214
This estimation can only be used for management purposes and interim statements. Formal financial
statements can only be prepared after a physical count has been performed.
INCOME STATEMENT
COST OF GOODS SOLD COST OF GOODS SOLD COST OF GOODS SOLD
OPERATING EXPENSES
OPERATING EXPENSES
OPERATING EXPENSES
GROSS PROFIT
GROSS PROFIT
GROSS PROFIT
NET INCOME
NET INCOME
NET INCOME
SALES REVENUE
SALES REVENUE
SALES REVENUE
+ $20,000 CR
+ $10,000 CR
+ $30,000 CR
Estimated
$12,000
Estimated
$6,000
Estimated
$18,000
+ $6,000 DR
+ $6,000 DR
+ $6,000 DR
Estimated
$8,000
Estimated
$4,000
Estimated
$12,000
Estimated
$2,000
Estimated
($2,000)
Estimated
$6,000
MAY
JUNE
JULY
Multistep Income Statement
The multistep income under a periodic inventory system is much like that of a perpetual inventory
system, except when it comes to COGS. Recall that there is a single line for COGS on the income
statement for a perpetual inventory system. However, this line is replaced with a COGS section for
a periodic inventory system.The section is taken from the schedule of COGS introduced earlier.
Note that the periodic and perpetual inventory systems both produce the same values for COGS,
gross profit, and net income. The only difference is the way in which COGS is calculated. The
multistep income statement for Tools 4U is shown in Figure 7A.17 using the same values from the
perpetual inventory system.
Inventory: Merchandising Transactions
Chapter 7
Appendix
