Final answer:
To complete a classified income statement, you calculate gross profit, subtract operating expenses for operating income, and deduct taxes to find the net income. The net annual income for a job is calculated after subtracting taxes and other mandatory contributions, which, divided by 12, gives you the monthly income.
Step-by-step explanation:
Completing a Classified Income Statement
To complete the classified income statement for the reporting year ended March 31, 2023, we need to follow several steps. First, we calculate the total revenues and deduct the cost of goods sold to find the gross profit. Then, we subtract operating expenses to find the operating income. Next, we take into account any other income and expenses to determine the pre-tax income (or earnings before taxes). After this, we apply the income tax rate of 30% to the pre-tax income to find the income tax expense.
Finally, we subtract the income tax expense from the pre-tax income to arrive at the net income. For example, if the pre-tax income were $100,000, the income tax expense would be $30,000 (30% of $100,000), resulting in a net income of $70,000 ($100,000 - $30,000).
To calculate the net annual income for a job position, one would subtract taxes, and deductions such as social security and medicare :
- Calculate pre-tax income.
- Deduct taxes (at the 30% tax rate).
- Deduct other mandatory contributions like social security and medicare.
- Resultant figure is the net annual income.
The monthly income is the net annual income divided by 12. Use this figure to determine the most beneficial job position based on financial needs against expenses like rent, utilities, and other costs of living independently.