Gamma Systems Ltd.
GAMMA SYSTEMS LTD. BALANCE SHEET For the five months ended August 31, 2014 UNAUDITED August 31, 2014 ASSETS Cash 1,400
Accounts receivable & Sundry 3,000 Gym equipment (net of depreciation) 1,600
LIABILITIES Loans payable 1,000
Shareholder's advances 2,400
Income taxes payable 413
SHAREHOLDER'S EQUITY Stated Capital Issued 100 Common shares 100 Retained Earnings 2,087
GAMMA SYSTEMS LTD. Non-Consolidated Statement of Income and Retained Earnings For the five months ended August 31, 2014 UNAUDITED August 31, 2014 REVENUES Sales 7,500
Cost of sales 3,100
Gross profit 4,400
EXPENSES Amortization 400
Salaries and benefits 1,500
NET INCOME 2,500
Provision for income taxes 413
NET INCOME AFTER TAXES 2,087
Retained Earnings, beginning of year - Dividends -
Retained Earnings, end of year 2,087 b) Jesse’s compensation.
There are two options for Jesse to withdraw funds from the corporation: through paying himself a salary or by paying himself dividends. The tax treatment of each option may influence Jesse’s decision. He would pay minimum tax by taking the $1,500 in salary and would also help reduce the tax liability for his corporation. If he takes a dividend, he would pay approximately 29% tax on non-eligible...
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