In Year 1, Kim Company sold land for $80,000 cash. The land had originally cost $60,000. Also, Kim sold inventory that had cost $110,000 for $198,000 cash. Operating expenses amounted to $36,000.

Required

1. Prepare a Year 1 multistep income statement for Kim Company.

2. Assume that normal operating activities grow evenly by 10 percent during Year 2. Prepare a Year 2 multistep income statement for Kim Company.

3. Determine the percentage change in net income between Year 1 and Year 2.

4. Should the stockholders have expected the results determined in Requirement c?