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In 1985, Juan Caron, Sr established Scooter’s Inc. to provide scooters for tourist destinations in the United States. After his father’s retirement in 2017, Juan, Jr (Junior) assumed control of the company. In 2018, Junior expected the company’s operating income to increase after they stopped paying his dad’s salary of $125,000. After Junior’s first in charge, he was dismayed. Inexplicably, the company’s operating income decreased. As Junior’s accountant, you prepared operating income reconciliation from 2017 to 2018. In preparation an upcoming meeting with Junior, you need to determine potential reasons why operating income decreased.  

Scooter, Inc. – Operating Income Reconciliation 2017 to 2018

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