At the end of the year the merchandise amounted to $216,735. Draw up the statement of profit and loss for the year.
3. Prepare a formal profit and loss statement of the Lincoln Leather Company for the year ending December 31, 19—, from the data below taken from the company’s books:
- Sales $1,559,087.
- Sales returns $13,456.
- Merchandise on hand January 1, 19—, $487,693.
Leather bought during the year $876,019, of which there were returns because of defects amounting to $8,716.
Inventory on December 31, 19— disclosed $513,860 worth of goods on hand.
- Expenses of operation were:
- Advertising $247,920.
- Sales salaries $143,560.
- Sales commissions $88,723.
- Sales traveling expenses $6,423.
- Freight-out $1,976.
- Delivery expenses $38,976.
- Rent $38,500.
- Taxes $12,890.
- Insurance $7,680.
- Light $4,320.
- Heat $15,648.
- Interest paid $3,216.
- Interest received $4,872.
- Office salaries $27,875.
- Sundry expenses $9,213.
4. The Interurban Railway Company whose comparative balance sheet was the basis of work in [Assignment IV, Problem 1], had the following particulars for its statement of profit and loss for the year ending December 31, 19—:
- Operating revenue, i.e., income received from sale
- of service to community, $152,228.11.
- Other income $1,191.83.
- Operating expenses $100,582.96.
- Deductions from income were:
- Interest on 5% first mortgage bonds $8,750.
- Interest on notes payable $4,727.41.
- Taxes $10,578.57.
What was the amount of the net profits for the year?
Compare this with the surplus change as developed by the comparative balance sheet in [Assignment IV, Problem 1].