Example Income Statement

Exhibit 2, below, is an example Income statement with typical level of detail for the Annual Report.

Grande Corporation Figures in $1,000's

Income Statement for Year Ended 31 December 20YY

Revenues
Gross sales revenues 33,329
Less returns & allowances 346
Net sales revenues 32,983
Cost of goods sold
Dirct materials 6,320
Direct labor 6,100
Manufacturing Overhead
Indirect labor 5,263
Depreciation, mfr equipment 360
Other mfr overhead 4,000
Net mfr overhead 9,623
Net cost of goods sold 22,043
Gross Profit 10,940

Operating Expenses
Selling expenses
Sales salaries 4,200
Warranty expenses 730
Depreciation, Store equip 120
Other selling expenses 972
Total selling expenses 6,022
General & Admin expenses
Administrative salaries 1,229
Rent expenses 180
Depreciation, computers 179
Other general & admin expenses 200
Total general & admin exp 1,788
Total operating expenses 7,810
Operating Income Before Taxes 3,130

Financial revenue & Expenses

Revenue from investments 118
Less interest expense 511
Net financial gain (expense) (393)
Income before tax & ext items 2,737
Less income tax on operations 958
Income before extraordinary items 1,779

Extraordinary Items
Sale of land 610
Less initial cost 145
Net gain on sale of land 465
Less income tax on gain 118
Extraord items after tax 347

Net Income (Profit) 2,126

Exhibit 2. Detailed example Income statement, showing how Revenue and Expense account items represent the Income
statement equation:
Income = Revenues – Expenses.
The Income statement structure simply builds detail into each term of this equation. Exhibit 1 below is a simple
(high level) Income statement example.

Grande Corporation Figures in $1,000's

Income Statement for year ending at 31 December 20YY

Net sales revenues 32,983

Cost of goods sold 22043
Gross Profit 10,940

Operating Expenses
Selling expenses 6,022
General & Admin expenses 1,788
Total Operating expenses 7,810
Operating Profit Before Taxes 3,130

Financial rev / exp gain (expense) (393)

Income before tax & extraord items 2,737
Less income tax on operations (958)
Income before extraordinary Items 1,779
Extraordinary items after tax 347

Net Income (Profit) 2,126

Exhibit 1. The simple example Income Statement shows the general statement structure and major Revenue and Expnse
categories.

The Statement of Retained Earnings Equation

The basic Statement of retained earnings equation is as follows:

Net income = Preferred stock dividends paid

+ Common stock dividends paid

+ Retained earnings

Or, equivalently

Retained earnings

= Net income

– Preferred stock dividends paid

 – Common stock dividends paid

Grande Corporation Figures in $1,000's

Statement of Retained Earnings for year ending 31 Dec 20YY

2,372 2,12
Beginning balance
6
Retained Earnings 1 Jan 20YY
4,498
Add net income for fiscal year 20YY
Total
(33)
Less dividends declared & paid FY
(101)
20YY
(134)
Dividends paid on preferred stock
Dividends paid on common stock
Total dividends deducted

Retained Earnings balance 31 Dec 4,364

20YY

Exhibit 1. Example Statement of retained earnings.

BALANCE

Annual Report versions of the Balance Sheet normally carry a level of detail no less than Exhibit 1 and no more
than Exhibit 2.

Grande Corporation Figures in $1,000's

Balance Sheet at 31 December 20YY

ASSETS
Current Assets 9,609
Long Term Investments & Funds 1,460
Property, Plant & Equipment 9,716
Intangible Assets 1,222
Other Assets 68
Total Assets 22,075

LIABILITIES
Current Liabilities 3,464
Long Term Liabilities 5,474
Total Liabilities 8,938

OWNERS EQUITY
Contributed Capital 3,464
Retained Earnings 5,474
Total Owners Equity 13,137

Total Liabilities and Equities 22,075

Exhibit 2 below shows the same Balance sheet from Exhibit 1, but with more detail. Definitions for the major
categories and line items appear below the example.

Grande Corporation Figures in $1,000's

Balance Sheet at 31 December 20YY

ASSETS
Current Assets
Cash 1,369
Short term investments 137
Accounts Receivable 1,969
Less allowance doubtful accts 137
Net accounts receivable 1,832
Notes receivable short term 20
Inventories
Raw materials 611
Work in progress 1,692
Finished goods/merchandise 3,664
Operating & office supplies 19
Total Inventories 5,986
Prepaid exp, insurance, def taxes 265
Total Current Assets 9,609

Long Term Investments and Funds

Common stock held 493
Preferred stock held 184
Bonds Held / Sinking funds 364
Other Long Term Investments 419
Total Long Term Investments 1,460

Property, Plant & Equipment

Factory Manufacturing Equipment 5,983
Less accumulated depreciation 2,782
Net factory mfr equipment
Store Equip / Selling Assets 5,456 3,201
Less accumulated depreciation 1,292
Net store/selling equipment 4,164
Computer systems 4,721
Less accumulated depreciation 2,370
Net computer systems 2,351
Total Property, Plant & Equip 9,716

Intangible Assets
Copyrights 1,014
Trademarks and Patents 108
Goodwill 100
Total Intangible Assets 1,222

Other Assets 68
Total Assets 22,075

LIABILITIES
Current Liabilities
Accounts payable 1,642
Notes payable, short term 912
Current portion of long term debt 349
Accrued expenses, Interest payable 146
Unearned revenues 274
Taxes payable Other withholding 141
Total Current Liabilities 3,464

Long Term Liabilities

Bank notes payable 912
Bonds payable, other LT liabilities
 Total Long Term Liabilities 4,562 5,474
Total Liabilities 8938

OWNERS EQUITY
Contributed Capital
Preferred stock 3,798
Common stock 4,184
Contributed capital excess of par 1,457
Total Contributed Capital 9,439

Retained Earnings 3,698

Total Owners Equity 13,137

Total Liabilities and Equities 22,075

Exhibit 2. A more detailed version of the example Balance sheet statement from Exhibit 1. Exhibit 2 represents about the
maximum detail must firms present in the Annual Report Balance sheet.