the business mans vade mecum' - forgotten books
TRANSCRIPT
THE
BusinessMan’
sVadeMecum '
A text book for those who des ire to combinein their work
ACCURACY, EFFICIENCY,
SPEED , SHORT CUTS
In N ine Parts .
Coming/tied
PUB LISHED B Y
THE B OOK-KEEPER PUB LISHING Co ., LTD .
DETROIT, M ICHIGAN .
CONTENTS.
PART I .
How to do without a Trial Balance—o r , Popular Checking Systems .
Also the science o f Lightning Add ition.
PART II .
Equation of Paym ents—The s im plest and quickest m ethods o f Averag ing Accounts .
PART III .
Cost, or Manufacturers ’ Accounts . Explanation of principles and exam ples fully worked out.
PART IV .
Accounting for Municipali ties, Waterworks , Publ ic Institutions . Debenture and S i
‘
nking Fund Tables .
PART V.
Accounting for Corporations , explaining organization , use of Stockbooks , open ing entries , trans fers from partnerships, treatment of capitalaccount, etc .
PART v1.
Accounting for the Wholesale Grocery and Hardware Business . Illustrated by forty forms . Special attention given to vouchers , order blanks,s lip checking system , tim e record s , etc .
PART V II .
Accounting for Retai l Stores , such as coal , bakeries, cream eries , drugs .
ice,etc .
PART VIII .
Tim e Record and Pay- roll System s—up—to- date methods of keeping
account of tim e on salary, day-work,and piece-work in businesses of di f
ferent kinds .
PART IX .
The Voucher System . Des igned for the assi stance of thos e who wishan up
—to- date system of record ing their accounts payable and securing an
efficient check on sam e.
160 11 4
PART I .
How to do Without aTrial ialance.
Popular Checking System s.
HE following methods are principally intended for the book- keeperwho does hi s work without ass istants , or with not more than onejunior. They are intended as a help in the way of show ing the book
keeper how to obtain complete assurance that h is work i s correct, inadvance of proving it to be correct.They are publ ished with a v iew to al leviate and remove the troubles of
the Trial Balance by il lustrating and describ ing the various methods devisedfor the purpose.They are publ ished to show that any book- keeper can , if he wishes ,
w ith very l ittle troub le,prove h is work each day and have h i s balance com
plete directly the las t item for the month has been pos ted, and are des ignedto show how the Trial Balance m ay be absolutely dispensed with exceptas an ornamenta l statement .
CHAPTER I.
The Check F igure.
This is an efi‘ective but laborious check . As a matter of fact,all checks
are laborious , and the inventor who wi l l COM B INE THE CHECK WITHTHE WORK ,
so that no extra labor i s involved, has y et to be introduced .
We do not present any mathematical explanation of the check figure,because such an explanation is quite unneces sary , the modus operandibeing s imple and eas i ly understood.
The check figure we i llustrate is eleven . Take two amounts of fivefigu res each . Starting at the right hand , add the first , th ird and fifthfigures and deduct the second and fourth . I f the latter exceeds the former
,
add 1 1 and then deduct . The result is the proof figure.
g6 J y
J
-q
This illu stration m erely show s that the footing i s correct , the footingof the check figures giving the sam e check figure as the footing of theamounts . But if these am ounts are posted to the ledger the sam e operationwill prove the accuracy of the posting.
We wi l l suppose that our book - keeper is enl ightened and progress ive,and d es ires to prove each d ay
’
s work as he goes along, so as to be able
to get his balance prom ptly without trouble on the first day of the mo n t h .
He wi l l post from h i s sales -book, or ticket, As he posts t h e
amount in the ledger he extracts hi s proof figure and wri tes it in t h e
sales -book in a column which he arranges for the purpose .The proof figure of the footing of the sales -book wi ll then prove t h e
accuracy of the pos tings to the ledger for the d ay by agreeing with t h e
footing of the column of proof figures in the sales -book which represe n tthe postings of the ledger. The same operation will prove the accuracy o f
the day’s postings from cash book , journal , purchase record , or any oth e rbook, so that it i s within the reach of every book-keeper with extraord in
ar i ly l ittle trouble to prove each day’
s work as he goes along, and to b efree from all bother and troub le of errors when he endeavors to obtainhis monthly trial balance.In order to make this matter perfectly clear', we append an il lus tration
representing one day’s work from the cash book and its proof.The amounts posted to the ledger from the sundries column of the
cash received s ide of the cash book are represented by the check figuresin the check column
,the footing of which is 29, or 9 The check
figure extracted from the total of the sundries column —i s alsothus prov ing the postings to be correct for the day . The postings
C a s h D e c e iv e d .
from sales -book, journal , etc ., are treated in l ike manner, each section ofthe work being thus proved separately and eas ily.
In entering balances from the ledger into the tri al balance book thecheck figure should be extracted first , and the amount copied from theledger after. The footing of the check figures wil l then check the correctness of the amounts in the trial balance book, which have been cop iedfrom the ledger
,and any errors wil l be promptly located .
But the check figure, unfortunately , is not infall ible . It is , of course ,quite poss ible to make a mis take in extracting it , but the check figu re isnot proof against al l errors , even when correctly extended , as the following example w il l show :
N o . 2 .S a le s B O O K.
The postings are represented by the check figures , the foot i ng ofwhich amounts to which is the check figure of the total of the amountsposted . The pos tings are therefore supposed to have been correctly made.This is the way
,however
,in which the postings appear in the ledger :
The check figures are inserted here merely for the purpose of comparison with thos e in the sales -book.
In such a case,it i s evident that the check figure certifies the work
as accurate when it i s out of balance, having been postedas This i s a very s imple i l lustration , but quite good enough forthe purpose. In order to get over . th is difficulty it is now proposed to
extend the last unit posted, by the s ide of the check figure , footing theseunits and comparing w ith the footing of '
the same units in the book oforiginal entry from which the postings are made. (See i llustration .)If $4 5 is posted as 4 5 cents the figure “
5” would be extended to the
left of the check figure, the addition of these units wou ld be insteadof 8, and the error would be immediately discovered . But i f 10 centsis posted as or i s posted as 10 cents , a cipher would be extended to the left of the check figure in each instance; and notw iths tandingall the checks , the books would be out of balanceThus , if i s posted as 4 5 cents , the footings of the columns of
S a le s B O OK .
units would discover a disagreement of 5 cents and promptly locate theerroneous posting. But, on the other hand, if $10 shou ld be posted as 10
cents , or $50 as 50 cents , this additional check would be labor lost ; andas in postings in a week it would require the writing of additional figures
,and as the writing of figures takes a great deal of time
(as any book- keeper may prove for himself), we unhes itatingly denouncethisladditional
check as worth les s , taking into cons ideration the extra laborinvo ved.
The check figure itself we believe to be a great boon to book-keep e r‘
s ,
and those who use it with care and intell igence undoubtedly derive s o l i dadvantages which they are on ly too glad to appreciate and acknowledg e .
CHAPTER II.The Slip Sy stem , or Reverse P osting and the Check Ledger.This i s a very effective, but also laborious , check . The labor, how
ever,of finding errors in a trial balance i s greater, and is the most unsati s
factory labor a book-keeper can pos s ibly have to perform .
The great end in v iew i s to abol ish the trial balance as an importantfactor in accounting . As an ornamental statement to produce to employer sit may be all right
,and
,to that exent, us eful ; but so far as book- keepers
are concerned , progress ive accounting leads to the abi l ity to prove the workon the books to be in balance at any moment .By the S l ip Sys tem
,the books can be balanced every day , and a trial
balance can be produced whenever required . It i s particu larly appl icableto the needs of book- keepers for concerns of comparatively smal l magnitude .The modus Operandi is very s imple and i s as follows :Ru le a sheet of paper w ith debit and credit columns for each book
from which postings are made. It is best to have separate sheets for debitsand for credits . If the books of original entry are merely :
Cash Book , Sales Book,Journal , Invoice Book,
your s l ip wi l l be ru led as per il lustration .
The credit sheet w i ll be ru led s imilarly .
When posting debits the book- keeper wi l l place the s l ip at h i s righthand s ide and w ill copy hi s postings from the ledger into the column whichrepresents the book from which he has posted . At the close of the daythe book-keeper wi l l foot the columns o f hi s “
s l ips” and compare the footings of each column with the footings of the charges and credits in cashbook, journal , sales book and invoice book for the day . I f the footingsagree he wi l l know that h is postings are correct and that h i s ledger i s inbalance . I f the footings of any particu lar column do not agree he willcheck back , find his error, and correct it.And when he takes hi s trial balance , if, it does not come out exactly
right, the book-keeper knows that th e error must have occurred in drawingoff the balance , and consequently can find the error with facil ity .
Progress ive book- keepers who use columnar cash books and journals
DEB IT SHCET.
wil l,of course
,prov ide the same columns on their s l ips as their cash
books and journals contain . When a mis take occurs they w il l thus be ableto locate it not only to the book , but to the column of the book where itwil l be found . 0
Out of this Sl ip or Reverse Posting has been evolved the extraordinary idea o f a “
Check Ledger. This ledger has not a very largepatronage
,but has been tried by some large corporations . It is a smal l
10
ledger ruled with the regular d ebit and cred it columns, and a clerk is pro
v id ed whose duty i t i s to Open accounts in it which wil l correspond w iththe accounts in the real ledger.The check ledger book- keeper goes over all the items already pos ted to
the real ledgers and posts them (the figures only) again in the checkledger. He then compares his balances with the balances on the rea l ledgersand adjusts the differences .
We do not suppose any more ineffi c ient check was ever devised . Them ajority of the mistakes made are usual ly found in the check ledger , thepostings to which are always made hurriedly
,and are therefore more than
usual ly susceptible to error.
CHAPTER III .Sectional Ledgers , Cash B ook and Journal s .
This article is addressed to a suppos itious book- keeper who keeps thebooks of a mercanti le house deal ing in hats , gloves and hos iery—three departm ents .
It does not matter particularly what system of book- keeping i s used ,our remarks can be appl ied equal ly as wel l to one system as another. Hav
ing obtained a ledger and journa l of some kind, the book- keeper w il l dividehis ledger into sections—one section for city accounts
,one for country ac
counts , one for purchase accounts , and one for sundry accounts . He w i llalso div ide his sales journal into three sections—one for hats , one for gloves ,and one for hos iery . I f the pres ident of the company wi ll not stand theexpense of a proper cash book , the book- keeper wi l l purchase some kindof a book which has on ly horizontal rul ing s , and wi l l rule for himself, d ayby d ay as required
,the following columns . On the deb it s ide :
On the credit s ide of the cash book the book- keeper wi ll provide s imilarcolumns , together with such expense columns as he can find room for , posting the totals of the expense columns month ly instead of posting individualitems .
The cross - entry,or pro and con , journal , should be s imilarly arranged .
All department sales on credit shou ld be entered in their respectivecolumns in the journal to the credit of such departments .
All department sa les for cash should be entered in their respectivecolumns on the debit s ide of the cash book .
All department purchases on credit, or returns from , or allowancesto customers , shou ld be entered in thei r proper columns on the debit s ideof the journal .All department purchases for cash should be entered in their proper
columns on the credit s ide of cash .
We have stated that the ledger w il l be divided into four sections . Thesundry account section w ill be the sun around which all the other sectionsrevolve—the pivot of the constel lation
,the key to the system . This section
wi ll contai n accounts with the other three sections . The account“
wi t h th e
c ity accounts section wil l charge that sectionwith al l city deb its , and c r e d i t
it with all c ity receipts,allowances , etc. The balance of this account w i l l
equal the total of the balances in the city accounts section.
The balance of the account with the country accounts section w i l l
equal the total of the balances in the country accounts section.
The balance of the account w ith the purchase accounts section w i l l
equal the total of the balances in the country accounts section.
The sundry accounts section w ill be self-balanc ing.
To i llus trate how th is is done we w il l take the hat department for t h e
month of June, 1893. and show a trial balance of the sundry accoun tssection .
Purchases of hats on credit during month , $800 .
This w il l be the total of journal credits and it w i ll be debited in b a tcolumn—one pos ting at end of month .
Purchas es of hats or hat material for cash , $178.
This is total of hat column credit s ide of cash .
Cash sales of hats , $750 .
This is total of hat column debit s ide of cash .
Credit sales of hats $620 .
This is total of sales book credited to hats and debited to city accountsaccount or country accounts account on journal .At the close of the month the totals of all columns in cash book and
journal (except sundry columns), wil l be posted to their respective accountsin the sundry accounts secti on . The totals of each section of ledger columnare posted to the debit and credit of each section of ledger accounts .
The results wi l l be as followsHAT ACCOUNTSWILL SHOW
DEBIT.
Hats on hand June I st
Hats purchased , cashHats purchased , journalBal . to gain and loss 250 00
00
CREDIT.
Hats sold , cashHats sold , journalHats on hand , Ju ly I st
00
CITY ACCOUNTS WILL SHOWDEBIT.
Customers ’ balances June I st! Hat salesGlove salesHos iery sales
73
12
CREDIT.Hats , cash
Hos iery, cashCustomers ’ balances July 1st
73
Gloves and hos iery accounts , country accounts account and purchaseaccounts account w i ll be s imilarly arranged .
The method of checking the total balances of city accounts , countryaccounts , and purchase accounts sections of the ledger have been previous lyd escribed . These sections having been balanced , it only remains to takea trial balance of the sundry accounts section , as per follow ing il lustrati on
DEB ITs .
City accounts receivableCountry accounts receivable
BankFixtures and fittingsHats , m d se.
Gloves , mdseHosiery , md se
i
ExpenseFreightWages
18
cREDITs .
Purchase accountsBi l ls payableSurplus from mdse
18
(Inventory taken month ly.)Th is system can be carried out to any extent . If the book-keeper wi ll
provide himself w ith cash books and what are cal led trial journals , w ithsuffi cient columns , he can divide each section of hi s ledger alphabetically ,and prove each section separately, Opening an account in hi s sundry s e
counts section with each alphabetical divis ion instead of with each section .
This wi ll be found very usefu l in some bus inesses where the number ofcustonters
’ accounts is very large.The departmenta l accounts will show the gross profits made in each
department for each period when inventory is taken .
CHAPTER IV .
Self-P roving Accounting System s .
This i s the title now general ly used to describe the Boston Bank Balance Ledgers ,
” and mercanti le ledgers arranged on the same principle . TheBoston Bank Ledger is arranged as follows
13
The Mercanti le Balance Ledger i s arranged as follows
To prove the correctnes s of your work in any section , add your balauces at the commencement of the period to the total deb its , deduct thecredits , foot the balances at the conclus ion of the period and the resultshould show thus
Total balances of Ledger A , January I st
Total deb its , January 2d
Total credits , January 2d
Total balances of Ledger A , January 2d 84
The total balances on January 2d are proved in two ways :
ILLUS T QAT IO N OF“
LEDGED DQOOFS
It wi l l be seen by these i l lustrations that the sys tem has m erit , for thereason that it loca lizes different sections of accounts and admits of theirbeing proved separately by the method indicated .
F IQ S T DQ O O F.
Thus , the postings of a given page , or series of pages , collectively canbe footed and compared in a way to demonstrate the accuracy of the work .
In other words , if the book-keeper wi ll provide a separate column in
14
cash book and journal for each page of the ledger the footing of thosecolumns in cash book and journal added together w i ll always equal the
S EC O N D DQ O O I".
R i a l ba lanc e s fbp’
d fwo m Joni I
5 5 10 9
Jo u mnts l De bil'
é.
foo ting of the debits and credits of the accounts posted to that particularpage of the ledger.In the ledger, arrange the debits and credits in sections , and provide
separate columns for the balances , as shown by the i llustrations . I f youare a bank, keep your debits and credits in sections of days . If you arean ordinary mercantile house keep your debits and credits in sections ofmonths . I f you do not do very much bus iness keep your deb its and creditsin sections of periods of three months
,etc .
CHAPTER V.
Lightning Add i tion.
Lightning addition can be acquired by hard work , just as Schaefer andIves learned how to play lightning and accurate b ill iards ; but in eachcase it is necessary to kow how to learn . The average clerk might havenothing to do al l h i s l ife but add 7 and 9, or 5 and 6, and do it al l hi s l i feat the same rate of speed . only accelerated by h is famil iarity with the work .
By the method we append we offer the means of becoming “ l ightningad d itionists
’ if s tudents w il l only work hard enough and long enough . Thecapacity to add rapidly i s really the capacity to group the figures to beadded . Thus , you mus t not th ink of 2, 7, 9, as but you mustsee at a glance that it reads You must put the “
8” into one pocket
and the “ 10 ” into another pocket . I f the next three figures are 9, 6, 5, youmust read them as
“0” and put the “20 ” into your other pocket along with
theIn order to acquire this satisfactory hab it , which w il l enable anyone
to foot 3. column of ordinary s ize in less than the twinkl ing of an ey e, thebes t plan i s to get some plain cards ad mark them thus
4 4 4 4 4 4 4 4 41 2 3 4 5 6 7 8 9
Make a set for each numeral , shuffle them wel l , and then throw themdown as fast as pos s ible one after another, cal ling the total without tens .
Thus , the 4 and 9 combination is to be known as After the studentis suffic iently fami l iar with the first combination , let him make out anotherset of cards on the second comb ination as above il lustrated
,viz :
to
n-ls
co
t-4
A
A
H
A
m
id
-h
Own-b
V
on
-h
Go
a
-h
won
-b
By the time this second comb ination has been thorough ly mas ter e d i t
wil l probab ly be found necessary to proceed to the third , as the S p e e d
obtained w il l be sufficient , not only for al l commercial purposes , bu t t o
place the possessor far ahead of any ordinary bus iness competitor.
16
Averaging Accounts.
CHAPTER I .
How to Average anAccount.
HERE are many methods of averaging accounts , which is one title ofthat arithmetical formu la known as “equation of payments”—the determining or finding of the balance of interest due on an account, or find
ing the common time of maturity of bil ls due at different times .
The general principle involved is s imple . Charge interest from due
date on amount owing ; credit interest on amounts received in payment, orpart payment ; the balance wi ll be the interest due. On large accounts withnumerous charges and credits it i s a laborious task to obtain this balance,and hence , mathematicians have dev ised many methods which were moreor less shortcuts . In fact , so many methods have been dev ised that it isqu ite confus ing, and a thankless task , to study them al l and follow upthe different reasons for the different rules .
The ru les appen d zd for S ingle and Double Averages are s imple , good ,and eas ily borne in mind , and w il l answer every purpose.
SINGLE AVERAGE .
Set down the items in their order of due date .Calculate the number of days between the first and seconds items , and
multiply the amount of the second item by the number of days . This iscal led the product for average . Proceed in l ike manner with each succeeding item.
Foo t the items and products for average:Divide the latter amount by the first . The resu lt wil l give the number
of days forward from the date of the firs t item , which added to that datewi l l give the average due date of the account .Calcu late interes t at the required rate on the sum of the account from
the average due date to the date of rendering statement.
PROOF.
Interest on at 6 per cent from Feb . 15 to June I 75Interes t on at 6 per cent from March 25 to June 1 1 08Interest on at 6 per cent from April 15 to June 1 75Interest on at 6 per cent from May 15 to June 1 25
DOUBLE AVERAGE.
Assume as the bas is for finding the average the I st of the mo n th i nwhich the first charge is m ade. This is cal led the “
Focal Date.”
DEBITS.
Calcu late the number of days from the Focal Date to the date o f e a c h
charge, or to the due date if it is a time charge.Mu ltiply the amount of each charge by the number of days obta ine d .
This gives the “Product for averaging.
”
Add the deb it items of the statement and the Product for averag i ng ”column .
CREDITS.
d
Calculate the number of days from the Focal Date to the date of ea c hcre it.
Multiply the amount of each credit by the number of days obtaine d ,
which gives the “Product for averaging.
1Add the credit items of the statement and the Product for averaging ”
co um n.
Deduct the total of the credits from the total of the deb its , and the tota lof the credit “products” from he total of the debit “Products .
”
Divide the balance of the Product columns by the balance of th eItem s
” or “Amount” columns . This wil l give the number of days forwardfrom the Focal Date when the balance of the account was , or wil l be d ue .
This is the average Due Date of the Account .Calculate interest on the balance of the account for the period of time
elapsed between the Average Due Date and date of rendering s tatem ent.
m
ab );lo
‘5 to d u lylq ' “3 6 9
Total tim e—Feb. 1 (Focal date) to July 1 (date of settlement)—5 months= 1 0 da 3 .
Divide tgfal product of deb its by amount of charges .
Deduct result from total days and calcu late interest on total charges forbalance of days obtained .
Divide total product of credits by amount of credits .
Deduct result from total days and calcu late interes t on total credits forbalance of days ‘obtained .
The difference between deb it interest and credit interes t will be theam ount of interes t due.
Da b / f
Tint ! C ho u-g e e» Tofi l Gno d u c
‘f TOTO !“
flm e'
A 16 0 dL e o s ffe uenc e 6 7 Jay-é
cam / r
T0 15 1 C ne d tt'
a To 'fb l o o d u-efi’ To
'
f'
a ' 17m :
lé o d a y -9L e ” O f fe r-C h o c . 5 6 d a ys,
37 /2. a jfl lét
w g fi fi a o m Da b / Ta - 4 0 0 Q9
As a matter of fact the form ula of the proof i s as good, i f not better,than the formula of the origi nal , because it seems more complete . A furtheri l lustration is , therefore , given , showing the double average thus obtained .
Total days from Jan . 1 (Focal date) to May 1 (date of settlement) 120 days .
Deb its—Total days 120 Interes t at 6% on $230 0 0 : $2 47Credits—Total l ays 120—85 =35 . Interest at 670 on $100 0 0 58
Interest due May 1 89
What i s cal led the Interest Process of Averaging Accounts i s so gen
erally used that an i l lustration is hereto appended in order to complete thesubject. By this method the interest is separately extracted in each calculation
,the credits are subtracted from the deb its , and the resu lt is the same
with a l ittle more labor .
D a‘ l'e o f s e l fle m e n
'f
There are numerous other methods of obtaining average due dates , andamount of interest due at a given date
,but the methods above described wi ll
answer every ordinary bus ines s requirement .In cases of “freak” averages , where the average due date wil l be found
prior to date of firs t charge , it w i l l be wel l to bear in mind that where thepreponderance of weight i s all on one s id e no average can be struck .
The average due date of an account i s the theoretical time the NETBALANCE mus t have run to produce at a given date the correct amountof interest on that balance .
Date of settlement assumed as Focal Date.Nov. I st date of settlement .
DR. 1394
May 14 , $soo>< 166 Ju ly 9,June 16
,80 0n Sept . 1 1 , 49
Ju ly 21, 3oo )< 98 Oct. 29, I
364 days back of Nov . I st.
Average date , Oct . 26, 1893.
Credit amounts in excess of Deb it amounts .
May Ist, Focal Date.
DR.
May 14 , $soo>< 14 June 9, 69June 16, 800X46 Sept . 1 1 , 131
Ju ly 21 , Oct . 29, 179
days back of May I s t
Average date Oct. 26, 1893.
365 days’ interest at 670 on
Proo f. May I st to Nov. I st date of settlement—180 days .
days . 18 days .
4 100
180 43: 137 days interest on at 6%180—1 18: 62 days interest on at 6%
Interes t due
CHAPTER II.
Another M ethod of Averaging Accounts and Com puting Interest.SIMPLE AVERAGE .
Arrange the items in order of date . Use d ue date, if any.
Carry out balance of account on each date after items on that date havebeen entered. With every new entry there i s , therefore , a new balance.Multiply each balance by the time intervening between its date and the
next succeeding entry.
Add amounts so obtained and divide by balance of account . The quotient wil l be the number of days to count backward from lates t date, whichwi l l give average due date .Compute one day’s interes t on total of Amounts column ( if time has
been computed in days which w i ll be the balance of interes t due at lates tdate.
Int. rate 570 .
74-e days back from March 7=January 28 equated
due date.570 for one interest due, March 7. Total due
M arch 7 ,COMPOUND AVERAGE
Proceed as before, but deducting credit Amounts from deb itAmounts” and deal ing with the balance .Required amount due Feb . 19,
’
96. Int . rate 7%Dr. Cr. Dr. B al . Cr. B al . Cr. Am t.
—6ooo=38, Ioo - IOOO (net Dr. balance)=38, 1- 10 days backfrom Feb . 19
—average due date , Jan . 12.
7% for one interes t due Feb . 19. Total due Feb.
194 10073 1 .
CHAPTER III.
The Conto Currento M ethod of Com puting Interest on Accounts Current.The method i l lustrated below is sti l l largely used by European banking
and commiss ion houses in figuring the interes t of accounts current renderedat certain intervals .
Date of statement Apri l 15, ’
96. Int . rate 670:Tim e. Due. Days . Num bers .
Mar 17 29Feb. 4 7 1
May 1 16
hdar. 15 31
Mar. 31 1560 d .
'
June 2 48
Deb it numbers from Cr . s ideBalance of numbers
-67
Jan. 31
M ar . 1
Apri l 15M ay I 5 30
June 16 61
Credit numbers from Dr . s ide670 on balance of numbers ( 140 2)Balance carried forward
EXPLANATION .
M u ltiply the principal (deb it or credit) by number of days , point O ff
last four figures at right and enter number left in “Number column . Th u s
Number to be entered—80 0 .
On coming to items 3 and 6 on the deb it s ide we find the date of matu r
ity to be May 1 , s ixteen days after date of equation . The numbers for the s eitems shou ld therefore be wr itten in red ink , not included in the foo ting o f
the column,but trans ferred to the credit s ide , as shown in il lus tration .
Simi larly on the credit s ide we enter the sth and 6th items in red inkand transfer th em to the deb it s ide.Enter the balance of the “Numbers column on the s ide to which it m ay
belong, and compute interes t due by dividing it (the balance) by 60 ,point
ing off the second and third figures of the quotient to the right to get dollarsand cents , as follows :Balance of numbers (Cr)
CHAPTER IV.
A Sym pos ium From The B ook -Keeper.November, 1896.
I have been trying to discover why I cannot find the average due dateof the following statement of account :
1805 . DR . Term s .
Jan . 1 30 daysFeb . 10 10 d ay sMarch 5 60 daysApri l 20 30 days
Balance due Jan. 1 , 1896 .
$894 24 $894 -24
I don ’t want the amount of Interest due . I want the average due date.U. P. B .
January , 1897.
To pass muster, it seems to me that an answer to the problem in Averag ing Accounts ,
” publ ished inyour November number, should be one more
of language than of figures . Thus , in figures I answer :the account in question averages due September 20 th of the preceding year. Then you wouldask :
“How can the account be due at a time preceding the date of anys ingle item?”
Now,take the first date as a bas is , same being indicated by a l ine d r a w n
around it, and find the number of days between each item and the b a s i s ,
then multiply the item w ith the number of days thus found :Feb . 2, $I3o >< 28 daysFeb . 3, 258X29 daysFeb . 19, days
$54 7Jan 4 . $150Jan . 7, daysJan . 12
,days
$4 30
Find the sum totals of al l b i lls , payments and gross amounts as ab o v e .
Subtract the sum totals of the credit s ide from the deb it s ide and div i d e ;the quotient wi ll represent the amount of days from Jan. 4 , at which t i m e
the balance of the account wou ld be due , or M ay 29.
= 14 5 days -from Jan . 4 .
L . B New York.
June, 1897.
I des ire to offer a solution of the problem presented by U. P . B a s
follows :In averaging accounts it i s proper to cons ider and include on ly such
credit items with dates fall ing within the radius of the original terms , andto discard those which come in irregularly and thereby lose al l connectionwi th the original transaction . In a compound average this rule i s of particu lar importance , as wi l l be shown in solution No. 2 ; therefore credititem of $20 0 , dated Dec . 31 , 1895, is left out of solution No. 1 .
SOLUTION No . I—Basis, January I,1895 .
Jan . 1 Feb . 1
Feb . 10 Feb . 20
March 5 M ay 4Apri l 20 M ay 20
TotalTime counted forward .
Days Int.
67@ Io%10 5@ Io%
To Bal . Debit Int $1
10
Balance of account i s and wi ll have to run 87 days from Jan . 1 ,
1895, forward , to earn balance of interest , which i s M arch 28, the average
date of equation . Now , from M arch 28, 1895, to Jan . I , 1896, is 278 days ,and at 10 per cent equals interes t , and the account wil l standas follows :Jan . 1 , 1896, balance of accountInterest on equals .
Less int . for 1 day on $20 0 ,paid Dec . 31 , 1895
Balance due Jan . 1 ,’
96
SOLUTION NO. 2—Basis , January 1,1896.
30
10
60
30
TotalTime counted backward .
1895 .
$10 0 to Jan . 1 ,’
96
100 to Jan . I ,’
96 298@ Io%200 to Jan . I ,
’
96
to Jan . 1 ,’
96 .06
Total
Bal . deb it interes tBal . account Jan . 1
Total , as s tated above .
Solution No. 2 shows that it i s on ly additional labor to find averagedate of equation of an account after it lapses into innocuous desuetudewithout deriving any benefit from the effort . C. G.,
St . Louis .
June, 1897.
A number of rules for averaging accounts have appeared in The BookKeeper, but some of them , I think , are too much encumbered with figures .
The method below i l lustrated has been adopted in our office, where thebook-keeper is often asked for the equated time of the balance of an ac
count at a moment’s notice.
1897.
Jan . 5, 60
Jan . 30 60
Feb . 7, cashM ar . 10 , 60
Apri l 5, 30
The book- keeper draws the account Off on a statement blank,fi l l ing in
as he goes the due date of each item , us ing 30 days as a month . For convenience in reckoning he uses the first day of some month for hi s bas is . In
11
th is cas e he takes Jan. 1 ,"97, and computes i nterest oneach item , us i n g th e
36 per cent one thousand day method. This method is deduced fro m th e
tact that any amount at interest for one thousand days at 36 per cent e qu a l s
the principle, so that moving the decimal point to the left one, tw o a n d
three places , gives interest for 10 0 days , 10 days , and 1 day , respect i v e ly .
Thus :Interes t on $350 for 65 days .
Interest for 10 daysInterest for 50 daysInteres t for 5 days
Interes t for 65 daysAfter calculating the interes t on the various amounts shown on th e
original account the book-keeper proceeds to arrange the following sta t e
ment, which shows the balance of account and balance of interes t.
STATEMENT—FOCAL DATE, JAN . 1
,1897 .
M arch 5 65 $350M arch 30 90
Feb . 7 37M ay 10 130
M ay 5 125
$964 8CREDITS.
Apr11 8 98 $240Apri l 23 1 13 150
Feb. 10 40 100
$490
Balance.60
87 days from Jan . 1 i s M arch 28 ; due date M arch 28,’
97.
W . F. A . ,Oklahoma City , I . T .
Ju ly. 1897.
The subject of averagi ng accounts has frequently been presented oflate in The Book-Keeper
,but being under discuss ion in the local society
to which the writer belongs it was sugges ted that the paper he read mightpresent a usefu l i llustration to your readers general ly.
The figuring should be direct to the purpose , which i s , a statement , orsettlement .
For s tatement June 1 , 1897, subject to 6% int . after maturity .
Dr. Cr.
30 days net M arch 21 .
60 days net April 1360 days net Balance. 30 days net
The first question is,wi ll we gain in this instance by averaging direct
to June 1 , the date for our statement ; or by averag ing first to Apri l I3, thelates t date in the account
,and figuring interest from there on? I w ill say
the latter, as we thereby keep our time figures smaller by 47 in each case.We now restate the account as follows
DEB ITS.
M atures D“ fntfil’
c
’
l‘
283113 Affi l il.5 1
14
CREDITS.
23
900 -00
Total DebitsTotal Credits
879-80
into or, say 4 days .
This means that balance of account would have four days to run toApri l 13, or in other words , that the average date of balance of accountwould be Apri l 9. We therefore, make statement June 1 , 1897, as followsBalance of account .Interest on balance from Apri l 9, average date , or 52 days at 6 per
cent
$225-37
To prove the above, divide 52, the balance of day totals , intothus obtaining $1692, the average amount, which at interes t for 52 dayswi l l equal for four days . W . C. P . , Ch icago.
t i t t t
September, 1897.
In the June number of The Book -Keeper,W . F. A. says the best
system i s that which requires the fewest figures and the least mental work .
The way I shal l now i l lustrate wi ll be to take the firs t date as “W . F. A .
”
does , s imply to i l lustrate that if you take the same date , figuring at 1 percent per m onth is eas ier than 36 per cent per year.
13
STATEMENT,FOCAL DATE JAN . I ST
,1897 .
DEB ITS.Due. Days . Am ’
t. l ot.
March 5 65 350
M arch 30 90 20 0
Feb. 7 37 140
10 130 1 10
May 5 125 290
CREDITS.
Apri l 23 1 I3Feb. 10 40
490 $14 83Total 600
We now divide the $600 by 30 , and get 20 . We divide the by th i s20 and get which we call 87. Counting forward from Jan. I gives u s
March 28 as the date when the $60 0 i s due. In dividing the balance of d o llars due it i s best to cut Off the cents and the units of dollars and divide by3. The above interes t is 12 per cent a year, or 1 per cent for every 30 days .
By removing decimal points two places to the left in the principle we havethe interest for 30 days , and removing it three places we have it for threedays . Take the first amount of $350 for 65 days . Sixty days i s $7, threedays 35 cents , and two days one- third less , or 23 cents .
S . H . T San Francisco .
PART I I I .
Manufacturers Accounts.
We believe, however, that it is best to include only those expen d i tu r eswhich vary in proportion to the volume of production, afterwards pro—r a t ingcapital expenditures in fixing the prices at which the manufactured a r t i c le s
are to be offered for sale.Generally speaking
,therefore, ou r cost records must provide for
Purchase of raw material .Returns and allowances claimed on account of imperfections, etc.Labor.Other factory expenditures .
M anufactured stock.
In a factory of any size the best plan is to arrange for a separa te s e t
o f books to be kept there, the main offi ce s imply charging the factory w i th
cash paid out,and crediting it with expenditures accounted for. Thus ,
th e
main office wi ll debit factory account with currency for wages or expen s e s ,
or checks in payment of raw material , and credit factory account with i ts
report of “Wages paid, “General expense, “Accounts paya b l e .
The trial balances of the factory and main set of books will be a s
sembled for the purpose of compiling balance sheets , etc.I f the factory i s small the factory accounts can be carried in the m a in
Office books , but it is not such a convenient arrangem ent.In the first place, we will pred icate an exam ple where only one k i nd
of raw material is used and only one class of articles manufactured . In
this case we will require a factory journal which may be ruled as show nin form A .
P o e m A c/ O ( JD /7b ,
When the raw m aterial i s received it wi ll be debited to raw materialaccount in the column provid ed for the purpose and credited to the concernfrom whom received in the purchase account colum n. From the periodicalreports received from foremen or workmen , labor will be charged with thetime expended on m anufacture , and manufactured stock charged with thematerial used
,
“raw material account” being
‘credited . Labor and expensewill also be closed into manufactured stock account in order to ascertaintota l cost of goods manufactured . When manufactured stock i s deliveredto the store (T. H . Co .) the store is debited and manufactured stockaccount is credited . When a balance sheet i s prepared a report i s requiredfrom the factory of all unfinished manufactured stock on hand and the laborso far .expended on same, and the total incorporated as an asset .The general expense of the factory ,
such as manager’s and office sal
aries,coal , horse feed , engineer
’
s wages , etc. , etc should be charged to aseparate account, and pro- rated where there are different kinds of products .
The raw material account will thus Show the amount of raw materialwhich should be on hand ; manufactured stock account will show amountof manufactured stock not delivered to store ; unfinished manufactured stockaccount will show am ount of raw material and partly manufactured stock
4
in factory in the hands of workmen, and cost of labor so far expended onsame. The appended diagram may be found useful in assisting to a thoroughcom prehension of the plan .
The factory reports of material used and time occupied are generallymade on blanks specially devised for the particular business for which theyare required . They specify quantity of material received and used and
hours spent on the job. Such reports are sometimes turned in to the office
dai ly, sometimes weekly , sometimes as a job is finished .
A book of record i s kept of raw material received and issued, and thestatistics in this book can be checked by the factory report blanks and bytaking inventory. In the latter case the stock on hand should agree withthe ba lance shown by the record of material received and issued.
The above are the fundam enta l principles on which all factory costs areascertained
,but the application of these principles i s carried out in an infinite
variety of ways in accordance with the conditions to be satisfied. Therem ay be twenty different kinds of raw m aterial , a separate account of eachof which must be kept, and also of the labor on each kind of material .There may be all kinds of extraneous operations , the cost of which must
be carefully recorded, as in the case of a coal mining company, or a manufacturer of electric motors and app liances . These present an opportunityto the accountant for the exercise of h is ski l l in adapting h i s variousforms to the special requirem ents o f the case.
One of the m ost im portant features in the system of factory accountingi s the pay roll . A great deal of tim e is usually spent in perfecting aneffi c ient sy s tem of recording and pay ing wages ,
and a great deal of timei s invariably was ted where effi c iency has not been obta ined . Such a
sys tem shou ld afford a guarantee agains t stuffing the rolls , or chargingup unearned w ages . It shou ld also furnish a s imple m ethod for accurately Obtain ing statis tics of costs of articles manufactured .
The actual num ber of hours and minutes should be recorded,as the
workmen enter or leave the prem ises , by one of the m od ern“Time Re
corder” machines . Where poss ible it i s best to use one onwhich the writingof the sig nature makes the required record , as this prevents one m an fromreg istering both for himself and a friend who may be late or absent altogether.Each wo rkman should be furnished w ith a blank ruled to suit the
peculiarities of the business , on which w ill be entered the description of thejob. or contract , and on wh ich the workman will record time occupied and
amount of individual production.
The forms we now present are no t expected to be su itable fo r e v e ry
bus iness , but are intend ed to i llustrate the fund am ental pr inciples on w h i chan effi cient cost system should be based .
Fig . I i s a Stock Record,show ing d ispos ition of material receiv e d a nd
quantity on hand . This record shou ld be partially or completely v e r i fi ed
at certa in intervals in order to show that the goods cal led for are ac t u a l lyI )” hand .
.s'
ro cn B o on r'ac c N a m e . o f
‘
M a fa m’
a l
Fig . 2 shows the order on the stockkeeper for material to be used in
m anu facture o f product. These orders constitute the storekeepers’ vou c h
ers for m aterial delivered, and the quantities are posted therefrom to th e
Stock Book .
T h e A M C D IC A N M A N U FACT UQ ING CO
2' b r oo m O Q DC Q N o
16 a lb fle fle epe n
De iwen1b beat e r-fi e fd bw”m S hop ord e r N o
Each workman is furnished with a cost card (Fig. on which h erecords particulars of time consum ed and m aterial used on. the contract ,o r job , on which he i s engaged . When the job is com pleted this card i s
(c os-
r CA DD n o s ) Tn:A M EQ ICA N M ANUFA CT U Q ING C0 ,
turned in to the cost clerk,who figures out on i t the cost o f m aterial
,labo r
and sundries and enters it on the Cost Reco rd of Sum m ary (Fig. Aseparate page i s allotted to each contract or job, and the total cost of sam e
ascertained . Th is am ount i s then posted to the contract account in the
ledger, which i s cred ited w ith contract price, the d i fference being the
am ount of either loss or gain. Where certa in s taple articles are m anu fac
tured a com parative statem ent o f cost of m anu facture shou ld be m aintained ,
in ord er to ascertain that such costs are not excessive or exceptional in any way.
C 0 5 7"
S U M M A Q V
In Figure 5 we show a form o f Pay Ro ll B ook , the particu lars o f
which are obtained from the Tim e Record er. I f the Pay Roll B ook i s compared w ith the workm en ’s cost cards a very good check is obtained on thetotal time reported.
Som e establishm ents sti ll have their em ployes s ign the pay- roll, butwhere the hands are very num erous this i s found laborious and inconven
ient, bes ides exposing to the view of the person signing the am ounts paidto others .
F 10 5 DA V D O L L. B OO/l"
Fig. 6 shows a very good form of combined wages card and voucher,which can be used with advantage.
1m o o f
T h eA M CQ ICA N M ANUFACT Ul CQ .
C h at-"B R - . l9 0 0
Qecz vveo Aune m eanW avy Callfie abm
- day or IQOO
All goods m anufactured w i ll be m ade in accordance with instructions
given the forem an of the d epartm ent,or the superintendent of the factory.
On com pletion o f the good s the shop order w i ll be returned to the office ,and the good s d el ivered and b illed . \V e append an i llustration ‘of shoporder referred to above (Fig . When com pleted it i s usual to trans ferthe goods from factory to store, the factory charging store, with cost , and
the store crediting factory and debiting m anufactured stock . Th e r e la
S H O D 0 0 0 5 9 "no 7 )
( o r-Go M
tionship between the store and factory accounts may be conveni ently i l l u strated here :
FACTORY BOOKS.Debit CreditRaw material. Accounts payable.Labor ( pai d).Sundries (pai d).Accounts payable ( paid).
( delivered) .
STOREDeb itLabor.Factory sundries.
Accounts payable.
Manu factured stock.Customers .
In a great many establishments it i s usual to add a certain percentageto manufacturing cost to cover factory general expense, maintenance, d epreci ation, etc., so that on the sto re books the factory account will showeven.
I f a custom er orders a suite of furniture separate shop orders shouldbe made for each article as the separate cost of each i s required to be tabulated .
Fig. 3 can be used for piece work i f such a system of labor is employed,but a special form of pay roll would be necessary to take care of the amountof piece work done instead of the num ber of days or hours
.
employed .
The invoices of material received will be O . K.
’
d by the stock-keeperto vouch for goods duly received , by the purchasing agent to vouch forcorrect price, and by the book-keeper to show that amount i s correct.All expenditures other than those incidental to the process of manu
facture will be separately class ified and recorded .
Store.Store.Manufactured
BOOKS.CreditCash.
Factory.
Sales account.
CHAPTER II.
Furniture B us iness .
In the many articles and discuss ions publ ished in rgeard to CostAccounting very l ittle attention i s paid to the manufacture of “
stock”
a rticles , i . e. , goods not made to order but in certain standard s izesand qualities .
As an example we w il l take a furniture manufacturer who makes cha irs ,tables , couches , ornamental stands , etc . It i s not necessary in such a caseto install a complex system of time records , as a certain standard of material used and time occupied can be es tabl ished . One chai r of a certaink ind and style shou ld cost exactly as much as another chair Of the samekind and style . The first thing the manufacturer should do, therefore, is tofix the s tandards , and then hold the foreman , or superintendent, respon
s ible for maintaining the standard.
The accounting department has now to provide a check on the cos tof product ion which i s accompl ished by means of a cos t ledger. In thisledger Open an account with each l ine of goods manufactured .
In the genera l ledger Open two accounts—a raw material account anda manufacturing account . All b ills of raw material are deb ited as they comein to raw material account .
Each shop order, on completion , wi ll show amount of raw material usedand time consumed . Debit cost to account in cost ledger and record comparison with standard, thus :
NO. 5 Upholstered Chairs . StandardS . O . 57 19 M aterial $16 4 2
Labor 16 25 3 267
NO . 5 Upholstered chairs account wil l always show whether orders areabove or below s tandard , and as a separate “key” wil l be kept to the s tandards , showing proportion on which establ ished
,the cause Of any disparity
can be instantly ascertained .
At the end of the month the clos ing entries wi ll be on the follow ingorder
Deb its .
Raw M aterial0 0 M anufacturing Account .For material used as per ShOp orders No sWages
00 M anufacturing Account .For time reported on shop orders Nos . to
These entries wi l l correspond with the cost accounts in the cos t ledger.The balance of raw material and wages accounts wil l represent assets ; material on hand and used on uncompleted shOp orders ; time employed on uncompleted shop orders .
CHAPTER III.
Too l M anufacturi ng .
Stock received from suppl iers is purchased by means of tri p l i c a teorders , and if necessary a special Stock Purchase Order i s also is sued . F o r
a full description of s imilar form s used for s tores , see September B o o k
Keeper.Quotations received are kept on record by means of a card inde x ,
o n
the same l ines as the Store Quotations . Stock ordered i s also ind e x e d
exactly as Stores on Order. In a sm a l l concern al l quotations rece i v e d ,
whether for stores or s tock , m ight be kept in the same index, and St o r e s
on Order and Stock on Order ( from suppl iers) in another index . If t h i s
plan i s followed it wil l be found wel l to use a different colored card fo r
s tores and stock .
The stock -keeper being respons ible for keeping on hand a pro p e rquantity of the various l ines required , requis ition upon the manager fo r
anything he may w ant manufactured by the Shops for s tock . It wi l l b eseen that Requis itions for Stock (Form 20 0 ) have a liberal space fo r
remarks . This i s in order that the Stock-keeper when cal ling for m anu
facto red stock m ay give the m anagement the benefit of any knowled g ehe may have as to the best or probable future dem and for the goods fo rwhich he is asking, and l
m ay put on record any sugges tions he m ay w is hto offer as to increas ing or decreas ing the quantities to be m ade, as com
pared with previous orders issued to the factory for the m anufacture o f
s imi lar goods .
As a m atter of convenience the Stock- keeper wi l l m ake requis ition fo rthe same c lass of goods only upon the one requis ition , and not use the sam e
sheet for different classes of such stock as m ay be required .
Th ese requis itions for stock (Form 200 ) are in dupl icate , bound inbooks of 10 0 each , the first or original perforated for rem oval , and alsopunched at the top for an arch file .
The Stock- keeper mus t be carefu l to have h i s requis ition for stock bearthe date he actual ly sends it to the M anager. The latter is sues FactoryOrders (Form VI .) for the m anufactu re of the l ines of which he mayapprove , and notes oppos ite such l ines the number of the order coveringsame and quantity ordered . W ith regar d to other items upon the requis ition , he notes any decis ion or remarks he may wish . This being done ,the requis ition i s returned to the Stock- keeper, who notes upon it thedate of such return , and w ith a colored penci l marks prom inently on thedupl icate in h i s book the same date. The original i s then placed upon anarch fi le with other requis itions for s tock , each class of goods called forbeing separated by a gu ide card indicating the nature of good s asked for .It m ust be unders tood that this file i s for the convenience of the Stock
keeper on ly , and whi le no t to be regarded as a record further than of theissuing of certain factory orders for s tock , w il l y et w el l repay a l ittle attention on the part of the Stock - keeper . It w i ll be noted that the M anagerfi lls in oppos ite each item the num ber of the stock order
,and the quantity
pletion of orders , being access ible to the Stock-keeper, and taken in c o n
junction w ith the information he has on record on h is own dupl icates o f
requis itions for stock , should enable him to keep a pretty safe cou r s e
between running too low, and over- stocking on the various l ines he h a nd les .
When times are pros perous and the turn-over large, it is an easy mat t e rto gradual ly lock up a large part of the profits made in stock , good , bad , o r
doubtful , as the results may prove.It is well to remember that s tock that to- day may be good as whe a t ,
by such a s l ight cause as the finding of advantages in us ing other materia l s ,
or other ways of obtaining certain resu lts , or even a change in style o r
fashions—by any or all of these causes , such stock m ay be rendered in a
very short tim e more or les s unsaleable, and even reduced to that least o fal l commercial values— scrap .
A gradual increase in the stock on hand i s unusual , unles s being a
natural result of accumu lating leas t marketable l ines of stock . I n
tim es of peace prepare for war —in time of b ig demand for goods pus hout all doubtfu l or questionable s tock poss ible .
For convenience I have assumed that the stock of the concern unde rdiscuss ion be divided into two main divis ions , namely, purchased , and
own m anufacture,and that these are subdivided into three classes , namely .
A,B
, C. For the sake of s impl i fy ing my description of the system followed ,
I have made no reference to the keeping of a Stock Ledger in describingthe course or treatment of any of the forms . The ques tion of a stock ledgerI w il l take up by itself, and if one i s to be kept , the only change necessaryin the forms used wi l l be an additional column for the s tock ledger fol io.
When stores are issued by the Store- keeper they are merely trans ferredto another account of the company . When s tock, however, is issued, i tleaves the possess ion of the com pany and i s transferred to another party .
It is this d i fferecne that causes the greatest d ifierence in the treatmentof stock , and of s tores .
It i s absolutely imposs ible to prov ide a sys tem that w i l l el iminate theposs ibi lity of goods which have been made for s tock , being shipped ordelivered without being charged , but when goods have been manufacturedfor a certain custom er there shou ld be no poss ibil ity of their del iverywithout charge for same , and if the plan here described i s carried out inall its detai ls
,such an error cannot occur. The sys tem i s intended to have
the least poss ible clerical work done in the Stock - room , and as far as
poss ible to have all records and entries made and kept in the office; Inproportion to the carrying out of this idea w i l l the Stock -keeper’s time beleft free to d evote to the duties of h is department . In a manufacturing bus iness , i f the shipments are to be prom ptly m ade , and properly looked after,the Stock- keeper w il l require a certain amount of time to trace up in theshops , articles being manufactured both for stock and cus tomers
’ orders .
The question of keeping track of sel ling prices and quotations given ,depends very largely on the nature of the bus iness done , and the frequencyof quotations and prices being asked . In the pres ent s tate of the market ,when so many firms find it necessary to notify their customers on theface of each invoice,
“Pri ces subject to change without notice ,” this question
i s a very serious one .If, ow ing to loosenes s in the quotation department , a cus tomer is quited
12
25c for goods for which he has been pay ing 26C, the loss to the firm i s
frequently greater than the amount involved in that particular order. Iti s an eas ier m atter to drop a price 1c than to raise it a very smal l fraction ofa cent , and mos t buyers are somewhat suspicious of an advance in price , nomatter how sm a ll , when the explanation given is that the lower price was
an “error of the quotation clerk .
”
THE M R C Q Lfl
WM » { M £2 70“ M fa
b oon r an 0 0 0 n r / om :
F O R M 8 O f
No matter how strictly a firm tries to carry out the one price to al lidea
,it i s few firms who in the present day do not, more or less frequently,
s ell exactly the same goods to different customers at different prices . Inview of these facts the time expended in keeping accurate records of sel lingprices and quotations given , while to some appearing to be wasted , maybe of great value in the resu lts Obtained . Unfortunately the resultsof such work , though very real and tangible, may be almost invis ible,while the labor expended to obtain them may be very evident . The
system here described may or may not suit indiv idual cases , but the ru lethat no quotation shal l be made without being put on record where , if anorder i s given or the quotation asked for aga in (no matter after what lengthof time), it may be access ible—is sound .
Discounts and sell ing prices of such goods as appear in the company ’scatalogue, are l isted , preferably in private mark in a cata logue bound w ith ablank leaf between each i llus trated or printed page . This catalogue i s keptat the Order Clerk ’s desk . After this plan has been in vogue for sometime, and the sel l ing prices of most of the firm
’
s product i s l isted , manyinquiries received by mai l or phone can be answered from the i nformationthere obtained .
The B i ll ing Desk being provided with a desk phone , a Memo Bookof any convenient s ize, cal led the
“
Quotation Given Book , i s kept bes ideit. This is s imply a memo book—the on ly ru l ing being a l ine m arking off acolumn about one and a half inches on the left hand s ide . When a quota
13
tion i s asked for over the phone which cannot be given from the infor m a
tion contained in the catalogue , the details of the article called for a r e
entered in this book with on ly the name of the party inquiring in the l e f t
hand column . This results in the los s of a certain am ount of space,b u t
DA r t
Or d n Gi ven
Q ff f an M A N U FA c r une O K F a n Ca t o / r
N A N A c a n 3 e C'
r f 7 30 5 4 5
f oa m 2 O 2
this loss i s more than counterba lanced by the greater ease with which anyrequired nam e m ay be found . The spec im en of this form is s im ply for thepurpose of showing how eas i ly any name m ay be found in such a book ,i f the column i s reserved for names only . The price quoted is entered , andi f an order i s received at once that fact i s also noted and the order writtenout on M em o Order (Form A smal l index in connection with thisbook wi ll prove of great value, and occupy but little tim e to keep entered
up . Each morning the quotat ions in this book and also those which mayhave been made by letter, and a copy of which wi ll , of course , be foundin the Letter Book , are entered upon a Quotation Given Card (FormThis card is filed away (alphabetical ly) in an index d rawer cal led “
Quotations Given Index” with what gu ide cards m ay be necessary . If des irable
14
this index may be arranged according to towns—the cards for each townbeing class ified alphabetically by customer’s name .At first s ight it wou ld appear as though this plan would resu lt in a very
large accumulation of cards containing quotations given . I f, however,the firm i s in possess ion of a pretty complete catalogue of goods of theirmanufacture
,and the Order Clerk ’s copy of this catalogue used as and to
the extent it shou ld be, it wil l be found that by us ing both Sides of thesecards
,very few customers wi l l require more than one card a year. When
a new year begins cards of another color should be used , and at the end ofsay s ix months al l cards of the previous year may be taken out and filedaway—class ified and indexed on the same l ines . It wi ll thus be seenthat the current index w il l always contain , at least , s ix months
’ quotations ,whi le quotations given previous ly wi l l all be together in such shape as tobe immediately available for reference if required.
CUSTOMERS’ ORDERS .
The ideal sy stem of keeping and handl ing of customers’ orders cons ists
in the mak ing out of a card for each ord er received , filing this card inindexes arranged according to province
,town
,and alphabet , and on this
card noting al l transactions in connection w ith such order—from the timeit i s received unti l the last item i s either shipped or cancel led, or thecustomer advised to that eff ect.Except in exceptional cases such as a bus iness having branches located
in various parts of the country, and each branch doing a large bus iness ,this plan i s too cumbersome, expens ive , and compl icated , and w il l resultin too much dupl ication of work to be a w ise one to adopt .
77 15 TD .
O m a n/1m 0 0 0 5 9
J% av
T ER M S
IlN V O lCE N O
The alternative plan i s to make the order itself after it has been issuedto the sbh ipper bear on its face all the information above Spoken of, butto also keep in the offi ce accurate and promptly obtainable information as
to the exact location of any given order,and to Show not on ly in whose
15
possess ion such order may be found , but also its exact location a m o ngthe other orders which the same em ploye may have, and if filed aw a y , to
show the number of the page of the book of which it has become a pa r t .
The term “Shipping Order is hereafter used to des ignate w r i tt en
instructions to the Stock-keeper or Shipping Clerk to ship or del iver ce r ta ingoods to a named party. Such shipping order bears a number with th e
TH E M Q. C o .Lfe/DZL I V E P V
P l e a s e R e cs /n. r o o m I’
M /£1 0 C‘
q LU
IN GO OD OO O I O A N D C ON a fl ON A 3 f GLLOWJ:
f o e " 2 0 3 6 .
Keep rm : S u p
prefix R and em anates on ly from the offi ce. The ru le i s that no stockmust be shipped or del ivered without such written instructions from theoffice . In most bus inesses it wi l l be found impracticable to strictly l ive upto this rule , but the on ly exception that shou ld be made i s the givingto the Stock- keeper a certain amount of authority to ship such stock as maybe sold by him or his ass istants personal ly . In such event he chargesthem out on a form exactly s imilar to the Shipping Order, but beari ng noregister number. Such forms are handed to the B il l ing Clerk at certaintimes , and by him entered in the reg ister and given a number .This form i s exactly the same as the Shipping Order , but i s padded in
such a way that by the one writing the Stock- keeper makes out a Shipping Order (Form zo3a), Delivery S lip (20 3b), and Receipt (20 3C). Areference to these forms shows that they each take on ly such information asproperly belongs to them— for the purpose for which they are used .
In most convnient access to the Order Clerk i s a cab inet containingas many drawers as may be required
,labeled as may seem best either
acord ing to custom r’
s name , or of alphabetical divis ions . The drawers inthis cab inet are about 9”x12”. Each drawer contains a set of manil lasheets so cut for index purposes as may be dec ided upon . These manil lasheets are kept in their place by rods running through perforations at theextreme inner edge and held together by an eas i ly released spring.
As soon as a shipping order i s made out or received upon the properform it i s entered in the “Shipping Order Reg ister” (Form 20 4) and giventhe first blank number therein .
Given the above appl iances and the neces sary forms , the proper andcomplete carry ing out of this sys tem in all its detai ls should make the“Shipping Order Dept.” one of the mos t smooth ly running branches of al lthe clerical work in the entire bus ines s . I f, however, the detai l or routinework of this system is allowed to run behind , or if certain details apparently useless and unnecessary are not carried out , then , when the informationwhich ought to be obtainable from this department at a moment’snotice is asked for, it w il l be useless to expect the results which alone can
T HE M D Co .L i d
DA TEO l c c l P r
em s?0 :C E ! vex-0 moon rh o/
"f 0 m am
0 0 0 4 0 A /VD C ON D I f /ON A 3 F O L L o w:
5 0 W
F O O M £0 3 6“
prove the value of this plan . If the plan i s in all its detai ls carried outas intended the cab inet of drawers referred to wi l l show at any time .
A . The date goods ca l led for and al l other details of al l orders on handto ship , or s imply supply stock to any named person , and , which nothaving been entirely shipped or cancelled m ay be cal led
“UncompletedShipping Orders .
”
B . On such orders there may be one or more register num bers , i fonly one the order i s s til l in the Shipping Clerk ’s hands . I f more thanone, the last one contains such articles as hav e to t v et been shippedand i s in possess ion of the Shipping Clerk . The others are part shipments and have become pages of the B inder cal led the “
Day-Book Detai ls .
”
C. On these uncompleted shipping ord ers there m ay be found one ormore numbers with “F. before them . This indicates “Factory Orders ,”and shows the manufacturing order num ber o n which certain requiredarticles are being made up in the shops .
Before proceeding to describe in detail the form s required and coursefollowed , it must be distinctly unders tood that w ith the exception alreadymentioned of goods sold directly in the Stock- room , this cab inet receivesthe origina l authority for all Shipping Orders issued by or from the offi ceto the Stock- keeper, class ified as may be found best and each class arrangedalphabetical ly. This cabinet retains such original authority until all thegoods cal led for have either been suppl ied or the order cancel led .
This original authority m ay be :A . A customer’s written offi cial order.B . A letter.
17
C. A telegram .
D . A M emo order (FormThe firs t three wi ll reach the firm in the ordinary course of bus ine s s ;
the last,the mem o order, is used when none of the other three are rece i v e d
by the company, or when being received they contain more than th e
actua l order and are, therefore , required by other than the Order Dept .In some cases memo orders may be used to supplem ent or expla in a
letter or telegram , in which event they are attached to the letter or te l egram as the case m ay be .
M emo Orders (Form 20 2) are put up in pads of about 10 0 each , andare supplied to any employee who is l ikely to take an order from a cu s
tomer,either verbal ly or by telephone . AS I have said , these memo orde r s
THE M D C 0 , Lfo’
I 3 ¢8
F O R M 2 0 4
are used when no other written authority for the issuing of shipper’s orderhas been received . When an order i s receivd over the phone, the nameof the party giving it should be ascertained and noted on this form , andif an order i s given verbal ly by the employee of any customer, hi s nameshou ld be marked or he should initial the form .
In som e cases it w i ll be found advantageous to supply certain em
ploy ees who ,whi le not actually travelers , would have frequent u se for it,
w ith a book of these forms perforated for removal .In a great many cases customers (particularly out of town) would be
glad to accept and use pad s of these forms , and this would , in many cases ,resu lt in that m uch to be des ired end -o f having such part of the correspond ence received by the firm as may contain orders , kept entirely separate from that treating of other matters . When a letter i s received containing
,in addition to an order, other m atters requiring the attention of
other employ ees than those of the Order Dept . , such part as shou ld be sentto the Ord er Dept . is indicated by means of a colored penci l and the stenographer m akes a copy of this indicated part on a M emo Order.Travelers ’ orders are received on the regular Shipping Order forms ,
and the stenographer m akes out a copy on a M em o Order,both then going
to the Order Clerk . The original i s given a registered number in the
18
CHAPTER IV .
Ord ers .
In a m anufacturing bus ines s it i s im poss ible that invoices Shou l d b e
ma i led alway s the d ay the goods are shipped or del ivered , though in m a ny
cases this wou ld be the result of carefu lly carrying out this sys tem . I f,
however , a certa in percentage i s got out the day of del ivery , the get t i ngout of the balance the day after del ivery i s that m uch eas ier, and excep t i nvery except ional cases invoices can and shou ld be ma iled w ith in the 24
hours after the good s have left the pos ses s ion of the company .
In except ional cas es where th is m ay be imposs ible , such as be ingunable to bi l l for a cu stom er unti l other good s are sent forward , or be ingunable to ascerta in the cost pr ice upon w h ich the sel l ing price is to b e
based,the charge m ust necessari ly be held over . In such cases to g i v e
the c ustom er an opportunity of check ing the quantity of goods receiv e da M emo Invo ice (Form 20 5) i s sent , and the date such m emo is sent note don the Shipping Order. These form s m ay be bound in books , in dupl ica tewi th the original perforated for rem ovel , or a letter- press Copy of themm ay be taken .
The Stock - keeper i s suppl ied w ith two files for h is Shipping Orders ;one for current orders , or such as he may reasonably expect to ship a t
once,and one for back orders— that is , orders which cannot be shipped a t
once, on account of goods hav ing to be m anufactured , or from som e otherreason . The ord ers on this back order file are arranged alphabetica lly , andthus all back o rders for a certain custom er wi ll be together.In a large bus ines s and as a matter of convenience, it might be well to
provide two such files , for city and country custom ers respect ively . A
m ore convenient file than any spring book - b inder i s a plain board filea l i ttle longer than the Shipping Orders , with a spring cl ip at the left- hands ide
,a sheet of ordinary heavy paper being used if found advisable , to pro
tect the top order .The Stock - keeper wi ll also be provided w ith a w ire correspondence
basket , in w hich he places , as they are ready , al l papers intended for theoffi ce, whether Shipping Orders , Credit Notes , Way B i lls , etc . The contents of this basket are taken into the offi ce four tim es each d ay ,
and at
stated and regular hours .
The Order Clerk i s provided with a s imi lar basket,in which he places
al l ord ers , whether for Sto ck-keeper or Factory Clerk . This basket isa lso em ptied at s tated hours , and the contents del ivered to those for whomintended .
On receipt o f a Shipping Ord er the Stock - keeper firs t ascertains i f anyof the good s cal led for w i l l have to be specia lly m anufactured , and also i fhe can supply enough to make a part shipm ent , or i f the ent i re order w i llawai t such m anu factu re . In the latter event he m arks in the space forrem arks , F . 0 . (Facto ry Ord er), Oppo s ite such l ines as wi ll have to bem anu factured ,
and puts the o rd er in the co rrespondence basket . I f,how
ever , h IS Intent i on i s to m ake a part sh ipm ent,he puts the ord er on h i s file
a fter m ark ing the neces sary item s as above .
When a sh ipm ent i s being m ad e ready,he checks o ff each item as it
i s packed or laid out ready for shipment, and if the entire quantity cal ledfor of each item i s marked in the column headed quantity shipped . Thisdenotes that that particular l ine has been entirely supplied. I f there i sany difference in quantity between what he ships and what the orderca lls for, he marks plainly the quantity which he actual ly ships or del ivers .
I f the balance i s to be shipped at a later d ate , he marks B . O . (Back Order)in the space for remarks , and places the Shipping Order in the correspondence basket for transmiss ion to the offi ce .In the case of out- o i - town shipments a duplicate B i ll of Lading i s
made out,and this also goes to the offi ce , and from there i s forwarded to
customer .If the Stock -keeper m akes a sale direct from s tock , he makes out 3
Shipping Order without a register number, which order i s also placed inthe basket intended for the offi ce . On receipt by the offi ce of these ShippingOrders
,etc . , the register number of each which contains such number i s
l ooked Up in the regis ter and the date (and in large bus inesses poss iblythe hour also) of receipt by the offi ce i s noted in the column ruled for thatpurpose . Such orders as the Stock- keeper has fi lled w ithout a “
register number are entered in rotation in the register, and the numbers thereof notedon their face.The Order Clerk then selects such orders as , owing to a part shipment
having been made, the balance must be trans ferred to another ShippingO rder, or such as require Factory Orders to be issued for one or morei tems upon them . A back order i s exactly the sam e as an ordinary Shipp ing Order, but i s , of course, made out for such l ines or quantities on lyas remain unsuppl ied, and are g iven the next blank number in the reg isterexactly as though they were new orders .
Back orders are of the same color as the original from which they aretrans ferred . For convenience in sorting or looking up a particu lar order
,
it is wel l to have them of an entirely distinct shade . This plan wi ll be foundbetter and more satis factory than us ing four colors . A very satis factoryarrangement has been found to be the following :
Original city orders—cream color ;Back city orders—canary color ;Original country orders—pale blue ;Back country orders—medium blue .On this system we have four distinct classes of orders , distinguishable
at a glance. The fact yet remains that city orders are always yel low,
and country orders alway s blue . This , of course , appl ies only to the Shipping orders ; the Memo orders m ay be o i any color preferred .
As back orders for balance of order or Factory orders for certaingoods ae made out , the
“original authority” for the Shipping Order i staken from the file
,and the new numbers noted thereon .
The “original authority” for such orders as are com pleted i s removedfrom the fi le , s tamped w ith an adjustable date,
Shipm ent completed22nd M arch , 190 1 ,
and filed away in index boxes with the date of contents noted thereon .
The Order Clerk then selects such of the Shipping orders as he i s
21
unable to charge to the cu stom er w ithout knowledge of the cost o f th e
article suppl ied . Thes e he hand s to the Pricing Dept . The costs o f th e
orders on which the articles supplied w ere m anu factured is at once m a d e u p
and the sh ipping ord ers returned to the ,Ord er Clerk . These Sh i p p ing
ord rs are then arranged alphabetical ly ; c i ty and country in separate l o ts ,
and here w i l l be seen the ad vantage o f hav ing the orig ina l autho r i ty"
for orders arranged in the cab inet a lphabetica lly ,ins tead of by trav e l e rs
’
route, or by d istrict . The prices at wh ich the various goods are .to be b i l ledto cus tom er i s then filled in by the O rd er Clerk , and the sh ipping o r d e rhand ed over to the Invo ice Clerk , to whom has been prev iou s ly del iv e r ed
al l duplicate B i lls of Lad ing . B y th is clerk the extens ions are checked , th e
entry and invoice num ber no ted on the sh ipping order , and a lso in th e
reg ister oppos ite the num bers of s uch sh ipping ord ers .
The Sh ipping ord ers then go back to the P ric ing Dept . , where a ll
the co s ts of the item s sh ipped are entered in the column for that purpo s e ,
and the clas s of goo d s o r d iv i s ion of sto ck which i s to receive credit fo rthe sale i s indicated in the co lum n fo r that purpose.
In the case und er cons i d eration let M represent goods m anufactured b ythe firm
,and P represent s tock purchased from outs id ers , and A , B and C
the different clas ses o f s tock hand led . The proper u se o f these letters in th ecolum ns d evoted to that purpose w ou ld enable the Factory AccountingDept . to Show at the clo se of each month w hat quant ity of the total s to c kshipped was purchased or m anufactured s tock , and also the va lue of th eshipments for the month o f the various clas ses of stock , both m anufacturedand purchased .
In the event of any s tock being delivered and sent out fo r which nocharge i s m ade to cu stom er
,the regu lar routine i s followed in every respect
and d etai l , except that no sel l ing price is extend ed on either shipping order ,invoice, or Day Book entry . These are all m ad e in the usual w ay , th e
invoice, how ever, being m arked no charge . This plan,carefu l ly followed ,
enables the stock- keeper to m ake sure that no stock leaves h is pos sess ionwithout being record ed . It rem ains fo r the Accounting Dept . to chargethe value of such sh ipm ents as are no t to be bil led to a customer to theacco im t to which they properly shou ld be d eb ited .
On the face of it th is sy s tem appears to have cons id erable d etai l workwhich m ight be avo id ed . In practice it w i ll be found no t more thanneces sary , i f the object i s to keep track o f al l o rd ers , sh ipm ents ,
and dcl iveries i s to be obtained .
The Ord er Clerk m u s t be particu lar whenev er he receives an o rderfrom the Sh ipping Dept.
,fo r w h i ch no back o rd er i s requ i red , to rem ove
the “original autho rity” from h i s cab inet. If th is “
or ig inal autho rity”is
then filed away s eparately , and d i s tinct fro m o ther co rrespond ence of thecom pany , the Ord er Clerk can im m ed iately pro cu re all o rd ers from a g ivencustom er . A g lance on the face o f thes e o rd ers w i ll Show at once whichare com p lete , and w h ich are s ti l l rem a ining partly o r altogether unsh ipped .
From the info rm ation on these o rd er s, and the fo l io s obta inable by
reference to the reg i ster , the Ord er Dept. can turn up at once the DayBook entry fo r any o r al l item s requ i red ,
and from the reg ister can also seeat a g lance i f the o rd er is y et uncom pleted , w hether i t i s in the pos sess ion ofthe Sh ipping Dept . , awa iting fu lfillm ent , o r o f the off i ce awaiting pricesand charging.
22
CHAPTER V .
B i ll ing and Charg ing.
The sy s tem which I have described m ay be used w ith an ordinaryD ay Book , the B i l l ing Clerk s im ply m aking the entry in the usual wayf rom the shipping order
, the extens ions of w hich he checks as he m akest he entry , and afterwards writes out an '
o rd inary invoice, the num ber ofw hich he notes on the Shipping S lip .
A better plan i s to use one of the several good form s of loose leafD ay Books , by which Day Book entry and invoice are m ade out by the onew riting. The sav ing of time by this plan i s cons iderable, but the greaterg a in lies in the fact that the Day Book being a loose leaf binder , the InvoiceC lerk requires only such pages as m ay cons titute that d ay
’
s work , the prev ions charges are at the disposal of the Ledger- keeper
,w ho shou ld then be
ab le to keep h i s posting perfectly up- to- date .
A loose leaf Credit Book shou ld be kept on the sam e lines as the DayB ook . The credit entry and note are made out , given the next consecutivecredit num ber , which i s noted on the M em o or letter under authority ofw h 1ch credit entry i s made. Such credit mem o or letter i s then filed awayw ith the com pleted shipping orders .
It i s es sential that neither shipping order nor credit note be m ade outfor any am ount or quantity w ithout w r itten autho rity ,
fo r such entry beingin pos ses s ion of the Order Department , and such written authority pos itiv ely m us t under a ll circum stances be such that it m ay rem ain in pos sess ion o f the order departm ent
,and not be requ ired by any other departm ent
o f the bus iness .
CHAPTER VI .
Del iveri ng and Shipping.
The chief idea in connection with the shipping and del ivering of stockhas been in all cases to keep an item ized record of articles del ivered toinvariably obtain a receipt for such , and to do this w ith the least po ss ibleamount of clerical work by s tock- keeper or shipper.
A s regards good s sold and del ivered to purchaser or h i s repres entat ivepersonal ly in the s tock- room ,
we have already seen how the Delivery S l ipto accompany such goods , and the receipts for same are made out by theone writing w ith the Charge S l ip .
For city shipm ents the Stock- keeper makes out s im ilar Del ivery S lipsand Receipts—which the carter takes with h im . The form er i s given thecus tomer , and the receipt brought back by the carter . I t wil l be notedthat these receipts are perforated for filing on a b inder . It i s not necessarythat they shou ld be perm anently put away in th is form . Two bind ers m ay
be kept in the s tock - room , each conta ining receipts for one month . At theend of the second m onth the receipts are taken o ff the b inder , and putaway ( label led with the m onth they are fo r). The Stock- room w i l l thus bealways in poss es s ion of receipts fo r at leas t one month ’s del iveries , -o lder
23
receipts than two months being filed away , labelled by the month , and th u s
easy of access .
The chief advantage of this plan i s that the carter carries only r e c e iptsfor the current day’s del ivery , so if he loses h i s book the los s i s co nfinedto as smal l a number of receipts as pos s ible , also i f a receipt for g o o d sdel ivered on a certain date is asked for, all receipts of that date w i l l b etogether
,and there wil l thus be no necess ity to look through several b o o k s .
Ins tead of the ordinary form of B il l of Lading supplied by car r ie r s ,
many firms find it to their advantage to supply their own—even at the a d d itional cost involved .
These B ills of Lading are padded 1n such a way that by the use o f fu l lcarbon” three copies are obtained . The firs t s igned by the carrier rem a insin possess ion of the stock- ke ,eper and Is filed away s imi larly to the rece ip tsdescribed above . The second , or fl imsy , copy is placed 1n the stock“keep e r s
correspondence basket—thus reaches the offi ce and i s forwarded to cu s tomer , either with invoice , or for reference , by m ail on the d ay shipment i smade .For del iveries to retai l branch three s l ips are required . These m ay b e
made out w ith one writing. The retai l branch being suppl ied cos t pr ic e ,
plus a percentage for handl ing goods . Such deliveries are only‘a trans fe r ,
not a sale . The del ivery s lip and receipt are treated in the usual w ay .
The Charge Sl ip goes to the Cos t Department , where the cost i s extende d ,
percentage added, and the s l ip then handed to the Invoice Clerk . T h e
Invoice clerk then makes out a M emo Invoice , but makes no book entry .
This invoice i s s ent to the retai l branch and the charge s lip turned over tothe accounting departm ent . The book entries made from these charge s l ipswil l be described later .
CHAPTER VII .
Stock Ledger.
In a bus iness such as we are cons idering the question of Stock Ledgersi s both important and a much disputed one. The mere deciding betweenunwieldy and bulky books or , on the other hand , too many books of s imilars izes requires som e thought . The advantages of a stock ledger as a perpetual inventory , are but very smal l in actual practice , but it has advantagesas a record of the salabil ity or unsalab il ity of various l ines as shown by pasttransactions which can hard ly be estimated . I f a stock ledger is kept allentries for manufactured or purchased goods of a s imilar kind mus t be carefully kept apart , and to do this involves the disadvantage of keeping s imi largoods in different ledgers , or else the serious risk of confus ing two classesof s tock hand led .
These ledgers are , of course , records of quant ity only , not of values .
At time of inventory an inventory sheet is u s ed , and upon th i s form theinventory , as shown by the books , is taken . This form should be providedboth for price and extens ion of values , and should approxim ately agree w itha phys ical inventory of sam e date .
I f the cos ts of the various goods are noted on the accounts in the
stock- keeper’s ledger, a very close averag e wi l l be obtainable at c los ing o f
the year’s bus iness .
Whether the information or resu lts obtainable from a stock ledger aresufficiently valuable to justify time and labor required to properly keepthem is a question each management mu s t decide for themselves .
If kept,however, under no circumstances mu st a deb it or credit entry
be m ade w ithout quoting the authority therefor. In this case, i f phy s icaland book inventories are far out of balance, ad jus ting sam e wou ld on ly bea question of tim e , checking al l entries , and granting that the inventory at
opening of ledgers was correct, as also the year’s charges and credits , the
difference wou ld then resolve itself into a Sim ple quest ion of stock tak ingor of shipp ing wi thout charging.
In no departm ent of a manufacturer’s account does the old ru le holdbetter than in this m uch disputed question of s tock ledgers : If a thing i sworth doing at all , it i s worth doing wel l ; if it i s not worth do ing wel l, it i snot worth doing at al l .
CHAPTER VIII .
P ro - rating Expenses .
The distributing or pro- rating of Shop and Factory expenses uponthe cost of the goods produced i s one of the m ost important Ac
counting questions a manufactu rer w i l l be cal led upon to face.
H e m ay instal l a necessari ly com pl icated system by which som e m anufac
turing expenses are pro- rated on the L . M . cost of the article produced ,som e on the value of productive labor, some on the number of hours u sed ,and some on the value of a given machine , the length of time it i s worked ,and its probable life. On the other hand he m ay decide on the s implerplan of lumping everything in General Expenses , and provid ing for suchexpense by a percentage on the g ros s direct cost of output . The day swhen the latter plan could be safely followed are past , and it i s not everyconcern that could justify by the resu lts obtained , the adoption of theformer.Before outl ining any plan I would like to call attention to an im portant
point which I think i s frequently overlooked . There i s a general im pres s ionthat it i s a safe and conservative plan to advance cos ts of product sufli cientto cover other expenses than those incu rred as a resu lt o f m anufacturing .
Som e firms go so far as to prov ide for sel ling expenses in this way , so as tobe “on the safe Side.
” In the case of a concern m anu factu ring on ly fo rcustom ers orders ’ and not for stock , or in the m os t im probable event of s el ling each year all product of such year, such a course, though wrong , m ightnot be dangerous . In the case, however, of the company m anu facturing and
carrying stock , the danger of such a cours e is not l imited to the question o f
wrong costs . It goes right through a ll the books , affects the balance sheet,
and resu lts in an inflated and mis lead ing s tatem ent of the com pany’
s as sets .
To m ake this more clear , suppose an extrem e case, u s ing ,for convenience,
even figures .
25
A furniture company m ake up a table at a prim e cos t of
The actual expens es incu rred by the factory during manufacturing ofthis article are, say 10 0 per cent . on productive labor , thu s giving an actualcost Ex . Shops of
M aterialProportion of m anu factu ring expenses
Suppose the firm ’
s expenses . other than the m anu facturing , are one halfthe am ount of what m ay be correctly cal led M anufactu ring Expenses . Th istable wou ld be charged to Stock at a value of
LaborM aterialProportion of expenses
Total 17 .50
I f it were sold before the end of the year, Stock wou ld be cred ited and
Sales Account charged with this value, and the difference between thisamount and the sel ling price wou ld be the correct profit , so that the errorwou ld have no resu lt .I f
,however , it were inventoried at th is figure, the assets of the com pany
would Show com posed as follows :
M aterialWagesActual increase in comm ercial value on account of expenses which wou ld be incu rred to replace tableFictitious increase of value owing to expenses incurredin o rder to sel l
The first three items com pos ing this are legitimate assets , butthe folly of including the las t item as an asset i s evident on its face. A s
long as fund s held out or credit rem ained good,th is plan l iberal ly carried
out , and the offi ce and sell ing expenses figured at a high rate, any m anufac
turing bus iness cou ld be m ade to show a constant increase of assets , quiteirrespective of either sales or profits .
The distributing of m anufacturing expenses as a percentage on th e L .
M . cost of an article i s gradual ly being recognized as an im proper procedute , and it i s now general ly admitted that the greater part , i f not all ofthe expenses , should be distributed in proportion to the productive labor
26
C . Expenses attributable indirectly to m anufacturing at factory, r ent
(or its equivalent), l ighting and heating, etc.
D . Expenses of receiv ing,keeping and handl ing stock .
E. Sel ling expenses , such as travelers ’ expenses , and salaries,comm i s
s ions , etc .F. Commerc ial and administrative expenses (many items as salar i e s
,
insurance , etc . , w il l have to be distributed amongst these expense accounts . )A .—Expenses of receiving and handl ing stores should be provided fo r
by a percentage advance on the price at which raw material i s charged o u t
and credited to stores . The amount provided in this way to be credite dto an account called “Stores Cost Advance , which shou ld be suffi cient tocover al l expenses of the stores department .B . C.
- M anufacturing expenses , both direct and indirect, should be prov id ed for by either a flat rate per productive hour, or a percentage on prod uctive labor, as determined . The amount so obtained to be credited toan account known as
“Factory Cost Advance ,” and the credit to this ac
count for a given length of time shou ld be suffi cient to cover al l expense sproperly coming under either of these heads during such time.D . E.
—Stock room and sel ling expenses are to be provided for by a
percentage advance on the price at which goods are credited to stock , andcharged to sales account . This amount to be credited to “Stock Cos tAdvance ,
”and to be suffi cient to cover al l stock room and selling expenses .
F.—All expenses other than the above are charged to Profit and Loss ,
which account is,of course, credited to the profit on sales . Sales account
wi l l thus show the difference between actual cos t of goods sold and theprice at which they are charged to customers , or , in other words , the actualProfit on Sa les ,
” leav ing to Profit and Loss account its correct function ofshow ing the net profit or loss , as the case may be .I f this plan i s adopted on a very careful estimate , based on the record s
of previous years , the various cost advance accounts Shou ld closely balancewith the expense accounts which they are intended to cover. Any s l ightdifference should be adjusted from time to time, not directly to Profit andCost, but through an account which m ight be called “
Cost Advance Adjustment Account ,” which shou ld ultim ately be closed out to Profit andLoss . This for record on ly , in order to ascertain how much the Cost Advance Account m ay exceed or fal l short of the amount required to offsetexpenses they ought to cover. Absolutely correct rates of advance couldnot be expected for the first year, w hen they would , necessari ly, be largelybased on estimates .
In most manufacturing concerns advertis ing should be treated as asel l ing expense , and the correct proportion charged out from month tomonth , according to the time covered by the contract of payment . In cer
tain cases it might be treated as an investment , to be credited w ith a percentage on the sales which it causes . This , however, com es more underthe scope of an Article on Advertis ing System s than on M anufacturing Accounts .
In a very large concern , instead o f any Factory Cost Advance Account ,there should be one for each prod uctixe department , based upon the amountof product , and the expenses of each d epartment
,and a proportion of gen
eral m anufactu ring expenses .
In no departm ent of a m anu factt. ing bus iness can loose papers and
28
cards be used to greater advantage than in the retail , and particu larlyis this the case when the actual accounting is done at another ofl‘i ce. Un
der such circum stances the book- keeping at the retai l offi ce resolves itselfinto promptly forwarding to head offi ce a ll necessary data and inform ation—retaining only such records as may be of value to the retai l management.A retai l departm ent can undoubted ly be operated to greater advantagewhen those respons ible are in a pos ition to keep a close watch from monthto m onth—not alone on the amount of sales , but also on the amount of thepurchases , stock on hand and the operating and m aintenance expens es , andthe proportion such amounts bear to one another .In the follow ing pages where card forms are given 6x4 i s assum ed ,
un less otherw ise spec ified . The s ize adopted Should , however, as a generalru le, be the same as that in use in the offi ce where the actual accountingis done .
Such lines of stock as require close watching are kept track of by oneof two forms of Stock Cards (Form s 30 1 ,
Form 30 2 i s so ruled as to Show quantities on hand at certain periods .
It is used for such goods as are in constant and fairly regular dem and andwhich are regu larly procured from a source which it i s known can supplythem in a given length of time. At such regu lar intervals as may be foundbes t these cards are taken by the stock- keeper and the stock on hand notedthereon . The specim en here given provides for w eekly reports of Oi l CupNo . 10 18. The quantity of stock being noted , the cards are handed to the
T H : M . F2. C O , R E TA /l . O TOCK CA Q D e x 4
C la s s O i l C u p 9 I' IQG A L E -6 A N D R 5 O S F’ T é
manager, who exam ines them and referring to the record of goods on order,governs him sel f as seems best.
Form 30 1 show s each receipt or issue of the article— the former in blackInk
, the latter in red . The column on this card headed “No .
”i s used to in
d icate the num ber of the page or invoice from which the entry i s made. Alist is kept in a convenient place of such l ines of stock as have been givenstock card 30 1 , and salesmen enter such articles as sold or received in abook prov ided for that purpose, and from which the entries are made onthe card .
Occas ional city purchases—i . e . , such purchases as may be found necessary from time to tim e , but are not actual purchases for stock ,
’
are m ade bya purchase order s imilar to Form 10 4 , and the accountant i s authorized tocharge the retai l department with such articles by means of a Retai l Departm ent Voucher (Form These vouchers—6"x4
” are bound inbook form
,num bered in dupl icate. They are written out with carbon
29
paper—the copy i s a card and is perforated for remova l , and transm iss i o nto head ofli ce, and i s the accountant
’
s authority for all charges against t h eretail branch , except those for goods suppl ied direct from the factory or e xpend itures made by it on account of Retai l Department .These vouchers are made out , their num ber noted on the invoices co v
ered by them and sent to the accountant at such intervals as m ay be foundmos t satis factory and convenient . The blank colum n on the right hands ide of this fo rm i s used for the m anager’s s i gnature on the card wh i c h
7 71 1: M . 9 . C O. LZTD . D E TA IL J TDCK CA Q D e x 4
goes to the head ofli ce—o u the paper copy rema ining in the book i t i s u sed
to carry forw ard the total am ount covered by vouchers up to d ate . Th is
book shou ld be kept indexed up to date, the voucher num ber being a ls o the
page number.
Regu lar stock requ ired either from facto ry or o ther sources i s ord eredby m eans of a Retai l Stock Order (Fo rm These ord ers are put up inpads num bered in duplicate ,
the orig inal o f paper and the copy - card . The
latter i s filed away in a card ind ex , clas s ified according to supplier’
s name orclas s of goods , as m ay be found bes t. On receipt of acknow ledgement oford er (not requ ired in case of the factory), the prom ised date of shipm enti s noted on the card . When goods are ordered from other sou rces than thefactory the seller i s given a form ca l led Retail Debit Note (Form and
30
the order i s only given 0 11 cond ition that this form is fil led out and enclosedwith the invoice to head Offi ce.
In cases where goods are purchased through travelers a copy of theorder i s obtained and pasted in a guard book , and a regular purchase order(Form 30 4 ) is made out, covering
“goods as per copy of order fi led in Guard
On receipt of Form 30 5 w ith invoice by head ofl‘i ce, the proportion ofcharges ( freight , d uty ,
etc .) on each item i s entered in the proper column ,and the tota l cost extended . The debit note i s then sent to Retail Departm ent , by which i t i s treated as an invoice from Factory for the gross amounton its face. It i s not , however, charged to the Retai l Department, nor theinvoice which it repres ents pas sed to credit of suppl ier unti l certified correct by a Retail Department Voucher (FormWhen the goods com e to hand the debit note i s checked and the Pur
chase Order Cards (Form 30 4 ) removed to another drawer and arrangedaccording to goods .
The accountant i s then duly authorized by Voucher (Form 303) tocharge Retai l Department w ith the am ount of invoice and charges on sameas Shown on the Debit Note,
the number of such voucher being noted on itsface . It i s then filed away on a binder, paged and indexed , the page numberbeing noted on the corresponding Purchase Order .It wi l l be seen that should a new m anager be called upon to take
R B TA IL. 6 7'
OCK OR DE R
charge , he w il l have immediately avai lable fu l l information as to the purchases o i his predecessor. The Purchase Order Card (Form 30 4 ) wi ll Showthe date and quantity and by whom suppl ied . It also shows the Debit Notenumber , which has now become a page in a bound book , and on which hew il l find an exact copy of invoice , and also the charges to lay the goodsdown in s tock— in other words , the price and the cost .
If in formation regarding smal l city purchases shou ld be required , theindexes of the dupl icates of vouchers issued will enable him to supply thehead office with the date and nam e of suppl ier, when they can read i ly lookthe invoices up . The original of the retai l voucher is retained by head office and fi led away num er ically . It wi l l thus be seen that any des iredchange for s tock purchased for the retail department can be at once lookedup from either nam e of article or suppl ier.Stock sold to c ity custom ers or to Factory i s entered on a Charge Sl ip
(Form Thes e s l ips are numbered consecutively and are padded w ithDelivery Sl ips (Form 30 7) and Receipts (Form bearing the samenumber. The Del ivery Sl ip i s of tough “fl imsy” so that by us ing “fu ll” car
31
bon the three forms are made out w ith one writing. Reference w i l l Showthat Nos . 307 and 308 are perforated about from the left hand s ide .The information appearing in this space should not be required on theseforms . This plan i s adopted to a llow the fill ing of prices , etc . , on the ChargeS lip before removing the forms from the pad , and to insure al l chargesreaching the invoice clerk . After removal this po rtion of Delivery S lip andReceipt is detached and given to the invoice clerk , and are retained by himunti l the original charge Sl ip has been priced and reaches him
,when he
makes the entry, noting the invoice number on the s l ip .
The del ivery s l ip and receipt are sent out w ith the goods,the one to be
retained by customer, the other s igned , brought back and filed away . The
charge s l ip goes to the Offi ce .As regards Shipment to out- o i - town customers
,a Charge S l ip (Form
310 ) with a“flimsy” copy and a Shipping Advice Note (Form 309) are
R E TA IL. S T O C K 0 9 0 5 0
N o . m e :
we
P lea s e e cKnow lel e Ihle ond en Ou éhnoa bove Na d a/ at ):F O R M 8 0 4
used . Instead of being padded these are bound in a book , the fl imsy te
maining, and the other two rem oved . The perforated Sl ip removed fromthe advice note is treated as the s l ip taken o ff the Receipt (Form viz. ,as a check against omitting to make a charge for goods shipped or del ivered.The Advice Note i s either enclosed with the invoice , or if imposs ible
to forward invoice same day as shipment, it i s mailed by itsel f. In case ofdelay in getting out invoices , this gives the custom er prompt advice andful l particu lars of shipment , except price , and enables him to check andstock hi s goods immediately on receipt , without hav ing to await an invoice.
I f through any cause a charge s l ip fai ls to reach the invoice clerk , thes lip detached from the receipt form or Shipping advice note being in h i spossess ion w il l , by its number, cal l hi s attention to the face, and the mattermus t be traced up . I f the charge s lip is actually lost , a dupl icate can be
obtained by referring to the receipt file,or to the fl imsy copy of shipping
adv ice note bearing the required number. Thus all poss ibil ity of a recordedshipment not being charged i s eliminated .
On receipt of the charge s lip in the ofli ce the prices and values—bothcost and sel ling—are fil led in . The entry i s then made in a loose leaf day
32
book by m eans of which invoice and day book entry are obtained with one
w riting. The invoice num ber i s noted on the charge s l ip,which i s then
R E TA IL. Db p'r
r . D E B IT N ew s
fi led aw ay on a binder , arranged numerical ly according to such number,the
totals , both cost and sel l ing being listed from day to d ay , and added up atthe end of the month .
The great advantage of this system i s that it enables the head offi ceto be prom ptly supplied w ith all the pages of the d ay book , except those ofthe current d ay , thus keep ing the posting up to date,
withou t the constantsending of the day books back and forth , and the consequent los s of time.
At the sam e tim e if a customer m akes any inqu iries of the Retai l Department regarding past purchases the Charge Sl ip i s a copy of the d ay bookentry , and can be at once looked up, either by invoice number or by date .All accounts being payable at head offi ce, the hand ling of cash by Re
tail Department i s a sm al l m atter. The s implest way i s to keep a PettyCash Book , and forward to the Accountant a daily report of a l l receipts ordisbursements with vouchers for the latter, taking a receipt fo r such vouchers . The entries are put through the regular cash book at head Offi ce in theusual way . At the close of the month the accountant i s notified by the
manager of the Retail Department of the total cost of h i s sales , as Show n
33
by the binder holding charge Sl ips for the month . All other inform atio nrequ ired by the accountant fo r the proper treatment of the accounts of th e
Q E—TA IL. D E P T: D S U V E R Y
Retai l Branch i s either origina lly in the pos ses s ion of Head Offi ce,or has
been forw arded from the Retail Departm ent from d ay to d ay during themonth on the lines described—returns from custom ers being treated on the
R fi TA /L. DE P T . Q E C fi IP T F O Q
s ame sy s tem s as sales credits fo r goo d s returned tak ing the p lace ofCharge S l ips , and a loo se leaf credit book that of the day book a lreadyd escribed .
As w il l be shown later the accounting sy stem u sed provides for all entr ies against any Of the Reta i l Departm ent Accounts going through a Transfer Entry Book instead o f being posted directly to such accounts from the
various books . The Cash Book alone i s an except ion to this ru le. At theclo se of each m onth the m anager of the Retai l Departm ent is suppl ied w itha copy of all Trans fer entr ies a ff ecting h i s d epartm ent
,includ ing , o f cou rse,
w hat proportion of general expens es m ay have been decid ed upon , and
a lso w ith a m em orand um of a ll cash entr ies,charg ing o r cred iting any of
hi s accounts .
For hi s own info rm ation and gu i d ance , no t as a m atter o f book - keeping,
he keeps a sm al l led g er conta ining the fo l low ing accounts :Retail Stock .
Expenses .
Sales .
competent and qual ified for the pos ition of manager of the Retai l Department should possess the entire confidence of h i s employers in regard to that
d epartment , otherw ise he i s on ly nominally manager. To use best judgment and and obtain bes t results requires fu l lest information as to the out
come o f past actions along the sam e l ines or under s imilar conditions . De
cis ions proven unw ise by their resu lts are Often condemned , in the l ight ofsuch resu lts , as poor judgment , when in real ity they were formed upon thesoundes t poss ible judgment , in v iew of the l imited and often mis leading inform ati in upon which they had to be based . K. FALCONER .
CHAPTER IX .
Electric M anufacturing Co .
It is not claimed for the system herein described that it is perfect in alli ts details , nor that it i s as thorough in its operation as a more elaborate sy stem might be. Nor i s it claim ed to be entirely new or differentfrom other plans for obtaining factory costs . It is merely the result of aneffort to adapt features of other system s to local conditions which it hasoccurred to the writer may be very s imi lar to
.those confronting other read
ers of The Book-Keeper . On that account it i s hoped this may be of someinterest .It might be wel l in the beginning to m ention some of the conditions for
which w e have attem pted to provide . In the factory where this is in operation we m anufacture electric dynamos and motors and have a l ine of about
36
thirty different s izes of fram es,on each of wh ich i s bu i lt m achines of three
s tandard voltages and three speed s to each vo ltage . The l im ited capacityof the factory (em ploying 10 0 m en) makes it diffi cu lt to wo rk up parts to:stock on such a large l ine of m ach ines
,mos t of the work being done after
mach ine is sold . Som e of the sm a ller parts , how ever , are made in quantIties , and a good many m ore are interchangeab le , being used on m ach ines o f
d ifferent s izes . These parts , after hav ing been com pleted for one ord er , arel iable to be “
s tolen” for use on another . In add it ion to a large l ine o f s tan
dard machines w e also do a great dea l of spec ial and repair wo rk , and m ake
a gr eat m any special tools , etc . ,for our own u se. An extens ive u se o f the
apprentice system also causes labor costs to vary ,as a handy apprentice
can do a piece of work at m uch lower cost than a regu lar workman or an apprentice who has just been put at that particular work and it i s pla in thatunder neither of these cond itions a lone cou ld be obtam ed rel iable figu resfor labor cos ts .
Bes ides providing for these and other conditions , it was necessary to
arrange a sy stem that cou ld be taken care of by the book- keeper at s uch
times as cou ld be spared from h i s regu lar work .
The firs t s tep taken w as to clas s ify and num ber the different parts o f
the various mach ines . In d o ing th is w e indicated the s izes by letters and
the parts by num bers . The iron and steel casting s which are the principalparts , were g iven the firs t num bers
, while the copper , bras s and bronze castings were given the next larger num bers , leaving , of cours e , sufli c ient
blanks for pos s ible changes in d es ign and cons truction . These letters and
num bers are cast on the parts . Thus “A I
”i s the base for sm al lest s ize m a
chine,
“B I
”the base for next larger ,
“A2
”the fram e for sm al les t m a
chine , etc’
.
For machines for special purposes w e double letters— thus for motorsfor driving printing pres ses PA represents the sm a llest s ize
,
“PB” the
next larger, etc . In cases where more than one pattern is used for any one
part, those not standard are represented by ad ding a lower case lettr to thenumber of the standard part , thus
“Ala i s a special base for the sm allest
machines , etc.
Forgings and other parts which cannot have num bers cast on them are
g 1ven s ti l l higher num bers , thus “A 160
”i s the shaft for sm al lest mach ine ,
“B I 25
”i s 500
- volt field . w ind ing fo r next larger , etc .
Now , for record ing tim e w e u se a“Daily Time Ticket as Shown in
Form A . Each m an tu rns in one o f thes e tickets every d ay ,and after it
has been inspected by the forem an as to the order num bers us ed and compared w ith the time as shown by the autom atic tim e reigster , it i s posted
37
to cards as shown by Form B . So far as poss ible all time i s charged d irectly to the part on which labor is perform ed . Assem bling, painting and
other Operations of l ike character, where severa l parts are involved , eachhave a number to which is prefixed the letter representing the s ize of m a
chine,thus “
A 175”is assembling smalles t machine. For special and repair
jobs , making tools , etc . , arb itrary shop order numbers are issued . For thevarious “
shop expense” items such as repairs on tools and machinery,sweeping and cleaning, etc ., regular standing numbers are provided . For
each of these various parts , Operations , special and standing orders a “FormB” card i s
'
fil led out and filed under index cards for immediate reference.Where it is thought des irable to know the cost of different operations thiscan usual ly be determined by the names of the workm en , as shown by thecard , or the different operations may be represented by different numbers .
Where one is suffi ciently fami liar with the rates of different men some timemay be saved by us ing rates instead of names and posting together al l timeof different men getting the same wages .
Bes ides having the numbers of the different parts indicated on theworking drawings , complete l ists of s izes and parts are kept posted conspicuous ly through the shop, and the men soon become thorough ly fam i liarw ith the numbers . This lessens the risk of time being charged to wrongnum bers , as i s so apt to be the case w ith a sys tem us ing purely arb itrarynumbers changing w ith every order.An ordinary weekly time book i s used and totals posted directly from
this to labor account unti l the close of the month (or any other period des ired), when the totals o i the various expense” items , and orders for newtools and other additions to plant and equipment for the month as shownby Form B are trans ferred to the proper accounts . This leaves labor” ac
count showing the net amount paid for labor which i s charged directly onForm B to either part or operation numbers or orders for specia l repairwork (as ide from those items that pertain directly to factory equipment).In other words , after this transfer has been made , labor account showsonly the net amount of “productive” labor . The cards for special and repair
w ork are removed from the active files as soon as completed , while thosew ith the standing numbers for expense items , as noted above, are reneweda t end of each month.
Now, on the date when we were ready to put this plan into operation ,w e took a complete inventory of a ll finished parts on the premises , —whetherin the s tock room ,
in the testing room , or on the floor of the machine shOp,
w hether in a completed machine or on a shelf did not matter. This inv entory was taken on sheets like Form C. These sheets were then class ifiedand filed for future use. On and after that date , as explained before, allw ork on any part was charged by the workmen to the number representingthat part and po sted to Form B at the convenience of the book-keeper.Also begi nning on the same date we have a card record (Form D‘
) of
machines and parts sold. This i s compiled from the sales book and of cours edoes not include parts sent out to replace defective work, etc .Blanks l ike Form E are also fil led out regularly covering periods of one,Six and twelve months . Bes ides being interesting as compari sons of differ
ent periods this form gives us the per cent or proportion to add to net laborcosts fo r expense.The method of obtaining labor costs from the equipment we have now
gathered together can best be made plain by an i llustration .
Suppose the plan has been in operation four months and it is des iredto know the labor cost of “C3
” for that period . The stock-keeper or foreman reports eight of these finished in stock . (By in stock we mean al l thatcan be found in the premises , whether in the stock room or elsewhere). Ourfirst inventory shows two of these on hand, whi le our Form D record ofsales shows that s ixteen have been sold in the interval . This indicates that
39
twenty- two have been finished in the period covered and on figuring FormB for the sam e period w e find they have cost apiece. Thisresu lt i s then recorded on Form C as indicated , and when at any futuretime it is des ired to obta in new figures on this part it can be done in thesame way and an average obtained either from the date of the original inventory or date of last figures . Thus i f on a later date we ascerta in thatthere are nine on hand
,and our record of sales shows that twenty have been
sold , it i s evident that five have been finished s ince date of las t figures , ortwenty - seven S ince orig inal inventory . Form B shows the labor for thislast period to be or ap iece , w h i le the cos t for the twenty - sevenwould be or apiece.
When total cos t of a given m achine i s requ ired , it i s readily obtainedby adding to the sum of the costs of the various parts the cost of erecting,paint ing and S im ilar operations as found by the same method .
For convenience in recording resu lts and obtaining totals and comparisons of different period s w e u se a card l ike Fo rm E
, one of these beingfi lled ou t fo r each part and the whole group properly clas s ified and indexedfor reference. Where a part i s used in m o re than one m achine its card isfi led und er the m achine fo r wh ich o rig ina lly intend ed and a plain card of ad ifferent co lor i s placed in i ts stead under each o f the other headings . Theseplain cards contain on ly m em orandum s referring to the location of the o rig inal card . At the end o f each g roup o r m ach ine i s placed a M i scel
laneous” card , giving a l ist of m aterial u sed on that m achine not covered by
40
the regu lar cards ,—such as screws,bolts , paint , boxing and packing ma
terial , etc. The last card in the group is a“Recapitualtion
” card l ike “FormG.
” This form is self- explanatory and i s fil led out as often as changes in
price of material , des ign of machine , methods of Operation or the des ires ofthe firm may necess itate , the old cards , of course, being preserved for comparison when new are fil led out.The per cent added to labor footing on Form G i s of course obtained
4 1
from Form E fo r the same period . I presume there w i ll be some o f th ereaders of The Book-Keeper who wi l l criticise this , because no distinctioni s made between “general” and sel l ing ” expense. It i s hard for us to m ake
this distinction , as we have no regu larly organized sales department , th is
part of the bus iness being attended to largely by the ofli cers of the company in connection with their other duties . However, where conditionswi l l permit, the system can eas ily be adjusted to make the distinctionbetween these two items . The last item on Form G,
“Depreciation and BadAccounts ,
”is figured on the bas is of the record for the previou s year and
is added more as a memorandum to comply with the des ires of the firmthat the card show the complete and total cost of marketing the machineand handling the account .It w i ll be noticed that this system is based on averages al l the way
through , and that the labor on parts that are junked after being partly completed , because of defective work or material , i s automatical ly pro rated andadded to cost of parts that are used . We also find we get the time morecorrectly recorded and at a great deal less expense than under the systemof is suing arbitrary shop-order numbers , as the men nearly always havethe numbers before them on the drawing and casting, and in other caseseach man has only a few numbers to remember
,and they do not change.
Bes ides being more accurate, this saves very mu ch time both for the menand for the forem an , and also removes the temptation to “load” the timeonto the general numbers in order to cover up defective work or forgottennumbers .
Another feature of this system that will commend itself in a great manycases i s that fact that the work can be kept up at one
’
s convenience . Aferthe Daily Time Tickets have been compared with the time regi s ter andchecked off to see that al l are turned In
,they need not be posted unti l it is
42
the data fo r the part cards secured from the ordinary sources o r fromfo rem en
’
s es timates .
The greates t gain in arranging costs on cards in place of books i s theease w ith w h ich changes can be made . For instance , if the metal i s changedin character or weight , the time required for the operation i s les sened , orany other change occurs to eff ect the cost of the part , only the card repre
senting that part i s changed and this i s s im ply removed from the file and rep laced by a corrected card .
For th is reason the cos t records are always complete and up- to- date .
In case any operation or part or article i s abandoned , it is very s impleto remove the proper cards and place them in a trans fer file or destroy thementirely . From the old cards
,provided they are trans ferred , calcu lations
can be made of great ass is tance in the conduct of the shop .
Cards are preferable to books for s ti ll another reason—the ease withwhich the card representing any article or part m ay be found . By means ofguide cards the record cards are so arranged that any one des ired may befound instantly .
The V2 cut gu ide cards make divis ions of the principal classes, and eachclass i s further subdivided into spec ific articles or s izes by means of V2 cutguide cards and into the various parts them eselves by means of V2 cut guidecards . Different parts are sometimes des ignated by number .The record cards representing the articles are of a different color from
these representing the parts , and in case record cards are also used forrecords of operations these cards are of s ti ll another color. The superintendent or any other interested person loses no time in consulting the files .
When the card plan i s used there i s no l im it to the growth of the sy stem . In a grow ing m anu facturing concern a book
.
soon becomes uselessbecaus e it i s fi l led with old and dead records which cannot be removed .
Then it is neces sary to recopy the live records and plan a larger book . In acard sy stem new m atter w ithou t l im it m ay be inserted in its proper locationw ithout dis turbing the present records .
To a particularly carefu l m anagement des irous or exhaustive recordsand of exact sum m aries , the cards are espéially suited . Each card beinga unit of record , it m ay be changed from place to place in the index , thusfurnishing the sam e information in different connections . For instance , thecards m ay be fi led by dates and thus represent the total amount of workdone in the shop in a definite interva l .
44
When this interva l is com pleted the totals of al l the cards may be takenand the cards themselves refiled through the regular index outl ined aboveto again yield up their information in a different connection .
The econom y of a card system is such that the entire cost i s more thancovered by the saving in clerical labor.This is m ore particu larly demonstrated when a shop has been in the
habit of paying overtime for accumu lating s imi lar records w ith cumbersome book systems . W ith the book system the work m ust be kept up evenly in du l l and busy tim es , but w ith the card system the records can be m adeduring the busy tim e and the cards arranged and the summ aries drawn upin the s lack season . A . W . SHAW .
4 5
PART IV .
Municipal Accounting.
Specification for M unicipal B alance Sheet.
CHAPTER I .
N THE specification on th is page wil l be found an analys is and clas s ification o i the several item s which enter into the accounts of the average m unicipal ity ; and i f followed in princ iple, the treasurer wil l be en
abled at all times to furnish a complete and satis factory pres entation of thes tanding of the corporation . The analy s is of accounts which is herewithpresented in chart form ,
i s that which i s required where the balance Sheeti s made an integral part of the system of book- keep ing.
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It must be rem embered that in the description of any model or system ,
it i s ess entially necessary to include more in items and detail than w i ll befound requis i te in any one municipal ity . If the il lus tration i s to be of anyserv ice it must of necess ity be exhaustive and com plete in al l its d etails ,local conditions governing as to selection in individual cases .
ASSETS .
The as sets are aga in subdivided into four classes—active, reserve, fixed ,and pas s ive .
Active assets comprise cash, which includes the amounts in the treasurer
’
s h ands , and the balances due from the bank on account current ; taxescurrent
,outstanding ; tax arrears , outs tanding ; water rates ; electri c l ight
rates ; rents ; advances on account of permanent publ ic works or localimprovements ; and miscel laneous .
Reserve assets include s inking funds on general , or local improvementaccounts , and other spec ial ly invested funds .
Fixed assets are subdivided under two heads , viz : necessary investments , and speculative investments . The first includes all permanent investments , as waterworks system ; electric l ight system ; fire hal l and apparatus market ; s chool buildings and equipments ; city hal l and furniture :public l ibrary ; parks ; real estate ; pub lic works equipment ; and other investments o i a like nature . The second includes stock held in rai lway orgravel road companies , or such other enterprises of a publ ic nature as arepermitted by statute.Pass ive assets represent investments which , while somewhat perma
nent in character, are intended to be written off as the debentures issued tocover the cost thereof are redeemed ; the li fe of the work and of the debentures intending to be concurrent . In this class is also included the itemof local improvements , of an amount equal to the debenture indebtednessoutstanding on that account
,an annual reduction being made , equivalent to
the yearly redemption of debentures . Advances by way of bonus also comeunder this head , the amount to be written off annually running concurrently with the retirement of the debentures which produced the orig inalamount of the bonus ; in cases where certain conditions , as , for ins tance,the employment of a certain amount of labor, are involved , then the sum tobe written off annual ly wil l depend on the extent to which the stipu lationsupon which the granting of the bonus was based, have been fu lfi lled .
LIABILITIES.The second divis ion of the balance Sheet—the l iabi l ities—is divided
into three classes , viz :bonded , floating, and capital .Bonded l iabil ities is subdivided under two heads , ( I) debentures , gen
eral , and (2) debentures issued on account of local improvements , this latter being a direct l iabi l ity, but secured by collateral .Floating l iabi l ities comprise debentures due and unpaid, coupons due
and unpaid , loans current, loans on local improvements in progress , andaccounts payable .Capital liab il ity represents s imply the surplus of assets over l iab i lities .
The municipal revenues for each year cons is t of the debts accruing dueby levy or otherwise from al l and sunud ry to the corporation , althoughthese may not necessari ly be collected w ithin the period . Land taxes , waterrates , electric l ight rates , l icenses , school grants , and fines and fees , formthe ordinary sources of revenue ; whi le the extraordinary revenues are derived from sale of debentures , temporary loans , sale of publ ic property ,franchises , and the like.The details of the various sources of revenue having been ascertained ,
they Should at once he made a matter of record , in books especial ly des ignedfor the purpose , with such accompanying particu lars as wi ll , either at thepresent or in the future , give al l needed inform ation . These records are inthe form of registers or rolls , as the tax roll , water rate roll , electric light
4
In the i llustration given herew ith,i s found the form for counties , the
ru l ing being practically the same for city, town , vil lage and township ac
counts , changes in the headings being made to suit the different requirements . The opening entries in the il lustration give the balance on handand in the bank , these being carried to the total column . The various re
ceipts have their various columns , and the additions to the total columnexhibit w ith each entry the whole amount of income from al l sources , whi lethe additions of the individual columns gives the exact receipts in each departm ent of the accounts . The balance in the bank account is also carriedcontinuous ly . Dis tribution of the payments i s made as the charges are entered , the gross paym ents being carried in the total column . The correct
Form 2 Receipt page of Government Cash Book .
ness of the clerical work is proved by the addition of the balance of cash inhand
,balance in bank and total payments , and these shou ld agree with the
gross receipts as recorded in the total column . The principles of the prov incial cash book are wel l exhib ited in the i llustration given , the l imits ofthe page being too circumscribed to permit of a fu l l page i llustration .
Form 3. Payment page of Governm ent Cash Book .
The headings showing the divis ions of account as they appear in thevarious books are as follows :
TOWNSHIPS .Receipts : ( 1) Res ident Taxes , (2) Non -Rers id ent Taxes , (3) Arrears
of Taxes , (4 ) Dog Tax , (5) Fines , (6) School Purposes , (7) Licenses (8)Debentures
, (9 B i l ls Payable , ( 10 ) Loans , ( 1 1) M iscel laneous , ( 12 toIn blank for such other accounts as it is found necessary or des irable
to exhibit individually .
Payments : ( 1) Salaries and Allowances , (2) Stationery and Printing,(3) Law costs , (4 ) Roads and Bridges , (5) Charity, (6) County Rates , (7)School Purposes , (8) Interest , (9) Board of Health , ( 10 ) Debentures , ( 1 1)Coupons , ( 12) Loans and Notes paid , ( 13) Depos its in Si nking Fund Ac
6
count, ( 14 ) Drainage , ( 15) M iscel laneous , ( 16 to 20 ) in blank for such
o ther accounts as it i s found necessary or des irable to exhib it individua l ly.
VILLAGES .Receipts : ( I ) B i lls Payable , (2) Res ident Taxes , (3) Non-Res ident
Taxes, (4 ) Dog Tax , (5) School Purposes , (6) Licenses , (7) Fines , (8)
Rents , (9) Debentures , ( Io) Loans , ( 1 1 M is cel laneous , ( 12 to 15) in b lank .
Payments : ( 1) B i lls Payable , (2) Salaries , Allowances , etc ., (3)Printing
,Pos tage, Advertis ing, (4 ) Interes t, 5) Law Cos ts , (6) Roads and
B ridges , (7) Charity , (8) School Purposes , (9) Debentures , ( 10 ) Coupons ,( 1 1) Fire Protection , ( 12) County Rates , ( 13) Loans Current , ( 14 ) StreetLighting, ( 15) Town Hal l , ( 16) Depos ited 1n S inking Fund Account , ( 17)M iscel laneous , ( 18 to 20 ) in blank .
TOWNS .Receipts : ( 1) Res ident Taxes , (2) Non-Res ident Taxes , (3) Arrears
of Taxes (4 ) Dog Tax, (5) Water Rates , (6) Rents , (7) Licenses , (8)School grants , (9) Debentures , ( Io) Loans , ( 1 1) Fines , ( 12) M arket , ( 13)M iscel laneous , ( 14 to 17) in blank .
Payments : ( I) Salaries and Allowances , (2) Printing, Advertis ingand Stationery , (3) Insurance, (4 ) Fire, Water and Gas , (6) Law Costs ,(7) Roads and B ridges , (8) Charity , (9) Debentures , ( 10 ) Coupons , ( 1 1)B i lls Payable, ( 12) Interes t , ( 13)Waterworks Capital account , ( 14 )Waterworks M aintenance , ( 15) County Rates , ( 16) School Account , ( 17) M arket ,( 18) Board of Health , ( 19) Sinking Fund, (20 ) M iscel laneous , (21 and 22)in blank .
CITIES.
Receipts : ( 1) Bi l ls Payable , (2) Debentures , (3) Res ident Taxes , (4)Non- res ident Taxes , 5) Arrears of Taxes , (6) Interest, (7) Water Rates ,(8) M arket Fees , (9) M arket Rates , ( 10 ) Pol ice Fines , ( 1 1) Licenses , ( 12)Free Library , ( 13) Public Schoo ls , ( 14 ) M iscel laneous , ( 15 , 16 and 17) inblank .
Payments : ( 1) B il ls Payable , (2) Interest , (3) Board of Works , (4)Free Library , 5) Publ ic Schools , (6) High Schools , (7) Printing, Advert ising and Stationery , (8) Fire, Water and Gas , (9) Pol ice Com miss ion, ( 10 )Parks and Trees , ( 1 1) M arket House , ( 12) Salaries , ( 13) Debentures , ( 14 )Coupons , ( 1 5) Board of Health , ( 16) Charity, ( 17) Water Works M aintenance, ( 18) Sewer M aintenance, ( 19) Depos ited in Sinking Fund , (20 )M iscel laneous , (2 1 and 22) in blank .
COUNTIES .Receipts : ( 1) County Rates , (2) Land Tax Account , (3) Licenses ,
(4 ) Schools , (5) Regis try Offi ce, (6) Roads and Bridges , (7) Administration of Justice
, (8) M agis trate’
s Fines , (9) Debentures , ( 10 ) Loans , ( 1 1)Redemption of Lands , ( 12) Divis ion Court Fund, ( 13) Miscel laneous , ( 14 ,15 and 16) in blankPaym ents : ( 1) Adminis tration of Justice , (2) Land Tax Account , (3)
Roads and Bridges , (4) M iscel laneous Grants , 5) M unicipal Government,School Purposes , (7) Registry Offi ce , (8) Gaol , (9) Printing, Advertis
ing and Postage , ( Io) Redem ption of Lands , ( 1 1) Law Costs , ( 12) Debentures and Coupons , ( 13) Loans Current , ( 14 ) Interest , ( 15) Depos its 1n
Sink ing Fund, ( 16) County Property , ( 17) Insurance , Heat , Light, etc . ,
( 18) Divis ion Court Fund , ( 19) M iscel laneous , in blank .
7
Obj ection i s sometimes made to the labor involved in the carry ing o f
the continuous balances . There might be force in this objection if the o ificial were to follow s lavish ly the bringing down of the balances with everyentry . While such a proceeding was necessary in the pro- forma shee twhich is embod ied in each cash book, it i s not real ly expected or requiredin actual practice . The sum of al l checks entered at one time, or of all d epos its , m ay be read i ly deducted from or ad ded to the balances , at s ingleoperations . SO long as the totals and balances are recorded at the con
elus ion o f each day’s bus iness , the modus operandi whereby this is effectedis of smal l moment .
TH E TWO VOLUME CASH BOOK .
In the larger municipalities where the accounts are kept in greater detai l
,another form of Cash Account i s recommended. In this the principles
embodied in the cash books already described , are followed , with the columnar ana lys is reduced in some degree, in view of the fact that the ledger wil lbe util ized to a much greater extent than i s usual in most of the munic ipal ities where the cash books previous ly described are used .
It i s preferable that the general cash book should be in two volumes ,the receiving cash book to contain all revenues , with analyzing columnsfor the representative sources of income . The form (4) ful ly exemplifiesthe idea .
Form 4—Showing Page of Receiving Cash Book .
As depos its are made in bank , credit i s taken in the proper column , andthe remainder in the balance column , exhib its the cash in hands of thetreasurer.The paying cash book contai ns the bank account in ordinary bank de
posi t ledger style, w ith the distribution o f accounts following. Form (5)makes further explanation unnecessary .
Form 5—Showing Page of Paying Cash Book .
Where the volume of bus iness requires a divis ion of labor, the twovolume cash book becomes a necess ity .
ABSTRACT REPORTS.The prime advantage of the Columnar Cash Book i s that the offi cial
is enabled to prepare w ith a minimum of labor,a dai ly
,weekly or month ly
8
abstract of receipts and disbursements for transmiss ion to the council orauditors .
C o upo n-SHOE eF‘l'Re G ena? o f
'
M rfl‘e f nee fi nd D iem -wand s
To 16 9
C c .T h o m a”
Form 6—Abstract Statement of Receipts and Disbursements , as Appl icableto Counties .
The form above is fairly ful l and comprehens ive,being to some extent
comparative, when taken in conjunction w ith the previous report.
CHAPTER III.The Journal .
The aim of many book-keepers of the present day is to do away altogether with the journal , and , to accompl ish this , matter entirely foreign tothe cash account, is often introduced therein . Whi le it i s des irable to use
the journal to the least poss ible extent, yet it cannot be altogether d i spensed with , it is necessary that the introduction of rates and revenuesshou ld be recorded in the journal , the trans fer of entries , the correction oferrors , which may occur, the collati ng Of the municipal profit and loss”
account, and the clos ing entries of each fiscal period .
CHAPTER IV.
The Ledger .
The ledger does not differ from the form m use for commercia l purposes , nor do the principles involved in the keeping thereof differ in any material po int. The material for a perfect balance Sheet shou ld be containedbetween the covers of a properly kept ledger, and such a balance sheet wil lshow in conc ise form the exact financial pos ition of the municipal ity . In
9
the al location of the various accounts in the ledger, regard shou ld be hadto the pos ition which they occupy in the balance sheet and revenue account.M uch time w ill be saved, both to the ofli cials and the auditors , if the detailsof al l transactions be fu lly set out in the ledger. I f
,as properly shou ld be,
the treasurer were compel led by the auditors to prepare the annua l statements and subm i t the same to them for inspection
,the advantage of giving
the particu lars of each entry in the ledger would be much more deeply impressed upon that ofli cial .
CHAPTER V.
Subs id iary B ooks .
It is of great importance that the utmost faci l ities should be prov idedfor internal checking, in the preparation of the various subs idiary books , asthe water rates , electric l ight, and collector
’
s tax rol ls . In the case Of thecollector’s roll , a form largely statutory must be used . In the other departments mentioned , such records may be kept as are prescribed by the counci l or adopted by the ofli cials , and these are perfect or imperfect, according to the abil ity of the des igner.
THE COLLECTOR’S ROLL.
As stated above, the form for this i s largely statutory, and one i s boundto admit , speaking from the accountant’s s tandpoint , there i s much roomfor improvement . I have prepared a sketch which I am incl ined to saywou ld much better fil l the requirements of the municipality , and satis fy theaccountant, than the stock form ordinari ly in use. Provis ion i s made fora complete internal check . As many columns would be required for specialrates as there are local improvements .
Form 7—Showing Improved Collector’
s Roll .
COLLECTOR’S CASH BOOK .
The col lector’s cash book Shou ld be ru led so as to Show in its variouscolumns the moneys collected for arrears of taxes , for percentages , and thecurrent taxes should be analyzed in accordance with the divis ions whichhave been made in the pos ting of the several items to the ledger, w ith acolumn for credits , as payments are made to the treasurer, also for -date Ofpayment
,and s ignature of treasurer
THE ASSESSOR’S ROLLBeing s tatutory in form , and covering pretty accurately the necessary
data required for the preparation of the collector’s roll , no changes are suggested in the ordinary form .
WATER WORKS ACCOUNTS.The forms presented herew ith cover the principal books of account
1ng 111 a waterworks department, and are more especially des igned for use
10
where the waterworks , though under corporate ownership , are controlledby a commiss ion . W ith s light changes they may be uti l ized and made toform a part of the system if under the control of the treasurer, the principles involved in both cases being the same .The water rate register contains on one page the house number, assess
ment roll number, offi ce progress ive number, name of occupant, owner,street, ward , etc . , in detai l ; then comes the assessed value, upon which i sbased the property charge, and the special rates for which charges arelevied . These , of course, vary with the different methods of impos ingrates . The various rates are total led in the column for that purpose . Theright hand page i s of the mos t importance to the accountant . The progress ive ofli ce numbers are repeated for ready reference purposes . Nextcomes the “arrears from previous year,” w ith the “pro- number” for thatyear
,and next i s the “rate for half year ,
”whi ch i s jus t one- half the rate in the
total column on the page Oppos ite . It may be said that the writing in ofthis column each term i s unnecessary work , but the internal check cannotwel l be prov ided in any other way ; and for the further reason that ratesmay vary term by term . The headings of the columns which follow areself- explanatory. In the cash columns wi l l be entered in the upper left handcorner the cash book fol io. In the deduction column wi l l be entered al labatements or allowances made on account of “no horse,
” “no cow , no“double tenancy , etc . , the receipt of which abatements must in al l cases b eacknowledged by the Signature Of the recipient to a “deduction s l ip.
” Thepercentage column is cal led into use immediately upon the expiration of thedate set for payment of rates without the impos ition of the penalty, wheneach delinquent’s account i s charged w ith the add itional rate . While thepercentages are being added , the clos ing up of the individual accounts i sbeing proceeded with , by the carrying forward Of al l unpaid amounts to the“arrears forward” column . This accompl ished , the various columns arefooted and checked , when the sum of the debit columns must equal the sumof the credit columns .
Form 8—Left- hand page of Water Rates Register.
Form 9—Right-hand page of Water Rates Register.Form 10 i llustrates the receiving cash book , and requires no explana
tion from me. In the case of a Commiss ion the “credits” column recordsthe bank depos its , and if the payments are hand led through the treasurer’soffi ce, the amount trans ferred to the general cash book.
The gross rates levied are charged to water rates account ha lf-yearly,the contra entry being to revenue account . At the close of each term ,
thed eductions , discounts , etc ., are credits to water rates account , and a correspond ing debit is made to water rate discounts , which u ltimately finds its
11
way to the deb it Of revenue account . Percentage i s a debit to water ratesaccount and a credit to revenue .
W IN DOOD WATEQ COM M IS S IONc u r -1 m a v e n
Form Io—Water Rates Receiving Cash Book .
A separate register i s maintained for use in the recording of meteredwater, an excellent form for which i s given herew ith .
Where the waterworks are hand led by commiss ioners , who disbursetheir own funds , a combination cash book and voucher register i s used , asper Form
.12. The princ iples appl ied here are the same as those employed
in the provincial cash book , and require no further eluc idation . The d i str ibution of accounts is divided into five general headings ,
“offi ce ,” “pump
ing s tation ,” “distributing sys tem ,
” “meters” and“general ,
” and these are
again subdivided to the regular accounts to be found under each .
W IN DGO Q WAT fl fl C O M M IS S CO N
W IN DOO D WAT C Q C O M M ls a'ON
D 19 1'
Q IOU T IO N o r A cc t-so m e
Form 12.—Voucher Cash Book and Regi ster.
TAX RECORDS .In the matter of keeping records of the arrears of taxes there is great
divers ity of method . The larger corporations are usual ly more careful inthe keep ing of these accounts , but there is yet a lamentab le lack of an ef
ficient means of ready reference.
” An index prepared in three parts , eachof which relates to the other, whi le some trouble to prepare wi l l be found toprove of great value as a time saver. Part one i s an alphabetical index ofthe streets , referring to part 3, as s een in the i llustration .
Part 2 i s a l ist of the different plans , commenc ing with the Crown o rGovernment survey
,and also referring to Part 3.
Part 3 i s the index proper . Each lot i s given a l ine to itself, and everyparcel of property in the corporation i s gathered into the index under itsproper street and plan .
When the uncollected taxes have been returned to the treasurer, anaccount i s opened in the lot ledger ( i f one be not already opened) for each
12
property against which there i s arrears , and the ledger fol io entered op
pos ite the lot in Part 3 of the index . As the arrears are paid the ledger fol iois marked o ff . When a search is required , reference i s made to the index.
Form I3.—Street Index (Part . I)
If there are no fol ios against the lots , or if crossed Off , there are no arrears ,and the search is completed ; always presuming, of course, that the work is
0. Thom asRead 8Degley Salter SJones
Jno .Northwood W.G. McOenz e
Form 14 .—Index of Plans .
faithfu lly done , upon which foundation the value of any system must depend . When posting from the collector’s roll to the lot ledger, the postingfol io shou ld be entered in each book for ready reference .
5 .5 ‘
lanleyN.WaterNWo’rer'5 .5 tonley
Form 15 .—Index to Lots .
In a paper read before the Institute Of Chartered Accountantsyears s ince
,by the late M r . Pow is , is was suggested that in case of
14
munic ipal ities , arrears of taxes shou ld not be reported to the county treasurer unless and unti l the arrears have reached that point when the land isliable to be sold for taxes .
” In this suggestion I mos t heartily concur. Thisphase of municipal government as it stands at the present time is most prolific in loss , trouble and annoyance .
M y sentiments also are practical ly voiced in h i s remarks as to theproper method of procedure prior to sale. “After the time has pass ed during which taxes ought to be paid in each year, a return should be made bythe minor municipal ity to the county, showing what properties are thenliable to be sold for taxes . Only between such date and the day of sale , andon ly concerning such properties as are l iable to be sold , shou ld it be necessary to apply to the county Offi cer at al l. A sale should be held by thecounty Offi cer on ly once in each year
,when there is any property liable to
be sold . Such sale should be held before the time for striking the rate bythe municipal ity . Immediately after the sale the county ofli cer shouldmake a return to the minor municipal ity , showing the resu lt Of each sale,and remitting the money collected , after deducting h is charges . The transactions Of each year should thus be closed and balanced . The only recordnecessary then on the part of the county offi cer is a fu ll account of the c ircum stances connected with each sale and the resu lt . And it is not necessary that the county offi cer shou ld keep any further account concerning ‘arrears of taxes . This system and process shou ld go on from year toyear, the county Offi cer acting each time solely on the new report handedhim from the minor municipality .
” There would then be no mixing up ofthe township and county bus iness . Fu ll remittance wou ld be made to theminor municipal ity for the proceeds of the tax sale, and the local municipality shou ld then remit in fu l l to the county treasurer for the county rate. Incases of redemption the county offi cer’s receipt wou ld be a sufli cient voucher for the township treasurer, upon which to return the purchase price tothe vendee at the tax sale .Til l such time as our legis lators may be brought to see the necess ity
for s impl ification of the methods as at present prescribed by the s tatutes ,these methods must be followed . In the majority of rural municipalities ,great carelessness exists in keeping the records pertaining to these arrears .
In mos t townships absolutely no account i s taken Of the arrears , once theyhave been sent to the county treasurer, and no check 1s had thereafter uponeither ofli cial . County auditors in a number Of instances have declinedto go into the county treasurer’s accounts relative to these arrears , on theground that such was outs ide the scope of the audit, and that the countytreasurer in keeping these accounts was the agent of the rural municipal ities and not of the county.
I f a systematic record Upon the follow ing lines be kept, no d ifli cu ltywi ll be experienced in maintaining a perfect and accurate account of taxarrears .
The Clerk of the minor municipal ity to prepare the non - res ident roll indupl icate , sending one copy to the county treasurer and the other to thetreasurer of h is own municipal ity
, who w i l l , upon receipt thereof, enter in aproperly ruled lot book or ledger, the charges agains t each property af
fected . Upon receiving the return of ‘ ‘uncollected taxes” from the collectorthe treasurer shou ld , in like manner , and in the same book , enter all properties returned, with the amounts against each . Upon M ay I st in eachyear, (the date set for the statutory addition of 10 per cent.) the countytreasurer shou ld prepare a s tatement in detail of the percentages added by
15
Form 16.—Ledger Specifications for Non -Res ident Lands in Arrears
for Taxes .
him to the various arrears , transmitting the same to the several treasurersof the minor munic ipal ities , who in turn wi l l enter the amounts so reportedagainst the respective lots in the lot ledger. As payments are made to thecounty treasurer, he is required by the law as it now stand s to prepare receipts in tripl icate—one of which goes to the payor, the second to the
Form 17.—Specification for Res ident Arrears Ledger.
county clerk, and the third he retains . What good purpose the sending ofthe receipt to the county clerk is intended to serve, I have never been able todiscover. He files it away and that i s the end of it. If, instead, the s econdreceipt were sent to the clerk of the municipality interested , by that offi cialto be careful ly filed for the future use of the auditors , a better purposewould be served. Then, quarterly, the county treasurer shou ld remit to theloca l treasurer, by check, the fu ll amount of taxes co l lected during the preceding three months , together with a s tatement showing the dates of paym ent
,and the amounts Of several collections ,
'
when the necessary entriesshould be made ' in the cash account and lot ledger of the minor m unicipal ity.
The accounts of the local treasurer wou ld then at al l times show the exacts tanding of the m unicipal ity as regards arrears of taxes .
The tripli cate receipt i s now not necessary—a duplicate receipt beingsufficient—one copy going to the person paying the taxes ; the other beingretained in the treasurer’s office.
16
DEBENTURE REGISTER .
A complete record of the debenture indebtednes s of every municipal ityis of absolute importance . Before the debentures leave the hands of thetreasurer al l particu lars relating
'
thereto shou ld be entered in a debentureregis ter, a very comprehens ive form for which is herewith submitted . Itwi ll be observed that the ful les t information i s required to be entered as tothe amount , years to run , dates payable , place of payment , annual paymentof principal and annual payment of interest as represented by the coupons ,dates d ue, and payments to the s inking fund , when the debentures are issued upon that plan . Other particu lars , as to the number of by - law au
thori z ing the is sue , date of sale, persons to whom sold , date of delivery ,amount received , divided as to princ ipal , premium and accrued interes t .Then the total amount to be raised annual ly by assessment , with particularsas to how much is from the individual property owners , in case the work onaccount of which the debentures are issued , i s in the nature of a local improvement . The specification given i llustrates the idea for a ten -year debenture. The register shou ld be ru led so as to cover twenty-year issues .
Form I8.—Specification for DebentureRegister.
GROSS DEBENTURE LIABILITY SCHEDULE.
To enable the treasurer to readi ly ascertain the total debenture indebtedness of the municipal ity at a glance , as it matures year by year, a sebedu le prepared after the specification exempl ified in Form 19 wi l l be found tobe of ines timable convenience . The footings are carried in penci l , until the
Form 19.—Schedule Show ing Gross Debenture Liabil ity
amounts have been raised -and the debentures retired . As new is sues occurthe particu lars are entered from time to time and the penc il footings arecorrected .
The carefu l keeping of matured debentures i s a matter of some importance, and one much neglected . A large book , Simi lar to the ordinary
17
invoice book used in the commercia l world , and ruled after the manner ofForm 20 , arranged to accommodate twenty coupons , is about as convenienta method of keeping these as I have seen. As the coupons mature
,and
Form 20 .—Fil ing Book for Cancel led Debentures and Ciupons .
are paid and cancelled , they are pasted in the book upon the block correspond ing to the number (the highest number maturing first). At maturi tythe page contains the coupons and the original debenture, al l in order.
CHAPTER VI .Pass ing Accounts .
W ith the exception of those payments which are authorized by by - lawor by statutory enactment, all others shou ld be passed upon and authorizedby the counci l previous to payment . In c ities and towns it is usual to passthe accounts first through the severa l committees having to do w ith theexpenditure , being final ly checked by the Finance Comm ittee , and presented in their report to the fu ll council , which sanctions payment .Another method i s to have al l accounts firs t come before the council ,
where they are read in detai l and referred by that body to the proper comm i ttee. This plan necess itates
.a longer wait before payment of the ac
count can be had , but has the advantage of a publ icity which is often wholesome .In the case of minor corporations and township counc ils , where the
meetings are held less frequently,accounts are usually received and d i s
posed o i at the same session .
18
All accounts shou ld be certified to by an Ofli cial of the corporation , thechairman of committee
,or a member of the counci l , previous to presen
tation.
Accounts having been acted upon and payment authori zed by the counci l , a warrant or order upon the treasurer i s drawn and s igned by the mayor,reeve, or clerk.
The usual form of warrant runs as follows
Form 21 .—Ordinary Warrant Form .
This warrant i s handed to the person in whose favor it is made , andhe presents it to the treasurer. That offi cia l generally takes up the warrant and cancels it, after issuing h is check for the same amount arid to thesame order. This operation necess itates a dup licationof work by the clerkand treasurer, and a mu ltipl ication of vouchers altogether unnecessary .
The substitution of a form of warrant which also operates as a bank check
Form 22.—Combination Warrant and Check .
when counters igned by the treasurer does away w ith the double labor andprovides a s ingle but comprehens ive voucher.
19
W ith this warrant in h is hand the payee appl ies to the treasurer. Thetreas urer takes the warrant , enters it in h is cash book , and , s igning
'
i t in theplace des ignated in the i l lustration
,returns it to the person to whom pay
able and he proceeds to use the same as an ordinary check . I f, by inadvertence, the treasurer omits to enter the amount and particu lars of thewarrant in h is books , he i s bound to discover the error and rectify it at theend of the month
,when he proceeds to verify h is cash and bank accounts .
SHEET SYSTEM OF VOUCHER.
An excel lent system and one which w ill prove labor- sav ing, as wellas prov iding a means for the further multipl ication of vouchers is the fo llowing, which may readily be adapted to the requirements of township andvi llage corporations .
Upon a form as shown in 23, a l is t Of al l accounts pas sed should'
be
entered,the accounts briefly numbered consecutively , the bi l l itself being
given the same number. When the other bus iness of the sess ion has beencompleted
,this l ist of accounts shou ld be form al ly acted upon , by the pas s
ing of a resolution “that accounts num ebred 30 to 37 be pas sed and that thereeve issue h i s order to the treasurer for payment of the same .”
At the foot of the form , as wi ll be seen , i s an ins truction to the treasurerto pay , which i s made operative by the s ignatures of the reeve and clerk .
In writing up the minutes the clerk copies , in detail , the list of accounts , with their respective numbers , and he carefu lly files the originalb il ls , which have all been properly endorsed with a number correspondingto that Oppos ite the account in the l ist .The original l ist i s then transmitted to the treasurer, and he proceeds
to pay.
The V eg a n-en a ?! p h as e
m fnbc ne d 15 d e s k
Form 23.—Sheet System Of Voucher.
CHAPTER VII .M unic ipal B ank ing .
Every dollar which goes through the hands of the treasurer shouldpass through the bank account . All moneys Shou ld be pa id only by bankch eck , and councils should make th is compu lsory . It is advisable to havtwo bank accounts , the principal one of which shou ld be in a charteredbank. This shou ld be in the name of the corporation or municipal ity , andchecks thereon to be s igned by the head of the counc il and the treasurer.Into th is account the tax collector shou ld be required to pay al l taxes .
The second account should be in the name of the treasurer of the m u
nicipali ty , as such,and al l funds of the corporation would require to pass
The account may be kept in another way,by taking totals ins tead of
balances , as the following formula shows . The resu lt wil l be the same byeither method , the firs t method being, to my mind , much the more practical .
1890
Jan. 1 B ank balance per Cash Book " 8187 5081 Depos its “ 1781 87 318118 87
81 Cheques , etc . . 1408 87 8870 50
81 Balance per Pas s B s 578 88Lass O-S CHEQUES
No sso onesm ith
842—Thom sonW FOIDCS . o a
880—Fulton 1m 88 870 50
Form 26.—Another Form of Reconc i liation Statement .
CHAPTER VIII .
V ouchers .
It s eems almos t unnecessary to say that every payment mus t be substantiated by voucher, upon which shou ld be endorsed the authori ty underwhich payment i s made. It is be not convenient to util ize the check numbers
,then all vouchers would best be numbered consecutively, and the num
bers shou ld find a place against each item , irrespective of the number ofbooks through which it may pass . Reference thereto is thus much faci litated . Although but few treasurers so regard it, yet it i s of equal importance that good and suffi cient vouchers sha ll be preserved in the case of receipts as well as of disbursements . Jus t here I may interj ect that it is sur
pris ing to find how l ittle attention i s paid by the rural auditor, and in m anyinstances by the auditor of urban accounts as wel l , to
‘
checking the receiptsas agains t their various sources . It seems to be taken for granted thatthere can be noth ing wrong w ith the receipt s ide of the cash book , but thegreatest care must be taken to see that the treasurer, in making disbursements , has not tampered w ith the funds of the rate- payers . In cases of default
,experience goes to prove that the trouble most often arises from fai l
ure to charge , rather than from manipulation of the funds once they havebeen entered in the books of account .In every municipal ity there shou ld be an offi cia l form of receipt
,and
these Shou ld be numbered Consecutively . For every dollar received oncivic account an official receipt should be issued .
Every receipt in the book should be accounted for. In cas e of anerrorbeing made and a receipt cancel led , the spoiled form should not be destroyed , but shou ld be s ecurely attached to the stub or counterfoi l of thereceipt book
,for the benefit of the auditors . The same remarks apply to
checks . Checks from the corporation book should never be taken for otherpurposes , and every form shou ld be accounted for . Explanations to theauditors are thus rend ered unneces sary . The records contain their ownexplanations.
22
CHAPTER 1x.
Strik ing the Rate.
In many munic ipal ities too little care i s taken in the preparation of theestimates . It m ay be that although the w hole requirements of the municipality are provided for, yet by loosenes s in the keeping of the records themoneys levied are not appl ied as was originally intended and autho rrzed .
Greater expenditures are made in some directions than are provided for inthe estimates , and to meet th is contingency , som e other fund i s made tosuffer. Usua lly the s inking fund , if there happens to be one , i s made thescapegoat . I call to mind a recent audit where in twelve years; althoughthe s inking fund levy was placed in the estimates and was raised each year,y et in on ly eight of the years was the sum depos ited to the credit of thefund . When the original estimates were asked for they were not forthcoming ; had not been preserved after the by - law striking the rate had beenpassed . An analys is of the entire tax levy was thus necess itated . Had the ostim ates been fi led , and the amounts lev ied in the tax roll been carried to theproper accounts in the ledger, such a laches cou ld not wel l have occurred . Irecommend that the statement show ing the estimates , upon which the bylaw striking the rate i s based shou ld be incorporated in and made a part ofsuch by - law , or, otherwise , that it Shou ld be copied in fu l l in the minutes ofthe meeting of counc i l at which passed .
The statement should Show , firs t the sums required to meet the severalfixed charges , or uncontrollable expenditures , and next the amounts whichit has been estimated wi l l be required for the carry ing on of the municipalgovernment . Against these should be placed firs t the antic ipated revenueexclus ive of the tax levy , and, second , the amount which must be rais edby impos t .
CHAPTER X .
Lo cal Improvements .
"When a publ ic work has been decided upon , the necessary s tatutorypre l im inaries having been observed , there are two methods which may befollowed to provide funds for the carrying on of the work , ( I) by issuingdebentures and dispos ing of the same in bulk at the outset of the und ertaking
,or by partial sales as the necess ities of the work require ; or (2) by ci
fecting temporary loans as the work progresses , charging capital or construction account with the interest of these loans , to the offset later on by theinterest which wi ll have accrued upon the debentures , i f they are dated concurrently with the in itiation of the work . Very often it i s imposs ible to tel lat the outset the extent of the expenditures which may be requis ite upon acontemplated work . The architect or engineer wi l l furnish an estimate ,general ly an outs ide figure
,and upon this i s based the amount for which
the debentures are issued . It may be that when tenders are ca l led for,much les s than the sum estim ated w i ll be need ed , and if so then the fu l l is sueof debentures wil l not be
,
neces sary . The method of providing the requis itefunds by temporary loan would seem to be preferable
,i f only for this rea
son; but where the work und er construction i s of the nature of a “ localimprovement” (part to be pa id by the municipal ity and part by the ownersof the properties to be benefited) there i s an added reason for refrainingfrom i ssuing the debentures til l the completion of the work . In such case
~23
the construction of the improvement i s in the nature of a partnership, and,properly, the greatest care should be taken to keep the transaction separateand free from other matters of a l ike nature , and from works in which on lythe corporation is interested . I use the word “properly” adv isedly, for nufortunately the average municipal offi cial i s not careful in this regard and
works are often undertaken and carried to completion, moneys advanced,and debentures sold without the s l ightest regard being had to the equitiesof the various interests concerned .
I have been unable to find any method of procedure in undertakingsof this kind better than the one I shal l Shortly outline. It certain ly has theadvantage of s impl icity. When the funds are required , arrangements aremade for special advance from the bankers suffi cient to meet the cost ofthe proposed undertaking, this advance to be carried in the way of an overdrawn account , guaranteed by a demand note , for the approximate re
qu irem ent, i f the bank ru les require it . All checks and payments made onaccount of that particular work , are entered to a special account , and interest is periodical ly charged upon the advances . When the work has beencompleted , and the actual cost arrived at , the time for the disposal of thedebentures wi ll have come , and these will then be issued to an amount exactly suffi cient to cover the cost of the work .
SPECIAL ASSESSM ENT REGISTER.
The method s of keeping the records of these local improvement assessm ents are almost as varied as are the classes of work done under thissystem .
C27}? o f
Reg isfi e of Spec ial flak e lewc d ondenlhe au'
llfosil?of“
Ian!co st of lm psovemen'
l’ 53
C721? o f Who ’s on
pa s s e d
Form 27.—Special Assessment Register.
24
DISB URSEM ENTS.
April 30 . Rent , light , etc .SalariesBooks (not fiction)Books (fiction)B ind ingEvening classes
Balance on hand
$425 00
All cash receipts are entered under their prOper date and class ification ,and are carried to the “total” column and added in w ith each entry, so thatthe sum of the total column represents at al l times the
'
total amount ofcash received . As these entries are made the amount in each case isadded into the balance cash on hand” column .
All disbursements are entered under proper date , and in the columnheaded “amount
,
” after which the amount is deducted from the“balance
cash on hand .”The amount of the disbursement is then carried over to the“distribution of accounts ,
” and i s entered in the proper column or columns .
This i s , or these are , then carried to the“total” column , on the right hand
s ide, and succeeding amounts are added in from time to time as the entriesare made . The sum of these represents the total of
'
the disbursements .
To prove the correctness of the clerical work , ad d the totals” of the d istr ibution page to the “balance cash on hand ,
” and the sum should ( i f no errorshave been made) equal the total of the receipts .
Form 28 .—Publ ic Library Records .
In carrying over the accounts from page to page,the whole work must
of necess ity prove itself in a number of different ways . The sum of thefootings of the receipts wi l l equal the “ total ; the sum of the footings of the“dis tribution” page wil l equal the “total .” The sum of the “totals” and the“balance cash on hand must equal the total receipts . These and otherproofs which m ay be appl ied make i t next to imposs ible to make a mistake,unless wrlfu lly , in trans ferring the accounts from one page to the next .Where greater elaboration of detai l i s wished , the number of columns
can be increased , and the book made of the necessary w idth to accommodatethem .
26
CHAPTER XII.
School Accounts .
It is as necessary that the accounts'
o f the thousands of school sections throughout the land , should be properly and accurately kept , as w ithany other branch of public accounts . To this end what can be betterthan the adoption of a uniform system of accounts . In the form belowwi l l be found the principles of a s imple, yet excel lent system . It i s alongthe same l ines as the cash accounts for municipal it ies , and public l ibrariesproviding a pos itive and certain internal check . For detai ls as to the keeping of this book, see chapter upon
“Public Libraries .
” The principles inboth cases are identica l .
S C H O O L. D O A Q D O F‘
s e t Q O A A O o r
Form 29.—Pub lic School Accounts .
CHAPTER X III .
Debentures .
Debentures and bonds are ordinari ly is sued upon either one of twomethods : “Sinking Fund” and “Ins talment or Annuity .
” Which of thesemethods i s the better has been a moot question , and it depends altogetherupon whether you are the purchaser or the seller of the securities whichpos ition you m ay feel disposed to take. For myself I have very decidedviews upon the subject , looking at it from the standpoint of the municipality .
SINKING FUND.
In the case of s inking fund debentures , no part of the principal isrepaid to the holder or purchaser during the currency of the bonds . Thefu l l amount of interes t and a portion of the principa l is annual ly collected .
The interes t i s paid to th e debenture holder. The principal i s paid into anaccount known as the s inking fund , which fund must be made to earn arate of interes t equal to that calcu lated at the time of issuing and this iscompounded yearly or half yearly during the whole period of existence ofthe debt , so that at maturity of the debentures there wi l l be in this fundjust suffi cient . to repay the principal . W ith the rates of interes t varying,it so happens that often it is not poss ible to make the s inking fund earn theamount contemplated , or it m ay be that too high a rate of interes t was
allowed in the calculation .
27
Each year,before placing in the estim ates the am ount required to be
raised for the s inking fund,a valuation shou ld be made to ascertain whether
the existing investments have amounted to the sum original ly intended as
that which should be on hand at that date . If deficient it mus t be augm ented by adding the necessary amount to the ordinary yearly appropriation.
I f precautions are taken , and fractional adjustments are made fromyear to year, there wi l l be no poss ib i lity of finding the s inking fund shortwhen the debentures mature .A common practice is to calculate the interest earning power of the
s inking fund at the same rate as the debentures bear, and this is a pit intowh ich many municipal ities stumble. There are many reasons why it i snot poss ib le to make the s inking fund earn interest equal to that whichmust be paid on the debentures , chief among which is lack of investment .The amounts being sm all and accumulating annual ly, it i s imposs ible tokeep the fund continually inves ted at a rate of interest higher than thatwhich can be obtained by depos it In the ordinary sav ing s bank . It followsthat no matter what rate of interes t it may be necessary to make the deben~tures bear, it is wel l that the s inking fund’s interest- earning power shouldnot be calculated at a rate higher than ordinary sav ings bank i nterest .
INSTALLMENT OR ANNUITY.
The insta lment or s l iding scale debentures are figured so that equalpayments during the period which the debentures have to run of principaland interest, wi l l be made . The firs t year’s payment wil l obvious ly belargely interest and very little principal . The second , a l ittle less interes tand more principal . Each year the interest decreases and the principalincreases , unti l in the final year the payment i s mostly principal . It w i llbe observed that the difference between the two forms of debenture is ,that in the firs t case the investor accepts on ly the interes t earned each year,leaving the principal in the hands of the munic ipality for reinvestment . Inthe second case the investor is himself under the necess ity of finding h i sown source of reinvestment for the principa l which he receives year by year.
The system of s inking funds originated because inves tors were averseto buying debentures which provided for the return yearly of a portion ofthe principal , necess itating the troub le of the reinves tment of smal lamounts . At any rate, debentures of such a character brought a less pricein the market, and hence the introduction of the s inking fund idea , whichplaced the onus of reinvestment upon the Shoulders of the persons orcorporations obtaining the loan , thus giving the capital ist the advantage ofa longer and, to him ,
more satis factory inves tment . This condition ofaffairs originated when rates of interes t were much higher than now
,and
money less plentiful . The day of the s inking fund i s past, however, thedifference in the price obtainable for debentures of the two kinds beingso s l ight that the trouble of maintaining the s inking fund largely exceedsthe paltry difference in the proceeds of the sa les . With a thorough senseof the respons ib il ity attaching to the pos ition which I take , I have nohes itation in saying that the s inking fund is a curs e to the average municipality . Lack of knowledge of finances , inab il ity to keep the s inking fundprofitably invested, the manipu lation of the fund by des igning and d ishonest offi cials , ignorance in computing the earn i ng power
,these are
28
SINKING FUND INVESTM ENTS .
The statute authorizes municipalities to inves t the s inking funds ingovernment securities , municipal debentures , their own or their neighbors ,and first mortgages , at the pleasure of the investing body. The fu l les tinformation shou ld be kept of all such investments , and a ledger shou ld beprovided , which w i l l furnish all the facts . It matters not particularlywhat the form , i f information be given as to date of loan , amount , d escription of property , certificate of valuation , and of sol icitor, and such otherdetai ls as the circumstances surrounding each particu lar case , and thenature of the investment
,may seem to require .
CHAPTER X IV .
Tabular Com putations .
In every municipal corporation publ ic works are undertaken requiringthe issuing of debentures or bonds to prov ide the neces sary funds for thecarrying out of the works . It becomes of the greates t importance , therefore
,that the offi cials charged w ith the issuing of these s ecuri ties should
be possessed of the information to enable them to quickly and correctlymake the necessary calcu lations as to the annual amounts to be levied .
SINKING FUND TABLES.In the Sinking Fund Table herew ith i s shown the amount of s inking
fund necessary to be set as ide annual ly to provide the required amount toany rate of interes t from 2 to 6 per cent . for any num ber of years , at theend of which debentures are ordinari ly made payable . Purchasers of debentures are, by recourse to this table , enabled to ascertain at a glance whetherproper provis ion has been made in the by - law, under which the bonds ordebentures have been issued, for the necessary amount of s ink ing fund .
INSTALM ENT OR ANNUITY TABLES.By far the greater part o f the debentures issued at the present time
are upon the instalment or annuity plan. In this way an equal annualpayment i s made . It i s thus necessary to know what amount of principalmust be paid off in each year
,in . order that the princ ipal so paid , together
with the interest , sha l l each year amount to the same sum . The tableswhich are presented in this volume are prepared to Show the exact amountof interes t and princ ipal respectively , payable each year, in order toreduce to an equal annual sum the amount to be levied . To financiersgenerally , and to municipal clerks and engineers espec ial ly these tablesw i ll prove of inestimable va lue, enabl ing them to make the necessarycalcu lations required in the issuing of debentures or bonds , in any sum ,
for periods of 5 , 10 ,1 5 , and 30 years , at rates of interest of 2, 2/2 , 3,
3Vz . 4 . 4V2. 5. 5V2 and 6 per cent .Special tables have been prepared for 2, 3, and 4 years , at rates of inter
est o i 2, 3, 4 , 5 , 5% and 6 per cent . These wi l l be foundusefu l more particularly in the case of school sections , where short termdebentures are frequently issued .
30
COMPOUND INTEREST TAB LE.
(One dollar interest .)Includ ed in the l ist of tabu lar computations is a tab le which shows
readi ly the sum to which One dollar principal wi l l increase at compoundinteres t in any number of years from I to 40 , at rates of 2, 3, 354 , 4 ,
5, and 6 per cent . per annum . Instructions for the finding ofthe sum to which any given amount w i l l increase at compound interestat any of the rates of interest, and number of years expressed in the table,are also given .
COM POUND INTEREST TABLE.
(One dollar depos ited at end '
o f each year.)
It frequently becomes a necess ity to ascertain whether or not a s inkingfund i s being maintained at its proper standard . To do this in the ordinarycourse means a deal of figuring. By the use of the table appended theproper s tatus of the fund at the end of any year may be '
obtained by as imple sum in multipl ication as exempl ified at foot of this table.
PROOF OF ANNUITY PAYMENTS .Purchasers of bonds and debentures invariably require to satis fy them
selves of the correctness of the sum provided in the by - laws as beingrequired to be raised annual ly to meet the i nterest and principal of thedebentures for which they are negotiating. The table on page 37 furnishesa s imple means to this end ; and it may furthermore be used to provethe correctness of h is calculations by the clerk or financier issuing the bondsor debentures .
TABLE TO SHOW TH E INTEREST- EARNING POWER OF STOCKS,BONDS AND
DEBENTURES BOUGHT AT VARYING PRICES, EITHER ABOVEOR BELOW PAR .
In these days of clos e competition in the money markets of the world ,the purchaser of securities i s called upon at almost every turn to b id forbonds , s tocks and debentures . The table on page 38 wi ll enable such to tel lat a glance the interest which investments wil l net, at varying purchaseprices either at a discount or a premium , ranging from 50 to 150 . The rulefor ascertaining the value at any rate not included in the table is also given .
These tables are printed from plates revised by the author, so thatthere need be no question as to their correctness .
F. H . MACPHERSON,C. A .
31
9 P er cent - 95 Years 3 l ot P er Cel t—5 l ean .
Interest, Payable m 5
Yearly Instalm ents.
LQUAL ANNUAL rAm m , nQUAL ANNUAL rAm uN'r. RQUAL ANNUAL rAna N'
r.
Principal.
$25000 00 3190246 8820243 83 195003 05
15368 75 199878 13
10371 80 M 75 08
5250 02 W 86
t l -QP er Cent—IO l ean .
nQUAL ANNUAL m u m ,
43716 16“1
'
d
825000 00 389258 7822768 53 91490 25
47319 77 20481 27 93777 5 118136 84 96121 94
5779 47 15733 79 98524 9950215 98 13270 66 100988 12
10745 96 1035 12 828158 14 106100 645505 62 108753 1621-2P er cent—85 l ean .
2786 99 111471 79
9 l o, P er Cent—15 l ean .
EQUAL ANNUAL PAM “ . 2 l -QP er Cent. 20 Year s .
Debentures beam u cent.Pm,
235
YearlyInstalm euts.Yearly Ins ants.
UQUAL ANNUAL rAvm 'r ,“V AL ANNUAL PAYMENT
829275 9313
235 17 9° Principal. Principal.
19476 94
17714 80 61555 7337475 67
15863 64671 9939372 88 144 77 66 66288 79
13918
4 1366 13 11121 80
31000000 00
9 l ot P er Cent—a.Years. 8 P er ( Bent—00 YearsDebentures bearin 24} per cent. Debentures bearin 3 per cent. Debentures bearin 3 per cent.
Interest, Paya le m 30 Interest, Paya le 1n 5 Interest, Pay 10 m 30Yearly Instalm ents. Yearly Instalm ents. Yearly Instalm ents .
EQUAL ANNUAL PAYM ENT. EQUAL ANNUAL PAYM ENT, EQUAL ANN UAL P AYM ENT.
Principal. 522?Interest. Pr incipal . Principal.1 330000 00 3188354 58
24349 36 194005 22244 30 56 2
218529 20 199825 38 28719 92
523248 61 12534 44 M 20 14
6359 90 211994 68 27361 89
8 P er ( tem .—10 Years.
Debentures bearin 3 per cenInterest, Paya le m 10
Year ly Instalm ents .
EQUAL ANNUAL PAYM ENT,
Interest. Principal.
11364 16
9520 72
1165 4761000000 00
1486 18
8 P er Gent—15 Years . 71000000 00
Debentures bear in 3 per cent.3 3"P O?Cel t—90 Years.
Debentures bear i u 3 per cent. Interest, Paya 16 m 15Interest, Paya 16 m 2) Yearly Instalm ents.
Yearly Instalm ents.
EQUAL ANNUAL PAYM ENT,EQUAL ANNUAL PAYE ENT, $83 766 58
EQUAL ANNUAL PAYM ENT:
Interest. Principal. wtPr incipal.
31000000 00
3 P er Cent—95 Years . 3 1 -9 P er Cent—5 Years . 3 1-9 P er vent—a.YearsDebentures bea 3 per cent. Debentures bearing 35 per cent. Debentures bearing 35per cent.
Interest, Paya 10 in25 Inte rest, Payable 1n 5 Interest, Payable m 30Year ly Instalm ents . Yearly Instalm ents . Yearly Instalm ents .
EQUAL ANNUAL PAYM ENT. EQUAL ANNUAL PAYM ENT, EQUAL ANNUAL PAYM ENT.
Interest. Principal. $22
Interest. Principal . Interest. Principal.
1 835000 00 $186481 382 284 73 15 193008 23
3 21717 86 199763 524 14726 14 206755 245 7489 75 213991 63
$1000000 00
3 1-9 P er Cent—10 Year s.Debentures bearin 35 per cent.
Interest, Paya 16 in 10Yearly Ins talm ents .
EQUAL ANNUAL PAYM ENT,
Interest. Principal .
31000000 00
8 1-9 P er Cent—95 Years.Debentures bearing 33 r cent. 000000
Interest, Payable81 00
Yearly Instalm ents. 3 P 0? Cel t—15 Years.81000000 m
Debentures bearin 35per cent.EQUAL ANNUAL PAYM ENT, Inte rest, Paya, le ln 15 4 P er Cel t—9.Years.
O4 Yearly Insta lm ents . Debentures bearin 4 per cent.Interest, Paya Is in20
EQUAL ANNUAL PAYM ENT, Yearly m am m a l“
EQUAL ANNUAL PAYM ENT,
Interest. Principal.Interest. Principal.
31000000 00
81000000 00 $1000000 00
a
c
co
qa
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a
h
ww~o
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ou
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3$8
8
8
a 5
19001 36
154 57 9611790 54
7994 764066 17
335000 0033186 12
31308 7629365 68
2735 4 6125273 1423118 82
20889 11
1858 1 3516192 82
13720 6911162 03
85 13 83
5772 932936 31
38524 1 3788224 82
91312 69
94508 63
97816 43101240 01
104783 4 1
108450 83
112246 61
116175 20
53638 96555 16 3257459 4059470 476155 1 9463706 2665935 9768243 7370632 2673104 3975663 0578311 2581052 15
83888 77
s
s
sss
s
s
s
s
s
s
35 1825 08
1—1—1—1—1—1-1—41—1-4—0
c
mu
a
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a
ww-o
o
wqa
a
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8
335000 0034322 00
33620 28
32893 99
32142 28
31364 26
305 5 9 02
725 5928862 98
27970 1927046 15
26089 7725099 91
24075 4 123015 05
21917 5820781 7019606 06
18389 28
17129 9115826 46
144 77 3913081 10
11635 95
10140 20
8592 11
6989 84
5331 48
3615 09
1839 17
840000 0038656 7337259 7335806 85
34295 85
32724 4 131090 11
29390 45
27622 8 125784 4523872 156
21884 19
19816 29
17665 6715429 03
13102 92
10683 778167 85555 1 29
2830 07
319371 3420049 34
2075 1 0621477 3522229 06
23007 08238 12 32
24645 7525508 36
26401 15
27325 1928281 5729271 4330295 93
31356 29
32453 7633589 64
34765 2835982 06
3724 1 433854 4 88
39893 954 1290 24
42735 3944231 14
45 779 2347381 5049039 86
50756 25
52532 17
333581 7534925 02
. 36322 02
37774 9039285 90
40857 3442491 64
44 191 30
45958 94
47797 3049709 19
5 1697 6653765 4655916 08
58152 7260478 8362897 98654 13 91
68030 477075 1 69
4 1-9 P er Cent—5 Years . 4 14 P er Cent.—80 Years. 5 P er Cel t—5 Years.Debentures bearing .”per cent Debentures bear ing
b4 4} per cent. Debentures bearing 5 per cent.
Interest, Payable in 5 Interest, Paya 16 in 30 Interest, payable in 5Yearly Instalm ents. Yearly Instalm ents. Yearly Instalm ents.
EQUAL ANNUAL PAYM ENT, EQUAL ANNUAL PAYM ENT, EQUAL ANNUAL PAYM ENT.
Interest. Pr inci 1. Pr inciInterest. Principal. pa pal.
1 84 5000 00 $182791 642 36774 38 191017 26
3 28178 60 199613 04
4 19196 01 208595 63
5 9809 21 217982 43 31000000 00
$1000000 00 5 P er Cent—l o Years.Debenture s bearin 5 r cent.
4 14 1 P er s eam—10 Yea rs .
Interest, Paya 1°Debentures bearing 4 } per cent. Yearly Instalm ents.
Interest, Payable in 10Yearly Instalm ents . EQUAL ANNUAL PAYM ENT,
EQUAL ANNUAL PAYM ENT,Pr incipal .
Principal.
1 $45000 00 381378 832 4 1337 95 85040 873 375 11 11 88867 71
4 335 12 07 92866 75
5 29333 06 97045 76
6 24966 00 101412 82
7 20402 43105
37633
8 15633 49 10 45000000
9 10649 95 115728 87$1 00
10 5442 15 120936 67 31000000 00 5 P er Gena - 15 Years.
5 P 0? Year s. Debentures bearin 5 r cent.31000000 00 Debentures bearin 5 per cent. Interest, Paya lo 1
1:1e
15
P er Cent—15 Years. In
ytere
it,I
Paya
l
le in 20 Yearly Instalm ents.
DebeI
ntures begring
b
‘
lfi per cent.
ear y nsta m ents.
EQUAL ANNUAL PAWnterest, aya e m 15
Yearly“U“ “ NU“ P ‘ m m ’
Interest. Pr incipal.
31000000 00
31000000 00 31000000 00
00 379504 5846024 77 83479 814 1850 78 87653 8037468 09 92036 49
32866 27 96638 31
28034 35 101470 22
22960 84 1065 43 7317633 65 111870 9212040 11 117464 466166 89 123337 68
5 P er Cent. -25 Year s. 5 P er Cent.—30 Year 1-9 P er Cent—5 Yea rs.Debentures bear i 5 per cent. Debentures bearin 5 per cent. Debentures bear ing 55 per cent.
Interest, Paya 16 in 25 Interest, Paya 16 in 30 Interest, Payable in 5Year ly Insta lm ents. Yearly Instalm ents . Yearly Instalm ents.
EQUAL ANNUAL “ Yu m “: EQUAL ANNUAL PAYM ENT,EQUAL ANNUAL PAYM ENT:
Pr incipal. Principal . Principal.
221968 19
5 1-9 P er Cent—10 Years .Debentures bearin 55 per cent.
Interest, Paya 16 m 10
Yearly Instalm ents .
EQUAL ANN UAL PAYM ENT,77
Interest.
31000000 00
5 P er Cent.—25 Years.Debentures bear in per cent. 000000
Interest, Paya 16 m 25$1 00
Yearly,
Instalm ents 5 l -2 P er Cent.—l 5 Yea t l o
31000000 00 Debelnltnres belarin 1
5} per cent»EQUAL ANNUAL PAYM ENT, 5 m P 0 0 t, ” y tercet, aya e in 15
374 1549 36 Debenturezr
beaan 53pee
zr
gent. Yearly In“8 11110 0 18Interest, Paya le in 20Yearly Insta lm ents . EQUAL ANNUAL PAYM ENT,
EQUAL ANNUAL PAYM ENT,33
Interest.
31000000 00
31000000 00 31000000 00
1 855000 00 377667 7750728 28 81939 4946221 60 864 46 174 1467 06 91200 71364 5 1 02 96216 7531159 10 101508 6725 576 13 107091 6419686 09 112981 68
134 72 09 119195 68
6916 33 12575 1 44Q
QO
QNI
Q
UHF
-‘d
lfl
1 355000 00 328679 332 53422 64
3 5 1758 52
4 50002 875 4 8 150 676 46196 59
7 44 135 04
8 4 1960 11
9 39665 55
10 3724 4 7911 34690 89
12 31996 53
13 29153 9714 26155 08
15 22991 25
16 19653 40
17 16131 9718 124 16 8719 8497 43
20 4362 43
0 P er cen - u Your;Debentures bearing 5 5 per cent. Debentures bearin 6 per cent.Interest, Payable i n30 Interest, Paya ls m 25
Yearly Instalm ents. Yearly Insta lm ents.
EQUAL ANNUAL PAYM ENT . EQUAL ANNUAL PAr m 'r. EQUAL ANNUAL PAW ,
39
Interest. Principal. Interest. Principal. Interest. Principal.
1 360000 00 3177396 402 49356 22 188040 18
3 38073 80 199322 60
4 26114 45 211281 95
5 13437 53 223958 87
31000000 00
0 P er Cent -
710 Years.
Debentu res bearin 6 per cent.
Interest, Paya Is i n 10Yearly Instalm ents .
m UAL ANNUAL PAYM ENT.
Interest. Principal.
31000000 00
0 P er (Jena—30 Years.Debentures bear in 6 per cent.
31000000 00 Interest, Paya Is in30Yearl Instalm e ts."000000 00 0 P er Cent - 15 Yea rs.
y n
0 P er Cent—30 Years. Debentum bearin 6 Per cenEQUAL ANNUAL PAYMENT,
Debentures bearing 6 per cent. Interest, Paya le m 15 372643 91
Interest, Payable in20 Yearly Instalm ents.
Yearly Instalm ents .
EQUAL ANNUAL PAYM ENT, EQUAL ANNUAL m m ’
887 , 184 .56.17.
Year.
Interest. Principal. Interest. Pr incipal.
51278 85
34011 4147196 82
“ 13 85
40516 23
51214 68
81000000 00
31000000 00
4W5867 96554 47 93
50622 7245508 01
40086 4 1
34339 52
28247 8121790 6014945 96
7690 64
80420 03
85245 24
90359 95
95781 55101528 44
107620 15114077 36120922 00
128 177 32
n-n—t-n—cp-n—t—o
Q
QHF
OS
N
H
C
GQ
QGO’
tlQ
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i58906 40
57747 18565 18 4 1
55215 91
53835 2652371 7750820 48
49176 1047433 0645585 44
43626 974 1550 9839350 44
37017 8634545 3331924 4529146 3126201 48
23079 9719771 1616263 8312546 06
8605 22
4 427 93
318226 7219320 3220479 5421708 3123010 81
24391 46
30793 663264 1 2834599 7536675 7438876 284 1208 864368 1 39
TA B LE.l ‘lowlfl. Ti l. ANNUAL 7 0 I . B i l l P I C"
Stock s , B ond s and Debentures
B earing the interest given along the top, when purchased at the rate in the first or “pr ice”
colum n. Exam ple: Stock paying annually 5 per cent if purchu ed at a 102 wi ll net per
cent onthe investm ent.
4 4 ;Pri ce.per Cent. per t. per Cent. per Cent.
Rule to find the value at any rate not included in this table: M ultiply the rate per centthe stock is hearing by 100 and d ivide by the pri ce you wi sh to pay. The result wi ll give theinterest the investm ent wi ll real ize; or , d ivide by the rate of interest you wish the investm ent torealize, and the result wi ll give the price to be paid for the stock.
Illustration: Stock bearing 4 per cent i s wanted to real ize 5 per cent:4 x
the price at whi ch you m ust buy to rea l i ze 5 per cent; or stock bearing 6 per cent is purchasedat 105 , what wi l l i t real ize: 6 x 70 per cent.
COMP OUND in surer TAB LE.
Conrourrn Inm 'r TAB LE, ONE DoLLAn PRINCIPAL .—The sum to whi ch one dollar principalwi ll increase, at com pound interest, inany num ber of years, not exceeding forty, at 2, 24, 3,34, 4 , 4g, 5 , 5 } and 6 per cent per annum .
5 5
3.per nt. per Cent. per t. per Cent. per nt. per Cent
1 . 884
To find the sum to which a given am ount wi ll increase at com pound interest, at any of the
rates per cent and num ber of years expressed in the above tableM ultiply the givenam ount by the sum to whi ch one dollar wi ll increase at the rate and for the
num ber of years requ ired, m arking 06 as m any decim als from the product as there are deci m alsinthe m ultiplier and m ultipli cand.
SINKING FUND INV ESTM ENT TAB LE.
COM PQUND Im am-r Tu m per annum , depos ited at end of year. This table gives the
sum to whi ch one dollar per annum , paid at the end of each year , wi ll increase at com poundinterest, in any num ber of years up to forty , at 2, 3, 4 , 5 , 55 and 6 per cent perannum .
pergent. per2
éent. pergent. perséeot. perCent. perfint. pergent. perfint. per
O
Cent
To ascertain the am ount whi ch should be ina s inking fund at any given tim e, m ultiply theannual depos it by the am ount which earns in the tim e required at the rate per cent asfound in the above table.
Exam ple: Required to find am ount whi ch should be in a sinking fund (m atur ing insoyears)at the end of the tenth year ; annual deposi t $250, at 3 per cent. One dollar for tenyearsat 3 per cent produces and thi s m ultiplied by 3250 the am ount whi ch willbe inthe fund if it has beenm aintained at its proper standard .
SHORT TER M DE B EN TURES .
2 P er (Jena—2 Years .EQUAL ANNUAL PAYMENT,
Interest. Pr incipal.
1 820000 00 3 495049 5 12 10099 02 504950 49
31000000 00
EQUAL ANNUAL PAYMENT,
Interes t. Principal .
1 820000 00 ‘3 32675 4 682 13464 90 333289 783 6799 14 339955 5 4
51000000 00
2 P er Cent - 4 Yea rs .EQUAL AN NUAL PAYMENT,
Interest. Pr incipa l.
1 820000 00 3 242623 642 15 14 7 52 217476 12
3 10198 00 252425 64
4 5 149 04 25 7474 60
31000000 00
8 1-9 P er Gena—8 Years .EQUAL ANNUAL PAYMENT,
2 1-2 P er Gena—8 Yea rs .
EQUAL ANNUAL PAYMENT,$350, 136.63.
Interest.
8 1-2 P er Cent—4 Years .EQUAL ANNUAL PAYMENT,
Year.
P er (Jena—8 Year s.EQUAL ANNUAL PAYMENT,
8530,
EQUAL ANNUAL PAYMENT,84 .
8 P er ( tem .- 8 Years.
EQUAL ANNUAL PAYMENT,36.
4 P er (Jena—8 Year s.EQUAL ANNUAL PAYMENT,
Interest. Principal . Interest. Pr incipal .
4320
30
294
00“333332
32353
333 1 840000 00 s 32034 8 53
3 10297 00 343233 362 05 333 162 48
5 4 346488 99
$1 0031000000 00
8 P er (Jena—4 Years .
EQUAL ANNUAL PAYMENT,
4 P“ Gen o—4 Yew .
EQUAL ANNUAL PAYMENT,
Interest. Principal .
Principal.1 330000 00 8 239026 872 22829 14 246197 733 26 253583 614 7835 08 261191 79
81000000 00
8 1-2 P er Cent - 4 Years . 31000000 01:EQUAL ANNUAL PAYMENT,
4 1-2 P er Cent—2 Years.EQUAL ANNUAL PAYMENT
,
Interest. Principal.
1 00 3 491400 492 17800 98 508599 5 1
31000000 00
8 1-9 P er Cent—8 Years .
EQUAL ANNUAL PAYMENT,4 l o! P er Cent—8 Years.EQUAL ANNUAL PAYM ENT.
Each I teInterest. Pr incipal. Year .
rest. Princi pal .
1 345 000 00 3187731 835000 00 3 321931 59 2 30654 95
3333118 9?
2 23732 39 333 199 20 3 15666 63 348 107 233 12062 38 34 4869 21
31000000 00$1 00
4 1-2 P er Cent—4 Yea rs .
EQUAL ANNUAL PAYMENT,8 M I P er ( tem .- 4 Yea rs .EQUAL ANNUAL PAYMENT
,
49.
Principal.
3 237250 17245 553 9325 4 148 22
31000000 00
5 1-11 P er Cent—8 Years.EQUAL ANNUAL PAYM ENT.
5 P er Cent—2 Year s.EQUAL ANNUAL PAYM ENT.
EachIn P
e
1
YearInterest Princi pal. Year .
” M t rm clpa
18 00l 350000 00 3 487804 87
l 355000 00 3 4866
2 25609 74 5 12195 13 2 28216 00 5 13382 00
81000000 00 81000000 00
5 1-11 P er Cent—8 Years .
EQUAL ANNUAL PAYMENT.5 P er Cent—8 Years .
EQUAL ANNUAL PAYMENT.
56. 57.
EachYear .
Interest. Pr inci pal. Year.
Interest, Prm o‘pal.
1 350000 00 3 317208 56 l 355000 00 3 315654 572 34 139 57 333068 99 2 37638 99 333015 58
3 17480 11 349722 4 5 3 19324 72 35 1329 85
31000000 00 31000000 00
5 l -fl P er Cent —4 Years .
EQUAL ANNUAL PAYMENT .5 P er Cent—4 Years .
EQUAL ANNUAL PAYMENT.1.56.
Principal .
1 350000 00 3 232011 562 38399 42 243612 14
3 26218 81 25 5 792 75
4 13428 01 268583 55
Interest. Interest. Principal.
42333 78855000 00 8 230294 82
242961 04
28970 92 256323 90
14874 58 270420 24
31000000 00
0 P er Gena—8 Years .
EQUAL ANNUAL PAYMENT.
Interest. Principal.
1 560000 00 3 485 436 882 30873 76 5 14563 10
31000000 00
0 P er Cent—8 Years .
EQUAL ANNUAL PAYMENT.
3374 , 109.81.
Interest. Principal.
1 860000 00 3 314 109 8 12 4 1153 4 1 332956 40
3 21176 02 352933 79
31000000 00
5 P er Cent—4 Years.EQUAL ANN UAL PAYMENT.
Interest. Principal .
1 360000 00 3 228591 802 46284 50 242307 303 31746 05 256845 754 16336 65 272255 15
Corporation Accounting.
CHAPTER I.a. a.
General Descr iption of Corporations and their Objects .
A. 3.
WH AT IS A CORPORATION ?
PRIV ATE corporation is a collection of individuals under a specialdenomination authorized by law to act as one person for certainspecified purposes, and endowed by law w ith the capacity of perpetual
succession, so that the corporate body remains the same so long as it exists,notw ithstanding the changes in its individual membership.
Corporations are aggregate or sole. An aggregate corporation, as itsname impl ies , consists Of several persons united inone society
,preserved by
a succession o f members . A corporation sole cons ists o f only one person,who is made a body corporate and pol itical, in order that he and his successors may possess that legal perpetuity which is denied to natural persons.These are few in number, being mainly offi
'
cers empowered by statute tomaintain action as successors, such as judges o f probate and county treasurers . A minister o f a pari sh, seized of parsonage lands in the right Of hisparish, holds the same to himsel f and successors, and has been held in law tobe a sole corporation for that purpose. The grant, however, of corporatepowers to one personand his associates
,although not requiring him to take
any associ ate before exercising the rights conferred, and thus virtual ly conferring upon him the power to exercise alone al l the corporate functionsthereby granted, does not make of him a corporation sole. The State has,inthis case, created a corporationaggregate, and such it must remain. Thegovernor Of a state is also a quasi corporation sole, and other instances w illdoubtless suggest themselves to the reader.
CORPORATION S ARE PU B LIC OR PRIVATE.
The chief distinction between public and private corporations is thatover the former the leg islature has exclusive and unrestricted control . Asthe guardianOf public interests, it may create, modify or destroy such institutions . They are only the auxi l iaries of the government inmunicipal rule,and nothing l ike a contract can be claimed to exist between them and theleg islature, their Objects and duties being incompatible w ith anything of thenature of a compact . Private corporations, on the other hand, are createdby the granting Of a charter, either under the general laws Of the state or byspecial act o f the legislature, which , inconnectionwith the acceptance, by thecorporation, Of such charter, is regarded as a compact , binding uponthe stateso long as the body corporate faithfu lly fu lfills its part.
3
Generally speakng ,public corporations are towns, cities, parishes, etc.,
existing for pol itical purposes only, w ith powers to be exercised for thepublic good. Private corporations are such as banks, insurance com panies,rai lroads
,furnaces
,mining or other organizations in which the stock is
owned by individuals for their personal profit.Railroad
,turnpike, steamship and some other companies are frequently
called quas i- publ ic corporations, because of their public uti lity, and becausethe public have cerain rights therein, but nevertheless, they are private corporations . The state may own an interest in a company as one Of thecorporators
,but does not, by such participation, identi fy itsel f w ith the
corporation. Perhaps no institution in the world is so general ly m isunderstood in this respect as the Bank of England , which although so closely connected with, and so important a factor in, the financial pol itics of that country, is entirely a private corporation. Chief Justice M arshall says “It isa sound principle of law that when a government becomes a partner in atrading company, it divests itsel f, so far as concerns the transactions o f thatcompany, o f its sovereign character, and takes that Of a private citizen.
”
But where a corporation is com posed exclusively Of Officers of the government, having no personal interest in such corporation, and only acting as theorganof the state, for the public good , it is a publ ic corporation.
The general meaning o f the word public must not be confounded with itslegal sense in this connection. A turnpike, for instance, is for the public useand benefit, but the turnpike company is a private corporation. A hospitalfounded by private benefaction is , in po int of law,
a private corporation,
although dedicated by its charter to publ ic charity. And a college, foundedand endowed in the same m anner, though for the general promotion oflearning, is private.
A private corporation is further distinguishable from a m unicipalcorporate body, by the irresponsibil ity Of the members for the corporatedebts beyond the amount Of their interest in the corporate fund. Towns,etc . , being establ ished only for political and civil purposes, hold each m emberof the same l iable in his private estate, his individual property being subjectto taxation to meet the corporate need s.
Private corporations are Of several kind s, the first d ivisionbeing intoecclesiastical and lay.
ECCLESIASTICAL CORPORATIONS
Are such as are incorporated for the prom otion of religion, and usual lyestablished for the advantageous management of the property belonging tothe church . They may be either sole or aggregate.
LAY CORPORATIONS
Are divided into eleemosynary and civil .
ELEEM OSYNARY CORPORATIONS
M ay be described as incorporated charities , their Object being the perpetuald istributionOf benefits as directed by the founders: Under this head are suchinstitutions as hospitals for the poor, asylums for the insane, etc. Also thosecolleges or schools whose members receive, from the funds o f the insti tution,pecuniary assistance in m eeting the expenses attend ing their academ ical
4
same as ina commonpartnership ; and of one or more special partners, whoshal l contribute to the common funds a specific sum in actual cash, afterpayment of which sum they shall not be further l iable for the debts Of thepartnership. A deed or certificate setting forth this agreement in full , signedby all the partners, is registered in the publ ic records of each county wherethe business is to be carried on, and publ icationmade thereof in the newspapers or such other manner as the statutes may prescribe.We have now seen that corporations are publ ic or private ; that private
corporations are ecclesiastical or lay ; that lay corporations are eleemosynaryor civil ; and how these last are to be distinguished from joint stock com
panics and limited partnerships.
CHAPTER II.
4 . 4 .
Organization of Corporations .
4 . 4 .
ENEVER a corporation is to be form ed it is usual for those interested to draw up certainpapers, cal led articles o f incorporation, andforward them to the secretary of state. He issues a perm it of
organizationand after some preliminary steps the company is givena charterand is al lowed to proceed to business . One of the most common steps to betakenbefore operations canbe commenced is the announcement Of the objectof the company and also the amount o f capital stock. The money contributedis called the capital stock, or the capital . Each member receives a paper,called a certificate o f stock, signed by the officers o f the corporation, statingwhat proportion of the capital is his. This amount need not all be paid inat one time, however, though, of course, at some time the whole amount o fthe capital must be paid into the company.
The reason is obvious : persons doing business w ith the company havea right to know just what the powers of the company are, and also they trustthe company onthe strength of the capital stock which they naturally supposehas actually beenat some time in existence, though it need not al l have beenpaid at one time . An i llustrationw ill make this a l ittle more clear. Supposethat five persons w ish to form a corporation, each one to take 20 shares of$10 0 par value each , making in al l a capital stock o f Uponfilingthe articles with the secretary of state and getting permission to organize,each one o f the five pays into the company 10 per cent o f the amount hesubscribed for. Thi s might possibly be sufficient to start the business andpossibly there would be no further cal l for payment on the stock. Perhapsafter some years the corporationmight get into difficulty and then the stockholders
,whoever they might be at the time , would be liable for the unpaid
portion Of the stock , or at least sufficient Of to satisfy the claim . The factthat the holder supposed it to be fu lly paid up, and paid value for it accordingly ,
does not render him the less l iable . O f course the company can
purchase at a fair valueany patents or other tangible effects and issue stockto pay for them,
The corporate body existing only in a legal sense must necessarily havesome one to act for it and this is accomplished by agents usually ca lled the“Board of D irectors, or Trustees.
” Although by no means absolutelyessential it has been the custom o f the law to permit the stockholders to electthe directors, but it is only a matter o f convenience and the fact does notchange the relationo f the stockholders to the corporation, which is solely acontract relation. They contribute their capital and in return get a share ofthe profits. The Board of D irectors generally appoint the executive Officers.
This brings us to a considerationo f the powers of the officers of a corporation. The officers are empowered to act for the company in al l mattersw ithin the scope o f the object o f the corporation, but beyond this they act
only on their own respons ibil ity and the company is not bound by their acts.It is right that this should be so as the stockholder advances money to thecorporationto be used for a Spec ific purpose and any business outs ide o f thatcanonly be a personal matter between the officer and the person doing business w ith him. Therefore before going into any extens ive transactionwitha corporation it is well to carefully ascertain the nature and extent o f thecorporate powers, or possibly after a considerable amount Of money, etc., hasbeen expended , some stockholder may come along w ith an injunction claiming that he contributed his money to the company for the purpose of
railroading, or whatever the Object might be, and not for trading ingrainormaking bicycles . Then the person doing bus iness as he supposed w ith acorporationOf unl imited credit hies him to a lawyer and soon discovers thatthe particular transaction inwhich he is interested is “ultra vires,
”or beyond
the power o f the corporation. He certainly has increased his knowledge oflaw and possibly his vocabulary, for which his lawyer charges him a goodprice ( the more difficult and uncommon the name the higher the fee isusual ly). The Officers may not evenbe l iable, or if so , they may be worthlessindividual ly.
Sometimes it is not desirable to appear as the holder o f stock in a cor
poration. Possibly the company may have been carelessly organized, orperhaps the stock has not been ful ly paid up. Of course i f a person wascontemplating purchasing the stock he would look to these and simi larmatters before closing the deal, but possibly he is only to become interestedin the company to the extent of holding the stock as security for a debt. In
such cases the better way is to take the certificate and a writing pledging thesame and have such security entered on the books o f the corpo ration. Thiseffects the Object desired and does not render the holder l iable. It is surprising how many persons w i ll take certificates of stock as security and simplyhold them instead Of going tc \he Office Of the corporation and seeing thatthe transfer is properly made, for inmost cases unless this is done there is apossibi l ity o f considerable trouble and loss arising, as the records o f thecompany are presumed to be correct.A corporation is possessed o f a perpetual existence, unless, as is usually
the case, the law provides the time during which it canexercise the privilegesaccorded it. The charter may, however, be voluntari ly forfeited, or undercertain conditions it may be compelled to rel inquish its privileges. Shouldall individual members withdraw or die, naturally the corporationceases toexist owing to the lack of anagent to act for it.
7
CHAPTER III .4 . 4 .
Corporati on Stock Account B ooks .
4 . 4 .
HAT most troubles a novice in corporation book- keeping is , not inwhat book to make the entr ies , but how properly to make them , or
how to make them at a ll ; and inasm uch as no coherent method, as idefrom i llustrative examples for the guidance o f tyros, appears in the textbooks, our Object is to attempt to formulate some general rules which w i l l behelpful to beginners .
I f the secretary o r book- keeper of a corporation is uncertain as to thebook inwhich he should enter the record Of a particular transaction or classo f transactions , he ought to make it a po int to ascertain, i f possible, the bestpractice in that regard . Is it the best practice to make the entries o f theCapital Stock account in the “Stock Books” or in the “Books o f Account ?”Before a satisfactory answer cou ld be made, the inquiry would be : Whatare
“Stock B ooks” and what “Books Of Account ?”It is to be taken for granted that the corporation to which reference has
been and i s being m ad e i s :
A private co rpo ration for pecuniary profit .That only one set Of books Of account are kept to Show the results of the
bus iness ; andThat the only books inwhich the stockho lders ’ names exclus ively appear
are those which w il l show the Officers Of the corporationwho are its stockholders and who are entitled to vote at stockholders’ meetings .
In the United K ingd om the law s w ith respect to corporations areuni form , and are m ore str ingent inthei r reg ulations thanw ith us . It appearsthat certainbooks mu st be kept ; that the books must be audited annually bya chartered auditor, and that the auditor’s suggestions as to how the booksth ould be kept are fo llowed as a rule.
The Co rporation stock books required by anEngl ish Public Companyire as fo l lows :
1 . Register o f M em bers .
2 . Directors ’ M inute Book .
3. M inute Book o f General M e etings .
4 . Register Of Transfers .5 . Register o f M ortgages.6. Reg ister Of Docum ents.7 . Share Certificate Book.8 . Seal Book .
9. Annual Summary of Capital Book.
10 . Directors’ Attendance Book .
Those required by anAmerican Private Corporationare as follows1 . Book of B y-Laws.2. M inute Book .
3. Stock Certificate Book.
4 . Transfer Journal.
5 . Transfer Ledger.6. Bond Register.
CHAPTER IV .
4 . 4 .
Illus trations ofOpening Entries
4 . 4 .
EXAM PLE NO. I
OR THE sake o f greater clearness in the entries let us assume that theauthorized capital o f the company is divided intoshares o f $ 10 0 each , that B . Brown has subscribed for 4 0 0 shares , S.
Smith 30 0 shares and J . Jones 30 0 shares. We“open” the stock books by
entering on the stock daybookSubscr iption 00
To capital stock 00
Fo r subscr iptions as fo llowsB . B rown, 400 shares $100S. Sm ith, 300 shares 100
J . Jones , 300 shares 100
Sunds to Subscr iption : 00
B . B rown, y r . sub. 400 shares 00
S. Sm i th, y r. sub. 300 share 00
J . Jones , y r . sub . 300 shares 00
Or subscription account may be omitted and the several subscriberscharged w ith the amount of their subscriptions and capital stock crediteddirect. I f we dispense w ith the stock day book, enter the same facts in fu l lon the several accounts in the stock ledger, making it a book of orig inalentry.
Our books are now Open and record the facts . The several subscribers are indebted to the company for the amount o f their subscriptionsand the entire authorized capital o f the company is invested inthese accounts .All future entries are merely records o f actual transactions or changes inposition or form o f the assets o f the company. When the capital (or theseaccounts) is paid , we enter :
Paid- up capital 00
B . Brown, y r . sub. pa id in full 00
S . Sm ith , y r . sub. pa id in full 00
J. Jones , y r . sub. pa id in full 00
The stock ledger then has but two open accounts , Capital Stock, whichis credited with the amount o f the authorized and subscribed capital and“Paid- up Capital , which is debited w ith the amount o f cash paid in. The
closed accounts make a fu ll and complete record o f how, whenand by whomthe authorized capital was subscribed and paid up.
The “Paid - up Capital” is placed in the charge of the treasurer and we
open our “Books of Account” by recording that fact :J. Jones , treasurer 00
Pa id- up Capital am t. cash cap1ta1 00
All future entries are records o f actual transactions.The subscribers having paid their subscriptions are entitled to stock
certificates in the usual form, which are transferable by assignment anddel ivery. It is unnecessary to waste space in describing these certificates ortheir stubs . Lithographed or printed forms are on sale by al l stationers andany one o f ordinary intel ligence can hardly make a mistake in fill ing theblanks . The records must show original issues and subsequent transfers.
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Upon the surrender of the receipts ( if any), g iven by the treasu rer, whenthe cash was paid, certificates are issued, signed by the president andsecretary
,and we enter on the stock day book :Sunds to Stock Certificates 00
B . B rown, Certificate No . I 00
J . Jones , Certificate No . 2 00
S. Sm ith , Certificate No . 3 00
Should Brown sel l 100 shares o f his stock to R. Robinson. certificateNo . 1 would be returned to the company and cancel led, new certificates beingissued
,show ing the new ownership and recorded thus :Stock Certificates 00
B . Brown(Certificate N o . I cancelled.)Sunds to Stock CertificateR. Robinson, Cert. No . 4 (Fo r part o f No . Icancelled) 00
B . Brown, Cert. No . 5 (Fo r part o f No . Icancelled) 00
Inthe case under consideration, it is sometimes thought best to have therecord of organization, subscription and payment of capita l stock kept onthe “Books of Account” and only use the stock book to record the issue andtransfer of stock certificates . We would then openour book of account asfollows
Sunds to Capital Stock 00
B . Brown, y r . sub 400 shares’
at $100S. Sm ith, y r . sub. 300 shares at $100J. Jones , y r . sub. 300 shares at $100
And when these accounts were paidJ . Jones , treasurer, to . 00
B . Brown, stock sub. paid in full 00
S. Sm ith , stock sub. pa id in full 00
J. Jones , stock sub. pa id in full 00
A trial balance wi ll now show exactly the same facts as the combinedtrial balance of the “Stock Ledger” and Account Ledger” under the planfirst suggested, viz. Capital stock credited w ith amount of authorized andsubscribed capital and treasurer debited with same amount, all other accountsbeing balanced, and our record of stock subscription and their paym ent iscomplete . In this particular case this is perhaps the better method . It is,however, for reasons which w il l be hereafter apparent, only avai lable whenthe capital stock is al l subscribed and all paid. Should this planbe adoptedthe issue and transfer o f stock certificates may be entered on an ordinarystock day book and ledger in regu lar double entry form as before suggestedor a “stock register,
” such as is sold by stationers, may be used . This regi ster is ru led about as the follow ing example inwhich the issues and transfersbefore i llustrated, are fil led in.
A columnheaded remarks might be added, inwhich are noted to whomcertificates are transferred and what certificates are issued in place of certificates surrendered . There are some objections to this form and I prefer theregu lar double entry
'
form before descr ibed .
Al l this is very s imple and is the obvious method of proceeding whenthe capital is al l paid incash . But some one is sure to ask : “Suppose someor al l o f these subscriptions are paid by transfer of property, accounts ornotes?” This does not alter the fact that the subscriptions are made andpaid , and only changes the form in which they are paid and therefore the
11
form of entry whenthey are paid . If they are paid innoteswe’
would Chai ‘gébills receivable instead o f treasurer ; i f in property, charge real es ta te,merchandise
,machinery or whatever account m ay be selected to represent
the particular property acquired by the company ; ineach case crediting , as a
matter o f course, the individual or firm from whom the property, no te o r
account receivable was received. If the company assumes liabil ities th eyare of course debited to the person or firm previously l iable and credited to
the account selected to represent the particular form o f liabil ity assumed .
The transaction and the form o f the entry is exactly the same whetherproperty is bought by the company from one of its stockholders or from a
stranger to the organization. The “company” is an entity or individua l ; itd eals w ith all other individuals or firms as an individual and w ithout re ference to whether those individuals or firms do or do not have among the irassets some Of its stock or shares .
M any Old business m enand capitalists insist that the capital o f al l companics inwhich they are interested, shall be paid in cash or bank checks, andall property bought or acquired by the company shall be paid for w ith thecheck of its treasurer. Inmy judgment this is the only correct course . Itmakes the record clear
, and the facts that subscriptions have been paid bythe subscribers and the property in its possess ion paid for by the companystand out so plainly that they are practically unassai lable.
Nor does this involve the use o f actual “cash .
” If the subscriber g ivesa check onhis ownbank to the treasurer for the amount of his subscription,and the treasurer g ives a check on the company
’s bank in payment for theproperty acquired by the company ; then i f the checks are of equal amountsand each deposits the check received in his own bank, both checks are goodand each party has a cancelled bank check as a voucher i f the transaction isever questioned .
We are well aware that many book- keepers, even some who call themselves accountants
,object to what they call the “extra work” and endeavor
to make modernbooks o f account a sort of “clearing house,”inwhich only
balances Of indebtedness are entered . But stationery and book- keepers areboth low- priced com modities and the clearing house method, as a ru le, makesmore
,instead o f less work in the end .
The corporation accountant, as such, has nothing to do w ith closingthe books Of the parties from whom his company purchases property, but i fit shou ld happen that the reader keeps both sets of books he w il l easi ly closethe o ld books i f he sees the facts as they are, and recognizes that firms arenot and cannot be changed into corporations . Corporations are created andpurchase property . The transaction is a sale at agreed figures, and is enteredjust l ike any other sale. It makes no whit o f difference in the form Of theentry in either Old or new books whether the members of the old firm do or
d o not own stock in the newly created corporation or whether the interestso f the Old partners are the same in both concerns . The two concerns arelegally and in fact separate and distinct entities . It is o f no interest to theseller how the buyer enters the transaction i f only he receive credit or is paidfor the property sold ; nor to the buyer how , at what value or inwhat name,the seller carried the property on h is books , so long as he conveys a perfecttitle to the property and gives a receipt for the consideration agreed to bepaid.
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that case,either sue the delinquent for the amount as a debt past due and fo r
which it has a l ienonhis stock, take the course prescribed by the statutes o fthe state inwhich the company is organized and the by- laws of the com panyitself for forfeiting and selling the shares o f stock onwhich d efault has beenmade
,or it can let it stand as a debit account on its stock ledger.Since the shares of stock are not ful ly paid no certificates Of stock can
be issued . Inplace thereof the treasurer gives receipts, stating that the payment is, first 10 per cent, first cal l of 20 per cent as the case may be.
It is a fami liar principal o f law that a debtor cannot transfer his liab i l ityw ithout the consent of the creditor. It follows that a subscriber for sto ckcannot assign or sell that stock so as to rel ieve himsel f o f responsibil ity forthe unpaid part of his subscriptionwithout the consent of the company .
Therefore all assignments or transfers of partly paid stock are made upon
STOCK R-EGISTER.
Num ber Nam e . Is sued . No . of Shares P ar V alue. Surrend ered .
B . Apr. l , 1897
R . RobinsonB .
a book kept for that purpose in the office of the company. It may be an
ordinary record book or a book o f printed forms . The original subscriber,or present owner signs an assignment and transfer naming the assignee andthe number Of shares ; the purchaser signs an acceptance of the stock and an
agreement to pay all unpaid portions of the orig inal subscriptions whenlegally “cal led” ; and the company by its president and secretary signs aformal consent to the transfer. We enter such an assignment on our stockday book .
Subscr iptionB . Brown, unpa id subscr iption fo r shares o fsto ck as s igned to Rob insonSee transfer book
We also make a foot note on the original subscription paper (w ith staror other reference Opposite the original signature) reciting same facts andreferring to fol io o f transfer book where assignment is made .
“What responsibility or liabi lity would attach to the officer or directorassenting to the transfer o f partly paid stock from a responsible originalsubscriber to an irresponsible assignee is an interesting legal question. It
is, however, for the consideration o f the persons d am nified and the consenting offi cer, not the accountant .I f the company o r its d irectors are not satisfied w ith the responsibil ity
o f the assignee they m ay refuse consent to the transfer and thus retain thecompany’s claim against the original subscriber . Whether the original subscriber can trans fer h i s interest inpartly paid stock so as to resignhis rightsw ithout divesting h im sel f o f h is l iabil ity for future calls is another fine legalpo int which might be decided either way by the courts of the several states.Our interest as accountants , is how to record such an assignment. for i fmade or attempted to be mad e, we must enter it onour books . The situationis not very l ikely to arise, but is certainly among the possibil ities . I f I were
14
secretary o f a corporationand was notified of a transfer of partly paid stockto which the company refused consent, I would merely
“note” the fact
'
on
the original subscriptionand on SubscriptionAccount onmy Stock ledger.Then i f a dividend were declared or other proceedings takenwhich involvedthe ownership inthe rights and benefits accruing to that stock I should refuseto pay that dividend or take any other action in the matter unti l the questionof ownership had been decided by the courts. Should the directors ( orofficers having authority) order any different course I would obey orders,but should make the books and records show clearly not only what had beendone, but that it had been done
“by order.”
The books o f account inthe case under considerationare opened exactlyasExample 1 , when Stock ledger is used, i . e. , treasurer is charged w ith allmoney received on account of capital stock and Paid- up Capital credited .
The remarks as to payment of stock subscriptionby transfer of propertyor things other than cash, in discussing Example I apply w ith sti ll moreforce to Example No . 2 . Because it is of evengreater importance to makethe records show clearly exactly when and how payments are made on subscriptions and how much is sti l l
“subject to cal l and who is responsible orl iable when such “cal ls” are made. The uncal led and unpaid subscriptionsare considered by the banks and other creditors as anadditionto the responsibi lity o f the company over and above its actual present assets. Theyoperate as an endorsement or guaranty by each subscriber to the amount ofhis unpaid subscription, o f the indebtedness of the company.
CHAPTER V .
a. a.
Illus trations of Opening Entries .
4 . 4 .
ANOTHER M ETHOD.
0 M ANY book- keepers of experience and skill inpartnership accountingfind themselves utterly at sea whenconfronted with the task o f openingthe books of a private corporation that a word in that connectionmay
prove of use to some readers . Al l the ordinary books of account being thesame in corporations as inpartnerships, it is only necessary here to treat o fthose recording the transactions in capital stock, and it is presumed that afew simple suggestions w ill suffice.
The capital stock of a corporation is fixed insome instances by the charter which gives it existence, in others by the corporate Officers . In eithercase, after the amount is once fixed, it cannot be changed w ithout authorityof the state . It therefore follows that the “Capital Stock” account in theledger
,as representing such fixed amount, should itsel f stand unchanged
either during the entire existence Of the company, or unti l an amendedcharter authorizes its increase or decrease.
The book- keeper must inform himsel f first,
as to the amount of theauthorized capital stock
, which information he can obtain from the record
(or minute) book, which should always containa copy o f the charter and the
15
resolution under which it was accepted as such by the corporation.
We w ill suppose that, either by charter or resolution, the capitalstock o f the Wilkins M anufacturing Company” has beenfixed atto be issued inshares o f $10 0 each . By such charter, or resolution, a latentvalue has been created, which , unti l disposed o f, rem ains in the treasury o fthe company. These facts are recorded by the first journal entry
, as follows :Treasury Stock 00
To Cap ital Stock . 00
w ith suitable reference to authority. The writer does not propose, hereand now, to discuss the objections which some accountants urge against thisform o f opening, but confines himself to the statement that inmany yearso f experience, w ith numerous corporations, he has found it the s implest andbest .
It is usual,immediately upon organization, to determine by resolution
how the stock shal l be disposed o f. I f subscriptions thereto are to be taken,
the incorporators m ay decide whether such subscriptions are to be paid atone tim e,
'
or in installments,and uponwhat terms ; o r they may depute that
power to the next board of directors . We w il l presume that in this instancei t, is decided that 25 per cent shal l be paid November I , 1897, 25 per cent in‘
two months from that date, 25 per cent four months later, and the remainderwhen called for by the board o f directors ; and that business may be comm enced whennot less than shal l have been subscribed .
A subscription l ist i s thenopened in form as follows, and we wi ll suppose signatures , etc. , to be secured as thereon entered :
Nam e and Ad d res s NO . o f Shares Am o unt
Sam uelJohnson Tenn
{SbnSh1eld sIn. Co le
Wm .
M .
C .
SU B SCRIPTION LIST.
We,the undersigned , severally subscr ibe to the capital stock o f the
Wi lk ins M anufacturing Company in the am ounts and fo r the number ofshares set opposite our respective names , and agree to pay fo r the same asfollows : Twenty- five per cent Novem ber I , 1897 ; 25 per cent January I ,
1898 ; 25 per cent M ay I , 1898 ; and the remainder when cal led fo r by theboard o f directors .
It is resolved now to commence operations, as we have subscribed . The l ist, being o i the utmost importance, is carefully preservedand the next journal entry fo llows :
Sto ck Subscr iptions 00
To Trea sury Sto ck 00
with a l ist o f subscribers and am ounts . By th i s process we have disposed o fo f the stock ; rem ains in the treasury for future disposition,
and the capital stock remains properly at
It is advisable to keep a sm al l subs id iary led ger with the subscr ibers ,credit Stock Subscription account in the general led ger , with al l paymentsthereon, and credit the individ uals in said subs idiary ledger. Almost any
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holders ; and that a corporationhaving no capital stock is called a non- stockcorporation”
and that its component parts are called members . It is evident,therefore, that a corporationmay exist without having a capital stock.
The capital stock of a corporation is the amount, inmoney or property,subscribed and paid 111
, or secured to be paid m,by the stockholders . The
amount o f capital stock,the number o f shares into which it is divided, and
the par value of each share are determined uponby the original subscribers,and embodied in the articles o f association, and the amount o f the capitalstock so fixed remains invariably the same
,unless changed by the stock
holders in pursuance o f legislative authority. The directors who are tomanage the affairs o f the corporation for the first year, or unti l theirsuccessors are elected, are named concurrently w ith the fixing of the amountof the capital stock
,and it follows that they could not have had any voice in
the fixing o f the amount of the capital stock, nor can they subsequently, byresolutiono r otherw ise, increase or diminish or inany w ise vary the amountof the capital stock as set out in the articles of the associationwhereby thecorporationwas created. The powers of the corporationbeing in the boardo f directors , it can, however, take the initiative and cal l the stockholderstogether for the purpose of deciding whether or not the stockholders deemi t desirable to have a change made m their original holdings m the corporation; the law 1n such case made and provided, must be closely followed, andi f any change is made in the capital stock, notice to the world must be g ivenby the fil ing, in the offices where the original articles of association werefiled, of a certificate o f such change. The capital stock o f a corporation isconsidered as a substitute for the personal liabil ity of the individual memberso f a private co - partnership, and the law implies a promise onthe part o f thesubscriber to pay its par value whencalled for.
Capital stock therefore differs from capital in these particulars :( 1 ) That it remains invariably the same as fixed by the articles of
association, unless changed by legislative authority ; and ( 2) That the termcapital stock is never properly used to indicate the value of the property ofthe corporation.
The capital of a corporation is the estate, whether in money or property , or both, at its actual value, owned by the corporation, and is subjectto fluctuation; in other words, it is the investments of the stockholders inthe corporation, together w ith the gains and profits realized from such investments ; or , i f there have been losses, then the capital is the residue, afterdeducting such losses from the investments.
The ownership o f the capital stock is inthe stockholders, but the ownership o f the property is in the corporation; and all o f the stockholders cansell al l of their stock to other persons, but all of the stockholders , jointly orotherwise
,could not transfer the corporate property. The stock need not
be sold precisely at par ; it may be sold above or below par, and is morefrequently sold below than above. InCal i fornia the right o f a corporationto sel l its stock at a price less than par and to receive the contract price infull paym ent is anestabl ished proposition.
Where the capital stock has not beenpaid in full , resort is had to assessments to provide funds for the corporation. Two kinds of assessment arerecognized by law ; one, on account of unpaid subscriptions ; the other, forthe purpose of rais ing money to pay debts. InCal i fornia, the latter kind of
18
assessment may be levied notwithstanding the subscription price has beenactually paid in fu ll . And the fact that certificates o f stock have printed orwritten thereon,
“Fully paid and non- assessable,
” does not waive the righto f the corporationto make assessments . These words are construed to meanthat no assessment w il l be levied onaccount of the deficiency in the subscription price ; as otherwise, the courts have held, a corporation, at the verybeginning of its existence
,wou ld be voluntarily depriving itself of th e only
means of protection afforded it in the rais ing Of money other thanby loans .
The laws o f many of the states, and the by - law s made in pursuance o f'
such state laws, provide that each director, as a qual ification for office, shallhold one or more shares o f the corporation, the object being that the affairsof a business corporation shal l be entrusted only to those having a pecuniaryinterest in its wel fare
, and conservative corporation managers are carefulto see that each director, incase he is not already a stockholder, shal l have acertificate for the proper number of shares, issued to him upon the very dayand date that he becomes a director. The directors named inthe articles ofassociationmust be so qual ified .
CHAPTER V II.
4 . 4 .
The D istr ibuti on of Div idend s .
T THE end of the fiscal year, and oftener i f required, the net result ofthe business is ascertained in the manner used in
’ “closing the books”
of any bus iness . It is desirable to take more thanusual care invaluingboth the property and the accounts receivable of a corporation, because mosto f the states make directors who assent to dividends which have not beenactually earned, personal ly l iable to the creditors of the corporation. Assetso f a corporation which have been distributed among stockholders so as toleave an amount insufficient to pay l iabil ities may be pursued into the handso f the holders by creditors of the corpo ration. Some corporations set asidefrom the apparent profits o f the current year a s ink ing fund to provide foraccounts receivable, which may afterwards prove to be uncollectable eitherinwhole or in part. When this has been done all accounts discovered to be“bad” during the current year (but which were left on the books by the lastpreceding “balance sheet as good or even doubtful ) are charged to thesinking fund . By this means each year’s business is made to take care of itsownbad debts only. Al l these details are strictly w ithin the province of theboard o f directors , who are legally responsible for the management and theaccountant only carries out its orders, and only makes entries of this kind byits direction. A balance sheet showing the gains and losses o f the year’sbusiness and the net resu lt of the same, also such trade statements as arerequired
,giving the fullest possible information o f the sources and causes
of those gains and losses, should be prepared by the book- keeper and sub
m itted to the board o f directors . The board by formal resolutionmakes suchdisposition o f the net gains as it thinks best . The usual course, after first
providing for doubtful assets and such other s inking funds as the case
19
requires, is to direct the balance of the gains to be carried to surplus or“rest.” This account, by whatever name it is called, represents the undiv i ded earnings of the “paid up capital .” These earnings are distributedamong the stockholders by the directors at such time and in such amounts asthe directors, by resolution, order.
This order of distribution is called declaring a dividend, and is gen
erally in the discretion of the board o f directors . ’ The accumulation o f a“surplus fund is usual ly thought good business pol icy
,and for certain
classes o f corporations is required by law . There are many very successfulcorporations whose “surplus fund” largely exceeds their “capital stock .
”
D ividends must be equal uponal l shares of stock of the same class and without preference . I f the corporation has issued preferred stock
,those shares
constitute a class by themselves and are by the terms o f the preferenceentitled as a class to dividends in preference to shares of com mon stock.
But as between holders o f stock o f the same class there must be no discrimination and funds set aside for dividends upon any class of stock must beevenly divided among the holders o f that class o f stock according to thenumber o f such shares each holds. Dividends are either a named sum pershare or a named percentage on the “paid up capital .” When the board ofdirectors have declared a dividend, whether payable at once or at a futuredate, the book- keeper transfers the amount required to pay it from surplus”
to“dividend” account by an entry as follows :
SurplusD ividend account,
Fo r d iv . No . per share.
Dividends whendeclared or ordered become at once a debt due from thecorporation to the ten owners of stock without reference to the ownershipat the time the profits were actually earned or at the time the dividends werepayable
,i f payment is deferred . The corporation is protected in paying
dividends to stockholders o f record on the day dividends are declared, w ithout requiring production o f the certificate o f stock, but it is probable that apurchaser after the transfer books were closed and before dividend wasdeclared
,would be entitled to collect a dividend in the absence of any agree
ment that the sale was “ex - dividend,
” provided he notified the corporationofhis purchase before the dividend was actual ly paid to the stockholder ofrecord.
Dividends are usual ly paid by special dividend checks or orders on thetreasurer
,payable to the order of the stockholder of record . They may,
however,be passed to the credit of the individual stockholders or paid inany
other convenient manner. Inany case the amount paid is charged to“divi
dend account” and credited to the source o f payment. Should there be morethanone class o f stock, that fact is recognized in the resolutiondeclaring thedividend by stating the amount to be paid oneach class, and the book-keepermust have as many dividend” accounts as these classes o f stock uponwhichdividends are declared, distinguishing them by appropriate names .
Since the method of distributing or disposing of profits is the only praetical difference between the books o f account o f a corporation and those ofa natural personengaged inthe same business any further d iscussronof suchbooks seems superfluous.
20
In taking the trial balance of the J. F. Robins ledger, draw off monthlydebits, monthly credits and the balances , and foot all three columns. Then,i f the total o f the individual balances does not amount to you can
see at a glance whether your total debits posted are and your totalcredits That means that ninety-nine times out of a hund red whenthere is anerror it canbe located to the side onwhich it occurred, which is atremendous advantage.
The principle above outl ined canbe successfully carried out inany business with mani fest benefit. Inenterprises o f considerable magnitude it wi llfrequently be found convenient to have separate cash books, sales books, etc. ,as the use o f columnar books in such cases w ill necessitate books of anunwieldly size.
The accounts may be sectional ized inmany ways as may be found mostsuitable to the requirements of the business. Some houses sectional ize territorially, as : New York ledger, Pennsylvania ledger, Ohio ledger, etc. , etc.Some sectional ize alphabetical ly, as A-F ledger, G-K ledger, L—R ledger,S-Zledger.A very frequent sectionalization is by departments, as Wholesale
Ledger, City ; Wholesale Ledger, Foreign; Retail Ledger, etc., etc.Where sales tickets are used it wi ll be found useful to have different
colored tickets for each section.
Where there are a number o f sections it is also found useful to carry theseparate adjustment accounts in the general ledger, and group them in theprivate ledger for the benefit o f the principal, or officers o f the company,thus
Fo lio . Debits . M o . Debits . Dr. B alance.
M ar. 31 . BalancesN . Y. ledgerPa ledgerOh io ledger
Apr i l 30 . JournalN . Y. ledgerPa. ledgerOhio ledger
CashN . Y. ledger 475 35Pa. ledgerOh io ledger 96 50 60
BalancesN. Y. ledgerPa. ledgerOh io ledger1900 .
Apr i l 30 . CashN Y. ledgerPa. ledgerOhio ledgerJournalN . Y. ledger 178 75P a. ledger 178 652 80Ohio led ger 180 678 25 89
Fol io . Cred its. M o . Cred its.
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CHAPTER IX .
1. a
The Trans fer of Accounts from P artnerships to Corporati ons .
4. 4 .
NY book-keepers who are otherw ise entirely competent appear to beafraid to take charge o f the detai l pertaining to the transfer o f
accounts from a partnership to a corporation. We are not referringnow to large interests , or trusts whose stock is open to public subscription.
We have in view merely a small commercial concern, rated in Dun’s at
the two proprietors of which w ish to introduce additional capital0 inorder to extend their business.
There is no questionof stock ledgers, or subscription ledgers, preferred
and common stock, debentures or bonds, or anything of that kind .
As anexam fle we wi l l take the incorporationo f the firm o f SchneiderSchroeder, who have arranged with M r . Schuettler that he should invest
in the bus iness, taking an active interest w ith the position of v icepres ident .
The balance sheet of Schneider 81 Schroeder onDecember 31 , 1898 , was
as follows :CashB i lls ReceivableAccounts ReceivableInvento ryReal Estate
A. Schneider, investm ent
B . Schroeder , investm ent
B i lls Payable, investm ent
Accounts Payable
43
Thenet assets o f the partnership were therefore The new
com pany was organized w ith a capital o f the stock to be subscribedas follows : A . Schneider, $2 B . Schroeder, C. Schnettler,$3 The company was incorporated under the name o f The SchneiderSchroeder Co .
”
A new set of account books was purchased for the new company andthe first entry made was as follows in the journal
Subscri tion Acct 00
To apital Acct . 00
This entry records the fact that the company was incorporated wi th acertain capital, and that the stock is waiting to be subscribed.
It was preceded by the follow ing explanation:“The Schneider 81 Schroeder Co . Incorporated under the laws of the
State of I st January, 1899. Authorized capital, 750shares, par value $100 each .
”
M essrs . Schneider, Schroeder and Schuettler having subscribed for250 , 150 and 350 shares respectful ly, the follow ing entries were made in thejournal
B . Sch roeder, Dr . , 150 shares $100 00 eachA . Schneider , D r . , 250 shares eachC. Schuettler , D r . , 350 shares $100 00 each
To subscr iption account, cr
28
The stock havm g all been subscribed the subscription account i s Closedand the subscribers are charged w ith the value of the stock for which theyhave subscribed .
At a m eeting o f the board o f directors o f the new company it wasresolved to purchase the business o f Schneider Schroeder at the par valueo f its net assets . A bi ll o f sale is accordingly drawnand the following entriesmade in the journal as a record Of the purchase :
“To transfer o f the business o f Schneider Schroeder ( consisting of
sundry assets and l iabi lities as hereunder shown) by bil l of sale dated I st
January, 1899, duly executed and acknowledged, and pursuant to a resolution o f the board o f directors at a meeting held on the first day o f January,1899, and entered on the minutes, pages 2 and 3
CashB i lls ReceivableAccounts Rece ivableInvento ryReal EstateTo B i lls Payable 00
Accounts Payable 60
Schne ider 8: Schro eder 83
In the meantime M r . Schnettler has paid by check for h i s stock, thereceipt o f which is du ly recorded inthe cash book . It is notnecessary to passChecks betweenthe o ld bus iness and the new,
as the following journal entriesw i ll ful ly answer the purpose :
Schne ider Schro eder . 83To A . Schne i d er , stock acct . 00
B . Schro eder , sto ck acct . 00
A . Schne ider , personal acct 50
B . Schro eder , personal acct 33
To pay for stock subscribed by A . Schneider and B . Schroeder inTheSchneider Schroeder Co . , and to transfer the balance o f the credit toSchneider Schroeder to their respective personal accounts as authori zedthis day by the said A . Schneider and B . Schroeder .
The balance sheet o f the new company w ill now show as follows :
ASSETS.
B i lls Rece ivableAcco unts ReceivableInvento ryReal Estate
143
LIAB ILITIES.
Cap i talB i lls PayableAcco unts PayableA . Schnei d er , personalB . Schro eder , personal
43
The closing o f the books o f the o ld company is a very simple matter.First , credit asset accounts w ith amounts o f balances o f such accounts,
Debit trade l iabi l ity accounts with amounts o f balances o f suchaccounts, Debit Schneider Schroeder with the d ifference
24
and preferred stock subscribers—at a Special general meeting called for thepurpo se. Or, i f the sanctionof all the shareholders is Obtained inwriting tothe by
- law passed by the directors, the necessity of a special general meetingis obviated . The latter course was w ith us the easier, and was the one pursued . The preferred stock carries with it the privilege o f a fixed, cumulativedividend of 6 per cent, which, inplainAnglo- Saxon
,means that dividend o f
6 per cent shal l be paid annually upon the preferred stock out o f the netearnings o f the company, before any dividend canbe declared upon the comm onstock, and i f inany year there is insufficient profits to pay the 6 per cent,then the amount required to make up the deficiency shall be a first chargeuponthe net earnings o f the follow ing year’s business . Whenthe ful l amounto f the dividend on the preferred stock has been provided for annual ly, thenany balance o f net earnings wil l be appl ied toward the payment o f a dividendon the common stock up to 6 per cent. Should there sti ll remain any undivi ded profits, it can either be divided pro rata over both the preferred andcom mon stock
, or be placed to the credit of a reserve account out o f whichfuture dividends may be paid . In the formation o f the larger corporationor trusts, those
“judicious combinations of capital” o f which we hear somuch , provision is generally made that before dividends are paid to thecommon stockholders, a certainamount shall be annual ly paid into a reserveaccount, which w i l l stand as a guarantee that the holders o f preferred stockwi ll receive their stated dividends as regu larly as the years roll by. Thisprecaution is generally taken by the controll ing interest—usually the preferred stockholders—who care very l ittle for the poor common stockholders .In the case I am discuss ing, with one or two exceptions, the preferred andcommon stockholders are identical, so that the interests o f the one class arethe interests o f the other.
The opening in the journal of the new company for the preferred stockis as follows :
Sundr ies , D r
Capital stock, preferred 00
Tho s . Jones , 50 shares 00
Dav id Harum , 100 shares 00
Richard Carvel, 40 shares 00
R. L. Stevenson, 50 shares 00
E. H . Beach , 160 shares 00
It w il l be observed that no attention has been paid to the fact that theauthorized preferred capital stock is In the majority o f works onaccounting, espec ial ly Am erican, the entry would be something l ike this
Subscr iption 00
Treasury stock (preferred) 00
Cap ital stock (preferred) 00
To my mind anentry inthe books showing the am ount of the authorizedcapital is totally unnecessary, besides being misleading to the publ ic havingbus iness w ith the company. The unsubscribed or treasury stock, as it iscalled , has no value whatever as an asset of the company . It is not an assetinany sense of the word . Its only value is one of availabil ity for subscriptionin case it be found necessary to interest an increased capital in the bus iness.Placing an account with such a high sounding title upon the books and inthe annual statem ents o f a company, canonly have the effect o f deceiv ing theunsophisticated and those not fami l iar w ith accounts, and serves no usefu l
26
purpose whatever . The subscribed, or paid-up capital of the company is allthat the publ ic w ishes to know anything o f, and no entry should be made inthe books which would in the sl ightest degree becloud the real facts. One
authority suggests “that the charter or act that brings into being the corporationalso creates value, or a latent value, inthe shares o f stock authorized bythe company.
” The latent value o f a mil lion dollars worth of unsubscribedstock w i ll not pay one dollar o f the liabil ities, unless a purchaser o f thatstock canbe found , and to say
“that the principles o f accounts and the logicof ethics both permit the debiting of treasury stock to represent unsubscribedstock,
” is beating his Satanic majesty around the bush ina manner for whichI Should not care to assume the responsibi l ity. The only kind of stock thatcan be truthfu lly term ed “treasury stock” is where stockholders return acertainnumber of shares o f the company (which they have already paid foreither in cash or by transfer Of property) into its treasury to be sold again,for the purpose o f providing a working capital .The next entry in the journal 1s
Sundr ies , Dr
Capital stock, com m on. 00
Thos . Jones , 30 shares . 00
David Harum , 133 1-
3 shares 00
Richard Carvel, 13 1- 3 shares 00
R. L. Stevenson, 26 2-3 shares 00
Robt. Thom son, 66 2-
3 shares 00
Adam Hope, 30 shares 00
D iscount upon shares i ssued 7 500 00
In the case o f the common stock, it was decided that of the authorizedissue, should be Offered to the preferred stockholders at $75 pershare, the nature of the business being such that although dividends wouldbe earned, none wil l likely be paid to the common stockholders for the firsttwo or three years . And here comes in another o f those anachronisms inaccountancy literature. In a well-known text book a discount on stock istreated insuch a way that the follow ing would be the entry :
Subscr iptionWorking capitalCapital stock, com m on (o r treasury stock) . 00
Why the discount on shares is debited to Working Capital is beyondm y apprehension. The author says that many book-keepers “feel justifiedindebiting Loss and Gainaccount instead o f ‘Working Capital,
’
and pointsout that the company does not practically, or otherw ise, lose anything by
.
thetransaction
, and therefore that it is not properly a charge to Lo ss and Gain.
In this he is right. But why debit Working Capital? It is not anaccretionto capital or assets of any sort . On the contrary, it real ly represents a loss,to the extent that the capital actual ly invested must earn a dividend not onlyfor itsel f but as wel l for the of rebate made on the stock. It soundsbetter, I presume, and really this is the only excuse or justification that itseems to me can be offered for debiting “Working Capital” rather than“Discount onShares Issued” or “Rebate onShares Account .” For my ownpart, I prefer to call a spade a spade. As a matter o f fact, according to thestatutes of Ontario there is some question as to whether stock ( except m ining companies) can be sold at a discount, and in case o f forced l iquidation,it is po ss ible that holders of stock bought at a discount might be successfu lly
placed upon the list of contrib utories in a wind ing up proceed ing, to theextent o f the amount o f discount so al lowed .
Capital account having beencredited w ith subscriptions, and the personssubscribing having been debited , we now proceed to a consideration of thetransfer o f the assets of the business . An inventory of the real estate, plantand merchandise having been takenunder the supervisionOf a com mittee ofthe directors o f the new company, and an arrangement arrived at as to theamount o f stock to be taken by the respective partners, the question o f the
l iabil ities of the partnership was next to be dealt with. Here, too, I recom
mended a departure from the ordinary mode of procedure. Instead o f thecompany assuming any of the liabi l ities o f the partnership, I arranged thatthe amount which was to be paid for the assets, less the stock whichWas to betakenby the partners, shou ld be paid to a trustee, who should be authorizedand empowered to pay off the partnership indebtedness according to a listto be furnished him by the partners. This proceeding materially s im plifiedthe book-keeping connected with the transfer, and the only entry requiredto get the assets on the books o f the company was :
Real estatePlant accountM dse. account
J. H . Brown 81 Co 00
O f the amount o f credit of J . H . B . 81 Co . , was to be paid overto the trustee, and this was accompl ished by an entry :
J . H . B rown 8:Co . 00
Henry Jones , trustee . 00
Fo r transfer o f account to cover liabi l iti es o f J. H . Brown Co .
Of the above one creditor agreed to take preferred stock for hisaccount of hence the ensuing two entries :
Geo . Johnson 00
Ca ital stock (preferred) . 00
or 50 shares o f preferred stock.
Henry Jones , trustee .
Geo rge Johnson 00
Fo r preferred stock taken in exchange fo r notes held agam st
partnersh ip .
To close the account of the partnership by exchange of stock for theequity of the partners in the assets of the partnership, this entry wasnecessary
J H . Brown 81. Co 00
J H . BrownE. B . WardT. BurnsCap ital stock (com m on) 00
As payments were received onaccount of stock, cash was debited, whilepayments to the trustee were credits to Cash .
The book debts of the partnership were divided by mutual consentamongst the partners.Thus
,very Simply and expeditiously, was the conversionOf the partner
ship to a joint stock company effected.
28
Such shares arenot responsible to the cred itors of the Company to the extento f the discount so allowed, should stress o f circumstances make such arecourse necessary.
No question arises as to how the discount on shares is treated by theoriginators of a mining com pany.
The usual course is to value the mining property at the par value of thecapital stock, be it or The capital stock having beendivided among the promoters according to their interests, the first entrywhich finds its way into the books o f the mining company w i l l read :
The Go lconda M ine 00
Capital stock 00
The above wi ll be po sted to the general ledger, whi le the stock ledgerwi ll contain details as to the holdings of stock by the promoters .Cash being required now to develop the property, the usual course is to
make a returnto the treasury o f a sufficient amount of stock to be sold to thepubl ic to provide the necessary working capital .
Let us suppose, for purposes o f i llustration, that o f the holdings Of the promoters is returned by them to the treasury. Then:
Treasury stock 00
Wo rking cap ital 00
So far so good. Of course the disposal o f the stock at par value is outo f the question, and it is placed upon the market at, say, 10 cents per share,realizing incash
The entry which covers the transaction usually runs as follows
Cash 00
Wo rking capital 00
Treasury stock 00
In this case stock is presented to the company o f an alleged value ofand it is perfectly legi timate and proper when, at the disposal of
the stock,it is found that it has been overvalued, that the loss arising from
the sale shou ld be charged back to the account inwhich it originated . The
questiono f the discount on shares issued is, in the case of mining com paniesorganized upon this plan, thus eas ily disposed o f.
L aus now take the case of a company formed for the purpose of purchasing a mining property. The property can be purchased forcash . The capital stock ( authori zed) o f the company is placed atin shares o f $1 each .
Of these the promoters take 4 shares at 10 cents each, thus realizing the needed to purchase the property.
How is this to be got upon the books o f the company? In the naturalorder of things the entry would be :
CashD1scount on sharesCapital. stock, subscr ibed 00
The directors decide now to sell of the $1 shares at 25 cents onthe dollar to provide a working capital o f They succeed in doingthis, and thenwould follow the entry
CashD 1scount on sharesCapital stock, subscribed 00
The balance of shares is left unsubscribed, or, as the literaryaccountants delight to cal l it, as
“treasury stock.
”
By the above treatment of the subscribed capital stock you have a plain,unvam ished statement upon the books as to the position of the company inrespect to its capital .
An account in the ledger must necessari ly be Opened for the DiscountonShares,
”and the query is as to how this Shal l appear inthe balance sheet of
the company.
To my mind, there are several ways Of treating it. The object Of showing the amount of subscribed capital stock in the balance sheet is to furnishinformation as to the value uponwhich dividends are being paid. The fact
O u r-s
pin.
M onS lant
that there is an account upon the books of the company knownas'
Discounton Shares” does not affect the company’s credit adversely, while to carrythe account under the heading “Working Capital” wou ld be to deceive thecreditors Of the company. How is the average individual who studies thebalance sheet Of the com pany, finding thereon on the asset side an entry
Wo rking capital 00
to know that such is not an asset at all , but merely a fictitious accountintended to give the company an appearance Of substantiality which it lacksentirely—although, as a fact, the concern may be perfectly solvent andhealthy?
I think the preferable way to dispose of the item is to cal l it what it reallyis inthe balance sheet, but to make a subdivis ionOf the statem ent as betweenthe capital and trade assets onthe one side and the asset knownas “WorkingCapital (discount on and on the l iabi lity side a simi lar divisionas
between trade l iabilities and the l iabi lity on capital account .Another way o f treating it, keeping it in the usual
“report form o f
balance sheet, wou ld be :Assets
M ines account 00
M achinery account 00
Ores in dum p 00
Cash on hand 00
00
00
00
00
00
Surplus00
31
CHAPTER XIII.
.1. .1.
The Treatm ent of B onus Account.
NTHE organizationof a corporation it is o ften the case that the originalincorators desire to pay for their stock otherwise than incash money. In
order to meet the diffi culties presented by this situation such accounts asgoodwi ll, bonus, franchise, etc. , are opened on the ledger and represent whatthe company has received for its shares o f capital stock in the way o f cons i derations other thanmoney or tangible assets. Let us consider some specialcases . A company is organized w ith a capital Of and the promoter isto receive for his services fifty Shares of the capital stock at a par value of$10 0 per share. The usual entry is Bonus to Capital Stock or Bonus toTreasury Stock
,Bonus is thus carried as an asset on the books Of
the company, whereas, as a matter o f fact, Bonus is an expense account pureand simple. Inthe organizationOf the company the serv ices o f the promoterare just as necessary and legitimate as the services o f an attorney or an
accountant. For such services the com pany may pay in one or four ways .It may pay incash
, or it may give the promoter credit onOpen account, or itmay give its promissory note
,or it m ay give a certainnumber of shares Of its
capital stock. The first three methods Of providing for a claim are fami l iarand need no Special discussion. The fourth method, which is the one usuallyadopted, seems to present some difficulty. The first po int to be made clearis that this is a perfectly legi timate mode o f paying the promoter for hisserv ices rendered . It is true that this method may be abused . The promotermay receive a great many more shares thanhe is entitled to . But so may anyother method o f payment be abused . The paym ent by way of shares in thecom pany stock is the most equitable in that the value Of the payment isdependent uponthe future success Of the company. I f the company succeedsthe promoter may
,i f he Chooses
,sell out his shares and thus turn his stock
payment into cash money. For the company the stock payment is the moreadvantageous in that it does not requ ire the outlay of cash money and ispractically a l ien only on possible profits . From the point o f view of theaccountant the diffi culty is to make a proper disposition o f the “Bonus”
account . The entry “Bonus dr . to Treasury Stock” is simply a Short way o ftelling a long story . An accountant understands at once from the entry andfrom the brief explanation in the journal exactly what has been done, but itis not always so plain to the general publ ic . It is said that “Bonus” appearsas an asset o f the company when
, in real ity, it is not an asset at all . It ismore correct to say that as against the creditors of the company it is not anasset and is not intended to be stated as such. but as against the stockholderso f the company it is an asset . In settl ing w ith its stockholders the companymay use the Bonus account as anasset to offset its liabil ity onaccount Of thecapital stock, or to Offset its l iabi lity onaccount of any undivided profits . Ifthere are no undivided profits . then the capital stock i s impaired to the extento f the Bonus account . I f there are undivided profits exactly equal to theBonus account then in settl ing w ith the stockholders the company w ill offsetits l iabi l ity on account o f capital stock by the amount o f the Bonus account.
32
The principle involved is to make a contra posting for every item postedto the ledger to be balanced, but to make such contra postings in totals andnot in detai l .
This necessitates separate books Of original entry for each ledger, orseparate columns, the latter being the planmore generally used .
NEGATIVE ACCOUNT.
—An account which reduces the value o f someother account . Thus treasury stock is a negative account to capital ; returnsis a negative to sales.
COM PARATIVE FIN AN CIAL STATEM ENT.
—A com parative financialstatement exhibits totals o f purchases, manufacturing expense, generalexpense, output, sales, etc. , at stated successive periods, thereby securing acom pari son Of cost Of production, gross profit, and sel ling expenses onamount of turnover, and facilitating the detection of excessive charges forlabo r
, or decrease o f efl‘i ciency inother departments Of the business.
1h
FIXED AssETs .—Fixed assets are those which form a permanent and
essential part Of the business carried on, such as real estate, machinery, landand plant Of a mine, roadbed and roll ing stock Of a rai lroad , etc . They aresubject to apprec iation and depreciation.
41 41 4!
FLOATINGASSETS.—Floating assets are those which vary from day to
day from sale,realization, or exchange, etc . , such as stock- in- trade, cash,
accounts and notes receivable, land o f a real estate company, etc.
4!
SPECULATIVE AssETs .—Speculative assets are those which fluctuate in
value from day to day—such as stocks, bonds, and“futures” in different
kinds o f products dealt in by the Exchanges .Such assets as patent rights, goodw il l and advertising devices are more
or less specu lative, the latter Often losing its entire value the mom ent abus iness is suspended or closed out .
A A
BALAN CESHEET—A statement Of actual assets and liabi lities at a givendate designed to exhibit the financial conditionof a business . It consists Ofthe balances o f assets and l iabil ities accounts extracted from the ledger afterinventory has been taken and the nominal accounts have been closed intoprofit and loss, and o f outstanding resources or l iabil ities not included in thebooks o f account.
The excess o f assets over l iabil ities represents the profit made by theOperations Of the business during the period covered by the statem ent ; theexcess o f l iabi l ities over assets represents a loss . This surplus, or deficiency,i s the balance Of the balance sheet
, and must agree with the balance of thecurrent profit and loss account.
Items such as “surplus,
” “reserve,
” “undivided profit , etc. , havingseparate accounts in the ledger , are in real ity sections Of the balance sheet,and should be classified accordingly.
34
The components Of a balance sheet are, inour opinion, best classified asfollows :
Assets—Cash and property, personal, specu lative .
Liabi li ties—Negatives to property, personal, proportion of wages,taxes, etc. , capital, reserve, profit and loss.
i s at:
TREASURY STOCK—C apital stock unsubscribed, or of which a corporation has acquired possession from its original owners. Stock set aside forsale in order to raise working capital .
at: =1= at:
RESERVE FUND.—Anam ount set aside out of profits to provide against
unforeseen contingencies.A sum set aside to provide for depreciation o f specified assets is con
sidered a charge against assets, and as such , shou ld be deducted on thebalance sheet from the amount o f the assets involved .
i ll
SIN KING FUND.—An amount set aside to provide against anticipated
losses on redemption Of debentures, expiration of leases, etc ., and Speciallyinvested. Whi le, therefore, a reserve fund appears among the liabi l ities andis simply a po rtiono f the surplus o f assets over l iabi l ities, a s inking fund asan investment is anasset and is so shown on the balance Sheet .
The sums so set aside and invested should be sufficient, w ith interest, toamount to the total outlay the sink ing fund is designed to cover.
a:
SUSPEN SE ACCOUNT.—A summary account to which are transferred
the balances Of doubt ful accounts from the customers’ ledger, and inwhichaccount they are retained unti l such time as they canbe definitely disposed o f.In this way they are not lost sight of, and can be estimated in the balancesheet at their proper value.COM M ON STOCK .
—The ordinary stock of a corporationonwhich dividend s are paid from the surplus earned .
a: a:
PREFERRED STOCK .—A special stock issued on which a specified divi
dend is guaranteed and which dividends must be paid prior to the holders o fcommon stock receiving any distribution from the profits of an enterprise.Where a business is very prosperous common stock may be a much morevaluable investment than preferred stock, as it may receive larger dividendsaccording to the increase o f profits avai lable for distribution, whereas, preferred stock cannever receive more than the specified percentage.
a: a:
CUM ULATIVE PREFERRED STOCK—Preferred stock which is entitled toall arrears of unpaid dividends prior to any distribution Of profits amongthe comm on stockholders.
4:
NON -CU M ULATIVE PREFERRED STOCK .—St0 ¢k the holders of which
lose any unpaid guaranteed d ividends which the earnings of a company wereinsufficient to pay at date of paym ent.
85
DEFERRED STOCK—It sometim es happens that some portionOf stock isissued on the understanding that it shal l receive nothing from the profits ofa bus iness until after the common stock holders have been paid a dividendOf a certain amount , after which deferred stock shall participate .
FULLY PAID NON -ASSESSAB LE STOCK .—St0 ck the face value o f which
has beenpaid by the holders on the agreement that it shal l not be as sessed bythe Officers of the company for any purpose.
i t i t
WATERED‘
STOCK .—\Vhen a corporation desires to evade its State or
M unicipal tax or other Obligations by reducing its show ing of profits, itreorganizes w ith an increased capital stock
,arbitrari ly increasing the values
o f its assets to correspond. By this means the percentage of profits on
capital invested is apparently reduced and the stock is “watered.
l it 4!
FUNDED DEB T.—A liabi lity or l iabilities secured by bonds. Unlike
debenture bonds these bonds are themselves secured by mortgages or equal lysubstantial security.
WORKING CAPITAL is the a mount avai lable to provide the necessaryexpenditures for running the business. This amount may consist of
a. Capita l stock subscribed and paid .
b. Capital stock sold by stockholders to raise cash.
c. Dividends or surplus undistributed.
(1. Part o f purchase money of business al lowed to rem ainunpaid.
e. Loans from banks or otherw ise.I. Proceeds o f accommodationnotes .
g. Assessment on stockholders.Etc , etc.
DEB ENTURES are unsecured bonds issued for sale for the purpose ofsecuring working capital , and interest on same is a first charge onprofitsthat is
, ln priority to preferred or other dividends .
ACCOUNTING SYSTEM S
FOR THE
Wholesale Grocery and Hardware B us inesses .
The system given below is designed for a house with a business of amillion a year. I have made it for a large bus iness, because I think it isan easy matter to fit a planwhich covers the operations of a large concernto the needs o f a smaller one. Fo r instance
,if the business only required
one debit or sales ledger, the posting would be made direct from the salesbook . There would be no journalizing o f sales at all . The reason forjournalizing is that in this business there are four ledgers
,it is necessary
,
in order to be able to balance separately. We will beginwith the original
s n ap—g u m MWE R N ED Gr C O .
order or sales ticket,as it is also called . (See Fig. I .) This is a ticket
which is made out by the salesman taking the order . It goes direct tothe credit m an, who , if the customer is good for it ,
“passes it by puttinghi s initial o r private mark on it .
From the credit m an the ticket goes to the head salesman. He checks theprices and sends it to the bi ll offi ce. This office is divided into two departments—c ity and country. Each department takes their orders and copiesthem on to loose sheets o f the sales book. These sheets have the com monjournal rul ing and are perforated so that they can be fastened temporari lyw ith a M cGi ll fastener. In charging
,two m enwork together. In the city
department, one calls Off and charges at the same time and the other takes the
dictation and makes the invoice. They figure separately and prove beforetaking up the next charge. The invoices are handed to the Shipper. He
orders the goods called for and checks off each article as it is placed on thewagon and g ives the driver the invoice. Every customer receiv ing goodsby wagon must insist upon an invoice for the same. One of the largesthouses in the country follows out this planand has never had a dispute w ith acustomer about not receiving goods. When the customer accepts an invoicefrom the driver it is understood that he received the goods the invoice calledfor. In the country department one charges and calls off and the othermakes the railroad receipts. The freight receipts are made in dupl icate bythe use of a carbon sheet. These receipts are handed to the country shipperand checked on the wagon in the same manner as the city deliveries. Thecountry bi l ls are made out inspare moments or the next day on the typewriterin the main office. I f the business is very large, by using loose Sheets three,four
,or as many teams as are necessary, canwork at one time. At the end
o f the day these sales sheets are fastened together and sent to the main office.The next morning they are figu red and in a general way the prices checked.
The sheets are thenpaged, taking up the last number Of the day before, andso on every day up to When is reached these sheets are boundinto a book and numbered 1 , 2, 3 and so on up to 100 , when they start at 1again.
The Sales Journals—Each ledger has a journal of its own. We aresupposing that the business requires four ledgers—A to K City, L to ZCity,A to K Country
,and L to ZCountry. At the beginning o f each month in
the sales journal two or more pages are left for journal items, cross entriesaw n c r r v d oc/Am e.
N e wa r k N J d o n 6 1"h 19 0 0
etc. For rul ing o f sales journal , see Fig. 2 . The ledgers m en have assistants whose duty it is _to take the sales book and write up the charges for theirledger. (See i llustration Of sales journal .) All packages that are returnable and such mem o. as time on certain goods are posted into the ledger..The sales book is then “cal led” back and the journals checked .
6
must give the book-keeper a settlement slip show ing just what bi lls are paid .
( See Fig.
b a r r e n-M a rv ?
The Cash Department—TO beginw ith, the bank account is kept on thestub of the check book. The books used are as follows : ( I ) blotter cash,
(2) dai ly cash, 3) auxi liary cash, and (4 ) a memorandum book ca l ledC. O. D. and cash sales . The blotter cash is a common book into whichis written inpencil al l receipts (of al l kinds) and paym ents of cash . Thereare two blotter cash books, used day about.The Dai ly Cash .
— ( See Fig. 4A and 4 B .) This book is a copy of theblotter cash and of the regu lar check book. All postings are made from this
C A S H
CA .S /‘ I
book. An assistant writes up the daily cash and must be fami liar w ith theaccounts in the several ledgers . The stubs of the check book state theaccount to which the charge belongs and the amounts are extended in theproper columns . The “merchandise column” is posted in total to the Dr.
8
of merchandise in the general ledger. (The footings of the columns arecarried onday by day to the end of the month and a summary made.)
The auxi l iary Cash Book.—(See Fig. This is a cash book w ith
only one s ide. It could be called, just as wel l, the auxil iary disbursing cashAUX IL M Q V CAM 6 OOK
W P ! o n
book. It is hand led only by the cashiers and the general book-keeper. Itemso f cash or checks givenwhich come under the division as illustrated are putthrough this book. Items of a private nature, such as payments of salary toOfli cials, heads of departments, etc., and checks for dividends, or anythingwhich it would be better not to put through the daily cash book, canbe putthrough there. There is a posting column and items canbe p osted direct totheir proper accounts in the general ledger from here. At the end of themonth the totals of the columns are written into the daily cash book and
posted from that book. The balance o f the auxi liary cash book, which hasbeen posted direct, is written into the dai ly cash book as
“sundries” and
marked “
Il”in the posting column
,which shows they have beenposted else
where. (See i l lustrations, Figs . 4A and This wi ll make the daily cashbook at the end o f the month Show the actual cash on hand. A separatecheck book can be kept for the paym ents of a private nature spoken of, thefooting to be carried into the regu lar check book where the bank account iskept. The cash sales and C. O. D . items are credited in one sum to
“cashsales and extended into that column at the end of each day. The total ofthis column at the end Of the month 18 credited to “sales merchandise. A
number of pages Of the sales book 15 reserved each day for charging C. O. D.
and cash sales . The name, carrier and amount is copied into a book for that
purpose and the charge “l ined out.” As they are paid, they are checked Off .
Purchase Department—This department checks al l bills and pays them.
The items o f the invoice are checked by the receiving clerk’s book—“goods
purchased.
” The bil ls are kept onfile unti l checked, when they are placed ina cabinet with 31 pigeon-holes numbered from I to 31 . These numbers arethe dates o f the month whenbills are due . For instance, a bil l is dated January l oth and due on the 20 th . That bil l is placed in pigeon- hole NO. 20 .
On that date al l bi lls in that compartment are taken out and paid. The
general books are ledger, journal and cash book. The trial balance Shows
The accounts inthe general ledger. There arenoaccounts kept W i th the sales
ledgers in the general ledger. With so much transferring, cross entries, etc.,
between these ledgers and the general ledger it would require Considerable“journaling” to keep them . Their balance Sheets are sufficient, which are
proved as per Fig. 6. As the cash postings have beenmade from the dai lyc s
A ron c z‘
r v LE D OE Q b a lm s . Fo s , a o -foo o'
T h ank GA L A N C E
and auxil iary cash books, the general cash book w ill deal with totals onlyeach day’s total Dr . and each day’s total Cr . marked “
il”in thecolumn to
show it has been posted.
0
All the bil ls for goods received before the end of
the fiscal year and counted in the inventory but not paid are journalizedcharged to merchandise, expenses, etc., and credited to sundries
”
( credit~
ors’
) account. Later when these bills are paid the amounts are charged to“sundries” account
,thus balancing it.
The Trial Balance (F the P . and L. Statement (Fig. and the
Balance Sheet (Fig. 10 ) need no explanation.
P 9 0 ” ? a ns -renew
Gr L i A B M - I PG J
In the following system o f accounting the necessary books are : Purchase Journal, Check Register, Order Register, Journal-Cash Book, Purchase , City and General ledgers, separate books, and three Country Salesledgers, in which the accounts are classified by States. For instance,
“A”
10
we turnto the invoice clip for the des ired bills, which have now been throughthe buyer ’s hands, prices OK
’
d,extensions checked, etc. We w i ll settle all
city accounts once a month, checking the statements rendered to us w ith ourledger accounts, and , of course, examining all the bills and attaching themto the statement, which shall be our voucher for the disbursement. Let usfollow a creditor’s invoice through the “mill.” It is received
,recorded in
purchase journal and settlement date checked . We thenCopy into a freightreceiving book (which shal l
'
be nothing more than a book with horizonta lru lings, 20 0 or 30 0 pages about 8x12 inches), the name of shipper, carnumber, i f any, routing, then the items any other information that the
receiving department should know. We stamp the invoice w ith a rubberstamp something like this : Price OK Extensions OK Item s
OK Receiving Book Page . Note the receiving book pagethereon and pass it to the buyer, who OK’
s the prices or makes note of anyovercharges—notes that freight is to be deducted perhaps—after whichextensions are checked and the invoice put on the clip for settlement in duetime. Post all invoices to your ledgers just as they are rendered, errorsand all, i f there are any . When you pay, make your remittance statementfrom the invoice
, and charge back any errors, overcharges, freight allowances, etc., through the check regi ster at the time you charge the accountw ith the check
,referring always, o f course, to the ledger account
to ascertain that there are no debit i tems to be deducted in Settlement and which would not show on the invoice goods returnedperhaps. When an invoice is paid, so m ark it w ith a paid stamp,note the check NO. thereon, and stamp “Paid” opposite the amountinyour purchase journal with a neat l ittle rubber stamp. A blank statementfor NO. 2) on the back o f the check is a good idea, and nothing more wi ll
be needed for most settlements . It is well, however, to have a separateblank remittance form, and when this is used take an impression and notethe copy-book page on the back Of the check. Our checks w il l be made w ithstubs
,and not bound in book form, but put Up in tabs o f 10 0 each. We
w ill not oftenhave use for the stub, for whenwe draw checks for settlements,
12
we wi ll m ake our entries in the check register direct from the check. How
ever, we will have the stub there in case it is needed. It may be more con~venient sometim es for the book-keeper to make a stub memorandum tem
porari ly, or, a member o f the firm might draw a check, in which case wewould not want him to make entries in our books.
Order blanks w ill be ruled l ike form No. 3. Salesmen should be furni shed with pocket order books for their convenience
,but we w i ll require
them to send all orders in on regular order blank forms . Before they startout, dri l l them wel l on the subject o f writing orders legibly, to use specialcare in spelling names and places, and little trouble w ill be experienced fromthat source. When orders are received they should be stamped w ith dateOf receiptand passed to the desk of the credit m an
,who
,i f he passes favorably
upon it, would put his official OK thereon in the proper space for it. Theorder should then be passed to an entry clerk
,that date
, name o f customer,town and state, may be entered in the Order Register ( form NO. which
wi ll serve also as a Salesm en’
s Sales Record,as we are to base their salary
som ewhat upon the volume of their sales. It w ill be observed that the linesare numbered numerically, and whenanorder is entered the register numberi s stamped thereonwith a numbering machine or pen, as preferred.
To keep a copy of all orders in the Office for fear that one m ay be lostin the shipping room is a waste of time and money. Furnish the shippingd epartm ent with a supply of order holders ( there are a num ber of excellentones on the market), impress upon shipping department and packing roomm enthe importance of returning all orders that pass through their hands, andI would not be surprised i f there never was an instance of a lost order. Wehave it registered, and i f it does not come back prom ptly, let it be the dutyof some of the oflfce force to ascertain the reason.
Now, whi le it is probably not des irable to keep separate department
accounts on our ledger, for shipping purposes we w i ll have what we mightcall the bulk and shelf-goods departments. In the shel f-goods departmentwe w i ll keep candies, cigars, pipes and all smal l box goods. The originalorder should go to the department which is to supply the larger number ofarticles. To illustrate : If an order called for two barrels sugar and quitean assortment of cigars, candies, etc. , the original order wou ld go to theshelf-goods department
,the sugar part would be copied off on a mem oran
dum slip and given the same register number as the original . The slipcould be sm aller in form, ruled with quantity column,
for nam e of customer,town and state, but used only to facilitate getting out goods for shipment,the sl ip going to the bulk goods department when the original went to theother departm ent, and vice versa, the original always going to the department supplying the most goods on the order. When the shipment is com
pleted , the order, w ith the memorandum Slip pinned to it,i f any, is returned
to the ofl‘ice and compared to ascertain that no item on the slip is crossed offas being out of stock, and i f so , must be crossed Off the original and backOrdered. It wi ll be found that the majority of orders canbe filled from the
original, and by this order method we obviate making more thanone bi ll fora shipment, which is frequently done by many large houses . The order isnow ready to be priced, i f prices do not already Show,
figured, the extensionschecked and billed. B i ll ing on the typewriting machine is the neatest andmost rapid way. Orders are now stamped A, B, C or D, as the case m ay
be,for its respective ledger, and it is
“up to” the book-keepers, and we oughtto have about three, including the cashier, for accounts, or aboutaccounts to a m an. M ail orders wi ll, of course, have to be copied, but wecan furnish our better customers w ith blanks and reduce order copying to a
minimum.
The Sales Ledger w ill be the loose- leaf style, ruled as shown by formNo . 5 . Inmost grocery accounts the debits exceed the credits two or threetimes
,and to save space and make the account more compact we w i ll have
two debit to one credit column. Each ledger is sel f- indexing. That is, toeach letter of the alphabet is apportioned a certain num ber of pages and
14
ment o f all unsettled accounts once a month only . Statements are printed .
with a foot-note :
Above i s a m em o randum o f your account, o f which is
due We send each custom er a statem ent at the end o f
every m onth fo r com par ison Of accounts . If NOT correct, pleaseadvise us at once. If not o therwise advi sed, we wi ll cons ider ourselves
at liberty to draw AFTER M ATURITY w ithout further no tice.
Yours respectfully ,
TWENTIETH CENTURY GROCERY CO.
I f an account is past due, we wil l leave the space after is due blanki f it is due on a certa in future date, we so mark it ; i f several bi lls are due
at different future dates not far apart, we assume an average date ; i f anaccount shou ld Show two bills, for instance, one due the 5th and the other
the 25th, we would mark the two items and the two dates on the statement.Then these amounts and dates, as shown on the bottom o f the statements
,
are noted in the due columns of the respective accounts,about on a l ine
w ith the last credit item. Then, after our work incidental to the first o fevery month is out Of the way, we w il l go through the ledgers and stamp the
current month before the due amount, using a neat l ittle rubber stamp and a
red ink pad. Now, onthe 10 th and 2oth of each month,we will make sight
drafts for all due or past due accounts . In running through the ledgersour eye quickly catches the items stamped the current month, and by reasono f the credit s ide o f the account being reversed
,the amount column to the
left, the close proximity o f the last credit date to the due amount indicates
at a glance that a payment has or has not been made Since the I st o f the
month, which determines whether we shall make a draft or not. One reads
the name and amounts to another, who writes them in a CollectionRegister,with numbered lines, and calls back the NO., which w i ll be the draft number.
This number is noted across the due amount in red ink. When amounts
have al l been drawn off , the name Of banks are filled in on the register and
the draft is thenmade from the register. Drafts and remittance letters are
written at the same time by the use o f pen carbon paper. The draft and
remittance forms are put together alternately in tabs Of 10 0 each and the
printed matter SO arranged that whenthe draft is writtenthe remittance blanki s filled in at the same time. Collections are sent direct to country banks.
Good rating does not always mean good credit. The manner inwhicha customer meets his bills is anexcel lent criterion to be guided by ingrantingcredits . And this scheme Of keeping a record o f due amounts on the ledgerhas many advantages . It enables the credit m an to tell at a glance how
promptly accounts are paid , how long an account is past due, whether customer pays drafts or not, and whether there i s one out for collection.
The Check Register ( form No. 6) is a reversal of the usual order o f
things in book-keeping. The right-hand page is al l debit columns. We'
get the debit and credit of our bank account from the two left-hand columns,and i f we keep them footed in penci l on the same l ine, the state of the
C H E C K'
9 5 0 13 7 5 51
bank funds is plainly Shown. The right- hand page provides columns fora distribution o f al l funds disbursed through the bank . A check is seldomdrawn that is chargeable to a sales ledger account, but we wil l make provision for an emergency and have such a column in the check register.Reference has already been made to settlements, but perhaps the three columus, cash discount, overcharges, and freight, under the head of creditors,need an explanation. After entering a check in check column
,crediting
bank, we enter the same amount to the right, debiting creditors, and on the
same line in their respective columns, cash account, overcharges, and freight,one or all, as the case may be. We post to the individual creditor
’s accounteach Of the last-named items separately. In fact, we post separate itemsfrom all the columns in this book
,excepting only from the bank columns
,
which are posted intotal at the end o f each month. As heretofore mentioned,we must keep the equi l ibrium o f our general ledger ; we therefore post alsothe total Of the four columns under the heading of creditors to the debit ofcreditors account in the general ledger, credit returns and rebates purchases,and credit discount account, credit freight with the totals o f their respectivecolumns. It wil l hereafter be explained that all totals are recapitulated in thejournal, and that from there they are transferred to the general ledger.Freight items should all be paid by check
, and all the expense bil ls coveredby a check pinned together with a slip attached bearing the date and numberof the check, and thenfiled in a file w ith a division for each railroad.
M ake it a rule to pay freight expense bills every Tuesday. Check upbi lls in the meantime and have checks drawn for each rai lroad ready forcollectors when they cal l . Post the total of each bunch of expense bi lls tofreight account
,using for anexplanationin the ledger the R. R. initials and
checks num ber.
Form No. 7 is the Journal Cash Book, and I believe needs no specialexplanation. Its use wi ll be principally to record the daily cash receiptsand for the clos ing entries each month. At the end of each month we willgather the totals from the sales binders, credit mem orandum binder, check
d OU Q N A'
L. C A an B oo rx
d OUR NA L C AS I'
I DO C K
and purchase registers and recapitulate them in the journal. As each mailbrings remittances they are passed to the cashier and cash discount or otherdeductions investigated to ascertain their correctness. Remittances wi ll notbe entered immediately
,but without separating the remittance letters from
the drafts, w il l hold them unti l an hour or two previous to the bank closinghour. The entire lot should then be arranged alphabetically according tothe accounts, then separated in pi les for the different ledgers, keeping themin alphabetical order, and the whole lot entered at one writing, entering thetown and state, as wel l as the name of account. After comparing depositsl ip with journal footing
,we debit and credit cash and enter the same am ount
in the check register . Column headed “6 Credit—Dis. and Ex. onCollee
tions,” is a
'
cred it to customers, a debit to regu lar Int. and Dis . account.
Nearly all cash receipts ina wholesale business are in the form Of checksor bank drafts—very little currency—but al l cash receipts to a cent, of whatever nature, shall be deposited in the bank each day. Cash sales for one dayare held til l the following morning and included in the deposit for that day.
N early al l disbursements Should be by check, but for petty expense items,for such other items as is more practical to pay by currency, and to supply
the cashier w ith change, checks are drawn to his order and charged to an
account with him in the private or general ledger. He takes vouchers for
ANNUAL FINANGIAL STATEM ENT.
RESOURCES.
Cred it.
Accounts Receivable
Notes ReceivableStocks and Bonds .
Cash in First Nat. BankCashier
’
s Cash
Furni ture and FixturesAccrued Interest on Notes RecM erchandi se Inventory
LIABILITIES.
Accounts Payable
Present worth, Dec. 31, 190 1 13
GAINS.
46
Less Inventory 20
26EXPENSES AND LOSS ITEM S.
Rent 00
Insurance 90
Ofli cers’
Salar ies 00
Salar ies o f Office Em ployees 08
Salesm en’
s Salaries 00
Salesm en’
s Traveling Expenses 45
General Expense 93
City Del ivery Expense . . 65Profit and Lo ss (bad debts) 12 13
Net Gain, year ending Dec . 31 , 190 1 13
TWENTIETH CENTURY GROCERY CO.
Capital paid in 00
Net Gain 13
Present Wo rth 13
DISPOSITION OF GAIN
Dividend, 10 per cent
Surplus Fund
491% I3 13
Our credit memorandum returns are similar in form to our ord erblanks, but o f different colored paper. Al l rebates, allowances for short
20
ages, etc., shall not be credited to accounts in sales ledgers except they com efrom these slips
,which shal l be OK’
d by the credit m an or member Of firm .
Travel ing m en are credited with their salary each month, and paid bycheck as the)
,
m ake requisition. A separate traveling expense account i skept with each traveler. They use the “common sense” weekly expensebooks
,and the total expenses Of each m an for a month, as shown by these
bo oks, is credited to his travel ing expense account, using as an explanationthe dates Of the weekly books. Travel ing expense is debited, using as an
explanation fo r each amount the name of traveler.Railroad shipping receipt books were the d uplicate form , bound, and
a separate book for each road, the name printed on top cover and backedge . The name of road and barrels, boxes, kegs, sacks, etc ., printed inthe form.
Offi ce and warehouse employes were paid once a week in currency, acheck being drawn for amount of pay roll and the money put in envelopes .
The annual sales Of a wholesale business may be or perhapsles s—they might be a year o r more. A system Of book- keepingfo r the former would be somewhat different in its details from a systemdesigned fo r a business Of the latter proportions. The foregoing outlinesuitable for a business employing about ten or fifteen salesmen,
withannual sales amounting to from to
The system of accounting here described is intended for a wholesalehardware company carrying all lines of Shelf goods, also a stock Of yardgoods and implements . Doing all their own cartage to and from yardsand warehouses, they employ considerable unskilled labor.
The system is designed to g ive the management each monthp romptand accurate statements of the business done and expenses incurred
,as wel l
as to Show each month the actual position of the company as regards assetsand liabilities, and the profit and loss on the sales of each departm ent ; alsoto clearly indicate the cause of any sudden or abnormal change in the conditiono f affairs from time to time .
For our present purpose we will assume the business is divided into thefollowing seven departments. The first four we will call stock and theothers operating departments
A—Shelf Goods . F—Shipping and Receiving.B—Warehouse Goods . G—Stable and Yards .
C—Yard Good s . H—Oflice.
D—Im plem ents.
At the outset it may be well to note the difference between stores andstock and betweenwages and salaries as the terms are hereafter used . Storeswe assume to represent all material except stationery and fuel , intended fo rthe actual use Of the company . Stock represents material and goods readyfor sale and de livery. Transfers of one to the other are provided for bymeans of “working orders.” The difference between wages and salariesis that the former represents payment to those whose services are valued by
21
t he day or hour, and who are required by time tickets or other means to
The time o f al l employes is recorded by themselves by means of a timeregister clock. The time clerk enters the time as Shown by the clock eachday ina time wages book for employes paid wages and ina time record book
a h o n'l'fi fl
‘fi e ne C “
for all others. It is his duty to see that all the time entered in the tim ewages book each day, and paid for twice a month, is accounted for by a tim ecard showing to which of the various working orders the time is to becharged . He then extends the time for each order at the employe's rate
N oTé. R nc e n‘ l‘
éfi e of f ine lo of by “ to p ic al q m p loy e e o
m a d e . u p‘i‘w ie c a m o m”?
per hour and posts it to the working order cash sheets. M aterial used uponsuch orders is charged out to them by means of charge slips made out by thoseresponsible for the various stores . These slips Often being priced and
extended, are also entered upon the cost sheet of the order uponwhich they7 7M E C A R 0
D e .p'i".
Wo o-Km a fl N o .
are issued, any surplus material being returned to stores and credited to theorder uponwhich it was drawn by means o f credit sl ips. These credits areentered on the cost sheets in red ink and deducted from the gross charges
22
various amounts for wages should of course exactly balance the wages payroll for that month, and the total stores charged out wi ll, i f correct entry of allcharges has beenmade, Show the exact amount of material used by the company for a given time.
“93" M o‘k nia l a n d 7h ”
N fi t 6 f‘
fu l a f o x nee. c a ve
‘lklo fiénd a ptc c .Y 5, Fe
As regard s such Special work as will not be continued from m outh tom onth, special orders are issued and follow the same course
,except that they
T h i b c a d e ts a u‘
l‘l‘wo ni z e a
a h d d ine c'
li Th a r/
O h “
as po e gf
yfu ll) ! W O fi R‘ i ‘b bo d one u nd e r
1 0 e n
are returned to the Office as soon as completed and the cost made up and
put on record. If the expense o f a working order is chargeable to any onef o a m ,
Th e M . Q .c o .
N a fa Inv o ic e s fi s t Ike a bo v e c a nt-10+ b e Pa u s e-l i s
yo u n g
u nle o o 11" b e a u-6 The, a b o v e . n u m b e r‘ s
department it bears as a prefix to the number the initial letter of that department. I f it is a general expense covering more than one department thenumber bears the prefix “
M .
”
24
Stores and stock are purchased by the chief stock-keeper . All pur
chase orders, however, w ith the exceptionof those calling for goods requiredfor imm ediate shipm ent to a customer must be initialed by the managerbefore being sent out. Orders for repairs or work to be done by outs idersare subject to the same rule. The stock-keeper is largely guided in his
p o p ” 6 .A T H E M Q L E T'
TE D 9 0 5 30 17 44 3 2 0 9 0 5 9
0
P ie r-ho e. 5 11 19 3 5 1.4 0.5 9 fo llo wé P
e n. gb fi Ibgffem m :nn
zwif m:pg sf
o r a e h IPFl‘jfiC o d e ")
purchases by inform ation g iven him by the salesmen of the stock departm ents, who are expected to prom ptly noti fy him of any l ines they m ight thinkit advisable to order. He also keeps a close watch upon stock ledgers ofthe various departments.
In the event of the order clerk requiring the purchase of goods for acustomer’3 order
,he draws a requisition upon the stock-keeper for what he
F OGM O
To C h ie f S la c k ke ep e r: D a‘
IE.
requires. The head Of each operating' department needing supplies alsorequisitions for what is required. By this means al l the buying is done byone m an ( subject to the approval of the manager), which in actual practiceis invariably found to be the b ‘
sf plan. These requis itions for purchases arebound inbooks of 10 0 each
, num bered indupl icate and the first sheet of eachnumber perforated for removal. The party requiring goods thus has a
copy o f what he has requisitioned for and thus avoids the frequent error ofasking for the same goods twice.
Im mediately uponthe receipt of goods the invoice is checked and handedto Office to pass to credit of suppl ies. I f they were purchased speciallyfor a custom er’s order they are sent to the shipping room and the order
25
clerk advised of their receipt. If they were for a working order they are
delivered to the party having charge Of the work called for by such orderand charged out by means of a charge sl ip as described above.
The travelers are provided with triplicate order books, one copy beingleft with the customer, one remaining inthe traveler
’s book, and the originala rr /p rom o c a ca o
Tl) ; O rd en ef 'fil io N o c a lla fisn ‘
h a fallow/15g 4 0 0 6.
w i ll
being forwarded to the house. On receipt of either a traveler’s or letterorder from a customer, or o f an order by telephone or w ire, it is enteredin the order register and g iven the first blank number. The order clerkthen makes out out department shipping Orders ( in the case of al l ordersexcept travelers’ he previously enters them upon forms sim i lar to travelers’orders), and sends the main orders to the shipping clerk. The departm entshipping orders
,which bear the sam e number as the main order from which
M N IO
they were drawn ( and also the letter of the department) are sent to the
various salesmen in each department. The goods are laid out for shipmentand in the case of smal l goods are sent to the shipping room . As regardsheavy goods
,the weights and quantities are filled in, a check mark put inthe
column opposite each l ine that is ready for shipment, and the departmentorders thensent to the shipper. As soonas he has the various good s shippedhe puts a plain cross mark on the check mark, wh ich now shows that the
d ifferent lines are actually in carriers’ hands. Before shipping the depart
26
department. The information to be had from these two books, taken inconjunction w ith the expense accounts o f each department, enables themanagement from m outh to month to make accurate comparisons not onlyo f the expenses, sales and profits Of each department, but what inmany casesmay be found evenmore valuable to compare the percentage such expenses,sales and profits bear to one another, as well as to those of other departm ents .
Credits to customers are made only upon the authority of a credit forreturns signed by the stock-keeper
,or a credit man’s signed by the secretary
treasurer. These forms are treated by the invoice clerk exactly as thedepartment shipping orders and filed ina similar binder called “credit binder.”
The credit book is on exactly the same principle as the day book,already
described.
The cash book is ruled to keep distinct cash received or paid out for
accounts in the various ledgers . The amounts in the three columns bearingthe names of the ledgers are posted in detai l to such ledgers and at - the closeof the m onth the totals Of the other two columns are posted to the accountsbearing the names of the other ledgers.
7 M N 6 P £R m m ? 5 0 0 K
{ Hi e M . Q .C o . L'
i‘
él M a r-e n M o nth
D o b i ‘l“
Suppl ies accounts are credited by means of a voucher which is enteredina purchase book. To this voucher are attached the various invoices whichit is des ired to pass to the credit of suppl ies account. The face of the voucheronly shows the total amount to credit and the debit to the various m ainaccounts
,to each of which a column in the purchase book is al lotted.
The ledgers used areLedger A—Accounts Collectable.Ledger B—Accounts Payable.Ledger C—General .
The two former are ordinary loose- leaf ledgers Of any of the modernpattern. The names of ledgers A and B are sufficient
.
indication of the
class of accounts they contain. In addition to such accounts,they carry
each two adjustment accounts , bearing respectively the names Of the othertwo ledgers. This renders them , as far as commercial and book- keepinguse is concerned , each independent and capable o f proof by balance withoutreference to the other ledgers .The general ledger is a locked ledger inwhich all the internal or work
ing accounts of the company are kept, and also two accounts called respec
28
tively accounts collectable and accounts payable Ledgers A and B are asa matter of fact only detai ls o f the accounts o f simi lar name in the generalledger, and as their names denote, are used exclusively for the accounts o fthe debtors and creditors of the company. It is of course w ith the generalledger that we have now to deal .
The general ledger accounts are divided into groups, a number of blank
pages being left between each group on which to open new accounts whichmay be decided upon from time to time. The accompanying “list ofaccounts” is inthe nature of a suggestiononly, as the actual accounts requiredfor any one business must be decided by those best acquainted w ith the circum stances . They cannot be based upon a l ist which has given proofOf efficiency and good judgment under what appear to be simi lar circumstances and surroundings. I f there were many departments it would bewel l to have the accounts in the general ledger opened only under the heading
of each group, a class of account, and by means o f a subs idiary ledger dividesuch mainaccount into as many sub- accounts as might be found des irable.
N o7‘é
'
o
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O n Inv o ic e . fo r» a b o v e Qa c ela a nal {m a ll e o nne o p o nc le nc ea m y flé'
g‘i ‘h ib o nd e r le a o e Q u ote . a bo v e nu m be r‘ s ».
D e fi‘
fé h a t".
m e,.
Ich e on; nc m m 5 w‘
AC K N OW L z o c z N T O f"O R D ER
Tho M ,R ,C o ,Ad d "
fi c fe nnig g 1670 14 » e rod e » be am -P ins a bp v o na m b e na , w e b”
12> e c lv io e
At the close of each month the accountant is suppl ied with a transferentry crediting wages and material accounts w ith the expenditure uponworking orders and charging the account named upon such working order.Where two or more working orders are chargeable to the same account thecosts are grouped together and charged out by the one transfer entry . Theamount credited to wages should o f course w ipe out the amount paid out
for wages by the secretary- treasurer during the month . By a s imi lar transfer entry salary account is wiped out and distributed among the variousexpense accounts in the proportion decided upon by the management . NO
amounts being posted to the general ledger except from the cash book and
trans fer entry book,it is necessary to make each month transfer entries for
al l transactions affecting the internal accounts o f the company. Thesetransfer entries are then entered in the transfer entry book and posted to thecredit of the various accounts and the total o f each column posted to thed ebit of the account whose name it bears. The total of accounts collectable
29
and payable in the cash book having beenposted to these accounts, it willnow be seen that a trial balance sheet of the general ledger is in itself a v
.
erycomplete statement of the affairs of the company. I f from this trial balancea statement is takenOff each month show ing the totaldebi ts and credits to eachaccount for the month and the excess o f one Over the other
,a very valuable
subject for thought and study on the part Of the management is presented.
The sales account being charged with the costs and credited w ith the sellingvalue o f stock sold w i ll o f course Show not only the amount of sales but the
N O T 5 A . L IS T OF
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f ra c a s, M e m o .
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c u e so .0 Q Q
235 3 . P":P a n e s . . £535:
profit made thereon at any given time. The stock returns account w ill ofcourse show a loss o f the difference between the amount credited to custom ers for goods returned and the actual value to the company of sam e. Acareful watch upon the accounts collectable and bills receivable and accountspayable and bi lls payable '
wi ll sometimes give somewhat startl ing information. It is of l ittle use having anefficient Operating and selling organization
30
GE N B fl A L. Le b a z n A CC OU N T é
N a m e o f A
W a ne h o u o e a
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,Ta x e a £1 ln ‘ .
Tfl a v . E x p e n s e s
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PART V II.
Retail Accounting.
custom er are assem bled together , and fo r som e bus iness these pass -booksm ay also constitu te the cus tom er
’
s ledger , with a s l ight m od ification of the
sys tem .
P rovid e a pass -book for each cus tom er .
P rovid e a su itable alphabetical file fo r the pass -books , with vowel andother ind exical d istribution to accom pl ish ins tant reference to the bookwanted .
P rovid e an ironclad ord inance that all pass -books not in use m us t bekept in the file.
Have the pas s - books m ad e in the form of a sales ticket in tripl icate, thed upl icate and triplicate w ith perforations to al low of their being d etachedfrom the book .
When the cus tom er m akes a purchase the salesm an enters sam e in thepass -book and hand s the dupl icate to the custom er , retaining the pass -book.The book-keeper pos ts the total purchases (not item s) from the pass
book original , and also enters the account on a sales recapitulation sheet inord er to obtain h is m onth ly total o f sales .
At the end o f the m onth the book-keeper m akes h is m onth ly statem entsfrom the ledger and attaches to sam e the tr ipl icate copies of bi lls from the
pass-books .
B y adopting this plan all the item izing necessary is done at one wr iting by the salesm an
.
who receives the ord er , ledger space is not unneces
sari ly wasted , and the book-keeper will begin to have a l ittle tim e to sparein wh ich to m ake h im self usefu l to h is em ployers .
Another m ethod i s : Have large s ized envelopes m ad e'
with statem ent
form printed on front—d ebit and cred it colum ns . Enclose dupl icate bil lsin envelopes and post totals on s tatem ent . Use cash book with separatecolum ns for cash sales and receipts from cus tom ers applying on account.Pos t from cash book to s tatem ent .Fi le s tatem ents in convenient card - ind ex file alphabetical ly arranged .
Enter am ounts of charge sales each d ay on“recapitulation” sheet.
Use d ifferent colored sheets for m erchand ise cred its , or allowances , andpost d irect to statem ents , m aking recapitu lation as in case of charge sales .
In sm al l general ledger keep cred itors ’ accounts , expense accounts , etc .,also representative account entitled “Custom ers ’ Account.” To this
6
a ccount charge total sales from recapitu lation sheets , cred it total m erchand ise returns and al lowances and total o f Specia l colum n provid ed in cash
book fo r receipts . The balance of th is account w il l then equal the aggre
g ate of the balance shown on the s tatem ents and so prove the accuracyo f the work .
Th is sys tem can be com b ined w ith the one previous ly d escribed—as
above suggested—by filing the pass -books in the envelopes .
The recapitu lation sheets above m entioned shou ld be specially ru ledso that total cash as wel l as cred it sales m ay be record ed , and so that thesales m ay be d istributed over the various d epartm ents to which theybelong.
The il lus trations given below wi l l show a very convenient form of
Recapitu lation Sheet and Com parative Record :
The total yearly sales in each d epartm ent m ay be kept in the sam e way
by entering the total m onth ly sales instead of the d ai ly as shown.
The follow ing is an excellent form of departm ental com parative record ,trad ing account , and profit and loss account com b ined
A subscriber to The B ook-Keeper d escribes a s im ilar system as follows
The Or ig inal Entry Led ger Sy stem .
A convenient item ized ledger i s som ething d es ired by a large m ajorityof sm al l retai l d ealers , in wh ich they canm ake the original charges without
7
the intervention of the journal . There is no reasonwhy a personal accountshou ld not be item ized on the ledger rather than on the journal i f the workcan be done as qu ickly and as conveniently . The loose leaf system sug
gested the plan. I adopted the Yonker s tatem ents , double ru led and filedthem in b ind ers . It is only the work of an ins tant to put in or take outa new leaf from any part of the volum e. Ind exed sheets were used to
keep the accounts und er the several letters of the alphabet , but in separategroups . Th is arrangem ent enabled m e to turn to an account m ore qu icklythan I cou ld in the ledger , i f I had to refer to the ind ex. I used severalbind ers to accom m od ate the bus iness , subd ivid ing the accounts both according to the alphabet and territorial ly . This plan enabled m e to m ake thecharges to the personal account as soon as the charge tickets were hand edin. Then accounts were always written up and always ready for the
custom er . Whereas , und er the o ld plan, it was im poss ible to be less thantwenty- four hours late. I m ad e the charges to the several accounts aboutas qu ickly as I cou ld write the item s in the journal . The item s of an
account were always grouped together , and when I cam e to enter them onthe custom ers
’ pas s -book (wh ich it was necessary to d o in alm os t all cases),it was the m ere act o f copying, and d id not involve a search through m anypages of the journal . As the pages were fil led , new pages were ad d ed and
the com pleted pages were rem ovd and placed in convenient files .
Sy stem for B akeries and Cream eri es .
For retail bus inesses where d el iveries are m ad e daily, and accounts are
paid weekly o r m onth ly , there i s noth ing super ior to the tabu lar plan of
record as shown below com bining the features of sales book and salesledger , arranged fo r d ays , w ith ba lance colum n to carry forward unpaidbalances from week to week.
Record books o f th is kind can be m ad e to run horizontally across thepage for a num ber of weeks w ithout rewriting nam es of custom ers . B y
allow ing one line to a nam e as m any as eighty accounts can be accom m o
d ated on a page. A recapitu lation o f totals of pages w ill give am ount of
sales per week . The total colum n can be d ispensed with as the totalcharges for the week ad d ed to the o ld balance w il l equal the am ount ofthe new balance ad d ed to the am ount paid , provid ed the work has beencorrectly perform ed , and the writing o f the total is unnecessary.
8
Ac c o u rv r a b A Y A é L E a, a n h z c to'f e n
accounts , wh ich wi l l therefore show the quantities purchased . The item s
entered in the sund ries colum nwi l l be posted in d etail .In the
“Reclam ation” co lum n are entered the am ounts o f claim s or
deductions in respect to d ifierences between quantities b il led and quantitiesreceived .
The total of the first am ount colum n w i ll be cred ited to V ouchers ’
Payable Account in General Ledger . The totals o f d istribution m oneycolum ns w il l be d ebited to the accounts Opened with each kind o f coal . The
sund r ies colum n is intend ed fo r m iscellaneous suppl ies to be pos ted in
d etai l .The total of the second Am ount colum n w ill be entered in the Cash
B ook to the d ebit o f V ouchers ’ Payable Account , wh ich w ill show on the
ledger som ewhat as follows :
V ouchers P ayab le Account.
Dr .
FreightReclam ations , etc.
Cash .
The balance of th is account wil l therefore exh ibit the am ount of outs tand ing Accounts Payable.
In case it i s found inconvenient to carry the Car Record on the Accounts
( 3 a n c o n c l
Payable or V oucher Record fo rm , the above separate form o f car record wil lbe found usefu l .By both m ethod s the totals o f quantity colum ns are pos ted to the d ebit
m em orand um stock accounts kept with each class o f fuel , these accountsbeing cred ited with reclam ations and shortages . A separate account i scarr ied for quantities sold , as hereafter shown, so that a perpetua l bookinvento ry resu lts , which w il l show am ount which shou ld be on hand in theyard s .
10
Com bination Cash-Journal, Etc.
The wholesale and retail bus iness i s frequently com bined , in wh ich casethe car and quantity. record m ay also be advantageous ly com bined by theuse o f a form after the follow ing pattern
It will be noticed that this is a com bination Cash-Journal and out
quantity record , and it cou ld therefore be com pleted by the use of Form 2,
wh ich is an in- quantity record .
In m any cases a further d istribution i s m ad e on the m em orandum stockaccounts by opening an account w ith each car and cred it ing it with sales asind icated later.
Del ivery Ticket.
For a d el ivery t icke‘
t a form s im ilar to that append ed i s recom m end ed .
It is m ad e in tr ipl icate, two copies being hand ed to the team s ter and one
retained at the office, from wh ich to pos t the charge. The team s ter leaves
A lc o l u " 4 9 0 2
C a n N o .
one copy with the cus tom er , and the other i s s igned by the custom er and
turned in by the team ster as a voucher for the d el ivery of the good s .
Where ord ers are very num erous a recapitu lation sheet can be used
from wh ich to m ake postings as per sketch .
The C. O . D . and Cash colum ns w il l show total receipts each d ay , and
afford a check on the team sters ’ co l lections .
Cash B ook—Journal .
We show on a previous page a form of com bination Cash -journal.Where in- quantities are record ed in an Accounts Payable book or Car
Record , and out- quantities in the S ales Ledger , posted d irect from Salestickets , the Cash B ook and Journal are m uch s im pl ified . The Cash B ookm ay be ru led l ike thi
C a s h Q e c e fv e c l
G a o l? p a id
The Journal wou ld be used fo r cro s s - entr ies only , such as al lowances ,shortages , etc. , and bes id e the ledger colum ns would requ ire on the Cred its id e colum ns fo r m aterial affected , viz. : Lum p , Egg , Nut and Slack.
The Sales Ledger can be arranged on the tabu lar system to contain a
record o f out- quantit ies , the totals o f wh ich are posted m onth ly to the cred itof the m em orand um quantity o r s tock accounts above m entioned , thuscom pleting sam e and giving approxim ate invento ry on hand .
Tabu lar Led ger .
The Tabu lar , or Sel f- proving Ledger , is a ledger inwhich the nam es are
written d own the s id e o f a page ins tead o f at the top, a page o r a certain
po s ition o f a page being used for all the transactions relating to an accountd u ring a given perio d , these transactions being extend ed ho rizontal ly acrossthe page instead o f perpend icu larly as in the ord inary ledger. It is provid ed
w ith d eb it , cred it , and balance colum ns in sections o f weeks , m onths , ord ays , so that the foo ting of the d eb its of the preced ing m onth, week, or
Mining Co ., who , in turn,b i l l their custom er. Th is sys tem does not call
fo r any com pl icated accounting, but there are, nevertheless , qu ite a num ber
o f form s used , and som e o f these it m ay be wel l to il lus trate and explain.
Form No . I is ord er blank sent to m ine .Form No . 2 i s advice sent to custom er .
Carbons of these two form s are retained , and the particu lars entered inthe Ord er and Sh ipping Record , wh ich is also a dai ly trad ing account ,showing gros s profit on sales to d ate. This form is ru led in sections o f
FORM 2
c a m e
o u t» p nom p‘l‘
“ e K"3 9 3:as; M O AL c . 5 M :C ° u
three m onths , as al l accounts are expected to be paid with in that period .
At the end of the m onth ,Accounts Receivable Account i s d ebited w ith total
of“Am ount” colum ns and Accounts Payable is cred ited with total of
“Cos t” colum ns . A new page i s started for each m onth and unpaid item s
M ‘ A l k-Jh n C oa l a nd M in ln/ Q C c .,
t the end o f three m onths m ay be transferred by Journal entry , cred itingAccounts Receivable and charging Sales , as the transferred entries will beinclud ed in the charge to Accounts Receivable o f the total of the new
page. B y th is m ethod it w i ll be observed that a Sales Ledger i s d ispensedwith entirely , or w e m ay say that th is form is a com bined Ord er and
Shipping Record and Sales Ledger .
The Ord er blanks are num bered consecutively , the colum n headed
Sub . No .
”referring to the m ines to wh ich the ord ers are sent . Thus
ord ers sent to one m ine are sub -num bered : A l, A2, A3, etc. Ord ers sent
to another m ine are sub-num bered :B 1 , B 2, B 3, etc.
14
Sy stem for Retai l Ice Com pany .
One of the greatest d ifficu lties encountered in keeping the books of abus iness of th is kind , i s the large num ber o f accounts to be hand led .
These, for the sake of convenience, are usual ly kept in territorial ord er,i . e. , all the M ichigan avenue accounts are kept together in rotation of
num bers of houses . Thus, one account wil l be head ed 1426 M ich igan
avenue, and und erneath this the nam e o f the tenant . The next account wil lbe 1428 M ich igan avenue, etc.
Owing to the large num ber of accounts in a bus iness of th is kind it isusual ly necessary to open a new ledger every year, involving a large expend iture o f tim e and labor .
Also i f M r . F. W . Jones of 4 129 B uckingham avenue , owed a balance ofand rem oved to 2649 M ich igan avenue, it i s necessary to trans fer the
account and great confus ion w il l ensue.
Som e ice com panies , therefore, have adopted the card ledger system ,
and have found that it is m uch eas ier to keep card s in territorial ord er thanis the case w ith ledger pages , ind ex card s being provid ed for each street oravenue , the nam es o f the streets arranged alphabetical ly , that is , Ad am sstreet wou ld preced e B ates street , the other s treets following in alphabetical ord er , Charles s treet , D ivis ion street , El l is avenue, Frankfortstreet , etc.
When a card i s fil led up, al l that i s necessary to be done i s to ad d a new
card . In a bound ledger , i f the space provid ed for an account provesinsufficient , the account m ust be trans ferred to another page, and i f the
Space allotted to M ich igan avenue i s insufficient , part of the record s of
that avenue m ust be provid ed fo r in another part of the ledger.
If F . W . Jones rem oves from 4 129 B uckingham avenue to 2649 M ichi
gan avenue, h i s card also w il l be rem oved from that portion of the file con
taining the accounts o f custom ers on B uckingham avenue, the correctad d ress noted upon it and placed in proper num erical ord er w ith the
M ich igan avenue card s .
The card s canbe so ru led as to provid e for a large num ber , usual ly fiftytwo
, charges and cred its on one s id e and fifty - two on the other .
When the card i s com pletely fil led it i s rem oved to a transfer file and a
new card substituted . B y th is system the accounts w ith each custom ercan always be kept together and w il l not be d istributed through severalledgers , as wou ld be the case i f they were record ed in a book- ledger .
It is scarcely necessary to say in th is connection that the or iginalentries are m ad e on the card s , the totals only being passed through the
journal once a week, or once a m onth , as m ay be d eterm ined by the need sof the bus iness . The d ebit being Ice Ledger Account and the Cred it IceSales Account , or whatever representative account m ay be carried .
15
By the card ledger system , accounts w ith custom ers canbe d ivided intoas m any sections as d es ired , each section being proved separately. Th is isa great convenience in cases where the volum e o f accounts i s very large.
Separate co lum ns m ust be provid ed in the cash book and journal foreach ledger section, and separate accounts w ith each ledger section beingcarried in the general or pr ivate ledger .
The tr ial balance o f the entire bus iness can then be obtained in a few
m inutes at any tim e from the representative and nom inal accounts .
The accuracy o f the balance o f each ice ledger account can be d eterm ined as found convenient by footing the balances o f each section and
com paring the total with the balance shown on the representative accountin the general ledger .
Sy stem for Retai l Drug B us iness .
A large d rug s tore i s usually d ivid ed into fou r d epartm ents , vizI . P ropr ietary m ed icines , toi let articles , etc.
2. P rescriptions .
3. Soda fountain.
4 . Cigars .
In ord er to show how statistics m ay be obtained w ith the least poss ibleexpend iture of tim e and trouble, we w il l d escr ibe the m ethod s used in a
large d rug bus ines s recently establ ished . It is an incorporated com panycapital ized at in 30 0 shares o f $100 each , o f wh ich A , the P res id ent,hold s 20 0 and B , the Secretary and Treasurer , ho ld s 100 . There is both a
P UDCN AéE 9 5 C 0 9 0
cash and a cred it bus ines s , the cred it sales being com paratively few innum
ber . The accounting d etails to be cons id ered , therefore, cons ist o f pur
chases and expenses on the one hand , and cash sales and cred it sales on
the other .
A sm al l purchase record i s used , ru led for nam e o f cred itor , date of
invoice, total o f invoices, and fou r co lum ns for d istr ibution to the four
d epartm ents . As invoices are received , they are entered in th is book and
the bil ls are then filed away und er their d ue d ates for cash d iscounts , noaccounts w ith crd ito rs being carried in the ledger . At the end of the
m onth ,th is purchase record i s footed and the total of the total colum n i s
”
N ith regard to cred it sales , a regu lar account is kept with eachcustom er on the Loose Leaf Ledger plan, wh ich perm its of the transferof paid accounts to a separate bind er , leaving only the l ive accounts to d ealw ith , which i s a cons id erable advantage. These accounts are kept in alphabetical ord er on the self- ind exing style, so that no ind ex is requ ired . Theyare posted d irect from the salesm an’s cred it ticket without the interventiono f any other record . The cash register or the salesm an
’
s own record gi vethe totals of the cred it sales each day , and the grand total i s charged d ailyto an account in the ledger cal led Accounts Receivable Account” a nd
cred ited in their respective proportions to the d epartm ent accounts .
Accounts Receivable account i s also cred ited at the end of the m onthw ith the total of the colum n provid ed in the cash book for receipts fromcustom ers . Th is account thus shows the total outstand ings due fromcustom ers .
C A 5 H P A ID
The accounts receivable account , the accounts payable account , thed epartm ent accounts , capital account and any other representativeaccounts , should be kept separate from the custom ers ’ accounts , because
the trial balance is taken entirely from the form er as per the followingexam ple
Cash and B ank Cap ita l StockAccounts Receivab le Accounts Payab leFurni ture and Fixtures Interest and D i scount
Patent Rights Dept. 2
Dept. I
Dept. 3Dept. 4
Genera l Expens e
00
When inventory is taken, the earnings of each d epartm ent can be ascertained by cred iting each d epartm ent account w ith the d epartm ental inventory. The d epartm ent accounts w ill then show as follows
18
DEPARTM ENT No .
Inv. Jan. I st 555 60 Cash Sa lesPurchases 44 Cred it Sa lesExpenses 864 42 Inv . June 1st
B alancw—Gro ss Profits . 5 14 59
85 85
We have referred to the turnover onwh ich general expense shou ld be
pro- rated , and now proceed to i l lus trate sam e :
Invento ry , Jan. I s t
PurchasesExpenses
Less Inv. June I st
Turnover 76 So ld fo r 35.
The percentage of general or adm inistrative expense, therefore, wou ldbe calcu lated on the total turnover of the four d epartm ents , after wh ich theam ounts to be charged against each d epartm ent cou ld be calcu lated in theusual way , the balance of the d epartm ent accounts then showing net profit.Another m ethod of taking care of custom ers
’
accounts , i f they are not
very num erous , i s as follows : Obtain from a m anufactur ing stationer asufficient num ber of boxes m ad e to accom m od ate your bil ls . P lace thed upl icate bills in these boxes (wh ich shou ld be m arked outs id e with the
nam e of the custom er and kept in alphabetical ord er) and place above thema form o f s tatem ent , wh ich should also be in dupl icate, with carbon sheetbetween . On th is s tatem ent enter d ate and am ount of each bil l as d eposited in the boxes . At the end o f the m onth go through the boxes , foot thes tatem ents , leave the d upl icates in the boxes , and m ai l the orig inals tothe custom ers w ith request for paym ent. Cash paym ents should be
entered on these s tatem ents from the cash book, and when bil ls are paid ,the papers relating to the accounts shou ld be taken out of the boxes so
that they can be used for other custom ers .
Pay -Roll System s.
Many diff erent m ethod s o f arrang ing pay ro lls have beendew'
sed witha vi ew both of saving cleri cal work and obtaining a check on the accuracyo f the pay ro ll.
Pay rolls are frequently com plicated by the em ployes obtainingad vances on their pay, and being charged with goods or suppl ies. In the
d ays when book- keepers transferred everything into the journal prior to
po sting to the ledger, they also kept their pay roll accounts in the length iestand m ost roundabout way possible . From the pay roll they copied all thenam es of the em ployes into the journal, and having opened an individualaccount with each em ploye in the ledger, they proceed ed to post to thoseaccounts from the journal. Now any proper system used wi ll provide forbut two postings to ledger accounts, the charge of the total to ledgeraccount and the cred it to cash . The pay roll book itself is so arranged witha system of short leaves following the nam es pages (see illustrations) that
the nam es of the em ployes need be wri tten only once in thirteen weeks,perhaps, instead of every week. Where the em ployes are charged withgoods and cash advances, a com bined pay roll and ledger i s used,which is especially adapted to the requ irem ents of plantations andlum ber cam ps, where a general store is m ai ntained and em ployes are paidby tickets representing the value of wages earned , wh ich they can eitherexchange for cash at the com pany
’
s offi ce or for goods at the com pany’sstore.
Another labor- saving m ethod is i llustrated below, where the pay roll
clerk sim ply takes account of tim e lo st instead of tim eworking , so that if a
m anworks six fu ll d ays with the exception o f two hours on one d ay, it isonly necessary to write the figure 2 on the pay roll instead o f the figures10 for five d ays in the week and the figure 8 onthe s ixth d ay when the tim ewas lost. By the o rd inary m ethod twelve figures would be written in thepay ro l l book ; by th is m ethod only one figure i s written, a saving o f elevenfigures. If it is necessary to keep track o f the tim e of two hund redem ployes, it i s easy to see what a saving o f tim e th is m ethod afford s .
Each em ploye has a num ber and carries a check with the corresponding num ber. He is required to d eposit the sani e in the m orning beforegoing to h is post o f d uty in a box attached to the check- board
,wh ich is
num bered from one up accord ing to the num ber of em ployes. After the
hour of com m encem ent the tim e - keeper distributes these checks on the
check-board and takes a record o f al l checks not on the board, wh ichrepresents the em ployes not present . The board i s then kept in the tim e
keeper’s offi ce until the noon hour fo r closing ,when the sam e operations
are gone through as in the m o rning . If for any reason an em ployed esires to leave before the regu lar tim e for closing he procures an ord erfo r his check from h is respective forem an, stating the num ber o f hours hehas worked up to the tim e o f his d eparture . This order is presented to
the tim e-keeper , who d elivers to the em ploye h i s cheek and m akes a recordo f h is tim e on the list above referred to . Each forem an i s requ ired tom ake a daily report of his em ployes who are absent , and th is report i schecked against the tim e- keeper ’s record . Th is form s a safeguard forer rors. This form s a com plete record of em ployes not present and thebalance o f the em ployes on your pay- roll m u st necessari ly be present .
You are now ready to post to your tim e - book and here com es theeconom ical feature o f th is system . You sim ply post the check num bersthat were absent ; those present taking care o f them selves on the books ,
'
as you wi ll discover later. In ord er that y ou m ay fully und erstand howth is is done , I wil l give below an illustration o f the m ethod generally usedby tim e-keepers , and one to the system I refer to»
tickets to each em ploye, the tickets stat ing the am ount ofwages due and theinstruction that onreceipting sam e and presenting it to the cash ier the am ountw i ll be paid . These receipts can then be filed away as vouchers or pasted on
the pay roll book or sheet.
PAY ROLL SYSTEM FOR HARDWARE M ANUFACTURING COM PANY .
The following m ethod of handling the labor account o f a large m anufacturing concern, w il l perhaps be of interest
The com pany is engaged in the m anufacture of bui ld ers’ hardware andem ploys about 30 0 m en; the labor is subd ivid ed into departm ents, beg inningat the pattern departm ent
,and ending with the packing and shipping depart
m ent, each d epartm ent having a forem an, who ,in addi tion to their other
duties, keep the tim e of the m en in their respective departm ents. The fore
Q o m o Ke V anna » i s ta c o
m anreports the tim e of them to the tim e- keeper twice a week, Thursdays andSaturdays, onsl ips specially ruled for this purpose ( see form No . I Theses l ips arewr ittenup by the tim e-keeper ona specially ru led book ( see form No.
the letters D andJafter the nam es of the workm en indicate whether thework is day or job.
After the week’s work i s all entered up, prices put in, extensions andfootings m ade, etc., the totals are entered in the pay roll ledger ( see form No.
3) w ith the parties’ nam es and num ber of hours m ad e. The job hours are
entered in red ink and the day hours in black ink, thus readi ly showing thekind of work each m anhas done at a g lance.
8
After the pay roll is com pleted , a recapitulation is m ade showing theam ount of day and job work of each departm ent, which should tally with the
total footings of the pay roll, these sum m aries are entered inthe back of thepay roll book ina condensed form ( see form No. 5) from this, very useful
and im portant inform ation is gathered. The com parative cost of each
departm ent is readily seen, the percentage of d ay and job work i s shown, thelatter inform ationbeing indispensable infiguring the cost on the product ofthe plant.
The com pany also runs a com m issary departm ent inconnection with itsbusiness. Com m issary checks are issued to the em ployes against their tim e,the checks used are sm all pieces of cardboard 3x5 inches ( see form No.
which are num bered consecutively . When a check i s issued it is charged ona m em orandum book and posted from there to the pay roll ledger in the
colum n m arked “Deductions,” other i tem s advanced to help, such as cash,coal, etc., are also entered in this colum n. These several am ounts deductedfrom the am ount earned g ives thenet am ount due.
After the pay roll i s closed , the tim e-keeper next m akes out a ticket foreach m an, showing the am ount earned, deductions m ad e, i f any, and the netam ount due him for the week. These tickets are put up in envelopes andturned over to the forem an to be distributed by them to the m en in their
departm ents.
Thenext step is to prepare for paying out the m oney. For this purposethey use m ani lla coinbags 3x4yz inches in s ize.
The nam e and am ount i s first plainly writtenon the upper end of the
bag, the m oney i s then counted out by the tim e-keeper and passed over wi ththe coin bag to an assistant, who recounts it
,puts it into the coin bag, and
seals itup. After thus putting up them oney, these bags are laid out onsom e
9
suitable place m alphabetical order. When the hour for paying off arrives,the m en assem ble at the pay window of the tim e-keeper ’5 office and presenttheir tickets for paym ent. After com parison w ith the coin bag as to nam eand am ount and getting it properly receipted , the m oney i s passed out to theowner.
After all o f these tickets have been cashed , they are filed away in som econvenient place for reference and as vouchers for the m oney paid out for
labor.
By this m ethod the m enare paid off every Saturd ay evening, one week’
s
wages being kept behind , as it takes this length o f tim e to m ake up the
pay roll.The actual tim e consum ed inpaying off the m enbeing about th irty m in
utes, this system was practically dev i sed by the writer and used for several
years w ith satisfactory results—S . S . B urch .
PAY ROLL SYSTEM FOR A TAN NERY .
It would be im practical for large concerns, having.
m any em ployes tokeep the account o f every em ploye on the regu lar double entry ledger. At thesam e tim e a system m ust be keptby which any possible errors in em ployes canbe avoid ed . The follow ing i s a system which i s now being used by a largenum ber of m anu facturers , and although one m ay cal l it double entry, it isauxi lliary to the regular set o f double entry books . The system is com
prised o i only two extra or special books . One i s the em ployes ’ tim e ledger,and the other i s the coupon register. I w i l l d escribe the form er as follows.The pages are num bered in fo l io, that i s, there i s a r ight hand page and a lefthand page for m cry twenty
- five em ployes ’ accounts. (See cut No . At
sam e date as entry on cash book. All cash charges on tim e ledger should be
preced ed by the letter C, and all journal charges by the letter J . The totalcharges in any one colum n in tim e ledger
, on any given day, should correspond w ith total charged sam e day to pay roll in the cash book and journal.
Thefirst m oney colum n o f the r ight hand page is for wages. The secondcolum n i s for sund ry cred its, or for balances carr ied forward from previousm onth. Into the third colum n are extended the total charges for the m onth .
Into the fourth m oney colum n i s carried the balance d ue each em ploye at endof m onth, after d educting all charges . The next colum n shows when balancewas paid . If paid on the regu lar pay day, the initials
“P. D .
”are inserted .
If paid any other tim e, insert the date. The last colum n i s for rem arks,and
into wh ich should be noted how balance was d isposed of After the tim e i sall entered ontim e ledger
,and figured and carried out, then all charges shou ld
be extend ed into the charge colum n. Then carry out the balances into the balance colum n. Then add up the colum ns onthe right hand page and prove asfollows : Ad d the first colum n to the second colum n, then subtract the thirdcolum n
,and the rem ainder should correspond w ith the last or balance col
um n. Then the footings o f all the pages of the sam e m onth are groupedtogether on one page and add ed up, and proved again, as above.
The aggregate footings of the first column of any m onth constitute the
pay roll for the m onth, and the footings of the last colum ns constitute the balance due em ployes on account of pay roll, and shou ld correspond with thebalance o f pay roll account in the double- entry ledger. After pay roll is al lcom plete d ivid e up the d ifferent labor item s, and m ake a journal entry, say asabove.
PIECE WORK .
Where a piecework system is ad opted , it is necessary to pay the strictest attention to the question of the output
,as the workm an is l iable to
sacrifice skill and careful attention to h is work for rapid ity of prod uction inord er to com plete as large a num ber of articles as possible and so increasethe am ount o f h is rem uneration . Those engaged on piece work are alsol iable to be careless with m achinery, tools and m aterial suppl ied, sacrificingeverything to the end of securing a large output . Labor unions d o not,as a rule, look upon piece work with favor, because the em ployer bases hi s
rate for p1ece work on the am ount of work perform ed by the strongest andm ost expert workm an
,thus rend ering it im possible for the ord inary work
m an to gain a reasonable living.
Where both piece work and day work are em ployed in the one establishm ent, it is useful to keep a record wh ich shall allow o f a com parison
9 15 6 5 VVOQ K Q 6 C 0 9 0
between the two m ethod s, so that it can always be ascertained wh ich is them ost profitable m ethod of m anufacture of any g iven article.
a:
COM B INED PAY ROLL AND LEDGER .
Accounts with laborers form an im portant part o f any system o f
accounting d ealing with plantations. A com bined pay roll and ledgershould be ad opted wh ich wil l save all the trouble of keep ing individ ualaccounts with laborers, and at the sam e tim e prevent the writing o f nam esoftener than once in about thirteen weeks instead of every week, as is
HA N DS) R AY R OL L l . 5 0 t
custom ary on m ost pay rolls . A com bined book of th is kind i s arrangedon the tabu lar system as per the following i l lustration : The laborer is
given by the superintend ent a ticket each day for value of work d one, andthis ticket he can exchange for cash at the com pany’s office, or for m er
chand ise at the com pany’s store . The book- keeper posts the d ebits fromthese tickets and files them away fo r reference . The superintend ent keepsan account o f all tickets issued and at the end of the week m akes a returnof the total wages earned by each m an,
d uly O . K.
’
d , from which the bookkeeper posts the wages cred ited to the pay roll and ledger.
The books should be ruled so that two weeks can go on left- handpages and three weeks on rig ht - hand pages. Then insert as m any cut, o rnarrow leaves (without nam e and num ber colum ns) as m ay be consid eredpractical
,the books thus running for as m any weeks as d esired without
rewriting the nam es.
TIM ERECORD SYSTEM FOR A FACTORY.
Each workm an i s furnished with a cost card (Fig. on which herecord s particu lars o f tim e consum ed and m aterial u sed on the contract
,
o r job, 0 11 wh ich he i s engaged . \V hen the job i s com pleted th is card i s
turned in to the cost clerk, who figu res o ut on it the cost o f m aterial , labor
(Cos T CA DD n a e ) THEA M ED ICA N M ANUFA CT UQ ING CO ,
and sund ries and enters it on the Cost Record o f Sum m ary (Fig. A
separate page is allotted to each contract o r job , and the total cost o f sam e
ascertained . This am ount is then posted to the contract account in the
ledger , wh ich is cred ited with contract price , the d ifference being the
C 0 6 7"
S U M M A Q Y
am ount Of either loss o r gain. Where certain staple articles are m anufac
tured a com parative statem ent o f cost o f m anufacture shou ld be m ain
tained , inorder to ascertain that such costs are not excessive o r exceptional
in any way.
In Figure 5 we show a form o f P ay Roll Book , the particulars o f
wh ich are Obtained from the Tim e Record er . If the P ay Roll Book i s com
DA Y D O L L. B OO/f
pared with the workm en’
s co st card s a very good check i s Obtained on the
total tim e reported .
14
one for em ployes who are paid wages , and one for all others. On rem ovingthe record sheets (Form II.) from the clocks in the m orning, that for the
salaried em ployes is sim ply placed onfile for inform ation of those to whomsuch em ployes are responsible.
On the record sheet from the other clock, the full am ount of tim e as
shown by the record i s extend ed into the colum n head ed total tim e. The
am ount of such tim e as has been spent onpiece-work being ascertained fromthe factory clerk (as described later) is entered in the piece-work colum n,
and the d ifference between the two extend ed into the colum n for day work.
The tim e in this colum n is entered into the wages book ( Form III .) eachday
,it having first been checked with the factory clerk’s day-work tickets
and daily tim e sheet in ord er to ascertain that all tim e cred ited to theworkm anhas been charged out against som e factory ord er. The total and piecework tim e being ad d ed , the d ifference should, of course, correspond withthe to tal of the Outsid e or d ay-work colum n . If a workm an is allowed to goout on his own business d uring working hours he is gi ven a pass (FormIV.)by his forem an , ind icating the tim e he stopped work . The d oo r being
“ IV N fl b k m w “ w a v e“
so arranged that he has to pass the tim e - keeper ’s d esk to leave the bu i ld ing,he gives hi s pass to the tim e- keeper and upon his return reports him self ashe passes in. The tim e he has been out is noted onhis pass , and is d ed uctedfrom the tim e passed to his cred it through the wages book for that day . If
he goes out onthe firm ’
s business he is given an outward tim e card ind icating the tim e he leaves the shop
,and having the num ber o f the ord er upon
wh ich h is work outsid e is required . This he leaves with the tim e- keeper.
On his return he receives this card ,wh ich he returns to his forem an in the
usual course. The tim e- keeper thus has either a pass o r an outwork tim e
card in h is po ssession for each workm an d uring absence from the shop . Itwil l be seen that every alternate page o f the wages book is a flyleaf; thisenables one writing Of workm en’
s nam es to suffice for two half m onths .
The keystone of factory accounting is a rigid ad herence to the ru lethat no work shal l be put in hand , expend iture incurred o r goods or m ateriald elivered without written authority em anating from the Office, and that
all papers and record s referring to or record ing such work,expenditure, or
d el ivery, m ust bear the num ber of the ord er autho iz ing the sam e.On receipt o f card from factory clerk and m aterial from stores, the fore
m an O i the d epartm ent puts the ord er in hand at once . He issues a tim e
card (Form XX I. to XX IV.) to the workm an to whom he allots the job,first noting thereon the ord er num ber and the d ate . With his private punchhe ind icates the hour at wh ich work is begun on the ord er in question.
Wh en the workm an finishes the operation , o r i s put upon another job, ncreturns the card to the forem an . The latter punches the tim e at whichwork was stopped on that particular ord er. The only writing the workm anis called upon to d o ,
i s to fill in the space head ed “Nature ofWork
, and
sign h is nam e . In a great m any instances it is not necessary to specifynature ofwork done, as , particularly in the m anufacture of stock, the workm an’s nam e is suffi cient to ind icate to the Office staff the nature of the workd one by him .
The tim e card s in possession o f the fo rem an are of four kind s,each o f
a d istinctive color, nam ely, d ay -work , piece-work, prem ium -work, and out
out-work. The ruling is practical ly the sam e on all card s, and as far
as both workm an and forem an are concerned , no m ore clerical work isnecessitated by one than the o ther.
On the prem ium tim e card the forem an fills in the tim e allowed,and
with,that exception the card s are treated exactly the sam e . It will be seen
that all responsibility for the correctness o f his tim e card is o ff the workm an,and put where it properly belongs—o n the forem an of the d epartm ent .The latter is responsible for the tim e card bearing the correct num ber, andshowing the actual am ount Of tim e expend ed upon that num ber. Underno circum stances is the workm an allowed to begin another job until he hasreturned to the forem an the card previously used by him and Obtainedanother with his starting tim e fo r that job punched uoon it . If a m an is
taken Off a job and goes back again to work onthe sam e, he gets a new cardeach tim e .
The back of the card s m ay be used for any rem arks either the workm anor forem an m ay wish to put on record concerning either the work d one o rtim e expend ed .
As regard s the prem ium tim e card , the system o f paying wages comm only cal led the
“prem ium plan,
”m ay require a l ittle explanation . To
those interested inthe question, and d esiring to study the plan inthe l ight o factual record ed results, I would recom m end a num ber of articles und er the
head ing “P rem ium Plan,
” wh ich appeared in the Am erican Mach inist atd ifferent tim es d uring the past two years. Briefly put the id ea Of the plani s , after ascertaining from past record s how long it has taken to produce agiven article , o r com plete a given operation , to Offer the workm an a prem ium or ad d itional wage upon such tim e as he can save on the sam e work.
If past record s show that certain work has been repeated ly d one in tenhours, it i s clear that if the workm an can be ind uced to d o the sam e work,or prod uce the sam e quantity in say , nine hours, a saving has been effected ,and the id ea i s to allow the workm an to share in that saving. Suppose theem ploye i s to be paid at the rate of 20 cents per hour, if he is Offered , sayone- third Of that am ount fo r each hour saved , he will see that hi s em ployer
’
s
interests and h is own are id entical . It is really Offering the workm an that
m ost powerfu l o f all ind ucem ents to increase his output, nam ely, self- interest. Those who have had long experience with th is plan claim it is the
only system whereby increased wages to the workm an m ean reduced coststo the em ployer.
From tim e to tim e d uring the day the tim e checks returned to the fore
m anare collected by the factory clerk . From the tim e punched he calcu
lates the tim e expend ed and , filling in the workm an’s rate per hour, extend s
it into space for value . On piece-work card s he sim ply m arks the tim eexpend ed and d oes not extend any value . The card s are kept sorted byworkm an
’
s num ber , and entered on the daily tim e sheets (Form
These sheets are ru led into convenient spaces to hold for each m ana record
18
to the wo rkm an . The original , which is of a d ifferent color , goes to the
o ffi ce and is extend ed and posted to the cost sheet. These piece-workslips are kept sorted by workm an ’s num ber until after the next pay day,when they are m ad e up and posted to the cred it o f the workm an ; they arethen sorted by ord er num ber and are filed away with other papers con
nected with the sam e ord er . It will be noted that while orig inal and d uplicate contain the sam e inform ation
, the printed m atter i s entirely d iff erent ,so by no poss ible m eans can the d uplicate be used to d raw pay the secondtim e, for wo rk done .
At first sight it would appear as though the system of a d iff erent tim ecard for each job would resu lt in so m any papers that the record s wou ld betoo bulky to be qu ickly and accurately hand led . If it were necessary toleave the collecting, sorting, pr icing, and extend ing of all tim e -card s untilthe close o f the (lay it m ight be found so . Co llecting them frequentlyd uring the d ay and keeping them sorted by workm an ’s num ber and pricedand extend ed , it shou ld only take a very short tim e to check them with theclock record s the next m orning. This having been d one , the tickets shouldbe sorted accord ing to ord er num ber, and it will then be found that theycanbe posted to the cost sheets in less tim e, and m uch m ore accurately thanif several num bers were onone card. Besid es putting the responsibility fo rthe proper order num ber and correct tim e upon the forem an, the system Of
a single ticket for each ord er takes from the workm an al l Opportunity toeither “cook” h i s tim e, or enter as d ay -work tim e wh ich he has actual lyspent upon piece-wo rk , so getting paid twice for hi s labo r.
11: 1k a:
PAY ROLL SYSTEM FOR A LUM B ER CORPORATION.
The laborers are em ployed in different ways , som etim es spending partof a day in one d epartm ent and the rem aind er in another. They also obtain
20
advances of cash, and purchase m erchand ise at the cam p store. It is
necessary, therefore , to have a special pay roll book , o r, as it i s cal led, a“Hand s Ledger,” an illustration o f wh ich will be found und er the head ingof Pay Ro ll . Each workm an i s furnished with d upl icate tickets —one foreach d epartment in wh ich he works . On th is ticket the forem an punches
the tim e occupied on the job, so that the laborer is always in a position tocheck up the settlem ent of his account by the tim e- keeper. We appendsam ples o f these duplicate tickets.
The orig inals Of these tickets go to the tim e- keeper, from wh ich hem akes up h is record s .
PAY ROLL SYSTEM FOR A M IN INGCORPORATION .
The com pany em ploys about I ,20 0 to I ,50 0 natives and 60 to 70 Am er
i cans , the latter being forem en,m echanics
,clerks and head s of d epartm ents .
The pay roll accounts for the natives are kept by the Tienda d e Raya (m eaning a store where m erchand ise i s advanced against tim e tickets The
Tiend a d e Raya cond ucts also what i s called a Prestim o Office (cashier’
s or
pay offi ce), where labor tim e- keepers and Prestim o cashier are em ployed.
21
It also cond ucts several branch stores wh ich ,however, are cash stores. Al
m erchand ise invoices and freights fo r the Tiend a are charged to it directwhen paid
,as also all cash advanced it for use in the Prestim o Offi ce . At the
end of the quarter the Tiend a de Raya i s charged with ad m inistration expenses and accrued profits . The Tiend a sched ules its pay rolls in whatm ight be term ed a d istribution journal , showing am ount of each class oflabor chargeable for the m onth to each m ine , each d epartm ent or eachaccount . This book when written up at close of m onth is turned in to thegeneral Office , when Tiend a d e Raya receives cred it fo r total am ount o f payrolls
,also for the personal accounts OfAm erican em ployes .
At the close Of the m onth a pay roll is m ad e up in the general Office forall Am eri can and salaried em ployes . There being no banking facilitieswhatever here, these em ployes leave the balance o f their earnings with thecom pany, each one has an account and i s furnished with a pass book .
Em ployes having balances are perm itted to d raw cash at will during them onth , and al l are al lowed store accounts . These cash item s (includ ingchecks and d rafts) are d ebited in d etai l d uring the m onth , and at the closeof the m onth the various acounts are charged with their respective storeaccounts and credited with salaries .
The Voucher System
A SYM POSIUM FROM “THE BOOK-KEEPER.”
HE V oucher Sys tem (so cal led ) cons ists of a record of accounts payable, arranged ith colum ns for the d is tr ibution of purchases to theirproper d epartm ents ; a record o f the paym ent of such accounts ; and
a form of voucher wh ich accom panies the paym ent .The V oucher Record (or record of accounts payable) i s not used in
all respects in the sam e way as a purchase record , for the reason that whereas a purchase record i s usual ly d evoted to a record of good s purchased , thevoucher record covers not only good s purchased but expend itures of whatever nature.
In the cash book a colum n i s provid ed on the cred it s id e for V ouchersPayable,
”and the paym ents entered in the cash book are posted to the
voucher record , the check num ber also being given. It i s one of the es
sentials o f th is sys tem that al l paym ents , no m atter how sm al l , be paid bycheck .
An account cal led Unpaid V ouchers ’ account i s opened in the generalledger , to which the total o f vouchers issued , as per the voucher record , i spos ted at the close of each m onth . The total o f the “
V ouchers Payable”
account in the cash book is posted at the close of each m onth to the d ebit ofthis account, the balance show ing the am ount o f vouchers outs tand ing and
unpaid .
For every entry in the voucher record , or series o f entr ies for one con
cern, a num bered voucher i s m ad e out, and these vouchers are kept in a
file until taken out for paym ent . After paym ent the voucher can be filedaway in alphabetical or num erical ord er , wh ichever m ethod m ay be foundm os t convenient to - the bus iness . The bills referred to on the vouchershou ld be attached to sam e prior to fil ing.
When vouchers are filed num erical ly , the follow ing is an excellent planfor keeping tracks o f sam e and afford ing a ready reference. File the vouchers in packages each m onth ; use an ord inary ind ex, but have it ruled w ithcolum ns for each m onth of suffi cient w id th to accom m od ate the vouchernum bers ; then ind ex all the vouchers filed away each m onth ,
thus : J . 0 .
Johnson 8: Com pany wou ld be ind exed V oucher No . 163 in Apr il ; 462 inJune 520 in Ju ly, etc
The voucher itself shou ld be arranged so that it bears on i ts face thefollowing endorsem ents
O. K. of shipping departm ent that goods have been duly received .
O. K. Of purchase agent that pr ices and term s are correct.0 . K. o f book-keeper that extensions are correct.0 . K. o f Aud itor .
And finally 0 . K. of Presid ent or Secretary for paym ent.Whi le this involves a certain am ount o f extra work, the system fur
nishes a com plete check upon the accounts payable of a bus iness, and i fcarried out properly, practical ly rend ers it im possible for anyth ing to be paidout for goods which have not been received or paid tw ice or paid w ithoutauthority .
A great m any Corporations now com bine voucher and check inthe sam eform by adding the following paragraph :When this voucher is s igned by the Treasurer , and counters igned by the
Pres id ent of the and receipted by the Payee, it becom esa draft payable at the First National Bank of
(S ig. o f President.) (S ig. of Treasurer .)When the voucher regi ster i s proper ly arranged with distribution col
um ns, the d istr ibution on the back of the voucher i s unnecessary .
for which it is d esigned. That these purposes m ay be m ad e clear I wi lld efine and explain them :
First—A voucher is a receipt for a paym ent of m oney.
Second—It is a docum ent d esigned to show d efinitely for what purposesuch paym ent is m ade.
Third—It i s m ad e uniform in size and shape so that it m ay be filed in am anner to m ake it easi ly obtainable at a m om ent’s notice.
Fourth—It is consecutively num bered , in ord er that it m ay be used toadvantage in aud iting, and the num ber of the voucher shou ld invariably preced e the entry o f paym ent in the cash book.
Fi fth—It shou ld be properly approved for paym ent by the officers o fthe corporation or m em ber o f the firm d es ignated for th is purpose, and inthis particular too m uch care cannot be exercised .
S ixth—It m ust accord in am ount with the invoice, or collection Of invoices, or account, which it represents , or i f used for purposes o f wage orsalary, w ith the item s thereon stipulated .
Being thus a d efinite and absolute receipt, cover ing a definite and absolute account , it i s obvious that a voucher shou ld have neither interl ineationor erasures and either of these would inval id ate it. If a m istake i s m ad eit i s just as necessary to void the num ber and m ake a new voucher as it wouldbe to vo id a bank check incorrectly filled out, and wr ite a new one. No bus iness m an wou ld th ink for a m om ent of m aking erasures or interl ineationsupon his bank check . The void ed vouchers shou ld be filed num er ically w iththe others .
A voucher shou ld never cover a greater or lesser am ount than theam ount paid , and should not be used for paym ents upon account except asa sim ple receipt. I d o not approve o f the use o f vouchers for this purpose atall . It i s better i f paym ents upon account are m ad e to take a s im ple receipt,and finally
,when the fast paym ent is m ad e and the account closed to m ake a
voucher reciting therein the com ponent parts o f the account and the var iouscred its as shown from tim e to tim e. Thus the voucher becom es in itselfa full and final receipt for the account.
The best use o f the voucher system which any firm canm ake is to use it
s im ply to cover paym ent for accounts due, and bi lls d iscounted for cash .
which are charged d irect to m erchand ise or accounts payable.In this case a voucher m ay recite the various invoices represented there
in . but und er no circum stances d o we consid er it necessary to duplicate uponthe voucher the var ious item s o f the original bi lls . This seem s like m uchuseless work, carries no authenticity w ith it and afford s ad d itional Opportunity for error . Som e firm s check up their m onthly accounts payable uponstatem ents sent by their cred itors , and , as i s shown in Form A
,to follow
,
attach the statem ent o f the person or firm inwhose favor the voucher i s m adeto the voucher . Others prefer to d estroy or file the statem ent and to wr itein the d ates and am ounts of the var ious invoices covered by the voucher .
Either m ethod i s equally correct, but I lean toward the attaching of thechecked and O . K
’
d statem ent, as it carr ies the ad d itional evid ence o f correctness o f the voucher furnished by the cred itor , and d oes not requ ire the re
checking o f the voucher at som e future d ate to establish its accuracy. Som e
firm s d estroy the cred itor ’s statem ent , but attach a statem ent o f their own,
6
fu lly and carefu lly filled out. B ut the good effect of this dupl ication is som ewhat problem atical . It cannot by any m eans carry in itself the weight orauthenticity which the origi nal statem ent d oes . Bes id es th is it m ay requirere- checking by the receiving firm .
Nine tenths o f the firm s or corporations us ing the voucher system atpresent discount their bills, but there i s no good reason why every firmshou ld not add this s im ple and effective check, guarding paym ents, assuringproper receipt, and gu iding any exam ination Of the books wh ich m ay becom eeither necessary or d es irable.
In lines of business of considerable m agnitud e, such as railroad companics , express com panies and great corporations, where the branches are
num erous, and rad iate to al l points o f the com pass ; where the purchases arem ade at m any d ifferent points , and by m any different people, whi le the
paym ents are m ade from one central point, it m ay becom e necessary to havevouchers in dupl icate or tripl icate, but in any ord inary business this isentirely unnecessary . Whenever a d upl icate voucher system i s used the
original invoices m ay be attached to the dupl icate voucher and i f so doneshould , at all tim es, rem ain a part thereof.
The m ain abuse of the voucher system of the present day i s the largeam ount of useless and unnecessary labor em ployed , corporations in m anycases requ iring that every item from the original invoice be entered upon thevoucher, deplicating and tr ipl icating, where no necessity exists . Som erai lroad com panies go to the extrem e o f requ iring a separate voucher foreach separate invoice, hence firm s from whom they purchase IOO bi lls perm onth w ill be required to enter 10 0 paym ents to balance them . Such acourse i s s im ply idiotic.It does not seem to m e either justifiable or advantageous to m ake the
voucher itself do service as a check, as m any railroad s do . There can bebut one absolute advantage in so doing, and that is the positive certaintyof its return to the send er for fil ing, but as the publ ic is becom ing bettereducated from d ay to day, in this system , there i s hard ly less surety Of thereturn of the voucher which i s sent accom panied by a check, and that byreturnm ail, than of the one which d oes check service .
Som e of the rai lroad s m ake the voucher do check service and yet avoidsom e of the d isadvantages of the voucher- check, by us ing a rubber stam p,which m akes the voucher when properly s igned a s ight d raft upon the m aker.
I herew ith g ive such notice which i s used by the Texas and Pacific RailwayCom pany. In the body o f the voucher , after the prel im inary description,the read ing m atter i s as follows :
tn full from furni shed during the m onth o f
as per bills d ated as
attached to the original voucher .
The d raft notice is as follows :
Th is voucher when properl y d ated and rece ipted becom es a s ight d ra ft on L. S.
Sm ith , Asst. Treasurer the Texas Pac ific Ra i lway Co .,and w i l l be pa id on
presentation through the Nationa l B ank o f Com m erce in St. Lou is , M O.
The advantage ofmaking the voucher a draft in place o f a check i s, thatno entry need be m ad e in the cash book, unti l such d raft is presented andpaid, and it Should always be borne in m ind by those using this system thatthe d ate o f paym ent is the tim e of the return of the voucher and not the dayupon which it is dated and forwarded .
A carefu l com pari son of the various system s shows that m ost o f themhave m ore m inutiae than is necessary . I herewith append a fOrm used bythe Heusinger Hardware Co., of San Antonio, Texas ( and with som e s light
variations by num erous other houses) which appears to m e to be the s inequanonof al l form s . It i s s im ple, contains absolutely all that is necessary for itsfull purpose, and not one unnecessary item . This voucher does away wi th aform for send ing checks . If th is feature i s d eem ed undes irable, as it m ay be
by som e firm s, the first part o f the voucher could be eas i ly changed toelim inate that feature .
It w i ll be noticed that I have entered in the form statem ent attached ,but I have alread y explained how th is m ay be changed to the var ious item s
paid i f such change appears d esirable . Form A is the face of the voucher,and form B shows the back o f the voucher w ith the m atter necessary forfiling purposes . This voucher is of the proper s ize to be fold ed once, toabout the size of an ordinary check, and form B i s just the w id th of one fold.
It i s entirely necessary, I th ink , to state the necess ity for m ethod andprecis ion in any kind o f a voucher system which m ay be adopted . At
'
the
tim e of paym ent the num ber of the voucher Should preced e the entry, whichi s carried to its proper colum n in the cash book, or separated as d istr ibuted
8
In a previous letter regard ing voucher system s, I m entioned the un
wieldiness of the voucher attached to a check as being against its usefulnes s,but to show m e that I was in error upon this point M r . Baker brought forthhis cheek book, which i s exactly the s ize of any other cheek book, runningfive checks to the page. At first he was at a loss to overcom e this d ifl
’
i culty ,but itwas finally done by fold ing the voucher dupl icate over and padding thecheck book a little to m ake up for the thickness o f the extra leaves . Whenthe checks are written these extra fold ed leaves are laid over to the right outOf the way, and the checks are wr itten before the voucher .
I w ill g ive the m od us Operand i from the begi nning.
We w ill suppose that the m onth ly bil ls are to be checked up and paid.After being proper ly attested “correct by the receiving clerks , they passinto the book-keeper’s hand s, and he checks them against the item ized statem ent and attaches them to the statem ent from the front. Turning the
sta tem ent over he stam ps it with a rubber stam p, for the d istribution o f thech:trges, thus
DISTR IB UTION .
Of course this d istribution m ay be d ivid ed and subdivid ed to suit the
business. Below th is i s stam ped ;
Th is account pa id by
Check NO
D a ta:0 0 0 0 o o o o o o o o o o o o o o o o o o o o o o o o o
If them should be only one bi ll to be paid by check the m atter above
goes upon the back o f that bi ll.The greatest advantages of hand ling invoices inth is m anner is that they
at no tim e leave the general offi ce Of the com pany. In m any cases , especiallywhere the d epartm ents of bus iness are separated , often tim es in differentcities, the attestation of an invoice i s of relatively as m uch im portance as theinvoice itself. The proper place, there, for this invoice i s at the generalofli ce where there i s no opportunity for it to be lost or destroyed .
After these accounts have been aud ited correct by the book-keeperthey go to the cashier for paym ent , and taking the m arkings upon the backof each invoice or statem ent as hi s gu id e, he m akes checks for each i tem .
10
The checks and statem ents audited can then go to a th ird party 1f necessary,who fills inthe vouchers attached to the checks , from the statem ents and bi llsin hand. The checks m ay then be verified i f des ired by the s igner from the
papers above m entioned.
Of course, it is obvious that all o f the above m ay be done by one person, but we are assum ing now the us e o f this system in a business of som evolum e.
After the checks are ready, they are sent to the cred itor , w ithout a letteror rem ittance blank, which is unnecessary, thus a large am ount o f work issaved. Upon receipt the voucher i s d etached by the recipient and returnedin an envelope sent for that purpose with the rem ittance. The check itselfgoes i s wand ering way, m any tim es going through a num ber o f banks beforeit is ret urned to the sender. It i s, however, eventually returned ; then as thereceipts have been arranged num er ical ly, and as they still form a part Of thecheck which has been cashed , they are united back to back, and left to lie intheir num erical order unti l wanted .
After the checks have been m ad e out for the bills or statem ents the latter are filed away, not by m onth or date, but by the nam e of the cred itor bym eans of the Shannon, or som e other equal ly convenient file. The advan
tage of this i s, that in the future, i f any account or invoice should be calledfor, even i f it was several years Old , all of the bi lls would be found in thesam e fil ing section. If it is advisable for the purchases from any source forany year to he figured , all of the bills representing those purchases, are foundtogether , and it is consequently a very short task to m ake the showingrequi red.
In case a firm m akes a claim that a certain bil l or account i s unpaid, iti s the work Of a m om ent, even for the Ofli ce boy, to bring from the file inquestion the requ ired bill . Upon its back w i ll then be found the date of
paym ent and the num ber of the check and voucher.
As these returned checks and vouchers are filed as before stated in juxtaposition, a reference to the check in question brings forth with it a receiptfor the account in question, and it is forever settled.
The advantage of this sim ple plan for auditing work w il l be seen evenwi thout the necess ity of any explanation. It i s so sim ple that none of itsworkings can be h id den, provid ing al l p
aym ents be m ad e by check.You m ay say that all paym ents cannot be m ad e by check in the line of
a general business, but in answer I wil l show you that they can. Wagesm ay vouched for by the person who pays them . Salar ies by the cashier .
Petty cash m ay be eas i ly hand led in th is m anner . A stipu lated accountm ay be checked out, vouchered by the cashier, and charged i f you please topetty cash . We wi ll say that $20 0 i s thus charged to start this bal l. Nowduring the m onth the cashier pays such things as m ay com e like postage,express, janitor service and odd s and end s for which a personal receipt ofthe receiver is considered unnecessary. H i s expenses from this fund m aybe during the m onth, He m akes a check for that am ount and signsthe accom panying voucher ; while his statem ent of the i tem s of account afterbeing 0 . K
’
d by his superior is filed l ike any other invoice. You wi l l seethat the draw ing of this check restores the petty cash account to its equi librium ,
leaving both voucher and receipt where they proper ly belong .
11
In the m atter of the return o f the receipt accom panying the check theHyd raul ic Press Br ick Com pany assure m e that in the last five ears thatthey have used the system , there have been few occas ions to ask or the re
turn Of the receipt and thatnot one is m iss ing.
In order to hand le this system in a per fect m anner, every cent that isreceived in a business shou ld be depos ited and every cent that i s used in theconduct Of that bus iness in any of its d epartm ents should be checked out.In order that you m ay form a m ore com prehensive idea of this system thanperhaps this explanation m ay give you we wi ll herew ith reproduce the check,w ith accom panying voucher, used by the com pany above m entioned .
Cash book entries should be m ad e from these checks or stubs , and bepreced ed by the num ber of the check. If colum nar cash book is used ford i stribution no further posting i s necessary or exped ient unti l the close ofthe m onth. C. A. SWEETLAND.
The V oucher System inaM anufacturing B usiness.
HAVE been running a set o f books under the voucher system for severalyears , and thought possibly an outline of m y m ethod o f recording m ightbe of interest.As M r . Sweetland in hi s articles does not touch on any m anner of re
cording, I w i l l, as well as I can, explain our m ethod . We use what M r.
Sweetland term s the thi rd class voucher , viz . that of attaching the invoiceto voucher in the place of transcribing the i tem s of invoice to voucher, except in cases where there i s no invoice, in which case record o f i tem s i s
entered on voucher . We pav al l vouchers by check, although the cash ac
count m ay be used also i f de5 1red , I attach a COpy of our voucher, also a leaffrom our record book which we term “Supply Regi ster,
”it wi ll be seen
that the colum ns of the supply regi ster conform to the distribution of theback o f the voucher. The voucher and leaf o f the supply regi ster are selfexplanatory when com pared w ith the exam ples below .
The voucher is always recorded before m ai ling, and generally beforei ssuing a check for paym ent of sam e, although the num ber and date of checkshould be entered in supply regi ster before m ai ling, then we have a full andcom plete record o f the whole transaction , and in case the voucher i s lost wem ay m ake a duplicate. The supply regi ster has a grand total colum n to
12
work in a bundle. If I were to choose from the three classes Of vouchersm entioned by M r . Sweetland I would surely choose the third class tnpreference to any o f the others for the following reasons , viz. . ,
I st the savi ng oftim e in m aking vouchers ; 2nd , the origi nal 1nvoice m ust be accepted as cor
rect, in transcr ibing we are, to a certain extent, liable to m ake errors ; 3rd ,
as the num ber and date o f check i s record ed in supply regi ster as well ason the voucher , the check form s a receipt of the best kind, as ide from the
voucher i tself, therefore i f the voucher should be destroyed the check andrecord of voucher form s a very good receipt, or at least good proof that theaccount has been paid. A. F. JOHNSON .
The V oucher System in a Hardware B usiness.
DO not know that the follow ing procedure is not the usual onefollowedby those m aking use of the voucher system , but subm it it in case it m aybe found usefu l to som e readers . Invoices, having been received ,
checked, approved, and entered in an abstract journal proper ly ruled forsuch purpose, and the journal folio note dthereon, are filed away in properfile cases in order of date o f paym ent.
As each d ate of paym ent arr ives, the invoices due to be paid onthat dateare taken from the file case and vouchers drawn.
N O
H M O
16 9 9
m J M M W cW NQ P e
1h f u l l pa y m e n‘l‘
o f a b o v e s ta rc m e n'
t‘
( D IM a nd ~ ef u nn
C O N T IN IZN TA I. m a m a : c a
The vouchers are num bered consecutively, which num bers are enteredinthe cash book in a special colum n between the d ates and the ledger folios.
The vouchers when returned , s igned by the cred itor, are filed in num erical order, and an index m ade Of the nam es and principal item s of purchase,thereby enabl ing one to im m ediately refer to all the vouchers issued to anyone person or firm , and, also, to ascertain read i ly the cost of any article purchased at any particular date, or the nam e of the firm hand ling such an
article.
It is very convenient for the auditor, in this system , i f the num bers onthe checks and vouchers correspond, in order to afford a ready reference between check and voucher . Where business i s done w ith but one bank, thisis easi ly done.
I attach a convenient form for vouchers .
The V oucher System in a Wholesale B usiness.
I wish to outl ine the system I have in use and which I bel ieve to be thebest system inexi stence. The accom panying form s show both s ides of thevoucher (which should be the sam e s ize as checks used, and not too wide togo in a m edium size envelope w ithout fold ing) properly filled out .
m u m ” w a s M L ?
“oh—a .TQTEM CNT.
raw .9273.
The Voucher System in a FtuftGrowing B usiness.
I subm i t herewith a form for a check voucher that em bodies m anyvaluable features, the resu lt o f several years ’ exper ience as Aud itor of the
Ozark Orchard CO. It has been prepared in a m anner so that anyone canobtain from the face of the voucher all inform ation concerning the transactions o f which it is a record , and this is a m atter of great convenience whenexam ining accounts of great length. By us ing this form o f voucher, an
AC C O U N TJ pA YAa E Va u c h c n N o Oa m c a s Cfi be/ow
OZADKOne /1210 0 C0 .
m u m s C IT Y ,M O i tchi ne s s
“Em p e'
.
ofli ce boy cantake the Ledger, and, without asking questions, get all vouchers, and , at the sam e tim e, all checks used in m aking paym ents , thus presenting in perfect form ,
all the facts so useful in ad justing d isputed accounts .
Should you des ire it, I wil l subm it another form that I have prepared .
I hope that the form enclosed herein m ay be interesting to m em bers Of m yprofession. E. M . SM ITH .
18
An Accountants’ Voucher Record.
HEN the voucher system first cam e into use, the voucher record wasa book of reasonable s ize and w ith a com paratively sm all num berof colum ns. As the advantages of the system cam e to be m ore
generally understood and appreciated, the record gradual ly expanded , unti lnow it has, in som e instance, grown beyond m anageable proportions. Ad
vantageous d ivis ions and subd ivis ions of an account are som etim es om i ttedin order to prevent the record from becom ing unwieldy. The short formOf voucher record here shown is intended to be used in connection ei therw ith a voucher ledger or w ith voucher accounts opened in the regu larledger.
A‘
s H OQ T vow 0 5 0 0 0 0 ;
In a certain business, for exam ple, the accounts are classified underthree general head s, Ofli ce, m anufactur ing and selling. These pr incipal accounts are subd ivid ed into_m ater ials, labor , supplies, and so on. The ledgerheadings follow the sub- d ivis ions . Thus the led ger w i ll be headed , “m anufacturing account, m ater ials
,
” “m anufactur ing account, labor,
” “ofli ce ac
count, suppl ies,” and so on . The colum n in the short voucher form headed
“d istr ibution of voucher” shows the am ount to be posted, and the colum nhead ed “
subord inate account” shows the ledger account to which the posting is to be m ad e. This short form of voucher record adm i ts of an indefinite division and subdivision o f the accounts without enlarging the s ize ofthe record . The disadvantage attending its use l ies in the fact that the several am ounts have to be posted separately instead of in totals . On the otherhand, the ledger accounts will show the way each item i s running and wi llalso adm it of explanatory notes being m ad e in the rem ark colum n of the
ledger . JOHN H . BLACKLOCK .
A General V oucher Form .
The following will describe the voucher used in our business. The faceof sam e is ruled off for Date, Am ount, Discount, Deductions or Rebates, andTotal Colum n. There i s also room for other colum ns should sam e be necessary. This form , of course, involves only the writing of gross am ounts ofeach bi ll . The Deduction colum n can be used for whatever ded uctions
19
have been m ade onortgtnal invoice for m istakes, overcharges short onorder,etc., the sam e indetail being wri tten onthe invoice and not invoucher . On
the reverse s id e the voucher has the headings for the accounts as there are.
in the Ledger. This form can be m ade to fit any bus iness, as they can beas m any subdivi s ions m ad e as d eem ed necessary. The voucher num ber canbe taken from the check number, so that in case Of its non- return the checkcanbe filed in its stead . Where a cash book i s used with Speci al colum nsfor accounts payable and expense, then this voucher is real ly a transcr ipt ofsam e, and can be eas ily checked off in case of error, and where an accountis to be looked up, for paym ents m ad e. The voucher is m ade to fold overthe invoices and i s eas i ly filed with them . In case there should be a number Of single bills paid, each w ith its own voucher, and these bi l ls are all form achinery account for instance, then the separate vouchers can in their turnbe placed in one voucher and filed away as one, as for exam pleVoucher NO. 10875. J. Sm i th 81 Co ., M ach
'
nery acct .
l
10897. S . Brown .
1 10 0 0 . J . White .
1 10 0 1 . B . Black 81 Co .
And the s ingle voucher to cover these four would readVouchers Nos . 10875 . Paid ( d ate on seperate vouchers need
97. not be repeated.)1 10 0 0 .
1
Paid to Nam es on separate vouchers need not be repeated .
Machinery
Principles of Distribution in the V oucher System
HERE is scarcely any line of book-keeping in which one does not atall tim es run across the very interesting question as to what accountthis or that item shall be m ad e a charge, and the answer to the ques
tion, taken through a series o f fiscal per iod s, as shown by the entries themselves, i s quite a clear expos ition o f the principles uponwhich the com panyaccounting is carr ied on.
In som e respects it i s unfortunate that such a m arked variation Of circum stances, etc. , prevai ls in even the accounts of com panies of the sam eclass ; and so it is alm ost im poss ible to prescr ibe any precise m ethods of
ru ling, any accounting form u la by which the item s o f an extens ive bill wi thm any charges shal l be ass igned to d ebits wh ich w ill prove at all uniform in
subsequent period s ; d ebits of such a nature, that i s to say, that any subse
quent item s in various classes of bi lls, can be reasonably inferred , even inthe m ajor ity of cases, to be a charge against the sam e account as those atfirst occurring. It i s in fact this very circum stance which m akes the em
ploym ent of a carefu lly prepared , wel l item ized voucher fold er of so m uchvalue, both to those interested in the business and to the aud itor as well, gi ving, as it w i ll, i f properly used , a clear and expl icit statem ent Of the speciald istribution of the enclosed bi l l or aggregate o f bil ls ; and i f a fold er is prepared in such a m anner that there will be near ly half an inch between thel ines of the fold er, space w il l thus be left for the aud itor to note in red ink,perhaps, his own m ethod of d istr ibution of the d ifferent disbursem entswhich, to hi s practiced eye, seem to have been originally incorrectly awardedto this, that, or the other account on the books passing in review.
In few com panies, unless we includ e build ing and loan associations. is
there the s lightest attem pt to regulate the m ethod s of distributing the ex
pense accounts, by charter or by- laws ; although in m unicipal accounts we
com e very close to the by- law regulations as to the d istributive principles tobe em ployed through the ord inance book, which i s strictly an exem plificationof continually changing and enlarging corporation by- laws ; and prescribingit does, the uses to which the allotm ents Of the general fund shall be put,
it d istr ibutes, m any tim es in advance of the receipts, the revenue of the corpr ration along the line of accounting principles which are governed by theexigencies of the cases brought before the counci ls, and the face of the vouchers them selves w il l have to corroborate ineach case, the special distributionof the fund s which i s i llustrated in the paym ents for sewer, paving,
lightingand other purposes.
B ut in ordinary undertakings there cannot possibly be any regulationof the disbursem ents of the incom e either in advance or at other tim es, owingto the unforeseen character of the com pany d isbursem ents connected w ith theOperating expense account, and which in the case of the m unicipality isusual ly quite closely approxim ated in advance through the com ptroller’sestim ates at the beginning of the fiscal period. Perhaps the m ost valuabledifference between these two lines o f com panies, the factory and the city
22
accounts, lies in the sim ple statem ent that the latter is not in any real sensea corporation “
for profit” while the other is such in every sense of the term .
It is a well known fact that labor charges, for exam ple, incurred in thebui lding account, do not always rend er it m ore valuable as a com pany asset,and for that reason shou ld be exclud ed from an appearance thereund er.
Whenever lum ber i s purchased and m en are set to work to adapt it to itsplace in the factory structures, for som e new purpose, then we have whatconstitutes a charge against the bu ilding account ; but when the labor isem ployed w ithout the auxi liary o f new bu ild ing m aterial
,then it form s
a charge, not against one of the vis ible assets o f the com pany , but againsta tepai r and renewal account, which i s not o f the nature of an add ition or
im provem ent to the structure, but only a m aintenance thereo f.Manufacturing com panies usually m ake a m arked difference between
the bu i ld ing and im provem ent accounts, relegating to the latter head ing suchitem s as the construction o f new walks, fences, partitions , rai l ings for ofli ces,
$t stairways, rem oval Of som e Old construction and substituting new thereor .
And they proceed upon the pr inciple that whatever representative account the varied item s m ay appear und er at first, a sharp distinction m ustbe m aintained up to the close of the fiscal year ; and then, when the d ifferentclasses of m aintenance, im provem ent and renewal costs have been properlydistributed, their relative place in the entire system o f accounts, and theirrelation to the m ain, the bu i lding account, can be very readi ly ascertained ,and am algam ated w ith it, closing into it one by one, the var ious sectionaldepartm ents, with their footings, subject to such changes as the m anagem ent m ay w ish, and thus preserving d istinct, not only through one fiscalyear, but up to close Of the und ertaking, the history o f the sectionalizedcharges in a clear and com prehensive m anner .
In the correlative ledger head ing in rai lway accounts (the constructionaccount) we find even interest and d iscount i tem s m ad e a charge against 1t ;where they are paid out on loans negotiated for that special purpose ; andsom etim es even certain portions o f the law charges are placed against i t also .
In the factory accounts, it i s necessary to keep very carefully in m indthe difference between footings of any representative account l ike the bui lding account, which is the substitute for the railway term “construction
,
”
and footings o f accounts which stand for added cost m erely and not foradded value ; for cost does not always m ean value as has been shown frequently in recent years, when sud d en insolvency assailed an undertaki ng.
In Oi l accounts, the sum of the charges against any particular well orgroup of wells i s very rarely indeed m ad e the bas is of a sale. It is the production alone which is the governing factor ; and the sum of the am ountsstanding against the lease construction, against the undertaking as a whole
,
is conveniently placed in the background, its results reserved only for theinterested consideration of the retir ing partners.
Now the arrangem ent of the voucher system and record in oi l accountshas two distinct aim s ; first, to obtain therefrom the exact cost of any onewell at any tim e, and second , the varied classes of costs com m on to all thewells, but so arranged that the cost for the origi nal purchase o f the property,d rill ing, tanks, labor , law, travel ing, etc., can be also ascertained by themselves separately.
23
This d istinctive result can be reached easi ly enough by one m ethod,keeping a separate sheet for each wel l of a lease, whatever their num ber m aybe, and then in ord er to reach the total cost for a given lease, or group ofleases, s im ply carry forward the footing o f each d istr ibutive colum n on thevar ious pages, into an aggregation sheet to represent the cost ( not value) ofthe total und ertaking. When we com e, however , to apply th is idea to factory accounts, it wi ll be need ful to bear in m ind the fact that there is a greatd ifference between the current Operating expenses and the cost or expense ofany s ingle m achine, or adventure which m ay form a part of the entire factorysystem of accounts .
There are in factory accounts two distinct m ethod s of charg ing labor ;one to the job account, and one to the current operation account , so far as
its item s fall outs id e of the charges which can be shown to be debits againstany particular jobs on hand . Any attem pts to reach the cost o f a sing lem achine or of a group of articles m ad e, m ust be carr ied out through the auxi liary of special statistical sheets as a ru le in which can be incorporated fromthe ordinary record books o f the com pany, the isolated charges taken seratim ,
which w i ll give the desired inform ation.
It is only where the num ber o f m ach ines i s l im ited that their cost up todate can be shown and carr ied into the regular factory accounts from dayto day, as for instance, where the equ ipm ent consisted o f s ix m achines of acertain kind , of different sizes for turning out d ifferent sizes o f the sam eclass o f products, and the rest of the equ ipm ent consisted o f the ord inarybelting, shafting, pulleys, engines, bo i lers, etc—the d istribution of costswas m ade through a special ly prepared voucher, d ividing the charges intotwo distinct classes—o ne of the six m ach ines, the Other for the rest o f theequ ipm ent in a single lum p ; that i s, the printing form on the fold er ran as
follows : Voucher num ber , am ount, net ( third line being reserved for ind ieating the net am ount paid in d istinction from the gross am ount entered uponthe line above, s ince there were always several deductions from the face ofthe original bill on account of freights, two per cent Ofl
’
, rebates, breakages,claim s o f var ious kinds, paid ( this line giving the date o f paym ent),by ( this l ine giving check num ber, or the word “note” i f paid by that m eans,or else the nam e of one of the firm who m ight have settled the bi l l h im self),charge ( following th is word cam e the distr ibution o f s ix lines for the
m achines , and eight l ines for the item s belonging to current operation costs,such as labor and wages, freights, interest and discount, rebates , o il, fuel,w ire and nai ls, And finally ent. ( that is entered), m eaning the folioof cash book, journal, etc., on which the figures were found which wereplaced on the folder .
In all cases where the carriage costs and the supply bi lls are so num erous as they are likely to be in factory accounts, oi l accounts, etc., the use ofan i tem izing sl ip ru led up by the printer for the purpose, i s advisable, andon which can be placed the item s picked out from the great array of figuresonthe consecutive pages of the periodical bills, freight and supply, the i tem soneby one being m arked in red ink or penci l with the initial o f the account towhich they should be charged, first ; and then the item s taken one by one andrecopied on d i str ibution sl ip pasted to the original bills as a proof sheet orslip
The divi son of the costs and its ski llful distribution i s carri ed out in
24
Advantages and Disadvantages of the V oucher System .
HE voucher system can be d ivid ed into three classes, each of which hasits ad herents . First, I w i ll cons id er the system em bodying the
voucher and check in the sam e d ocum ent, which is used by m any ofthe larger corporations, especially the rai lroad com panies . The pr incipaladvantage of this system i s the fact that upon the return of the voucher checkthe send er has in one docum ent a record o f the good s purchased, the tim eof purchase, the tim e of paym ent, and a receipt for the sam e. The uni for mity of size renders filing easy, and the consecutive num ber ing ( copies Of
which appear at the proper entry in the cash book) facil itates the checkingby auditors .
The d isadvantages of this system to the sender are: First, the additional labor requ ired to transcr ibe the bi lls upon the voucher, the additionalOpportunity for error from this work ; and i f the bills are not thus transcribed, the voucher itself i s of no m ore benefit than an ord inary check.
This item o f labor m ust am ount to a consid erable sum , where the transactionsare m any.
Second , there i s no ready record as i s the case w ith check stubs, and therecord o f the account w ith the bank m ust be also separately kept. -In som elarge Ofl‘ices where the cash book is in constant dem and the posting of cashdebits, paid by check, are m ad e d irect from the stubs them selves .
Third , where there is a m istake m ade in the voucher , it causes, frequently m uch confusion, as the cash entry has already been m ad e, and wh ilethe voucher m ust o f necessity be returned , being incorrect, and being itselfa receipt in fu l l for the account, the issuance o f a new voucher for theproper am ount wou ld vitiate the cash entry, and also the cred it to the bankand the return o f this one, w ith the issu ing o f an add itional voucher, shouldthis one be short inpaym ent for the d ifference, carr ies w ith it no evid ence ofauthenticity ; as it m ust be issued to correct an error . The m ain d isadvantage to the recipient of such a voucher check i s that it is usually sentwithout an inclosure s lip, and no corroborative record of its receipt can bekept, a very d es irable thing in all record s o f cash receipts . Second ,
wherethe cashier and treasurer ( receiving) are separated, the or iginal docum entm ust rem ain in the cashier ’s hand s until it is checked correct
, and entered.
If this was the only check received it would not take long, but it i s frequentlyonly one of hund red s . Of course. this d isadvantage could be eas ily obviatedby the send er using a s im ple rem ittance sl ip, m erely stating the nam e o f thesender and the am ount of the voucher . Som e of the larger corporations arenow doing th is .
The second class of vouchers used are sim ilar to the voucher- check inall particulars , except that they are accom panied by a check, for the am ountand are not cons id ered a check or d raft in them selves.
The principal d isadvantage of this system to the send er i s the largeam ount o f tim e requ ired to transcribe entire the item of bi lls purchased uponthe voucher . This in large firm s or corporations requires the servi ces of
many extra clerks, and i s never placed upon the book-keeper . It i s really
unnecessary labor , as the item s with the proper check ing o f receipt, correctness as to practice and quality, as wel l as extensions and footings , shou ld all
be found upon the or iginal invoice, and wherever this voucher system is used ;the entire labor of the d ifferent cred itors ’ bill clerks, m ust be duplicated uponthe vouchers . Then these vouchers m ust be carefully com pared with the
originals , to avoid error .
The Objections m entioned in third paragraph o f the voucher - check system are also appl icable to this system . Of course not to the extent Of d i sturbing the equ il ibr ium o f the bank account, but as far as its other effectsreach .
There is no question o f the advantage of having all receipts of a s im i lars ize and appearance, and consecutively num bered ; as by this m eans the laborof tabu lating or checking i s red uced to a m inim um ; but still , wherever thereexists a necess ity for ad d itional entr ies , either upon vouchers or in record s.there also exists ad d itional Opportunities for error .
The third class o f vouchers I w i ll m ention i s that where the voucheritself d oes not item ize the account, but i s issued for a stipulated am ount topay for bills thereunto attached . The var ious bills for which the vouchervouches are attached to it, and thereafter form a part o f it .
This system m inim izes the labor, and brings an ad d itional feature o faccuracy to bear upon it, viz ., the actual invoices of the cred itor wh ich com
m end s it above either of the others , where it becom es necessary to use th issystem to facilitate checking, and to avoid paym ents o f m onies for whichthere has been no value received . B oth of the other classes o f vouchersm ay be juggled , and it wou ld requ ire the corroborative evid ence of the
Original bills,to be absolutely certain o f their exactitud e and accuracy .
Even this system has been beaten. One case to m y knowledge invo lving several thousand dollars, was d iscovered by an expert
,by close investi
gation. Everyth ing seem ed per fectly regu lar , but after m uch investigation,it was found that the cashier had used invoices several years o ld , eras ingand br inging the dates up to the present . The voucher was then m ad ewith bill attached , in due form , charged out and the cash pocketed by thed ishonest em ploye. Of course, had all paym ents been m ad e by check thism ethod cou ld not have been so successfu lly used . Even in this case it wasfinally d iscovered .
The great d isadvantage o f this system i s that it becom es cum bersom eto file voucher and bi lls together , especially whenever there i s a great num bero f bil ls paid in one voucher . It also costs ad d itional postage to the senderand the receiver . Of course, when there is but one bil l or perhaps two, itd oes not appear so disadvantageous , but whenever the purchases o f the
m onth m ount into the hund red s of dollars, and perhaps as m any invoices itbecom es a m atter of seriou s d iscom fort .
Next, and by no m eans least in im portance, i s the fact that the invoicesfor good s purchased shou ld by all m eans be kept separate from the receiptsfor paym ent to facil itate ready reference which i s so often requ ired in anybusiness house to ascertainpr ices paid at a g iven tim e, or quantity or qualityof good s purchased . Where all o f these bills have been carr ied into theperm anent receipt files , and their identity lost , except as a receipt for paym ent of account, it becom es , i f not an im poss ibility, a very 1rksom e task toseek for invoice should it be requ ired .
27
Som e o f the rai lroad com panies and perhaps other corporations com
bine the first and third styles o f vouchers . The Wabash rai lroad , forinstance, issues a voucher ( in duplicate) for each bil l. One o f these i s sentto the cred itor, wi th this endorsem ent “This voucher when proper lyreceipted, becom es a sight d raft upon John Doe, Treasurer . Payablethrough Clearing House. Just im agine, two o f these vouchers for eachbil l ; the original with bil l attached i s filed in its proper place in the officeof the com pany. The one with bill attached being called the or igi nal, howdoes the dupl icate voucher ( so called ) differ from a check? In a greatcorporation l ike theWabash railroad what an im m ense volum e of seem inglyuseless work i s m ade for som e one. Of course, it m ay be argued that allof this “
red tape” gives em ploym ent to just so m any m ore clerks and bookkeepers, and whi le this is true it does not follow that, because it has this verysalutary effect, it is an exam ple o f the best book- keeping.
When we are studying a system to gain an idea o f its advantages and
defects and how its application m ay be m ade to im prove its science o f bookkeeping, it wi ll not do to lose sight of the fact, at all tim es , that the bestbook- keeping in the world is that which gives all of the d es ired results wi ththe least am ount o f labor and the fewest num ber o f entries . Book-keepingm ay be theoretically correct and still four tim es as m any entr ies m ade asare actually need ed . A better book- keeper taking charge of such a set o f
books , w ill have them just as accurate in every particu lar , and will not spendone- half o f the tim e o f hi s predecessor or use one- half of the Space .
In carefully com paring the various system s, it seem s that an even betterone than any I have m entioned cou ld be evolved . It would be a sim plereceipt in itself
, but wou ld be consecutively num bered, and treated exactlyat the papers used in the voucher system s now used are ; being of a uniformand proper Size to fit your receipt files ; the num ber being placed oppos itethe entry on the cred it sid e of your cash book ; then, when this voucher i sreturned , all o f them could be num erically filed for instant reference. If
thought o f advantage the file num ber , o f the voucher cou ld be placed uponeach invoice covered by said voucher w ith blue penci l . The form m ight bevery s im ple and still carry with it all o f the advantages o f the m ore voluminous plans, with but very l ittle labor ad ded to the plan which now uses novoucher .
Why shou ld not such a voucher answer all of the requ irem ents of thevoucher system , and stil l be sim ple, cheap, requiring but little extra tim e andlabor and necessitating no extra expense? I think it would prove in everyway as efficacious as its m ore cum bersom e brother. C .A . SWEETLAND.
rtcan ness an
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In 12 m onth s thanany other book fo r bus inessreference has ever reached .
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INDEX .
o f the book .
ACCOUNTING SYSTEM S FOR DIFFERENT B US IN ESSES.
Accountants 24Agents ’ Accounts 68Ag r i cultura l Im plem ent B us iness 80As s ignees ’
B us iness 122Arch i tects ’
B us ines s 101
A ttOI’DQYS'
B USIHCSS c o c o a mAucti oneers ’
151
Cem etery AccountingCh urch AccountingCi ty AccountingC lear ing H ouse
Clo thi ng B us ines sCl ub AccountingCoa l B us inessCollege AccountingCo ll i ery Acco untingC ons ignm ent B us ines sContractors
’ AccountsCor ora tion AccountingCo t on Mi l l AccountingCream s B us inessCus tom ouse A ccounting 397Cos t Sys tem for B oot Sh oe B us ines s 538-541Cos t Record for Ag ri cu ltura l Im pie‘
Dm ent B us ines s 542-544Cos t Sys tem for Metal Manu factur ingcomgana
o o o o o o o c c o o o o
Cos t y s m for Mach ine and Too lW orks Com any 646-554
570-574Cos t S s tem or B i cycle M anufacturing us ines s
Doctors ’ B us inessDepartm ent StoreDrug B us iness
Ed ucati ona l A ssociati onExem tonh ip A ccounts
F i sh B us ines s olesa le) 596-604F lour Mi ll ing us ines s . .
F ound r and Mac h ine Sh op 620-621F ru i t rowers B us inessGas B us ines sGra in B us ines sGra in E leva tor B us inessGrocery B us inessH ard ware B us inessH OSDIIQIS 0 0 0 0 0 0 0 o n e a t
Ho tel B us iness
Ice B usinessIns ta llm ent B usinessIns ti tutionsInsurance A g encIron and S teel usi
Jobb ing B us ineSS o o o o o o o o o s o o o o o o o o o o c o o o
Li very B us ines sLum ber B us iness
Mai l Ord erManufacturing B us ines s (Genera l)M inin B us ines sMuni c pal AccountingNewspaper B us inessO i l Em m as
P aper ManufacturersP ers ona l AccountingP h ys i cians ’
B us ines sP i cture P ubl i am ns B us!“ mP lanta tion B UB Inm 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 mP lum bers
’B us iness 887
851-8m
P r inting 3 1181119” c o c o a
P ub i i sh ers’
B us ines s
R ea l Es ta teRece ivers
’ Acco untsRetai l B uS ine“
Sav ing s B anksSOhOO‘B O . 0 0 0 . 0 0 0 0 0 0 0 0 0 0 0 0 0 Q O Q O Q O O O O O 0 .
Saw Mi ll B us ines sSh ‘ plug B HSIIICSS o o o o o o o o o e o e o o o o o o o o o o o
Bo etles 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
S team Ra i lroadS torage and H a rd wa re B us iness
c o c o - 0 0 0 0 0 0 0 0 0 0 m , 264,
Expense A ccount, Di s tr ibution of 523-525
F i ling Correspond ence
H avl l l B ank Led ger
O 0 0 0 0 0 0 0 0
O
O
0 0 0 0 0 0 0 0
O .
o o o o o o o o o e l e o o o s o o o o o s o o o
c c c c c c c c c c c c
O
0 0 0 0 0 0 0 0 0 0 0 0 0 O “
0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
FORMS AND TAB LES.
A cceptm ce 0 0 0 0 0 0 0 0 0 0 o o o o o o o o o o o o o o o o o o o o o c o c oAccounts of Receipts and Di sbursem ents(B ui ld ing and Loan 8 1
Teleph one Com pani esTheaters
Voucher SystemW a ter WorksWorkroom
SPECIAL ACCOUNTING M ETHODS.A ccounts P ayab leAccounts R ece i vab le Di scountedAccounts R ece ivab leAd j us tm ent AccountAud i ting Sys tem Cond ensed
B alance Sheet
B oston B ank Led gerCash Sa lesCashCash and B ank AccountCh ang ing S ing le to Doub le EntryC . O. D. Record s 302-308COIICCIIODS -mCons i gnm ent Account-s 346-347
Da i ly B a lance Sheets (Savings B anks) 977Del ivery Wagons 162-163Duties o f P erm anent Aud i tor of Cors
po ration
Ins ta llm ent Co l lections 710Ins urance So lic i tors ’
Record 700Inventory 101, .738Invento ry B oot and S h oe Trad e 838Invoi ces Recei ved 130Invo ices . K eeping Track of 740M a i l Ord er 394
P ay in H elp 263P ay o ll 866-873P ay Ro ll for H ard ware M anufacturing Com anv
P ay Itoi l or TanneryP etty Cas hP iece WorkP os tage AccountP os tingP r iva te Led gerP ur chas e Record
R ent Accrued DueR eta i l Accounting Wi tho ut Le d ger A c
countsR everse P os ting
Sa les B ook (Lum ber)Sa les (Lum ber )Sa lesm en
’
s R ecord
Tim e Record s443, 444, 557, 558, 564, 565 , 566, 667 , 668, 778, 779, 888
Account Sa les (Gra in B us ines s)“Accountants ’
Da y B ookAccountants ’ Dia rAcknow led gm ent e fore N ota ry .
A cknowled g m ent o f Ord erAd j us tm ent Account42, 43. 44 447, 653, 988
A d verti s ing Contrac t R eco rd 64Ad ver ti s ing Cos t and P rofi t S ta ti s ti cs “-54 5
5
Ad verti s ing Month ly Ana ly s i sAd ver ti s ing Month ly Sum m a ryAd verti s ing R ecord sA
giver
‘
t
ii s ing R ecord and Jo urna l Com
noAg ents ’
Sa les R ecordAm end m ent to A r ti c lesAm er i can B a lance Sheet .Am er ican Exper i ence Ta b leAm or t.za tion o f Lea seAnnua l S ta tem entAntic ipa tingg B i l lss
’s rs Month ly R epor t .Ar tic les o f As soc ia tionArti c les of Cc - pa r tnersh i pAs ses sm ent N o ticeAs ses sm ent Reco rd
A ud i to r’
s Ab s trac t Sum m aryA ud i tor
’
s Cer tifica teA ud i to r
’
s Da i l yA ud i tor
’
s Journa lAud i tor’s R epo r tAud i t N o te B ook .
A uxi l ia ry Ca s h B ook .Averag e of S torag e Ch arges
B a lance Led ger 164. 279, 442, 750. 970, 988B a lance Led ger ( B ank) 188
,199. 200. 988
B a lance S heet 168 . 169 170, 173. 214 .228, 244 , 268, 370, 372. 374. 4 45 . 486 495 .
653, 663,685 , 687. 689, 690. 701. 756, 810. 677
B a lance Shee t ( B u i ld ing and Loan A s
s oc ia ti on 281, 283B a lance 8 se t (Gra in Eleva tor )B a lance S hee t (L i fe i ns u rance Co .) 756B a lance S hee t ( M unic i pa l) 83lB al ance Sh ee t (R a i l road ) . 1009B ank B a lance S hee t 214 , 228B ank Ca s h B ook 188B ank Cl ea r ing H o u se D ue B i ll 217B ank Co l lec ti on R eg is ter 193, 226B ank Co l lec tion T ick ler 209B ank C red i t R e po r t 225B ank Cus tom ers S igna tures 227B ank D i scount R eg i s ter 190B ank Eo re i gn Co l lec tion B ook ” 209B ank F o re ig n Cred i t B ook 209B ank Ins urance on Co l Hla tera l 226B ank Jou rna l 188B ank L i a b i l i ty L ed g erB ank N a te T i ckler 192B ank Offer ing s B ook 191B ank P ay ing Te l ler ’
s Settlem ent B ook . 218B ank Rece i v ing Te l ler ’s Se ttlem ent B ook 219B ank R ece iv ing Te l ler'3 S ta tem ent 219B ank R econcnlem ents .231B ank S ta tem ent 214 , 228. 978B ank S tOCk Certlfica te C O . 224B ank S tock Led g e r 187B ank S tock T rans fer 203B ank ru
ptcy S ta tem ent
B a rg e eg ls ter 244B i l l B ook “
545, 500, 887B i l l s R ece l i a b le A cco unt 250B i l ls Rece i va b le L ed g er 250, 251B i l ls R ece i va b le R eco rd ( i ns urance) 750B i l ls Rece i vab le R eg i s ter and 250B ond ed S to ck Le d g e r 253B os ton B a lance Led g er 188, 200. 985B ranc h O lh ce B a lance Sh eet 267. 268B rewe ry Led g er 269B rewe ry S a l es B oo k 269B us ines s Co l leg e Cas h B oo 301
Cap i ta l Account 244 483
Ca r R eco rd s 623
Ca r load R eco rd ( M ining ) (2) 812
Ca r bing Ca s h B o ok 291
Car ting Job B ook 289Car ting Ord er F orm 290Ca s h AccountCas h Ad jus tm entCas h B a lanceCa s h B ooks 257, 291, 296. 298, 299,
301. 311, 442. 445 , 446. 447, 474. 602, 651, 721, 722Cas h B ook (Aux i lia ry ) 652
B oo k ( B ank) 188
681 682900 am
- 0 0 0 0 0 . 0 0 0 0 0 0 0 0 0 0
i
D ai ly 0 8 8 1) B a lanceDu ly T im e Sh eetDa y Wo rk Tim e Card
407
Cash B ook (B u i ld ing and Loan As socia
275on)Cas h B ook. Secre ta r ies ( B u i ld ing andLoan Aes om a ti on) 278
Cas h B ook. Trea s urers ( B ui ld ing andLoan As so ci a tion 278
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B h tter 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 00 00 0 0 0 0 0 0 0 0 0 0 0 0 $ 1.B ond 685. 829. 833B ond s Coupon)B ond s wem um 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0
B ond s D eferred 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
B ond s Guam ” 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
B ond s Mor tgag eB OM B Muni ci pa l o s o s s s s o o s o s s s s s s o s s s s o o s s o s o
it u
s
8 0 0 1:Deb t
o o o o o o o o
0
Chec k End o rs em ents
0 0 0
0 0 0 0
B os ton B ank Led ger a . 1mB oug h t Invoi ce B ook n . 919B ranch B us iness -8 8B ranch H ous e Accounting 5 4B ranch om ce Accounting asB rewer y 20 -271B r ickwork Mea s urem ent 31:B r i d g e B us ines s A ccounting mB rokerag eB ro kers ’ AccountingB rokers ’
Com m i ss i onB ucket Sh opB u i ld ers ’ AccountsB ui ld ing s AccountB u i ld ing Soc iety AccountingB ui ld ing Soci ety Journa lB ul l ionCC
B yO’
B y -Laws ( B ank)B y -Laws o f Corporati ons (See A rti c leso f Incorporation)
Cal lsCa l l R eg i s ter 28!Capi ta lCap i tal Account noCapi tal Account on the B a lance Sheet 281Cap i ta l Expend i ture 281Capi ta l Expend i tu res (Ra i lroad ) 1mCap i ta l R ecei ts 288. 700Ca p i ta l and evenue 288Capi ta l Stock 977Capi ta l S tock Uns ubscr i bed 1038Card Ind ex 65 , 315. ass-ass. 702Ca rd Led g ersCard 8 s tem s . 226. 227. 275 m .29 65 66 75an.
847 879, 956. m .
Carting B us ines s Accounting
Cash B alance B ookCas h and B ank Account . 295 .Cash B ook 387 , 430, 526, 602.Cash B ook ( B ank)Cash D i scount 90 -98.Cas h Journa lC . O. DCash P ri ceCash R eg i stersCas h Sa lesCas h V ouch erCas h ierCem etery AccountingCer ti fica te (Arch i tec t's )Certi fica te o f Depos i t ( B anking )Certi ficate of Depo s i t R eg i s ter ( B ank)Certifica te (S tock)Certi fied ChecksCertified P ub l ic AccountantCer tified P ub l i c Accountants ’
A ctCertified Sta tem entCha in Meas ureC ha lk P i tsChang ing from S ing le to Doub le EntryCharg e 306.Cha r e. F ixedCh ar itab le Ins ti tuti on AccountingCha rterCharter P artyCh artered AccountantCh artered A ccountants o f ScotlandCh arter ed Accountants o f Onta ri oCh ar tered Accountants o f N ova Scctia 17
304 306. 307
Ch eck Reg i s terCh eckC heck ing P os tin
gs
Ch urc h A ccount nCi r c ula ti ti CapttaiCi s tern ens u reC i tyAccounti ng
Cla in B ook ( Ins u rance)C la im D epa rtm entC land es tine S tockClas s i fica ti on o f Accounts 317.C las s ifica ti on of A ccounts (on B a lanceSheet.)
Clas s ifica ti on of As sets and Li ab i l i ti es
Class ifi cati on of Mining Accounts0 0 0 0 s s o 0 s s s o s s s s . s s s o s o s s o s . o o o o o om y 809. 822.
Class i fica ti on o f Mini ng Expens eClats s ifi ca tlon of Opera ting Expen
ses,
Q C.o o o o o o o o s o o s s s o s s o s s s o o o s s o s o s s o o o o o o o o
Clas s ifi ca tion of P ub li sh ers’
C lea r ing H ouse
C lear ing H ous e D ue B i l l (B ank)C ical Entr iesC lo th ca s ura
C lo th ing B us ines s AccountingC lub A ccountinCoal B usines sCol latera lCo llecti on B ookCo l lec ti on and Exchang eCo llecti ons of N o tes and Dra f tsCo llec tion R ecord ( B ank)Col lec tionCo llection R eg i s ter ( B ank)Co l lection Sym b o lsCo lleg e Account ingCo l l i ery Accounti ngCo l li ery Wei g hCOlor 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Co lum na r B ooksCo lum na r Jo urna lCo lum nar Sys tem 11, 36,Com b ined V ouch er and Ch eckCom m erc ia l R epor tsCom m i s s i onCom m i ss i onCom m i s s i on and B rokerag eCom m onCom para ti ve S ta tem entsCom pa ra ti ve S ta ti s ti csCom po und Avera geCom ound Inter es t
Con i tiona l Ind o rs em en
Cons i d era ti onCons ignm entsCons i gnm ent Accounts .
Cons i no rCons o i d a tionsCons o i sCons tructi on Account 351. 491,Cons tructi on and Equ i pm entContinenta l B a lance SheetContingent As s etsConti ng ent F und
Conting ent Li a b i l i ty 351.
Conto Currento MethContraContrac t B ookContrac ts Unfini s h ed
Contractors’ Accounts
Contro ll ing Account b,36 32> i , i a». 410.
Copar tners h i pCapantners h i p , A r ti c les o f
Copyri g h tsCo rn Meas u reCorpora tionsCorpo ra ti on AccountingCorpo ra ti on A g g reg a te
Corpora ti on Cap i ta lCorpo ra ti ons , Ch a r itab leCo rpora tions ,
Dom es ti c
Corpora tions , Doub le L iab i li tyCorpora tions , F oreign
Corpora ti on Law
Corporat ions , Lim i ted Li ab i l i tyCorpo ra tions , P r i va te
Corpora ti ons , P ub l i cCorpora tions . So le
Corpora ti on Stock Acco unt B ooksCorres pond ents
’
A cco unts ( B ank ing )Corres pond ence R eg i s ter
Cos tCos t Accounti ngCos t C las s i fica tion (B oots and
Cos t Led r
Cost M a r
Cotton Mea surem ent
Co tton M i ll AccountingCountingCouponsCoupon B ond sCountry C h ecksCream ery B us ines s Accountingcr 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
cred i t 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cred i t B ookM t Joum u 0 0 0 0 0 0 0 0 0 0 0 0
ccounti ng0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
84 .
823811
809919
3483 i 8351983496168
351393160351770
353
354431
354115
305
355356
cw t M d ger 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cc red -tt vouch ers 0 0 0 0 0 0 0 0 0 0 0 0 0 0 . 0 0 . 0 0 0
c red i tor 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 p
212
s o o o o s s . 0 s o o s . o s 0
.s s s s s s s s s s
D
s s s s s s s s s s s
o o o o o o o o o o o o o o o o o o o
0 0 0 0 0 0 0 0
C ros s Entr i esCros s Entry Journa lCros s ed Ch eckCubi c Meas u resCum u la ti ve P reference StockCum ul ati ve S tockCurrency , F ore ign (See F orei gn Cu rreney )
Current AccountCus tom ers
' Acco untsCus tom ers
’
Led g erCus tom ers
’ Li s tsCus tom ers
’
R eco rd sCus tom ers
’
Si gna tu resCus tom H ouse Accounti ngDa i ly B a lanceDa i ly B a lance B ookDa i ly B a lanc e Led g erDa i ly B a lance R eportDai ly B a lanceDa i ly B ank Sta tem entDa i ly Sa les Ab s tractsDai lyIIga i l y S ta tem ent B ook (B ank)ay
Day s o f GraceDead AccountDead R entDea th o f P a rtnerDebenturesDebentures . Accounts and R ecord s ofDebenture (Red eem ab le)DebentureDebenture So ld a t a D i aconuDebenture S tock and B ond sDeb i tsDeb i t Led gerDeb tDeb torDeferred Annu i tiesD fecrred B ond s and StockDefic i ency Acco untDefic i tDel inquent StockDe l ivery C lerks ’
Sta tem entDel i very R ece i ptsDe l iver o f S tock and B ond sDem an Exch ang eDem and N o teDem ur rag eDe pa r tm entDepa rtm ental AccountingDepa r tm ent S hore Accounting 426,Depa r tm ent Sum m a r iesDepos i Sc ra tch er ( B ank)Depree 81
,171, 449.
"64
,864 981,Deprec ia tion Co l ler iesDeprec i a ti on F reeh o ld B u i ld ingDep rec ia tion F reeh o ld LandDep rec i a ti on Inves tm entDep rec i a tion Land lo rd '
s F ixturesDeprec ia ti on Mach inery 452 453.Deprec i a tion M inesDep rec ia tion P lantDep rec ia ti on P a tentsDeprec i a ti on Shi psDepreci a tion R epa i rsDe tec tion o fD ing ley Ta r i ffD i rec torsD i s countD i sco untD i s count B anking )D i scount o lum nD is co unt and F re i g h tD i s count Reg i s terD i scounting B i llsD i s counted N otesD i s co unt R eg i ster ( B ank)D i s tr i bu tion AccountD i s tr i bu tion of Cos tsD i v i d end sD iv i d end B ookD i v i d end B ook ( B ank)D i v i d end on P referred StockD i v i d end TicklerDoc um enta ry Excha ng eDom es ti c Corpora ti onsDona ti on Acco unt
613426426426
443
199
459451451452453
452452452
Dorm ant P a rtner 471Doub le Account B a lanc e Sheet 169Do ub le Averag e 155Doub le Entry . 29. 471Do ub le Ind ex 741Doub le Liab i li ty Corp om ti 357Doub le P os ting 10Doub le S l i d e 461
Doubtfu l Accounts 472Dra fts ( B anki ng ) 195Dra ftsBR eg i s ter ( B ank) 189
D ru B u s ines s Acco unti ng 473, 476ry ean 477
D ue B i l l s 477
D ue B i lls 195Dupl i ca te 477Dup l i ca te B i l l ing Sys tem 99Dup l i ca te P a rts 81
Dup l ica te Ord er Sys tem 845
Ea rning s (See P rofi ts )Econom y (o f La bor in Devi s ing F o rm s ,etc .) 478
E d uca ti ona l As s oc ia tion Acco unt ing
481E lec tr i c Li ht Com pany Accounting .481- 518Em p
’
i oyes d ger”
519. 666End ors ed B end
ga 519
844. 950Eng i ls h Money (See Co ins )Eng l is h R eg i s ter Com pany B a lance Sh eet 169Entry C lerk 519E qua l P aym ents o f P r inc i pal and Inter
Equa tion o f P aym ents (See Averag i ngo f Acco unts )
Equ i pm ent 89Equ i pm ent Account 500E ras ures 520E rro r Account 520E rrors (See Detecti on o f Em u )Es tim ate B ook 769Es tim a ted P rofi ts . 860Exam ina tion ( B ank) 197Exchang e 522 607 619 800Excha ng e See Co llection and Exchang e)Exchang e (Dem and )Exch ang e (Docum enta ryExch ang e (Ster l ing )Exc i seExecu to rs ’ Acco untingExecu to rs ' AccountsExpend itu re AccountsExpenseExpense Account 145Expenses Di s ting u i s h ed from As sets . . 118. 119
pert Accountant 525EXpres s Traffic 1017
Face V a lue 860Factory As sets 535Fac to ry Cos t Accounting 529- 581Factory P rem i um P lan 565Factory (N om encla ture) .575 - 581F am i ly Led g er 696F i cti tious A s s ets 582F icti ti ous Di v i d end s 582F i le 582F inancia l B ooks 255F inanc ia l Sta tem ents 255 , 5 13 583F i re Ins urance Accounting 583- 593F i re Ins urance Ad j us tm ents 593F i re Ins urance Averag e C lause and 0 pcra ti on 595
Fi re Ins u rance Lo s sF i re Ins u rance R eco rd . 755F i sh B us ines s Accounting (W ho lesa le) . 595-604F ixed As s ets .604F ixed cap i ta ! 0 0 0 0 0 0 0 0 0 o o o o o o o o o o o o o o o $ 7. 604F i xed Ch arg es 906, 604F ixed Li ab i l i ti es 604F ixture s 604 . 624 , 747, 798F la t Opening B ooks
”
32F loa ti ng A s s ets ” 119, 604F loa t]: Debt 605F lou r l l A ccount ln 605F l uc tua ti on o f As s ets 606F o l ioFoo tingF o re i gn Co l lec tion B ook ( B ank)Fo rei gn Co r o ra'tionsF ore i g n C r i t B ookFo re i gn Exchang eFo re ign M oney ( See Co ins )F o re l Scra tch erF orfe ited S tock
Fou nd ry and Mac h ine Sh ep Accounting . QF reeh o ld B u i ld ln (Deprec ia tion) . 451F reeh o ld Land eprec ia tion) . 451F re i g h t 621F re ig h t B ook 771F re i g h t and D is count 621F re i g h t Recei ved Ab s tract 1008F re ig h t R e
cord 990F reig h t T rafi
’i c (Ra i lroa d ) . 1006
F ru i t Growers’ As soc ia ti on Accounting .622-024
F urni ture and F i x tures 624F und ed Deb t 624F utures
Ga inGas Com any Acco unti ng 625-682Genera l ed ge 41
,213, 639
Go ld ( P r i ce o f) .
Good -w i l lGo vernm ent B ond sGrace , Days o fGrai n B us ines s Acco unti ngGrai n E leva tor AccountingGrocery B us iness AccountingGro s s A m ountGros s P rofi tsGros s P rofi t B ookGua ranteed B ondGua ranteed Acco untsGuaranteed S tockGues ts ' Led g er (See ‘
H otel Accounting )H and s
’
Led er
H a rd wa re us iness AccountingH ay Mea s u rem ent .
H i re P urc has es (See Ins ta l lm ent Accounting )H om e Stud yH ori zontal Add i tionH o rs es . Deprec ia ti on o fHo s tzi ta l AccountingH o tel B us i nes s AccountingH ow to Ad ver ti seH y po theea ted Secur i ti es
Ice Com pany AccountingIm pa i rm entIm pa i red AccountIm per s ona l Acc ountsIm p lem ent M anu fa ctur ing Accounting( Sec Ag r i cu l tu ra l and Ha rd wa re)
Im p res s i on B ook"Im pres t
’
P e tty Cas h Sys tem “
Im p ro vem entIncom e
Inco m e and Ex end itu re Acco untInco rpo ra ti on ee Corpo ra tion)Inco rpora ti on, Arti c les o f .
Inco rpo ra ted AccountantsIncorpora ted Accountants ' Journa lInd ex to Ad ver ti s e rsInd ex Led g ersInd i v i d ua l
gA cco unt
Ind i v i d ua l B ank Led g erInd i v i d ua l Led g erInd ivnd ua l Led g er ( B ank)Ind i v i d ua l P rop r ietorsh i pInd orsed B ond sInkIns ta l lm entIns ta l lm ent B ook .
Ins ta l lm ent B us iness AccountingIns ta llm ent Di v i d endIns ta l lm ent Interes tIns ta l lm ent LeaseIns ta l lm ent N o te
Ins ta l lm ent Scr i pIns ti tu te o f A ccounts at N ew Yo rkIns ti tu te o f Ch ap tered A ccountantsIns ti tu te R ules and R eg u la ti onsIns ti tu tion Acco unting
0 0 0 0 0 0 0 0 0 0 0 0
Ins urance AccountIns urance Ag ents ’ Acco untingIns urance Expi ra tion R ecordIns urance R eco rd
éB ank )
398 Ins urance Unea rne
356 Interw t Accrued210 Interes t on Ca p i ta l
607-619 Interes t on Da i ly B a lancesIntere s t in Di fferent Sta tes
218 Interes t and D i s count AccountInteres t on Ins ta l lm entInteres t on P rofi ts N ot Drawn Out
Ord ers Unfini shedOr i g ina l EntryOut A d ver ti s in RecordOuts tand ing D counts
55
$88
o vem rg 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Over and Short AccountPackag es in B ond
ccounting
P artners h i pP artnersh ip Acc ounti ngPartners h i p A ifi us tm entP artne rsh i p Arti cles ofPa rtia l Aud i t
0 0 0 0 0 0 0 0 0 mP atents (Deprec iation)Pa tients
’
R ecord453881
P a tterns 81. 769. 864P ay Ro ll 532, 866. 874 , gP ay R o l l D i s tr i buti on (Mining )Pay Ro l l
gaining ) 810
Pay Ro ll ook 772“ m g Tel ler 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
ay ing Tellers ’
Settlem ent B ook ( B ank ) 218ercentage 874P ercentag e on Turnover 874P erm anent As setsP erpetua l Led g erP erm anent As setsP erm anent P lan ( B u i ld ing and Loan A ssoci a ti on) 276
P er petua l Debentu re Stock 874
Perpetua l InventoryP erpetua l Led g er 764P ersona l Account 875. 898P er sona l Accounting 875
P ersona l E s ta te 878P etty Cas h
P etty Led g er 879, 1022P etty Sa les Led gerP hys i c ians ' Accounts 879-881
P iece Work 568, 567. 574. 881P i cture P ub li sh i ng B us i nes s
P lant AccountP lant (Deprec iati on)P lant Led g erP lanta ti on B us iness AccountingP lum b ers
' AccountsP ol i cy R eg i s terP o l icy TicklerP oolP os i tion of As sets and Liab i l i ti es on B a lance SheetP os tag e Accountos ti ngos tin Ch ecks
h eck S ys tem )P racti ca l Working o f Ad jus tm ent A o
P referred Cred i to rsP refer red D iv i d endsP refer red Stock .
P relim ina ry Expens esP rem i um s
P repara ti ons fo r Aud iP rescri ption B ookP resent V a lueP resent worth 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
P r event ion of E rrorsP fl ce or GOId 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
P fl C’ng 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0
P ri m e Co s tP r inti ng B us ines s AccountingP r ivate Acco untP r iva te Co rpora tions .
gr iflva
zJournal
va Led g erm m “ 0 0 0 0 0 0 0 0 0 0 0
m at E s tim ated 0 0 0 0 ”0 0 0 0 0 0 00 0 0 0 0 0 00 0 0 0 0 mP rofi t and Loss 809. $ 9, 1047P rofits Und i s turbed 901. 115 0P rom i ss ory N ote anP rom oti on .348. 351P rom o tion Expenses 892.
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
P rop r ietors’ Account
904904
P roof o f P os ting gt;
P ro-Ra ting Ad ver ti s ing Expend i tures 64P ro -Ra ting Expens es 427, 546-554P ro ving Accuracy 255P ro ving W ork on the B 0 0 461. 469P roving Ledg er Separa tely 749P ub l ic Corpo ra ti ons 5 6P ub l ic Lib rary Accounting g
919P ub l i s hers ’ AccountsP ub l i sh ers ’ AccountingP u rch as e Account 12. 95. 919P urchas e B ook 256. 387. 741. 989P u rcha se H ire Sys tem (See H i re P urcha ses )
P u rchas e Journa l 430. 919P urcha se Led ger 741 919Pfl
'chasd
e Led g er and Stock R ecord Comne 0 .
P urcha se and Osem ti
P urchas e R ecorP urchase Record (Coa l)Ra i lroad AccountingRa i lroa d Corpora ti ons Subscri ption
m entsRa p i d Ad d i tionRaw Ma teri a lR aw Ma teri a l AccountRea l AccountR ea l E s ta te AccountingR ebateRecap itu la ti onR ece i ptsR ecei pts and Di sburs em ents AccountR ecei pts and P aym ents AccountR eceivers
’ AccountsR eceiv ing Te l lerR ece iv ing Te l ler s
219R ec eiving Tellers ’
Statem ent ( B ank) 219R econc i lem ent B ock ( B ank) 215Reconci l iati on Account (Cash in.
B ank ) 300R econc i l iation o f B ank Account 947R econc i l ia tion of B ank Sta tem ents 2mR econci l ing the N ew York Account m mR ecor d B ook 947R eco rd of Cus tom ers 334Red uction o f Capi ta l Stock 287. 947Red eem ab le Dea d R entR ed eem ab le Debentu resR ed em pti on F undR ed i s counts (B ank ing )Reg is ter 948
(See Ch eck R eg i s ter , Ord er R eg i ster.Co l lecti on Regi s ter .)
Reg i s tered B ondR eg i s tra ti on B ock (Grai n E leva tor )
tra ti on B ockg
o tel)R e inqu i s hm ent o f p i ta lR em i ttance Sh eetsR enewa lsRenewa l N o teR en-t AccountR ent Accrued D ue
R epa i rsR epa i rs . R enewa ls and Di sp lacem ents
81 949, 984Re presentative Accounts .12, 95 949R es erve,
Reserve F undR es erve for B a d DebtsRes ourcesR es tri cti ve End ors em entR eta i l B us ines s B ock-k ee ingR eta i l Yard , Accounting or
R eturnsR evenueR evenue AccountR evenue AccountsRevenue Expend i tuRevenue Item s
R evenue
R u l ing 0 1 Accounts
Sa les Account 12. 34.Sa les B ock 256. 430. 597. 700. 767.
29770965965
Sa les B ock (to r 152Sa les B ock (Coa l) 329
825966430
Sa les Led g er 393.Sa les Sh eet (Departm ent)Sa les Ti cketSa lesm en
’
s Accounts(See Ag ents .)
Salesm en'
s Sarnples$ m p le AccountSav ing s B ank Accounti ngSaw Mi l l AccountingSch oo l A ccountingson p B ock 0 0 0 0 0 0 0 0 0 0
Scr i p Div i d endSecret R eservesSecretar ies
’ Led gerSecretar i es
’Repcx. (Soc iety) .
Secti ona l i za ticn 43M d cna l i z ing Led g ers
320. 447 748. 987Sectional i z ing AccountsB ecufl ty 0 0 0 0 0 0 0 0 0 0 0 0 0 mSelf Ind exing Led g er 703. 1022Sel f Ind exing ° Syvetem 701Sel f P rov ing
118Led g ers 8 7. MSel f P rov ing Sys tem 29
Selling Expens e 989Seria l8 P lan (B u i ld ing and Loan A ssoci ati on)Settl ing C lerk ’
s Statem entSeven Account Sys temSewing B lank B ooksSha res . A l lo tm ent c tSh i p AccountingSh i p RecordS h ip p ing B cck (Gran E levator)Shi ps (Depreci ation)Sh cp Expens eS ig h t Dra1 .s
S i lent P a rtnerS i li cate Extens i ons on Led g e“S im p le Averag ea m ple Interes tS ing le AverageS ing le to Doub le EntryS ing le EntrySinking 416. 417. 624 . 947. 949. 992-995Six P er Cent Interes t Rule
417. 418463. 658. 959
15
440 0 0 0 0 0 $ 6
370119
tr i c Ra i lwa y Accounts 488
Sta tem ent 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 00 00 0 mStatem ent o f A ira ir s 998S ta tem ents of As sets and Liab i l i ti es 172S ta ti s ti ca l Record s 999Sta ti s ti ca l Reports 147Steam Ra i lroad Accounting 1000—1018S terl‘ng ExChm g e 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 mSteward ’
s B ook (H otel) 683. 686Stocks . .620. 665. 837. 874. 1018Stock ( Inventory) .
S tOCk , A l lotm ent 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 aStock Cer ti fica tes 224Stock C erti fica tes B ock ( B ank) 187. 224Stock
gDel inqquent) 424
B tOCk l V ld eDd 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 “ 0 1018stock D ona tw 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Stock Exchang e Ru les 275S t“ I‘Gd g er 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 00 0 0 w:mStock Led gg er ( B ank ) .187. 1018Stock R ecord 181 532. 1018S tock Record and P urchase Record Com
Stcck R ter and Trans fer B ock ( B ank) inStock s gem IN
434
0 0 0 0 0 0 0 0 0 0 0 0 . 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0W ’ m m
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 m0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12’ 1m
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 lel:lou479
1024. 103951
Tab u la r Led ger 1021. 1024 1027Tellers ( B ank) .
Telephone Oom pa hTerm inab le Annu iTerm inati ng P lan ( B um nng and LoanAs s oc. .ti cn)Thea terT l l 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
”m e cam 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 .
T im e Record 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
TvTr'
elve P er Cent Interest MoveCnccm pleted Ord ersUnd i s turbed P rofi ts
Und i v i d ed P rofits AccountUnexpi red Ins uranceUnfi lled Ord ersUnfini s h ed Contrac ts
3:1
1PM V ouch er s Accounters i'ti es Accounting for (See Co l leg eU
A ccounting )
Venture Account (See Ad venture)Ves s el AccountVouch erouch er R ecord . . 35. 492. 493. 681. 986. 990. 1051‘
V ouch er RReg i ster 336. 987Vouch er Sys tem 29. 1059Voyag e Account 991
S toresS tores AccountStore K eeper
’
s Journa l (H osp i tal ) 717S tc rek eepers
’
R e or t 717Stores R ecei ved cck 827Sto res Record MS torag e 420S torag e and Warehouse Accounting 1021S treet Ra i lroad Accountin
g31021
S treet Ra i lw ay Accounts lass i fica ti on 497S tud ents
’
Recor d .335. 9“S tud ents
’ Lectures 10
Sub scri pti onAccountSubs crip ti on Ag reem entsSub s cri pti on L i s tSubs i d ary B ooksSund ry AccountsSund ry Expens eSum m ary A ccountSurplusSuspenseSus pense Ac countSuspense Led g erSyntheti c Account Sys tem
Too ls and Suppli esTra d e Di scount 1031Tra d e Inqu i ry Form 1031Trad ing Account 1031 1035. 1047T rans fer of Accounts 1035Trans fer to N ew Com pany 372Trans por ta tion Acco unts 506. 507. 508T ranspos i ti ons 461Trans fer of Stock 202-204
Travel ing Sal esm en’
s Account . .1035-1038
Trea s ury S tockTreasury S tock Account 254Tr i al B a lanace 1039-1047Tri p l i ca te Ord er System 846T rue sccuntTrus tee
’
s Account (See As si gnee and Recelver )
Trus t Com pany Accounting
Wag es Account35“ages . e c
W atered StockWa terworks AccountingWay B i -l l Rai lro ad s)Way and ctures A ccountWear and TearW eekly Gro ss P rofi t B ookW ind ing Up P artnersh ipWorking B a lanac e Sh eetWorking Ca ta lWorkroom !am ounting
THEAMERICAN BUSINESS ANDACCOIJNTlNii ENCYCLOPEDIA.
C A S H O R D E R .
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Ad d ress
INSTALLM ENT ORDER FORM .
Ninth Edi ti on.
I9O
To THE BOOK-KEEPER PUB LISHING Cc ., Ltd .
DETROIT. M ICH.
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’
s subscription to The B ook-Keeper ( from d ate o f
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M ONTH DAY YEAR
l st 190
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