Reference no: EM132779050

Albert also had a sole proprietorship that made personal protective equipment- specifically cloth masks. The busines was doing ok but when Covid happened the business soared. Business was booming so much that Albert was not even looking for a job when he returned to Newfoundland and Labrador. The business was doing so well, he decided not to look for employment but to concentrate all his efforts on the business.

The summary income statement is shown below for 2020 BEFORE any gains and losses on the disposition of any capital property in 2020

Gross Revenue       $650,000

Expenses:
Depreciation             43,000
Wages                  150,000
Operating expenses     238,000
Fee paid to CIBC for financing 12,000
Meals and entertainment     $7,000
Total expenses               $450,000
Net income                     $200,000

You have been provided with the following details re the Income Statement

1. Wages included $15,000 paid to his son Mike- he didn't really work in the business at all, but he had not other income so Albert thought it would reduce the family tax ill.

2. Albert required additional equipment to keep up with the demand, so he received a bank loan from CIBC. The bank charged him a financing fee of $12,000. The loan is a 10-year term loan.

Problem 1: What is business income of Albert?