Santos corporation is considering investing in Fenco corporation but is unsure about what levelof ownership should be undertaken. Santos and Fenco have the following reported incomes Santos Fenco Sales ………………………………………………………………$700,000$450,000 Cost of Goods Sold ………………………………………..$300,000$300,000 Gross Profit ……………………………………………. $400,000$150,000 Selling and Administrative Expenses………..$120,000$80,000 Net Income …………………………………………… $280,000$80,000 Fenco paid $15,000 in cash dividends to its investors, Please prepare a pro forma income statement for Santos corporation that compares income under 15%, 40%, 90%, and 100%ownership levels.

Income statement is the part of the four main financial statements which is prepared at the end of…

Answered: Please prepare a pro forma income…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Santos corporation is considering investing in Fenco corporation but is unsure about what level
of ownership should be undertaken. Santos and Fenco have the following reported incomes

				Santos	Fenco
Sales ………………………………………………………………	$700,000	$450,000
Cost of Goods Sold ………………………………………..	$300,000	$300,000
Gross Profit …………………………………………….		$400,000	$150,000
Selling and Administrative Expenses………..	$120,000	$80,000
Net Income ……………………………………………		$280,000	$80,000

Fenco paid $15,000 in cash dividends to its investors, Please prepare a pro forma income
statement for Santos corporation that compares income under 15%, 40%, 90%, and 100%
ownership levels.

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