Brightway Retail Ltd.
Detailed Income Statement — For the Year Ended December 31, 2025
1. Adjusted Trial Balance — Income Statement Accounts
The adjusted trial balance below has been filtered to show only the revenue and expense accounts needed for the
income statement (balance sheet accounts — assets, liabilities, and equity — are excluded).
Account Category Debit (■) Credit (■)
Sales Revenue Operating Revenue 850,000
Sales Returns & Allowances Operating Revenue (contra) 15,000
Cost of Goods Sold Direct Operating Cost 420,000
Salaries & Wages (Admin) Indirect Operating Cost 95,000
Rent Expense Indirect Operating Cost 36,000
Utilities Expense Indirect Operating Cost 12,000
Marketing & Advertising Indirect Operating Cost 28,000
Depreciation — Office Equipment Indirect Operating Cost 18,000
Insurance Expense Indirect Operating Cost 9,000
Office Supplies Expense Indirect Operating Cost 6,000
Interest Income Non-Operating Revenue 4,000
Interest Expense Non-Operating Cost 22,000
Income Tax Expense Non-Operating Cost 48,250
Totals 709,250 854,000*
*The remainder of total credits relates to balance sheet accounts (assets, liabilities, equity) which are outside the scope of the income
statement and are not shown here.
2. Categorization of Revenue and Expenses
Operating Revenue: Sales Revenue, net of Sales Returns & Allowances.
Direct Operating Costs: Cost of Goods Sold — costs directly tied to producing/selling goods.
Indirect Operating Costs: Administrative salaries, rent, utilities, marketing, depreciation, insurance, and office
supplies — costs of running the business that are not directly tied to a unit sold.
Non-Operating Items: Interest income, interest expense, and income tax — items arising outside core operating
activities.
3. Detailed Income Statement
Description Amount (■) Subtotal (■)
Sales Revenue 850,000
Less: Sales Returns & Allowances (15,000)
Net Revenue 835,000
Less: Cost of Goods Sold (Direct Operating Costs) (420,000)
GROSS PROFIT 415,000
Less: Indirect Operating Expenses
Salaries & Wages (Admin) (95,000)
Rent Expense (36,000)
Utilities Expense (12,000)
Marketing & Advertising (28,000)
Depreciation — Office Equipment (18,000)
Insurance Expense (9,000)
Office Supplies Expense (6,000)
Total Indirect Operating Expenses (204,000)
OPERATING PROFIT (EBIT) 211,000
Less: Non-Operating Items
Interest Expense (22,000)
Interest Income 4,000
Net Non-Operating Expense (18,000)
PROFIT BEFORE TAX 193,000
Less: Income Tax Expense (48,250)
NET PROFIT 144,750
Summary: Gross Profit of ■415,000 reflects strong core product profitability (49.7% gross margin). After indirect
operating costs, Operating Profit stands at ■211,000 (25.3% operating margin). Net Profit after non-operating items
and tax is ■144,750 (17.3% net margin).
4. Key Formulas Used
Gross Profit = Net Revenue − Direct Operating Costs (COGS)
Operating Profit (EBIT) = Gross Profit − Indirect Operating Costs
Net Profit = Operating Profit − Non-Operating Costs (Net Interest + Tax)
Note: Figures above are illustrative, built from a sample adjusted trial balance to demonstrate the full income-statement workflow
(categorization → gross profit → operating profit → net profit). Substitute your organization's actual adjusted trial balance figures to
produce a company-specific statement.