Bruce also requires a calculation of taxable income for the most recent year ended December 31, 2019. The calculation should be prepared in Excel. He has also requested that you prepare the year-end journal entry for taxes payable using a marginal rate of 14% on income less than the small business deduction. Bruce has provided you with the draft statement of income and retained earnings (Appendix II) and additional information you will need (Appendix III). Appendix II Quality Cabinets In Statement of income and retained earning For the period ended December 31 (Draft)
Current year Prior year
(Draft) (Audited)
Sales $ 8,959,800 $ 8,834,000
Cost of sales 5,949,648 6,129,709
Gross profit 3,010,152 2,704,291
Expenses:
Advertising and promotion 357,900 266,500
Amortization 219,163 166,584
Automobile 140,800 102,600
Bad debts 17,250 19,110
Donations 1,200 1,000
Dues and fees 7,500 —
Insurance 69,600 57,200
Interest and bank charges 119,203 46,600
Office 101,200 108,700
Professional fees 67,700 34,800
Property taxes 44,700 40,900
Repairs and maintenance 207,100 155,100
Rent expense 84,654 —
Salaries and wages 1,160,460 1,175,600
Travel 117,666 103,900
Utilities 67,600 60,200
Warranty 72,059 69,482
Income before taxes 154,397 296,015
Income taxes (Note 1) 70,000 76,754
Net income 84,397 219,261
Retained earnings, opening 2,571,214 2,360,953
Dividends 48,750 9,000
Retained earnings, closing $ 2,606,861 $ 2,571,214