Reference no: EM132965891

The records for Oxtongue Inc. show the following data for calendar 2020:

a) Gross profit on instalment sales recorded on the books was $100,000. Gross profit from collections of instalment receivables was $50,000.

b) Golf club dues were $3,800.

c) Machinery was acquired in January 2020 for $300,000. Oxtongue uses straight-line depreciation over a ten-year life (no residual value). For tax purposes, Oxtongue uses CCA at 14% for 2020 after considering the half-year rule.

d) Dividends received from a Canadian corporation were $ 4,000.

e) The estimated warranty liability related to 2020 sales was $19,600. Warranty repair costs paid during 2020 were $13,600. The remainder will be paid in 2021.

f) Pre-tax accounting income is $250,000. The enacted income tax rate is 25%.

Required

Problem 1: Prepare a schedule (starting with pre-tax accounting income) to calculate taxable income.