The following multiple-step, income statement was prepared for Carlsbad Company.

a. Identify the errors in the preceding income statement.

b. Prepare a corrected income statement.

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CARLSBAD COMPANY Income Statement For the Year Ended February 28, 20Y8 Sales.... $4,220,000 Cost of goods sold. (2,650,000) Operating income $1,930,000 Expenses: Selling expenses Administrative expenses.. Delivery expense... Total expenses $ 800,000 600,000 50,000 (1,450,000) $ 480,000 Other expense: Interest revenue.. 40,000 Gross profit ..... $ 440,000