Question

The following income statement contains errors.

Curbstone Company

Income Statement

For the Year Ended August 31, 2019

1	Sales		$8,595,000.00
2	Cost of merchandise sold		6,110,000.00
3	Income from operations		$2,485,000.00
4	Expenses:
5	Selling expenses	$800,000.00
6	Administrative expenses	575,000.00
7	Delivery expense	425,000.00
8	Total Expenses		1,800,000.00
9			$685,000.00
10	Other expense:
11	Interest revenue		45,000.00
12	Gross profit		$640,000.00

Identify the errors by preparing a corrected multiple-step income statement. Be sure to complete the heading of the statement. Refer to the information given in the exercise and to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. In the Other expenses section only, enter amounts that represent other expenses as negative numbers using a minus sign.

Answer 1

CURBSTONE COMPANY
Income statement
For the year ended 31st August 2019
Particulars	Amount	Amount
1.Sales		$8,595,000.00
2. Cost of Merchandise Sold		$6,110,000.00
3. Gross Profit [1-2]		$2,485,000.00
Other Operating expenses:
4. Administrative expenses	$575,000.00
5. Selling expeses	$800,000.00
6. Delivery expenses	$425,000.00
7.Total other operating Expenses		$1,800,000.00
8.Income From operations (3-7)		$685,000.00
9. Other income and expenses
10. Interest revenue		$45,000.00
11. Net income before tax/        earning before tax (8+10)		$730,000.00
12. less: tax		0
13.Net income		$730,000.00

Note:

Gross profit is derived by subtracting cost of merchnadise sold from sales.

income from operations is derived by subtracting operating expenses from gross profit.

Net income or net income before tax is derived by adding the interest revenue to the income from operations.