ABC Retail Income Statement as of December 31, 2026 Instructions The names of the accounts have already been provided. Sales Revenue Less returns Net Sales Revenue Less: Cost of Goods Sold Inventory used Import fees, transport Total Cost of Goods Sold (COGS) Gross Profit Less: Operating Expenses Accounting and bookkeeping fees Advertising and marketing Bank charges Depreciation Employment expenses Insurance Rent Rental of office equipment Selling, General and Admin costs Sponsorships Telephone & utilities Other Total Operating Expenses Operating Profit Less: Interest Expenses Profit before tax Less: Income Tax Expense Profit for the period You need to provide the numbers in the light blue spaces. If it is none, then indicate this with a 0. 2026 2025 You will need to set up formulas where needed. Tip: the cells that are darker blue. Do not type the number or use a calculator. Use =(cell name) to link the data in Columns N and P to the right location in the Income Statement 2026 2025 ABC Retail had a great year in 2025 with total sales of $2,467,094 and a 4% return rate. Return rate (percent of sales that were returned to the retailer for a refund or credit.) 2026 was a good year and total sales increased 9.5% over last year. 2,467,094 4.0% 9.5% There were some issues with product quality in 2026 and the company's return rate increased. 6.3% You need to determine inventory cost, but you don't have that number. You do know that the overall COGS rate (COGS as a percent of Net Sales) improved slightly from 2025 to 2026. The import fees and transportation were a small percentage of Net Sales: 55.0% 57.0% 3.2% 51.8% 3.0% 54.0% So you realize you can subtract the import fee and transportation rate from COGS to find inventory cost rate (Inventory cost as a percent of Net Sales). Tip: You need to multiple these rates times net sales revenue, not total sales revenue. Now, you can calculate Gross Profit. 2026 2025 Selling, general and administrative (SGA) costs are not included in the cost of goods sold; instead, they are charged to expense as incurred. This operating expense has two parts: Salaries and fixed expenses (this do not change as sales increase of decrease) Selling flex (flexible selling expense). This increase or decreases with sales. So you need to calculate this. 324,820 298,000 The formula for SGA is fixed expenses + (net sales x selling flex rate) Selling flex is close to flat (almost unchanged) for 2025 and 2026: Other expenses are as follows: Accounting and bookkeeping fees. Advertising and marketing Bank charges Depreciation Employment expenses Insurance Interest expense Rental of office equipment Sponsorships Taxes Telephone & utilities Other 2026 2025 9.5% 9.4% 11,000 10,560 285,220 265,255 4,601 4,509 14,540 14,540 860 1,230 36,980 34,761 14,242 13,672 18,099 17,375 4,400 4,136 12,605 13,613 52,999 48,229 12,650 13,030