Multiple-step income statement Obj. 4 The following income statement for Curbstone Company was prepared for the year ended August 31, 20Y5:

Curbstone Company Income Statement For the Year Ended August 31, 20Y5 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,595,000 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (6,110,000)

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,485,000 Expenses:

Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $800,000 Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575,000 Delivery expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  425,000 Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (1,800,000)

$ 685,000 Other expense:

Interest revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000 Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 640,000

a. Identify the errors in the income statement.

b. Prepare a corrected income statement.

AppendixLO1