Basic Instructions for a Simple Income Statement

Love Thy Pet Inc., Income Statement For the Year Ended, December 31, 2011
Revenues: Sales Revenues Interest Revenues Total Revenues Expenses: Rent Expense Salaries Expense Interest Expense Pet Supplies Expense Depreciation Expense-Pet Store Equipment Depreciation Expense-Office Equipment Insurance Expense Total Expenses Net Income $XX,XXX X,XXX XX,XXX $XX,XXX XX,XXX X,XXX X,XXX X,XXX X,XXX X,XXX XX,XXX $XX,XXX

Step-by-Step Instructions
Please start by creating the header for the statement. The header includes the name of the company, the title of the statement, and the period for which the statement is being prepared. Step 1. Place the title Revenues: on the first line in the body of the statement. Because this is a section title, there will be no amount in the far right column. Step 2. Next, indent the revenue accounts placing the account titles in the far left column from highest to lowest in value. Place the amounts in the column to the far right. Step 3. Add the dollar amounts for all of the revenue accounts together to get the total for the companys revenues. Step 4. Next place the title Expenses: This is a section title so do not put an amount in the far right column. Step 5. Next, list all of the expenses from highest to lowest in dollar amounts. Place the titles of each account in the left-hand column indented. Place the amount for each expense in the middle column. Step 6. Total all expenses cost then place the dollar amount in the right hand column. Label that line Total Expenses and indent it two positions to the right. Step 7. On the last line, subtract the total expenses from the total revenues to get net income. Should the expenses exceed the revenues the negative result will be net loss. Title that line either net income or net loss depending on whether the revenues or the expenses are higher. Step 8. Double underline the net income amount, single underline the addition or subtraction of amounts in the body of the statement. Place dollar signs at the top and bottom of the right column and at the top of the middle column.

MJC Revised 10/2011

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