Question
PETA Ltd. sold a fur coat to a customer on October 1, 2016 for $150,000. The inventory cost of the coat was $69,000. The customer
PETA Ltd. sold a fur coat to a customer on October 1, 2016 for $150,000. The inventory cost of the coat was $69,000. The customer paid $46,000 of the purchase price at the time of the sale. The remainder of the purchase price due in 2 instalments of $47,000 payable on October 1, 2018 and the remaining balance on October 1, 2020, respectively.
Assuming PETA minimizes business income for tax purposes by claiming the maximum available reserve and including the minimum required amount, complete the following table by indicating the total amount of inclusions, deductions, and the net effect on income for tax purpose for each year shown (assuming a December 31st year end).
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