Just after preparing the adjusting entries for the year, the long-time controller at Parrot Company took a leave of absence. Her inexperienced assistant did his best to prepare financial statements from the information the controller had left behind. He had particular difficulty with the income statement. The item labeled sales expense is the sum of the amounts charged customers during the year for goods and services provided.

Required
A. Identify and list the errors in the income statement above.
B. Prepare a corrected incomestatement.

Income Statement December 31, 2004 Sales expense Cost of goods sold Net profit Operating expenses: $260,722 102,690 $158,032 $59,780 9,002 14,420 13,510 Wages Utilities Interest Depreciation Total operating expense Operating income Advertising expense Pretax income Income tax expense Net income Eanings per share of common stock 97,712 60,320 9,968 $50,352 13,150 $63,502 ($64,50215,000 shares) $4.30