Coffee CoBegan Operations in 20x0 and Recognized $37,000 in Business Income

question 5

Multiple Choice

Coffee Co.began operations in 20x0 and recognized $37,000 in business income and $1,000 in taxable capital gains that year.In 20x1,the company incurred a business loss of $25,000,a taxable capital gain of $2,000,and an allowable capital loss of $5,000.Business income for 20x2 was $50,000,taxable capital gains were $4,000,and the company received $10,000 in dividends from a taxable Canadian corporation.Coffee Co.utilizes any unused losses in the earliest years possible,Which of the following taxable incomes are correct after all carry-over adjustments have been made?

• A)20x0: $12,000; 20x1: $0; 20x2: $52,000
• B)20x0: $38,000; 20x1: ($28,000); 20x2: $64,000
• C)20x0: $13,000; 20x1: ($0; 20x2: $61,000
• D)20x0: $37,000; 20x1: $0; 20x2: $27,000

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A series of equal payments made at equal intervals, such as monthly or annually.

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An annuity for which the payment is due at the beginning of the period, as opposed to the end of the period.

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The value of an investment at a future date, considering compound interest or returns over time.