INCOME STATEMENT
RECONCILIATION CHECKS
| Checkpoint | Computation | Result |
|---|---|---|
| Gross Profit | $25,200 - $16,632 | $8,568 |
| Operating Income | $8,568 - $4,410 - $474 | $3,684 |
| EBITDA (memo) | $3,684 + $474 | $4,158 |
| Net Other Income | $5 + $13 - $12 | $6 |
| Net Income | $3,684 + $6 | $3,690 |
All checkpoints confirmed. Net income of $3,690K agrees with the Adjusted Trial Balance (per Trial Balance), the Structured Data Map (A-042), and serves as the starting figure for the Statement of Members' Equity and Statement of Cash Flows.
FOOTNOTES
[1] Owner Compensation (Guaranteed Payments): TRG is a single-member LLC. The managing member's compensation of $625K is classified as Guaranteed Payments and is recorded as an SGA expense on the Income Statement. This amount also appears as a component of total member distributions ($3,814K) on the Statement of Members' Equity. For Income Statement purposes, it is an operating expense reducing net income; for equity purposes, the full distribution amount (including this payment) reduces retained earnings. See Structured Data Map, A-015 and A-087.
[2] Miscellaneous SGA: The 19 individually itemized SGA line items in the Baseline Analysis sum to $4,310K against a stated total of $4,410K. The $100K difference has been assigned to Miscellaneous SGA, increasing it from the stated $152K to $252K. The $4,410K total is internally consistent with stated EBITDA of $4,158K ($25,200 - $16,632 - $4,410 = $4,158). See Structured Data Map, Section D, item D-001.
[3] Other Non-Operating Income: The derivation of net income from stated EBIT ($3,684K) plus Gain on Disposal ($5K) less Interest Expense ($12K) yields $3,677K. The stated entity-level net income is $3,690K, confirmed across the equity roll-forward and cash flow statement. The $13K difference is presented as Other Non-Operating Income and is immaterial (0.35% of net income). It likely represents minor items such as negligible interest income (described in the Baseline as "under $1K") and rounding across multiple sub-accounts. See Structured Data Map, Section D, item D-003.
[4] Entity Tax Status: TRG is a single-member LLC treated as a disregarded entity for federal income tax purposes. No entity-level income tax provision is recorded on the Income Statement. All taxable income flows through to the owner's personal return. Pro forma tax calculations at a blended 30% rate (provision of $1,104K, yielding after-tax net income of $2,580K) are provided in the Baseline Analysis for comparability purposes only and are NOT reflected in these financial statements. See Structured Data Map, A-043 and A-044.
[5] Contra-Revenue Items: Warranty callback credits of $126K and material return credits of $63K are described in the Baseline as contra-revenue items. Per the company's reporting practice, these amounts are netted within cost of revenue and SGA rather than presented as separate contra-revenue deductions from gross revenue. Total revenue of $25,200K is presented gross, consistent with the Adjusted Trial Balance. See Structured Data Map, A-005 and A-006.
SOURCE REFERENCE INDEX
| Income Statement Line | Data Map Ref | TB Account(s) |
|---|---|---|
| Residential Re-Roofing & Repairs Revenue | A-002 | 4000 |
| Commercial Roofing Revenue | A-003 | 4010 |
| New Construction Roofing Revenue | A-004 | 4020 |
| Total Revenue | A-001 | -- |
| Materials | A-008 | 5000 |
| Direct Labor | A-009 | 5100 |
| Subcontractor Costs | A-010 | 5200 |
| Project Expenses | A-011 | 5300 |
| Total Cost of Revenue | A-007 | -- |
| Gross Profit | A-012 | -- |
| Owner Compensation | A-015 | 6000 |
| Non-Owner Salaries | A-016 | 6010 |
| Payroll Taxes & Benefits | A-017 | 6020 |
| Facility Lease | A-018 | 6100 |
| Insurance | A-019 | 6200 |
| Professional Fees | A-020 | 6300 |
| Advertising & Marketing | A-021 | 6310 |
| Owner Vehicle & Personal Expenses | A-022 | 6320 |
| Utilities & Communications | A-023 | 6330 |
| Office Supplies & Equipment | A-024 | 6340 |
| Software & Technology | A-025 | 6350 |
| Dues, Subscriptions, Licensing Fees | A-026 | 6360 |
| Travel & Entertainment | A-027 | 6370 |
| Bad Debt Expense | A-028 | 6400 |
| Bank & Merchant Processing Fees | A-029 | 6410 |
| Charitable Contributions | A-030 | 6420 |
| Recruiting & Training | A-031 | 6430 |
| Repairs & Maintenance (Admin) | A-032 | 6440 |
| Miscellaneous SGA | A-033, D-001 | 6500 |
| Total SGA | A-014 | -- |
| Depreciation Expense | A-034 | 7000 |
| Gain on Disposal of Assets | A-036 | 8000 |
| Other Non-Operating Income | D-003 | 8010 |
| Interest Expense | A-038 | 8100 |
| Net Income | A-042 | -- |