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Mr . Baker and Mr . Cain are members of a partnership that provides accounting services. The partnership's income statement for the fiscal period ending
Mr Baker and Mr Cain are members of a partnership that provides accounting services. The partnership's income statement for the fiscal period ending December is provided.
Partnership Income Statement
Baker and Cain
Partnership Income Statement
Fiscal Period Ending December
Fees received in cash
$
Capital Gains on Temporary Holdings of Canadian Securities
Eligible Dividends received from Canadian corporations
Total Revenues
$
Less Expenses:
Salaries and Wages
$
Rent on Office Space
Interest on Bank Loans
AmortizationOffice Furniture and Equipment
General Office Expenses
Charitable Donations
Convention Registration Fees
Total Expenses
Net accounting income
$
Other information
The partnership agreement provides that all income and losses are to be shared equally.
The salaries and wages reported on the income statement include a payment of $ comma to each of the two partners. The convention fees were for the two partners to attend the annual CPA conference. This was the only convention attended in
Both partners use their personal automobiles for business purposes and pay their own operating expenses. Mr Cains automobile cost $ comma and at the beginning of it had a UCC of $ comma His operating expenses for the year were $ comma for a total of comma kilometres driven. Only of the kilometres driven were for personal use.
At the beginning of the current fiscal period, the partnership had fees receivable from clients of $ comma At the end of the year, the corresponding balance was $ comma The closing receivables have not been included in the determination of the partnership's net income.
At the beginning of the year, the UCC of the office furniture was $ comma In computer equipment was purchased for $ comma Prior to this time, all computer equipment had been leased.
The partnership makes regular annual contributions of $ comma to a registered charity.
Assume that neither partner is subject to the highest federal income tax rate of
Required
Calculate the minimum net income for Mr Cain for Include in the calculation Mr Cains share of business income. Also, indicate other partnership amounts that would be allocated to Mr Cain as well as any deductions or tax credits that can be used to reduce federal income tax payable that result from partnership allocations. Ignore GSTHST and PST considerations and immediate expensing.
Start by working on the business income of the partnership. In this step, calculate the Class CCA. Round your answer to the nearest whole dollar.
Computer equipment purchased
times
Class CCA rate
times
AccII rate
Class CCA
times
times
Part
Next calculate the business income of the partnership. Round your answers to the nearest whole dollar.
Fees received in cash
Additions:
Partners' salaries
Amortization
Charitable donations
Closing accounts receivable
Total additions
Deductions:
Opening accounts receivable
Capital gains on securities
Taxable dividends received
CCA
Class
Class
Total deductions
Business income
Part
Now work on finding the addition to Mr Cains net income. In this step, calculate the CCA of the automobile. Round your answer to the nearest whole dollar.
UCC of automobile, beginning of
times
CCA rate of automobile
times
Percentage of kilometres driven for business
CCA of automobile
times
times
Part
Now find the addition to Mr Cains net income. Round your answer to the nearest whole dollar.
Partnership business income
Mr Cain's share
Mr Cain's share of partnership business income
Partner expenses: Automobile expenses
CCA
Operating expenses
Business income
Other partnership income:
Taxable capital gains
Eligible dividends
Gross up
Total other partnership income
Mr Cain's share
Mr Cain's share of other partnership income
Addition to net income
Part
Calculate the credit Mr Cain can receive from charitable donations.
First amount of eligible gifts
times
Rate for first amount
Rate for gifts exceeding first amount
times
Mr Cain's share of charitable donations
First amount of eligible gifts
Credit from charitable donations
times
times
Part
Finally find the federal dividend tax credit to which Mr Cain is entitled. Round your answer to the nearest whole dollar.
Gross up of eligible dividends
times
Inclusion rate
times
Federal dividend tax credit rate
Federal dividend tax credit
times
times
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