Evaluating business performance [10 min]Consider the facts presented in S1-12 for Elegant...

Evaluating business performance [10 min]

Consider the facts presented in S1-12 for Elegant Arrangements Corporation.

Requirements

1. Review the income statement prepared in S1-12. Evaluate the results of 2012 operations for Elegant Arrangements Corporation. Was the year good or bad?

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2. If the company’s service revenue was 20% less than reported in S1-12, how will the net income (loss) change?

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3. If the company’s salary expense was 20% more than reported in S1-12, how will the net income (loss) change?

Prepare the income statement [10 min]

Elegant Arrangements Corporation has just completed operations for the year ended December 31, 2012. This is the third year of operations for the company. As the sole-shareholder, you want to know how well the business performed during the year. To address this question, you have assembled the following data:

Requirement

1. Prepare the income statement of Elegant Arrangements Corporation for the year ended December 31, 2012.