Income Statement Inquiry

To: Abel Terrio, Jackson Company

From: Joyce Simmons, Jackson company Accountant

Date: December 8, 2012

Subject: Income statement inquiry

I understand your dilemma and confusion with the 6,000 dollar loss to the Black Hawk company's common stock. I am confident and convinced that the information that I presented to you was accurate. To alleviate any further undue stress over this matter, I would like to offer a chronological break down of the information of the loss for you to see, in order for you to get a better mathematical understanding of how this particular Black Hawk common stock was not the benefactor of a $75,000 gain on the sale that you believe should have taken place.

You purchased the 50,000 shares of stock at the cost of $500,000 in December 31, 2009, with a 40% interest value. Your total income on investments for the year 2010 was reported. I then calculated the $126,000 at 40% resulting in $50,400 as your total interest earned. Upon viewing your 2011 net income report in regard to your investments, it showed that you had accrued 202,500 dollars. You then sold your Balck Hawk stock for the cost of $575,000. Although, with the additional 40% interest earned of 202,500, the amount for that transaction earned you $81,000. In essence you gained 75,000 dollars extra from your sale of the Black Hawk Company, but since your total investment for the stock only generated 81,000 nd the sale only yielded 75,000 you did in fact accumulate a 6,000 loss.

Believe me, I can relate to you in regard to your confusion that you underwent with this stock, and I do understand why you felt that the outcome should have favored you this 75,000 gain. But, because you sold the stock under the amount of the interest earned (which may have been an oversight), and not above, you suffered a loss with this stock. By neglecting to sell above the amount of interest this resulted in a 6,000 dollar difference in your sale to the gained interest.

Please accept my apologies for the confusion over this stock.

Respectfully,

Joyce Simmons