The following information is taken from the financial statements and audit working papers of Eldridge Asset Sales Inc. (EASI) for its fiscal year ended December 31, 2020. Eldridge Asset Sales Inc.

The following information is taken from the financial statements and audit working papers of Eldridge Asset Sales Inc. ("EASI") for its fiscal year ended December 31, 2020. Eldridge Asset Sales Inc. Condensed Unaudited Income Statement For the Year Ended December 31, 2020 Sales $16,650,000 Cost of goods sold (14,050,000) Gross profit S 2,600,000 Selling expenses $975,000 General and administrative expenses 195,000 (1,170.000) Net income before provision for income taxes $ 1.430,000 Provision for income taxes current $220,000 future 310,000 (530.000 Net income after tax 900.000 The following items were included in arriving at the above net income: 1.Included in sales for the year is a deposit of $8,200 received from a customer for goods that will be delivered next year. 2. During the year, a warehouse worker managed to remove valuable inventory worth $8,000 during the night shift by taking it out in his lunch box. 3. Late in the year, it became apparent that during the next year new competitive products would come on the market which would drive the price of EASI's products down. They expect this decline to take place in about six months. As a result, they decided to set up a reserve for a decline in the inventory value in the amount of $17,000. They have never set up this kind of reserve before. 4. Because EASI's products come back for repair under their warranty program, they set up a reserve for this expense on their financial statements. Last year the reserve was $76,000. This year they increased the reserve to $97,000, 5. Charitable donations were made in the amount of $9,000. 6. Golfclub membership fees in the amount of $2,600 were paid for the sales manager who used the club regularly to close sales. 7. The sales manager incurred expenses related to meals and entertainment at the golf club in the amount of $2,300 8. Management bonuses of $96,000 were accrued at December 31, 2020 ($35,000 was not paid until June 30, 2021 due to lack of sufficient funds). 9. The December holiday banquet for the employees cost $15,000. 10.EASI had a dispute with one of its major suppliers over the use of the supplier's product. As a result of a court decision, the supplier was awarded damages for breach of contract in the amount of $38,000. 11. In order to raise money for expansion, the company mortgaged the real estate it used in the business. It incurred accounting fees of $5,000 and appraisal fees of $2,000 related to this financing. The mortgage has a 10-year term and a 30-year amortization period. 12. A number of years ago, the company issued a bond at a discount. They have been amortizing this discount at the rate of $7,000 per year ever since, including this year. 13. During the year, the company bought the shares of another company. In completing this transaction, legal fees of $8,500 were incurred. 14. During the year, they borrowed to buy new equipment. The interest expense related to this was $23,000. 15. Instead of borrowing money at the bank, the company decided to pay their income tax instalments late. This resulted in an interest charge from the Canada Revenue Agency in the amount of $390. 16. A life insurance policy was taken out on the president's life in order to provide funding for the company in the event of his death. Life insurance premiums on this policy amounted to 54,600. 17. Business interruption insurance premiums of $3,300 were paid to protect the company in the event a fire forced them to close for a period of time. 18. Computer software costing S750 related to word processing was expensed because they always bought the upgrades each year. 19. Amortization expense on the fixed assets was $86,000. 20. An examination of the capital cost allowance schedule for 2020 provided the following opening balances for the undepreciated capital cost for each class of EASI's assets: Class 1 Class 8 Class 10 Class 12 Class 13 Class 44 Bbuilding Office furniture and equipment.. Trucks for transportation of goods Ssmall tools. Lleasehold improvements Patent and rights limited life $188,383 60,000 80,000 5.000 187.500 90,000 The following additional information was found in the 2020 fixed asset schedules working paper files. A. The building which cost $997,426 in 1992 was sold for $150,000. It was the only building in Class 1 at the time of its sale. A new building was purchased (non used) in April 2020 for truck. $750,000. Also, in February 2020 a lot adjacent to the new building, was purchased for $100,000 for use as a parking lot by employees and visitors. This lot was paved at a cost of $25,000. A fence was erected around an outside storage area near the new building at a cost of $40,000. B New office furniture was purchased for $20,000. This purchase replaced old assets which were sold for $5,000. None of the old assets was sold for more than capital cost. C Three small trucks purchased in 2015 for $12,000 cach were traded in for three new trucks. Each new truck was priced at $15,000, but this was reduced by a trade-in credit of $2,500 for cach old D. Some small tools were sold for a total of $7,000. All of these tools were sold at a price less than their capital cost. E. Leasehold improvements had been made to a leased warehouse at a cost of $225,000 in October 2018. The remaining length of the lease in that year was six years with two successive renewal options of three years cach. Further leasehold improvements were made to this warehouse in 2020 at a cost of $21,000. F.During 2020, an unlimited life franchise was purchased for S48,000. G.Accounting gains and losses on the above asset sales netted to nil. Required: Based on the foregoing information, Compute the income from business for tax purposes for Eldridge Asset Sales Inc. for its 2020 fiscal year. 1. Your answer should incude the following six column Item # Description Amount Action(Add back/Deduct/No adjustment Amount for adjustment Reason for ITA Adjustment Reference 2. Follow the sequence of information given above 1 to 20. 3. Show all calculations whether or not they seem relevant to the final answer. 4. Provde CCA calculation 5. State the assumptions if any information is not adequate for the balculation. The following information is taken from the financial statements and audit working papers of Eldridge Asset Sales Inc. ("EASI") for its fiscal year ended December 31, 2020. Eldridge Asset Sales Inc. Condensed Unaudited Income Statement For the Year Ended December 31, 2020 Sales $16,650,000 Cost of goods sold (14,050,000) Gross profit S 2,600,000 Selling expenses $975,000 General and administrative expenses 195,000 (1,170.000) Net income before provision for income taxes $ 1.430,000 Provision for income taxes current $220,000 future 310,000 (530.000 Net income after tax 900.000 The following items were included in arriving at the above net income: 1.Included in sales for the year is a deposit of $8,200 received from a customer for goods that will be delivered next year. 2. During the year, a warehouse worker managed to remove valuable inventory worth $8,000 during the night shift by taking it out in his lunch box. 3. Late in the year, it became apparent that during the next year new competitive products would come on the market which would drive the price of EASI's products down. They expect this decline to take place in about six months. As a result, they decided to set up a reserve for a decline in the inventory value in the amount of $17,000. They have never set up this kind of reserve before. 4. Because EASI's products come back for repair under their warranty program, they set up a reserve for this expense on their financial statements. Last year the reserve was $76,000. This year they increased the reserve to $97,000, 5. Charitable donations were made in the amount of $9,000. 6. Golfclub membership fees in the amount of $2,600 were paid for the sales manager who used the club regularly to close sales. 7. The sales manager incurred expenses related to meals and entertainment at the golf club in the amount of $2,300 8. Management bonuses of $96,000 were accrued at December 31, 2020 ($35,000 was not paid until June 30, 2021 due to lack of sufficient funds). 9. The December holiday banquet for the employees cost $15,000. 10.EASI had a dispute with one of its major suppliers over the use of the supplier's product. As a result of a court decision, the supplier was awarded damages for breach of contract in the amount of $38,000. 11. In order to raise money for expansion, the company mortgaged the real estate it used in the business. It incurred accounting fees of $5,000 and appraisal fees of $2,000 related to this financing. The mortgage has a 10-year term and a 30-year amortization period. 12. A number of years ago, the company issued a bond at a discount. They have been amortizing this discount at the rate of $7,000 per year ever since, including this year. 13. During the year, the company bought the shares of another company. In completing this transaction, legal fees of $8,500 were incurred. 14. During the year, they borrowed to buy new equipment. The interest expense related to this was $23,000. 15. Instead of borrowing money at the bank, the company decided to pay their income tax instalments late. This resulted in an interest charge from the Canada Revenue Agency in the amount of $390. 16. A life insurance policy was taken out on the president's life in order to provide funding for the company in the event of his death. Life insurance premiums on this policy amounted to 54,600. 17. Business interruption insurance premiums of $3,300 were paid to protect the company in the event a fire forced them to close for a period of time. 18. Computer software costing S750 related to word processing was expensed because they always bought the upgrades each year. 19. Amortization expense on the fixed assets was $86,000. 20. An examination of the capital cost allowance schedule for 2020 provided the following opening balances for the undepreciated capital cost for each class of EASI's assets: Class 1 Class 8 Class 10 Class 12 Class 13 Class 44 Bbuilding Office furniture and equipment.. Trucks for transportation of goods Ssmall tools. Lleasehold improvements Patent and rights limited life $188,383 60,000 80,000 5.000 187.500 90,000 The following additional information was found in the 2020 fixed asset schedules working paper files. A. The building which cost $997,426 in 1992 was sold for $150,000. It was the only building in Class 1 at the time of its sale. A new building was purchased (non used) in April 2020 for truck. $750,000. Also, in February 2020 a lot adjacent to the new building, was purchased for $100,000 for use as a parking lot by employees and visitors. This lot was paved at a cost of $25,000. A fence was erected around an outside storage area near the new building at a cost of $40,000. B New office furniture was purchased for $20,000. This purchase replaced old assets which were sold for $5,000. None of the old assets was sold for more than capital cost. C Three small trucks purchased in 2015 for $12,000 cach were traded in for three new trucks. Each new truck was priced at $15,000, but this was reduced by a trade-in credit of $2,500 for cach old D. Some small tools were sold for a total of $7,000. All of these tools were sold at a price less than their capital cost. E. Leasehold improvements had been made to a leased warehouse at a cost of $225,000 in October 2018. The remaining length of the lease in that year was six years with two successive renewal options of three years cach. Further leasehold improvements were made to this warehouse in 2020 at a cost of $21,000. F.During 2020, an unlimited life franchise was purchased for S48,000. G.Accounting gains and losses on the above asset sales netted to nil. Required: Based on the foregoing information, Compute the income from business for tax purposes for Eldridge Asset Sales Inc. for its 2020 fiscal year. 1. Your answer should incude the following six column Item # Description Amount Action(Add back/Deduct/No adjustment Amount for adjustment Reason for ITA Adjustment Reference 2. Follow the sequence of information given above 1 to 20. 3. Show all calculations whether or not they seem relevant to the final answer. 4. Provde CCA calculation 5. State the assumptions if any information is not adequate for the balculation