a)
To calculate: Pro forma income statement using percent of sales method.
Introduction:
A reports that shows the revenues and expenses from business operations and the result of those operations as net income or net loss for a particular timeframe is referred to as income statement.
b)
To explain: The manner in which percent-of-sales method can result in the overstatement of profits for the pessimistic prediction case and understatement of income for the optimistic and most likely cases.
Introduction:
A reports that shows the revenues and expenses from business operations and the result of those operations as net income or net loss for a particular timeframe is referred to as income statement.
c)
To calculate: Pro forma income statement using fixed and variable costs.
Introduction:
A reports that shows the revenues and expenses from business operations and the result of those operations as net income or net loss for a particular timeframe is referred to as income statement.
d)
To compare: The findings of Pro forma income statement using percent of sales method and using fixed and variable costs.
Introduction:
A reports that shows the revenues and expenses from business operations and the result of those operations as net income or net loss for a particular timeframe is referred to as income statement.
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Chapter 4 Solutions
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