30 BULLETIN 865, U. S. DEPARTMENT OF AGRICULTURE. 



Income an i Ezpi nse Stateme it for , 19 — Continued. 



No. 



Nl 



N2 



N3 



N4 



N5 



N6 



N7 



N8 



N9 



Kl 

 Ol 



PI 



P2 

 12 



Gro~s Profit forward 



Administration and Selling: 



Express, Freight, and F/ravage 



Telephone, Telegraph, and Postage. 



Office Salaries 



Office Supplies 



Taxes 



Insurance 



Interest 



Loss from Bad Accounts 



Miscellaneous Expense 



Total Administration Expense. 



Operating Frofit 



Miscellaneous Income: 



Merchandise Sales 



Merchandise Purchases 



Inventory beginning of year. 



Less Inventory end of year. 

 Cost of Merchandise Sales 



Merchandise Profit 



Discount Received 



Net Miscellaneous Income. 



NetProfit 



Distribution of Net Profit: 



Dividend Appropriation 



Sinking Fund Appropriation 

 Surplus 



Total 



Current year. 



Last year. 



INSTALLATION OF ADDITIONAL EQUIPMENT. 



It may be well to discuss the procedure to be followed in case additional equipment 

 is installed or new buildings are constructed to accommodate the expansion of the 

 business. This expense may possibly be met by selling more capital stock. How- 

 ever, if the authorized capital stock has been entirely sold, this procedure woidd first 

 necessitate receiving approval of the proper State officials to increase the capitaliza- 

 tion. This method of securing additional funds is often impracticable, however, and 

 the amount may be raised by placing a sufficient mortgage on the plant to meet the 

 cost of the proposed expansion. In case the plant is mortgaged, an amount sufficient 

 to liquidate the indebtedness at maturity will necessarily have to be deducted 

 periodically from the gross earnings. This is the proper scope of the sinking fund as 

 referred to in the first paragraph in this discussion. The interest on the mortgage 

 should be paid annually and included in the Operating Expense. This amount de- 

 ducted should be regularly deposited in a savings account, and there should in no 

 case ever be a possibility of using this fund to pay current expenses. 



However, if neither of the above methods can be adopted, it will then become 

 necessary to anticipate the expansion and withhold periodically a certain amount 

 from the earnings. The amount thus withheld should be deposited in a savings 

 account and not merged with the ordinary bank account. The following entries will 

 illustrate the procedure to raise the reserve and other accounts. Assume that $5,000 

 is the necessary amount to be raised for the purpose of installing a new refrigerating 

 plant. 



