Chapter 5, Problem 5.1CTDC

To determine

Decision case:

In this case, B, the controller of Company P is contemplating to improve on the net income with the target of $100,000 during 2016. He has two plans in his mind. Plan a is about making an advertisement with an expense of $20,000, with the cost of goods sold percentage remaining same along with the administrative expenses. But plan b is about selling higher margin merchandise, with an advertising expense of $5,000.

To Prepare: single step income statements of Company P for both the plans: