Income Statement for Computer Software Company
Powersoft Company is engaged in developing computer software for the small business and home computer market. Most of the computer programmers are involved in developmental work designed to produce software that will perform fairly specific tasks in a userfriendly manner. Extensive testing of the working model is performed before it is released to production for preparation of masters and further testing. As a result of careful preparation, Powersoft has produced several products that have been very successful in the marketplace. The following costs were incurred during 2008:
Salaries and wages of programmers doing research |
$265,000 |
Expenses related to projects prior to establishment of technological feasibility |
82,200 |
Expenses related to projects after technological feasibility has been established |
|
but before software is available for production |
53,800 |
Amortization of capitalized software development costs from current and prior years |
32,150 |
Costs to produce and prepare software for sale |
49,800 |
Additional data for 2008: |
|
Sales of products for the year |
$675,000 |
Beginning inventory |
155,000 |
Portion of goods available for sale sold during year |
60% |
Instructions: Prepare an income statement for Powersoft for the year 2008. Income tax rate is 35%.