Purchase Solution

Income Statement

Not what you're looking for?

Ask Custom Question

Gill Bates, Jr. spent $1,000,000 developing a software utility that is intended to be sold to small businesses. In his first full year of business following the development, he sold 50,000 copies at $109 each. The direct cost of packaging, and fulfilling orders for the software was $34 per unit. Overhead costs are 10% of this direct cost.

The largest expense was servicing customers following sales. The following costs were incurred including all equipment which will be replaced annually.
Software Maintenance $300,000
Customer Service $200,000
Marketing & Sales $350,000

Gill and his immediate staff were paid $500,000. Financing was by an Angel investor who received a 35% ownership and one loan of $250,000. Interest only at 8.3% is paid annually on the loan.

Tax rate is 20%.

Prepare an Income Statement for this first year of operation using three year MACRS depreciation.

Note: Software development is depreciable for a product that is sold. See http://www.irs.gov/businesses/small/article/0,,id=137026,00.html

Purchase this Solution
Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • Diff. between financial statement income & taxable income

    The following are some of the differences between financial statement income and taxable income  Financial statement income is the income as reflected in the Income statement i.e. the Net Income and taxable income is the income which is calculated

  • Income Statement, the Balance Sheet, and the Statement of Cash

    521777 Income Statement, the Balance Sheet, and the Statement of Cash Discuss the relationship between the income statement, balance sheet, and statement of cash.

  • Information is presented on the Income Statement

    348233 Information is presented on the Income Statement What information is presented on the Income Statement? Why is the statement presented in the order in which it is? Who will tend to focus more on the Income Statement vs the other reports?

  • Importance of the Income Statement

    298569 Importance of the Income Statement What is the importance of the Income Statement? What are its major limitations? Explain with an example. Importance of the Income Statement What is the importance of the Income Statement?

  • Cash flow statement vs income statement

    225200 Cash flow statement vs income statement What makes the cash flow statement more useful in these respects than the income statement? What makes the cash flow statement more useful in these respects than the income statement?

  • Your friend comments, 'I just ignore the income statement wh

    The income statement will also show where the expenses are. I would use the income statement to compare it to the previous income statement.

  • Accounting - Evaluating an income statement

    An income statement is also known as a revenue statement, earnings statement, operating statement, or Profit and Loss (P&L) statement. The income statement explains how a company's revenues are transformed into net income.

  • Creating an Income Statement

    375022 Income Statement Assignment The items below are from an income statement, but are not in the final order that they should appear in the Income Statement. Take this information and construct a complete Income Statement from it.

  • Preparing Income Statement and GAAP

    Note: Please open attached file for an income statement sample. This solution clearly highlights the components of an income statement and includes an attached sample income statement.

  • Proforma Income Statement Question - Silver Company

    Pro-Forma Income Statement Silver Company has asked you to prepare a pro-forma income statement for the coming year.

View More Related Solutions