Statement of

Comprehensive Income –
Multi Step Approach for a
Merchandising Business
The module includes lesson on:

Preparation of SCI – Multi Step

SCI for a Merchandising
Business
Lesson 1: Preparing Statement
of Comprehensive Income –
Multi Step Approach for a
Merchandising Business
Multi-step approach
• is used to prepare the Statement of Comprehensive Income (SCI) of a
merchandising business as there are several steps needed in order to
arrive at the company’s net income. A merchandising company will
present total sales and cost of goods sold on the first part of the
statement that will net to the company’s gross profit before presenting
the other expenses, which are classified as either administrative
expenses or selling expenses.
_ =
_
or =
EXPENSES
EXPENSES
 EXPENSES

Selling expenses
- are those that are directly related to the main purpose
of a merchandising business: the sale and delivery of
merchandise.
 EXPENSES

Selling expenses

Example: If a company sells solar panels, the selling expense is not the cost of the
production of the solar panel nor the installation of the solar panel. It is strictly the
costs involved with the person who drives to a neighborhood and spends the day
knocking on doors until he gets someone to buy the panels. That salesman's salary,
commission, mileage and parking fall under selling expenses.
 EXPENSES

General and Administrative expenses

- are expenses not directly related to the merchandising
function of the company but are necessary for the business to
operate effectively.
 EXPENSES

General and Administrative expenses

Example: the same solar panel company has general administrative expenses in the
form of central office rent, administrative staff and installation employees. Utilities,
insurance, office supplies and management-related expenses are considered general
and administrative expenses.
 HAPPY SELLING COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016

Sales ₱500,000
Less: Sales Returns ₱30,000
Sales Discounts 10,000 40,000
Net Sales ₱460,000
Less: Cost of Goods Sold
Beginning Inventory ₱250,000
Net Cost of Purchases
Purchases ₱100,000
Less: Purchase Returns 20,000
Purchase Discounts 10,000
Net Purchases 70,000
Freight In 15,000 85,000
Cost of goods available for sale 335,000
Less: Ending inventory 50,000 285,000
Gross Profit ₱175,000
Less: Operating Expenses
General and Administrative
Salaries Expense 20,000
Rent Expense 15,000
Depreciation Expense 10,000
Utilities Expense 5,000
Miscellaneous Expense 1,000 51,000
Selling Expense
Salaries Expense 10,000
Rent Expense 8,000
Depreciation Expense 7,000
Utilities Expense 6,000 31,000
Net Income ₱93,000
 Business Name

Title of Financial Report

HAPPY SELLING COMPANY End of Accounting

STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016
HEADING
Period Date

Sales ₱500,000
Less: Sales Returns ₱30,000
Sales Discounts 10,000 40,000
Net Sales ₱460,000
Less: Cost of Goods Sold
Beginning Inventory ₱250,000
Net Cost of Purchases
Purchases ₱100,000
Less: Purchase Returns 20,000
Net Sales ₱460,000
Less: Cost of Goods Sold
Beginning Inventory ₱250,000
Net Cost of Purchases
Purchases ₱100,000
Less: Purchase Returns 20,000
Purchase Discounts 10,000
Net Purchases 70,000
Freight In 15,000 85,000
Cost of goods available for sale 335,000
Less: Ending inventory 50,000 285,000
Gross Profit ₱175,000
 HAPPY SELLING COMPANY
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2016

Sales ₱500,000
Less: Sales Returns ₱30,000
Sales Discounts 10,000 40,000
Net Sales ₱460,000 GROSS PROFIT
Less: Cost of Goods Sold =
Beginning Inventory ₱250,000 NET SALES – COST OF GOODS SOLD
Net Cost of Purchases
Purchases ₱100,000
Less: Purchase Returns 20,000
Purchase Discounts 10,000
Net Purchases 70,000
Freight In 15,000 85,000
Cost of goods available for sale 335,000
Less: Ending inventory 50,000 285,000
Gross Profit ₱175,000
Less: Operating Expenses
General and Administrative
Gross Profit ₱175,000
Less: Operating Expenses
General and Administrative
Salaries Expense 20,000
Rent Expense 15,000
Depreciation Expense 10,000
Utilities Expense 5,000
Miscellaneous Expense 1,000 51,000
Selling Expense
Salaries Expense 10,000
Rent Expense 8,000
Depreciation Expense 7,000
Utilities Expense 6,000 31,000
Net Income ₱93,000
Cost of goods available for sale 335,000
Less: Ending inventory 50,000 285,000
Gross Profit ₱175,000
Less: Operating Expenses
General and Administrative
Salaries Expense 20,000
Rent Expense 15,000
NET INCOME
Depreciation Expense 10,000 =
Utilities Expense 5,000 GROSS PROFIT– EXPENSES
Miscellaneous Expense 1,000 51,000
Selling Expense
Salaries Expense 10,000
Rent Expense 8,000
Depreciation Expense 7,000
Utilities Expense 6,000 31,000
Net Income ₱93,000
Sales ₱500,000
Less: Sales Returns ₱30,000
Sales Discounts 10,000 40,000
Net Sales ₱460,000
Less: Cost of Goods Sold
Beginning Inventory ₱250,000
Net Cost of Purchases
 Sales Discounts 10,000 40,000
Net Sales ₱460,000
Less: Cost of Goods Sold
Beginning Inventory ₱250,000
Net Cost of Purchases
Purchases ₱100,000
Less: Purchase Returns 20,000
Purchase Discounts 10,000
Net Purchases 70,000
Freight In 15,000 85,000
Cost of goods available for sale 335,000
Less: Ending inventory 50,000 285,000
Gross Profit ₱175,000