FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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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