he following is the 2021 January income statement that Jason prepares for his fashion retail shop which he operates in a shopping mall in Mong Kok. $ Sales 400,000 Cost of goods sold(Note 1) 200,000 Depreciation(Note 2) 15,000 Salary expense(Note 3) 10,000 Rental expense(Note 4) 40,000 Interest expense(Note 5) 1,000 Other administrative expense 12,000 Net Income 122,900 Note 1: The Yen has appreciated somewhat against the Hong Kong Dollar in the past few months. The stock was imported from Japan before the appreciation. Note 2: Jason used $360,000 to furnish the shop. He used straight line depreciation method and assumed two years as the useful life. Note 3: Jason employs a shop assistant for a salary of $10,000. He also works as the shop manager, but he receives nothing as salary. Note 4: As Jason knows the owner of the shop, he used a discount price to rent the space. Note 5: Jason obtained an overdraft credit line of $200,000 from a bank with an annual interest rate of 12% but he only used $100,000 of the credit in 2021 January. The rest of the capital was financed by his own saving. Comment on the appropriateness of the amount entered on each item in the above statement in terms of economic cost
The following is the 2021 January income statement that Jason prepares for his fashion retail shop which he operates in a shopping mall in Mong Kok.
$ Sales 400,000 Cost of goods sold(Note 1) 200,000
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