Kim Shurson is the sole proprietor of Shurson Enterprises, a Shurson retail shop selling gadgets located in Calgary, AB. The shop has been in operation for several years. Kim provides you with the Statement of Income for the proprietorship for December 31, 2021: Shurson Enterprises Statement of Income for the Year Ended December 31, 2021 Item Amount Amount Sales $610,000 Cost of sales: Opening inventory $50,000 Purchases 250,000 300,000 Closing inventory 60,000 240,000 Gross profit 370,000 Expenses: Accounting and Legal (Note 2) 5,000 Advertising and promotion (Note 3) 5,000 Depreciation (Note 4) 27,000 Automobile expenses 7,000 Bad debts (Note 5) 4,000 Insurance (Note 6) 7,000 Interest 20,000 Office expenses (Note 7) 12,000 Rent 36,000 Wages and benefits (Note 8) 110,000 233,000 Net income for the year: $137,000 Notes to the above statement of income: 1. Shurson Enterprises is a proprietorship operated by Kim Shurson. 2. Accounting and legal include legal fees related to Kims dispute with regard to a personal car accident, in the amount of $2,000. 3. Advertising and promotion include Meals and Entertainment costs in the amount of $4,350. 4. Information for capital cost allowance (CCA) purposes: (a) The undepreciated capital cost balances at January 1, 2021 were Class 1: $200,000; Class 8: $60,000; Class 10: $80,000; Class 13: $37,500; Class 14.1: $0 ACCT 2303 Fall 2022 (b) Disposal of property of plant and equipment: sale of the corporations only Class 1 asset (proceeds: $180,000; original cost in 1995: $300,000). The land on which the building was situated was sold for its fair market value which was equal to its cost in 1995. (c) During 2021, the corporation made the following purchases: - A new office building (Class 1, 6%) was purchased in October for $700,000. In addition, the cost of the related land was $400,000. It cost $20,000 to pave part of the land for use as a parking lot; - New office furniture was purchased for $25,000. This purchase replaced office furniture which was sold for its $4,000 net book value (original cost: $10,000); - An unlimited life franchise was purchased for $100,000; - A 10-year patent, class 44 (expiring June 30, 2030) was purchased on July 1 for $20,000; - Improvements on its leased head office premises which were rented in 2019 for four years with two successive options to renew for five years and five years. Improvements had originally been made in 2019 in the amount of $45,000. Additional improvements were made in 2021 at a cost of $28,000. (d) During the year, the corporation sold some Shurson tools (each costing less than $500) for their net book value of $500. 5. The company has set up an allowance for doubtful accounts based on a review of the Accounts Receivable on December 31 of the current year. This is a procedure that the proprietorship follows every year. 6. Insurance includes life insurance premiums for Kim Shurson in the amount of $3,000. This insurance is required as collateral for the business bank loan. 7. Office expenses include the purchase of a computer, on January 15 of the current year, for $1,500 and $300 for an upgrade of accounting software for payroll tax information (Hint: these amounts were expensed in accounting statements, but for tax purposes they have to be added to Class 50 and Class 12). 8. Wages and benefits include the club dues/membership fees paid to the Royal Oak Club in the amount of $6,200. The club dues are paid for the five managers who take clients to the Royal Oak Club on a regular basis for business purposes. 9. The following information was taken from various expense accounts: a. Hockey game tickets given to customers ....... 8,000 b. $3,000 for auto allowance paid to the sole employee. This allowance was calculated as $1 per km for 3,000 kms driven by the employee. c. Cost of sponsoring local little league teams ... 5,000 d. $8,000 of financing fees incurred in connection with the bank loan You have been asked to reconcile accounting income to Division B net business income for tax purposes for your client who is operating as a proprietorship. Ignore the effects of leap years. Required: Part A: Use the template provided to prepare a Reconciliation Schedule to reconcile accounting net income to net business income for tax purposes. For each amount, give brief explanation to support your response (i.e., explain why the amount is added or subtracted in Schedule 1 or why no adjustment to accounting income is required). Part B: Prepare a Capital Cost Allowance Schedule in good form.