Question: This income statement was prepared by Bobs Bookkeeping Service for the Atlas Corporation: ATLAS CORPORATION Income Statement At December 31, 2010 Sales . $ 1,200,000
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.
Step by Step Solution
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a Errors 1 The date on the statement is incorrect 2 Other income and gains are mixed in with sales 3 ... View full answer
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