Ed's Appliances Ltd (Ed's) sold a furnace to a customer in October, 2022 for $10,000....
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Ed's Appliances Ltd (Ed's) sold a furnace to a customer in October, 2022 for $10,000. The mark-up on the $5,000 cost of the furnace was 100%. The customer paid 20% of the purchase price on delivery, with the remainder of the purchase price due in March 2023. What is the maximum reserve Ed's can claim for the taxation year ending November 30, 2022?
a. None of the above. (This is the correct answer but I'd like to know the solution step-by-step)
b. $8,000.
c. $2,000.
d. $4,000.
e. $6,000.
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