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Question 1 Mercer Corp is a merchandizing company 2020 business results are provided below : Revenue 1,700,000 Cost of Goods Sold 825,000 Gross profit 875,000
| Question 1 | ||||||||||
| Mercer Corp is a merchandizing company | ||||||||||
| 2020 business results are provided below : | ||||||||||
| Revenue | 1,700,000 | |||||||||
| Cost of Goods Sold | 825,000 | |||||||||
| Gross profit | 875,000 | |||||||||
| Operating expenses | ||||||||||
| Advertisement and promotion | 350,000 | |||||||||
| Rent | 97,000 | |||||||||
| Insurance | 56,000 | |||||||||
| Amortization | 125,000 | Note 1 | ||||||||
| Salaries and wages | 290,000 | |||||||||
| Other expenses | 55,000 | Note 2 | ||||||||
| 973,000 | ||||||||||
| Net profit (loss) | (98,000) | |||||||||
| Notes | ||||||||||
| 1 | Amortization relates to furniture and equipment and computer equipment | |||||||||
| Opening UCC - class 8 | $50,000 | |||||||||
| Opening UCC - class 10 | $25,000 | |||||||||
| No additions or disposals during the year | ||||||||||
| 2 | Break-up of other expenses is provided below | |||||||||
| Meals and entertainment | 29,000 | |||||||||
| Fines and penalties | 4,700 | |||||||||
| Automobile allowance | 21,300 | Note 3 | ||||||||
| 55,000 | ||||||||||
| 3 | Mercer allows $1 for each km travelled to its employees. | |||||||||
| Required : | ||||||||||
| 1 | Determine the net income for tax for Mercer | |||||||||
| Question 2 | ||||||||||
| ABC Ltd. had acquired 2 items A and B in class 8 (20%). At the end of the year 2019 the UCC for the class was $6,500 | ||||||||||
| Cost item A | 7,000 | |||||||||
| Cost item B | 10,000 | |||||||||
| Item A was sold for $6,000 and item B was sold for $11,000 | ||||||||||
| Required : | ||||||||||
| Calculate the recapture and the capital gain | ||||||||||
| Question 3 | ||||||||||
| Alex purchased his rental Condo in 2020 and is trying to estimate the tax liability related to the Condo. | ||||||||||
| Note : No CCA was claimed on the property for 2020 | ||||||||||
| Price of the Condo | 250,000 | |||||||||
| Expenses | ||||||||||
| Rental income | 15,600 | |||||||||
| 2021 Condo management fee | 4,800 | |||||||||
| Legal fees (to acquire the Condo, paid in 2020) | 3,500 | |||||||||
| Question 1 | ||||||||||
| Mercer Corp is a merchandizing company | ||||||||||
| 2020 business results are provided below : | ||||||||||
| Revenue | 1,700,000 | |||||||||
| Cost of Goods Sold | 825,000 | |||||||||
| Gross profit | 875,000 | |||||||||
| Operating expenses | ||||||||||
| Advertisement and promotion | 350,000 | |||||||||
| Rent | 97,000 | |||||||||
| Insurance | 56,000 | |||||||||
| Amortization | 125,000 | Note 1 | ||||||||
| Salaries and wages | 290,000 | |||||||||
| Other expenses | 55,000 | Note 2 | ||||||||
| 973,000 | ||||||||||
| Net profit (loss) | (98,000) | |||||||||
| Notes | ||||||||||
| 1 | Amortization relates to furniture and equipment and computer equipment | |||||||||
| Opening UCC - class 8 | $50,000 | |||||||||
| Opening UCC - class 10 | $25,000 | |||||||||
| No additions or disposals during the year | ||||||||||
| 2 | Break-up of other expenses is provided below | |||||||||
| Meals and entertainment | 29,000 | |||||||||
| Fines and penalties | 4,700 | |||||||||
| Automobile allowance | 21,300 | Note 3 | ||||||||
| 55,000 | ||||||||||
| 3 | Mercer allows $1 for each km travelled to its employees. | |||||||||
| Required : | ||||||||||
| 1 | Determine the net income for tax for Mercer | |||||||||
| Question 2 | ||||||||||
| ABC Ltd. had acquired 2 items A and B in class 8 (20%). At the end of the year 2019 the UCC for the class was $6,500 | ||||||||||
| Cost item A | 7,000 | |||||||||
| Cost item B | 10,000 | |||||||||
| Item A was sold for $6,000 and item B was sold for $11,000 | ||||||||||
| Required : | ||||||||||
| Calculate the recapture and the capital gain | ||||||||||
| Question 3 | ||||||||||
| Alex purchased his rental Condo in 2020 and is trying to estimate the tax liability related to the Condo. | ||||||||||
| Note : No CCA was claimed on the property for 2020 | ||||||||||
| Price of the Condo | 250,000 | |||||||||
| Expenses | ||||||||||
| Rental income | 15,600 | |||||||||
| 2021 Condo management fee | 4,800 | |||||||||
| Legal fees (to acquire the Condo, paid in 2020) | 3,500 | |||||||||
| 2021 Mortgage interest | 360 | |||||||||
| Required : | ||||||||||
| Calculate the 2021 rental (property income) | ||||||||||
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College Accounting Chapters 1-15
Authors: James A Heintz, Robert W Parry
19th Edition
0324376162, 978-0324376166
