Identify and list the errors in the income statement

Assignment Help Accounting Basics

Reference no: EM13257275

Just after preparing the adjusting entries for the year, thelong-time controller at Parrot Company took a leave of absence. Herinexperienced assistant did his best to prepare financialstatements from the information the controller had left behind. Hehad particular difficulty with the income statement.

The item labeled sales expense is thesum of the amounts charged customers during the year for goods andservices provided.

Income Statement

December 31, 2007

Salesexpense $260,722

Cost of goodssold 102,690

Netprofit 158,032

Operating expenses:

Wages $59,780

Utilities 9,002

Interest 14,420

Depreciation 13,510

Total operatingexpense 97,712

Operatingincome $60,320

Advertisingexpense 9,968

Pretaxincome $50,352

Income taxexpense 13,150

Netincome $63,502

Earnings per share common stock

($64,502 ÷ 15,000shares) $4.30

Required:

Identify and list the errors in the income statement.
Prepare a corrected income statement.

Reference no: EM13257275

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