Financial Accounting

Just after preparing the adjusting entries for the year, the long-time
controller at Parrot Company suffered a massive heart attack and died
instantly. Her inexperienced assistant did his best to prepare financial
statements from the information the controller had left behind. He had
particular difficulty with the income statement.

The item labeled sales expense is the sum of the amounts charged
customers during the year for goods and services provided.

Income Statement

December 31, 2002

Sales Expense $260,722

Costs of Goods Sold $102,690

Net Profit $158,032

Operating Expenses:

Wages $59,780

Utilities $9,002

Interest $14,420

Depreciation $13,510

Total Operating Expense $97,712

Operating Income $60,320

Advertising Expense $9,968

Pretax Income $50,352

Income Tax Expense $13,150

Net Income $63,502

Earnings per Share of Common Stock

($64,502 divided by 15,000 Shares) $4.30

Identify and list the errors in the income statement above.

Prepare a corrected income statement.