Canadian Controlled Private Company Case Study: Opco Ltd.
Opco Ltd., is a Canadian Controlled Private Corporation which manufactures soap and bath products. The company’s Statement of Income for the year ended December 31, 2015 is as follows: Opco Ltd.
Statement of Income
For the Year Ended December 31, 2015 Sales Revenues $2,400,000
Cost of Goods Sold 960,000
Gross Profit 1,440,000 Sales and Administrative Expenses: Salaries 600,000
Depreciation expense 60,000
Bad debt expense …show more content…
Included in salaries expense is a $25,000 bonus to Mr. Kraft, the majority shareholder and President of the company. The bonus was paid on August 3rd, 2016.
2. Included in General & Administrative expenses are the following:
a) $1,600 in life insurance premiums on a policy that was taken out on the life of the president. In the event of his death, the policy will be used to pay the bank loan. The policy was not a condition for obtaining the bank loan.
b) The company incurred $3,000 in legal and accounting costs when it issued preferred shares. c ) The company made a charitable donation of $1,000 which it deducted as a business expense. d) The company incurred $3,200 of landscaping costs. $700 of this amount was accrued at year-end. h) $300 in property taxes on vacant land. 3. On December 13th, the company received $10,000 from a customer for goods that were delivered in February of 2016. 4. In 2014, the company claimed a reserve of $23,000 for doubtful accounts. The appropriate reserve for 2015 is $17,000.
5. The company’s January 1, 2015, NBV’s of depreciable assets were as follows. Class 1: 540,000 Class 3: 80,000 Class 8: 75,000 Class 10: 120,000 Class 10.1: 25,000 Class 12: 26,000 Class 13: 400,000 Class 29:
Statement of Income
For the Year Ended December 31, 2015 Sales Revenues $2,400,000
Cost of Goods Sold 960,000
Gross Profit 1,440,000 Sales and Administrative Expenses: Salaries 600,000
Depreciation expense 60,000
Bad debt expense …show more content…
Included in salaries expense is a $25,000 bonus to Mr. Kraft, the majority shareholder and President of the company. The bonus was paid on August 3rd, 2016.
2. Included in General & Administrative expenses are the following:
a) $1,600 in life insurance premiums on a policy that was taken out on the life of the president. In the event of his death, the policy will be used to pay the bank loan. The policy was not a condition for obtaining the bank loan.
b) The company incurred $3,000 in legal and accounting costs when it issued preferred shares. c ) The company made a charitable donation of $1,000 which it deducted as a business expense. d) The company incurred $3,200 of landscaping costs. $700 of this amount was accrued at year-end. h) $300 in property taxes on vacant land. 3. On December 13th, the company received $10,000 from a customer for goods that were delivered in February of 2016. 4. In 2014, the company claimed a reserve of $23,000 for doubtful accounts. The appropriate reserve for 2015 is $17,000.
5. The company’s January 1, 2015, NBV’s of depreciable assets were as follows. Class 1: 540,000 Class 3: 80,000 Class 8: 75,000 Class 10: 120,000 Class 10.1: 25,000 Class 12: 26,000 Class 13: 400,000 Class 29: