36 BULLETIN 865, U. S. DEPARTMENT OF AGRICULTURE. 
Income and Expense Statement for 2-4 2=~.-) 2. es , 19—Continued. 
Account | 
No. Current year. Last year. 
GOSS ETO Ge © Tee Cl pee ce ep | eee ec |e 
Administration and Selling: 
IBS oR, Peele UNG IDV) cas asoouiiscseaosal > ee hese 
Telephone, Telegraph, and Postage...... Ff feeeseee ac me ae Rie oscar 
Here Oni GO: Salaries. ye" mete, nn aati eae LEE & Bees Sy: lin Seen pel tess eal nae alee ae 
OmcelSupplicse acess ey eee aif fare; ayeusvece cll asec ahd] ue ole peat fee eae 
TAS OS ahs Se Rei ee Heder sauce goo 29 Or aD Hates eee 
TG SYSYBNG Ha fave eee ne eae Se a OP 3) lesa co ae Re 
-eccceee 
Loss from Bad Accounts........... deose ||ieeictefeiaes i eee 
iit  Miscellancous Easpenseye.. oe ote ee SSeS eae eee 
bop bed bed bd bd bo bb 
222,222, 2'2,'7, 
WOOD OR Whe 
Total Administration Expense...... Wee oo Culp mete Mikes. Se teri Sa oc ic lecee ae diel mm a 
Ojpera bine se TO tae Sas eae ‘PexctefarsesciSiling: +a ue gril ieh weet et ames eseaeeatiee 
Miscellaneous Income: ; 
MerchandisesSales ams -. ose ee Ee Ae eI eee) | een | reek eee 
Merchandise Purchases-..........2.-..-- eee ees ei etcs| fare cia ide = pees [ates Tk 
Inventory beginning of years-22. 2522 7-2. |/ Psseets oe 
On 
—a 
Less Inventory end of year...........-  (eaeaeee eat ae Repeat he eet Aiilar a e 4 2 
Cost of Merchandise Sales.........2-.-- PER IES ICN Iter Sree coer tices 6 wha Pee 
Merchandicegernoniteseserceetseacae eee eoedooue ears cee 
Discount Recetved ess. V4 sees allP GAD oat ce eee | eee ye ee 
Net Miscellaneous Tm Com ee same era (ere ay ay Ne eee oe eae |e be 
ING Prontss = ese eae e eee = adeese Hae!) Ss ns eee 
Distribution of Net Profit: | 
1B Dividend A ppropriation.-.............- aoe | TWeostecce 
25 Pen on kam obi GAs LOPLI bl Olesen ays ees te a eee | actus 
12 SUEPIUSPRe Bae cee aeictees ae See aires cie oes tore | ea er eeetroee ea | Da | er S 
INSTALLATION OF ADDITIONAL EQUIPMENT. 
Tt 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, lf the authorized capital stock has been entirely sold, this procedure would first 
necessitate recelving 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 annualiy 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. 
