Question 2:

At the end of the year a small business owner comes to you with this self prepared income statement.

The goal is to clean up this report:

What items would you raise questions about?

Are there any potential bookkeeping errors?

Do you see any mistakes in the formatting of the report?

P&L (Income Statement) ABC Law Firm, POC 2017 01 02 Q3 Q4 Jan Dec Legal Fee Income 32,000 36,000 41,000 29,000 138,000 5,000 40,00030,000 46,000 17,000 133,000 Divorce Cases Immigration Cases 8,000 (6,000 5,000 (12,000 Total Revenues from Clients COGS Client Fees Merchant account fees 5002,000 5002,000 500 500 500 500 500 500 Expenses Payroll 15,000 10,000 15,000 10,000 50,000 Payroll Taxes (Employer's FICA Match)10,000 8,000 10,000 8,000 36,000 2,000 4,000 3,000 2,000 2,000 3,000 10,000 (50) (168) Rent Credit Card Payments Postage 2,000 (240 (28) 150 240 Owner's Draw 28 2,850 50 3,168 Total Expenses 30,000 20,000 30,000 23,000 103,000 Net Profits 10,000 10,000 16,000 (6,000) 30,000