Meaghan Mirkle owns the Unicorn Day Spa, which has prospered during its second year of operation. To

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Meaghan Mirkle owns the Unicorn Day Spa, which has prospered during its second year of operation. To help Mirkle decide whether to open another spa in the area, her bookkeeper has prepared the current income statement of the business.image


Mirkle recently read in an industry trade journal that a successful 2-year-old spa meets these criteria:


a. Gross margin is at least 48.7 percent.


b. Net income is at least $150,000. Basing her opinion on the entity’s income statement data, Mirkle believes the business meets both criteria. She plans to go ahead with the expansion plan and asks your advice. When you point out that the income statement includes errors, Mirkle asks you to prepare a corrected statement prior to analyzing the results.



Required 


Prepare a correct multi-step income statement and make a recommendation about whether to undertake the expansion at this time.

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Related Book For  book-img-for-question

Horngrens Accounting Volume 1

ISBN: 9780136889373

12th Canadian Edition

Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura

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