Income statements

for the year ended 31st december 2022

Sales Revenue € 1,280,000

Sales return and allow. € 150,000
Sales discount € 45,000 € 195,000
net sales € 1,085,000
cost of good sold € 621,000
gross profit € 464,000
operating expenses
Selling expenses € 194,000
Administrative and general exp. € 97,000 € 291,000
operating income € 173,000
non-operating expenses
Interest revenue € 86,000
€ 259,000
Interest expense € 60,000
loss on impairment of plants assets € 120,000 € 180,000
income before taxes € 79,000
Income tax € 26,860
Net income € 52,140
earning percommon share € 0.52
 Weatherspoon shoe Weatherspoon shoe
statement of comprehensive income Income statement
for the year ended 31st december 2022 for the year ended 31st dece

Net sales £ 980,000 Net sales

Cost of good sold £ 516,000 Cost of good sold
gross profit £ 464,000 gross profit
operating expenses operating expenses
Selling expenses £ 140,000 Selling expenses
Administrative and general exp. £ 181,000 Administrative and general exp.
Cash dividends declared £ 16,000 £ 337,000 Cash dividends declared
operating income £ 127,000 operating income
non-operating expenses non-operating expenses
Rent revenue £ 29,000 Rent revenue
£ 156,000
Interest expenses £ 18,000 Interest expenses
Loss on sales of plant assets £ 15,000 £ 33,000 Loss on sales of plant assets
income before taxes £ 123,000 income before taxes
Income taxes £ 30,600 Income taxes
Net income £ 92,400 Net income
Other comprehensive income
Unrealized gain on non-trading equity-
£ 31,000
securieties, net of tax
Comprehensive income £ 123,400
 Weatherspoon shoe Weatherspoon shoe
Income statement statement of comprehensive income
e year ended 31st december 2022 for the year ended 31st december 2022

£ 980,000 Net income

£ 516,000 Other comprehensive income
£ 464,000 Unrealized gain on non-trading equity-
securieties, net of tax
£ 140,000 Comprehensive income
nd general exp. £ 181,000
declared £ 16,000 £ 337,000
£ 127,000
nses
£ 29,000
£ 156,000
es £ 18,000
plant assets £ 15,000 £ 33,000
£ 123,000
£ 30,600
£ 92,400
n shoe
ensive income what do you prefer?
december 2022 In this approach, the traditional net income is a subtotal, with total comprehensive income
shown as a final total. The combined statement has the advantage of not requiring the
£ 92,400 creation of a new financial statement. However, burying net income as a subtotal on the
statement is a disadvantage.
£ 31,000

£ 123,400
ehensive income
equiring the
ubtotal on the
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1. The usual but infrequently occurring charge of $8,500,000 should be disclosed separately,
assuming it is materials. This charge is shown above income before extraordinary items and
would not be reported net of tax. This item should be separately disclosed to inform the
users of the financial statement that this item is nonrecurring and therefore may not impact
next year’s results. Furthermore, trend comparisons may be misleading if such an item is not
highlighted and adjustment made. The item should not be considered extraordinary because
its usual in nature
2. This loss was reported on the income statement thereby reducing net income. However,
cash was not reduced. Cash of $17,000,000 was actually received from the sale of the
equipment and it appears in its entirely in the investing activities section of the cash flow
statement. A loss in disposal of plant asset is shown in income statement as an expense
(Subtracted from our profit). The asset is written off from the balance sheet. And should be
reported net of tax in a separate section for extraordinary items.
3. The adjustment required for correction of an error is inappropriately labelled and also
should not be reported in the retained earnings statement. Changes in estimate should be
handled in current and future periods through the income statement. Catch-up adjustments
are not permitted. To restate financial statements every time a change in estimate occurred
would be extremely costly. In addition, adjusting the beginning balance of retained earnings
in appropriate as the increased charge in this case affects current and future income
statements.
4. Earnings per share should be reported on the face of the income statement and not in the
notes to the financial statement. Because such importance is ascribed to this statistic, the
profession believes it necessary to highlight the earnings per share figure. In this case the
company should report both income before extraordinary item and net income on a per
share basis.