Question

During the year ending December 31, 2018, Ramona Collins has employment income before the deduction of any RPP contributions of $40,000, a net business loss of $16,000, interest income of $6,000, and income from royalties of $7,000. The royalties were on a book written by Ms. Collins in her undergraduate years at university. She has no Unused RRSP Deduction Room from previous years. She is a member of a Deferred Profit-Sharing Plan in which, during 2018, her pension adjustment was $3,000. Her maximum deductible Registered Retirement Savings Plan contribution for 2019 is:

Select one:

a. $2,580

b. $1,320

c. $5,580

d. $3,660

Answer 1

Correct option is d = $3,660

For better understand i Prepared General Journal

Particulars	Amount in dollars
Employment Income	$40,000
Rental Loss minus (-)	- $16,000
Interest income	$6,000
Royalties	$7,000
Gross income	$37,000

Explanation:

Employment Income - Rental Loss + Interest income + Royalties

= $40,000 - $16,000 + $6,000 + $7,000

=$53,000- $16000

=$ 37,000

Gross income = $ 37,000

Her pension adjustment was $3,000.

Current year contribution

18% of gross income

18% * 37,000

= 6,660

Deductable RRSP contribution=

Current year contribution - Her pension adjustment

=$ 6,660 - $3,000.

= $3,660

Correct option is d = $3,660

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