Sari ran a proprietorship that generated $75,000 in profits in 2020.Included in these profits were: a) $10,000 - amortization expense; b) $5,000 - reasonable bad debt expense; c) $55,000 - cost of goods sold (closing inventory at market value); and $8,000 - meals and entertainment with clients.The business' capital cost allowance has been accurately calculated at $8,500 for the year.How much is Sari's business net income for tax purposes?
A)$73,500
B)$75,000
C)$80,500
D)$89,000

Question

Quizplus · Accepted Answer

To calculate Sari's business net income for tax purposes, we need to subtract the deductible expenses from the profits generated. The deductible expenses include amortization, bad debt, cost of goods sold, capital cost allowance, and other reasonable business expenses. Therefore, Sari's business net income for tax purposes is:
$75,000 - $10,000 - $5,000 - $55,000 - $8,000 - $8,500 = $80,500
Thus, the best choice is C.

Sari Ran a Proprietorship That Generated $75,000 in Profits in 2020.Included