Partial Income Statement Periodic System

Gross profit section of income statement periodic system free download as pdf file pdf text file txt or read online for free.

Partial income statement periodic system. This statement breaks out costs into product and period costs. Partial income statement periodic system. For example a company may have acquired another business in the middle of a month and so only needs the financial results of the acquiree for the remaining days of the accounting period for consolidation purposes. Cost of ending inventory 10 800 cost of goods.

Answer to partial income statement periodic systemlapine company has the following account balances as of december 31. Purchases returns 250 cost of goods available for sale 12 250 less. Required prepare a partial income statement for lapine company for 2008 through gross profit. A periodic inventory system is a commonly used alternative to a perpetual inventory system.

Cost of purchase 12 500 12 500 less. Later on in the course we will discuss another format for the income statement called the contribution margin income statement. Calculate lapine s gross profit ratio for 2008. Sales returns and allowances 150 net sales revenue 2 900 cost of goods sold.

Any adjustments related to these purchases of goods will be credited to a general ledger contra account. All purchases are debited to purchases account. Rather than debiting inventory the company debits the temporary account purchases. Cost of opening inventory 0 add.

This preview shows page 16 20 out of 27 pages. A partial income statement reports information for only part of a normal accounting period this tends to be a special purpose document that is only used once. How a periodic inventory system works because the physical accounting for all goods and products in stock is so time consuming most companies conduct them sparingly which often means once a year or maybe up to three or four times per year. Under periodic inventory system inventory account is not updated for each purchase and each sale.

Gross profit is the amount from sales that is left over. This is called the traditional format income statement. The periodic inventory system does not update the general ledger account inventory when a company purchases goods to be resold. Instructions on how to create the gross profit section of an partial income statement using the periodic system of accounting for inventory.

Under a periodic inventory system. 1 answer to partial income statement periodic system lapine company has the following account balances as of december 31 2008. At the end of the period the total in purchases account is added to the beginning balance of the inventory to compute cost of goods available for sale.