Multistep and common size income statements
The following information was drawn from the records of Laufer Sales Company.
| 2011 | 2012 |
Net sales | $100,000 | $100,000 |
Cost of goods sold | (45,000) | (40,000) |
Operating expenses | (30,000) | (25,000) |
Loss on the sale of land | -0- | (12,000) |
Required
a. Prepare a multistep income statement for each year,
b. Prepare a common size income statement for each year.
c. At a recent meeting of the stockholders, Laufer’s president stated 2013 would be a very good year with net income rising significantly. Write a brief memo explaining whether you agree or disagree with the president. Assume that the operating trends between 2011 and 2012 continue through 2013.
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