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taxation business income Part 2 Aaron Hill is the sole shareholder of Hill Enterprises Ltd., a small retail shop selling locally made arts and crafts.
taxation business income
Part 2 Aaron Hill is the sole shareholder of Hill Enterprises Ltd., a small retail shop selling locally made arts and crafts. The shop has been in operation for several years and has a calendar fiscal year. Aaron provides you with the Income Statement for the corporation for December 31, 2020. Hill Enterprises Ltd. Income Statement For the year ended December 31, 2020 Income $ Sales Cost of sales 640,000 S 52,000 24,200 Opening inventory Purchases 76,200 Closing inventory 64,000 Total Cost of Goods Sold 12,200 Gross profit 627,800 3,600 4,800 25,600 7,000 Expenses Accounting and legal expenses (Note 2) Advertising and promotion expenses (Note 3) Depreciation expense (Note 4) Automobile expenses Bad debts expense (Note 5) Insurance expense (Note 6) Interest expense Office expenses (Note 7) Rent expense Wages and benefits expenses (Note 8) 3,400 7,800 18,400 10,500 34,000 102,000 Total expenses 217.100 Net income $ 410,700 Notes to the financial statements 1. 2. 3. Hill Enterprises Ltd. is a small business corporation operated by the sole shareholder, Aaron Hill. Accounting and legal includes legal fees related to Aaron's dispute in regards to a personal caraccident in the amount of $1,960. Advertising and promotion includes 'Meals and Entertainment' costs in the amount of $4,210. Information for Capital Cost Allowance (CCA) purposes-the CCA for 2020 was as follows: Class 8 (Office & General Equipment): $9,060 4. 5. 6. Class 10 (Automotive Equipment): $7,200 The company has set up an allowance for doubtful accounts based on a review of the Accounts Receivable at December 31 of the current year. This is a procedure that the proprietorship followsevery year. Insurance includes life insurance premiums for Aaron Hill in the amount of $2,600. This life insurancepolicy is required as collateral for the business bank loan. Office expenses include the $5,600 purchase of laptop computers on January 15, 2020. Wages and benefits includes the club dues/membership fees paid to the Royal Oak Club in the amountof $5,920. The club dues are paid for the five managers who take clients to the Royal Oak Club on a regular basis for business purposes. 7. 8. Required Calculate the net business income for Hill Enterprises Ltd. for 2020Step by Step Solution
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