Chapter 1, Problem 4ATC

a.

To determine

Compute the percentage of growth in net income from Year 1 to Year 2. Describe whether the stockholder’s expect a similar increase between Year 2 and Year 3.

b.

To determine

Explain how the money (collected for cash from earnings by Company MIC) was spent in Year 2.

c.

To determine

Ascertain the amount of income from continuing operations that the owners can expect to see on the Year 3 income statement, assuming that Company MIC experienced the same percentage of growth from Year 2 to Year 3 as it did from Year 1 to Year 2.

d.

To determine

Prepare an income statement and balance sheet as of December 31, Year 3.