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Prepare a pro forma income statement for Santos Corporation

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Reference no: EM132712007

Question - 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 10%, 30%, and 80% ownership levels.

Reference no: EM132712007

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