Excel Skills | Exercises | Income Statement www.excel-skills.

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Instructions
Versions: Excel 2010 & Excel 2007

Our practical Excel exercises are much more than just exercises! We design our exercises in such a way that they provide the user with a mapping of the Excel
features that can be used in order to complete the appropriate task in the most efficient manner possible. We also reference each step in each exercise to the
appropriate tutorial that needs to be studied in order to be able to complete the step.

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membership, we unfortunately cannot provide you with any of the solutions or assist you with any of the steps that are included in the appropriate exercise.

Start the exercise by saving the workbook on your system, then complete step number 1 and each subsequent step in the order as listed on this sheet before
comparing your workbook to the solution that we have provided.

Step Task Tutorial

1 Open the TB sheet - this sheet contains a monthly trial balance which we'll use in order to compile a monthly Using Named Ranges : Define Named Ranges
and year-to-date income statement. Select all the month headings on the TB sheet (cells C4 to N4), define a
name for this cell selection and enter the name as the following: Months
2 Open the Summary sheet and select cell E2. Add a drop-down list box to this cell (by using the data validation Data Tools : Insert Drop-Down List
feature) and enter the Months named range in the Source section (Tip: Enter an equals sign before the name).
Select the Feb-2012 month from the list box.
3 Select cell F2 and enter a MATCH function which will match the month selection in cell E2 to the Months named Lookup Functions : Match Value in Cell Range
cell range (you need to find an exact match in the target cell range that is represented by the Months name).
The value that is calculated in this cell will be used to determine which columns on the TB sheet to sum later on
in this exercise.

4 Open the TB sheet and select all the cells excluding the column headings that form part of the monthly trial Using Named Ranges : Define Named Ranges
balance (the cell range from cells A5 to N41). Define a named cell range for this cell selection and enter the
following name for the named cell range: TBAll
5 Open the Summary sheet, select cell E5 and enter a SUMIF function to calculate the year-to-date Revenue total Statistical Functions : SUMIF Function
for the selected month:
5.1 Include the TBAll name in the range function argument. Statistical Functions : SUMIF Function
5.2 We've already entered the criteria that we need to use in the formula in column A. Select cell A5 in the criteria Statistical Functions : SUMIF Function
function argument (the second function argument) and add an absolute column reference to the cell reference
($A5).
5.2.1 Note that all the criteria that we've entered in column A contain the "*" wildcard character. This means that our Using Functions : * Wildcard Character
calculation will sum the account balances of all the accounts that start with the characters before the wildcard
character when calculating the result of the SUMIF function. For example, all the accounts that start with "IS-1"
will be added together as a result of including the wildcard character at the end of our criteria in column A.

Page 1 of 7
Step Task Tutorial
5.3 The cell range that needs to be included in the sum range function argument (the third function argument) Lookup Functions : Offset Cell References
needs to be determined based on the month that is selected in cell E2. We'll therefore use the OFFSET function
to specify the cell range that is included in the sum range function argument and we'll base the column selection
on the TB sheet on the result of the MATCH function that has been entered in cell F2:

5.3.1 Include cell B2 on the TB sheet as the first function argument in the OFFSET function and change the cell Formulas & Links : Relative & Absolute References
reference to an absolute cell reference ($B$2). This cell will therefore always be the starting point for
determining the cell range that is specified with the OFFSET function.
5.3.2 Enter a value of 1 in the rows function argument (the second function argument). This means that the cell Lookup Functions : Offset Cell References
selection will be moved one row down from the column heading row to include the first row of account balances
in our cell selection.
5.3.3 Select the value in cell F2 on the Summary sheet in the columns function argument (third function argument) Formulas & Links : Relative & Absolute References
and change the syntax of the cell reference to an absolute cell reference ($F$2). This means that the value that
is calculated with the MATCH function will determine how many columns our cell selection is moved to the right
of the initial cell reference that has been specified in the first function argument.

5.3.4 Our trial balance includes 37 accounts and you'll therefore need to enter a value of 37 in the height function Lookup Functions : Offset Cell References
argument (the fourth function argument). This means that our cell selection will include 37 rows.

5.3.5 We only want to include a single column in our sum range and we'll therefore enter a value of 1 in the width Lookup Functions : Offset Cell References
function argument (the fifth function argument of the OFFSET function).
5.4 After entering the SUMIF function, you'll notice that the value that is calculated for the Revenue line on the
income statement is negative. This is to be expected because revenue accounts usually have credit balances
on a trial balance. We'll change the formula later on in this exercise.
6 Copy cell E5 and paste only the formula into all the cells in column E for which a value has been specified in Copy & Paste Data : Paste Formulas
column A.
7 Enter a minus before the SUMIF formulas in cells E5 and E8. The Revenue and Other Income accounts have Edit Data : Edit Data
credit balances on the trial balance - by entering a minus before the SUMIF function, the negative values will be
converted to positive values.
8 Select cell E7 and enter a formula to deduct the Cost of Sales amount from the Revenue amount. Copy this Enter Data / Select Cells : Enter Formulas
formula to cell C7.
9 Select cell E13 and enter a formula to add the Other Income amount to the Gross Profit amount and to deduct Enter Data / Select Cells : Enter Formulas
the sum of the Operational Expenses, Depreciation, Other Expenses and Finance Costs lines from this
calculation. Copy this formula to cell C13.
10 Select cell E15 and add a formula to deduct the Income Tax amount from the Profit / (Loss) before Taxation Enter Data / Select Cells : Enter Formulas
amount. Copy this formula to cell C15.

Page 2 of 7
Step Task Tutorial
11 Now that we've completed the year-to-date income statement, we'll start with the monthly income statement.
The first point to realize is that the account balances in a trial balance typically reflect the cumulative
movements for the entire year as at the end of each period. The monthly income statement should be calculated
based on the monthly movements in the income statement account balances. We'll therefore need to adjust our
calculations accordingly.

12 Copy the SUMIF formula in cell E6 to cell C6. Copy & Paste Data : Paste Formulas
13 Both the year-to-date and monthly income statements need to be based on the month that is selected in cell E2.
We'll therefore use the SUMIF formula that has been included in the year-to-date column as a starting point and
simply adjust it in order to calculate the monthly income statement amounts. In order to do this, we'll have to
deduct the cumulative account balances as at the end of the previous calendar month from the cumulative
account balances that have been calculated in the year-to-date column.

14 Copy the entire SUMIF formula from the formula bar (except for the equals sign), enter a minus sign at the end Edit Data : Edit Data
of the formula and paste the copied formula into the formula bar (you should now have two identical SUMIF
formulas which are separated by a minus sign and the result of the calculation should be a nil value).

15 We now need to change the second SUMIF function so that the calculation is performed based on the month Edit Data : Edit Data
before the month that has been selected in cell E2. The month number that is calculated in cell F2 is used to
determine which column on the trial balance needs to be included in the SUMIF calculation. We therefore simply
need to adjust this value by deducting a value of 1 from it in the third function argument of the OFFSET function
(Tip: The third function argument in the OFFSET function should therefore include: Summary!$F$2-1).

16 Note: If the March 2011 period is selected from the list box in cell E2, the MATCH function result in cell F2 will
be 1 and if we then deduct 1 from this value in the second SUMIF function, it means that the second SUMIF
calculation would effectively be applied to the Description column on the TB sheet (which contains only text).
This will however not result in an error but simply a nil value for the second SUMIF formula because the SUMIF
function ignores text values.

17 Copy cell C6 and paste only the formula into all the cells in column C for which a value has been specified in Copy & Paste Data : Paste Formulas
column A.
18 Edit the formulas in cells C5 and C8 by adding round brackets around both SUMIF functions and adding a Edit Data : Edit Data
minus sign before the round brackets. The minus sign converts the credit balances to positive values as we've
explained earlier in this exercise.
19 Save the workbook and compare your workbook to the solution that we've provided.

Page 3 of 7
 Example Limited Select Month:
Income Statement

Monthly Year to Date

IS-1* Revenue
IS-2* Cost of Sales
Gross Profit
IS-8* Other Income
IS-3* Operational Expenses
IS-4* Depreciation
IS-7* Other Expenses
IS-5* Finance Costs
Profit / (Loss) before Taxation
IS-6* Income Tax
Profit / (Loss) for the period
Example Limited
Monthly Trial Balance

Account Description Mar-2011 Apr-2011 May-2011 Jun-2011

BS-100 Fixed Assets 9,445.00 12,076.58 12,076.58 12,076.58
BS-200 Investments 6,000.00 6,000.00 6,000.00 6,000.00
BS-300 Bank Account 18,124.42 13,703.88 2,911.38 -4,246.74
BS-350 Petty Cash 210.00 223.00 217.00 207.00
BS-400 Trade Debtors 21,400.00 34,420.00 50,080.00 42,340.00
BS-500 Trade Creditors -11,478.00 -14,220.00 -11,982.00 -11,179.00
BS-600 Sales Tax Control -1,335.38 -3,419.71 -8,726.94 -4,007.62
BS-700 Long Term Liabilities -14,980.00 -14,760.00 -14,540.00 -14,320.00
BS-800 Share Capital -100.00 -100.00 -100.00 -100.00
BS-900 Retained Earnings -21,485.00 -21,485.00 -21,485.00 -21,485.00
IS-100 Sales -40,147.37 -80,340.35 -126,901.76 -159,042.11
IS-110 Royalties -3,000.00 -6,000.00 -9,000.00 -12,000.00
IS-200 Cost of Sales 14,051.58 24,619.12 40,915.62 53,914.74
IS-305 Accounting Fees 877.19 1,754.38 2,631.57 3,508.76
IS-310 Advertising & Marketing - - - -
IS-315 Bank Charges 74.56 175.44 276.32 377.20
IS-320 Commission - - - -
IS-325 Computer Expenses - 35.96 35.96 35.96
IS-330 Consumables & Cleaning - - - -
IS-335 Entertainment - - - -
IS-340 Insurance 298.25 596.50 894.75 1,193.00
IS-345 Office Expenses 78.95 155.27 212.29 308.78
IS-350 Office Rent 5,614.04 11,228.08 16,842.12 22,456.16
IS-355 Postage - - - -
IS-360 Professional & Legal Fees - - - -
IS-365 Salaries & Wages 13,000.00 33,000.00 53,000.00 73,000.00
IS-370 Stationery - - 861.40 861.40
IS-375 Subscriptions & Memberships 419.30 419.30 419.30 419.30
IS-380 Telephone & Internet 157.02 314.04 471.06 628.08
IS-385 Training - - 192.98 192.98
IS-390 Travelling & Accommodation 175.44 175.44 669.30 2,232.46
IS-395 Utilities - - - -
IS-400 Depreciation 2,500.00 5,000.00 7,500.00 10,000.00
IS-500 Interest Paid 100.00 200.00 300.00 400.00
IS-600 Taxation - - - -
IS-700 Other Expenses - - - -
IS-800 Other Income - -3,771.93 -3,771.93 -3,771.93
Jul-2011 Aug-2011 Sep-2011 Oct-2011 Nov-2011 Dec-2011 Jan-2012
12,076.58 12,076.58 12,076.58 12,076.58 12,076.58 12,076.58 12,076.58
6,000.00 9,750.00 9,750.00 9,750.00 9,750.00 9,750.00 9,750.00
17,817.28 3,507.02 6,536.90 5,071.72 16,759.12 24,379.12 14,436.67
228.00 200.00 210.00 192.00 198.00 202.00 206.00
15,200.00 26,970.00 13,200.00 25,500.00 31,720.00 8,300.00 3,400.00
-14,698.00 -11,981.00 -25,698.48 -11,351.00 -20,161.00 -12,453.00 -11,514.00
-6,640.50 -2,078.98 -3,360.66 -5,714.71 -8,490.40 -1,212.50 -2,292.94
-14,100.00 -43,880.00 -43,660.00 -43,440.00 -43,220.00 -46,000.00 -45,780.00
-100.00 -100.00 -100.00 -100.00 -100.00 -100.00 -100.00
-21,485.00 -21,485.00 -21,485.00 -21,485.00 -21,485.00 -21,485.00 -21,485.00
-188,164.91 -206,822.80 -239,863.15 -309,450.87 -357,275.43 -365,575.43 -381,224.56
-15,000.00 -18,000.00 -21,000.00 -24,000.00 -27,000.00 -33,000.00 -39,000.00
64,107.72 72,387.98 83,952.10 101,307.80 111,046.40 113,951.40 119,428.60
4,385.95 5,263.14 6,140.33 7,017.52 7,894.71 8,771.90 9,649.09
- - - - - - -
478.08 578.96 679.84 780.72 881.60 982.48 1,083.36
- 655.26 4,376.31 4,376.31 5,237.71 6,081.57 6,532.45
857.89 857.89 857.89 912.28 912.28 965.79 965.79
- - - - - - -
- - - - - - -
1,491.25 1,789.50 2,087.75 2,386.00 2,684.25 2,982.50 3,280.75
334.22 402.64 481.59 672.82 762.29 846.50 938.61
28,070.20 33,684.24 39,298.28 44,912.32 50,526.36 56,140.40 61,754.44
- - - - - - -
- - 10,964.91 10,964.91 10,964.91 10,964.91 10,964.91
93,000.00 113,000.00 133,000.00 153,000.00 173,000.00 193,000.00 213,000.00
1,528.94 1,734.20 1,734.20 1,987.71 1,987.71 2,259.64 2,259.64
2,173.69 2,173.69 2,173.69 2,173.69 2,173.69 2,278.95 2,278.95
785.10 942.12 1,099.14 1,256.16 1,413.18 1,570.20 1,727.22
192.98 192.98 436.38 436.38 436.38 436.38 777.83
2,232.46 3,353.51 3,353.51 5,008.77 5,008.77 5,008.77 5,008.77
- - 4,929.82 4,929.82 4,929.82 4,929.82 4,929.82
12,500.00 15,000.00 17,500.00 20,000.00 22,500.00 25,000.00 27,500.00
500.00 1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00
- 2,600.00 2,600.00 2,600.00 2,600.00 2,600.00 2,600.00
- - - - 3,540.00 3,540.00 3,540.00
-3,771.93 -3,771.93 -3,771.93 -3,771.93 -3,771.93 -20,192.98 -20,192.98
Feb-2012
20848.51
9750
82522.41
201
12000
-21,468.00
-5,775.65
-55,560.00
-100.00
-21,485.00
-409,382.46
-45,000.00
129,283.86
10,526.28
-
1,184.24
6,532.45
965.79
-
-
3,579.00
1,004.40
67,368.48
-
10,964.91
233,000.00
2,513.15
2,278.95
1,884.24
777.83
5,008.77
4,929.82
30,000.00
4,000.00
6,300.00
3,540.00
-92,192.98