Prepare and interpret an income statement, LO 1, 4, 5) You are provided with the following accounting information for Hanmer Ltd. (Hanmer), a retail electronics store, for the years ended December 31, 2012 and 2013:

Required:

a. Prepare income statements for Hanmer for 2012 and 2013.

b. What was Hanmer’s gross margin and gross margin percentage each year? In which year do you think Hanmer was more successful? Explain.

c. Suppose Hanmer had the same gross margin percentage in 2013 as it did in 2012.
What would its gross margin and net income have been in 2013?

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Advertising and promotion Cost of inventory sold 2013 $ 270,000 1,200,000 2012 $ 250,000 1,040,000 General and administrative Income tax Miscellaneous Rent Salaries, wages, and commissions Sales Utilities 321,000 301,000 187,500 148,000 52,000 64,000 58,000 55,000 485,000 450,000 3,160,000 2,851,000 15,800 15,200