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Springer Company, a sole proprietorship, had the following transactions in August:
Earned $5,000 of revenues on account;
collected $5,000 from a customer for services provided last month;
incurred $500 of repair expense and paid cash; paid $600 for rent that it owed from the previous month.
Problem 1: What is the net income in August?
A) $500
B) $5,000
C) $9,500
D) $4,500
Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 3% increase in sales?
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