Reference no: EM132794222
Jaylen Abbas runs a small proprietorship. You have been provided with the following financial information pertaining to his business:
Sales$150,000
Cost of goods sold*80,000
Advertising in a local paper1,000
Advertising in a U.S. newspaper directed at Canadians living in the U.S.2,000
Meals and entertainment10,000
Property taxes on a vacant piece of land (which earns no income) adjacent to the business2,500
Golf course fees for Jaylen1,500
Cost of one convention held on a cruise ship in the Mediterranean Sea sponsored by a Canadian fishing association.2,000
(*All closing inventory is valued at market value.)
Required:
A) Calculate the net income for tax purposes for Jaylen's proprietorship.
B) Explain why any items have been omitted.
C) Briefly discuss how your answer in A) would change if Jaylen had valued the inventory at cost.