Simon Sayze formed a single-person window cleaning business in Prince George B.C., as a summer job. To start, on May 1, 2020 he deposited $3,000 in a new bank account called "Sayze cleaning" for this proprietorship to start purchasing needed items. The $3,000 consisted of a $1,500 loan from his father and $1,500 of his own money. Simon rented scaffolding equipment, purchased supplies, and hired high school students to assist with customer's windows. At the end of each month, Simon emailed bills to customers owing for services provided. On August 31, he was ready to return to university for the fall semester and closes up shop for summer #1. Simon has been so busy, he had forgot the importance of keeping records of payment! Using online bank statements, expense receipts, and a list of amounts owed/paid by customers, he had some serious accounting to do for the filing his 2020 income tax return. At August 31, the bank account shows a positive balance, so he's not worried about operations; just the CRA. Simon has yet to collect $3,000 from customers. On August 7th, he collects $5,000 from July's account customers. Services in August total $3,500 on account receivable, however payment is not expected till September. He made a payment from the business bank account June 6th for supplies kept in inventory, paying a total of $800. At August 31, he still has an inventory of cleaning products and other supplies left at a value of $150. Employees are paid $2,000 on Aug 22th, and are still owed $1,000 by August 31st. His marketing campaign consisted of brochures at a cost of $500 as paid on May 20th. Simon rented equipment from Scaffold Depot Ltd on May 1. The business signed a six-month lease on the equipment and paid $600 on May 1st for the full lease period (until April 30 2021). Simon had an accident with equipment, resulting in a further payment in cash of $300 for repairs on August 1st 2020. To transport employees, equipment, and supplies to jobs the business purchased a used truck and trailer for $5,000 on May 1. Simon figures that the summer's work used up one-fifth of the truck trailer's service potential. There was a bank transfer from the business bank account to Simon's personal bank account of $1,000 on June 13th. Simon also paid his father back $1,500 on August 20th. Simon would like to see if the business shall continue next summer.
Simon Sayze formed a single-person window cleaning business in Prince George B.C., as a summer job. To start, on May 1, 2020 he deposited $3,000 in a new bank account called "Sayze cleaning" for this proprietorship to start purchasing needed items. The $3,000 consisted of a $1,500 loan from his father and $1,500 of his own money. Simon rented scaffolding equipment, purchased supplies, and hired high school students to assist with customer's windows. At the end of each month, Simon emailed bills to customers owing for services provided. On August 31, he was ready to return to university for the fall semester and closes up shop for summer #1. Simon has been so busy, he had forgot the importance of keeping records of payment! Using online bank statements, expense receipts, and a list of amounts owed/paid by customers, he had some serious accounting to do for the filing his 2020 income tax return. At August 31, the bank account shows a positive balance, so he's not worried about operations; just the CRA. Simon has yet to collect $3,000 from customers. On August 7th, he collects $5,000 from July's account customers. Services in August total $3,500 on account receivable, however payment is not expected till September. He made a payment from the business bank account June 6th for supplies kept in inventory, paying a total of $800. At August 31, he still has an inventory of cleaning products and other supplies left at a value of $150. Employees are paid $2,000 on Aug 22th, and are still owed $1,000 by August 31st. His marketing campaign consisted of brochures at a cost of $500 as paid on May 20th. Simon rented equipment from Scaffold Depot Ltd on May 1. The business signed a six-month lease on the equipment and paid $600 on May 1st for the full lease period (until April 30 2021). Simon had an accident with equipment, resulting in a further payment in cash of $300 for repairs on August 1st 2020. To transport employees, equipment, and supplies to jobs the business purchased a used truck and trailer for $5,000 on May 1. Simon figures that the summer's work used up one-fifth of the truck trailer's service potential. There was a bank transfer from the business bank account to Simon's personal bank account of $1,000 on June 13th. Simon also paid his father back $1,500 on August 20th. Simon would like to see if the business shall continue next summer.
Chapter2: Income Tax Concepts
Section: Chapter Questions
Problem 25P
Related questions
Question
Corrections:
- reads "5000 was collected for July's sales." should read "$5000 in services (and cash collection) were complete each month at the end of may, june, july, and august."
- the scaffolding lease is for a year rental term.
Prepare the
Transcribed Image Text:Simon Sayze formed a single-person window cleaning business in Prince George B.C., as a summer job. To start,
on May 1, 2020 he deposited $3,000 in a new bank account called "Sayze cleaning" for this proprietorship to start
purchasing needed items. The $3,000 consisted of a $1,500 loan from his father and $1,500 of his own money.
Simon rented scaffolding equipment, purchased supplies, and hired high school students to assist with customer's
windows. At the end of each month, Simon emailed bills to customers owing for services provided. On August 31,
he was ready to return to university for the fall semester and closes up shop for summer #1. Simon has been so
busy, he had forgot the importance of keeping records of payment! Using online bank statements, expense receipts,
and a list of amounts owed/paid by customers, he had some serious accounting to do for the filing his 2020 income
tax return.
At August 31, the bank account shows a positive balance, so he's not worried about operations; just the CRA. Simon
has yet to collect $3,000 from customers. On August 7th, he collects $5,000 from July's account customers. Services
in August total $3,500 on account receivable, however payment is not expected till September.
He made a payment from the business bank account June 6th for supplies kept in inventory, paying a total of $800.
At August 31, he still has an inventory of cleaning products and other supplies left at a value of $150.
Employees are paid $2,000 on Aug 22th, and are still owed $1,000 by August 31st.
His marketing campaign consisted of brochures at a cost of $500 as paid on May 20th.
Simon rented equipment from Scaffold Depot Ltd on May 1. The business signed a six-month lease on the
equipment and paid $600 on May 1st for the full lease period (until April 30 2021). Simon had an accident with
equipment, resulting in a further payment in cash of $300 for repairs on August 1st 2020.
To transport employees, equipment, and supplies to jobs the business purchased a used truck and trailer for $5,000
on May 1. Simon figures that the summer's work used up one-fifth of the truck trailer's service potential.
There was a bank transfer from the business bank account to Simon's personal bank account of $1,000 on June
13th. Simon also paid his father back $1,500 on August 20th. Simon would like to see if the business shall continue
next summer.
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