Exhibit 1 Parmelee Publications, Inc.

Income and Expense ($'000) 2004 2005 Net sales $3,219 $4,185 Cost of sales 1,819 2,373 Gross profit $1,400 $1,812 General, selling and and admin. 1,127 1,536 Operating income (EBIT) $274 $276 Interest expense 10 10 Earnings before taxes $264 $266 Tax allowance 86 87 Net Income $178 $179 Exhibit 2 Schedule of retained earnings Beginning balance Net income (deficit) Dividends paid Ending balance

2004 $0 178 0 $178

2005 $178 179 0 $357

See BS and Tax Table below for additional data. Common Size Analysis (%)

Exhibit 3 Balance Sheets - Dec 31 ($'000) Cash Accounts receivable Inventory Other current assets Current assets Fixed assets, net Total assets Bank notes payable Accounts payable Accrued expenses Other current liabilities Current liabilities Shareholder loan Common stock Retained earnings Total liabilities and Equity

2004 2005 $259 $96 663 825 645 878 55 94 $1,622 $1,893 139 165 $1,761 $2,058 $0 303 133 47 $483 100 1,000 178 $1,761 $0 370 195 36 $601 100 1,000 357 $2,058

Figure 6

USA Corporate Tax Rate Schedule If taxable income is:

Over $0 50,000 75,000 100,000 335,000 10,000,000 15,000,000 18,333,333

But not over Tax is $50,000 $0 + 75,000 7,500 + 100,000 13,750 + 335,000 22,250 + 10,000,000 113,900 + 15,000,000 3,400,000 + 18,333,333 5,150,000 +

15% 25% 34% 39% 34% 35% 38% 35%

Of the amount over $0 50,000 75,000 100,000 335,000 10,000,000 15,000,000 0

Hint: Try making up a table of tax amounts from this information so that you can employ the "=VLOOKUP() Excel function for simulation proceedures when taxable income may be less than $18.333 million. Here's a start (examine the tax payable calculations) Taxable Income Tax Payable 5000 750 10000 1500 15000 2250 20000 3000 25000 3750 30000 4500 35000 5250 40000 6000 45000 6750 50000 7500 55000 8750 60000 10000 65000 11250 70000 12500 75000 13750

To use the vlookup function to obtain the tax payable on taxable income of $45 Taxable Income 45000 Tax payable =VLOOKUP(G22,A21:B35,2)

If you name the tax table array, TaxTable, then just put the array name into the Tax Payable =VLOOKUP(G22,TaxTable,2) =

Extend the table on down to the bottom of the spreadsheet so you can use it in other cases as well as this one.

x payable on taxable income of $45,000, for example,

where the "2" is thecolumn number in the tax table.

hen just put the array name into the fuction 6750

as well as this one.