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P$4\mathrm{.}7$ The following financial statement was prepared by employees of Intellisys Corporation, which fol$-$

lows ASPE:

Sales revenue

Gross sales revenue, including sales taxes

Less: Sales returns and allowances

Net sales revenue

$\backslash$table$[[$Dividend revenue, interest income, and purchase discounts,$988,100],[$Recoveries of accounts written off in prior years,$30,250],[13,850,],[$Total revenues,$1,032,200\_]]$

Operating expenses

$$1,044,300$

$56,200$

$[988,100],[30,250],[13,850],[1,032,200]$

$[465,900],[60,500],[19,100],[3,400],[27,800],[576,700],[455,500]$

Note $1$: New styles and rapidly changing consumer preferences resulted in a $$37,000$ loss on the disposal

of discontinued styles and related accessories.

Note $2$: The corporation sold an investment in trading securities at a loss of $$39,050.$ The corporation

normally sells securities of this type.

Note $3$: The corporation sold one of its warehouses at an $$86,350$ loss $($net of taxes$).$

Note $4$: The corporation was charged $$34,500$ for additional income taxes resulting from a settlement in

Of this amount, $$17,000$ was for $2022,$ and the balance was for $2021.$ This type of litigation recurs

frequently at Intellisys.

Instructions Identify and discuss the weaknesses in classification and disclosure in the single$-$step income statement above. Explain why these treatments and weaknesses and what the proper presentation of the items would be in accordance with recent professional pronouncements.

Answer & Explanation Solved by verified expert

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