Grace works evenings and weekends as a computer consultant. On…
Question Answered step-by-step Grace works evenings and weekends as a computer consultant. On… Grace works evenings and weekends as a computer consultant. On weekdays she is employed full-time as a network administrator with Apple Ltd., a Canadian-controlled private corporation. Grace has an office downtown where she organized her consulting business where she takes care of paperwork as well as the assembly and repair of computers. The rent she pays is $1,600 per month. The following information was provided by Grace.Grace’s home condo fees$2,900Mortgage interest on condo 9,250Telephone bills at the office downtown 900Deductible CCA on computer equipment used for diagnostic purposes1,700The telephone is used for business. In addition, Grace uses her personal phone in the Condo for Long-distance bills for a business total $350. All consulting revenues are deposited into her personal account but she keeps a record in her consulting journal. All payments for supplies are paid out of her personal bank account. She provided you with the following information from her cheque book. Money received for consulting services$65,000Cheques issued: CompWorld for parts19,000Computer Association500Savoir Faire cocktail party for clients800Future Shop for a television and DVD player2000Straw Warehouse for office room furniture5,500Computer World magazine subscription150Notes:By looking at Grace’s last year’s tax return, you notice she claimed a reserve of $900 for amounts not collected. This year, $2,400 is outstanding on doubtful customers’ accounts. Grace’s records indicate that she was unable to collect $400 for two jobs completed last year.At the beginning of the year, Grace had $2,500 worth of parts. At the end of the year, she held an inventory of widgets that had dropped drastically in price; while the original cost was $2,000, the replacement cost is only $1,200.Grace would like you to calculate her income from business for tax purposes. Explain why any items above were omitted from the calculation. Law Social Science Tax law ACCT TAXATION Share QuestionEmailCopy link Comments (0)
