The income statements that follow are for Doug’s Hardware Corporation. 

Required 

1. From the information provided, prepare a multistep income statement for 2010 and 2011 showing percentages of net sales for each component. 

2. Did income from operations increase or decrease from 2010 to 2011? Write a short explanation of why this change occurred. 

3. What effect did other revenues and expenses have on the change in income before income taxes? What action by Doug’s Hardware’s management probably accounted for this change?

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Doug's Hardware Corporation Income Statements For the Years Ended July 31, 2011 and 2010 2011 2010 Revenues Net sales $4,200 $388,466 Interest income 1,420 750 Total revenues $465,620 $389,126 Costs and expenses Cost of goods sold $243,880 $198,788 Selling expenses 55,644 95,160 General and administrative expenses 49,286 90,840 Interest expense 5,600 $435,480 $ 30,140 1,100 Total costs and expenses $304,818 $ 84,398 Income before income taxes Income taxes expense 8,000 21,250 $ 22,140 $ 63,148 Net income Earnings per share 2.21 6.31