ACCT4453Assignment 3

 

 

Question 1

In 2016, Juanita received a salary of $62,000 and earned commission income of $9,000. Of the $9,000 earned from commissions, only $7,500 was received in 2016 with the remaining $1,500 received in January 2017. She also received a car allowance of $0.55 per employment kilometre (km). Juanita is required to pay her own expenses relating to her sales duties. She has paid the following expenses in 2016, all of which are considered reasonable:

 

Automobile operating costs (gas, repairs, insurance)

$7,200

Interest on loan to purchase a car

 1,200

Advertising and promotion items

2,000

Entertainment meals and drinks

1,000

Parking

400

Cost of new home computer (30% employment use)

1,100

Home office costs:

 

    Utilities – heat, water, electricity

4,800

    Mortgage interest

6,000

    Property taxes

3,000

    Insurance

800

 

Juanita purchased a new car two years ago for $25,000. At the end of 2015, the undepreciated capital cost of the car was $19,000. In 2016, she drove the car 24,000 km of which 16,000 were for employment purposes.

Juanita used her home office exclusively for her employment and routinely met there with clients. Normally, she worked one day a week from the home office and the other days at her employer’s place of business or out of the office visiting customers. Her home office occupies 5% of the space in her home.

Required:

(1)   Determine Juanita’s net income from employment for the 2016 taxation year. (assume the automobile for salespersons option has NOT been chosen by the employer under ITA 6(2.1). List separately any other deductions Juanita may have that are not part of her employment income calculation.

(2)   Calculate the automobile standby charge and operating benefit if Juanita’s employer supplied her with the car. (So, she would not get an allowance, nor does she pay anything toward the personal use of the car.)

 

(3)   Assume Juanita is self-employed salesperson. She operates her business out of her house (using the same 5% space). She earned $71,000 during the year, however, $1,500 is still owed to her and will likely be received in January 2016. Complete the T2125 (or include the relevant information from it).

 

 

Question 2

Cathy Carlson, CPA is a self-employed management consultant. Her business is called Carlson Consulting. She provides accounting and general business advice to her clients. In 2011, Cathy purchased a non-residential building for her office. It is a class 1 asset for CCA purposes.

At the beginning of the year, January 1, 2016, Cathy had unbilled work-in-process of $28,000, along with billed accounts receivables of $37,000. During 2016, her cash receipts total $105,000. On December 31, 2016, the unbilled work-in-progress has increased to $35,000 and the billed accounts receivables have increased to $42,000. Cathy elected to follow the rule under ITA 34 for professional businesses.

On January 1, 2016, the business had the following UCC balances:

              Class 1 Building                                                             $226,000

              Class 8 Furniture & fixtures                                           46,500

              Class 10 Vehicle (purchased for $20,300)    17,255

 

During January 2016, Cathy acquired a new computer for $1,800, along with applications software of $725.

During March 2016, the Class 10 vehicle was involved in an accident, requiring it to be written off. The insurance proceeds were $12,300. On April 1, Cathy replaced it by leasing a $32,000 vehicle for $475 per month. Both vehicles were used 100% for business purposes.

During July 2016, Cathy replaced some of the office furniture. The old furniture had a capital cost of $18,000, while the new furniture cost $34,000. Cathy received a trade-in allowance of $6,000 for the old furniture.

During September 2016, Cathy acquired a client list from an accountant who is retiring. The cost of the list was $47,000.

During 2016, the various costs of operating her business, determined using the accrual basis of accounting, were as follows:

Building operating costs

$24,500

Costs of operating the leased vehicle

7,200

Payment to assistants

13,500

General office costs

3,750

Meals with clients

4,200

 

Required:

Calculate the minimum net business income Cathy would need to include on line 137 of her T1. (Hint use the T2125 to help you)

SuperTutor

(15)

Status NEW Posted 20 Jun 2017 06:06 AM My Price 20.00

-----------

Attachments

file 1497941659-Solutions file.docx preview (56 words )

S-----------olu-----------tio-----------ns -----------fil-----------e -----------Hel-----------lo -----------Sir-----------/Ma-----------dam----------- T-----------han-----------k y-----------ou -----------for----------- yo-----------ur -----------int-----------ere-----------st -----------and----------- bu-----------yin-----------g m-----------y p-----------ost-----------ed -----------sol-----------uti-----------on.----------- Pl-----------eas-----------e p-----------ing----------- me----------- on----------- ch-----------at -----------I a-----------m o-----------nli-----------ne -----------or -----------inb-----------ox -----------me -----------a m-----------ess-----------age----------- I -----------wil-----------l b-----------e q-----------uic-----------kly----------- on-----------lin-----------e a-----------nd -----------giv-----------e y-----------ou -----------exa-----------ct -----------fil-----------e a-----------nd -----------the----------- sa-----------me -----------fil-----------e i-----------s a-----------lso----------- se-----------nt -----------to -----------you-----------r e-----------mai-----------l t-----------hat----------- is----------- re-----------gis-----------ter-----------ed -----------onÂ----------- th-----------is -----------web-----------sit-----------e. ----------- H-----------YPE-----------RLI-----------NK -----------&qu-----------ot;-----------htt-----------p:/-----------/wo-----------rkb-----------ank-----------247-----------.co-----------m/&-----------quo-----------t; -----------\t -----------&qu-----------ot;-----------_bl-----------ank-----------&qu-----------ot;----------- -----------Tha-----------nk -----------you----------- -----------

Not Rated(0)

• Buy Answer