stone operates a concrete repair business. His condensed income statement for fiscal December 31, 2021 is shown below: Sales $202,000 Cost of Goods Sold (89,000) Gross Profit 113,000 Operating Expenses (41,000) Employee Bonus (8,000) Convention Costs (6,200) Loss on Sale of Assets (3,400) Net Income $54,400 Other Information: 1. Operating expenses include a $3,000 penalty to a
Sam Winchstone operates a concrete repair business. His condensed income statement for fiscal December 31, 2021 is shown below:
Sales $202,000
Cost of Goods Sold (89,000)
Gross Profit 113,000
Operating Expenses (41,000)
Employee Bonus (8,000)
Convention Costs (6,200)
Loss on Sale of Assets (3,400)
Net Income $54,400
Other Information:
1. Operating expenses include a $3,000 penalty to a customer for a delay in completing a contract, $6,500 in amortization expense, a $4,500 golf membership for Sam that he uses mainly for clients and $2,600 in meals and entertainment costs.
2. Operating expenses also include $25,000 in wages to his 15 year old brother, Dean. Dean came in on Saturdays to help file paperwork. Sam could have hired an experienced adult from a temporary agency for $4,000. Dean was the only employee for the business for the year.
3. The employee bonus will be paid to Sam on January 31, 2022.
4. Sam travelled to Montreal to attend the Canadian Home Renovators convention where he learned new techniques to use in his business. Of the convention costs, $1,700 was for airline tickets for his wife who travelled with him.
5. Sam sold old computer equipment which resulted in a terminal loss of $500. CCA on the remaining
6. Sam used one room of his eight room house to operate his business. During 2021, Sam had the following costs related to his house:
Utilities 2,400
Property taxes 1,500
Mortgage interest 13,000
Repairs 500
Insurance 700
CCA 8,000
Total 26,100
Required: Using a RECONCILIATION APPROACH, calculate Sam’s minimum Business Income for the year ending December 31, 2021. In preparing your solution, ignore any deductions associated with Canada Pension Plan. In addition, provide reasons for any items that were excluded from your calculations
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