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problem: For 2008, Doane Inc. reported its most significant increase in net income in years. In the end of the year, Jeff Newton, the president, is presented with the following condensed relative income statement:

Doane, Inc.

Comparative Income Statements

for the years ended Dec 31, 2007 and Dec 31, 2008

 

 

 

2007

2008

 

 

 

 

 

Sales

 

 

$73,200

$91,500

Sales Return and Allowances

 

 

1200

1440

Net Sales

 

 

$72,000

$90,060

Cost of Goods Sold

 

 

42000

50400

Gross Profit

 

$30,000

$39,660

Selling Expenses

 

14400

16560

Administrative Expenses

 

 

$9,600

$10,800

Total Operating Expenses

24000

27360

Income from Operations

$6,000

$12,300

Other Income

 

 

600

600

Income before Income Tax

$6,600

$12,900

Income Tax Expense

 

1440

2880

Net Income

 

 

$5,160

$10,020

Instructions:

[A] Make a comparative income statement with horizontal analysis for the 2 year period using 2007 as the base year. Round your answer to one decimal place.

[B] To extend the data permit, make a comment on the significant relationships revealed by the horizontal analysis prepared in [1].

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M916097

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