Income Statement Sample Merchandising

Income statements for each type of firm vary in several ways such as the types of gains and losses experienced cost of goods sold and net revenue.

Income statement sample merchandising. Selling expenses were shown separately from administrative expenses. When you are ready click next below to begin. What the new income statement tells you. Example 2 shows how an income statement of merchandising and manufacturing businesses would look like.

The income statement must report the interest incurred regardless of the date the interest is paid. Back to top 5. To summarize the important relationships in the income statement of a merchandising firm in equation form. It shows the cost of items sold hence also known as cost of goods sold.

Total operating expenses selling expenses administrative expenses. This is the most difficult section of the four part income statement. What does the income statement report. 100 000 x 12 x 1 12 1 000.

Merchandising companies sell products but do not make them. A merchandising business however has a few slight differences in its income statement and balance sheet. Service companies primarily sell services rather than tangible goods. The income statement also called the profit and loss statement is a report that shows the income expenses and resulting profits or losses of a company during a specific time period.

Therefore these companies will have cost of goods sold but the calculation is much easier than for a manufacturing company. The income statement is prepared first because the net income or loss is calculated on this statement and is used on the statement of owner s equity. Is a retailer s interest expense an operating expense or a non operating expense. Expenses for a merchandising company must be broken down into product costs cost of goods sold and period costs selling and administrative.

Merchandise inventory is the merchandise purchased to be sold to consumers. A merchandising company engages in the purchase and resale of tangible goods. Let s go through it step by step. Net sales sales revenue sales discounts sales returns and allowances.

Sample income statement download 11 54 kb 20 download 42 50 kb 21 download 94 50 kb 22 download 13 26 kb 23 download 31 92 kb 24 download 13 91 kb 25 download 31 00 kb 26 download 4 08 kb 27. The income statement can either be prepared in. In the above example a separate line for cost of sales is presented. The balance sheet of the merchandising business expands its assets section to include merchandise inventory and sometimes estimated returns inventory.