Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Year 1 $ 300,000 (40,000) Year 2 $ 430,000 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Interest income (related to business income) Municipal bond income Government fines Overall net income Distributions (60,000) (40,000) (80,000) (25,000) (50,000) (20,000) (40,000) (30,000) (50,000) 12,000 1,500 0 $ 158,500 $ 30,000 22,500 4,000 (2,000) $ 174,500 $ 50,000