how does the annual audited information differ from the quarterly data 613825

Interim Reports

Falcon Amusements, Inc. chose September 30 as its year-end. Reported below are its quarterly income statements for fiscal 2000 and its annual income statement.

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			Quarterly
	10/1/99	1/1/00	4/1/00	7/1/00	Annual at
	12/31/99	3/31/00	6/30/00	9/30/00	9/30/00
Net sales	$577,441	$571,930	$698,432	$818,034	$2,665,837
Cost of goods	118,563	126,471	134,587	174,259	553,880
Gross profit	458,878	445,459	563,845	643,775	2,111,957
Selling, general
& administrative
expense	303,755	377,096	393,309	428,588	1,502,748
Depreciation	52,055	51,622	52,651	53,044	209,372
Non-operating
income	(114,062)	(17,251)	(14,845)	(3,315)	(149,473)
Interest expense	28,413	11,515	11,717	9,234	60,879
	270,161	422,982	442,832	487,551	1,623,526
Income before tax	188,717	22,477	121,013	156,224	488,431
Provision for
income tax	51,614	6,412	36,499	44,521	139,046
Net income	$137,103	$ 16,065	$ 84,514	$111,703	$ 349,385

Required

a. Discuss briefly why Falcon is reporting quarterly information. Is it audited?

b. How does the annual audited information differ from the quarterly data?

c. Are there any obvious seasonal trends? Why might the cost of goods sold rise in the fourth quarter (aside from sales being higher)? Hint:Year-end adjustments. How might an investor be concerned about such trends and fluctuations?

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