Meal and Entertainment Expenses $9,500 Salaries Expense 210,000 Club Dues Expense 3,600 Advertising Expense 11,500 $945,000 280,000 $665,000 Administrative Expenses: Utilities Expense Depreciation Expense Interest Expense Appraisal and Insurance Expense Charitable Donations Rent Expense (Building) Miscellaneous Expenses Net Income before Taxes Less: Provision for Income Taxes Net Income for Accounting Purposes 12,500 12,000 37,000 14,000 7,200 55,000 2,400 $374,700 $290,300 58,060 $232,240 NOTES: #1) Charitable Donations in the amount of $7,200 have been made to the Canadian Cancer Society. #2) Wilson Sports and Recreation maintains close relationships with its clients and regularity uses Hillcrest Golf and Country Club to close deals with new customers. The annual Club Dues are $3,600. #3) Management bonuses of $92,000 were accrued at December 31, 2017. $65,000 of the bonuses were paid on February 15, 2018 and the remaining $27,000 was not paid until September 30, 2018, due to lack of sufficient funds. #4) During the year they borrowed money to buy new equipment. The interest related to this was $21,000. #5) Instead of borrowing more money at the bank, the company decided to pay their income tax instalments late. This resulted in an interest charge from Canada Revenue Agency (CRA) in the amount of $2,500. #6) Advertising Expense includes $3,000 CAD paid to a USA Broadcaster to entice USA customers to purchase our products and services. #2) (Continued) #7) Appraisal expense contains a $2,500 cost for determining the asset values for the sale of equipment #8) A life insurance policy was taken out on the owner's life in order to provide funding for the company in the event of his death. Life insurance premiums on this policy amounted to $4,200. #8) CCA has been correctly calculated for tax purposes in the amount of $14,600 #9) Included in the Miscellaneous Expenses was the cost of a $25.00 parking ticket incurred while meeting with clients. #10) The corporation sold inventory on installment in 2017. The sales price was $120,000 and the cost of goods sold was $60,000. The $120,000 accounts receivable will require payments of $60,000 on June, 2018 and $60,000 on June, 2019. REQUIRED: Using the Reconciliation method compute the Net Income for Tax Purposes for Wilson Sports and Recreation for December 31, 2017. Show all calculations. #2) (17 Marks) You are the accountant for Wilson Sports and Recreation and the following financial information has been determined for the year ending December 31, 2017. Wilson Sports and Recreation Income and Expense Statement For the period ending December 31, 2017 Revenue: Sales Cost of Goods Sold Gross Profit Expenses: Selling Expenses Meal and Entertainment Expenses $9,500 Salaries Expense 210,000 Club Dues Expense 3,600 Advertising Expense 11,500 $945,000 280,000 $665,000 Administrative Expenses: Utilities Expense Depreciation Expense Interest Expense Appraisal and Insurance Expense Charitable Donations Rent Expense (Building) Miscellaneous Expenses Net Income before Taxes Less: Provision for Income Taxes Net Income for Accounting Purposes 12,500 12,000 37,000 14,000 7,200 55,000 2,400 $374,700 $290,300 58,060 $232,240 NOTES: #1) Charitable Donations in the amount of $7,200 have been made to the Canadian Cancer Society. #2) Wilson Sports and Recreation maintains close relationships with its clients and regularity uses Hillcrest Golf and Country Club to close deals with new customers. The annual Club Dues are $3,600. #3) Management bonuses of $92,000 were accrued at December 31, 2017. $65,000 of the bonuses were paid on February 15, 2018 and the remaining $27,000 was not paid until September 30, 2018, due to lack of sufficient funds. #4) During the year they borrowed money to buy new equipment. The interest related to this was $21,000. #5) Instead of borrowing more money at the bank, the company decided to pay their income tax instalments late. This resulted in an interest charge from Canada Revenue Agency (CRA) in the amount of $2,500. #6) Advertising Expense includes $3,000 CAD paid to a USA Broadcaster to entice USA customers to purchase our products and services. #2) (Continued) #7) Appraisal expense contains a $2,500 cost for determining the asset values for the sale of equipment #8) A life insurance policy was taken out on the owner's life in order to provide funding for the company in the event of his death. Life insurance premiums on this policy amounted to $4,200. #8) CCA has been correctly calculated for tax purposes in the amount of $14,600 #9) Included in the Miscellaneous Expenses was the cost of a $25.00 parking ticket incurred while meeting with clients. #10) The corporation sold inventory on installment in 2017. The sales price was $120,000 and the cost of goods sold was $60,000. The $120,000 accounts receivable will require payments of $60,000 on June, 2018 and $60,000 on June, 2019. REQUIRED: Using the Reconciliation method compute the Net Income for Tax Purposes for Wilson Sports and Recreation for December 31, 2017. Show all calculations