can you exlain why in part b we subtract the costs of goods sold

(b) Prepare an income statement for May through gross profit. LOPEZ COMPANY (Partial) Income Statement For the Month Ended May 31, 2017 $215,000 Sales revenue Cost of goods sold Finished goods, May 1 Cost of goods manufactured Cost of goods available for sale Less: Finished goods, May 31 Cost of goods sold Gross profit $12,600 151,200 163,800 9,500 154,300 $60,700 1 E19-9 Prepare a cost of goods manufactured schedule and partial financial statements At May 31, 2017, the accounts of Lopez Company show the following 1. May 1 inventories - finished goods $12,600, work in process S14,700 and raw materials $8,200. 2. May 31 inventories - finished goods $9,500, work in process, 15,900, and raw materials $7,100. 3. Debit postings to work in process were direct materials, 562,400, direct labor $50,000, and manufacturing overhead applied $40,000. 24. Sales revenue totaled S215,000, 3 4 Instructions (a) Prepare a condensed cost of goods manufactured schedule. 16 (b) Prepare an income statement for May through gross profit 17 (c) Indicate the balance sheet presentation of the manufacturing inventories at May 31, 2017 18 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "7". 19 20 21 frared schedule