One year ago, Herb Smith quit his job at Adcox Medical where he earned $28,000 a year as a health care technician to start the Super CD Store. He invested almost his entire life’s savings in the venture and is now concerned. He notes that when his money was in the bank, he earned about 4% interest. Now, when he compares his company profits to the amount invested in the store, the profits seem lower than what he could have earned if he had simply left the money in the bank. The following information is available for the company’s first year of business:

The administrative expense includes $30,000 received by Herb in the form of salary.
Herb’s friend Bill has suggested that a simple $5,000 computer might help with company record keeping and ordering inventory.
Herb has indicated that he does not mind the added work or ordering the merchandise without a computer. In fact, when it comes to ordering product, he seems quite proud of the job he is doing as he almost always has the CDs his customers want. Herb has engaged your services as a consultant to determine whether his feelings are correct about the low earnings of the company and to suggest some possibilities to improve the situation.
Also, Herb would like some input regarding the computer.
Required: Prepare a report for Herb addressing each of his concerns,

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Sales Cost of goods sold Selling expense Administrative expense $600,000 450,000 90,000 50,000 Inventory at year end 300,000 Other assets at year end 30,000 Total liabilities at year end 50,000