1-Use the following information to compute NET INCOME. The income tax rate is 40%.

Cost of Goods Sold $ 4,000

Interest Expense 1,100

Selling and Administrative Expense 1,750

Sales 10,000

Dividends 700

a-$1,890

b-$1,260

c-$1,190

d-$1,470

e-$980

2-The data below are for Julian Company and Standard Company. Standard Company is the best company in Julians industry; all companies in the industry strive to do things the way that Standard does them.

Julian Standard

Cash 500 3,250

Accounts Receivable 5,000 15,000

Inventory 3,000 19,500

Property, Plant, and Equipment 12,000 40,000

Total Assets 20,500 77,750

Total Liabilities 13,000 37,000

Total Equity 7,500 40,750

Sales 40,000 200,000

Cost of Goods Sold (18,000) (80,000)

Wage Expense (12,000) (60,000)

Research Expense (5,000) (25,000)

Advertising Expense (1,600) (8,000)

Net Income 3,400 27,000

Which ONE of the following statements is TRUE regarding Julians income statement? Remember, Standard Company represents the standard of performance in Julians industry.

Julian Company has a problem with its cost of goods sold.

Julian Company has a problem with its advertising expense.

Julian Companys profitability is better than Standard Companys profitability.

Julian Company has a problem with its wage expense.

Julian Company has a problem with its research expense