John Amos Corporation was incorporated and began business on January 1, 2008. It has been successful and now requires a bank loan for additional working capital to finance expansion. The bank has requested an audited income statement for the year 2008. The accountant for John Amos Corporation provides you with the following income statement which John Amos plans to submit to the bank.

Instructions
Indicate the deficiencies in the income statement presented above. Assume that the corporation desires a single-step incomestatement.

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John Amos Corporation Income Statement Sales 850,000 32,300 Gain on recovery of insurance proceeds from earthquake loss (extraordinary) 38,500 920,800 Less: Selling expenses Cost of goods sold Advertising expense Loss on obsolescence of inventories Loss on discontinued operations S101.100 510,000 13,700 34,000 48,600 73,400 Income before income tax Income tax Net income 780,800 140,000 56,000 $ 84,000