Brandon and Christian own Tiki Tours company, a Canadian incorporated company which plans sea cruises around the beautiful islands of Antigua and the Caribbean. They have come to you to file their taxes, and as a junior associate on the file, you've been asked to complete the schedule 1 adjustments to calculate Net Income for Tax Purposes.
Tiki Tours Year ended Dec 31 2016 Statement of Earnings
Revenue 680,000
Selling & Admin Expenses Advertising Expense 12350
Amortization Expense 18000
Depreciation Expense 8020
Salaries and wages 135000
Yacht club dues 24600
office expenses 1860
Bad debts 3500
Insurance expense 29250
interest expense 10000
Meals and entertainment 62000
Donation expense 9000
Total Expenses 313580
Operating Income 366,420
Income Tax expense 128247
Net Income 238,173
Other Information
1. During the year, the company estimated uncollectable accounts of $2800. This was increased from last year's estimate of $3200. They always claim a reserve when available.
2. The company had taken a reserve in 2015, based on a large scale cruise they were organizing. The revenue of which was $350,000 and the estimated profit from the cruise would be $160,000. The customers agreed to make 3 equal payments before their cruise date. The first payment was received on March 1 2016.
REQUIRED: Calculate Tiki Tour's Net income for tax purposes and provide any additional advice you think these clients should have. (Be sure to list any assumptions you make, and reference your tax sources).