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"The balance sheet shows the firm’s financial position at a certain point in time. The income statement summarizes the firm’s revenues and expenses and shows its total profit or loss over a period of time. Most companies prepare monthly income statements for management and quarterly and annual statements for use by investors, creditors, and other outsiders. The primary elements of the income statement are revenues, expenses, and net income (or net loss). The income statement for Delicious Desserts for the year ended December 31, 2018, is shown in Table 14.2.\n\nIncome Statement for Delicious Desserts\n\nDelicious Desserts, Inc.\n\nIncome Statement for the Year Ending December 31, 2018\n\nRevenues\n\nGross sales $275,000\n\nLess: Sales discounts 2,500\n\nLess: Returns and allowances 2,000\n\nNet sales $270,500\n\nCost of Goods Sold\n\nBeginning inventory, January 1 $18,000\n\nCost of goods manufactured 109,500\n\nTotal cost of goods available for sale $127,500\n\nLess: Ending inventory December 31 15,000\n\nCost of goods sold 112,500\n\nGross profit $158,000\n\nOperating Expenses\n\nSelling expenses\n\nSales salaries $31,000\n\nAdvertising 16,000\n\nOther selling expenses 18,000\n\nTotal selling expenses $65,000\n\nGeneral and administrative expenses\n\nProfessional and office salaries $20,500\n\nUtilities 5,000\n\nOffice supplies 1,500\n\nInterest 3,600\n\nInsurance 2,500\n\nRent 17,000\n\nTotal general and administrative expenses 50,100\n\nTotal operating expenses 115,100\n\nNet profit before taxes $42,900\n\nLess: Income taxes 10,725\n\nNet profit $32,175"