MULTI-STEP INCOME STATEMENT MERCHANDISE ACCOUNTING Calculation Steps for Gross Profit NET SALES - SALES - RETURNS - ALLOWANCES - SALES DISCOUNTS NET PURCHASES = BEGINNING INVENTORY + PURCHASES - RETURNS . ALLOWANCES . PURCHASE DISCOUNTS COST OF MERCHANDISE PURCHASED = NET PURCHASES + FREIGHT MERCHANDISE AVAILABLE FOR SALE BEGINNING INVENTORY + COST OF MERCHANDISE PURCHASED COST OF MERCHANDISE SOLD COST OF MERCHANDISE AVAILABLE FOR SALE - ENDING INVENTORY GROSS PROFIT = NET SALES. COST OF MERCHANDISE SOLD Calculation of Operation Expenses TOTAL OPERATING EXPENSESS Selling expenses + Administrative expenses Calculation of Income from Operatons INCOME FROM OPERATION = GROSS PROFIT - TOTAL OPERATING EXPENSES Calculation of Net Income before Tax NET INCOME BEFORE TAX- Income from Operations + Miscellaneous Revenue - Miscellaneous Expenses OTHER IMPORTANT INFORMATON TO KNOW 1) PERPETUAL SYSTEM taries and cost of Merchandise Sold (COMS) pated in computer with each train PERIODIC SYSTEM rend cont of Merchandise Sold COSmuts are updated at end of period fully end of month FREIGHT OURGES FOR "Free Borgonowe FOS DESTINATION SELLER PAYS FREIGHT TO SHOPPING POINT BUVER PAYS FREIGHT CREDIT CARD TRANSACTIONS MasterCard and ise are treated les because they are normal processed through dearing one that contact the bank that American Express may be treated as a clearing house is sed by the retailers Accounts Recebe sent free to AMX (4) SALES AND PURCHASE DISCOUNTS 2/10, gald withinten det du in 30 days 30 in the days Column 1 2 3 4 SALES REVENUE Gross Sales Less: Returns & Allowances Sales Discounts NET SALES $720,185 -6,140 -5.790 11.930 $708,255 $59,700 COST OF MERCHANDISE SOLD: Merchandise Beginning Inventory Purchases Less: Returns & Allowances Purchase Discounts Net Purchases Add: Freight costs Cost of Merchandise Purchased (COMP) MERCHANDISE AVAILABLE FOR SALE (BI+ COMP) Less: Merchandise Ending Inventory COST OF MERCHANDISE SOLD GROSS PROFIT: 521,980 -9,100 -2.525 -11,625 510,355 17400 522 255 587,455 -62.150 -525,305 182,950 LESS: OPERATING EXPENSES: Selling Expenses: Sales salaries Advertising Depreciation expense-equipment Delivery expense Miscellaneous expenses 53.430 10,860 3,100 2.800 630 -70,820 Administrative Expenses: Office Salaries Rent Depreciation expense-equipment Insurance expense Office supplies expenses Miscellaneous administrative expenses TOTAL OPERATING EXPENSES INCOME AFTER OPERATIONS: 21.020 8,100 2,490 1,910 610 760-34,890) -105.710 77,240 OTHER INCOME AND EXPENSES: Rent revenue Interest rexpenses NET INCOME BEFORE TAX: 600 -2.440 1.840 75,400 MULTI-STEP INCOME STATEMENT MERCHANDISE ACCOUNTING Calculation Steps for Gross Profit NET SALES - SALES - RETURNS - ALLOWANCES - SALES DISCOUNTS NET PURCHASES = BEGINNING INVENTORY + PURCHASES - RETURNS . ALLOWANCES . PURCHASE DISCOUNTS COST OF MERCHANDISE PURCHASED = NET PURCHASES + FREIGHT MERCHANDISE AVAILABLE FOR SALE BEGINNING INVENTORY + COST OF MERCHANDISE PURCHASED COST OF MERCHANDISE SOLD COST OF MERCHANDISE AVAILABLE FOR SALE - ENDING INVENTORY GROSS PROFIT = NET SALES. COST OF MERCHANDISE SOLD Calculation of Operation Expenses TOTAL OPERATING EXPENSESS Selling expenses + Administrative expenses Calculation of Income from Operatons INCOME FROM OPERATION = GROSS PROFIT - TOTAL OPERATING EXPENSES Calculation of Net Income before Tax NET INCOME BEFORE TAX- Income from Operations + Miscellaneous Revenue - Miscellaneous Expenses OTHER IMPORTANT INFORMATON TO KNOW 1) PERPETUAL SYSTEM taries and cost of Merchandise Sold (COMS) pated in computer with each train PERIODIC SYSTEM rend cont of Merchandise Sold COSmuts are updated at end of period fully end of month FREIGHT OURGES FOR "Free Borgonowe FOS DESTINATION SELLER PAYS FREIGHT TO SHOPPING POINT BUVER PAYS FREIGHT CREDIT CARD TRANSACTIONS MasterCard and ise are treated les because they are normal processed through dearing one that contact the bank that American Express may be treated as a clearing house is sed by the retailers Accounts Recebe sent free to AMX (4) SALES AND PURCHASE DISCOUNTS 2/10, gald withinten det du in 30 days 30 in the days Column 1 2 3 4 SALES REVENUE Gross Sales Less: Returns & Allowances Sales Discounts NET SALES $720,185 -6,140 -5.790 11.930 $708,255 $59,700 COST OF MERCHANDISE SOLD: Merchandise Beginning Inventory Purchases Less: Returns & Allowances Purchase Discounts Net Purchases Add: Freight costs Cost of Merchandise Purchased (COMP) MERCHANDISE AVAILABLE FOR SALE (BI+ COMP) Less: Merchandise Ending Inventory COST OF MERCHANDISE SOLD GROSS PROFIT: 521,980 -9,100 -2.525 -11,625 510,355 17400 522 255 587,455 -62.150 -525,305 182,950 LESS: OPERATING EXPENSES: Selling Expenses: Sales salaries Advertising Depreciation expense-equipment Delivery expense Miscellaneous expenses 53.430 10,860 3,100 2.800 630 -70,820 Administrative Expenses: Office Salaries Rent Depreciation expense-equipment Insurance expense Office supplies expenses Miscellaneous administrative expenses TOTAL OPERATING EXPENSES INCOME AFTER OPERATIONS: 21.020 8,100 2,490 1,910 610 760-34,890) -105.710 77,240 OTHER INCOME AND EXPENSES: Rent revenue Interest rexpenses NET INCOME BEFORE TAX: 600 -2.440 1.840 75,400