Please solve scenario b. George Godhi has a sole proprietorship called Godhi Sports. It has no associated business and files itssales tax return on an annual basis.The Income Statement for the current year is as follows (all amounts are shown before applicableGST/HST amounts):Revenues:Fully Taxable Goods$270000Exempt Services68000$338000Less Expenses:Cost Of Goods Sold (All Taxable)($145000)Amortization Expense( 18000)Salaries And Wages( 20000)Rent( 19000)Interest Expense( 45000)Other Operating Expenses( 22000)( 269000)Income Before Taxes$ 69000Less: Federal And Provincial Income Taxes( 14000)Net Income$ 55000 Other Information:1. Godhi Sports had no beginning inventory balance while ending inventory balance totalled $18800.2. A capital expenditure was made during the year at an GST/HST inclusive cost of $55000. Theexpenditure was for equipment that will be used 60 percent for the provision of fully taxable goods.GST/HST was paid on the acquisition of all assets on which amortization is being taken during thisperiod.3. All of the Other Operating Expenses involved the acquisition of fully taxable supplies and wereacquired to assist in the provision of fully taxable supplies.4. The rent was not subject to GST/HST as it was paid to a non-registrant. The proportion of theleased property that is used for the provision of exempt services is 20 percent.Required: Calculate the net GST/HST payable or refund based on the 2 respective scenariosbelow:Scenario A: Assume Godhi Sports is located in Alberta (5% GST). Calculate the net GST payable orrefund to be remitted for the current year using the regular method.Scenario B: Assume Godhi Sports is located on Ontario (13% HST). Calculate the net HST payable orrefund to be remitted for the current year using the simplified input tax credit method.Assume all revenue earned and expenses incurred within the province. Ignore any PST considerations.

Simplified Input Tax Credit Method Amounts in $ Amounts in $ As per simplified input tax credit…

George Godhi has a sole proprietorship called Godhi Sports. It has no associated business and files its sales tax return on an annual basis. The Income Statement for the current year is as follows (all amounts are shown before applicable GST/HST amounts): Revenues: Fully Taxable Goods $270000 Exempt Services 68000 $338000 Less Expenses: Cost Of Goods Sold (All Taxable) ($145000) Amortization Expense ( 18000) Salaries And Wages ( 20000) Rent ( 19000) Interest Expense ( 45000) Other Operating Expenses ( 22000) ( 269000) Income Before Taxes $ 69000 Less: Federal And Provincial Income Taxes ( 14000) Net Income $ 55000

George Godhi has a sole proprietorship called Godhi Sports. It has no associated business and files its sales tax return on an annual basis. The Income Statement for the current year is as follows (all amounts are shown before applicable GST/HST amounts): Revenues: Fully Taxable Goods $270000 Exempt Services 68000 $338000 Less Expenses: Cost Of Goods Sold (All Taxable) ($145000) Amortization Expense ( 18000) Salaries And Wages ( 20000) Rent ( 19000) Interest Expense ( 45000) Other Operating Expenses ( 22000) ( 269000) Income Before Taxes $ 69000 Less: Federal And Provincial Income Taxes ( 14000) Net Income $ 55000

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 26P

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