ControlThe income statement that has been prepared by Recon Ltd$.$s accountant for the current year ending July $30$ is as follows:

Sales Revenue

$750,000$

Cost of Goods Sold

$270,000$

Gross Profit

$480,000$

Operating Expenses:

Salaries and Wages

$118,000$

Interest and Property taxes

$22,000$

Amortization expense $($see Note $1)$

$56,000$

Charitable donations

$2,700$

Life Insurance $($see Note $2)$

$6,600$

Meals and Entertainment $($see Note $3)$

$31,000$

Repairs and Maintenance $($see Note $4)$

$62,000$

Other operating expenses

$62,000$

$360,300$

Operating income

$119,700$

Other revenue and expenses

Loss on sale of delivery vans

$-56,000$

Interest revenue

$3,300$

Gain on sale of shares $($Note $5)$

$10,800$

Dividends from taxable Canadian corporations

$7,200$

$-34,700$

Income before taxes

$85,000$

Income tax expense

$6,750$

Income after taxes

$78,250$

Note $1$: Recon$$s assets include:

$$

Cost

NBV

UCC

Land

$350,000$

$375,000$

$$

Building

$560,000$

$380,000$

$340,000$

Furniture and equipment

$325,000$

$117,000$

$97,150$

Delivery vans

$320,000$

$186,000$

$115,280$

During the year, Recon decided it would most cost effective to rent delivery vans as necessary than own the vehicles. Proceeds of $$123,500$ were received on the sale of the vans. New equipment and furniture was purchased for $$50,500.$

Note $2$: Recon carries a life insurance policy on the major shareholder to ensure the company can survive until personnel can be replaced or redeployed in the event of his death.

Note $3$: Meals and Entertainment expense included $$5,000$ to sponsor local children$$s sports teams. The remainder was spent while entertaining clients.

Note $4$: $$23,000$ was spent to replace leaking windows. The balance was spent to install a sky light above the employee breakroom.

Note $5$: Recon sold shares for proceeds of $$22,000.$ The shares had an original cost of $$13,500.$

Note $6$: Recon has $$4,800($from $1997)$ in their net capital loss pool, and a $$12,700($from $2007)$ balance in their non$-$capital loss carryover pool.