Prepare income statement

Notes & extra information provided to you from discussions with the Junior Accountant:

1. The cash balance shown on the financial statements includes a $35,000 overdraft in the payroll account.

2. Accounts receivable includes a provision of $85,000 for uncollectible accounts.

3. Management is holding the FV-OCI investments for strategic reasons, and as such does not plan on selling the investments in the near future.

4. Property, plant, and equipment is being accounted for using the cost model. A few years ago the corporation acquired land and building for $500,000 and $350,000 respectively. The total amount of depreciation recorded on the building as year-end is $70,000.

5. The bonds are 5-year bonds which have been acquired at a premium during the year. The bonds will be held to maturity.

6. The bank loan is an interest-bearing instalment loan secured by land and the building. The loan principal to be repaid over the next 12 months is $125,000.

7. During the year, the company issued refunds to customers for inventory returns in the amount of $60,000. Also, a total of $4,550 in sales discounts were provided to credit customers for early payment. Both these amounts are included in sales revenues.

8. The company successfully received $14,150 in supplier rebates on inventory purchases and recorded these as extra revenues in the income statement. The supplier rebates relate to inventory that has already been sold.

9. When inventory was purchased, SWI paid $13,500 was spent on freight to have the inventory shipped to its warehouses. All inventory has since been sold. The remaining freight charges related to shipping costs for SWIs largest customers.

10. Included in this balance is $6,500 of amortization for the trademark.

11. SWI declared and paid cash dividends of $90,000 during the year.

12. SWI is subject to a 30% effective tax rate (Hint: The income tax expense shown in the draft F/S was incorrectly calculated by the junior accountant.)

13. The amount of accumulated other comprehensive income that shouldve been shown on the balance sheet is $44,800.

Sports World Incorporated Income Statement Year Ended, December 31, 2022 REVENUES: \begin{tabular}{lr} Sales Revenue (note 7) & $585,450 \\ Supplier rebates (note 8) & 14,150 \\ Unrealized holding gain (FV-OCI Investments) & 9,800 \\ Interest revenue & 11,500 \\ Dividend revenue & 85,000 \\ Total Revenues & $705,900 \\ \hline \end{tabular} EXPENSES: \begin{tabular}{lr} \hline Freight in and freight out (note 9) & $16,000 \\ Cost of items sold & 258,000 \\ Depreciation expense (note 10) & 46,500 \\ Bad debts expense & 41,600 \\ Income tax expense & 18,735 \\ Interest expense & 12,000 \\ Loss on sale of equipment & 18,000 \\ Write-off of obsolete inventory & 35,000 \\ Property taxes & 12,500 \\ Repairs \& maintenance & 10,000 \\ Salaries \& wages & 67,000 \\ Utilities & 55,000 \\ Dividends expense (note 11) & 90,000 \\ \hline Total Expenses & $680,335 \\ \end{tabular} Net Income $25,565