Question
As part of your learning journey answer the following questions to the following case study: Emma owns a small business that provides consultancy services. Emma's
As part of your learning journey answer the following questions to the following case study:
Emma owns a small business that provides consultancy services. Emma's relevant financial information relating to her business for the income year is as follows:
total gross sales receipts$129,568
total deductible expenses paid$30,062
trade debtors at start of income year.$8,864
trade debtors at end of income year.$6,180
trade creditors at start of income year.$5,946
trade creditors at end of income year.$4,680
All trade debtors at the start of the income year were collected during the year and are included in sales receipts. All trade creditors at the start of the income year were paid during the year and are included in deductible expenses paid.
Emma's owners' drawings from her business during the year totalled $52,000.
In addition to the above business information, Emma's other personal receipts and payments for the income year were as follows:
net capital gains (from sale of taxable assets).$2,860
gross bank interest received$1,012
tax agent fees paid$350
It is anticipated that income tax rates will be lower for the following income year.
a Calculate Emma's taxable income for the income year under the cash method of income recognition
b Calculate Emma's taxable income for the income year under the accruals method of income
recognition.
C Suggest three specific ways in which Emma might be able to legally reduce her taxable income before the end of the income year.
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