This income statement was prepared by Bob s Bookkeeping Service for
This income statement was prepared by Bob’s Bookkeeping Service for the Atlas Corporation:
ATLAS CORPORATION
Income Statement
At December 31, 2010
Sales ............. $ 1,200,000
Interest income ............ 5,000
Less sales returns .......... 9,000
Net sales ........... $ 1,196,000
Cost of goods sold ........ 740,000
Gross margin .......... $ 456,000
Gain on sale of equipment ...... 40,000
Total revenue inflows ...... $ 496,000
Administrative expenses ...... 120,000
Selling expenses .......... 45,000
Loss on sale of land ......... 10,000
Operating income ........ $ 321,000
Interest expense ........... 9,000
Extraordinary loss on building ..... 20,000
Income from continuing operations . $ 292,000
Tax expense (30%) ......... $ 87,600
Net income .......... $ 204,400
Required:
A. Make a list of all the errors found on this income statement and briefly describe what is wrong.
B. Prepare a correct multistep income statement for Atlas Corporation.
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