On Oct 1, 2020, Jaime started a new business making cool outdoor speakers. He worked out of his garage, but still incurred some expenses. Over the course of three months, he purchased $3,000 of direct materials (none remained at the end of the year).

Soon after he started his business, Jaimes sister, Cersei, came up with an idea. She could install speakers for customers! Jaime liked the idea so he offered her $50 per speaker installed and an additional sales commission of $10 per speaker for any business she brought in. Cersei agreed and ended up installing thirty speakers in 2020. She also referred eight customers, resulting in twelve speaker sales.

For his part, Jaime sold forty-four speakers as stand-alone sales (no installation), charging $100 per speaker. He charged $170 for speakers which included installation.

Jaime is thinking of making a couple of changes for 2021, when he is expecting the sales numbers from 2020 to quadruple. He is wondering if he should pay Cersei a $30 hourly rate for 10 hours a week, plus a $20 commission per speaker sold (he estimates that the average speaker installation takes 1.5 hours).

Jaime is also considering buying better equipment. He thinks he can make 300 speakers a year with his current tools. However, with new $3,000 machinery, he would be able to produce an extra 200 units. The equipment would be expected to last three years with no salvage value.

Type out Jaime's 2020 Income Statement. Correctly format your work, putting dollar signs at the appropriate places and indicate which numbers should be double-underlined using a "DU" label.

Give Jaime some advice on buying new equipment and accounting treatment of it. Also, analyze and comment on things Jaime has done well, things he could improve on, and things he should keep an eye on in 2021.