O??Malley Corporation was incorporated and began business on January 1, 2012. 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 2012. The accountant for O??Malley Corporation provides you with the following income statement which O??Malley plans to submit to the bank.

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

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O'MALLEY CORPORATION INCOME STATEMENT $850,000 32,300 Sales revenue Dividends Gain on recovery of insurance proceeds from earthquake loss (extraordinary) 38,500 920,800 Less: Selling expenses Cost of goods sold Advertising expense $101,100 510,000 13,700 34,000 48,600 73,400 Loss on obsolescence of inventories Loss on discontinued operations Administrative expense 780,800 Income before income tax 140,000 Income tax 56,000 $ 84,000 Net income