the other balances listed in the trial balance are not needed for the income stateme 611246

The other balances listed in the trial balance are not needed for the income statement but will be used in the construction of another financial statement – the balance sheet. A full income statement is illustrated in the following example.

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Sales		124,500
Purchases	76,800
Inventory as at 1 January 2014	8,940
Machinery	15,000
Fixtures and fittings	8,450
Trade receivables	9,876
Trade payables		5,676
Bank overdraft		5,344
Electricity	1,630
Wages and salaries	21,340
General expenses	3,450
Advertising	274
Capital		35,000
Drawings	11,500
Maintenance	2,890
Commission received		2,130
Equipment	12,500
	172,650	172,650

Inventory on hand as at 31 December 2014 was valued at £7,652.

Income statement for the year ending 31 December 2014

	£	£
Sales		124,500
Less Cost of goods sold
Opening inventory	8,940
Add Purchases	76,800
	85,740
Less Closing inventory	7,652	78,088
Gross profit		46,412
Add: Commission received		2,130
		48,542
Less Expenses
Electricity	1,630
Wages and salaries	21,340
General expenses	3,450
Maintenance	2,890
Advertising	274	29,584
Net profit		18,958