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Annually your firm, Smith & Jones, CPAs, come in to prepare a year end compilation of the financial statements and the Sub S corporation tax return for Cazenovia Creations

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Annually your firm, Smith & Jones, CPAs, come in to prepare a year end compilation of the financial statements and the Sub S corporation tax return for Cazenovia Creations. This past year the owner, Meghan McGuire, has become concerned because the sales figures year over year have been growing significantly but net income does not seem to be keeping pace. Her best sales quarters are usually around Valentine’s Day and the Christmas season. The 2012 Christmas season was particularly good, and she had expected a sizeable increase in net income for the year. Meghan has asked for your assistance in determining why the net income for 2012 has not been as good as expected. She has provided you with comparative financial statements and transaction data (purchases, sales, and payroll) for the last seven months of 2012 in an Access database. based on the vertical and horizontal %, list reasons why you think the net income for 2012 has not been as good as expected.