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 $ 70,000 Fenco paid $15,000 in cash dividends to its investors. Prepare a pro forma income statement for Santos Corporation that compares income under 10%, 30%, and 80%ownership levels.
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 $ 70,000
Fenco paid $15,000 in cash dividends to its investors. Prepare a pro forma income statement for Santos Corporation that compares income under 10%, 30%, and 80%ownership levels.
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