Sample Income Statement Of Merchandising

Net sales sales revenue sales discounts sales returns and allowances.

Sample income statement of merchandising. It shows the cost of items sold hence also known as cost of goods sold. For example if the company is considering a merger a pro forma income statement may be prepared to determine the profitability of the merger. Example 2 shows how an income statement of merchandising and manufacturing businesses would look like. In the above example a separate line for cost of sales is presented.

A pro forma income statement is based on projections or possibilities. Merchandising business and for manufacturing too. Expenses for a merchandising company must be broken down into product costs cost of goods sold and period costs selling and administrative. Therefore these companies will have cost of goods sold but the calculation is much easier than for a manufacturing company.

Service companies primarily sell services rather than tangible goods. A merchandising company engages in the purchase and resale of tangible goods. The income statement can either be prepared in. To summarize the important relationships in the income statement of a merchandising firm in equation form.

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. Merchandising businesses use the multiple step income statement as it provides more information for financial statement users on the profits made from the actual merchandise versus the costs of running the business. Merchandising companies sell products but do not make them. 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.

Just like all income. Gross margin net sales cost of goods. Companies often use pro forma income statements to forecast what may happen in anticipation of an event. Figure 1 9 merchandising company income statement for fashion inc presents an income statement for fashion inc a retail company that sells clothing.

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. Notice that the schedule of cost of goods manufactured and related.