Portsmouth Company was incorporated and began business on January 1, 2019. It has been successful and now requires a bank loan for additional working capital to finance expansion. The bank has requested an audited income statement for the year 2019. The accountant for Portsmouth company provides you with the following income statement, which Portsmouth plans to submit to the bank. Portsmouth Company Income statement Sales revenue $1,000,000 Dividends 30,000 Gain on recovery of insurance proceeds from earthquake loss 40,000 Total 1,070,000 Less: Selling expenses $100,000 Cost of goods sold 500,000 Interest expense 15,000 Loss on obsolescence of inventories 35,000 Loss on discontinued operations 50,000 Operations Administrative expenses 70,000 Total 770,000 Income before income tax 300,000 Income tax 50,000 Net income $250,000

Instructions 1 Indicate the insufficiencies in the income statement presented.

2 Prepare a classified statement of financial position in good form