Prepare an Income Statement for XYZ Merchandisers for the year ended 31st December 2019.

Net Sales are calculated by subtracting Sales Returns from Sales.

$$\begin{align*} \text{Sales} &= \text{K}200,000 \\ \text{Less: Sales Returns} &= \text{K}15,000 \\ \text{Net Sales} &= \text{K}200,000 - \text{K}15,000 \\ &= \text{K}185,000 \end{align*}$$

Gross Profit is Net Sales less Cost of Goods Sold.

$$\begin{align*} \text{Net Sales} &= \text{K}185,000 \\ \text{Less: Cost of Goods Sold} &= \text{K}75,000 \\ \text{Gross Profit} &= \text{K}185,000 - \text{K}75,000 \\ &= \text{K}110,000 \end{align*}$$

Operating expenses include all expenses related to the core operations of the business, excluding Cost of Goods Sold and non-operating items like interest expense.

$$\begin{align*} \text{Advertising expenses} &= \text{K}6,000 \\ \text{Sales commission expense} &= \text{K}1,500 \\ \text{Sales wages expense} &= \text{K}7,000 \\ \text{Sales Rent Expense} &= \text{K}5,000 \\ \text{Admin wages Expense} &= \text{K}12,000 \\ \text{Admin Rent Expense} &= \text{K}6,000 \\ \text{Utilities Expense} &= \text{K}15,000 \\ \text{Office Supplies Expense} &= \text{K}3,000 \\ \text{Depreciation Expense, Office Equipment} &= \text{K}600 \\ \text{Depreciation Expense, Office Motor Vehicle} &= \text{K}300 \\ \text{Depreciation Expense, Distribution Motor Vehicle} &= \text{K}700 \\ \text{Insurance Expense} &= \text{K}2,000 \\ \text{Total Operating Expenses} &= \text{K}6,000 + \text{K}1,500 + \text{K}7,000 + \text{K}5,000 + \text{K}12,000 + \text{K}6,000 + \text{K}15,000 + \text{K}3,000 + \text{K}600 + \text{K}300 + \text{K}700 + \text{K}2,000 \\ &= \text{K}59,100 \end{align*}$$

Net Income is Gross Profit less Total Operating Expenses and any other non-operating expenses like Interest Expense. The Revaluation loss on Distribution Motor Vehicle (OCI) is an Other Comprehensive Income item and is not included in the calculation of Net Income.

$$\begin{align*} \text{Gross Profit} &= \text{K}110,000 \\ \text{Less: Total Operating Expenses} &= \text{K}59,100 \\ \text{Operating Income} &= \text{K}110,000 - \text{K}59,100 \\ &= \text{K}50,900 \\ \text{Less: Interest Expense} &= \text{K}1,700 \\ \text{Net Income} &= \text{K}50,900 - \text{K}1,700 \\ &= \text{K}49,200 \end{align*}$$

The Net Income for XYZ Merchandisers for the year ended 31st December 2019 is:

$$\text{K}49,200$$