1.John worked at the local Indian Restaurant in College City all through his college years. Although the working conditions were good and the pay was not bad, John believed he could do much better job of managing the restaurant than the current owner-manager. In particular, John believed that the proper use of marketing campaigns and sales incentives, such as selling a second burger for a 25 percent discount, could increase annual sales by 40 percent. Just before graduation in 2018, John inherited $500,000 from his great uncle. He seriously considered buying the restaurant. It seemed like a good idea because he liked the town and its college atmosphere, knew the business, and always wanted to work for himself. He also knew that the current owner wanted to sell the restaurant. John developed the following income statement for the restaurant's 2017 operations.

Indian Delicacies Restaurant Income Statement For the year ended Dec 31 2017 Sales $450 000 Expenses Cost of food $150 000 Supplies $20 000 Employee expenses $140.090 Utilities $28000 Property taxes 520 000 Insurance $10 000 Advertising $8000 Depreciation $60. 000 $436 000 Net income $14.000