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REAL ESTATE
AND
(Copyright. 1917, by The Record and Guide Co.)
NEW YORK, SEPTEMBER 1, 1917
INCOME STATEMENT IN REALTY OPERATION
Through Logical Presentation of Facts, Final Result Is Obtained
Showing Relation Between Individual Items and the Total
AS the income statement shows the
profit or loss in operation, it is an
essential real estate record. In most
kinds of business, the income statement
is generally accepted. An understand¬
ing of its nature -has resulted in a ten¬
dency toward uniformity. In real estate
operation, however, no such uniformity
exists and, in most instances, no com¬
prehensive statements of income from
the individual houses are prepared, what¬
ever, because of the supposed technical¬
ities in the preparation of them.
The ideal statement of real estate op¬
eration is not technical, however, but
simple and comprehensive. Through a
logical presentation of facts, the final
result is obtained in a manner which
shows the relation between the individ¬
ual items and this result.
The sources of the income statement
are the actual cash transactions {past
and present) and cash transactions an¬
ticipated. Past actual cash transactions
are considered only so far as these
transactions affect the period of the
present report. Cognizance, therefore,
is taken in the income statement of that
part of water tax and insurance earned
in the present period, although paid for
in the prior period. Present actual cash
transactions consist of cash received and
disbursed during the present period.
Proportion Applicable.
Disbursements, such as insurance, may
not apply exclusively to the present
period, but also to the past and future
periods. For this reason, as in the in¬
stance of past actual cash transactions,
only the proportion of such expenses ap¬
plicable to the present period should be
included in ascertaining the income for
the period. Cash transactions antici¬
pated are considered because a propor¬
tion of certain items is earned during
the period, although paid in a future
period. That part of taxes and interest
earned during the present period should
therefore be included in the statement.
For clearness, the groups underlying
these cash transactions may be tabu¬
lated (Figure 1).
FIGURE 1.
BALANCE SHEET GROUP.
1. Renovating and improvements.
2. Prepaid items.
3. Accrued items.
4. Accounts payable and receivable.
5. Miscellaneous.
L\COME STATEMENT GROUP.
Rent
Income Telephone
Miscellaneous
Repairs and renewals
Operating Telephone
Miscellaneous
Admini¬
strative
and
Renting
Commissions
Stationery and
Advertising
Miscellaneous
printing
Fixed
Charges
Adjust¬
ments.
By CHARLES F. KAPPES, of Deed Realty Company
FIGURE 2.
STATEMENT OF INCOME.
Schedule Rent.
Deductions from Rent:
Vacancies ..........................................
Concessions ........................................
Total Deductions.................................
Net Rent—Income......................................
Expenses:
Repairs and Renewals:
Flumliing ..................................... $
Decorating .................................... $
Plastering ..................................... $
Carpentry ..................................... $
Electrical .................................
Roof ......................................
Tiling .....................................
Masonry and cement.......................
Glazing ...................................
Shades ........................................ $
Awnings ...................................... $
Duinb waiter................................... $
Miscellaneous ................................. $-
Service:
Superintendence:
Payroll ............................ $
Uniforms .......................... $
Supplies .......................... $-------------$
Elevator:
â– taxes, in-
capi-
Protection â–
surance
Outgo Charges Use of borrowed
tal—interest
Chiefly miscellaneous
items of income and
outgo paid during the
present period but ap¬
plicable to prior p -
riod, unusual profits
or losses, uncollect¬
ible rent. etc.
Balance sheet items consist of those
items which increase the value of the
property, that proportion of such iteins
Payroll ............................ $
Uniforms .......................... $
Repairs ........................... $
Power............................. $-------------$
Heat and Light:
Payroll ............................ $
Coal ............................... $
Gas ............................... $
Electricity ......................... $
Boiler repairs...................... $
^liscellaneous...................... $-------------$
Telephone:
Payments ......................... $
Operator .......................... $
Uniforms .......................... $------------- $
Less: Receipts .................... $------------- ^
Exterminator .................................. $
Range rental .................................. $
Refrigerators .................................. $----------— $-
^Miscellaneous Operating:
Furniture repairs, etc.......................... $
Ash cans ...................................... $
Miscellaneous .................................$........ $-
Total Operating Expenses.....................................
Gross Income from Operating Building.........................
Administrative and Renting:
Commissions .............................................. $
Stationery and Printing.................................... $
Advertising............................................-
Net Income from Operating Building...........................
Miscellaneous Income:
Cash discounts .......................................... $
Interest on Bank Balances................................. $
Miscellaneous Income ..................................... $-
Total Income ..................................................
Deductions from Income:
Water Tax Proportion.................................. $
Property Tax Applicable................................ $
Insurance to Period................................ $-
Income on Value of Building (—% on $----------) .............
Less: Interest on Mortgages.................................
Income on Equity in Building (—'/r on $------)...............
Adjustments:
Miscellaneous Profit:
Appreciation of Building.
. $-
$-'
Miscellaneous ....................... $-
Miscellaneous Losses:
Uncollectible rent ................... $
Depreciation of Building............. $
Accounts of prior period............. $-
Result of Adjustments....................
Net Result to Be Transferred to Profit or Loss.
RECORD AND GUIDE IS IN ITS FIFTIETH YEAR OF CONTI.WOUS PUBLICATION.