Corner Pharmacy is a chemist shop. It provides no credit sales but accepts major

Question

Corner Pharmacy is a chemist shop. It provides no credit sales but accepts major credit cards. It sells items off the shelf and the proprietor fills prescriptions for cash and for payments made under the Pharmaceutical Benefits Scheme [PBS]. Three (03) assistants are employed. The following financial data is provided: Cash sales --------------------------------$300,000 Credit card sales------------------------$150,000 Credit card reimbursements -----------$160,000 PBS: - Opening balance ---------------$25,000 - Closing balance ---------------$30,000 - Billings --------------------------$200,000 - Receipts ------------------------$195,000 Stock - Opening stock------------------------------$150,000 - Purchases-----------------------------------$500,000 - Closing stock -------------------------------$200,000 Salaries ----------------------------------------$60,000 Rent --------------------------------------------$50,000. Requirement. On the assumptions that an accrual basis applies and the cost of sales and other outlays are allowable deductions for tax purposes, calculate the pharmacy’s taxable income.    Corner Pharmacy is a chemist shop. It provides no credit sales but accepts major credit cards. It sells items off the shelf and the proprietor fills prescriptions for cash and for payments made under the Pharmaceutical Benefits Scheme [PBS]. Three (03) assistants are employed. The following financial data is provided: Cash sales --------------------------------$300,000 Credit card sales------------------------$150,000 Credit card reimbursements -----------$160,000 PBS: - Opening balance ---------------$25,000 - Closing balance ---------------$30,000 - Billings --------------------------$200,000 - Receipts ------------------------$195,000 Stock - Opening stock------------------------------$150,000 - Purchases-----------------------------------$500,000 - Closing stock -------------------------------$200,000 Salaries ----------------------------------------$60,000 Rent --------------------------------------------$50,000. Requirement. On the assumptions that an accrual basis applies and the cost of sales and other outlays are allowable deductions for tax purposes, calculate the pharmacy’s taxable income.    - Closing balance ---------------$30,000 - Billings --------------------------$200,000 - Receipts ------------------------$195,000 Stock - Opening stock------------------------------$150,000 - Purchases-----------------------------------$500,000 - Closing stock -------------------------------$200,000 Salaries ----------------------------------------$60,000 Rent --------------------------------------------$50,000. Requirement. On the assumptions that an accrual basis applies and the cost of sales and other outlays are allowable deductions for tax purposes, calculate the pharmacy’s taxable income.   

Explanation / Answer

Total Sales

Cash Sales

300000

Credit Card sales

150000

PBS Billing

200000

Total Sales

650000

Cost of sales

Opening Stock(1)

150000

Purchase(2)

500000

Closing stock (3)

200000

Cost of goods sold (1+2-3)

450000

Sales 1

650000

Cost of goods sold 2

-450000

Salaries 3

-60000

Rent 4

-50000

Total Taxable Income(1+2+3+4)

90000

Total Sales

Cash Sales

300000

Credit Card sales

150000

PBS Billing

200000

Total Sales

650000

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