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Unformatted text preview: 350,000 Deduct: Finished goods inventory, August 31 60,000 Gross margin 290,000 Selling and administrative expenses 142,000 432,000 Net operating income $18,000 3.) Although the company's net operating income was understated by $30,000 (Net loss of 12,000 to Net gain of 18,000), I would still recommend that the company search for a buyer. This is because the company has not been performing in its last five months. Since the company's controller resigned last month and the new controller (Sam) has very little experience, I do not see a bright future for the company. Sam just illustarted that he was incapable of preparing an accurate income statement and therefore the company should search for a buyer....
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- Spring '11