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Question 17 {3? Marks} London Supplies is a proprietorship owned by John Forthwell. For the taxation year ended December 31, 201?, John has determined that

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Question 17 {3? Marks} London Supplies is a proprietorship owned by John Forthwell. For the taxation year ended December 31, 201?, John has determined that his Net Income for accounting purposes is $87,000. In calculating this figure, John used generally accepted accounting principles. Other Information: 1. As the business is unincorporated, no taxes were deducted in calculating Net Income. 2. In determining accountingNetIncome, John deducted $33,200 in Amortization Expense. For the taxation year ending December 31, 2017, John has determined that maximum CCA would be $43,500. 3. Accounting expenses included a reserve for bad debts of $4,500 and a reserve for inven tory obsolescence of $8,500. 4. During the year, London Supplies spent $5,300 for landscaping the grounds around its Winnipeg office. In accordance with generally accepted accounting principles, this amount was treated as a capital expenditure. As the work was done late in the year, no amortization was deducted for the current year. 5. Accounting expenses included $1 2,000 in business meals, as well as $2,300 in charitable donations. 6. The business spent $3,500 for advertisements on a U.S. radio station. As the station is on the border with Manitoba, the audience for this station is largely Canadian residents. 2. John spent $6,200 for advertising circulars, charging the full amount to expense. At December 31, 201?, onehalf of these circulars were still on hand. 8. One of John's employees stole cash in the amount of $1,100. As the individual has left town, this amount is unlikely to be recovered. 9. The following additional items were included in the accounting expenses: Cost Of Sponsoring Local Hockey Team 15 2,100 Interest Paid On Building Mortgage 6,300 Appraisal Costs On Land To Be Sold 2,100 Damages Resulting From Breach 0f Contract 1,400 10. Also included in the accounting expenses were $2,000 in fees paid to John's 16 year old son for creating and maintaining the web site of London Supplies. In pricing this work, John found that it would cost at least $3,000 to obtain the equivalent services from an outside consultant. Required: Calculate the minimum net business income for London Supplies that will be included in John Forthwell's tax return for the year ending December 31, 201 2.1ndicate why you have not included any of the preceding items in your calculations

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