• Ziggy’s Inc. is a retailer of highly specialized clothing that opened for business on May 1, 2019, in a leased store in a strip mall. A condensed income statement for Ziggy’s Inc. for its year, ended December 31, 2022, shows the following: Ziggy’s Inc. Condensed Income Statement For the Year Ended December 31, 2022 ($) Sales 1,932,000 Cost of sales (1,439,000) Gross profit 493,000 General and administrative expense (279,000) Other (54,000) Income before income taxes 160,000 Income tax expense (13,000) Net income 147,000 An analysis of the cost of sales account revealed that the inventory is valued at average cost within each of the different styles carried. Since the owner is still learning what has appeal, a “mark-down rack” has become a common fixture at the back of the store. The tagged prices of the mark-downs are less than their costs, at December 31, 2022 by $700. This difference has not been recorded in the financial statements. Cost of goods sold includes a charge of $1,800 to set up an allowance for returns (at 0.1% of sales) that are not subsequently saleable at full retail price. No such allowance was recorded last year-end because the company only discovered that the allowance was necessary this year. The company paid to Sun Insurance Limited during the year the group term life insurance for the four full- time employees $2,200. Ziggy’s Inc. is the beneficiary of the insurance policy on the president. The term life insurance policy on the president was assigned to the bank as collateral for a $500,000 loan from January 1 through August 30, 2022. The loan was repaid on September 1, 2022 in favour of an operating line of credit. Page 2 of 6 The following selected information was taken from the “Promotions” account: $ Charitable donation to the local United Way 4,500 Political contributions to the local politicians 2,500 Hockey tickets given to suppliers as Christmas gifts 2,800 Meals and entertainment incurred by the owner while negotiating with suppliers 2,000 Golf green fees incurred while entertaining suppliers 1,800 Two customer parties and one staff party — full costume occasions (staff and “significant others” make up about one-third of the attendees) 12,000 Account total 25,600 The company’s “Professional expense” account included the following legal and accounting fees: Accounting fees for yearend work and monthly bookkeeping 15,000 Legal fees incurred on the purchase of capital assets during the year 2,000 Legal and accounting fees incurred in connection with negotiations for a line of credit at the bank 4,000 Account total 21,000 In 2021, the company incurred fees of $1,000 to issue shares to the president and CEO. Other expenses deducted in the financial accounting computation of income include: Depreciation and amortization 47,000 Interest on the loan and operating line of credit 7,500 Interest on insufficient income tax instalments 400 Purchase of additional store fixtures bought at a going-out-of-business sale; expensed due to their small dollar amount 1,500 Damages under a breach of contract suit initiated by a supplier 1,700 Total 58,100 Added to the capital asset account for leasehold improvements this year is $15,000. This amount represents the store’s share of new landscaping of the strip mall premises that was undertaken after road work was done in front of the mall. You have correctly determined that Ziggy’s Inc. is entitled to a $50,000 capital cost allowance amount claim in 2022. Required: Based on the foregoing information, compute the income from business for tax purposes for Ziggy’s Inc. for its 2022 fiscal year. Show all calculations whether or not they seem relevant to the final answer. Comment briefly on why any items were omitted from the calculation.