Using the work sheet as a guide, draw up pro forma balance sheet and statement of profit and loss for the year ending December 31, 19—. Show the gross profit on the sales of each department. Support both the balance sheet and the profit and loss statement with properly set-up schedule.
Instructions
Balance Sheet. Where the number of accrued and deferred items is small, they may be shown on the face of the balance sheet or in attached schedules as preferred. [See page 577] for form of schedules.
Profit and Loss Statement. Where the record of the period’s business has been made by departments, it is desirable that the summary for the period show departmental results, at least so far as the gross profit stage. To get rid of the detail on the face of the statement, schedules may be appended showing such items as Cost of Goods Sold, the group of Selling Expenses, the group of General Administrative Expenses, etc. Such a statement of profit and loss, supported by schedules, is called a condensed profit and loss statement. Such a statement for a departmental business is shown by the following illustration. Only Schedule B-1 is given; the other schedules are merely lists with their totals shown.
Exhibit B
Jackson Edwards Company
Statement of Profit and Loss
For the Year Ending December 31, 19—
| Department A | Department B | Total | |||
|---|---|---|---|---|---|
| Sales | $100,000.00 | $150,000.00 | $250,000.00 | ||
| Less—Returns and Allowances | 5,000.00 | 6,000.00 | 11,000.00 | ||
| Net Sales | $ 95,000.00 | $144,000.00 | $239,000.00 | ||
| Cost of Goods Sold (Schedule B-1) | 60,000.00 | 90,000.00 | 150,000.00 | ||
| Gross Profit | $ 35,000.00 | $ 54,000.00 | $ 89,000.00 | ||
| Selling Expenses (Schedule B-2) | $ 35,000.00 | ||||
| General Administrative Expenses (Schedule B-3) | 20,000.00 | ||||
| Financial Management Expenses (Schedule B-4) | 5,000.00 | 60,000.00 | |||
| Financial Management Income (Schedule B-5) | 2,000.00 | 58,000.00 | |||
| Net Profit | $ 31,000.00 |
Schedule B-1
Jackson Edwards Company
Cost of Goods Sold
For the Year Ending December 31, 19—
| Department A | Department B | Total | |||
|---|---|---|---|---|---|
| Inventory, January 1, 19— | $12,000.00 | $ 18,000.00 | $ 30,000.00 | ||
| Purchases | 60,000.00 | 87,500.00 | 147,500.00 | ||
| In-Freight | 3,500.00 | 5,000.00 | 8,500.00 | ||
| $75,500.00 | $110,500.00 | $186,000.00 | |||
| Deduct: | |||||
| Purchase Returns | $ 2,000.00 | $ 3,000.00 | $ 5,000.00 | ||
| Inventory, December 31, 19— | 13,500.00 | 17,500.00 | 31,000.00 | ||
| $15,500.00 | $20,500.00 | $36,000.00 | |||
| Cost of Goods Sold | $60,000.00 | $90,000.00 | $150,000.00 |