INCOME STATEMENTUnder a periodic inventory system, the income statements of a merchandiser and a manufacturer differ in the cost of goods sold section. Merchandisers compute cost of goods sold by adding the beginning merchandise inventory to the cost of goods purchased and subtracting the ending merchandise inventory. Manufacturers compute cost of goods sold by adding the beginning finished goods inventory to the cost of goods manufactured and subtracting the ending finished goods inventory. Illustration 14-5 shows these different methods. Illustration 14-5 Cost of goods sold componentsHelpful Hint We assume a periodic inventory system in this illustration.