An individual with a sole proprietorship business recorded accounting profits for the year of $268,400. The following expenses were included in this profit amount: amortization expense – $78,500; warranty reserve – $4,500; cost of goods sold – $162,000 (ending inventory at market value of $985,000); meals and entertainment – $34,600. Additional data related to the business’ operations during the year: expenses paid under warranty agreement – $3,200; ending inventory valued at cost – $994,000; allowable CCA for the year – $83,000.
What was the sole proprietorship’s business net income for tax
purposes?
a) $282,500
b) $272,900
c) $279,300
d) $265,200
e) none of the above
