Calculate his income from a business for tax purposes

Marty started a self-employed bakery business in a North Bay warehouse on March 1, and he has selected a fiscal year end of December 31. His business includes the baking and delivery of muffins and bagels to various coffee shops throughout the city.

(a) On March 1, Marty purchased a large gas oven, a computerized blender, and a used van for his business. Marty only used the van for deliveries. Assume the deductible CCA on this equipment is $2,400.

(b) Uncollectible bad debts are from Jo Jo's coffee shop. The owner has declared bankruptcy and the business closed on September 15.

(c) Meals and entertainment expenses were incurred in the attempt to gain new business with several coffee shops.

(d) Diane, Marty's spouse, worked full-time for Marty overseeing hiring, orders and deliver of all goods.

Marty has asked you to calculate his income from a business for tax purposes for the calendar year, ending December 31.

Ma Bagels

Statement of Income

For the period March 1 to December 31

Gross Revenue

$340,000

Cost of Goods Sold

(190,000)

Gross Profit

$150,000

Expenses:

Accounting amortization (Note a)

4,000

Repairs and maintenance

2,800

Annual tennis club dues

2,500

Uncollectible bad debt (Note b)

4,200

Political donations

1,000

Charitable donations

8,000

Hotel and travel

7,800

Meals and entertainment (Note c)

3,400

Building rent

12,000

Salary to Spouse

40,000

(85,700)

Cash Outflow

$64,300