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Assets Current assets $300,000 Fixed assets (at cost): Land $100,000 Buildings 300,000 Equipment 200,000 600,000 Accumulated amortization (220,000) 380,000 Slap Shot manufacturer's licence (at cost)
Assets Current assets $300,000 Fixed assets (at cost): Land $100,000 Buildings 300,000 Equipment 200,000 600,000 Accumulated amortization (220,000) 380,000 Slap Shot manufacturer's licence (at cost) 80,000 Goodwill, at cost 60.000 $820.000 Liabilities and Equity Liabilities $600,000 Proprietor's equity 220,000 $820,000 HOCKEY FACILITIES Exhibit 2 Statement of Income Year Ended December 31, 20X1 Sales (retail and manufacturing) $1,600,000 Cost of sales: Opening inventory $ 300,000 Purchases and manufacturing costs 800.000 1,100,000 Closing inventory 200.000 900,000 Gross profit 700,000 General administrative and selling expenses 250.000 Net Income $ 450.000 In addition to the income derived from Hockey Facilities, Cameron has substantial investments that generate high returns. The investment income by itself has put Cameron in the top marginal tax bracket. That income consists of dividends from shares of public corporations and interest on bonds. Cameron's marginal tax rate is 50% (federal and provincial, combined) on regular income, 35% on eligible dividends, and 41% on non-eligible dividends. As the proprietor, Cameron draws funds from Hockey Facilities to pay his personal expenses and income taxes. He usually requires $40,000 annually for living expenses exclusive of any income taxes. You have recently met with Cameron to discuss the possibility of incorporating Hockey Facilities' business operations. At the meeting, Cameron provided you with the following additional information: 1. Expected profits from Hockey Facilities are as follows: 20X2$475,000
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