#$2)(9$ MARKS$)$ Tom's Outdoor Experience has been in business for a number of years. They are getting ready to

prepare their income tax return for the year. Below are the accounting records and other information:

Tom's Outdoor Experience

Income and Expense Statement

For the period ending December $31,2021$

Revenue:

Sales

Cost of Goods Sold

Gross Profit

Expenses:

Selling Expenses

Meal and Entertainment Expenses

Salaries Expense

Club Dues Expense

Advertising Expense

Administrative Expenses:

Utilities Expense

Depreciation Expense

Interest Expense

Insurance Expense

Charitable Donations

Rent Expense $($Building$)$

Miscellaneous Expenses

Net Income Before Taxes

Provision for Income Taxes

Net Income for Accounting Purposes

$$1,000,000$

$270,000$

$$730,000$

$$7,000$

$235,000$

$4,000$

$17,000$

NOTES: $1\mathrm{.}40\%$ of Interest Expense is related to purchasing assets used for business purposes. The

remaining $60\%$ relates to interest used in the line of credit for day to day operations.

Club Dues relate to a membership at the local golf club where clients are entertained.

CCA was correctly calculated as $$20,000$ for the year.

Insurance expense includes $$1,000$ in premiums for a life insurance policy for the owner. In

the event of his death, the policy will pay his wife.

One of your customers did not have cash to fully pay for a purchase in the year. You granted

him credit on the sale. The sales price was $$2,000($CoGS $$400).$ The customer will make the full

$$2,000$ three years from now.

REQUIRED:

Using the Reconciliation method compute the Net Income for Tax Purposes for the company for

December $31,2021.$ Show all calculations.