Please assist me in my home work question.

This is a practical excercize of client base, which links to integrated issues subject.

The extra information is,

Land purchased on 3rd of april, 2020. -$1,690,000

Selling price - 2,470,000

Meal entertainment by company -$1400, $100 per head for 14 employees, biscuits and other $800 per year, parties for clients $6200.

$20,000 for prepaid rent in 2020 year end.

march and june BAS payments.

Modani Furniture Pty Ltd is a furniture manufacturer. It makes a range of furniture ranging from lounge suites, bedroom furniture, bookcases, bedside tables, dining room tables and chairs as well as desks and entertainment units.

The company has been trading in Australia for more than 50 years. It rents two manufacturing facilities in Australia Brisbane and Melbourne and employs a total of 14 staff across its two factories.

According to the external financial statements prepared, the accounting net profit of the company (before income tax) for the year ended 30 June 2020 came to $1,326,000.

An extract of the Income Statement for the year ended 30 June 2020 is presented below:

Modani Furniture Pty Ltd

Income Statement (Extract)

for the year ended 30 June 2020

$

Income:

Sales revenue 14,780,000

Cash flow boost income 24,640

Gain on sale of vacant land 780,000

Total Income 15,584,640

Less: Cost of goods sold (c) (8,145,700)

Gross profit 7,438,940

Less: Expenses

Meal entertainment 8,400

Rent expense 480,000

Warranty expense (for accounting purposes) 12,500

Other tax-deductible expenses (d) 5,612,040

Total Expenses 6,112,940

Net profit before income tax $ 1,326,000

(a) Modani Furniture Pty Ltd is registered for the GST. Hence, all of the figures contained in the Income Statement on the previous page are shown GST-exclusive.

(b) The company adopts the accrual accounting method for the preparation of its year-end accounts.

(c) As the company is using a computerised accounting system, detailed inventory records are maintained and the company uses the perpetual inventory accounting method. Therefore, the opening and closing stock amounts are irrelevant for taxation purposes. Furthermore, there is no adjustment to either cost of goods sold or to sales revenue.

(d) "Other tax-deductible expenses" Includes such items as accounting fees, bank charges, cleaning, fringe benefits tax paid, insurance, interest, salaries and wages, superannuation, telephone and internet charges and workers compensation. Students can assume that the total amount of these "amounts (ie. $5,612,940) is also fully tax-deductible (ie. no adjustment is required for these expenses) and no additional questions relating to these items need to be asked.

Required:

The companys CEO, Joe Jackson, has approached you as he wants you to calculate the taxable income of the company for the year ended 30 June 2020.

Specifically, Joe asks you to show him what adjustments you made to the net profit of $1,326,000 to derive at the company's taxable income figure for the year ended 30 June 2020.

In other words, he wants you to show each individual adjustment as:

1. an increase to net profit;
2. a decrease to net profit; or
3. no adjustment to net profit (if so, explain why no adjustment is required).

There is no need to calculate the tax payable by the company, just its 2020 taxable income.

Note: Students should start their answer with the accounting net profit before income tax of $1,326,000 and make relevant adjustments to arrive at the companys taxable income for the year ended 30 June 2020.