Question

Can you solve the following question using the provided Excel template? Question 13 (20 points) The business will be run out of space that he has set aside in his residence. This space involves 25 percent of the total floor space in the residence. The residence was acquired on January 1, 2017, at a total cost of $345,000. It is estimated that $95,000 of this total value can be attributed to the land on which the residence is situated. For the year ending December 31, 2018, Mr. Collins has the following costs that can be associated with this residence: Utilities for Home (Heat, Light, and Water) - $2,580 Mortgage Interest Paid - $8,410 House Insurance - $600 Property Taxes - $3,800 Repairs and Maintenance for Home - $3,100 Total - $18,490 The business begins operations on March 1, 2018. On that date, Mr. Collins acquires the following assets to be used in his new business: Office Furniture and Storage Racks - $12,000 Computer - $1,650 Accounting Software - $750 In addition, he has a separate telephone line installed for dealing exclusively with the mail order business. The telephone charge includes charges for a toll-free number and a long-distance package. During the period March 1, 2018, through December 31, 2018, his mail order sales total $118,000. Costs associated with these sales are as follows: Cost of Merchandise Sold - $64,000 Unsold Merchandise (Lower of Cost and Market) - $11,500 Packaging Materials - $3,600 Shipping Costs - $5,800 Miscellaneous Office Supplies - $660 Telephone (Total Charge for the Period) - $1,350 Printing of Posters and Brochures Distributed - $680 Required: Compute the minimum net business income or loss that Mr. Collins must report in his 2018 personal income tax return. (17 marks) Note: Mr. Collins does not want to claim CCA on his personal residence. Calculation of minimum net business income Yes/No Amount Comments/Remarks Revenue Cost of merchandise sold Unsold Merchandise (Lower of Cost and Market) Packaging Materials Yes $3,600 Shipping Costs Yes $5,800 Misc. Office Supplies Yes $660 Telephone Yes $1,350 Printing of Posters and Brochures Yes $680 CCA Yes/No Amount Office Furniture and Storage Racks Calculation Yes/No Amount Computers Calculation

Can you solve the following question using the provided Excel template?

Question 13 (20 points)

The business will be run out of space that he has set aside in his residence. This space involves 25 percent of the total floor space in the residence.

The residence was acquired on January 1, 2017, at a total cost of $345,000. It is estimated that $95,000 of this total value can be attributed to the land on which the residence is situated. For the year ending December 31, 2018, Mr. Collins has the following costs that can be associated with this residence:

Utilities for Home (Heat, Light, and Water) - $2,580
Mortgage Interest Paid - $8,410
House Insurance - $600
Property Taxes - $3,800
Repairs and Maintenance for Home - $3,100
Total - $18,490

The business begins operations on March 1, 2018. On that date, Mr. Collins acquires the following assets to be used in his new business:

Office Furniture and Storage Racks - $12,000
Computer - $1,650
Accounting Software - $750

In addition, he has a separate telephone line installed for dealing exclusively with the mail order business. The telephone charge includes charges for a toll-free number and a long-distance package.

During the period March 1, 2018, through December 31, 2018, his mail order sales total $118,000. Costs associated with these sales are as follows:

Cost of Merchandise Sold - $64,000
Unsold Merchandise (Lower of Cost and Market) - $11,500
Packaging Materials - $3,600
Shipping Costs - $5,800
Miscellaneous Office Supplies - $660
Telephone (Total Charge for the Period) - $1,350
Printing of Posters and Brochures Distributed - $680

Required:

Compute the minimum net business income or loss that Mr. Collins must report in his 2018 personal income tax return. (17 marks)

Note: Mr. Collins does not want to claim CCA on his personal residence.

Calculation of minimum net business income

Yes/No
Amount
Comments/Remarks
Revenue
Cost of merchandise sold
Unsold Merchandise (Lower of Cost and Market)
Packaging Materials
Yes
$3,600
Shipping Costs
Yes
$5,800
Misc. Office Supplies
Yes
$660
Telephone
Yes
$1,350
Printing of Posters and Brochures
Yes
$680
CCA
Yes/No
Amount
Office Furniture and Storage Racks
Calculation
Yes/No
Amount
Computers
Calculation

Added by Jose Antonio C.

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