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ABC Inc. Statement of Income For the period October 1, 2018 to September 30, 2019 Revenue                           &nb

ABC Inc.

Statement of Income

For the period October 1, 2018 to September 30, 2019

Revenue                                                                                                                       $15,800,000

Operating Expenses:

Rent                                                                                                      1,350,000

Advertising expense                                                                       1,105,000

Bad Debts                                                                                             179,000

Salaries and wages                                                                         3,800,000           

Interest                                                                                                3,150,000

Accounting and legal                                                                         195,000

Meals and entertainment                                                            1,300,000

Amortization                                                                                         750,000

Repairs and maintenance                                                                500,000

Automotive                                                                                        2,120,000        

                                                                                                                                               

Net Income from Operations                                                                             1,351,000                                                   

Gain on disposal of asset                                                                                         350,000

Net income before taxes                                                                                      1,701,000  

Income Taxes                                                                                                               635,000

Net Income                                                                                                            $1,066,000

Additional Information relating to the preparation of the statement of income for the period:

  1. Legal fees of $120,000 were accrued at September 30, 2019 to reflect an estimate of potential legal fees for a threatened lawsuit against the company.
  2. The company paid XYZ Advertising Inc. a total of $600,000 for advertising services for the period. It was decided that $243,000 be expensed in the current period and the remaining amount be capitalized as the company will benefit from this outlay in the following year.
  3. Included in salaries and wages is a bonus accrual to the shareholder in the amount of $1,250,000. This amount was paid to the shareholder with appropriate source deductions (Income tax, CPP) on March 30, 2020.
  4. Included in interest expense is $23,500 of interest paid to CCRA for late tax installments.
  5. Included in repairs and maintenance is an accrual of $185,000 that represents potential warranty work for defective items sold.
  6. Automotive expenses consists of company owned and or leased vehicles provided to employees of the company to perform their employment duties.
  7. During the period the company sold its land and building and moved into rental space. The company received $1,900,000 for the sale of the land and building. The land and building had an original cost of $350,000 and $950,000, respectively. The undepreciated capital cost (UCC) of the building at October 1, 2018 was $949,000.
  8. For the period, the company is eligible to claim CCA of $340,000 on assets in various classes.

Solutions

Expert Solution

INCOME STATMENT OF ABC INC FOR THE PEROID ENDED ON SEPTEMBER 2019.

PARTICULARS AMT IN $'000 AMT IN $'000
INCOME
- revenue from operation 15800
-other income :-
(1) gain on disposal of assests 1701 17501
total income (A)
EXPENSES
-rent 1350
-advertiseing 1105
(less :- c/f for next years 357 748
bad depts 179
salary & wages 3800
less :- bonus of share holder incuded 1250 2550
intrest 3150
less:- ccra tax istallments 23 3127
accounting & legal 195
add:- legal fees 120 315
meals & entertainment 1300
amortization 750
repair & maintances 500
less:- warranty work expense 185 315
automotive 2120
deprication of building @ 10% 94
add:- cca assests claim 340 434
TOTAL EXPENSES(B) 13188
PROFIT BEFORE TAX (A-B) 4313
less :- Income tax 635
NET PROFIT 3678

so as per above we will perpare income statment of ABC co pvt ltd.

ekkarill92 answered 1 year ago
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