Bella Buster Ltd started operations in Whitby in 20X7.The company reported the following in its first two years of operations:20X720X8Earnings (loss)Depreciation(assets have a costof $210,000)CCA$110,000($150,000)$20,000$20,000$35,000$45,000Non-deductibleexpenses$15,000$10,000Tax Rate30 %30%Required(a) What is the amount of taxable income for each year?(b) How much is the tax refund to be claimed in 20X8?(c) How much is the tax expense (recovery) in 20X8, assuming the use of the losscarryforward is not probable? Show the journal entries.

Journal entries refer to the process of systematic documentation of the financial transactions of a…

Bella Buster Ltd started operations in Whitby in 20X7. The company reported the following in its first two years of operations: 20X7 20X8 Earnings (loss) Depreciation (assets have a cost of $210,000) $110,000 ($150,000) $20,000 $20,000 CCA $35,000 $45,000 Non-deduuctible

Bella Buster Ltd started operations in Whitby in 20X7. The company reported the following in its first two years of operations: 20X7 20X8 Earnings (loss) Depreciation (assets have a cost of $210,000) $110,000 ($150,000) $20,000 $20,000 CCA $35,000 $45,000 Non-deduuctible

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

100%

Bella Buster Ltd started operations in Whitby in 20X7.
The company reported the following in its first two years of operations:
20X7
20X8
Earnings (loss)
Depreciation
(assets have a cost
of $210,000)
CCA
$110,000
($150,000)
$20,000
$20,000
$35,000
$45,000
Non-deductible
expenses
$15,000
$10,000
Tax Rate
30 %
30%
Required
(a) What is the amount of taxable income for each year?
(b) How much is the tax refund to be claimed in 20X8?
(c) How much is the tax expense (recovery) in 20X8, assuming the use of the loss
carryforward is not probable? Show the journal entries.

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