Byrd Industries has a taxation year that ends on December 31, They prepare their accounting statements in accordance with GAAP and had a net income of $100,500 for the 2019 fiscal year on these statements. Here are some notes related to the preparation of these statements:

1. $47000 total was deducted as income tax expense, which included $12000 in future income taxes.

2. During the year, the Company starts selling a product on which it provides a six-year warranty. At the end of the year, it recognizes a warranty liability of $19000.

3. Financing costs, incurred on January 1, to issue new common stock during the year totalled $24000. All of these costs were charged to expense in the accounting records.

4. As the Company was late in making its required income tax instalments, it was charged $700 in instalment interest.

5. The Company recorded $70000 in amortization expense on the financial statements. Maximum available CCA deductions for this period were $85000.

6. The Company's accounting expenses includes a payment of dues in a local yacht club of $5000 (sporting/recreational facility). The cost of entertaining clients at this club during the year ending December 31, 2019 was $3000.

7. The Company had a Christmas party during the year for all employees which cost $900 in meals and entertainment expenses. They typically only hold two seasonal company-wide parties a year.

8. Two employees worked at a remote work location for the Company during the year. The meals for these two employees during their remote work were paid for fully by the Company and cost $525. These were expensed on the accounting income statement as meals and entertainment expenses.

9. For accounting purposes, no allowance for bad debts was established at either the beginning of end of 2019. The $7100 bad debt expense that was included in the accounting records in 2019 reflects only the amounts that were written off during the year. For tax purposes, the Company deducted a reserve of $4200 for the taxation year ending December 31, 2018. An appropriate reserve for the year ending December 31, 2019 would be $3800.

10. The Company paid for attendance at three conventions during the year. Each convention cost $1500, so a total of $4500 was expensed for these conventions in the financial statements. All of the conventions were in a location that is consistent with the territorial scope of the organization.

11. The Company spent $8000 to investigate a site that they were going to be using for business purposes. It was fully expensed in the accounting income statement.

12. The Company expensed $2000 of donations to local registered charities during the year.

13. On December 31, 2019, the Company paid landscaping costs of $14000. These costs were treated as capital expenditures for accounting purposes and, as the expenditure was made at the end of the year, no amortization was recorded in the 2019 financial statements for this.

14. In the accounting records, the Company recognized a Pension Expense of $52000. Contributions to the pension fund totaled $39000.

15. The 2019 accounting expenses included $34500 in bonuses that were declared in favour of Company executives. These bonuses were paid at different times: $6000 in November 2019, $22000 in March 2020, and $6500 in November 2020.

16. The Company's Interest expense includes $8000 in bond discount amortization.

17. The Company's Interest expense includes $7000 of interest paid in 2019 on a financed vehicle, which was purchased last year. The vehicle is used 100% for business purposes. The interest paid in 2019 are financing charges for the period from January 1 to December 31, 2019.

18. The 2019 accounting expenses included $2200 for the premiums on a life insurance policy on the life of the Company's president. The Company is the beneficiary of this policy. None of the Company's creditors requires that this policy be in force; the Company just decided that they would pay into this insurance policy, just in case.

19. The 2019 accounting expenses included $2800 for the cost of an appraisal on real estate that is going to be sold.

Required: Calculate the minimum net income for tax purposes for Byrd Industries based on the above information. Show all your notes/ extra work done for each line item

RESPONSE SHEET:

Problem 2- Enter the appropriate adiustments in the vellow boxes. Write any notes you have beside (in Column D \& to the right in green) nent