Practice Data
Draw up statements for the year, supporting both the profit and loss statement and the balance sheet by schedules. (See Volume I, pages 411-412 and 509-510, for suggestive forms and instructions as to methods of condensation of data.)
Take into consideration the following data:
Rent income received in advance $40; warehouse rent paid in advance $100; interest accrued on notes receivable $50; salesmen’s salaries accrued $420; salesmen’s commissions accrued $125; advertising bills unpaid $100; advertising paid in advance $250; stationery on hand $50.
Insurance: first policy, one year, bought October 1, cost $125, part unexpired $10.04; second policy, one year, bought January 2, cost $250, ⁴/₁₂ unexpired $83.33. Taxes for the year 1916, estimated $565.42, ⅔ used $376.95. Purchases discount not yet taken advantage of on unpaid vouchers, $475.
The Knoxfraud patent had 15 years to run when purchased. Write off ¹/₁₅ of its value, it being the policy of the company to maintain an experimental laboratory and so overcome any possible supersession. Write off organization expense and good-will 5% each. Create reserves for: furniture and fixtures 10%; delivery equipment 15%; doubtful accounts ½% on all sales gross. Take no account of depreciation on factory building or power equipment.
Inventories of stock-in-trade: desks and tables $4,943.86, bookcases and filing cabinets $1,521.31, sundry office supplies $3,197.20, total $9,662.37.
In-freight and delivery: charge $2,500 to Desks and Tables purchases, $2,100 to Bookcases and Filing Cabinets Purchases, $297.69 to Sundry Office Supplies Purchases.
Light, heat, and power: charge ¾ to Selling, ¼ to General Administrative.
Receiving and shipping room: charge ¾ to Shipping, ¼ to Receiving, of which 50% to Desks and Tables, 45% to Bookcases and Filing Cabinets, 5% to Sundry Office Supplies.