Multistep and common size income statements
The following information was drawn from the records of Hall Sales Company.
| 2011 | 2012 |
Net sales | $50,000 | $50,000 |
Cost of goods sold | (20,000) | (22,500) |
Operating expenses | (12,500) | (15,000) |
Gain on the sale of land | 0 | 8,000 |
Required
a. Prepare a multistep income statement for each year.
b. Prepare a common size income statement for each year.
c. Assume that the operating trends between 2011 and 2012 continue through 2013. Write a brief memo indicating whether you expect net income to increase or decrease in 2013.
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