First of all you have to understand how the income statement’s heading is listed. It is placed in between the category and its figures. The following step will indicate how it is placed.
You have to calculate the total revenue of the firm. All sorts of revenues should be taken into consideration while preparing the income statement. See the example below:
Blue Bird Enterprises
For the Year Ended December 31, 2002
Net Sales Revenue $1000
Rental revenue 500
Interest revenue 50
Total Revenue $1550
Now you have to calculate the amount of expenses. Add all sorts of expenses you incurred in the stated time period. See the example below:
Rent paid 50
Salary and wages 100
(Add all other expenses you have)
Total expenses $220
Now subtract the total expenses from total revenue to get the figure of Net Income before Interest and Tax.
NPBIT (1550-220) $1330
Now subtract total interest incurred in the period.
Net Profit After Interest and before Tax $530
Subtract Tax now (530*35%) $185.5
Net Profit After Interest and Tax $344.5
This is the basic format of the Income statement that is in place for the calculation of profit. You can either include the distribution of profit in the same statement or differently depending on your choice.