Reference no: EM132830980

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 paper 1,000
Advertising in a U.S. newspaper directed at Canadians living in the U.S. 2,000
Meals and entertainment 10,000
Property taxes on a vacant piece of land (which earns no income) adjacent to the business 2,500
Golf course fees for Jaylen 1,500
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:

Problem A) Calculate the net income for tax purposes for Jaylen's proprietorship.

Problem B) Explain why any items have been omitted.

Problem C) Briefly discuss how your answer in A) would change if Jaylen had valued the inventory at cost.