Solution-Deficiencies in the income statement

Deficiencies in the income statement

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Reference no: EM13548808

(Identification of Income Statement Deficiencies) 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.

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

Instructions

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

Reference no: EM13548808

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Deficiencies in the income statement

Reference no: EM13548808

Reference no: EM13548808

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