RUE BENNETT Company develops software for small businesses and household computers. The majority of the company's computer programmers are working on developing software that will perform relatively specialized functions in a user-friendly manner. Before the working model is released to production for the preparation of masters and additional testing, it undergoes extensive testing. As a result of this meticulous planning, various computer software packages have been developed that have proven to be very successful in the industry. RUE BENNETT Company incurred the following costs during 2020: Cost to reproduce and prepare software for sale 200,002 Amortization of capitalized software development costs from current and prior years 94,321 Expenses related to projects after technological feasibility has been established but before software is available for commercial production 151,323 Salaries and wages of programmers doing research 910,000 Expenses related to projects after to the establishment of technological feasibility 225,300
RUE BENNETT Company develops software for small businesses and household computers. The majority of the company's computer programmers are working on developing software that will perform relatively specialized functions in a user-friendly manner. Before the working model is released to production for the preparation of masters and additional testing, it undergoes extensive testing. As a result of this meticulous planning, various computer software packages have been developed that have proven to be very successful in the industry.
RUE BENNETT Company incurred the following costs during 2020:
|
Cost to reproduce and prepare software for sale |
200,002 |
|
Amortization of capitalized software development costs from current and prior years |
94,321 |
|
Expenses related to projects after technological feasibility has been established but before software is available for commercial production |
151,323 |
|
Salaries and wages of programmers doing research |
910,000 |
|
Expenses related to projects after to the establishment of technological feasibility |
225,300 |
Additional information for the year 2021:
|
Sales of products for the year |
2,041,987 |
|
Beginning Inventory |
526,000 |
|
Portion of goods available for sale sold during the year |
60% |
|
Income tax rate |
30% |
Requirements:
- What amount should be recognized as research and development cost?
- What amount is to be capitalized as software development cost?
- How much is the ending inventory of the company? -
- How much is the total gross income? -
- How much is Rue Bennett’s net income (income after tax) for the year 2021?
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