Sam Runs a Proprietorship That Generated $75,000 in Profits in 20x0

question 6

Multiple Choice

Sam runs a proprietorship that generated $75,000 in profits in 20x0. Included in these profits are: 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. Sam's capital cost allowance has been accurately calculated at $8,500 for the year. How much is Sam's business net income for tax purposes?

• A) $73,500
• B) $75,000
• C)$80,500
• D) $89,000

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Definitions:

Reaction

A process in which one or more substances are changed into others by the reorganization of their atoms.

HCl

Hydrogen chloride, a diatomic molecule consisting of a hydrogen and a chlorine atom, known for its role as a strong acid when dissolved in water.

Alcohols

Organic compounds characterized by one or more hydroxyl (-OH) groups attached to a saturated carbon atom.

HBr

Hydrogen bromide, a diatomic molecule consisting of hydrogen and bromine, used as a reagent in many chemical reactions.