Practical 
 Garage Accounting 
 
 A Complete System of General 
 
 and Cost Records for 
 
 the Garage 
 
 BY 
 
 HORACE EDWARD HOLLISTER 
 
 Public Accountant and Auditor 
 
 Editor Accounting Department 
 GARAGE EFFICIENCY 
 
 CHICAGO 
 
 SECOND EDITION 
 
 ROCKFORD, ILLINOIS 
 
 GARAGE SYSTEMS COMPANY 
 
 1916 
 

 COPYRIGHT 1915, 1916 
 
 BY 
 
 HORACE EDWARD HOLLISTER 
 
i-rrata 
 
 86 - 8th line, "charge 'it to" 
 
 should read "charge to it". 
 
 139 - 3rd line, after the word 
 
 "ascertained" insert the words 
 "and the total sales." 
 
 140 - 9th line, substitute for 
 
 "office volume" the words 
 "purchases and expenses." 
 
 rtance of 
 
 Methods 
 
 Requisi- 
 
 ery Trip 
 
 ;st way of 
 insactions, 
 Paid, Pur- 
 i Account, 
 icnts. 
 
 BILLING 
 o Depart- 
 Df Billing. 
 
 L a b o r 
 ne depart- 
 
 al Points 
 j . ....nal. 
 
 VII THE GENERAL JOURNAL AND MONTHLY 
 ENTRIES How to show true profit 
 and loss monthly. 
 
 5 
 
 358846 
 
COPYRIGHT 1915, I 4 . 
 
 BY 
 HORACE EDWARD HOLI 
 
TABLE OF CONTENTS 
 
 CHAPTER 
 
 I INTRODUCTORY The Importance of 
 
 Better Garage Accounting. 
 
 II PRIMARY RECORDS Modern Methods 
 
 -Time Cards Material Requisi- 
 tions Storage Tags Livery Trip 
 Tickets Cash, etc. 
 
 III THE MODERN JOURNAL Best way of 
 
 recording the six kinds of transactions, 
 viz. : Cash Received, Cash Paid, Pur- 
 chases on Account, Sales on Account, 
 Labor Account and Adjustments. 
 
 IV SALES DISTRIBUTION AND BILLING 
 
 Division of the Garage into Depart- 
 ments Optional Methods of Billing. 
 
 t V INTER-DEPARTMENT SALES Labor 
 
 and materials supplied by one depart- 
 ment to another. 
 
 (V v I SALES JOURNALIZING Special Points 
 to be Observed Sales Journal. 
 
 VII THE GENERAL JOURNAL AND MONTHLY 
 ENTRIES How to show true profit 
 and loss monthly. 
 
 5 
 
 358846 
 
6 CONTENTS 
 
 CHAPTER 
 
 VIII THE GENERAL LEDGER Classification 
 
 of Assets. 
 
 IX THE GENERAL LEDGER, CONT'D Clas- 
 
 sification of Liabilities and Net 
 Worth. 
 
 X EXPENSE ACCOUNTS Classification of 
 
 Garage Expenses. 
 
 XI SUBSIDIARY RECORDS Best form of 
 
 Ledger for Customers' Accounts, 
 Duplicate Statement Method, Dupli- 
 cate Billing Method, etc. 
 
 XII THE MONTHLY STATISTICS What the 
 
 proprietor wants to know. 
 
 XIII THE COST SHEET Department Profit 
 
 and Loss. 
 
 XIV INSTALLING THE SYSTEM Instructions 
 
 for commencing the system, step by 
 step. 
 
 XV DAILY PROGRAM To promote book- 
 
 keeping efficiency. 
 
 XVI MONTHLY PROGRAM For posting led- 
 
 ger and drawing off statements. 
 
 XVII YEARLY PROGRAM Instructions for 
 
 Closing Books. 
 
 XVIII SUPPLEMENTARY FORMS AND RECORDS 
 
 Purchase Order System Daily 
 Business Summary Statements. 
 
PREFACE 
 
 ONE of the leading automobile trade jour- 
 nals that maintains a carefully corrected 
 mailing list of automobile sales agencies, 
 garages, repair shops and supply houses, states 
 that the changes therein are in excess of 33 1-3 
 per cent per year. Another such journal states 
 that there are 14000 yearly changes in a list of 
 some forty thousand. 
 
 A business mortality of approximately one- 
 third per year indicates something radically 
 wrong. The first step toward a cure is to diagnose 
 the disease. The logical means of locating the 
 trouble, in the trade in general as well as in par- 
 ticular cases, is better accounting more accu- 
 rate, more scientific, more analytic modern 
 Cost Accounting adapted to the special needs of 
 the retail automobile emporium. 
 
 Heretofore there has been no standard system 
 of accounts available to supply this undeniably 
 crying need, such as the Standard Cost System of 
 the printing trade. To be sure, in isolated in- 
 stances, expert accountants have been employed 
 to devise special systems for particular establish- 
 
 7 
 
8 PREFACE 
 
 ments ; but these have been the rare exceptions to 
 the general rule. 
 
 To satisfy the growing demand for such 
 a standardized system simple, practical, yet 
 thorough and complete was the ambition that 
 prompted the preparation of this volume. In its 
 preparation the technical and theoretical have 
 been uniformly made to give place to the prac- 
 tical. 
 
 It is believed that merely a limited use of the 
 book as a reference work will prove helpful in 
 many cases by suggesting shorter methods and 
 improved forms in various departments, even 
 though the complete system laid down herein be 
 not adopted. But the work is intended especially 
 for the garage man who is convinced that the 
 foregoing statements concerning the urgent need 
 of better accounting are true, or who is willing to 
 give the matter sufficient consideration to be con- 
 vinced. The complete system outlined has been 
 developed by over three years experiment and 
 improvement in many different garages. The 
 endeavor has been made through it to standardize 
 as far as possible the information of greatest 
 value and importance to the average garage 
 owner, and in general the forms and methods for 
 securing this information; at the same time mak- 
 ing the system so flexible as to be readily adapted 
 
PREFACE 9 
 
 to a wide variety of conditions, in local business 
 practice, in volume of sales, and in office person- 
 nel and equipment. Judging by the number of 
 garages in which the system has been found prac- 
 ticable and satisfactory we believe this ideal has 
 been very largely attained; and trust that at least 
 this volume may prove suggestive and helpful as 
 a pioneer in its particular field, blazing a trail 
 for those seeking more scientific methods and 
 satisfactory results in Practical Garage Account- 
 ing. 
 
 HORACE EDWARD HOLLISTER 
 
 Rockford, Illinois 
 January, 1916 
 
fe 
 
 <I p 
 
CHAPTER I 
 INTRODUCTORY 
 
 INEFFICIENT accounting is the cause of 
 more business failures than all other causes 
 combined, not only because it overlooks im- 
 portant factors of profit and loss, but also be- 
 cause of the inaccurate and misleading inform- 
 ation that it does supply. 
 
 The subject of better accounting is one, there- 
 fore, that is of immediate and vital concern to all 
 business men, compelled as they are to operate 
 under very much more strenuous conditions of 
 capital demanded, expense and competition than 
 prevailed a generation or even less ago. The 
 subject is especially important to the garage bus- 
 iness because of the fact that owing to its infancy, 
 principles and policies that should govern in 
 order to make it profitable under normal condi- 
 tions have not had time to be ascertained and dis- 
 seminated ; and because from a variety of causes 
 a large number of men unfitted for executive 
 management have been attracted to the garage 
 line, and have to a considerable extent demoral- 
 ized the business at the same time that they were 
 being financially demoralized themselves. 
 
 11 
 
12 PRACTICAL GARAGE ACCOUNTING 
 
 It has been the author's observation, during a 
 considerable experience in garage accounting 
 and systematizing, that very few garages have 
 anything approaching an adequate accounting 
 system. When we consider that the average ga- 
 rage sells such a wide diversity of merchandise as 
 new and used automobiles, storage space, auto- 
 mobile parts and accessories, tires, labor in the 
 car repair shop and in the tire repair shop, in the 
 battery department and on the wash rack, elec- 
 tric current, gasoline, oils, livery service, and 
 often a few side-lines, we begin to realize the 
 many possibilities in fact the strong probability 
 of serious and often disastrous leakages devel- 
 oping. While the proprietor may suspect that 
 this, that or the other department is a "Jonah" 
 that is sinking his business ship, he can only be 
 sure which one it is and so be enabled to take the 
 necessary steps to plug the leak and pump out the 
 water, by means of the information supplied to 
 him through a complete and accurate cost ac- 
 counting system. 
 
 Such a system of accounts distributes the cost 
 of merchandise and labor, together with the oper- 
 ating and other expenses, over the various depart- 
 ments of the business so that each will bear its due 
 and proper proportion and show exactly what 
 the product or sales of each department cost for 
 
INTRODUCTORY 13 
 
 the period. The progressive garage owner or 
 manager should be satisfied with nothing short 
 of this. It is not sufficient to figure more or less 
 closely, when inventory is taken at the end of the 
 year, what has been made or lost on the whole 
 business during the year; it leaves the proprietor 
 in the dark on the most vitally important point, 
 namely, 'where the gain or loss occurred where 
 to look for mistakes or dishonesty on the part of 
 employees, or to make changes in business policy 
 or methods. 
 
 Some few garage men get from their books a 
 "Profit and Loss Statement" or a "Business State- 
 ment" monthly; still fewer divide their sales and 
 prime costs (of merchandise and labor) into de- 
 partments, and so get some idea of the gross pro- 
 fits in each. But the distribution of the "over- 
 head" expense to the several departments, which 
 is seldom attempted, often completely changes 
 the complexion of the returns and shows that a 
 supposedly profitable department is in reality a 
 bad loser, or that one less profitable but properly 
 chargeable with a smaller proportion of "over- 
 head" is yielding a much higher percentage of 
 net profit. 
 
 The departmental cost records may be kept en- 
 tirely separate from the general books, in a Cost 
 Journal and Ledger; or they may be combined 
 
14 PRACTICAL GARAGE ACCOUNTING 
 
 with the General Journal and Ledger accounts ; 
 or, as in the system described in the following 
 pages, some of the necessary cost accounts may be 
 kept in the General Ledger, and the depart- 
 mental subdivision of the operating accounts be 
 completed on a monthly Cost Sheet. This method 
 we have found most convenient and economical 
 of time and money. 
 
 The monthly Cost Sheet placed before the pro- 
 prietor should merely give him a general view of 
 his business from a different angle than that of the 
 Balance Sheet and Profit and Loss Statement 
 drawn from his General Ledger; precisely as a 
 man to get an idea of the size and proportions of 
 a house would need to see it from at least two 
 sides. 
 
 No doubt some readers by this time may be 
 saying to themselves, "That sounds very desir- 
 able, but how can I afford it?" Permit us to say 
 that the real question is, "How can you afford to 
 do without it?" The man who cries "too much 
 red tape," is always the man who has never had 
 a real Cost System. The man who has one may 
 always be open to suggestions of improvement 
 his system educates him that way but it is never 
 "too much bother" to him. He would rather 
 give up his business than do without a Cost Sys- 
 tem. Doing business in the dark, after experi- 
 
INTRODUCTORY 15 
 
 encing the light, would prove too great a mental 
 strain. 
 
 As a matter of fact the principles underlying 
 Cost Accounting are not complicated or diffi- 
 cult, and a system may be built upon or around 
 any good set of general accounts. It is largely a 
 matter of a little extra work in the beginning in 
 laying out the lines on which to proceed, and the 
 use of properly designed forms for obtaining and 
 recording the necessary information. 
 
CHAPTER II 
 PRIMARY RECORDS 
 
 THE subject of accounting is invested , in 
 the minds of many who have not given any 
 very serious consideration to it, with con- 
 siderable mystery. The bookkeeper's "balance" 
 is almost as wonderful and hard to understand as 
 the balance of the equilibrist who crosses Niagara 
 on a tight rope. Nor have the multitudinous 
 forms for various bookkeeping purposes, fear- 
 fully and wonderfully made, with which the mar- 
 ket has been flooded by alleged accountants in the 
 employ of blank book manufacturers and station- 
 ery houses, tended to simplify the matter in the 
 mind of the average person. 
 
 As a matter of fact there is no mystery about 
 accounting. It is the process of recording busi- 
 ness transactions. There are still three broadly 
 marked steps or stages in this process, as there 
 have been ever since the cunning Italians in- 
 vented the double entry method the only scien- 
 tific system of accounts. In many of the text 
 books of schools and "business colleges" these 
 three divisions of bookkeeping are embalmed in 
 what are denominated the "Day Book", the 
 
 16 
 
PRIMARY RECORDS 17 
 
 "Journal" and the "Ledger." Each of these in 
 modern accounting practice has changed greatly 
 in form, but the three successive stages are still 
 clearly defined. They are: 
 
 1. The original memoranda of transactions 
 
 (Corresponding to the "Day Book") 
 
 2. Assembling and classifying these memoranda 
 
 ("Journalizing"). 
 
 3. Final Recording in the Ledger. 
 
 To these three the writer would add a fourth, 
 as being equally essential if the accounting system 
 is to be regarded as a productive and valuable 
 part of the business establishment, and not merely 
 as an expensive parasite, tolerated because it can- 
 not be gotten rid of, but to be pruned to the least 
 possible dimensions. This fourth stage is: 
 
 4. The Monthly Operating Reports to 
 
 the Management 
 
 It has never dawned upon many business men 
 that their accounting systems might be easily 
 made to yield them the very certain and vital in- 
 formation about their business that they are 
 worrying themselves grey-headed trying to guess. 
 
 THE MODERN "DAY-BOOK" 
 
 In actual practice the "Day Book" has been 
 almost entirely superseded by numerous special 
 
18 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 tra 
 
 H 
 
 O 
 
 W 
 
 3 
 
 Q 
 
 W 
 
 
 
 is 
 
 1 
 
 I 
 
 
 09 
 
 P 
 
 2 is 
 
 a 
 
 i i 1.1 
 
 - <5a 
 
PRIMARY RECORDS 19 
 
 forms and apparatus for the primary recording 
 of business operations. Pocket duplicate Order 
 Books, duplicate and triplicate Billing Machines 
 and the Cash Register are among the most widely 
 used. All of these can be adapted to garage pur- 
 poses and to the system outlined herein. A Cash 
 Register is especially desirable where a large 
 volume of cash business is done. Two forms in 
 particular are essential for garage use, to take the 
 place of the old-fashioned day-book, viz., a speci- 
 ally designed Material Requisition, and a special 
 garage Time Card; and several others will be 
 found very desirable under some circumstances. 
 
 Form 1 Material Requisition 
 
 On this form all sales of materials, and miscel- 
 laneous sales such as storage and battery current, 
 are to be entered. For this purpose a book of 
 these blanks should be kept for use in the stock 
 room, and another in the office. The forms are 
 printed in duplicate and numbered consecutively 
 and blocked in books of 100 each. The original 
 is to be torn out, the duplicate remains in the 
 covers. Each form made out should show date; 
 to whom the goods were isssued; for what de- 
 partment if an Inter-department sale; customer's 
 name, or "Cash" if a cash sale; account charge- 
 able if not a sale to a customer; the full descrip- 
 
20 PRACTICAL GARAGE ACCOUNTING 
 
 tion of the article or material issued from stock; 
 the selling price; and total of sale. It should be 
 signed by the one upon whose authority the goods 
 were issued from stock. The numbered duplicate 
 filled out by means of carbon paper at the time 
 the original is made, supplies a means of check- 
 ing up missing slips and a record of the store- 
 keeper's authority for issuing goods. The origi- 
 nals of these Requisitions, accumulated during 
 the day, should not later than the following 
 morning be entered on the Stock Record, when a 
 perpetual inventory is maintained; and at the 
 same time the cost as shown by the Stock Record 
 be entered on the Requisition. The Requisitions 
 showing the day's sales are then ready to be en- 
 tered in the Sales Journal, or billed if the dupli- 
 cate billing system is used. In case of cash sales 
 where a Cash Register is in use that permits re- 
 cording details on the tape opposite the amount of 
 each sale, it is not necesary to make out a separate 
 Requisition for each sale. The tape answers the 
 same purpose of original record that the Requisi- 
 tions do in the case of charge sales; and at the 
 close of the day's business, after the cash received 
 on account has been entered from the tape in the 
 Cash Received Journal, and the cash payments 
 verified and the proper entry made of them, the 
 cash sales on the tape may be summarized, pre- 
 ferably on a special form. 
 
PRIMARY RECORDS 
 
 21 
 
 DAILY CASH SALES AN 
 
 i 
 
 ALYSIS 
 I 
 
 
 sucrnrron 
 
 L..b 
 
 M 
 
 tr 
 
 "ST" 
 
 fcS, 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 I 
 
 
 
 
 
 
 
 
 
 
 EE 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 I 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ! 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Form 2 DAILY CASH SALES SUMMARY 
 
 Size 3 l / 2 x7 inches 
 
 Form 2 Daily Cash Sales Summary 
 
 This summary is to be entered on the Stock Re- 
 cord in the same way that the Material Requisi- 
 tions are, and afterward entered on the Cash 
 Sales pages of the Sales Journal. The adding 
 machine tape for the day should then be attached 
 to the summary and the two filed away together. 
 
22 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 
 m 
 
 I 
 
 
 
 > j 
 
 i i 
 
 
 1 
 
 < S I 
 
 ! i a 
 
 S 
 
 I 
 
 
 -3 
 
 o 
 
 2 
 
 2 
 
 Jo 
 
 : 
 
 ^j ^j 
 
 s 
 
 v f 
 
 1 I 
 
 4 r> 1- 
 
 1 i 
 
 I 
 
 1 j 
 
 
 
 
 I I 
 
 
 M 
 
 
 
 ! I 
 
 C 
 
 
 S 
 
 
 i i 
 
 s 
 
 
 
 
 1 
 
 
 
 Ul 
 
 
 
 i 
 
 1 i 
 
 1- 
 
 I 
 
 ! 
 
 I 
 
 1 i 
 
 8 j 
 
 
 
 5 
 
 i 
 
 
 
 
 j 
 
 E 
 
 
 
 s i 1 M 
 
 i 
 
 
 
 
 o i | 2 : 
 
 o 
 
 
 
 ll If 
 
 Ul 
 
 c 
 
 E 
 
 I 
 
 
 i a 1 ! 
 
 h 
 09 
 
 o 
 
 
 2 S o 
 
 
 J" 
 
 i 
 
 3 a t * 
 
 HHi 
 
 
 
 o 
 
 
 
 
 
 5 
 
 
 
 9 
 
 i 
 
 1 
 
 O 
 
 Ul 
 
 I | 
 
 
 Mil 
 
 DC 
 
 S 1 
 
 
 
 to 
 
 Q 
 
 
 i a h - 
 
 
 (C 
 
 
 I S 3 5 
 
 
 | 
 
 
 ril 
 
 
 \ 
 
 1 
 
 ? i j . 
 
 i i i i ! ! 
 
 I i i M Ml 
 
 i 
 
 t jn 
 
 t 3 ^ 
 
 2 O O * * 
 f </> 
 
 8 al 1 1 1 
 
 I 
 t i t't 
 
 1 1 ! ! I ! I s 
 
 ' ' i ^ 
 
 Uilj 
 
 lilli ill 
 
 Form 3 TIME CARD (Face) 
 Size 7^x4 inches 
 
PRIMARY RECORDS 23 
 
 DIRECTIONS 
 
 Use a separate card for every job. Details must be given AFTER 
 EVERY UNDERLINED WORD on the reverse hereof, as follows: 
 
 BY Name of employee. 
 
 IN Check Department in which work was done. 
 
 FO R Name of Customer; or If shop work, check Item Indicating nature 
 
 of work. 
 ON Name of Car, whether Customer's or Company's. 
 
 FULL DETAILSof work done must be Indicated, below. STATE 
 EXACTLY WHAT WAS DONE, commencing on line opposite name 
 of part worked on. 
 
 Body ~ 
 
 Brakes - *.. . .- ......... 
 
 Carburetor - _ - ~ 
 
 Cleaning Carbon .... ... - ......... 
 
 Clutch _ . - ~ 
 
 Cooling System ................. . ............... 
 
 Delivering Cars - 
 
 Dismant'g- Assemb'g _ 
 
 Drive Shaft .... 
 
 Electrical System 
 
 Fenders 
 
 Moor <& Run. Bo'ards ..._ 
 
 Frame .. 
 
 Gas and Air System 
 
 Grinding Valves' 
 
 Motor ..... ................. 
 
 Oil &. Grease 
 
 Speedometer 
 
 Springs ....._ , 
 
 Steering Connections _.. 
 
 Transmission _ _ 
 
 Universal Joint ._ 
 
 Upholstering & Top 
 
 Wheels 
 
 Windshield ... 
 
 Form 3 TIME CARD (Back) 
 
 Size 4x7^2 inches 
 
24 PRACTICAL GARAGE ACCOUNTING 
 
 Form 3 Time Card 
 
 Time cards should be handed in by each em- 
 ployee of the garage, except the office force, 
 covering all the time for which he is paid. A 
 separate card should be made out for each job on 
 which he works during the day, showing name of 
 workman, department in which work was done, 
 customer's name or name of the department 
 for which the work was done, commencing and 
 stopping time, and all necessary details of work 
 performed. As both from nature of the work and 
 the exigencies of the business the workman is 
 likely to be interrupted before the completion of 
 any particular job and put on something else, it 
 will be found desirable to have space on each 
 card for checking on and off the same job at least 
 three times during the day. It will also be found 
 a convenience to have the usual operations of the 
 repair department in repairing automobiles 
 listed on the card so that the work done may be 
 indicated by a check mark instead of having to be 
 written out in every case. A few lines will then 
 afford sufficient space for all further details re- 
 quired. 
 
 A Time-Stamp, of which there are a number of 
 very moderate priced models on the market, 
 will save its cost in a very short time in more ac- 
 curate recording of time actually put on cus- 
 
PRIMARY RECORDS 25 
 
 tomers' cars. The usual habit of guessing at it 
 in round figures is frequently a cause of consider- 
 able loss. 
 
 From these cards, turned in daily at the office, 
 the time of each workman will first be entered on 
 the Payroll Sheet and distributed to the proper 
 labor account; then the Productive Labor per- 
 formed be charged to the customer on the Sales 
 Journal or duplicate billing form; or if Inter- 
 department work, entered as an Inter-depart- 
 ment sale on the Journal, or the time cards filed 
 in the Inter-department sale file for billing at the 
 month's end. Time cards covering labor for cus- 
 tomers should be filed so as to be readily referred 
 to if any dispute should arise requiring reference 
 to the original record of labor performed. This 
 may be accomplished by filing the card either al- 
 phabetically under the customer's name, or 
 numerically, numbering each card consecutively 
 with a numbering machine (which we consider 
 preferable) , or with the number of the sales jour- 
 nal page, or the invoice number on which it is 
 charged. 
 
 Storage Register 
 
 For monthly storage charges it will be found 
 desirable to keep a Storage Register, showing 
 owner's name, description of car, agreed price 
 for storage, date of entry for storage and date out. 
 
26 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 This record will lessen the liability of overlook- 
 ing charges for storage, besides facilitating the 
 recording of this part of the business in other 
 ways. All storage charges should be made from 
 the date of entry to the month's end, and for each 
 calender month thereafter. 
 
 Identification Tig. T?c_L!L2_i) 
 
 B 
 
 IB In 
 
 o 
 
 rxa itp 
 
 
 
 _ 4^9 
 
 W.B.Taylor Auto Co. 
 
 
 HM. 
 
 IJ Vo 
 
 
 M. 
 
 
 318-20 Chestnut St. 
 
 
 OUT 
 
 N.nML 
 
 IN 
 
 OCT 
 
 
 
 
 
 (^ 
 
 
 
 Ota 
 
 DAT STORAGE RATES 
 
 
 
 teltai 
 
 
 
 teMMM 
 
 4 Bonn orlen .2Se 
 
 
 
 Bl^. 
 
 
 
 
 
 
 
 
 
 
 
 2HGHT STORAGE 
 
 1 
 
 
 
 
 
 
 6 p. a. to9i.au 
 
 P-Wigkt f 1R 
 
 - w-k ann 
 
 I 
 
 J 
 
 (M. 
 
 | 
 
 
 
 " Month are 8.00 
 " Month-dead 6.00 
 
 
 
 
 
 
 ftn 
 
 Tin. 
 
 
 
 
 
 Tube, 
 
 
 
 Tnh- 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 UTE ARE HOT RESPONSIBLE for 
 
 
 
 T.^ 
 
 
 
 
 ehlel and tctersories left witt at far 
 tilt, etonce or reptin. 
 
 11 
 12 
 
 
 A. M. 
 
 Cw re*dy i F. M. 
 
 11 
 12 
 
 
 C^^, ^ 
 
 Form 4 TRANSIENT STORAGE TAG 
 
 Size 8x5 inches. After filling in, the first section is given to 
 
 customer as a claim-check, the second is attached to the 
 
 car, and the third goes to the office for a check on 
 
 the work to be done and the collection of the 
 
 Proper charge 
 
 Form 4 Transient Storage Tag 
 
 For transient storage customers a triplicate 
 Identification Tag such as we illustrate will be 
 found very convenient and valuable. The three 
 sections of the tag bear identical numbers; the 
 
PRIMARY RECORDS 27 
 
 left-hand section is to be torn off and handed to 
 the customer, to be retained and presented when 
 calling for his car. It has printed on it the tran- 
 sient storage rates, to avoid the possibility of mis- 
 understandings arising, and any other advertis- 
 ing or informative matter desired. Section two, 
 with time of car's arrival indicated by a single 
 pencil mark, and any instructions for supplies or 
 repairs desired is attached to the car. Section 
 three is taken to the office, to be held on a sticker 
 file as a check against possible oversight of charge 
 or loss of the garage copy, until the car is checked 
 out. 
 
 Form 5 Livery Trip Ticket 
 
 A very complete and convenient form for 
 livery or taxi driver's report is presented here- 
 with. It is self-explanatory, and can be readily 
 adapted to almost any circumstances. It fur- 
 nishes the data for the proper journal entry of 
 charges for livery service, and for the Livery 
 Department statistical report described in an- 
 other chapter. 
 
 The original entries of other transactions are 
 usually made in the office. The Cash Received is 
 rung up on the Cash Register, or written out on 
 a duplicate credit memorandum form of some 
 kind, and the Journal (Cash Book) records after- 
 wards made from the Cash Register tape or dup- 
 
28 PRACTICAL GARAGE ACCOUNTING 
 
 LIVERY 
 
 CAR. DATE 
 
 DEST 
 
 FOR 
 
 ADDRESS... 
 
 Start A. M. 
 
 ...P. M. 
 
 Return A.M. 
 
 ...P. M. 
 
 WAITING Hrs Min. 
 
 TOTAL TIME..._ Hrs Min. 
 
 SPEEDOMETER I Return -Miles 
 
 READINGS (start. ..__ Miles 
 
 TOTAL RUN _ Miles 
 
 AVERAGE PER HOUR. Miles 
 
 (MILE 
 
 RATE HOUR 
 
 ( WAITING Per Hr. 
 
 Driver's Exp. $ Earning $ 
 
 Driver 
 
 ....Cash Credit 
 
 Form 5 LIVERY TRIP TICKET 
 
 Size 3x5 inches. One to be properly filled out by the driver for 
 every trip or wait, thus giving a complete record of his time. 
 
PRIMARY RECORDS 29 
 
 licate of receipt issued. The best method of re- 
 cording cash and check payments is discussed in 
 a later chapter. 
 
 The Main Consideration 
 
 Whatever the method, the object to be kept 
 constantly in mind in providing forms for pri- 
 mary records is to furnish an easy and quick 
 means of getting down the essential information 
 for the bookkeeper, by employees who are not 
 expected to be clerks and whose productive 
 work is along quite different lines. 
 
 Where a cost system or a perpetual inventory is 
 a part of the accounting system, special provis- 
 ion should be made on the primary record forms 
 for noting the cost of merchandise or labor sold. 
 The necessity of keeping all these various 
 features in view emphasizes the desirability of 
 using forms designed by competent accounting 
 experts to secure the required information in the 
 easiest way, without duplication of work. These 
 forms constitute the foundation for the account- 
 ing superstructure, and unless they are properly 
 laid out they are the cause of as much trouble and 
 dissatisfaction with the whole accounting system 
 as a weak and improperly designed foundation of 
 a building is to its owners and tenants. 
 
CHAPTER III 
 THE MODERN JOURNAL 
 
 THE second step in recording transactions 
 is journalizing; the work of assembling, 
 sorting and arranging the primary memo- 
 randa of debits and credits, for the purpose of 
 posting to their final resting places in the ledger. 
 The object to be kept in mind here is to arrange 
 for posting as many items as possible in monthly 
 totals, instead of each item separately, as would 
 be necessary if one journal were used and a sepa- 
 rate debit and credit made for each item. In 
 journalizing, there are six general divisions into 
 which the transactions of the garage may first be 
 divided; namely: 
 
 Cash Received 
 
 Cash Paid 
 
 Purchases on Account 
 
 Sales on Account 
 
 Labor Account (Payroll) 
 
 Adjustments 
 
 For any but the smallest business it is desirable 
 that a separate form be used for journalizing each 
 of these six divisions of transactions, as each af- 
 fects a different group of ledger accounts, and the 
 
 30 
 
THE MODERN JOURNAL 31 
 
 effort to combine two or more of these divisions 
 usually results, not in simplifying but in compli- 
 cating the matter; either by expanding the size of 
 the book to accommodate a larger number of 
 columns, making it more difficult to make entries 
 correctly, as well as a more awkward book to 
 handle; or by contracting the columnar distri- 
 bution and defeating the very object of journal- 
 izing. The books containing the above six divis- 
 ions of the journal are usually called: 
 
 The Cash Book or Cash Received Book 
 The Cash Paid Journal, or Check Register 
 The Purchase Journal, or Invoice Register 
 The Sales or Sales Distribution Journal 
 The Payroll Book 
 The Journal, or the General Journal 
 
 Combination Journal 
 
 The forms for journalizing these six divisions 
 of transactions which are presented herewith are 
 designed to be of uniform size so as to go into a 
 single sectional-post binder if desired, each divis- 
 sion marked by a suitably lettered leather-tabbed 
 guide sheet. This is a great convenience and re- 
 sults in a considerable saving of time. 
 
 Form 6 Cash Received Journal 
 
 As the title indicates, all cash received should 
 be entered in this journal. Five column ruling is 
 
32 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 < < 
 
 < 
 
 E. 
 
 o ^ 
 b. 
 
THE MODERN JOURNAL 33 
 
 usually quite sufficient, providing space, in ad- 
 dition to that for date and details of each entry, 
 for the distribution of credit for amounts re- 
 ceived under the folowing headings: "General 
 Ledger Sundries," "Accounts Receivable," "Cash 
 Sales," "Discount Deducted" and "Amount Re- 
 ceived." The accuracy of the work in this journal, 
 so far as amounts entered are concerned, may be 
 verified at any time during or at the end of the 
 month by footing the columns, cross-footing the 
 first three, deducting from that total the total of 
 the fourth, and comparing the balance with the 
 total of the Amount Received column, with 
 which it should agree. 
 
 Form 7 Cash Paid Journal 
 
 This journal is also the Check Register, and 
 no other record of checks issued against the bank 
 account need be made. Even filling in a check 
 stub is an unnecessary duplication of work. By 
 establishing an Imprest Fund, periodically re- 
 imbursed as described hereinafter, all disburse- 
 ments no matter how small or whether in actual 
 cash or by check can and should be distributed to 
 the proper general ledger accounts through this 
 journal. In order that the maximum possible 
 number of the charges for cash paid during the 
 month may be made to the ledger accounts in 
 
34 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 
 
 S 
 
 1 
 
 
 
 
 2 
 
 1 
 
 o 
 
 ll 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1] 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 II 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 JJ I 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 [i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 .'1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 A 
 
 y 
 
 
 
 
 
 
 
 
 
 
 
 2 
 
 
 
 
 
 
 < 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 t.l 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ,J1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 s 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 }^ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 u 
 
 1 
 
 8 
 
 I 
 
 si 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 ! 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 f 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
THE MODERN JOURNAL 35 
 
 single monthly totals, rather than in separate 
 entries for each payment, this journal should 
 have a number of amount columns, from 12 to 20 
 or more, in addition to the columns for date, 
 payee and number of each check issued. The 
 first of the distribution columns, commencing 
 at the right of the detail columns, should be 
 headed "General Ledger Sundries", and in it 
 should be entered all items affecting accounts not 
 having a separate column provided. The next 
 column should be headed "Accounts Payable", 
 and in it should be entered all payments on ac- 
 counts in the Accounts Payable ledger, what- 
 ever the account may have represented origin- 
 ally. The columns next to the right are to be 
 headed with the designation of the ledger ac- 
 counts to which the greatest number of payments 
 are charged during the month; as, "Payroll," 
 proprietor's personal account, "Parts and Acces- 
 sories", "Office Expense," etc. The fourth col- 
 umn from the right hand side of the page should 
 be headed "Discount", and in this column any 
 deductions on account of cash discounts are to be 
 credited. The amount of discount in each case, 
 deducted from that of the gross charge as entered 
 in preceding column or columns, leaves the net 
 amount of check, which is to be entered in the 
 next column to the right, headed "Amount of 
 
36 PRACTICAL GARAGE ACCOUNTING 
 
 Check". It follows that the book may be "bal- 
 anced" by adding together the footings of the dis- 
 tribution columns and deducting the total of the 
 Discount column; the remainder equalling the 
 total of the "Amount of Check" column if all 
 payments have been distributed in correct a- 
 mounts in the debit columns. 
 
 Bank Account 
 
 Additionally, this journal as the most conveni- 
 ent place contains the detailed account with the 
 depository bank. The "Amount of Check" col- 
 umn constitutes the credit side of the account; the 
 next column to the right, headed "Deposits," the 
 debit side; and the last column to the right of 
 each page or double page should show the "Bank 
 Balance," which should be figured each time 
 a check is issued or a deposit made. The three 
 right hand columns, therefore, constitute a sub- 
 sidiary detail account to the general ledger Cash 
 account; the detail of deposits being shown by 
 the Cash Received Journal. 
 
 When deposit accounts are kept with two or 
 more banks it is suggested that one be made the 
 active account if possible, deposits in the other 
 banks be made only by check on the active bank 
 account, and the record of the few checks issued 
 on the inactive accounts be made through the 
 
THE MODERN JOURNAL 37 
 
 general journal. When funds in the inactive 
 accounts are needed for general purposes, a 
 check for the round sum to be transferred should 
 be made out, payable to "Cash", and entered as 
 a Cash receipt in the Cash Received journal, the 
 general ledger account with the bank drawn on 
 being credited in the General Ledger Sundries 
 column. This check will then be deposited, with 
 the other receipts, in the active bank account. 
 If for any reason it is necessary to have two or 
 more active bank accounts, the simplest way to 
 handle the matter is to have a separate section in 
 the Cash Paid or Combination journal for each 
 bank account. 
 
 Imprest Fund 
 
 The maximum amount necessary to carry in 
 the office Cash drawer should be determined, 
 this amount drawn from the bank and charged to 
 Imprest Fund; and no further entry be made in 
 this account unless changing conditions make de- 
 sirable an increase or decrease of the fund. 
 
 The total amount of money, checks, etc., taken 
 in, should be deposited daily in the bank. All 
 petty office expenditures, too small to be made by 
 check, should be made from the Imprest Fund; 
 and a receipt, preferably on a special form, 
 should be taken for every such expenditure; or 
 
38 PRACTICAL GARAGE ACCOUNTING 
 
 the voucher may be initialed by the one making 
 the payment or approving it. This voucher 
 should have space for the name of the ledger ac- 
 count to which the expenditure is ultimately to 
 be charged. Form 8. 
 
 PAID VOUCHER- 
 
 CHICAGO IlL 
 
 0-K- 
 
 RE.CEJVED RAY^eNT or ABOVE AI-IONTT. 
 
 Form 8 CASH PAID (IMPREST FUND) VOUCHER 
 Size about 4J^x3 inches. 
 
 These receipts or petty cash vouchers are to be 
 considered as so much cash, and should prefer- 
 ably remain in a compartment of the cash drawer 
 until the actual cash in the drawer is so depleted 
 as to make necessary the reimbursement of the 
 fund, or until the end of the month. Then the 
 vouchers are to be taken from the drawer, sorted 
 among the various accounts to which the expend- 
 itures represented are to be charged, and a check 
 payable to "Cash, a/c Imprest Fund" drawn for 
 the total amount expended. This check should 
 
THE MODERN JOURNAL 39 
 
 be either cashed at the bank or from the day's 
 deposit; in which latter case it is to be deposited* 
 in place of the cash abstracted. 
 
 The entry in the Cash book covering the trans- 
 action should show the distribution of the charge 
 to the various accounts for which the expendi- 
 tures were made. It is never to be charged to the 
 Imprest Fund. For example: 
 
 Payee 
 
 Ch'k No. 
 
 Office 
 
 Shop 
 
 Freight 
 
 Amount 
 
 Cash a/c I. Fund 
 
 153 
 
 3.46 
 
 2.10 
 
 2.00 
 
 7.56 
 
 Thus the amount in the Cash drawer, includ- 
 ing cash and vouchers, will always equal the a- 
 mount of the Imprest Fund as shown by the led- 
 ger. The Cash vouchers covered by each reim- 
 bursement, should be carefully filed away in an 
 envelope marked with the date of the re-imburse- 
 ment, and preserved as vouchers for the expendi- 
 ture until the books are audited and are closed, at 
 least. 
 
 By following this method all expenditures for 
 the month are distributed through one journal, 
 and the total of the month's cash receipts as 
 shown by the Cash Received Journal will be the 
 same as the total of the "Deposits" column of the 
 Cash Paid Journal. The final deposit for the 
 month, containing the last day's receipts, must 
 necessarily be made on the first business day of 
 
40 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 \ft 
 
 is 
 
 E 
 
 
 
 
 n 
 
 M 
 
 ii 
 
 
 ij 
 
 Y 
 
THE MODERN JOURNAL 41 
 
 the following month, but should be entered in the 
 journal as if made on the day cash was received 
 the last day of the month. 
 
 Form 9 Purchases on Account Purchase Journal 
 
 This journal is primarily for the recording of 
 invoices for merchandise purchased on Accounts 
 Payable. Entry of such invoices should be made 
 in this journal as soon as goods are received and 
 put into stock, and the entry should bear date not 
 of the invoice, but of the receipt of merchandise. 
 In the average garage, two or more columns 
 should be provided for distribution of these mer- 
 chandise purchases, viz: for Parts and Acces- 
 sories, and Tires and Tubes ; and if the purchases 
 during the month in other departments warrant 
 it, additional columns should be provided for 
 them, such as New Car purchases, Gasoline and 
 Oil purchases, etc. Additionally a Miscellan- 
 eous column is necessary for invoices covering 
 merchandise purchases for which a separate col- 
 umn is not provided, and for expense and other 
 general ledger account items. In the case of all a- 
 mounts entered in the Miscellaneous column, the 
 account to be charged should be stated in connec- 
 tion with creditor's name in the detail column; 
 e. g. : "John Jones & Co., Furniture and Fix- 
 tures." Credit memoranda from creditors, to be 
 
42 PRACTICAL GARAGE ACCOUNTING 
 
 charged to their Accounts Payable, may also be 
 most conveniently entered in this Journal; but 
 the amounts of such must be entered in red ink, 
 which amounts will be deducted instead of ad- 
 ded in footing the columns. 
 
 In this way all entries affecting Accounts Pay- 
 able other than cash or note payments, are en- 
 tered through this Journal. If desired, a Total 
 column may be added at the right hand side of 
 the page, for the purpose of checking the addi- 
 tion of the other columns. The total of every in- 
 voice entered should be extended to this column ; 
 and the totals of all columns cross footed will 
 then equal the grand total of the total column. 
 
 The Voucher System 
 
 This system affords some advantages and has 
 some disadvantages over the method of handling 
 Accounts Payable and Cash payments just out- 
 lined. It avoids the use of a Purchase Journal, 
 Cash Paid Journal and Accounts Payable ledger, 
 substituting therefor a voucher for each invoice 
 or group of invoices payable, a Voucher Register 
 and a Check Register. In the Voucher Register 
 the distributions to General Ledger accounts pro- 
 vided for in the Purchase Journal and the Cash 
 Paid Journal as before described are combined; 
 the Check Register then requires only columns 
 
THE MODERN JOURNAL 
 
 43 
 
 for Vouchers Payable, Discount Deducted, 
 Amount of Check, Deposits and Bank Balance. 
 
 Below is shown a comparison of the operations 
 required under the two systems from which the 
 reader may draw his own conclusions as to their 
 respective merits. 
 
 Accounts Payable Ledger 
 System 
 
 1. Invoices for Mdse. pur- 
 chases entered in Purchase 
 Journal. 
 
 2. Post to Accts. Payable 
 Ledger a/c. 
 
 3. Purchase Journal footed 
 and posted to General 
 Ledger. 
 
 4. Current Expense Items 
 distributed in Cash Paid 
 Journal. 
 
 5. Cash Paid Journal Dis- 
 tribution Footing and 
 Posting 
 
 6. Creditors' Accounts in 
 one place more perma- 
 nent record especially 
 advantageous when par- 
 tial payments are made. 
 
 Voucher System 
 
 1. Vouchers made for mdse. 
 Invoices (Typewriter) 
 
 2. Enter in Voucher Regis- 
 ter. 
 
 3. Voucher Register footed 
 and posted to General Led- 
 ger. 
 
 4. Current Expense Items 
 Vouchered ( Typewriter ) . 
 
 5. Expense Vouchers en- 
 tered in Voucher Register. 
 
 6. Voucher Register Foot- 
 ing and Posting of Expense 
 Accounts. 
 
 7. Unpaid Vouchers held in 
 separate file until paid. 
 
 8. Paid Vouchers filed a- 
 way under consecutive 
 numbers. 
 
44 PRACTICAL GARAGE ACCOUNTING 
 
 The writer is of the opinion that the voucher 
 system is not suited to the needs of the average 
 garage. Usually it is desirable that ledger ac- 
 counts be kept with creditors from whom mer- 
 chandise is purchased; and the making up of 
 vouchers for expense and other items paid in 
 cash involves an unnecessary amount of labor. 
 The time saved in footing and posting by com- 
 bining the distribution of the Purchase and Cash 
 Paid journals is not so great as would at first ap- 
 pear, as the accounts most frequently affected by 
 the entries in the one are not the same as in the 
 other. 
 
 Modification of Voucher System Optional Method 
 
 A modification of the Voucher System, how- 
 ever, that may sometimes be found preferable, is 
 as follows: The Purchase Journal, or Register 
 of Invoices Payable, distributes all charges for 
 cash payments and accounts payable items for the 
 month in one place, thus combining the Cash 
 Paid and Purchase journals as before described, 
 and corresponds to the Voucher Register. In- 
 stead of making up vouchers for all items pay- 
 able, all invoices are to be entered, as soon as re- 
 ceived and approved, in this Journal. Expense 
 items, for which it is not desired to open separate 
 accounts in the Accounts Payable ledger, may all 
 
THE MODERN JOURNAL 45 
 
 be charged to one Miscellaneous account in that 
 ledger called Expenses Payable. Correspond- 
 ingly the Check Register (Cash Paid Journal) 
 will have but one debit column Accounts Pay- 
 able ; two credit columns Discount and Amount 
 of Check; and the Deposits and Bank Balance 
 (memorandum) columns. Imprest Fund reim- 
 bursements will be distributed in the Purchase 
 Journal as Expenses Payable before check in re- 
 imbursement is drawn. In fact the point to be 
 kept in mind in using this method is that every 
 expenditure, of 'whatever nature, must be entered 
 in the Purchase Journal before being paid ex- 
 cept petty cash (Imprest Fund) disbursements 
 as explained above. 
 
 Sales Journal 
 
 Besides providing for the entry of charge sales 
 to customers when these are not otherwise taken 
 care of, a garage sales journal should show: 
 
 Departmental Distribution of Sales 
 Departmental distribution of Cost of Sales 
 Departmental distribution of Cash Sales and Cost of 
 
 Sales 
 Distribution of Inter-department Sales and Cost of 
 
 Sales 
 
 The forms and usage of this journal will be 
 described in subsequent chapters. 
 
46 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 o: 
 
 to 
 
 
 tt 
 
 H * 
 
 o?-* Jt 
 
 *.* 
 
THE MODERN JOURNAL 47 
 
 Form 10 The Payroll 
 
 The Payroll Sheet or Book or Summary, how- 
 ever designated, constitutes in reality a subdivis- 
 ion of the Journal, as it accumulates the credit to 
 Payroll account in the general ledger, of the a- 
 mount of wages due employees for the current 
 wage period; and distributes the charge for 
 wages due between Productive Labor and Non- 
 Productive Labor for posting to these accounts 
 in the general ledger, and among the various de- 
 partments for use in compiling the monthly Cost 
 Sheet 
 
 The form suggested for the Payroll, as illus- 
 trated (Form 10), provides also for the distri- 
 bution of the time as between Productive and 
 Non-Productive Labor, and over the various de- 
 partments. For convenience the departments 
 are designated on this standard form by letters of 
 the alphabet. These sales departments and their 
 letter symbols will be found listed in the follow- 
 ing chapter. 
 
 Adjustments General Journal 
 
 All entries in the General Ledger which can- 
 not properly be entered in one of the five journals 
 before described, should be journalized in the 
 General Journal never directly entered in 
 the Ledger accounts affected, with out journaliz- 
 ing. The form and use of this journal also will 
 be detailed in following chapters. 
 
CHAPTER IV 
 SALES DISTRIBUTION AND BILLING 
 
 THE function of the Sales Journal, as out- 
 lined in the preceding chapter, is to list 
 the month's sales and cost of labor and mer- 
 chandise sold, under the various department 
 headings in a convenient manner for summariz- 
 ing, that the totals may be posted to the proper 
 general ledger accounts and be available for use 
 in compiling the monthly Cost Sheet. Addition- 
 ally, the charges to the Accounts Receivable 
 (Customer's) ledger are posted from this jour- 
 nal if a duplicate billing method, supplying a 
 posting copy of invoice, is not employed. 
 
 Forms 11 and 12 The Sales Journal 
 
 The following department division of the gar- 
 age represents a great deal of study, experience 
 and consultation with representative and pro- 
 gressive garage men. We believe it will be found 
 to be close to a standard scheme of sub-division 
 for the average garage, both theoretically and 
 practically. There are sound reasons for cons- 
 
 48 
 
SALES DISTRIBUTION AND BILLING 49 
 
 tituting each of these separate departments, based 
 on diversity of commodity handled, or methods 
 of handling; or upon prices charged for service 
 or merchandise; or in general the information 
 needed by the manager, as will become more ap- 
 parent in studying the information supplied by 
 the monthly Cost Sheet. A still finer sub-divis- 
 ion may be desired by some, as for instance, when 
 two or more New Car agencies are handled; or 
 a separation of Parts and Accessories. Whether 
 the latter separation would really be better or not 
 would depend on whether the two lines were 
 handled in the same stock or store room, and by 
 the same set of employees, or not. Similarly, 
 whether Oils and Grease should be combined 
 with Parts and Accessories department, or with 
 Gasoline, or constitute a separate department, 
 would depend on how, where and by whom these 
 items are handled. Our preference is usually to 
 combine these items with Parts, Accessories and 
 Supplies, calling these lines General Stock, and 
 keeping separate only Gasoline and Tires and 
 Tubes (Tire Stock). 
 
 The letters prefixed to department names in 
 the following list are suggested for use as depart- 
 ment symbols on the Payroll Sheet and elsewhere. 
 
50 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 V. 
 
 
 
 i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 E 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 * 
 
 
 
 I 
 
 3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 : 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 a 
 
 E 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 % 
 
 
 f 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 < 
 
 i 
 
 1 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Ik 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 IK 
 
 
 
 j 
 
 | 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 2 1 
 
 
 
 I 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 z 
 
 w t 1 . 
 
 
 
 I 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 s $ ^ 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 r ^ 
 
 H 5& 
 
 
 
 
 
 Sr 
 
 
 
 
 
 
 
 
 
 
 
 v 
 
 
 
 < ^^ 
 W 5j' 
 
 Pll 
 
 Pi e 
 S1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 < 
 
 
 
 
 
 ;u 
 
 v> 
 
 
 
 
 
 
 
 
 
 
 
 " r^ 
 
 
 
 JOURNAL, I 
 
 x8 inches. J\ 
 m in the cut c 
 
 
 
 
 s 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 CO < I 
 
 
 
 i 
 
 3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 w ,-1 
 
 bJ '*^^> 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 < %z 
 
 I 
 
 3 
 
 
 5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 CO - 
 
 c 
 
 c 
 
 ' 
 
 i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 " s 
 
 
 3 
 
 i 
 
 i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 M <fc 2j 
 
 ^ 2 ^ 
 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 73 -S 2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 S-7 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - . 3 
 
 
 
 ; 
 
 3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ^ 3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 I"S 
 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1-5 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 fe ^ 
 
 I 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 N 
 
 . 
 
 1 
 
 
 ! 
 
 ? 
 1 
 i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 "^ 
 
 1 
 ^S 
 
 Q 
 
 5 
 
 7 
 
 
 j 
 
 I 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 --, 
 o 
 
 
 
 3 
 
 | 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 <x> 
 
 
SALES DISTRIBUTION AND BILLING 
 
 51 
 
52 PRACTICAL GARAGE ACCOUNTING 
 
 Garage Departments 
 
 A New Car 
 
 B Used Car 
 
 C Parts and Accessories (General Stock) 
 
 D Tire Stock 
 
 E Gasoline 
 
 F Live Storage 
 
 G Dead Storage 
 
 H Livery 
 
 I Wash Rack 
 
 J Car Repairs 
 
 K Tire Repairs 
 
 L Battery 
 
 M Paint Shop 
 
 Three optional methods are recommended for 
 sales distribution and billing, the one selected to 
 depend on the office equipment and personnel. 
 These three will hereinafter be referred to as the 
 Duplicate Statement Method, the Duplicate Bil- 
 ling Method, and the Triplicate Billing Method. 
 
 Forms 13 and 14 Duplicate Statement Method 
 
 This is suitable for offices in which the book- 
 keeping must all be done by hand because no 
 typewriter is available or the bookkeeper or bil- 
 ling clerk is not sufficiently skillful in its use. 
 
 The simplest and most economical way under 
 these circumstances, is to distribute the sales and 
 costs among the departments, directly on the cus- 
 tomer's (Accounts Receivable) Duplicate State- 
 ment ledger sheets, from the original records of 
 charges as made on Time Cards, Material Re- 
 
SALES DISTRIBUTION AND BILLING 53 
 
 quisitions, etc. Form 13 shows a superior model 
 for this kind of Duplicate Statement. The costs 
 are to be entered, of course, only on the office, or 
 carbon copy. At the end of the month the charges 
 for the month under each department, on each 
 customer's account, are to be footed, as also the 
 costs on the office copy; and these totals sum- 
 marized in the Sales Journal, to obtain the total 
 Sales and Costs in each department. In this way 
 only the totals of each department's Costs and 
 Sales to each customer need be entered in the 
 proper column after the customer's name. 
 
 If this form of ledger-statement is objection- 
 able for any reason, Form 14 may be used. This 
 form makes no provision for department divis- 
 ion of Sales or for recording Costs. Hence a 
 synopsis of each item charged to customers must 
 be entered in the Sales Journal with Cost, from 
 the Time-Card or Material Requisition Slip 
 constituting the original memorandum of the 
 charge. 
 
 By using a good quality of medium heavy 
 linen paper for the Customer's Statement as il- 
 lustrated in Form 14, the statements may be made 
 out on the typewriter, taking out from the ledger 
 each customer's statement and duplicate upon 
 which charges are to be entered. This method 
 requires considerable care in handling the state- 
 ments out and into the ledger so many times dur- 
 
54 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 ing the month, if they are to be kept in a present- 
 able condition. It necessitates an excessive a- 
 mount of detail distribution in the Sales Jour- 
 nal, and to our minds is unnecessarily cumber- 
 some and awkward when a typewriter can be 
 
 o 
 
 Form 13 DUPLICATE STATEMENT LEDGER 
 COST-FINDING FORM 
 
 Size 11x11 inches, with 1^4 inch binding margin. This illustrates 
 
 customer's copy the original. For record duplicate 
 
 see Form IZa 
 
SALES DISTRIBUTION AND BILLING 
 
 55 
 
 used. Our preference is for the use of Form 13 
 where the typewriter is not available, and the 
 daily duplicate or triplicate billing system if a 
 typewriter is used. 
 
 o 
 
 0= 
 
 Form 13a DUPLICATE STATEMENT LEDGER 
 COST-FINDING FORM 
 
 Size 11x11 inches. Posting (duplicate) copy, showing cost columns. 
 
56 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 Ul 
 
 !{ 
 
 1! 
 S : 
 
 s 
 
 9 
 
 It 
 
 ^ ?M 
 (J - 
 
 8 
 
SALES DISTRIBUTION AND BILLING 57 
 
 Forms 15 and 16 Duplicate Billing Method 
 
 This method requires the use of a typewriter. 
 Customers' invoices are made directly from the 
 workmen's Time Cards and the Material Re- 
 quisition slips. These invoices should be made 
 out daily. By use of carbon paper a copy of each 
 invoice is made at the same time which is called 
 the "posting copy". The cost of the various items 
 are entered on the posting copy only, at the time 
 that the invoice is made out. Two methods of 
 aligning the forms so that the cost figures shall 
 not appear on the customer's invoice are illus- 
 trated in Forms 15, iSa and 16. The invoices 
 should be numbered consecutively, each dupli- 
 cate bearing the same number as the correspond- 
 ing original. The original or customer's copy 
 may be mailed to customer at once or filed until 
 the end of the month or billing period. The post- 
 ing copies should be placed in numerical order 
 in a post binder from which the bookkeeper will 
 post the charges to the Accounts Receivable led- 
 ger. The sales and cost of sales will then be dis- 
 tributed departmentally in the Sales Journal, 
 but only the serial number and department totals 
 of each invoice need be entered. 
 
 The charges on repair jobs extending over 
 several days may be accumulated until the job is 
 finished and then invoiced all at once. For the 
 
58 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 
 
 
 
 
 I 3 
 
 i 
 
 
 | 
 
 t ft i 1 
 
 
 
 1 
 
 o 
 | 
 
 
 
 i 
 
 o. a 
 
 
 
 h 
 
 s 
 
 ^p 
 
 
 
 S 9 
 
 
 i 
 
 
 S X 
 
 2 .3 
 
 ^ 
 
 
 
 I 5 
 
 s * 
 
 
 
 
 2 1 
 
 
 
 ^ "3 
 
 INVOICE 
 
 fad Motor Gomp 
 
 FIRE PROOF GARAGE 
 DEBAKER and FORD AUTOMOBII 
 Eureka, Illinois 
 
 All bill. H. Uri ol month lollwln H-., .1 
 
 i 
 
 
 National Automobile Trade 
 ient SERVICE we base onr 
 
 j ' ill 
 
 
 
 i 1 
 
 
 
 
 g *o 
 
 
 
 
 I 
 
 ,| 
 
 
 
 I 
 
 1 h!h 
 
 i 
 
 
 i 
 
 
 
 ' 
 
 
SALES DISTRIBUTION AND BILLING 
 
 59 
 
 
 
 fc 
 
 
 
 21 
 
 o: R 
 < < 
 
 +* O ft 
 
 1 
 * a 
 
 I 
 
 
 tinjiiilaiii 
 
 <auouft.ox *->x u s 
 
60 
 
 PRACTICAL GARAGE ACCOUNTING 
 
SALES DISTRIBUTION AND BILLING 61 
 
 purpose of keeping the Time Cards and Material 
 Requisitions on each job together, an ordinary 
 alphabetical box file or vertical drawer file will 
 be found very convenient. But the file must be 
 cleaned out at the end of the month, and all un- 
 completed work invoiced and charged, whether 
 the invoice is rendered to the customer or not. 
 
 Triplicate Billing Method 
 
 This varies slightly from the preceding, being 
 a still shorter and more convenient method made 
 possible by the use of an adding and listing ma- 
 chine, eliminating entirely the use of the Sales 
 Journal. It involves the use of a three-sheet bil- 
 ling form for charges to customers. The Posting 
 copy in this case does not contain the cost col- 
 umns, but is a duplicate of the customer's 
 copy. The third copy, called the "Cost Copy," 
 is to be filed during the month, under the name of 
 the department that is to be credited with the sale. 
 For this reason separate invoices must be made 
 out for each department's sales. At the end of 
 the month the invoices under each department 
 are to be added on the adding machine, the list 
 pasted to the back of the last invoice, and the in- 
 voices placed all together in the department order 
 in the "Cost binder" for the bookkeeper to post 
 the month's costs as shown by the lists, to the debit 
 
62 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 of Cost of Sales account, and to the credit of the 
 proper merchandise Stock account, in the Gen- 
 eral ledger. 
 
 The cost of labor Sales will be charged to Pro- 
 ductive Labor account from the Payroll Sheet; 
 but the amount should be entered in the Sales 
 Journal or on each invoice, and the items totalled, 
 including the cost of labor charged on Inter-de- 
 partment Sales (See Chapter V) ; and the grand 
 total cost of labor charged for be compared with 
 the total of Productive Labor paid for, with 
 which it must approximately agree. 
 
CHAPTER V 
 INTER-DEPARTMENT SALES 
 
 SERVICES rendered by one department of 
 the Garage to another, or Merchandise is- 
 sued by one of the Merchandise departments 
 -the General Stock Room, Tire Stock or Gaso- 
 line departments for use by another depart- 
 ment, are to be charged to the department Inside 
 Expense or other operating account of the de- 
 partment receiving the service, etc., and credited 
 to Inter-department Sales of the department per- 
 forming the service. In the Sales Journal these 
 charges are to be entered on separate pages from 
 those to customers ; the name of the department or 
 account to be charged for the service is to be en- 
 tered in the column headed "Customers", and the 
 amount of cost entered in the proper column un- 
 der the heading of the department to be credited. 
 The costs only will be entered during the month ; 
 at the end of the month the charge to the depart- 
 ment receiving the benefit, for the month's total, 
 will be fixed at as nearly as possible the actual cost 
 plus "overhead". In commencing a cost system 
 it will be necessary to estimate the overhead, but 
 after the system has been in operation for a month 
 the actual costs as shown by the first monthly Cost 
 
 63 
 
64 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 H 
 U 
 
 cu 
 
 Q 
 
 u 
 
 H 
 Z 
 
 1 1 
 
 J 8 
 1 1 
 
 i" -s 
 
 O 
 
 o i 
 
 ii 
 
 U, O 
 
 ill, 
 
INTER-DEPARTMENT SALES 65 
 
 Sheet will be the basis for the next month's 
 charges of Inter-department Sales. After the 
 system has been in operation for a longer period, 
 the average of the preceding three or six months 
 costs should in every case be used as a basis for 
 these charges. 
 
 When the triplicate billing method is em- 
 ployed the Inter-department Sales should be 
 billed monthly or oftener on a special one-sheet 
 form. (Form 17) . Department symbols are used 
 in making out these forms, and very little detail 
 need be given, thereby reducing the work to a 
 minimum. The entire month's charges from 
 each department to another can usually be writ- 
 ten on one invoice. The Inter-department sales, 
 from the Inter-department invoices under each 
 department, should be listed on the machine, the 
 lists plainly marked with department for the Cost 
 Sheet sales analysis, and the total posted to the 
 credit of Inter-department Sales account. Cost 
 of Sales are also to be listed and totalled for each 
 department separately, the amounts credited to 
 the respective Stock accounts and the grand total 
 charged to Cost of Sales account. 
 
 Inter-department Credits 
 
 The principal ways in which such sales are 
 likely to be made are listed below, with a sug- 
 
66 PRACTICAL GARAGE ACCOUNTING 
 
 gested basis for charges until the average over- 
 head can be ascertained. 
 
 GENERAL STOCK ROOM : The cost of operating 
 the General Stock Room is handled on the 
 monthly Cost Sheet as a General Expense charge, 
 the purchasing and carrying cost being distri- 
 buted accurately over the departments through 
 which sales of General Stock are actually made. 
 The transfer of materials or parts from the Gen- 
 eral Stock Room to other departments, such as 
 the Car Repair Department, Battery Department, 
 Paint Shop, Tire Repair Department, etc., for 
 sale to customers in connection with the work 
 done by those departments, is not to be considered 
 as Inter-department sales nor entered on the In- 
 ter-department sales sheets of the journal. The 
 charge to customers for such materials or articles 
 will, of course, be entered on the customers' sales 
 sheets or invoices as a credit to the department 
 through which the sale was made; only direct 
 sales from General Stock being credited in the 
 General Stock sales column. But materials sup- 
 plied from the General Stock Room, Gasoline 
 Department, or Tire Department to other depart- 
 ments for use in the department, are to be charged 
 to that department as an Inter-department Sale, 
 credited to General Stock Sales Department as 
 before provided. The General Stock Room over- 
 
INTER-DEPARTMENT SALES 67 
 
 head may be estimated at 15% of the cost, until a 
 more accurate rate has been determined. 
 
 CAR REPAIR DEPARTMENT : This department ^ 
 will frequently perform labor for the New Car 
 Sales, Used Car Sales, and Livery departments, 
 and occasionally will furnish workmen to make 
 repairs or betterments on the buildings, especi- 
 ally when owned by the proprietor of the garage. 
 The labor on the building should be charged at 
 full selling price, the same as to any customer, as 
 the profit or loss on the real estate investment 
 should be kept carefully separate from the garage 
 operating accounts. The garage is charged full 
 rental, which is credited to real estate income; so 
 any work performed by garage employees on the 
 property should be charged at full rates to the 
 Real Estate Accounts. For charges to the other 
 garage departments, estimate labor overhead at 
 80% until the actual average rate is ascertained. 
 
 STORAGE DEPARTMENT: If a definite part of 
 the floor space is not set apart for the use of the 
 New Car Department, Used Car department and 
 Livery department, the overhead on which is 
 charged to these respective departments direct, it 
 will be necessary to enter a charge in the Sales 
 Journal monthly against these departments for 
 floor space in the Live Storage department oc- 
 cupied by new or used cars on hand for sale or 
 
68 PRACTICAL GARAGE ACCOUNTING 
 
 demonstrating purposes. It is suggested that the 
 cost price be estimated at 80% of the amount 
 charged customers until the actual cost of storage 
 space per car is ascertained for a three or six 
 months average. If a service car is kept, Service 
 Car Expense should be charged with the space 
 occupied. 
 
 BATTERY DEPARTMENT, TIRE REPAIR DEPART- 
 MENT, PAINT SHOP and other departments fre- 
 quently perform inter-department service, and 
 the charge and credit for same should be entered 
 in the Sales Journal or billed as an Inter-depart- 
 ment sale in the manner outlined above. 
 
 Inter-department Charges 
 
 The principal accounts to be charged with 
 these Inter-department sales are as follows : 
 
 INSIDE EXPENSE : A separate account with 
 this designation should be opened for each de- 
 partment affected, as "New Car Inside Expense", 
 "Livery Inside Expense," etc. These accounts 
 represent the purchases of labor and materials 
 from other departments for operating purposes. 
 The distinction between this classification of ex- 
 pense and the Non-productive labor cost within 
 each department should be clearly recognized. 
 
 FREE SERVICE: A Free Service Account 
 should be opened for each department giving free 
 
INTER-DEPARTMENT SALES 69 
 
 service on a "policy" basis to customers. The de- 
 partment performing the service should be cred- 
 ited with the amount as an Inter-department sale ; 
 the department benefiting be charged. These 
 charges are usually to New Car Free Service; 
 occasionally to Used Car Free Service, Livery 
 Free Service, Storage Free Service, etc. The de- 
 partments to be credited are most frequently Car 
 Repair Department (for free repairs on cars 
 sold) , and General Stock Sales (accessories given 
 free with cars sold). 
 
 USED CAR STOCK: Materials or labor ex- 
 pended in the process of rebuilding or perma- 
 nent betterment of used cars, usually by the Car 
 Repair, Tire Stock or Battery departments. 
 Carefully distinguish this classification from re- 
 pairs or up-keep, which is a charge to New Car 
 Inside Expense, Used Car Inside Expense, Liv- 
 ery Inside Expense, or Service Car Expense. 
 
 REAL ESTATE ACCOUNT: Labor and mater- 
 ials furnished by the garage for the building, in 
 making additions or other permanent better- 
 ments. 
 
 MAINTENANCE OF BUILDINGS: Labor or 
 materials in making repairs to the buildings 
 owned by the garage proprietor. 
 
T 
 
 CHAPTER VI 
 SALES JOURNALIZING 
 
 HE departments through which labor is 
 usually sold are as follows : 
 
 Car Repair Shop 
 Tire Repair Shop 
 Battery Department 
 Livery Department 
 Wash Rack 
 Storage Department 
 Paint Shop 
 
 The departments should appear in the order on 
 the sales journal sheets that will bring those hav- 
 ing the largest number of items nearest the detail 
 columns. Some of the labor costs in the above 
 departments cannot be shown against each sep- 
 arate customer's job, but will have to be charged 
 to the department in general, i. e., to the process 
 of operating the department; for example, vul- 
 canizing tubes, charging batteries, driving livery 
 cars, car washing, care of cars in the Live Storage 
 Department, and work in the Paint Shop. In all 
 of these departments it is customary to charge 
 work by the job rather than per hours of labor 
 
 70 
 
SALES JOURNALIZING 71 
 
 performed; and it is frequently impossible for 
 the workman to keep his time separate for each 
 job. Where it is possible it should be required 
 that they do so; but particularly in the Tire Re- 
 pair Shop, Battery department and Live Storage 
 department it is impracticable and the cost of 
 this labor so far as it applies to work for cus- 
 tomers, should be charged to the department pro- 
 cess on the Sales Journal Sheets; or, if a dupli- 
 cate billing system is used, the time cards for de- 
 partment process work should be accumulated 
 during the month in a suitable file, in the same 
 way that Inter-department charges are, and be 
 assessed against the department sales at the end of 
 the month. 
 
 MERCHANDISE SALES are made through the 
 following departments: 
 
 Gasoline and Oil 
 General Stock 
 Car Repair Shop 
 Battery Department 
 Tire Stock 
 Tire Repair Shop 
 New Car 
 Used Car 
 Paint Shop 
 
 In some of the above departments, notably the 
 Battery Department, the Tire Repair Shop and 
 the Paint Shop, it will be necessary to charge 
 some of the merchandise sold to customers to the 
 
72 PRACTICAL GARAGE ACCOUNTING 
 
 general sales of the department or department 
 process, as the quantity used on each job cannot be 
 measured and assessed against each particular 
 sale; as for example, rubber stock used in repair- 
 ing tubes. 
 
 Miscellaneous Sales 
 
 Miscellaneous sales are sales that cannot be 
 classified as of merchandise or labor. They usu- 
 ally consist of Battery Current and Live and 
 Dead Storage. Where a separate meter is used in 
 the Battery department it is possible to charge 
 the cost of battery charging to each particular 
 job; but where this current is taken through the 
 same meter as that measuring the current used for 
 lighting or power purposes, a proportion should 
 be charged to Battery department on the monthly 
 cost sheet; and no costs, therefore, will appear 
 under this head on the sales journal sheet. Simi- 
 larly all costs on storage sales in the Live and 
 Dead Storage departments appear on the 
 monthly cost sheet as a part of overhead expense. 
 
 Cash Sales 
 
 One sheet in the Sales Journal should be de- 
 voted each month to an analysis of cash sales. 
 The Material Requisitions, or adding machine 
 tape, constituting the original record of these 
 sales, should be analyzed daily, preferably on a 
 
SALES JOURNALIZING 73 
 
 special form (No. 2) providing columns for costs 
 and amounts of sales in each department, and 
 transferred to the cash sales sheets of the Sales 
 Journal as a daily total under each department. 
 By thus summarizing on a separate form each 
 day's cash sales it will be necessary to use only one 
 line a day for their entry in the Sales Journal, and 
 therefore but one page a month. Similarly, when 
 the triplicate billing system is used (without the 
 distributing Sales Journal,) the days sales in each 
 department may be summarized on one invoice. 
 For this purpose use the single-copy "Interde- 
 partment Sale" form, (No. 17) accumulate these 
 in a separate binder sorted among the depart- 
 ments, list on the adding machine at the end of 
 the month, and see that the grand total balances 
 with cash sales receipts as shown by the Cash Re- 
 ceived Journal. 
 
 Sales Journal Summary 
 
 If the Sales Journal is used a summary of the 
 month's business must be drawn off. Use one of 
 the Journal sheets for the purpose. Enter first 
 the total of the customers' sheets under each de- 
 partment. Next the totals of the Cash Sales 
 sheets should be brought forward and added to 
 the Charge Sales totals. Beneath these totals of 
 sales to customers should then be entered the 
 
74 PRACTICAL GARAGE ACCOUNTING 
 
 totals of the Inter-department sales, and then the 
 grand total of sales under each department 
 brought down. 
 
 The totals of the labor costs in the various de- 
 partments should approximately agree with the 
 totals of the charges on the payroll sheets to Pro- 
 ductive Labor. The amount shown by the Sales 
 Journal will be somewhat larger than the charge 
 from the payroll, as the time charged on the Sales 
 Journal will be in round figures and may to some 
 extent overlap, and a small portion of the work- 
 man's time be charged to two jobs ; but this dif- 
 ference should not aggregate more than a few 
 cents to a dollar or two if more the difference 
 should be located and corrected. If the payroll 
 sheets, however, show a larger amount than the 
 Sales Journal it will indicate that some of the 
 men's time has not been properly charged to cus- 
 tomers or expense accounts on the Sales Journal, 
 and in that case a careful check should be made 
 of the time cards to discover the errors. 
 
CHAPTER VII 
 
 THE GENERAL JOURNAL AND 
 MONTHLY ENTRIES 
 
 THE General Journal (Form 18) is intended 
 for such adjusting entries as cannot prop- 
 erly be made in any of the other journals. 
 Some of these entries are incidental, such as the 
 transfer of balances from the Accounts Receiv- 
 able to the Accounts Payable ledger, or the entry 
 of new Notes Receivable or Notes Payable, etc. 
 Other entries covering accruing expenses, appli- 
 cation of the month's proportion of deferred 
 charges to operations, etc., should be made 
 monthly; and to facilitate the making of these 
 entries and to avoid forgetting any of them, a 
 schedule or list should be kept and referred to at 
 the end of each month, as the basis for the entries. 
 Following is a list and explanation of the more 
 important and usual of these monthly adjust- 
 ments : 
 
 Rent 
 
 If the property occupied is owned by the gar- 
 rage a monthly entry should be made charging 
 Rent account and crediting Real Estate Income 
 
 75 
 
76 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 i 
 
 ': 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 s 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 4 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 s 
 
 
 o 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 I 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $ 
 
 
 
 
 
 
 
 
 
 i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 ^ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 ) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ! fo 
 
 
 1 
 
 
 
 
 
 
 
 i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 i< 
 
 
 
 
 
 
 
 
 
 / 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ! z 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ' 
 
 ^> 
 
 
 > 
 
 
 
 
 
 
 
 
 ; 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 d 
 
 R 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 < c 
 
 py 'd 
 
 GENERAL 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 18 THE GENERAL JOU 
 11x11 inches. Both sides t 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ! 
 
 
 
 I 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ! 
 
 in 
 
 ) 
 
 
 
 
 
 
 
 
 i 
 
 30 
 
 1 
 
 
 
 
 
 
 
 
 
GENERAL JOURNAL AND MONTHLY ENTRIES 77 
 
 with a suitable rental for the premises. This 
 should be as nearly as possible at the figure for 
 which the property could reasonably be expected 
 to rent to an outside party. Business property is 
 usually expected to yield from 8 to 10% gross on 
 the investment. It is therefore suggested that, as 
 a basis for the rental charge, a percentage of 8 to 
 10% of the cost of the property be fixed as the 
 yearly rental, one-twelfth being debited and cred- 
 ited each month; and all expenses of maintain- 
 ing the property be charged to suitable real estate 
 expense accounts, such as Taxes, Insurance, De- 
 preciation and Maintenance. This will make it 
 possible to show the garage earnings and real es- 
 tate earnings separately and accurately on the 
 Balance Sheet and Profit and Loss statement. 
 
 Taxes 
 
 One-twelfth of the estimated amount of taxes 
 on equipment and stock for the current year 
 should each month be charged to Garage Taxes, 
 and one-twelfth of the estimated tax on Real Es- 
 tate be charged Taxes on Real Estate, and the 
 total be credited to Tax Reserve. When taxes are 
 paid, usually the following year, the actual 
 amount will be charged to Tax Reserve, and an 
 adjusting entry may then be made debiting or 
 
78 PRACTICAL GARAGE ACCOUNTING 
 
 crediting the balance to the expense accounts or 
 to Profit and Loss. 
 
 Fire Insurance 
 
 An insurance schedule should be made up 
 on opening the books, showing all policies in 
 force. After dividing the unexpired premium 
 on each policy into the correct future months' 
 proportions, these amounts should be entered in 
 columns headed by the names of the months cov- 
 ered. When the schedule is complete it will be 
 possible to foot these columns and so ascertain 
 the total insurance cost for each month ; and this 
 amount should be charged to Fire Insurance ac- 
 count in the garage expense section, and to Build- 
 ing Insurance account in the real estate section of 
 the ledger, the total being credited to Prepaid in- 
 surance. All actual payments for insurance are 
 charged to the latter account. The insurance 
 schedule must be corrected whenever any new 
 insurance is taken out or old insurance expires or 
 is cancelled. 
 
 Depreciation 
 
 All property of every nature in use by the gar- 
 rage should have an estimate of its depreciation 
 charged off on the books monthly. The length of 
 time that the building or equipment may be ex- 
 pected to last should be estimated, and the cost 
 
GENERAL JOURNAL AND MONTHLY ENTRIES 79 
 
 thereof divided by the number of years. Divide 
 this quotient by 12 to ascertain the monthly pro- 
 portion, and charge this amount monthly to De- 
 preciation Expense account, crediting Reserve 
 for Depreciation accounts, one of which should 
 be opened for each property (used cars, equip- 
 ment, fixtures, machinery or tools) account. 
 These Reserve Accounts will appear on the Bal- 
 ance Sheet as a deduction from the asset account 
 representing the property. 
 
 A reasonable depreciation on machinery, fur- 
 niture and fixtures is ten percent a year; on small 
 tools and used automobiles, twenty percent. 
 
 Salaries 
 
 Salaries of such officers or other employees of 
 the Company as are permitted to have a drawing 
 account with the Company should be credited 
 monthly to their personal accounts and charged 
 to the proper salary expense accounts. 
 
 Estimated Bad Debt Loss 
 
 A certain loss on charge accounts due to fail- 
 ure to collect, is inevitable. The probable a- 
 mount of this loss should be estimated as closely 
 as possible on the basis of statistics of pre- 
 vious years. The percentage of these losses to 
 sales should be calculated or estimated, and this 
 
80 PRACTICAL GARAGE ACCOUNTING 
 
 percent of charge sales charged to Bad Debt Loss 
 monthly, being credited to Reserve for Bad 
 Debts, which account appears on the balance 
 sheet as a deduction from Accounts Receivable. 
 Actual bad debt losses when ascertained should 
 be charged to Reserve for Bad Debts, not to Bad 
 Debt Loss account. Reserve for Bad Debts will 
 require adjustment periodically, it being usual 
 to make such adjustments at the close of each fis- 
 cal year. 
 
 Interest 
 
 The exact amount of interest accruing on Notes 
 and Mortgages receivable and payable should be 
 entered on the books monthly. Interest on Notes 
 Payable is usually prepaid. If so, the amount 
 prepaid should be shown as a debit balance in 
 Prepaid Interest account; and the amount accru- 
 ing monthly be charged to Interest account and 
 credited to Prepaid Interest. Interest not pre- 
 paid on Notes or Mortgages Payable should be 
 accrued monthly, charged to Interest and cred- 
 ited to Reserve for Interest on Notes (or Mort- 
 gages) Payable. Interest accruing on Notes Re- 
 ceivable should be charged to Accrued Interest 
 on Notes Receivable Account, and credited to 
 Interest account, monthly. 
 
GENERAL JOURNAL AND MONTHLY ENTRIES 81 
 
 Payroll 
 
 The total amount due to employees for their 
 services each month should be charged to the dif- 
 ferent labor accounts and credited to Payroll. 
 Actual payments of wages or salaries to employ- 
 ees will be charged through the Cash Paid Jour- 
 nal to Payroll account. The balance of Payroll 
 account at the end of the month shows the amount 
 due employees on wages at that date. 
 
CHAPTER VIII 
 
 THE GENERAL LEDGER- 
 CLASSIFICATION OF ASSETS 
 
 THIS is the principal book of account of 
 the business. It contains the condensed and 
 classified record of all transactions, and 
 from the General Ledger it should be possible at 
 any time to draw off a complete Balance Sheet 
 without reference to any other record. 
 
 General Ledger accounts should not be opened 
 at haphazard nor in alphabetical order, but in the 
 order in which they appear on the Balance Sheet. 
 For this reason a loose-leaf ledger is much more 
 convenient than a bound book, as leaves may be 
 inserted in the former in any section in which it is 
 desired to open an account. The double head 
 ruling or old style form is better for this ledger 
 than the three-column ruling, for when the latter 
 is used it is necessary to show the credit balances 
 in red in order to distinguish them from the debit 
 balances, and this is not convenient and increases 
 liability to error in entering balances, and in 
 drawing off the Trial Balance. 
 
 82 
 
 
THE GENERAL LEDGER 83 
 
 Proper classification of ledger accounts is one 
 of the most important features of scientific ac- 
 counting. The following list shows the prefer- 
 red order in which the various classes of accounts 
 should appear in the General Ledger. It will be 
 noted that the assets are arranged in order of their 
 availability to a going business the "quick" or 
 "current" assets first, then the tangible fixed as- 
 sets, then the intangible, such as "Good Will". 
 Similarly, the current or floating liabilities are 
 shown first, then the fixed liabilities, if any, such 
 as long-time bonds or other obligations. Lastly 
 the Net Worth Accounts appear in their proper 
 order Capital, Surplus, or Partners' Invest- 
 ment accounts, Profit and Loss and the operating 
 accounts, such as Sales, Cost of Sales, Expenses, 
 etc. A study of the Balance Sheet and its prepa- 
 ration will make more apparent the desirability 
 of following this order. 
 
 Assets 
 
 (1) Cash 
 
 (2) Receivables, Accounts and Notes 
 
 (3) Deferred Charges to Operations 
 
 (4) Merchandise Accounts 
 
 (5) Equipment Accounts 
 
 (6) Real Estate 
 
 Liabilities 
 
 (7) Payables, Accounts and Notes 
 
 (8) Accrued Future Due Accounts 
 
 (9) Liens or Fixed Liabilities 
 
84 PRACTICAL GARAGE ACCOUNTING 
 
 Net Worth 
 
 (10) Capital Stock, or Partners' Investment 
 Accounts 
 
 (11) Surplus 
 
 (12) Profit and Loss Account 
 
 (13) Operating Accounts 
 
 (14) Capital Income and Expense Accounts 
 
 The accounts usually appearing under the 
 above divisions will each be treated briefly in the 
 following pages. 
 
 Cash 
 
 CASH IN BANK: This account should be 
 charged with the total of cash on hand, deposited 
 in bank or banks at the commencement of busi- 
 ness; and at the end of every month should be 
 charged with the total cash received and depos- 
 ited as shown by the total of the Cash Received 
 Journal entries for the month. It is to be credited 
 with the total of checks issued as shown by the 
 Cash Paid Journal, and also with any amounts 
 charged by the bank for which a check was not 
 issued ; entry for the latter being made through 
 the General Journal. After posting the month's 
 entries the balance should be compared with the 
 balance shown in the last column of the Cash 
 Paid Journal, with which it should , of course, 
 agree. 
 
 The bank balance should be reconciled 
 monthly with the bank's account. Check off the 
 
CLASSIFICATION OF ASSETS 85 
 
 paid and cancelled checks returned by the bank 
 against the entries in the Cash Paid Journal; 
 make a list of the checks not checked off and 
 therefore not paid by the bank, up to the date of 
 the bank's balance; add to the total of this list of 
 unpaid checks the balance of Cash in Bank Ac- 
 count; if the sum does not agree with the balance 
 on deposit as shown by the bank, the error or 
 errors thus indicated should be located and cor- 
 rected. Make out deposit slips in duplicate if 
 practicable with the name of the person or com- 
 pany from which the check was received written 
 opposite the amount. Each entry of deposit by the 
 bank teller in the Pass Book should be compared 
 with the duplicate deposit check retained in the 
 office. These duplicate slips should be kept on file 
 for six months or a year at least. Banks retain 
 their copies for ten years. They will frequently 
 be found very valuable for reference. 
 
 IMPREST FUND: The method of handling 
 this fund has been explained in connection with 
 the description of the Cash Paid Journal. (Chap- 
 ter III). The balance of this account as it ap- 
 pears in the General Ledger should be the 
 amount of the Imprest Fund in the office cash 
 drawer, and should not change except when the 
 fixed amount of the fund is increased or de- 
 creased. 
 
86 PRACTICAL GARAGE ACCOUNTING 
 
 (2) Receivables 
 
 ACCOUNTS RECEIVABLE: The balance of this 
 account should at all times represent the total of 
 the balances of the Accounts Receivable ledger. 
 For this reason it is called a "representative" or 
 "controlling" account. In opening the books 
 charge it with the total of all Accounts Receiv- 
 able balances; and at the end of each month 
 charge it to the total of charge sales to customers 
 from the summary sheets of the Sales Journal, 
 and credit the total cash received from customers 
 from the Cash Received Journal. This account 
 should also be charged with any cash refunds to 
 customers through the Cash Paid Journal, and 
 with any adjusting entries affecting Accounts Re- 
 ceivable from the General Journal. Miscella- 
 neous charges to customers which cannot be en- 
 tered in the Sales Journal because notinthenature 
 of a sale, are likely to arise frequently. Charge 
 for long distance telephone service, and for ex- 
 press, etc., on parts specially ordered, are of this 
 description. It will be found convenient to set 
 aside a page for these charges each month in the 
 General Journal. The debits to each customer's 
 account are entered as they come up, without mak- 
 ing the credit entry. At the end of the month the 
 credits will be entered in totals, to the proper ac- 
 counts, as Telephone and Telegraph, Freight on 
 General Stock, Freight on Tire Stock, etc. 
 
 
CLASSIFICATION OF ASSETS 87 
 
 Only accounts receivable considered good, i. e., 
 collectible, should be included in the Accounts 
 Receivable ledger and in this General Ledger ac- 
 count. 
 
 DOUBTFUL ACCOUNTS: All accounts with 
 customers which are long past due and upon 
 which further credit has been denied should be 
 separated from Accounts Receivable, the amount 
 charged to Doubtful Accounts, and the detail ac- 
 counts placed in a separate section of the Ac- 
 counts Receivable Ledger. In opening the Gen- 
 eral Ledger the accounts receivable considered 
 doubtful should all be charged to this account 
 and a considerable reserve set up to cover possible 
 losses thereon, say fifty per cent. This ac- 
 count should not, of course, include any accounts 
 considered actually bad or uncollectible. Any 
 entries of cash collected on these accounts or ad- 
 justments in any of the journals will be posted to 
 this account, as well as to the detail account in the 
 Doubtful Accounts section of the Accounts Re- 
 ceivable Ledger. 
 
 RESERVE FOR BAD DEBTS: This is a contra- 
 account to the two accounts receivable accounts 
 just described; that is to say, it is contra to or 
 against them because a reduction of their value 
 on the Balance Sheet. To this account must be 
 credited, in opening the books, the amount that is 
 
88 PRACTICAL GARAGE ACCOUNTING 
 
 estimated will be lost in collecting the total of the 
 Accounts Receivable and Doubtful Accounts. 
 Thereafter a monthly credit to the account 
 should be made of the estimated percent of the 
 total charge sales for the month that will prove 
 uncollectible, say one to three per cent, which 
 amount should be charged to Bad Debt Loss Ac- 
 count in the Expense accounts section of the Led- 
 ger. The balance of this reserve account should 
 be adjusted at the end of each fiscal year to con- 
 form to the actual percentage of losses ascer- 
 tained by a careful check over the individual ac- 
 counts. 
 
 GUARANTEE DEPOSITS WITH MANUFACTUR- 
 ERS: Such deposits are usually required from 
 automobile dealers by the manufacturers. One 
 general ledger account should be opened in this 
 section including all such deposits, the amounts 
 of which, however, should be separately spec- 
 ified in opening the account. 
 
 CUMULATIVE DISCOUNTS ON NEW CARS: A 
 fixed or sliding scale of extra discounts, the 
 amount depending on the number of new cars sold 
 during the season, is usually a feature of the deal- 
 er's contract with the automobile manufacturer. 
 These discounts are sometimes payable in cash or 
 by credit memorandum as soon as earned but 
 more often are accumulated until the expiration 
 
 
CLASSIFICATION OF ASSETS 89 
 
 of the yearly contract at the end of the selling 
 season. 
 
 These discounts should not be anticipated or 
 taken into account until earned, that is, until the 
 number of cars entitling the dealer to the extra 
 discount have been bought. As soon as the dis- 
 count has been so earned, whether payable im- 
 mediately or at some future time, it should be 
 taken into account, the amount thereof being 
 charged to Cumulative Discount on New Cars 
 account, and credited, if on cars already sold, to 
 Cost of (New Car) Sales; or, if on cars in stock, 
 to New Car Stock account. Thereafter in en- 
 tering Cost of Sales on New Cars Sold, in the 
 Sales Journal, care must be taken to use the new 
 net price, deducting the total discount applying 
 in each particular case. 
 
 NOTES RECEIVABLE: This account represents 
 the total due to the company on promissory notes. 
 Debit entries will usually be made to it from the 
 General Journal, credit entries from the sundry 
 column of the Cash Received Journal. 
 
 ACCRUED INTEREST ON NOTES RECEIVABLE: 
 This account should represent at all times the 
 amount of interest accrued to date on promissory 
 notes due to the company. A monthly entry 
 should be made through the General Journal 
 charging the total accrual for the month to this 
 
90 PRACTICAL GARAGE ACCOUNTING 
 
 account; while all actual payments of interest on 
 notes receivable are to be credited herein, as ex- 
 plained in Chapter VII. 
 
 (3) Deferred Charges to Operations 
 
 PREPAID INSURANCE: The amount of unex- 
 pired premium on all insurance policies at the 
 opening of the books should be charged to this 
 account, and afterward all actual payments of 
 premiums. The monthly proportion of premium 
 expiring should be credited to this account 
 through the General Journal, as heretofore ex- 
 plained. 
 
 PREPAID INTEREST: Interest on notes payable 
 especially those given banks, is usually prepaid. 
 In such case it should be charged to this account; 
 the monthly accrual to be credited here at the end 
 of each month, and at that time charged to In- 
 terest Account. 
 
 FUEL: It being usual to purchase several 
 weeks' or months' supply of fuel at a time, it is 
 proper to consider such purchases as Deferred 
 Charges to Operations, and to charge these pur- 
 chases to Fuel account as an asset. At the end of 
 each month the amount of fuel consumed should 
 be estimated as closely as possible and credited to 
 this account; at which time it is to be charged to 
 Heating expense. 
 
 
CLASSIFICATION OF ASSETS 91 
 
 Other deferred charge accounts are sometimes 
 opened, such as for office supplies, repair shop 
 materials, paint shop supplies, etc. If it is desired 
 to carry such purchases as an asset until they are 
 actually used in the business, it is best to charge 
 the items to General Stock, (Parts and Acces- 
 sories) and issue the materials to the departments 
 using them in quantities necessary for immediate 
 use as an Inter-department Sale. Or, if that is 
 impracticable, charge purchases to a deferred 
 charge account, estimate the average number of 
 months' supply purchased at a time, and charge 
 off that proportion of total supply on hand at the 
 end of each month to the proper expense account, 
 crediting the deferred charge account. Thus, if 
 it is estimated that the usual purchase is a six 
 months' supply, charge off one-sixth of the bal- 
 ance of the deferred charge accounts to the oper- 
 ating account each month. 
 
 (4) Merchandise Accounts 
 
 NEW CAR STOCK : Charge the cost, including 
 inbound freight, of all new cars to this account; 
 and credit the total cost of new cars sold each 
 month from the Sales Journal summary sheet. 
 A separate New Car Stock account may be kept 
 for each car agency had, if desired. A card record 
 of each new car, showing cost and freight 
 
92 PRACTICAL GARAGE ACCOUNTING 
 
 paid, may be advantageously kept in a section of 
 the stock record drawer. 
 
 USED CAR STOCK: Charge original cost of 
 used cars, whether cash paid or the amount al- 
 lowed on a new car sale for the used car taken in 
 trade, to this account; and also the materials 
 and labor expended in rebuilding and put- 
 ting these cars into salable condition, as ex- 
 plained elsewhere in this book, under the head- 
 ing "Inter-department sales." A separate record 
 should be kept with each used car to which 
 the same items that are charged in totals to this 
 account in the General Ledger will be charged in 
 detail to the car concerned. This record may be 
 in a section of either the General Ledger or the 
 Accounts Receivable ledger, or on Stock Re- 
 cord Cards ; and the totals of the balances of this 
 section should, of course, at all times agree with 
 the balance of the Used Car Stock Account. By 
 means of the detail record it will be easy to ascer- 
 tain immediately upon the sale of a used car just 
 what the car has cost the company to date (aside 
 from the actual up-keep of the car, which is con- 
 sidered as a department expense in demonstrating 
 these cars to possible purchasers). This actual 
 cost is to be entered against the selling price of the 
 car in the Sales Journal, whether the amount for 
 which it is sold is greater or less than the cost. 
 
CLASSIFICATION OF ASSETS 93 
 
 The total of these costs at the end of the month 
 will be credited to this account, and the items 
 separately credited to the detail account of each 
 used car sold. 
 
 RESERVE FOR DEPRECIATION ON USED CARS: 
 A suitable reserve for depreciation should be set 
 aside monthly on all used cars on hand, based on 
 the estimated average life of the cars. It is ob- 
 vious that used cars deteriorate rapidly in value, 
 and it is much better to spread this loss over the 
 period that the car is carried than to show the 
 whole loss at the time of selling the car. The rate 
 for this depreciation used by many garages is 20 
 per cent per year. General journal entries 
 should be made monthly covering this deprecia- 
 tion, which should be charged to Depreciation 
 Expense. Reserve for depreciation on Used Cars 
 immediately follows Used Car Stock account in 
 the General Ledger, and appears on the Balance 
 Sheet as a deduction from that account. 
 
 GENERAL STOCK, OR PARTS AND ACCESSORIES: 
 This account is to be charged with amount on 
 hand at opening books, and with all purchases of 
 parts and accessories of all descriptions, carried 
 in the general stock room, in show-cases, etc. When 
 desired it may, of course, be divided into any 
 number of separate accounts covering different 
 lines. The cost of general stock sales, whether 
 
94 PRACTICAL GARAGE ACCOUNTING 
 
 made through the General Stock Sales depart- 
 ment, the Car Repair department or the Battery 
 department, as shown by the monthly summary 
 sheet of the Sales Journal, should be credited to 
 this account at the end of each month, so that the 
 balance of the account after posting the month's 
 entries will show the cost value of the stock of 
 parts and accessories on hand. 
 
 TIRE STOCK: Casings and tubes are usually 
 carried as a separate stock from Parts and Ac- 
 cessories, and sometimes where they are kept in 
 a separate stock room certain tire accessories are 
 included in the Tire Stock Account. Purchases 
 and sales in this stock should be handled as di- 
 rected under General Stock. 
 
 GASOLINE: Sales of gasoline, because of the 
 difference in the nature of the commodity and 
 method of handling it, are accounted for sepa- 
 rately from General Stock sales. Gasoline is 
 usually handled in a different part of the build- 
 ing, and frequently by a separate set of em- 
 ployees. A card stock record of gasoline should 
 be kept, but it should be corrected as frequently 
 as possible whenever the actual amount of stock 
 on hand can be ascertained. This correction 
 should be by means of a journal entry debiting or 
 crediting the stock account; the contra-entry to be 
 made in the Cost of Sales account. 
 
CLASSIFICATION OF ASSETS 95 
 
 (5) Equipment Accounts 
 
 An equipment account should be opened for 
 each department supplied with permanent equip- 
 ment of any value. If it is desired to charge small 
 tool purchases to an asset account, it is better to 
 open separate accounts for such purchases, as the 
 depreciation on small tools is naturally much 
 heavier than on machinery and equipment. It 
 will also be necessary to open an account for Of- 
 fice Furniture and Fixtures in this section; and 
 for Service Car, if one is kept. Next to each equip- 
 ment account a "Reserve for Depreciation on 
 account should be opened, to be credited with the 
 amount of depreciation set up each month; this 
 Reserve account to appear as a deduction from 
 the equipment account on the Balance Sheet. The 
 equipment accounts should represent as nearly as 
 possible the actual cost of the equipment covered. 
 
 (6) Real Estate 
 
 In this section open a separate account for each 
 piece of real estate owned by the garage, to which 
 charge its cost price as well as the cost of any im- 
 provements added from time to time. Next to 
 each such account in the General Ledger, a "Re- 
 serve for Depreciation on Real Estate" account 
 should be opened, to which the depreciation on 
 buildings is to be credited; the amount of which 
 
96 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 will be charged to Depreciation on Real Estate 
 in the Capital Income and Expense section, not to 
 the Garage Depreciation (expense) account. 
 
 MORTGAGES ON REAL ESTATE : An account re- 
 presenting the amount of mortgage or other fixed 
 liability against it should appear in the General 
 Ledger next to each real estate account, and be 
 treated on the Balance Sheet as a deduction from 
 that account; or it may appear as a Fixed Liabil- 
 ity in Section 9 as hereinafter provided. 
 
 ACCRUED INTEREST ON REAL ESTATE MORT- 
 GAGE: The monthly accrual of interest on the 
 real estate liability should be credited to this ac- 
 count, and be included on the monthly Balance 
 Sheet with the amount of the mortgage as a de- 
 duction from Real Estate Investment. 
 
CHAPTER IX 
 
 THE GENERAL LEDGER Continued. 
 
 CLASSIFICATION OF LIABILITIES 
 
 AND NET WORTH 
 
 (7) Payables 
 
 ACCOUNTS PAYABLE: This is the controlling 
 account of the Accounts Payable ledger, and in- 
 cludes all outside current liabilities of the com- 
 pany both for merchandise and for expense. 
 Net purchases on account for the month are cred- 
 ited to this account from the Purchase Journal; 
 the total payments of the Accounts Payable col- 
 umns are charged to this account from the Cash 
 Paid Journal; and any adjustments affecting it, 
 from the General Journal. The balance at the 
 end of the month should show the total amount 
 due on open accounts to all creditors other than 
 employees, and should agree with the total bal- 
 ances of the Accounts Payable Ledger. 
 
 PAYROLL: This account should show at the 
 end of each month the amount due all garage em- 
 ployees other than the members of the firm or offi- 
 cers of the corporation. To it should be credited 
 
 97 
 
98 PRACTICAL GARAGE ACCOUNTING 
 
 at the end of each period the total of wages 
 earned; and all actual payments to employees 
 other than those excepted above are to be charged 
 to this account. 
 
 OFFICERS' OR PARTNERS' PERSONAL ACCOUNTS : 
 A separate account should be opened with each 
 officer of the company or partner if the business 
 is a partnership, in addition to the investment ac- 
 count with each. To each of these personal ac- 
 counts is to be credited monthly the amount of 
 salary due for the month; and cash withdrawals 
 are to be charged to these accounts as they occur. 
 
 SUB-AGENTS' DEPOSITS: All guarantee de- 
 posits by sub-agents are to be credited to this ac- 
 count. 
 
 CUSTOMERS' DEPOSITS : Advance deposits by 
 customers on New Cars ordered for future de- 
 livery should be credited to a special account in 
 the General Ledger, rather than to the customers' 
 accounts in the Accounts Receivable Ledger. 
 
 NOTES PAYABLE : The balance of this account 
 represents at all times the amount owing by the 
 company on notes payable, other than those se- 
 cured by mortgage on the real estate. Cash re- 
 ceived for such notes will, therefore, be credited 
 to this account; and payments on such notes are to 
 be charged to it. 
 
GENERAL LEDGER CLASSIFICATION 99 
 
 ACCRUED INTEREST ON NOTES PAYABLE : The 
 amount of interest accruing monthly on notes pay- 
 able upon which the interest is not prepaid should 
 be credited to this account and payments of such 
 interest be here charged. On the balance sheet 
 this account will appear as an addition to the 
 amount of notes payable. 
 
 (8) Accrued Future Due Accounts 
 
 RESERVE FOR TAXES : The estimated accrual 
 of taxes should be credited monthly to this ac- 
 count and charged to Taxes (expense) account. 
 When taxes are paid the payment is to be charged 
 to Reserve for Taxes, not to the expense account. 
 
 (9) Liens, or Fixed Liabilities 
 
 These include mortgages, bonds, and other 
 long time obligations which are a direct lien on 
 the assets of the company. They should appear at 
 this point in the ledger and on the Balance Sheet, 
 unless the lien is against some particular asset, 
 in which case the lien account may be inserted 
 next to the asset account and appear on the Bal- 
 ance Sheet as a deduction therefrom. The latter 
 method is particularly desirable in the case of a 
 mortgage on real estate, as the proprietor usually 
 prefers to regard his real estate investments and 
 liabilities as distinct from the business, and to 
 
100 PRACTICAL GARAGE ACCOUNTING 
 
 consider the net amount thereof, or his equity, as 
 a clear asset. 
 
 (10) Capital Stock or Partners' 
 Investment Accounts 
 
 CAPITAL STOCK : This account is to be credited 
 with the par value of capital stock issued and to be 
 charged with any capital stock cancelled. This 
 account is usually found only on the books of cor- 
 porations. When Capital Stock is sold at a dis- 
 count or a premium, a special account should be 
 opened to show the total amount of such dis- 
 count or premium, as a deduction from or an ad- 
 dition to Capital Stock on the Balance Sheet. 
 
 PARTNERS' INVESTMENT ACCOUNTS: In the 
 case of partners an investment account should be 
 opened for each partner, to which is to be credited 
 his investment in the business, which is his 
 proportion of the Net Worth at the opening of 
 the books. The Net Worth is the excess of 
 assets over liabilities. Cash withdrawn by 
 partners on account of salary, or advanced as 
 temporary loans to the business, should not be 
 handled through these accounts but rather 
 through personal accounts in the Accounts Re- 
 ceivable or Accounts Payable section of the led- 
 ger, depending on whether the account shows a 
 debit or credit balance. These investment ac- 
 
GENERAL LEDGER CLASSIFICATION 101 
 
 counts are subject to adjustment at the end of each 
 fiscal period, when the undivided profits should 
 be added to each partner's investment in proper 
 proportion, or the net deficit on the year's busi- 
 ness charged, unless it is desired to keep a record 
 of the amount of such deficit constantly before the 
 management by leaving it in a Deficit account. 
 
 (11) Surplus or Deficit Account 
 
 At the end of each fiscal period when a balance 
 of undivided profits from operations remains it 
 may be credited to Surplus account, usually by 
 vote of the board of directors. On the balance 
 sheet the amount of this account will appear as an 
 addition to Capital Stock, to constitute Working 
 Capital. 
 
 DEFICIT : This account is opened when the re- 
 sult of the operations of preceding fiscal periods 
 is a net loss. It should appear on the Balance 
 Sheet as a deduction from the Capital Stock or 
 investment accounts. 
 
 (12) Profit and Loss Account 
 
 This account is primarily a statistical account, 
 active only at the end of the fiscal period. As such 
 it will be described under "Statistical Accounts" 
 further on. But it may be used as a current ac- 
 count for handling extraordinary profits or los- 
 
102 PRACTICAL GARAGE ACCOUNTING 
 
 ses not arising from the regular operations of the 
 business, such as unrecoverable fire losses, shrink- 
 ages in value of assets, loss from accidents or 
 damage suits; or from preceding fiscal periods 
 such as recoveries from old debts written off, in 
 order to avoid changing the amount of the in- 
 vestment accounts as shown at the beginning of 
 the period. However, current losses on Accounts 
 or Notes Receivable should not be charged to 
 this account, but to Reserve for Bad Debts, as 
 hereinbefore provided. 
 
 (13) Operating Accounts 
 
 SALES: In the system of accounts outlined in 
 this volume the Monthly Cost Sheet is designed 
 as a permanent record and an essential part of the 
 system. It is intended that the division of sales 
 among the various departments should be made 
 on this sheet, which should be filed in a binder for 
 permanent record. When it is so used it is not 
 necessary to sub-divide the Sales Account in the 
 General Ledger into department sales accounts, 
 as the figures of each department's sales are taken 
 directly from the Sales Journal summary sheets 
 or listed and added on the adding machine from 
 the Cost Copies of invoices, and distributed on 
 the Monthly Cost Sheet. It is only necessary to 
 post the total of each month's sales to the credit of 
 the Sales Account. Adjusting entries from the 
 
GENERAL LEDGER CLASSIFICATION 103 
 
 General Journal, affecting the Sales account, 
 whether deductions or additions to sales, should 
 invariably state what department's sales they af- 
 fect, and this information should be noted in the 
 Ledger in making the entry so that these addition- 
 al items may be properly distributed before en- 
 tering the department net sales on the Cost Sheet. 
 Only such items as are a direct reduction of sales 
 should be charged to Sales account. If desired, 
 supplementary accounts to receive these entries 
 may be opened, such as Sales Allowance Ac- 
 count, Return Goods Account, etc. ; which ac- 
 counts appear as a reduction of Sales account on 
 the Balance Sheet, and the items of which should 
 be deducted from the proper department's sales 
 in entering the amount thereof on the Cost Sheet 
 each month. As a rule, however, no specially de- 
 sirable object will be attained by opening these 
 separate accounts for sales deductions, which usu- 
 ally are inconsiderable. Our preference is that 
 returned goods be entered in red ink in the Sales 
 Journal, the amounts to be deducted instead of 
 added in footing the columns; and that sales al- 
 lowances be journalized in the General Journal 
 and charged direct to Sales account. 
 
 INTER-DEPARTMENT SALES: Services or ma- 
 terials supplied by one sales department to another 
 should be credited to Inter-department Sales ac- 
 
104 PRACTICAL GARAGE ACCOUNTING 
 
 count through the Sales Journal, or on a special 
 billing form, as provided in the preceding pages. 
 This account should appear as a separate item, 
 added to Sales account, on the Balance Sheet. 
 
 COST OF SALES: To this account is to be 
 charged at the end of each month the cost of all 
 merchandise sold to customers, or used out of any 
 of the merchandise stock account by the garage 
 during the month. 
 
 PRODUCTIVE LABOR: Productive Labor is 
 theoretically defined as labor that can be charged 
 directly to a particular job or process of manu- 
 facture or operation. In garage practice, pro- 
 ductive labor is labor that is performed for a cus- 
 tomer, or in one department of the garage for 
 some other department. On the Balance Sheet, 
 Productive Labor should be added to Cost of 
 Sales and the total of these two items deducted 
 from Sales account to show the Gross Profit from 
 Operations. 
 
 EXPENSE ACCOUNTS AND CAPITAL INCOME 
 AND EXPENSE ACCOUNTS, will be treated in a 
 separate chapter. 
 
 
CHAPTER X 
 
 EXPENSE ACCOUNTS AND 
 CAPITAL INCOME AND EXPENSE 
 
 BELOW is a list of the usually desirable gar- 
 age expense accounts, in the order in 
 which they should appear in the General 
 Ledger. They are grouped, not according to 
 departments, but according to nature of expense. 
 In the case of expenses which are paid in one item 
 and are for the benefit of the whole garage, such 
 as Rent, Light, Heat, etc., a single account is 
 opened, the departmental distribution being left 
 to the Cost Sheet. On the other hand, where the 
 items, because of their nature, affect some partic- 
 ular department of the garage only, a separate ac- 
 count for that class of expense for each depart- 
 ment should be opened, in order to avoid exces- 
 sive labor in analyzing and distributing the ex- 
 pense on the monthly Cost Sheet. Examples of 
 such departmental accounts are: Inside Expense, 
 Free Service and the direct department expense 
 accounts. Depreciation is charged to one account 
 as the distribution may readily be obtained from 
 
 105 
 
106 PRACTICAL GARAGE ACCOUNTING 
 
 the Reserve accounts showing estimated deprec- 
 iation of each department's equipment. The 
 reason for the differing expense distributions of 
 the General Ledger and monthly Cost Sheet is to 
 give the proprietor two different perspectives on 
 his expenses, just as viewing a building from two 
 different angles gives a better idea of its propor- 
 tions than seeing it from one side only. On the 
 Balance Sheet only the total of all Expense ac- 
 count balances should be shown, as a deduction 
 from Gross Garage Profit from Operations, leav- 
 ing Net Garage Profit from Operations ; or, if the 
 total expenses are greater than the gross garage 
 profits, then the subtraction is the other way and 
 the difference is a Net Loss on Operations, and 
 should be entered in red on the Balance Sheet. 
 A separate statement of expenses, grouped under 
 the different classifications and compared with 
 the expenses for the preceding month and the cor- 
 responding month of the previous year, should 
 accompany the monthly Balance Sheet and 
 Cost Sheet when placed before the proprietors or 
 executives of the business. 
 
 GARAGE EXPENSE ACCOUNTS 
 
 House 
 
 100 Rent 
 101 Light 
 102 Heat 
 
EXPENSE ACCOUNTS 107 
 
 Investment 
 
 110 Taxes Equipment and Stock 
 
 111 Depreciation, Equipment and Stock 
 
 112 Insurance Equipment and Stock 
 
 Operating 
 
 120 Non-productive Labor 
 
 121 Liability Insurance 
 
 122 Power 
 
 123X Inbound Freight General Stock 
 
 123D Inbound Freight Tire Stock 
 
 124X General Stock Room Expense 
 
 124A New Car Department Expense 
 
 124B Used Car Department Expense 
 
 124C General Stock Sales Dept. Expense 
 
 124D Tire Stock Dept. Expense 
 
 124E Gasoline Department Expense 
 
 124F Live Storage Department Expense 
 
 124G Dead Storage Department Expense 
 
 124H Livery Department Expense 
 
 1241 Wash Rack Expense 
 
 124J Car Repair Shop Expense 
 
 124K Tire Repair Shop Expense 
 
 124L Battery Department Expense 
 
 124M Paint Shop Expense 
 
 125X General Stock Room Inside Expense 
 
 125 A New Car Inside Expense 
 
 125B Used Car Inside Expense 
 
 125C General Stock Sales Inside Expense 
 
 125D Tire Stock Inside Expense 
 
 125E Gasoline Inside Expense 
 
 125F Live Storage Inside Expense 
 
 125G Dead Storage Inside Expense 
 
 125H Livery Inside Expense 
 
 1251 Wash Rack Inside Expense 
 
 125J Car Repair Inside Expense 
 
 125K Tire Repair Inside Expense 
 
 125L Battery Inside Expense 
 
108 PRACTICAL GARAGE ACCOUNTING 
 
 125M Paint Shop Inside Expense 
 
 128 Service Car Expense 
 
 129 General Expense 
 
 Administrative 
 
 130 Administrative Salaries 
 131 Office Salaries 
 132 Office Expense 
 
 Selling 
 
 140 Advertising (General) 
 
 140A etc. (Departmental Advertising Expense 
 Accounts as needed. ) 
 
 141 Salesmen's Salaries and Commissions 
 
 (Separate account for each department hav- 
 ing exclusive salesmen) 
 
 142 Credit and Collection Expense 
 
 143 Estimated Bad Debt Loss 
 
 144 Free Service (General) 
 
 144 A etc. (Departmental Free Service Accounts 
 as needed.) 
 
 It will be noted that, in the foregoing list, ten 
 numbers are devoted to each division of expense 
 accounts commencing at 100. Should additional 
 accounts be needed they can be opened in the 
 proper division, assigning an unused number. If 
 it is desired to number all the General Ledger ac- 
 counts the numbers 1 to 99 may be used for the ac- 
 counts preceding the expense accounts in the Led- 
 ger, following a similar plan of assigning ten 
 numbers to each section. The use of the account 
 number as a posting check against each journal 
 
CAPITAL INCOME AND EXPENSES 109 
 
 item posted to the General Ledger will be found 
 especially helpful as a time-saver in checking 
 for errors. 
 
 The above arrangement of expense accounts is 
 not only logical but it greatly facilitates quick re- 
 ference in posting, etc., as well as the distribution 
 of expenses on the Monthly Cost Sheet or Depart- 
 mental Profit and Loss Statement. A further 
 analysis of these accounts will be given in connec- 
 tion with a description of the statement referred 
 to. 
 
 % 
 
 (14) Capital Income and Expense Accounts 
 
 REAL ESTATE INCOME : As the title indicates 
 all income from Real Estate, including the 
 amount charged to the garage Rent account 
 monthly, is to be credited to this account. Real 
 Estate expenses may be charged to this account, 
 in which case the balance of the account repre- 
 sents the net real estate income; or these expenses 
 may be distributed to a number of separate ac- 
 counts, to follow this one in the Ledger and on the 
 Balance Sheet, the total of which accounts will 
 appear as a deduction from Real Estate Income ; 
 such as : 
 
 Maintenance of Buildings (Repairs and up-keep) 
 Depreciation of Buildings 
 Taxes on Real Estate 
 Insurance on Buildings, etc. 
 
110 PRACTICAL GARAGE ACCOUNTING 
 
 INTEREST: Interest accruing on Notes and 
 Mortgages Payable should be charged to this ac- 
 count monthly. Interest accruing on Notes or 
 Mortgages Receivable is to be credited here 
 monthly. Incidental collections or payments of 
 interest, e. g., on over-due accounts, not bearing 
 interest ordinarily, may be debited or credited 
 directly to this account. Actual payments or col- 
 lections of interest on collateral should be debited 
 or credited to the Interest Accrued or Prepaid ac- 
 count, as the case may be. 
 
 DISCOUNT : All cash discounts given or taken 
 are to be entered in this account in monthly totals 
 from the Cash Paid and Cash Received Journals. 
 Trade discounts, in which category are included 
 all discounts in excess of two or three percent, 
 should be credited to the proper Stock account, 
 or better still, deducted when entering the in- 
 voice in the Purchase Journal. 
 
 STATISTICAL ACCOUNTS: These accounts are 
 so-called because they are opened only at the end 
 of a fiscal period for the purpose of collecting and 
 segregating certain statistics of the operations of 
 the business for the period, the net result of which 
 when ascertained is transferred immediately to 
 some other account for final recording. These 
 accounts are also called closing accounts, because 
 used to close the operating accounts for the 
 
STATISTICAL ACCOUNTS 111 
 
 period. The two accounts commonly falling 
 within this category are the Trading Account and 
 the Profit and Loss Account. 
 
 The Trading account is in reality a sub-divis- 
 ion of the Profit and Loss account, used for deter- 
 mining the Net Profit on Operations for the per- 
 iod, separate from the other factors of gain or 
 loss, such as purely profit and loss items outside 
 of the current operations of the business, and the 
 Capital Income and Expense accounts. 
 
 For detailed procedure for closing the operat- 
 ing accounts through the statistical accounts at 
 the end of the year or other fiscal period, see 
 Chapter XVII. 
 
CHAPTER XI 
 SUBSIDIARY RECORDS 
 
 SUBSIDIARY records or accounts are those 
 which are supplementary to General Led- 
 ger accounts, showing in greater detail the 
 same transactions that are recorded in the Ledger 
 in more condensed form. The corresponding ac- 
 counts in the General Ledger are called "Control- 
 ling" accounts, from the fact that they control or 
 prove the accuracy of the subsidiary record; and 
 the subsidiary records are called "Detail" ac- 
 counts, records, or ledgers. The subsidiary re- 
 cords are posted from the books of original entry 
 just as is the General Ledger. The principal 
 records of this kind found usual or necessary in 
 the garage are as follows : 
 
 ACCOUNTS RECEIVABLE LEDGER: This is the 
 detail account with customers; and the widest 
 variety of methods of handling these accounts are 
 in use. Sometimes the ledger is a bound book, 
 sometimes loose-leaf, sometimes a cabinet drawer 
 of cards, sometimes merely a collection of charge 
 tickets. 
 
 112 
 
SUBSIDIARY RECORDS 113 
 
 The bound book we discard because of incon- 
 venience. The mere preservation of duplicates of 
 charge tickets is awkward and insufficient, be- 
 cause of the accumulation of large quantities of 
 the slips, and the difficulty of locating all the 
 charges to a customer's account when it is desired 
 to do so. Accounts with customers should be 
 kept in some way that makes possible ready refer- 
 ence, for at least six months or a year. Neglect to 
 do so invites loss through unsettled disputes and 
 dissatisfied customers. To copy all the details of 
 transactions in a loose-leaf ledger, even when the 
 statement for the customer is made out at the same 
 time by use of carbon paper, except in the smaller 
 garages, is a needless duplication of work besides 
 being slow and awkward. 
 
 The duplicate billing system hereinbefore de- 
 scribed (Chapter IV) obviates the necessity of 
 recording in the customers' ledger anything but 
 the date, invoice number, and amount of each in- 
 voice. The duplicate invoice supplies the only 
 detailed record of each transaction necessary to 
 retain. These duplicates are kept in a cheap post 
 binder in numerical order, and can be quickly 
 referred to in case of need. It is the logical and 
 modern method of handling customers' charges, 
 where a typewriter is available. When it is not, 
 we recommend the use of the duplicate ledger 
 
114 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 leaf and statement system, combined with a per- 
 manent ledger sheet for each customer for record- 
 ing monthly totals and cash payments. These 
 permanent sheets should preferably be kept in the 
 same binder as the monthly statement sheet and 
 carbon duplicate, and by use of a tumble-form 
 ledger sheet the customer's permanent account 
 may always be opposite his accumulating current 
 month's itemized account. 
 
 ACCOUNTS PAYABLE LEDGER : By all means a 
 detailed account should be kept with each credi- 
 tor, either in a separate loose-leaf book or in a 
 section of the General Ledger, represented by a 
 controlling account in the liability section. If but 
 few purchases are made on credit but little time 
 and effort will be necessary to keep this record; 
 while if the credit purchases are numerous, the 
 necessity for the record increases proportionately. 
 If a perpetual inventory is maintained the gener- 
 al ledger Accounts Payable account is indispens- 
 able, and the work of keeping the latter account 
 in balance with the total of unpaid invoices will 
 be found greater where detailed accounts payable 
 are not kept than when they are. 
 
 PERPETUAL INVENTORY: The work of keep- 
 ing a continuous record of all stock on hand in the 
 garage may appear to be excessive, but after the 
 record is started it will be found in practice to 
 
SUBSIDIARY RECORDS 
 
 115 
 
 ARTICLE 
 
 Vertflcailoa 
 Ofttei 
 
 Minimum 
 
 LOCATION 
 
 UNIT 
 
 
 Maximum 
 
 
 PaUs 
 
 Kauj 
 
 BOUGHT FROM OR 
 
 UNIT PRICES 
 Cost List 
 
 STOCK, KECO 
 In 1 Out 
 
 RD 
 
 Biln 
 
 
 Avx- Unit 
 Cost of 
 BiUncc 
 
 Total cos: of 
 Ba-Uaco 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Form 2. HollUttr'a Caraie Cost Srntm. 
 
 Form 19 STOCK RECORD CARD 
 Size 3x5 inches. 
 
 LOCATION OF STOCK 
 
 JS2 
 
 nrfii"-"'"-T - IT 
 
 Form 20 STOCK RECORD CARD 
 Size 5x8 inches. 
 
116 PRACTICAL GARAGE ACCOUNTING 
 
 save more time than is required to keep it up. For 
 this record we strongly prefer a specially de- 
 signed stock card, such as we illustrate ( Form 1 9 ) , 
 having a space for recording of orders ; articles 
 received; sales; cost and list price; location of 
 stock ; maximum and minimum quantities desired 
 to be kept on hand ; dates of verification by physi- 
 cal inventory; and value of stock, to be entered 
 whenever it is desired to check the total of the 
 card record with the controlling stock record in 
 the General Ledger. Among the advantages to 
 be derived from maintaining this record we 
 would mention : 
 
 ( 1 ) It makes possible a smaller investment in stock 
 than would otherwise be necessary, the saving 
 amounting to 15 to 25 per cent, with a con- 
 sequent economy of interest on money invested, 
 space occupied by stock, etc. 
 
 (2) It facilitates the estimation of cost of work to 
 be done, thus securing contracts that might 
 otherwise be lost or insuring a profit on jobs 
 that might be taken at an unprofitable figure. 
 
 (3) It promotes convenience and economy in buy- 
 ing. 
 
 (4) It saves time and consequently money often 
 lost by having to wait for needed materials, by 
 automatically calling attention to low stock. 
 
 (5) It forms a basis for figuring costs, so that it 
 is not necessary to depend on price lists or in- 
 voices. 
 
 (6) It saves the time of employees in locating parts 
 or materials in stock. 
 
SUBSIDIARY RECORDS 117 
 
 (7) It furnishes a basis for settlement of insur- 
 ance in case of fire loss. Hundreds of times 
 the cost of the record may be saved in such a 
 case. 
 
 NOTES PAYABLE AND RECEIVABLE : An excel- 
 lent specially designed book for the purpose of 
 recording the details of notes receivable and pay- 
 able can be purchased in nearly every stationery 
 supply house. This record shows at a glance just 
 what obligations fall due in each month, and the 
 due date. 
 
 USED CAR STOCK AND LIVERY EQUIPMENT: 
 A detailed record should be kept with each Used 
 Car owned by the garage either for sale or as a 
 part of the livery department equipment, which 
 detailed record should be controlled by Used Car 
 Stock Account and Livery Car Equipment ac- 
 count in the general Ledger. Expense of main- 
 taining or operating these cars should not be 
 charged to these accounts, but only such charges 
 as are capitalized ; that is, original cost, and cost of 
 rebuilding or other permanent additions to value. 
 These records may be kept in a separate card or 
 loose-leaf record. In addition to the above an 
 expense account with each livery car in service 
 should be kept from which a statement may be 
 drawn off monthly for the information of the 
 management; which accounts will be controlled 
 by the Livery department expense accounts. To 
 
118 PRACTICAL GARAGE ACCOUNTING 
 
 these detailed accounts should properly be dis- 
 tributed each item of expense appearing in the 
 Livery column of the monthly Departmental 
 Cost Sheet 
 
 Other special subsidiary records are frequently 
 found desirable in particular cases; and in open- 
 ing them their relation to the General Ledger 
 should invariably be borne in mind and their 
 agreement with General Ledger controlling 
 accounts be maintained. 
 
CHAPTER XI I 
 THE MONTHLY STATISTICS 
 
 THERE is a large amount of wasted effort 
 in the accounting department of many gar- 
 ages, as well as in other lines of business, 
 through maintaining records of which no profit- 
 able use is made. These records sometimes might 
 be made valuable by being carried a little further 
 and by having the information obtained pre- 
 sented periodically in the right form to the man- 
 agement. In other cases the record is in itself 
 useless and had better be discontinued. 
 
 No record should be kept, no account opened in 
 the ledger, without a definite object in view. Fur- 
 thermore this object should not be merely the sat- 
 isfaction of the bookkeeper's ideas, instincts, or 
 training, but rather the information of the propri- 
 etor or director of the business. Therefore the ex- 
 perienced accountant's first inquiry in reference 
 to any system of accounts that he is called upon to 
 design, is; What particular items of information 
 are necessary or desirable for the manager to 
 know and to be guided by in the conduct of the 
 
 119 
 
120 PRACTICAL GARAGE ACCOUNTING 
 
 business, in order to better attain the object for 
 which it is intended, namely, the increase of the 
 proprietor's income or wealth? 
 
 The ultimate object of any accounting system, 
 then, by which it is to be judged and which 
 should be kept constantly in mind and worked to- 
 ward, is the information supplied periodically, at 
 least monthly, to the executive management of 
 the business; the statements, showing in detail 
 and in summary, in readily understood and easily 
 grasped form (for most business managers are 
 not accountants) the actual accomplishment in 
 profit and loss making, and the actual present con- 
 dition of the enterprise. The excellence of man- 
 ner and completeness with which this informa- 
 tion is secured and presented to the management 
 are the criterions by which any system of account- 
 ing and every accountant should be finally judged. 
 
 The following described statements should be 
 required of the bookkeeper by the garage propri- 
 etor or manager; and he should not be satisfied 
 unless and until he gets them in good shape and in 
 a reasonably short time after the close of the 
 month. 
 
 Balance Sheet 
 
 This is a statement of the Assets, Liabilities 
 and Net Worth of the business at a particular 
 date, arranged in a condensed but regular and log- 
 
 
THE MONTHLY STATISTICS 121 
 
 ical form. It therein differs from the Trial Bal- 
 ance, which is a list of balances of all open ac- 
 counts in the ledger, separated into two parts or 
 columns of debits and credits. The Trial Bal- 
 ance is merely for the purpose of informing the 
 bookkeeper whether the ledger is in balance or 
 not. 
 
 A model garage balance sheet is presented here- 
 with (Form 21). It will be observed that the 
 totals of the different classes of assets and liabil- 
 ities as at the end of the preceding month are 
 shown for comparison, so that the increase or 
 decrease of every item is apparent at a glance. 
 
 Comparative Operating Expense Statement 
 
 COMPARATIVE OPERATING EXPENSE STATE- 
 MENT: This statement supplements the Balance 
 Sheet by giving the details of the operating ex- 
 pense accounts, which are grouped in totals on 
 the Balance Sheet. It should include the figures 
 of the corresponding accounts for the preceding 
 month and for the corresponding month of the 
 preceding year, thus supplying a valuable index 
 of the upward or downward tendency of the bus- 
 iness. A model for this statement is also pre- 
 sented, (Form 22), which we believe will be 
 readily understood. 
 
122 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 CASK: Bank 
 Imprest Fund 
 
 ACCTS. RECEIVABLE 
 Good 
 Doubtful 
 Defer. Chgs. 
 
 April 
 
 THE MODEL 
 
 COMPARATIVE 
 
 March - April 
 
 - ASSETS 
 30, 1915, 
 
 Depreciation* 
 Keservaa 
 
 Grosa Tit Mar. 31, Increase 
 1915. or Deer.* 
 
 1740.26* 
 
 478.95 
 35.00 513.95 342.64 171.31 
 
 6279.12 
 2121.20 
 191.89 
 8592. 21_ 6851.95 6858.73 16.78* 
 
 TIRE 60ARANTEE ACCT. 
 DEPOSIT ACCT. "ITH MANUFACTURER 
 
 KOTES RECEIVABLE 
 Acer. Interest 
 
 MERCHANDISE: 
 New Car 
 Used Cars 211.20* 
 Oen'l. Stock 
 Tire Stock 
 Gaaoline ft Oil ___. 
 211.30* 
 
 13.00 13.00 
 1000.00 1000.00 
 
 3623.73 
 100.17 3723.90 3479.89 244.01 
 
 6042.32 
 3832.31 
 1183.20 
 3298.64 
 64.96 
 14421.43 14210.23 13572.62 637.61 
 
 EQ0IPME3T: 
 Office 
 C-on'l. Stk. Fcon 
 Gasoline ft Oil 
 Live Storage 
 Car Repair 
 Tire Repair 
 Battery 
 
 REAL ESTATE: 
 Garage Prop. 
 Less Mortgage 
 Interest 
 Ret R. Eat. Invest. 
 
 62.63* 
 15.40* 
 23.90* 
 25.25* 
 187.12* 
 156.38* 
 44.26* 
 534.94* 
 
 636.01 
 177.22 
 181.24 
 189.43 
 1160.20 
 1015.05 
 273.66 
 3632,81 3097.87 3052.48 45.39 
 
 244.52* 
 9500.00* 
 295.57* 
 10040.09* , 
 
 20334.32 
 20334.32 10294.23 9778.92 515.31 
 
 DEFERRED CHARGES TO OPERATIONS: 
 Prepaid Int. on Notes Pay. 
 Insurance 
 Fuel on Hand 
 
 126.. 84 
 111.87 
 89.80 328.51 446.34 117.83* 
 
 A0033.64 38541.62 1492.03 
 
 Form 21 COMPARATIVE 
 The original form from which the above was 
 
THE MONTHLY STATISTICS 
 
 123 
 
 iE CO. 
 
 ACCOUNTS PAYABLE: Mdae. 
 Payroll 
 Proprietor's Personal Acct 
 
 SUB-AGEKTS' DEPOSITS 
 BOTES PAYABLE 
 RESERVE FOR TAXES 
 
 TOTAL LIABILITIES 
 
 CAPITAL STOCK 
 
 SURPLUS at Dec. 31, 1915, 
 
 PROFIT AND LOSS ACCT. 
 
 SALES: Sal ea acct. 
 
 Inter-dept. Sales 
 Vic. Income 
 
 LIABILITIES 
 
 Mar. 31, 
 1915. 
 
 Increase 
 or Deer.* 
 
 April 30, 1915 
 
 5701.19 
 315.78 
 Acct.. 357,64 6374.61 
 
 8675.57 
 
 2300.96* 
 
 1200.00 
 
 1200.00 
 
 
 16982.46 
 
 15692.37 
 
 1290.09 
 
 174.04 
 
 225.00 
 
 50.96* 
 
 24731.11 
 
 25792.94 
 
 10 61. 63 
 
 NET WORTH 
 
 Cost of Sales 
 Pro. Labor 
 Allowances 
 
 38518.67 
 
 1507.57 
 
 199.41 
 
 49738.64 
 
 1293.27 
 
 ?3.14 
 
 51105.05 
 
 40225.65 
 
 GROSS GARAGE PROFIT 10879.40 
 
 Expanses 8904. 17 
 
 NET GARAGE PROFIT 1975.23 
 
 INTEREST 391.52* 
 
 DISCOUNT 49.64 
 
 REAL ESTATE INCOME 716.00 
 Uaint ( n'ce 85.82 
 Taxes 72.00 
 Depre't'n 244.52 
 Insurance 35.68 438.02 277.98 
 
 TOTAL RET PROFIT 
 HET PRESENT *ORTH 
 
 13391.20 
 
 1911.33 
 
 i3391. 2t 
 
 615.84' 
 282.33' 
 
 45.56 
 
 210.09 
 
 2591.0* 
 109.19* 
 4.0,8 
 
 67.89 
 
 15302.53 
 
 40033.64 38541.62 
 
 BALANCE SHEET 
 
 reproduced, was typewritten on two 8^x11 in. sheets. 
 
 1492.02 
 
124 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 'THE MODEL GARAGE CO. 
 
 COMPARATIVE OPERATING EXPENSE 
 
 STATEMENT 
 
 1915 
 To Date 
 
 
 April 30, 1915 
 
 March 
 1915 
 
 April 
 1915 
 
 Rent 
 
 163.00 
 
 163.00 
 
 652.00 
 
 Light ft Power 
 
 45.54 
 
 43.13 
 
 163.60 
 
 Heating 
 
 38.06 
 
 69.55 
 
 249.63 
 
 Taxes 
 
 7.00 
 
 7.00 
 
 28.00 
 
 Depreciation 
 
 115.73 
 
 164.67 
 
 347.35 
 
 Fire Insurance 
 
 7.24 
 
 4.44 
 
 26.16 
 
 Non-Productive Labor 
 
 348.87 
 
 332.62 
 
 1390.37 
 
 Liability Insurance 
 
 40.96 
 
 40.42 
 
 149.00 
 
 General Stock Inbound Freight 
 
 11.90 
 
 8.38 
 
 12.60 
 
 Tire Stock " " 
 
 9.05 
 
 3.20 
 
 16.44 
 
 General Stock Room Expense 
 
 
 30. 65' 
 
 52.19 
 
 New Car Dept. 
 
 125.53 
 
 181.04 
 
 435.33 
 
 Used Car Dept. 
 
 .25 
 
 65.70 
 
 133.64 
 
 Tire " 
 
 1.91 
 
 4.00 
 
 11.46 
 
 Live Storage Dept. -^ 
 
 
 * .03 
 
 4.82 
 
 Livery Dept. 
 
 
 
 29.84 
 
 Wash Rack 
 
 
 2.29 
 
 7.29 
 
 Repair Dept. 
 
 15.00 
 
 31.64 
 
 95.83 
 
 Tire Repair Dept. 
 
 
 6.52 
 
 16.46 
 
 Battery " 
 
 
 .58 
 
 3.03 
 
 New Car Inside Expens 
 
 77.54 
 
 39.35 
 
 116.89 
 
 Uaed Car inside Expen e 
 
 260.47 
 
 41.90 
 
 302.37 
 
 Wash Rack " 
 
 1.14 
 
 
 1.14 
 
 Car Repair " 
 
 8.59 
 
 .01 
 
 8.60 
 
 Battery " 
 
 . 1.85 
 
 .02 
 
 1.87 
 
 General Expense 
 
 76.73 
 
 35.94 
 
 270.71 
 
 Administrative Salaries 
 
 441.67 
 
 445.83 
 
 1756.03 
 
 Office Salaries 
 
 161.70 
 
 167.90 
 
 648.01 
 
 Office Expense 
 
 55.05 
 
 75.12 
 
 178.82 
 
 General Advertising 
 
 22.84 
 
 4.50 
 
 253.47 
 
 New Car 
 
 13.45 
 
 7.85 
 
 84.76 
 
 Tire Dept: n 
 
 22.25 
 
 7.00 
 
 29.25 
 
 Car Repair Dept. Advertising, 
 
 
 
 3.75 
 
 Salesmens Salaries ft Com. 
 
 356.95 
 
 202.62 
 
 879.57 
 
 Collection Expense 
 
 5.30 
 
 2.52 
 
 17.44 
 
 Estimated Bad Debt Loos 
 
 295.07 
 
 141.69 
 
 493.69 
 
 New Car - Free Service 
 
 10.64 
 
 13.70 
 
 32.76 
 
 2741.28 2344.81 
 
 8904.17 
 
 Form 22 MONTHLY COMPARATIVE OPERATING 
 EXPENSE STATEMENT 
 
 Typewritten on 8^x11 inch sheet. 
 
THE MONTHLY STATISTICS 125 
 
 THE MODEL GARAGE CO. 
 PROFIT AND LOSS STATEMENT 
 April, 1915 
 
 Gain Loss flet 
 
 New Car Department 2386,79 
 
 Ussd Car H 411.35 
 
 General Stock Sales Dept. 69.27 
 
 Tires & Tubes Department 244.26 
 
 Gasoline and Oil n 1.15 
 
 Live 'Storage Department 23.82 
 
 Dead -", 
 'Wash Rack 
 Car Repairs 
 Tire " 
 Battery 
 
 2.56 
 
 15.65 
 333.13 
 
 112.72 
 
 13.59 
 
 Miscellaneous Garage Income 15.15 
 
 3110.25 519.18 
 
 Garage Operating Profit for Month 2591.07 
 
 Discount Gained 4.08 
 
 Real Estate Income - Net 67.89 
 
 TOTAL 2663.04 
 
 LESS: Interest Accrued 109.19 
 
 INCREASE OF NET WORTH FOR MONTH 2553.85 
 
 Form 23 MONTHLY PROFIT AND LOSS STATEMENT 
 
 Typewritten on 8*^x11 inch sheet 
 
126 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 THE 
 
 April 
 
 General Expense Distribution r ^* 
 
 Used 
 Car 
 
 Gen. 
 Stk. 
 
 House Aim'tive 
 
 3en.Stk.Rm, 
 
 , Selling Car 
 
 Net Dept. Investment 
 
 553.28 
 
 1345.02 
 
 6042.32 
 
 3621.11 
 
 
 Rent 163.00 
 
 
 
 
 
 
 Heat 38.06 
 
 
 
 
 
 
 Light 11.76 
 
 
 
 
 
 
 Taxes 
 
 .23 
 
 .54 
 
 2.44 
 
 1.47 
 
 
 Depreciation ' . 
 
 5.30 
 
 1.56 
 
 
 60.82 
 
 
 Insurance 
 
 .23 
 
 .56 
 
 2.53 
 
 1.51 
 
 
 Dept. Diract Expanse 
 
 
 
 125.53 
 
 .25 
 
 
 Inbound Freight 
 
 
 11.90 
 
 
 
 
 Power 
 
 
 
 
 
 
 Mon-Pro. Labor - 1947 Hrs. 11.90 
 
 30.42 
 
 40.55 
 
 42.20 
 
 29.07 
 
 
 Liability Insurance .43 
 
 ' 3.10 
 
 2.26 
 
 9.73 
 
 1.05 
 
 
 Inside Expense 
 
 
 
 77.54 
 
 260.47 
 
 
 Aim'tivs. Salaries 
 
 333.33 
 
 21.66 
 
 43.34 
 
 
 
 Office Salaries 
 
 161.70 
 
 
 
 
 
 " Expense 
 
 55.05 
 
 
 
 
 
 General Expense ____ 
 
 76.73 
 
 
 
 
 
 Distribution - House Gen'l. 225.15 
 
 17.51 
 
 14.03- 
 
 
 
 
 Adm'tive. Gen'l. 
 
 683.60 
 
 16.78 
 
 364.91 129.04 
 
 25.44 
 
 
 TOTAL, LABOR OVERHEAD 
 Distribution, General Stock Room Gsn 
 TOTAL GARAGE OPERATING EXPENSE 
 
 l 
 
 109.89 
 
 
 
 53.69 
 
 432.40 
 
 400.C8 
 
 53.69 
 
 Advertising 
 
 
 
 22.84 13.45 
 
 
 
 Salesmen's Salaries ft COM. 
 
 
 
 356.95 
 
 
 
 Credit and Collection 
 Bad Debt Reserve 
 
 
 
 $.30 
 250.07 
 
 11.52 
 
 2.72 
 
 Free Service 
 Distribution, Selling Ganaral 
 
 
 
 10164 
 393.05 327.65 
 
 16.41 
 
 3. 65 
 
 TOTAL EXPENSES 
 COST OF DSE. SOLD 
 
 
 
 1391.16 
 20583.73 
 
 428.01 
 1190.00 
 
 60.07 
 377.17 
 
 COST OF LABOR SOLD - 1622 Hr. 
 
 
 
 
 11.99 
 
 
 GP./.ND TOTAL COSTS 
 TOTAL SALES 
 
 OAIH OR LOSS 
 
 21974.89 1630.00 437.24 
 (Misc. Incoma 15.15) 24361.68 1218.55 367.97 
 
 15.15 2386.79 411. 35* 69.27' 
 
 Interest, 1 Mo. 5 6% on. Departmental Investment 
 Percent of Gain or Loss to Total Costa 
 Average Prime Coat of Pro. Labor per Hour 
 
 " Labor Overhead per Pro. Labor Hour 
 Percent Operating Expanae to Mdaa. A Pro. Labor Ceat* 
 
 " Total Expense to Mdse. A Pro. Labor Costs 
 
 30.21 
 10.86 
 
 18.11 
 
 25.24^* 15.85/H 
 
 2.10* 33.28JS 14.20? 
 6.76* 35.60* 15.93;-: 
 
 Form 24 MONTHLY DEPART- 
 
 Typewritten on two 8^x11 inch 
 
 actual month's business in a 
 
 be considered 
 
THE MONTHLY STATISTICS 
 
 127 
 
 1915. 
 
 Tire 
 
 Gaa. * 
 
 Liva 
 
 Da*d Wash 
 
 Car 
 
 lira 
 
 Eattary 
 
 Total* 
 
 Stock 
 
 Oil 
 
 Stga. 
 
 Sts. Rack 
 
 Baoair 
 
 Repair 
 
 
 
 3298.64 
 
 222.30 
 
 164.18 
 
 
 973.08 
 
 858-. 67 
 
 229.40 
 
 17309.10 
 
 
 
 
 
 
 
 
 163.00 
 
 
 
 
 
 
 
 
 33.06 
 
 
 
 
 
 
 
 
 11.76 
 
 1.33 
 
 .09 
 
 .07 
 
 
 .39 
 
 .35 
 
 .09 
 
 7.GG 
 
 
 1.63 
 
 1.58 
 
 
 11.71 
 
 10.38 
 
 2.76 
 
 115.73 
 
 1.38 
 
 .09 
 
 .07 
 
 
 .41 
 
 .36 
 
 .10 
 
 7.24 
 
 1.91 
 
 
 
 
 15.00 
 
 
 
 142.69 
 
 9.05 
 
 
 
 
 
 
 
 20.95 
 
 
 
 
 
 4.00 
 
 2.00 
 
 27.78 
 
 33.78 
 
 56.39 
 
 5.38 
 
 56.18 
 
 2.59 .93 
 
 35.13 
 
 25.23 
 
 12.35 
 
 343.87 
 
 2.05 
 
 , .20 
 
 2.05 
 
 \ .10 .64 
 
 15.30 
 
 2.30 
 
 1.70 
 
 4G.96 
 
 
 
 
 1.14 
 
 8.59 
 
 
 1.35 
 
 349.59 
 
 
 
 
 
 .43.34 
 
 
 
 441.67 
 
 
 
 
 
 
 
 
 161. *0 
 
 
 
 
 
 
 
 
 53.03 
 
 
 
 
 
 
 
 
 76.73 
 
 9.93 
 
 2.79; 
 
 80.65 
 
 9.15 6.57 
 
 51.23 
 
 26.63 
 
 6.57 
 
 
 22.64 
 
 2.10 
 
 14.90 
 
 .74 4.64 
 
 78.30 
 
 14.21 
 
 9.90 
 
 
 
 
 
 13.92 
 
 263.45 
 
 81.51 
 
 63.60 
 
 
 
 
 
 
 , 47.09 
 
 2.63 
 
 6.43 
 
 
 104.67 
 
 12.27 
 
 155.50 
 
 12.53 13.92 
 
 310.54 
 
 84.19 
 
 70.03 
 
 
 22.25 
 
 
 
 
 
 
 
 58.54 
 
 
 
 
 
 
 
 
 356.95 
 
 
 
 
 
 
 
 
 5.30 
 
 16.00 
 
 .64 
 
 .25 
 
 .16 .39 
 
 10.32 
 
 1.13 
 
 1.18 
 
 295.07 
 
 
 
 
 
 
 
 
 10.64 
 
 24.52 
 
 .87 
 
 .67 
 
 .20 .63 
 
 13.90 
 
 1.67 
 
 2.87 
 
 
 167.44 
 
 13.78 
 
 156.42 
 
 12.94 14.94 
 
 334.76 
 
 37.04 
 
 74.72 
 
 2741.28 
 
 1575. CO 
 
 166.61 
 
 
 
 330.82 
 
 13.35 
 
 45.13 
 
 24287.31 
 
 
 
 
 16.61 
 
 327.33 
 
 38.05 
 
 33.09 
 
 427.5o 
 
 1742.44 
 
 180.39 
 
 156.42 
 
 12.94 31.55 
 
 993.40 
 
 143.94 
 
 152.94 
 
 27456.15 
 
 1986.70 
 
 179.24 
 
 132.60 
 
 15.50 47.20 
 
 1326.52 
 
 130.35 
 
 265.66 
 
 30047.22 
 
 244.26 
 
 1.15* 
 
 23.82* 
 
 2.56 15.65 
 
 333.12 
 
 13.59* 
 
 112,72 
 
 2591.07 
 
 16,49 
 
 1.11 
 
 .82 
 
 
 4.87 
 
 4.29 
 
 1,15 
 
 6.34 
 
 14.02* 
 
 .64$* 
 
 15.27$* 
 
 19.70$ 49.60$ 
 
 33. $1$ 
 
 9.43$* 
 
 73.67$ 
 
 *.44$ 
 
 
 
 
 .218 
 
 .266 
 
 .253 
 
 
 .264 
 
 6.65? 
 
 7.37$ 
 
 
 .155 
 83.85* 
 
 .214 
 47.15$ 
 
 .541 
 147.96 
 
 .527 
 89.56$ 
 
 .259 
 6.27$ 
 
 10.53$ 
 
 8.25$ 
 
 
 87.8$ 
 
 50.78$ 
 
 155.36 
 
 95.80$ 
 
 11.09$ 
 
 MENTAL COST SHEET 
 
 sheets. These figures show an 
 successful garage, and may 
 fairly typical 
 

 128 PRACTICAL GARAGE ACCOUNTING 
 
 Profit and Loss Statement 
 
 PROFIT AND Loss STATEMENT : A condensed 
 Profit and Loss Statement showing net operating 
 gain or loss of each department, the capital in- 
 come and expense items, and the purely Profit 
 and Loss account items is the third monthly state- 
 ment to be compiled. (Form 23). 
 
 Departmental Cost Sheet or 
 Profit and Loss Statement 
 
 This, the fourth of the monthly set of business 
 statements, presents the summing up of the re- 
 sults and findings of the whole accounting sys- 
 tem. Although necessarily somewhat complex 
 the complications we believe have been reduced 
 to a minimum by the special form presented as 
 an essential part of the system of accounts out- 
 lined herein. (Form 24). It will be described 
 in detail in a subsequent chapter. 
 
CHAPTER XIII 
 THE MONTHLY COST SHEET 
 
 TWO objects have been kept in view in 
 working out the details of this form : First, 
 to tell the exact facts concerning the results 
 of the operations of the business in the most easily 
 understood terms; Second, to arrive at this in- 
 formation in the simplest and quickest manner. 
 The Monthly Cost Sheet is in fact an analysis and 
 redistribution of the figures of the Profit and Loss 
 statement. The grand total of Net Garage Profit 
 or Loss shown by each of the statements should 
 agree in amount. The grouping and arrange- 
 ment of the items that are used in reaching this 
 figure, however, differ radically on the two state- 
 ments, and present the results attained by the bus- 
 iness from two different standpoints or angles, as 
 has been before suggested. 
 
 The analysis of sales into departments is merely 
 a matter of deciding what departments the busi- 
 ness is to be divided into, and keeping a careful 
 record of the sales made, under the department 
 headings. A considerable part of the expenses of 
 the garage are also easily divided among these de- 
 
 129 
 
130 PRACTICAL GARAGE ACCOUNTING 
 
 partments, as direct charges. The larger part of 
 the expense, however, is general. It is not directly 
 applicable to the different departments, and 
 no single method of distributing this indirect ex- 
 pense or "over-head" is at all accurate or satis- 
 factory, owing to the differences in nature of the 
 various expense items. For instance, it would be 
 manifestly unfair to distribute the charge for 
 Rent to the different departments on the basis of 
 proportion of total sales. The New Car Sales, 
 or the Car Repair sales may constitute a consider- 
 able proportion of the total, while the actual 
 space occupied by these departments as a matter 
 of fact is usually but a small portion of the whole. 
 Neither would it be fair to all departments to 
 charge expenses such as office salaries, advertis- 
 ing or collection expenses, on a basis of space oc- 
 cupied by the various departments ; as the Storage 
 department, using the largest space, would then 
 usually bear a disproportionate burden that 
 would make impossible the showing of a profit in 
 that department. Literally scores of questions 
 of detail have entered into consideration in fixing 
 the exact arrangement of this form, which in 
 reality condenses into a single sheet the large vol- 
 ume of entries usually made through a cost jour- 
 nal and ledger. 
 
THE MONTHLY COST SHEET 131 
 
 Preliminary Schedules 
 
 The following schedules should be compiled 
 before commencing the preparation of the Cost 
 Sheet: 
 
 (1) Department area or space percentage 
 sheet, showing percentage of floor-space oc- 
 cupied by each general and sales department. To 
 obtain these percentages measure the dimensions 
 of the space set aside for each department, and 
 figure the percentage that this space bears to the 
 total of the garage floor-space actually used. The 
 space occupied by the office and that in the gener- 
 al stock room should be considered as separate 
 departments. The entrances and passageways 
 space should be disregarded in the calculation, as 
 this "overhead" space is distributable to each de- 
 partment in the same proportion as the space used 
 by that department bears to the whole area of 
 "productive" or actually used space, hence would 
 have no effect on the percentage of space in each 
 department if it were included. 
 
 (2) A schedule of Departmental Investment 
 at the end of the month. This is the sum of each 
 department's stock on hand, machinery and 
 equipment and small tools accounts, less depreci- 
 ation reserve accounts set up against these assets. 
 This schedule should include the Office and Gen- 
 
132 PRACTICAL GARAGE ACCOUNTING 
 
 eral Stock Room Equipment Accounts, as sepa- 
 rate items. 
 
 (3) Summary of Payrolls for the month by 
 departments, showing hours and cost of produc- 
 tive and non-productive labor. 
 
 (4) A memorandum of rate of Liability In- 
 surance premium per hundred dollars of payroll, 
 and of departments and employees covered. 
 
 (5) Net Sales by Departments (analysis of 
 Sales, Inter-department Sales, Miscellaneous 
 Sales, and Sales Allowance accounts, showing 
 merchandise, labor and miscellaneous sales sepa- 
 rately.) 
 
 (6) A similar departmental analysis of Cost 
 of Sales account. 
 
 The above described schedules are referred to 
 by number in the course of the following instruc- 
 tions. The other items of the monthly Cost Sheet 
 are either obtainable direct from the general led- 
 ger, or must necessarily be figured during the 
 preparation of the Cost Sheet itself. 
 
 Take a sheet of columnar paper, or a special 
 form such as is illustrated in Form 24, head the 
 first four columns with the designations of the 
 four subdivisions of general or overhead expense, 
 viz., House (or Space), Administrative, General 
 Stock Room and Selling, followed by a column 
 headed for each department operated, and a 
 Total column. In listing the expense and other 
 
THE MONTHLY COST SHEET 133 
 
 items on the sheet, enter the general ledger totals 
 in the Total column first, then after making the 
 proper distribution in the general and depart- 
 ment columns, see that the distribution of items 
 on each line cross-foots to the total shown in the 
 Total column. 
 
 In a preceding chapter the expense accounts 
 have been divided into five classifications, 
 namely: House, Investment, Operating, Admin- 
 istrative, and Selling. This classification had 
 reference to their distribution on the Depart- 
 mental Cost Sheet. 
 
 House or Space General 
 
 The House expense items, consisting of Rent, 
 Heat, and Light, Fireman's labor etc., are dis- 
 tributed over the garage in proportion to the 
 space occupied by each department. These items 
 are to be entered in the first column of the Cost 
 Sheet, and the total distributed on the percentage 
 basis ascertained as above (Schedule 1), the 
 charge to the office being entered in the Admin- 
 istrative Expense column, and that proportion 
 charged to General Stock Room entered in Gen- 
 eral Stock Room Expense column. 
 
 Investment Expenses 
 
 The Investment Expense classification is dis- 
 tributed in proportion to the investment in equip- 
 ment and stock in each department ( Schedule 2) . 
 
134 PRACTICAL GARAGE ACCOUNTING 
 
 Each item should be figured separately, how- 
 ever; it being desirable to show the items of 
 Taxes and Insurance separately under each de- 
 partment, and the Depreciation being a direct 
 charge, set up separately on each department's 
 equipment in the General Ledger. For the in- 
 formation of those to whom this statement is sub- 
 mitted as well as for convenience in calculating 
 the distribution, the net departmental investment 
 should be entered at the top of statement under 
 each department heading. The amount of Taxes 
 and Fire Insurance are distributed on a percent- 
 age basis arrived at by dividing the departmental 
 investment by the total investment in all depart- 
 ments. After figuring this distribution on a work- 
 ing sheet the items should be added to see that 
 they agree with the total as entered in the Total 
 column, the probable difference of a few cents 
 adjusted by changing the unit figures in some of 
 the department items; and the amounts charge- 
 able to each department are then to be entered in 
 the proper columns, the charge based on Office 
 Furniture and Fixtures in the Adminstrative 
 General column, that on account of General 
 Stock Room equipment and stock in the General 
 Stock Room Expense column. The figures for 
 depreciation under each department may be 
 quickly ascertained by referring to the Reserve 
 for Depreciation accounts in the General Ledger. 
 
THE MONTHLY COST SHEET 135 
 
 Direct Operating Expenses 
 
 The Operating expense classification embraces 
 expenses directly chargeable to the different op- 
 erating departments, which are already distri- 
 buted in the general ledger expense accounts, 
 with the exceptions of Non-Productive Labor, 
 Liability Insurance and Power. The Non-Pro- 
 ductive Labor distribution is taken from the Pay- 
 roll (Schedule 3), that charged to General Non- 
 Productive Labor being entered in the Adminis- 
 trative General expense column, that to General 
 Stock Room Non-Productive to the General 
 Stock Expense column, and the departmental 
 Non-Productive charged in the proper depart- 
 ment columns. Liability Insurance cost is dis- 
 ributed on the basis of the rate of premium per 
 hundred dollars of the total payroll ( Schedule 4) . 
 Power should be distributed between the Car Re- 
 pair and any other departments using it, on the 
 basis of such information as is obtainable. Fre- 
 quently the current for power purposes is taken 
 through the same electric meter as the current 
 for lighting, in which case an estimated division 
 must be made in making the charge to these Gen- 
 eral Ledger expense accounts. In larger estab- 
 lishments where separate meters are in use the 
 distribution will be more exact. 
 
136 PRACTICAL GARAGE ACCOUNTING 
 
 Administrative General 
 
 The fourth division of expense accounts is the 
 Administrative, and this presents the greatest dif- 
 ficulties in distribution. If it were possible to 
 arrive at even a reasonably close approximation 
 of the time devoted by the administrative officers 
 and the office and other general employees to the 
 work of each department, that would perhaps be 
 best basis for this distribution ; but as this is mani- 
 festly impossible some other method of general 
 applicability must be arrived at. 
 
 It is arbitrary and illogical to distribute office 
 overhead in the same ratio as the direct depart- 
 ment expenses. The fact that a large amount of 
 direct expenses can be fastened on one depart- 
 ment, as for instance the Car Repair Shop, is no 
 justification for still further penalizing that de- 
 partment with the same proportion of the admin- 
 istrative expenses ; especially in view of the fact 
 that car and accessory sales usually occupy the 
 larger part of the proprietor's time and attention. 
 To distribute this classification of expense on the 
 basis of space occupied by each department 
 would also be manifestly unfair, especially to the 
 Live-Storage Department, which occupies the 
 largest amount of space but by no means creates 
 the most work for the officers and office em- 
 ployees. To make the distribution on the basis of 
 department sales would be unjust, for instance, to 
 
THE MONTHLY COST SHEET 137 
 
 the New Car Department, as new cars usually 
 constitute a much larger proportion of the vol- 
 ume of sales than the proportion of time devoted 
 to the department by the administrative and office 
 force. To base the distribution on the employees' 
 time or labor hours in each department would 
 place an undue burden on the labor sales depart- 
 ments, Car Repair, Tire Repair, etc. But since 
 both the volume of business and the operating 
 employees' time required by each department, 
 have a bearing on the proportion of the officers' 
 and office employees' time required by each de- 
 partment, it would appear that a combination of 
 the two last mentioned methods of distribution 
 would be the fairest basis for general garage use. 
 
 Method of Distribution 
 
 As a rule the method of distribution described 
 below will be found to be not only logical, but to 
 work out well in practice, giving each depart- 
 ment a fair share of the general administrative 
 expenses, in accordance with the size and activ- 
 ity of the department. It is suggested, however, 
 that the percentage of administrative expense 
 chargeable to each department on this basis be 
 figured by the bookkeeper, and a schedule of the 
 percentages be submitted to the manager for con- 
 sideration. If he decides that it does not fairly 
 represent the department distribution of his own 
 
138 PRACTICAL GARAGE ACCOUNTING 
 
 and the office force's time he should make an ar- 
 bitrary adjustment of the figures and so establish 
 a standard for the distribution each month. 
 
 Selling Expenses 
 
 Before making this distribution on the Cost 
 Sheet the expenses under the fifth classification 
 must be entered, viz., the Selling Expenses. The 
 amounts of such of the selling expense accounts 
 as are general, applying to the whole garage, are 
 to be entered in the General Selling Expense col- 
 umn ; but accounts that apply to a particular de- 
 partment will be charged direct to that depart- 
 ment, such as special department Salesmen's Sal- 
 aries and Commission, departmental Free Ser- 
 vice, etc. The Estimated Bad Debt Loss should 
 be directly distributed on the basis of the charge 
 sales of each department. 
 
 After entering the amounts of all the selling 
 expense accounts, the General Administrative 
 expense must next be distributed, as a proportion 
 of it is chargeable to General Selling Expense. 
 Take a sheet of columnar paper, head the col- 
 umns "General Selling", "General Stock Room", 
 and with the operating department names. Enter 
 in the respective columns the amount of mer- 
 chandise purchases for the month, the total of the 
 expense items so far entered on the Cost Sheet, 
 and finally the cost of Productive Labor, in each 
 
THE MONTHLY COST SHEET 139 
 
 department. Foot the columns of the Distribu- 
 tion SheeJ: and add together the totals so ascer- 
 tained, to find the grand total of Office Volume 
 for the month. The proportion that total sales 
 bears to this grand total will be the proportion of 
 Administrative Expense chargeable to General 
 Selling Expense, and this amount should be en- 
 tered in the column so headed on the Cost Sheet. 
 This results usually in charging a little over one- 
 half of the administrative general expenses to 
 general selling expense. This division will be re- 
 cognized as fair when we remember that the of- 
 ficers' or proprietor's time is or should be largely 
 given to the problem of selling; while the time of 
 the office force is to a great extent devoted to re- 
 cording, billing, and collecting the charge sales 
 of the business. 
 
 The remainder of the Administrative Ex- 
 pense is considered to apply to the superintend- 
 ence, buying, and accounting of the operating 
 departments. It is to be distributed in two ways 
 and the results averaged in order to be fair to 
 both the labor and the merchandising depart- 
 ments. The office volume summary sheet just 
 referred to shows the total purchases and ex- 
 penses so far, under each department. Find the 
 percentage of each of these department totals to 
 the grand total of these amounts, which is the of- 
 fice volume for the month excluding sales. Then 
 
140 PRACTICAL GARAGE ACCOUNTING 
 
 calculate the percentage of total productive and 
 non-productive labor hours in each department 
 (disregarding labor charged in any general ex- 
 pense column except the General Stock Room) 
 to the grand total of labor hours charged to the 
 departments direct including the general stock 
 room. These department percentages must then 
 be averaged with the percentages just previously 
 obtained on office volume, by adding together the 
 two percentages under each department and div- 
 iding by two. See that the averages so obtained 
 total 100 percent; then calculate the distribution 
 of the remainder of Administrative General 
 Expense (left after deducting the amount charged 
 to General Selling Expense) and enter the 
 amounts so ascertained in the proper department 
 columns of the Cost Sheet. 
 
 Labor Overhead 
 
 The totals of departments H, I, J, K, L and M 
 columns should now be struck and entered as the 
 Labor Overhead of those departments. Distri- 
 bution should then be made of the General Stock 
 Room expense column, on the proportion of the 
 cost of general stock sold through departments 
 C, J, K, L, and M ; and another total struck across 
 all the department columns (except the purely 
 selling departments A, B, C, D, E) which will 
 show the total Garage Operating Expense by de- 
 
 
THE MONTHLY COST SHEET 141 
 
 partments. The expense of the five departments 
 excepted is in reality all Selling expense. 
 
 The total of the General Selling Expense col- 
 umn is then to be distributed over the depart- 
 ment columns in proportion to department total 
 Sales to customers, and totals struck showing the 
 Grand Total Expense by departments. To these 
 figures are then added the Cost of Merchandise 
 sold and Cost of Labor sold (i. e. Pro- 
 ductive Labor), the total of the three items giv- 
 ing the Grand Total Costs by departments. Next 
 enter total sales in each department (Schedule 1) 
 entering the amount of any miscellaneous sales, 
 such as junk or waste paper, which cannot pro- 
 perly be credited to any particular department, 
 in one of the General Expense columns. The dif- 
 ference between the last two figures under each 
 department is the net gain or loss of the depart- 
 ment for the month. If a gain, enter in black ink ; 
 if a loss, in red. 
 
 Statistical Information 
 
 The six other items of statistical information 
 provided for beneath the Gain or Loss figure for 
 each department, are the items most often re- 
 quired by the management. These are : 
 
 Interest for one month at 6% on Departmental Investment. 
 (This is shown in dollars and cents, and as ft appears 
 directly beneath the profit or loss of each department 
 those desiring to include interest on deparmental in- 
 
142 PRACTICAL GARAGE ACCOUNTING 
 
 vestment in figuring their costs may readily subtract 
 the interest item from department gain or add it to 
 department loss. The highest accounting authorities 
 differ as regards the propriety of considering the in- 
 terest on departmental investment as an item of cost ; 
 the majority holding that interest should not be con- 
 sidered as an item of cost, but as a Capital Expense.) 
 
 Percent of Gain or Loss to Total Costs. 
 
 Percent of Department Operating Expense to total prime 
 Costs. 
 
 ( In this calculation the operating expense totals, not 
 including the Selling expense, are used. By total 
 prime cost is meant the Merchandise and Productive 
 Labor costs added together.) 
 
 Percent total expenses to total prime costs. 
 
 ( In this calculation the selling expense is included ; 
 the prime cost being the same as in the calculation 
 just preceding. Hence, the percentage of Selling Ex- 
 pense to Total Prime Costs is the difference between 
 the last two percentage figures under each depart- 
 ment.) 
 
 Average prime cost of Productive Labor per hour. 
 
 Average Labor overhead per Productive Labor hour. 
 
 Other statements will be desired in special 
 cases, such as Livery Department Operating 
 Statement by cars; (see Model, Form 25) ; Real 
 Estate Income and Expense Statement; Average 
 Cost per unit in each department, i. e., per car 
 stored in Storage department, per car washed in 
 Washing department, per Battery charged, etc. 
 All these reports should be submitted on uniform 
 sized sheets so that they may be placed together 
 in a ring binder or other suitable receptacle and 
 kept on the executive's desk for ready reference 
 and study. 
 
MONTHLY STATISTICS 
 
 143 
 
 LIVEKY DEPARTMENT PROFIT AND Loss- 
 
 Morvi-rM OF* 191 
 
 I 
 
 I 
 
 ,3 
 .j 
 i 
 
 J 
 
 it 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 I 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 % 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 f 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 7 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 J 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Z 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 | 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Z 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ( 
 
 z 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ( 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 4 
 
 IC.XPENSE. ANAUYS/S 
 INVESTMENT 
 
 1 l5,*5 I i ! I iM 
 
 ^ItM-iil i]|.'iiHtj.H 5 
 
 limniii Hi 1 * I ! 
 
 * h sfll t*t ; f<l 
 
 M iliil-l M-llri 
 
 ^0 Qhu-jao ohci.^c 
 
CHAPTER XIV 
 INSTALLING THE SYSTEM 
 
 AN argument on the high desirability, from 
 the standpoint of efficiency, of planning 
 all work in advance and adhering as faith- 
 fully as possible to the program mapped out, 
 would be out of place here; but the principle is 
 well established and in recognition thereof this 
 and the three following chapters are included in 
 this volume. Such a guide, of course, is especi- 
 ally needed in installing a new system of accounts 
 by the bookkeeper of limited experience. Hence 
 we present instructions for doing so which to the 
 experienced accountant may appear unnecessar- 
 ily elementary and minute. 
 
 For the benefit of those who desire to spread 
 the work of inaugurating and learning the details 
 of the system over some time, gradually adding 
 one feature after another until the whole is in 
 operation, we have divided the course to be fol- 
 lowed into several sections which may be taken 
 up one at a time, at such intervals as may be 
 thought desirable. 
 
 144 
 
INSTALLING THE SYSTEM 145 
 
 We would state, however, that we cannot re- 
 commend this course as the best. We consider it 
 entirely feasible for any person of good average 
 intelligence and ability and a fair knowledge of 
 the principles of double-entry bookkeeping to in- 
 stall a complete and thoroughly satisfactory sys- 
 tem of general and cost accounts by following the 
 program outlined in this chapter and explained 
 in detail in the preceding pages; but so much 
 time, labor and annoyance can be saved by the 
 employment of a competent expert to oversee and 
 assist in the installation of the whole system at 
 once, that the latter course will almost invariably 
 be found by far the most satisfactory and econom- 
 ical in the end. 
 
 ( 1 ) Obtain a supply of Time Cards, Material Re- 
 quisitions, Stock Record Cards, and Payroll 
 Sheets. 
 
 (2) Take a complete and careful physical inven- 
 tory of General Stock, Tire Stock and Gaso- 
 line and Oil Stock on hand the last day of the 
 month. 
 
 (3) Open General Ledger Accounts by first care- 
 fully listing all assets and liabilities according 
 to the classifications outlined in Chapters VIII, 
 IX and X ; then enter the amounts of the 
 schedules of assets in the General Journal, in 
 the debit column, followed by the liabilities in 
 the credit column; the difference between the 
 total assets and total liabilities is the Net 
 Worth, which should be entered last as a bal- 
 ancing figure. If the concern is incorporated 
 
146 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 the par value of Capital Stock must be entered 
 as a credit, and the difference between the total 
 assets and total liabilities, including Capital 
 be then entered as Surplus (credit) or Deficit 
 (debit). These items are then to be posted to 
 the General Ledger as opening entries in each 
 account. 
 
 (4) Transfer the items of the inventory to the 
 Stock Record Cards. 
 
 (5) If possible, place some one individual in charge 
 of General and Tire Stocks, and if practicable 
 make it impossible for anyone else to get any- 
 thing out of stock, by arranging stock room 
 under lock and key. Thereafter issue articles 
 or merchandise only upon properly filled-out 
 Material Requisitions. 
 
 (6) Get a time-stamp or clock, issue Time Cards 
 to workmen, and insist on their use as ex- 
 plained in Chapter III. 
 
 (7) Commence analyzing workmen's time on Pay- 
 roll Sheets; insisting on Time Cards being 
 turned in for shop-time as well as customers' 
 with full report of how time was spent. 
 
 II 
 
 (8) Change methods of handling cash to conform 
 to those outlined in Chapter III, installing the 
 Combination Garage Journal and Imprest 
 Fund as there described. 
 
 Ill 
 
 (9) Select the billing system best adapted to 
 your needs as described in Chapter IV, and 
 commence the distribution of Sales and Cost of 
 Sales according to departments as explained in 
 Chapters IV, V and VI. 
 
INSTALLING THE SYSTEM 147 
 
 (10) Prepare a schedule of monthly entries for the 
 General Journal, as outlined in Chapter VII. 
 Open subsidiary records described in Chapter 
 XL The form of Accounts Receivable Ledger 
 will depend on the method adopted for sales 
 journalizing. All invoices for purchases or ex- 
 penses, due at the commencement of the month, 
 should be listed in the Purchase Journal and 
 a detail account for each creditor opened as ex- 
 plained under Accounts Payable Ledger in 
 ChapterXI. 
 
 IV 
 
 At the close of the first month's business that 
 has been fully recorded as outlined in the three 
 preceding sections, get out a complete set of mon- 
 thly statistical statements as described in Chapters 
 XII and XIII in accordance with program out- 
 lined in Chapter XVI. 
 
CHAPTER XV 
 DAILY PROGRAM 
 
 THE following program is of course merely 
 suggestive, and should be varied to suit the 
 convenience of the bookkeeper and the exi- 
 gencies of the business. It is intended more par- 
 ticularly as a memorandum of what should be 
 done daily in keeping up the various accounting 
 records. It is strongly recommended, however, 
 that a daily program suited to his own particular 
 needs be made up by each bookkeeper using this 
 system, and an estimate of the time required be 
 put on each item of the work. By so doing, and 
 endeavoring to keep within this time limit, much 
 greater efficiency will be attained than by going 
 about the work entirely at haphazard. 
 
 "The day's business", and similar expressions 
 in this program, in every instance refer to the 
 operations of the preceding day unless otherwise 
 specified. 
 
 Cash 
 
 (1) Balance the preceding day's Cash, and make 
 up deposit slip for the cash receipts, leaving 
 only the Imprest Fund, consisting of cash 
 vouchers and balance, in the Cash Register or 
 drawer. 
 
 148 
 
DAILY PROGRAM 149 
 
 (2) Analyze Cash Sales, and set aside Analysis 
 Slip for later entry in the Sales Journal. 
 
 (3) Enter cash collections from Cash Register 
 tape or other original record on Cash Re- 
 ceived Journal, if such entries are not made 
 immediately upon receipt of each payment. 
 Cash Sales should be entered from the An- 
 alysis Slip as a total for the day; all other 
 receipts itemized. 
 
 Merchandise 
 
 (4) Enter Merchandise credits on Stock Records 
 from Material Requisition slips, at the same 
 time entering costs on the slips from the Stock 
 Record, and set aside the Requisitions for 
 journalizing or billing later. 
 
 (5) Enter invoices turned in by the store-keeper, 
 covering goods received, and expense invoices 
 which have been checked as correct, in the 
 Purchase Journal. 
 
 Labor 
 
 (6) Enter workmen's time on Payroll Sheet, dis- 
 tributing charges to department labor col- 
 umns. 
 
 Sales Journalizing or Billing 
 
 ( 7 ) Journalize the day's Cash, Charge and Inter- 
 department sales, if the Duplicate Statement 
 Method is used (See Chapter IV). If the 
 Duplicate or Triplicate Billing method is used 
 the sales should now be billed from the Time 
 Cards and Material Requisitions, with the 
 exception of the Inter-department Sales, the 
 original records of which are to be filed for 
 preservation until the end of the month. 
 
150 PRACTICAL GARAGE ACCOUNTING 
 
 Postings 
 
 (8) ACCOUNTS RECEIVABLE LEDGER: 
 Post the day's charges from the Sales Journal 
 or Posting Copies of invoices. Post the day's 
 credits from the Cash Received Journal. Post 
 any adjusting entries from the General Jour- 
 nal. 
 
 (9) ACCOUNTS PAYABLE LEDGER: Post 
 charges from Cash Paid Journal. Post credits 
 from Purchase Journal. Post any adjusting 
 entries from the General Journal. 
 
 (10) GENERAL LEDGER: Post debits, from 
 General Ledger Sundry column of Cash Paid 
 Journal, and from the Miscellaneous column 
 of the Purchase Journal. Post credits from 
 the General Ledger Sundry column of the 
 Cash Receivable Journal. Post General Jour- 
 nal adjusting entries. 
 
 Journals 
 
 (11) Payment by check should be journalized in 
 the Cash Paid Journal before or immediately 
 after the check is made out to insure that the 
 check does not go out without the record being 
 made of it. 
 
 (12) The Cash Paid, Cash Received and Purchase 
 Journals should be frequently footed and cross 
 balanced, always when the foot of the page is 
 reached, in order that there shall not be an 
 unnecessary accumulation of work for the end 
 of the month. 
 
CHAPTER XVI 
 MONTHLY PROGRAM 
 
 AS in the case of the daily program in the pre- 
 ceding chapter the following schedule of 
 the bookkeeper's monthly duties need not 
 be followed in the exact order presented. But it 
 will be advisable, at any rate during the first few 
 months the system is in operation, for the book- 
 keeper to make a copy each month of this 
 program, and check off the items as they are per- 
 formed. 
 
 (1) Leave bank passbook at bank when making 
 deposit of cash receipts for the last day of the 
 month, for balancing of book and return of 
 cancelled checks. 
 
 (2) Render Accounts Receivable Statements. 
 
 (3) Foot columns of Cash Received, Cash Paid, 
 and Purchase Journals, and cross foot and 
 balance the month's totals. 
 
 (4) Verify the total deposits as shown in the de- 
 posit column of the Cash Paid Journal, as 
 equalling the total cash received for the month 
 as shown by the Cash Received Journal. 
 
 (5) Post Cash Received Journal entries for the 
 month to the General Ledger, as follows: 
 total of Accounts Receivable column to the 
 credit of the Accounts Receivable controlling 
 account; total of Discount column to the 
 debit of Discount account; total of Amount 
 
 151 
 
152 PRACTICAL GARAGE ACCOUNTING 
 
 Received column to the debit of Cash in Bank 
 account (Total of cash sales should be 
 posted from Sales Journal Summary Sheet.) 
 
 (6) Post Cash Paid Journal entries to the Gen- 
 eral Ledger as follows: total of Accounts 
 Payable column to the debit of Accounts 
 Payable controlling account ; the totals of the 
 various distribution columns to the debit of 
 accounts specified at the heading of the col- 
 umns; total of the Discount column to the 
 credit of the Discount account; the total of 
 the Amount of Check column to the credit of 
 Cash in Bank account. 
 
 ( 7 ) Post Purchase Journal totals to General Led- 
 ger as follows : total of each purchase column 
 to the respective Merchandise Stock account; 
 total of the total column, or the sum of all 
 of the debit columns, to the credit of the Ac- 
 counts Payable controlling account. 
 
 (8) Bill and enter Inter-department sales for 
 month as shown by the accumulated Time 
 Cards and Material Requisition slips. (If 
 there are a large number of these Sales they 
 may be entered on a separate page or pages of 
 the Sales Journal, or billed on Form 17 weekly 
 or semi-monthly). 
 
 (9) Post debit for Inter-department Sales to In- 
 side Expense accounts and other accounts af- 
 fected from the Sales Journal or Invoice 
 binder. 
 
 (10) Make up Sales Journal Summary Sheet as 
 described in Chapter VI. 
 
 (11) Post total Sales from Sales Journal, or from 
 adding machine lists, to Sales and Inter-de- 
 partment Sales accounts. 
 
 (12) Verify accuracy of cost of Productive Labor, 
 as shown by Sales Journal cost columns, by 
 comparison with total of Productive Labor 
 on the Payroll sheets for the month. 
 
MONTHLY PROGRAM 153 
 
 (13) Make monthly journal entries covering fixed 
 charges, as per schedule in the General Jour- 
 nal, and post them to General Ledger. (These 
 may be made and posted sometime during the 
 month if preferred.) 
 
 (14) Balance Accounts Receivable ledger with con- 
 trolling account in the General Ledger. 
 
 (15) Similarly balance Accounts Payable Ledger 
 with controlling account. 
 
 (16) Balance the General ledger by taking off 
 Trial Balance and locating any discrepancies. 
 Make up schedules one to six as described in 
 Chapter XIII. 
 
 (17) Draw off Comparative Balance Sheet from 
 the General ledger; make up detailed Com- 
 parative Expense Statement and itemized 
 Profit and Loss statement ; make up monthly 
 Cost Sheet; all as described in Chapters XII 
 and XIII. 
 
CHAPTER XVII 
 YEARLY PROGRAM CLOSING BOOKS 
 
 LOSING the books", figuring the results of 
 the year's operations and drawing up state- 
 ments exhibiting these results for the infor- 
 mation of the proprietor or Board of Directors, is 
 often somewhat of a bugbear to the bookkeeper. 
 Taken in conjunction with the foregoing instruc- 
 tions, the following program will no doubt afford 
 all additional assistance needed by the garage 
 bookkeeper to satisfactorily complete the year's 
 records. 
 
 ( 1 ) Take a physical inventory of each merchandise 
 stock, viz.: New Cars, Used Cars, General, 
 
 Tires, and Gasoline and Oil, valuing the items 
 as nearly as possible at cost, unless same have 
 become shopworn or obsolete, in which case a 
 suitable reduction should be made. After care- 
 fully figuring and verifying these inventories, 
 
 (2) Correct Stock Record cards by making red ink 
 entries on each one on which the balance does 
 not agree with the physical inventory of that 
 item; specifying in the entry "Adjustment to 
 actual." Adjust General Ledger Merchandise 
 Stock accounts to agreement with total of physi- 
 cal inventories by General Journal entry, mak- 
 ing the contra debit or credit in the Cost of 
 Sales or the Trading account. 
 
 154 
 
SUPPLEMENTARY FORMS 155 
 
 (3) Check over Accounts Receivable and Doubt- 
 ful accounts with the proprietor, and make any 
 adjustment of these accounts deemed necessary 
 by transfers to Doubtful accounts or to Re- 
 serve for Bad Debts ; making such transfers by 
 General Journal entries. 
 
 (4) Compile Compaq tive Balance Sheet (com- 
 paring the assets, liabilities and net worth ac- 
 counts "before closing" with the same items at 
 the end of the preceding year), also detailed 
 comparative Profit and Loss Statement for the 
 year, and a Cost Sheet covering the entire year's 
 business. 
 
 (5) Make and post General Journal entries closing 
 Operating accounts into Trading account: 
 that is, charge Trading account with Cost of 
 Sales and Return Goods accounts, if such are 
 carried; and credit Trading account with the 
 balance of Sales account, Inter-department 
 Sales account, and Miscellaneous Sales or 
 Income account. 
 
 (6) Make and post journal entry transferring bal- 
 lance of Trading account representing gross 
 profit on operations, to Profit and Loss account. 
 
 (7) Make and post journal entry charging Profit 
 and Loss account with debit balances of Garage 
 Expense accounts. 
 
 (8) Make and post General Journal entries trans- 
 ferring to Profit and Loss account balance of 
 Capital Income and Expense accounts. 
 
 (9) Make and post entries debiting or crediting 
 balance of Profit and Loss account to Surplus 
 or Deficit account, Dividend account, or part- 
 ners' Investment accounts, as directed by the 
 proprietor or Board of Directors. 
 
CHAPTER XVII 
 SUPPLEMENTARY FORMS 
 
 In the operation of any growing business en- 
 terprise the necessity wil arise from time to time 
 for the introduction of special forms and records 
 to meet particular needs as they develop. Often 
 the result is that successive executives or book- 
 keepers, adding their own ideas to those of their 
 predecessors, build up an accounting system that 
 is an inharmonious patchwork of the more or less 
 conflicting ideas of many minds, and that in- 
 volves much duplication of work and loss of 
 time. On the other hand, many office men travel 
 in a rut and waste time in trying to adapt out- 
 grown forms or records to changing conditions. 
 These opposite extremes of undesirable results 
 but emphasize the importance of adopting a sys- 
 tem of accounting that is complete, harmonious 
 and coherent, hence efficient; and of having it, if 
 possible, installed by genuinely expert account- 
 ing talent. In the foregoing pages there has been 
 described such an acounting system for the aver- 
 age garage; but in some cases slight alterations, 
 as for instance in the headings of the Cash Paid 
 
 156 
 
SUPPLEMENTARY FORMS 157 
 
 or Sales Journal columns, will make these forms 
 better suited to particular cases ; and supplemen- 
 tary forms will also in many instances be found 
 advantageous. A few such forms, of quite gen- 
 eral applicability, are illustrated and described 
 in this chapter. 
 
 Purchase Order and Record System 
 
 In all but the smaller garages the purchase or- 
 der and recording system illustrated in Forms 26, 
 
 JOSLYN AUTOMOBILE COMPANY 
 
 ROCKFORD, ILI^, 
 
 w T. * ' T '*>..c_ 
 
 ORDER N2 2499 
 
 MESSRS. 
 
 W. ,ll no, b Hpo.bte lo, .njr (oodi ctfe 
 
 ,lho. w,,n orde, urot*H, ncd Please deliver tO befej_ 
 
 And charge to 
 
 JOSLYN AUTOMOBILE CO. 
 
 Form 26 PURCHASE ORDER 
 
 Size 7 l / 2 x7y 2 inches, in duplicate. 
 
158 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 27, 28, and 29 will be found especially valuable. 
 The first, Form 26, is a Purhcase Order, printed 
 in duplicate: the original after being filled out 
 is to be handed or mailed to the Company from 
 which the purchase is made; the duplicate to 
 remain in the order-book for a check against the 
 invoice for the goods when it is received. The 
 second, Form 27, should also be printed in dup- 
 
 MATER! 
 
 Received 
 Ou{ 
 
 M- RECEIVED 
 
 nf 
 
 
 
 /. fly 
 
 
 
 
 -""* 
 
 ..TKUT 
 
 X&SS5SZ 
 
 COT 
 
 *ELUN 
 
 CMCCM 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Form 27 RECEIVING CHECK-SHEET 
 
 Size 85^x6 inches, in duplicate. 
 
 licate and used in the stock room for the purpose 
 of recording the receipt of materials and supplies 
 ordered. The record of receipt should be made 
 
SUPPLEMENTARY FORMS 159 
 
 on this form without reference to the invoice 
 covering the shipment, in order that the count of 
 articles received may not be influenced by 
 amounts billed by the shipper a most natural 
 tendency in hurried checking up of shipments 
 received. The original, after the entries are 
 made, is sent to the office to be there attached to 
 the invoice covering the shipment. The invoice 
 should be stamped with the Purchase Invoice 
 Stamp the day it is received in the office, and filed 
 temporarily in a special file. When the receiving 
 check-sheet (Form 27) covering the shipment 
 comes in from the store-room the invoice charge 
 should be checked against the record of receipt, 
 the invoice calculations verified, the proper trade 
 discount deducted (anything over two percent 
 for cash in ten days is a trade discount) , the goods 
 
 CHECKED INTO STOCK.. _BY. 
 
 FOOTINGS AND EXTENSIONS 0. K .. 
 
 INVOICE RECEIVED 
 JUN181915 
 
 ENTERED STOCK RECORD BY 
 
 ENTERED PURCHASE JNL. FOL... 
 
 APPROVED FOR PAYMENT. 
 
 Form 28 PURCHASE INVOICE STAMP 
 
 Actual size. 
 
160 
 
 PRACTICAL GARAGE ACCOUNTING 
 
 entered on the stock record unless this record is 
 made in the store-room from the receiving slip, 
 and finally the invoice entered in the Purchase 
 Journal. Each of these successive operations 
 should be noted in the proper space provided by 
 the Purchase Invoice Stamp (Form 28). The 
 invoice may now be finally filed. 
 
 OOTE UICM*SCO 
 
 Form 29 RETURNED GOODS TAG 
 
 Size 4x10 inches 
 
 Returned Goods Record 
 
 Form 29 illustrates an especially convenient 
 combined shipping tag and card record of goods 
 returned by the garage. A reference to the illus- 
 tration will show the amount of important infor- 
 mation that is provided for. The section to be 
 torn off and retained in the stock room as a re- 
 cord of goods returned until credit memorandum 
 has been received is, in the form illustrated, of the 
 exact size to fit a stadard 4x6 file. The form may 
 be contracted to fit the smaller 3x5 file if desired. 
 
SUPPLEMENTARY FORMS 161 
 
 The Daily Business Statement 
 
 As has already been stated, one of the princi- 
 pal objects kept in mind in designing the system 
 of garage accounts described in the preceding 
 pages has been to furnish data for and to facili- 
 tate the compilation of statements presenting the 
 results of the operations of the business as fully 
 and accurately as possible at the end of each 
 month. To compile all this information about 
 the business daily or even weekly is a much more 
 difficult proposition and the advantages gained 
 are not at all commensurate with the labor in- 
 volved. Great claims have been made by the 
 manufacturers of certain forms of journal or 
 combination records that by their use a daily bal- 
 ance sheet and profit and loss statement could be 
 automatically produced. Concerning such re- 
 cords Robert H. Montgomery, C. P. A., the fore- 
 most American authority on auditing, says in his 
 monumental work entitled AUDITING, THEORY 
 AND PRACTICE, p. 308 : 
 
 "Suppose we compare present conditions with 
 those of about ten years ago. At that time sta- 
 tionery houses, which carried an "auditing de- 
 partment" as a side line, were making a great stir 
 through advertising and traveling solicitors, and 
 were offering to produce wonderful results, in- 
 cluding daily balance sheets and profit and loss 
 
162 PRACTICAL GARAGE ACCOUNTING 
 
 statements, the only requirement being the instal- 
 lation of their patented stationery. Offices were 
 turned inside out and new books and blanks were 
 installed by the ton, but for some reason the ser- 
 vice did not measure up to the promises, and hun- 
 dreds of offices discarded much of the "junk" 
 which had been thrust upon them and went back 
 to saner methods." 
 
 However, nothing in the foregoing should be 
 understood as disparaging the value to the execu- 
 tive of a daily statement of the condition of the 
 principal asset and operating accounts. Some of 
 this information is essential, whether compiled 
 in the form of a statement or not; and a daily 
 summary statement of the principal business op- 
 erations, placed regularly before the managing 
 head of the business, will be found to be of the 
 greatest interest and value in supplementing the 
 monthly business statements, and to present all 
 the information of any real value that would be 
 contained in a supposedly more complete daily 
 balance sheet and profit and loss statement. 
 
 A form for such a daily statement is presented 
 herewith (Form 30) . It may be easily compiled 
 from the Combination Garage Journal, if that 
 record is kept properly up to date, at a minimum 
 of labor on the bookkeeper's part. It will be noted 
 that the form summarizes the day's operations 
 
SUPPLEMENTARY FORMS 
 
 '163 
 
 DAILY BUSINESS NUMMARY- 
 
 1*1 
 
 
 CA 
 
 
 
 
 
 AT BEGINNING OP PAY IN BANK. 
 
 
 
 ON HAND* 
 
 
 
 To 
 
 ADD CASH Recz.it 
 To 
 DEDUCT TOTAU CMC 
 BALANCE. AT C/ND 0^ D/ 
 
 TA, 
 
 
 >TA 
 
 
 
 
 
 r*tA 
 
 
 
 V 
 
 
 PROOF : CW.NK BAJ 
 CASH Ow HA 
 TOT 
 
 -4MC 
 
 
 
 -Al_ 
 
 
 
 SALES' 
 
 
 
 DeLPARTMElNT 
 
 THis DAYS SAi_t3 MONTH s TOTAI_TO EKre 
 
 NE.W CAR 
 
 
 
 
 
 
 
 Uato CAR 
 
 
 
 
 
 
 PARTS Acccowj 
 
 
 
 
 
 
 
 TIRES 5 Twc.s 
 
 
 
 
 
 
 
 GA30L.iMe.S- Oii_ 
 
 
 
 
 
 
 Uivc. STORAE. 
 
 
 
 
 
 
 DEAD STORASC: 
 
 
 
 1 1 
 
 
 
 LIVCR.Y 
 
 
 
 
 
 
 
 WASH RAC.K. 
 
 
 
 
 
 
 
 CAR. RtRAiR. 
 
 
 
 
 
 
 
 TIRe RE>AI 
 
 
 
 
 
 
 
 
 ^A-TTt.V 
 
 
 
 
 
 
 PAHSIT SMOR 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 TOTALS 
 
 
 
 
 
 
 
 ACCOUNTS RE.CEIIVABLEL SHOP EFFICIENCY 
 
 
 AT _BeG'N/^N& or Dwy(&oonT FwD 
 
 
 
 LABOR 
 
 home 
 
 M.NS 
 
 fcpCENT 
 
 
 ADO CHARt SLC.S AsAeovE. 
 
 
 
 PRODUCTIVE 
 
 
 
 
 TOTA1_ 
 
 
 
 \ON-PkoPUCTTVt 
 
 
 
 
 DE.CHJCT Co_i_ec.Tiois(3 
 
 
 
 TOTAI_ 
 
 
 
 100 7 
 
 BALAMCE ArdMoOF DAY 
 
 
 
 O K APP 
 
 
 
 Form 30 DAILY BUSINESS SUMMARY 
 inches 
 
164 PRACTICAL GARAGB ACCOUNTING 
 
 under four headings : Cash, Sales, Accounts Re- 
 ceivable and Shop Efficiency. 
 
 The information contained in this Daily Bus- 
 iness Summary places in the executive's hands in 
 succinct and easily grasped form all the essential 
 facts of operations and of actual present condi- 
 tions of the business, for his immediate guidance 
 and for study in comparison with the preceding 
 daily reports, which should be retained in a suit- 
 able ring binder on his desk. The trend of the 
 results of operations, up or down, in comparison 
 with the preceding day's and month's results are 
 here easily and quickly noted; and if more de- 
 tailed information of expenditures, sales, collec- 
 tions or shop efficiency are desired it may be 
 gained from an inspection of the journal itself. 
 Moreover, the information can not be given him 
 in this form unless the books are kept constantly 
 up to date, hence this statement also affords an 
 index of the efficiency o f the accounting depart- 
 ment. 
 
 Conclusion 
 
 In conclusion, the proprietor or manager who 
 receives from his bookkeeper each day the Daily 
 Business Summary as illustrated in Form 30, and 
 at the end of each month the four monthly busi- 
 ness statements illustrated in Forms 21, 22, 23 and 
 24, together with Form 25 if a Livery department 
 
SUPPLEMENTARY FORMS 165 
 
 is operated, cannot be deceived for any length of 
 time concerning the condition of his business, or 
 the trend of the results of its operations, either by 
 his own optimism, by a superficial appearance of 
 prosperity, by the errors or dishonesty of clerks, 
 or otherwise. His business becomes more and 
 more a well regulated and smoothly working ma- 
 chine, and decreasingly that which all business 
 is to some extent, and most business enterprises 
 are to a very large extent, a gamble. 
 
 The statements enumerated are the final pro- 
 duct of a scientifically designed and co-ordinated 
 system of accounts ; and as the manager becomes 
 familiar with the information supplied and pro- 
 ficient in sensing its significance he is enabled to 
 quickly recognize varying conditions in any part 
 of his business machine, and in proportion to his 
 executive ability and capacity applies the knowl- 
 edge so gained to the correction of undesirable 
 conditions, such as the elimination of waste, the 
 stopping of leaks and the application of stimu- 
 lants when necessary. This constant, exact knowl- 
 edge gives him a satisfaction of mind and an as- 
 surance and certainty of action that places his 
 business efforts on an entirely different plane 
 from his competitors' who do not use the 
 same methods of modern accounting efficiency; 
 and other conditions being equal, insures a far 
 
166 PRACTICAL GARAGE ACCOUNTING 
 
 greater degree of stability and permanence to his 
 business structure than is possible in one less in- 
 telligently directed. For the advantages of scien- 
 tific accounting, in all that the expression implies, 
 are but a modern exemplification of the wisdom 
 of the ancient Greek who declared, twenty odd 
 centuries ago, 
 
 "KNOWLEDGE IS POWER/' 
 
INDEX 
 
 (References are to Pages) 
 ACCOUNTING, 
 
 By Machines 19 
 
 Defined, _.._ _ 16 
 
 Four Stages, 17 
 
 Modern Methods, _ ^ 17-19 
 
 Obsolete Methods, 16 
 
 ACCOUNTS PAYABLE ACCOUNT, ,... _ 97 
 
 ACCOUNTS PAYABLE LEDGER, 114 
 
 ACCOUNTS RECEIVABLE ACCOUNT ,. 86 
 
 ACCOUNTS RECEIVABLE LEDGER 112 
 
 ACCRUED FUTURE DUE ACCOUNTS _ 99 
 
 ACCRUED INTEREST ON NOTES PAYABLE 99 
 
 ACCRUED INTEREST ON NOTES RECEIVABLE ^ _ 89 
 
 ACCRUED INTEREST ON REAL ESTATE MORTGAGES 96 
 
 ADMINISTRATIVE EXPENSE ACCOUNTS _ 108, 136 
 
 ADMINISTRATIVE SALARIES + _ _ 108 
 
 ADVANTAGES OF COST SYSTEM OF ACCOUNTING _.11-14, 164 
 
 ADVANTAGES OF PERPETUAL INVENTORY _.. 116 
 
 ADVERTISING, GENERAL _ ....108 
 
 ALLOWANCES TO CUSTOMERS 103 
 
 ASSETS, CLASSIFICATION IN LEDGER 82 
 
 BAD DEBT LOSSES * 79 
 
 BALANCE SHEET, THE 
 
 Description ,. 120 
 
 Form 21 122-123 
 
 BANK, CHECKING ACCOUNT _^. 36, 84 
 
 BATTERY DEPARTMENT EXPENSE 107 
 
 BATTERY INSIDE EXPENSE 107 
 
 CAPITAL INCOME AND EXPENSE ACCOUNTS 109 
 
 CAPITAL STOCK ACCOUNT _ _ 100 
 
 CAR REPAIR DEPARTMENT EXPENSE * 107 
 
 CAR REPAIR DEPARTMENT INSIDE EXPENSE 107 
 
 CASH IN BANK ACCOUNT * .._ 84 
 
 Reconciliation with Bank's Account 84 
 
 CASH PAID JOURNAL, 
 
 Description, _ 33 
 
 Form 7 _ ^ _ 34 
 
 CASH RECEIVED JOURNAL, 
 
 Description 31 
 
 Form 6 32 
 
 CASH RECEIVED, METHOD OF HANDLING, ... _ 27 
 
 CASH REGISTER ^ 20 
 
 CASH SALES, ANALYSIS OF _ 72 
 
 CHART OF GARAGE COST SYSTEM 10 
 
 167 
 
168 INDEX 
 
 (References are to Pages) 
 
 CLASSIFICATION OF GENERAL LEDGER ACCOUNTS, 
 
 Assets 82 
 
 Liabilities - _ 97 
 
 Net Worth 100 
 
 CLOSING BOOKS, PROGRAM FOR .- 154 
 
 COMBINATION JOURNAL 31 
 
 COMPARATIVE BALANCE SHEET, MONTHLY _ _*...120 
 
 COMPARATIVE OPERATING EXPENSE STATEMENT, 
 
 Description ~ .121 
 
 Form 22 _ - - _ 124 
 
 CONTROLLING ACCOUNTS _ 86, 112 
 
 COST ACCOUNTING IN GARAGE, 
 
 Objections answered ..._ _ 14 
 
 Various methods _ 43 
 
 What it accomplishes ~ .. 12, 13 
 
 Why needed ~ _ - - ~ * 11, 12 
 
 COST OF SALES ACCOUNT _ ~ _ ...104 
 
 COST SHEET, MONTHLY 429 
 
 CREDIT AND COLLECTION EXPENSE _ . 108 
 
 CREDITS, 
 
 On accounts payable _ - .41 
 
 On accounts receivable 103 
 
 DAILY CASH SALES SUMMARY 
 
 Description _ _ 21 
 
 Form 2 . - - _...-. 21 
 
 DAY BOOK, MODERN ^ _ 17 
 
 DEPARTMENTAL COST SHEET _* 129 
 
 (See "Monthly Cost Sheet") 
 
 DEPARTMENTS OF GARAGE 52 
 
 DEPOSITS ON NEW CARS, 
 
 By Customers _ 98 
 
 By Sub- Agents _ 98 
 
 With Manufacturers _ ~ - _ *.88 
 
 DEPRECIATION * _ 78, 107 
 
 On Real Estate 96 
 
 DETAIL LEDGERS - * 112 
 
 DIRECT OPERATING EXPENSES - 135 
 
 DISCOUNT ~ - 1 1 
 
 DISHONESTY OF EMPLOYEES, COST ACCOUNTING A CHECK ON 13 
 
 DOUBTFUL ACCOUNTS RECEIVABLE _ +...87 
 
 DUPLICATE BILLING METHOD, 
 
 Description _ 57 
 
 Form 15 58-59 
 
 Form 16 60 
 
 DUPLICATE STATEMENT METHOD, 
 
 Description 52 
 
 Form 13 _ + 54-55 
 
 Form 14 - - 56 
 
 ENTRY OF MONTHLY EXPENSE ACCRUALS 80 
 
INDEX 169 
 
 (References are to Pages) 
 
 EQUIPMENT ACCOUNTS . 95 
 
 ESTIMATED BAD DEBT Loss _.. 108 
 
 EXPENSE ACCOUNTS, CLASSIFICATION OF ...133 
 
 FIRE INSURANCE _ _+ 78 
 
 FORMS, 
 
 Cash Received Journal 32 
 
 Cash Paid (Imprest Fund) Voucher ..._ 38 
 
 Cash Paid Journal _ _....* 34 
 
 Comparative Balance Sheet _ 122-123 
 
 Comparative Operating Expense Statement 124 
 
 Daily Business Summary ^ 163 
 
 Daily Cash Sales Summary _ .21 
 
 Duplicate Statement Ledger, Cost Finding Form 54-55 
 
 Duplcate Statement Ledger, Ordinary Form 56 
 
 Duplicate Billing _.. *. ...58-59 
 
 Duplicate Billing, Optional Form _ 60 
 
 General Journal *. 76 
 
 Inter-department Billing 64 
 
 Livery Trip Ticket _ _ .. 28 
 
 Material Requisition 18 
 
 Monthly Profit and Loss Statement 125 
 
 Monthly Departmental Cost Sheet 126-127 
 
 Monthly Livery Department Profit and Loss Statement _...143 
 
 Payroll Distribution Journal _ .....46 
 
 Purchase Invoice Stamp _ 159 
 
 Purchase Journal _ _ 40 
 
 Purchase Order _ *._ 157 
 
 Receiving Check Sheet 158 
 
 Returned Goods Tag _ * 160 
 
 Sales Journal, Labor Departments _ 50 
 
 Sales Journal, Merchandise Departments . 51 
 
 Stock Record Card ,. 115 
 
 Time Card _ 22-23 
 
 Transient Storage Tag _ _ 26 
 
 FREE SERVICE _ 108 
 
 FUEL ACCOUNT + 90 
 
 GASOLINE DEPARTMENT EXPENSE + 107 
 
 GASOLINE DEPARTMENT INSIDE EXPENSE . _ 107 
 
 GASOLINE STOCK * _ 94 
 
 GENERAL EXPENSE + 1 08 
 
 GENERAL JOURNAL 47, 75 
 
 Form 18 _ 76 
 
 GENERAL LEDGER ^. 82 
 
 GENERAL STOCK _ _ 93 
 
 GENERAL STOCK ROOM EXPENSE ..... 66, 107, 140 
 
 GENERAL STOCK ROOM INSIDE EXPENSE ... + 107 
 
 GENERAL STOCK SALES INSIDE EXPENSE - 107 
 
 GUARANTEE DEPOSITS WITH MANUFACTURERS _ > 88 
 
 HEAT ACCOUNT .. ....106 
 
1 70 INDEX 
 
 (References are to Pages) 
 
 HOUSE EXPENSE ACCOUNTS .....106, 133 
 
 INBOUND FREIGHT GENERAL SOCK 107 
 
 INBOUND FREIGHT TIRE STOCK * 107 
 
 INSIDE EXPENSE ACCOUNTS 68 
 
 INSURANCE 107 
 
 INTERDEPARTMENT SALES ACCOUNT : * _ 103 
 
 INTER-DEPARTMENT SALES, 
 
 By Battery Department 68 
 
 By Car Repair Department 67 
 
 By Live Storage Department 67 
 
 By Paint Shop 68 
 
 By Tire Repair Department 68 
 
 Credits 65 
 
 Distinct from Non-productive Labor 68 
 
 Form 17 ..._ _ - * 64 
 
 To Free Service 68 
 
 To Inside Expense _ + 68 
 
 To Maintenance of Buildings 69 
 
 To Real Estate * 69 
 
 To Used Car Stock 69 
 
 INTEREST ACCOUNT 110 
 
 INTEREST ON DEPARTMENTAL INVESTMENT ,141 
 
 INTRODUCTORY 11 
 
 INSTALLING AN ACCOUNTING SYSTEM, BEST WAY 144 
 
 Progressive Installation 145 
 
 IMPREST FUND _ * 37, 85 
 
 Reimbursement of 39 
 
 Voucher, Form 8, - 3 8 
 
 INVESTMENT ACCOUNTS, PARTNERS' 100 
 
 INVESTMENT EXPENSE ACCOUNTS _ .. 107, 133 
 
 JOURNALIZING, Six SUBDIVISIONS OF ,. 30 
 
 JOURNALS, 
 
 Cash Paid _.. 33 
 
 Cash Received 31 
 
 Combination 31 
 
 General + 47 
 
 Modern 30 
 
 Payroll Distribution 47 
 
 Purchase * 41 
 
 Sales - 45 
 
 Six Subdivisions 31 
 
 LABOR, 
 
 Charges for, how made 70 
 
 Errors in Charging, how to detect * 74 
 
 Non-Productive 107 
 
 Productive - ,. 104 
 
 LABOR DEPARTMENTS, LIST OF * 70 
 
 LABOR OVERHEAD .. 140 
 
INDEX 171 
 
 (References are to Pages) 
 
 LEAKS, How TO LOCATE ^ 12 
 
 LEDGER, 
 
 Accounts Payable 114 
 
 Accounts Receivable , 86 
 
 Detail 112 
 
 General 82 
 
 LIABILITY INSURANCE * ~ 107 
 
 LIABILITIES, LEDGER CLASSIFICATION OF 97 
 
 LIENS OR FIXED LIABILITIES . 99 
 
 LIGHT ACCOUNT 106 
 
 LIVE STORAGE DEPARTMENT EXPENSE 107 
 
 LIVE STORAGE DEPARTMENT INSIDE EXPENSE ,....107 
 
 LIVERY CAR DETAIL RECORD 117 
 
 LIVERY DEPARTMENT EXPENSE 107 
 
 LIVERY DEPARTMENT INSIDE EXPENSE 107 
 
 LIVERY DEPARTMENT MONTHLY OPERATING STATEMENT 142 
 
 Form 25 + .....143 
 
 LIVERY TRIP TICKET 27 
 
 Form 5 < 28 
 
 LOSSES ON ACCOUNTS OR NOTES RECEIVABLE .* _ 102 
 
 MATERIAL REQUISITION _ _ 19 
 
 Form 1 ..18 
 
 MERCHANDISE ACCOUNTS 91 
 
 MERCHANDISE SALES DEPARTMENTS, LIST OF _ _ 71 
 
 METHODS OF DISTRIBUTION OF OVERHEAD EXPENSE 137 
 
 MISCELLANEOUS CHARGES TO CUSTOMERS ~ 86 
 
 MISCELLANEOUS SALES _ 72, 141 
 
 MODERN "DAY BOOK" THE 17 
 
 MONTHLY COST SHEET, 
 
 Description _ 129 
 
 Form 24 ~ + 126-127 
 
 MONTHLY ENTRIES IN THE GENERAL JOURNAL _ 75 
 
 MONTHLY PROGRAM 151 
 
 MONTHLY STATISTICS, THE _ 119 
 
 MORTGAGES ON REAL ESTATE * 96 
 
 NET WORTH 84, 100 
 
 NEW CAR DEPARTMENT EXPENSE ...107 
 
 NEW CAR DEPARTMENT INSIDE EXPENSE _ L 107 
 
 NEW CAR STOCK ACCOUNT 91 
 
 NON-PRODUCTIVE LABOR 107 
 
 NOTES PAYABLE 98 
 
 NOTES PAYABLE AND RECEIVABLE BOOK , 117 
 
 NOTES RECEIVABLE 89 
 
 OFFICE EXPENSE _ ...>. _ 108 
 
 OFFICE FURNITURE AND FIXTURES _ _ 95 
 
 OFFICE SALARIES 108 
 
 OFFICERS' ACCOUNTS * 98 
 
 OPERATING ACCOUNTS 102 
 
 OPERATING EXPENSE ACCOUNTS ... ....107 
 
172 INDEX 
 
 (References are to Pages) 
 OVERHEAD EXPENSE, 
 
 Departmental distribution of 130, 136 
 
 Subdivisions of ^ _ 132 
 
 PAINT SHOP EXPENSE _ 107 
 
 PAINT SHOP INSIDE EXPENSE 108 
 
 PARTNERS' INVESTMENT ACCOUNTS 100 
 
 PARTS AND ACCESSORIES STOCK * j. 93 
 
 PAYROLL _ 81, 97 
 
 PAYROLL DISTRIBUTION JOURNAL, 
 
 Description _ 47 
 
 Form 10 _ * _ 46 
 
 PERPETUAL INVENTORY _ 114 
 
 POWER _ * 107 
 
 PREFACE _ 7 
 
 PREPAID INSURANCE * _ 90 
 
 PRIMARY RECORDS _ 16, 29 
 
 PRODUCTIVE LABOR J.04 
 
 PROFIT AND Loss ACCOUNT ...- _ 101 
 
 PROFIT AND Loss STATEMENT, MONTHLY, 
 
 Description _ _ 128 
 
 Form 23 _* _ 125 
 
 PROFITS OR LOSSES, UNUSUAL _ 102 
 
 PURCHASE JOURNAL, 
 
 Description , _ 41 
 
 Form 9 * _ ~ 40 
 
 PURCHASE ORDER AND RECORD SYSTEM 157 
 
 PURCHASES ON ACCOUNT - 41 
 
 REAL ESTATE - 95 
 
 RECONCILIATION OF BANK ACCOUNT ._ _ _ 84 
 
 RENT ACCOUNT ~ 106 
 
 RENT CHARGES, 
 
 How made - - 75 
 
 Proper rate _ - 76 
 
 REPRESENTATIVE ACCOUNTS - 86 
 
 RESERVE FOR BAD DEBTS . _ 87 
 
 RESERVE FOR DEPRECIATION, 
 
 On Equipment - 95 
 
 On Office Furniture and Fixtures _ * 95 
 
 On Real Estate - -95 
 
 On Service Cars * - 95 
 
 On Used Cars _ - - 93 
 
 RESERVE FOR TAXES * - - 99 
 
 RETURNED GOODS RECORD, 
 
 Description + - 160 
 
 Form 29 ..._ 160 
 
 SALARIES, MONTHLY, CREDIT OF OFFICERS 79 
 
 SALES ACCOUNT 102 
 
 SALES DISTRIBUTION AND BILLING _ _ - - 48 
 
 Optional Methods 52 
 
INDEX 173 
 
 (References are to Pages) 
 SALES JOURNAL, 
 
 Description . ........ _. _... ..........48 
 
 Forms 11 and 12 ...- 50, 51 
 
 Summary _ _ 73 
 
 SALES JOURNALIZING 70 
 
 SALESMEN'S SALARIES AND COMMISSIONS ...* ...108 
 
 SECOND HAND AUTOMOBILES (See Used Cars] 
 
 SELLING EXPENSE ACCOUNT _ 108, 138 
 
 SERVICE CAR ACCOUNT _ 95 
 
 SERVICE CAR EXPENSE 108 
 
 STATISTICAL ACCOUNTS 110 
 
 STOCK RECORD CARD, DESCRIPTION -.114 
 
 Form 19 115 
 
 Form 20 _* ~ 115 
 
 STORAGE REGISTER _ 25 
 
 SUB-AGENTS' DEPOSITS _ ~ 98 
 
 SUBSIDIARY RECORDS 112 
 
 SUPPLEMENTARY FORMS 156 
 
 SURPLUS ACCOUNT *.._ 101 
 
 TABLE OF CONTENTS _ 5 
 
 TAXES _ 77, 107 
 
 TIME CARD, 
 
 Description 24 
 
 Form 3 _ * - _ 22, 23 
 
 TIME-STAMP, VALUE OF 24 
 
 TIRE REPAIR DEPARTMENT INSIDE EXPENSE ...* 107 
 
 TIRE REPAIR DEPARTMENT EXPENSE _ -.107 
 
 TIRE STOCK DEPARTMENT EXPENSE 107 
 
 TIRE STOCK DEPARTMENT INSIDE EXPENSE .^.... 107 
 
 TRADING ACCOUNT .. 110 
 
 TRANSIENT STORAGE TAG, 
 
 Description 26 
 
 Form 4 _. 26 
 
 TRIAL BALANCE *.._ - 121 
 
 TRIPLICATE BILLING METHOD 61 
 
 USED CAR DEPARTMENT EXPENSE .. 107 
 
 USED CAR DEPARTMENT INSIDE EXPENSE .+ 107 
 
 USED CAR STOCK _ 92 
 
 USED CAR STOCK RECORD 117 
 
 VOUCHER SYSTEM, THE ._ _ _. 42 
 
 Comparative merit of * .43 
 
 Modification of ..... 44 
 
 WASH RACK EXPENSE _ 107 
 
 WASH RACK INSIDE EXPENSE _ _ 107 
 
 WASTED EFFORTS AND RECORDS IN ACCOUNTING 119 
 
 WISDOM OF THE ANCIENTS APPROVES COST SYSTEM 166 
 
 YEARLY PROGRAM FOR CLOSING BOOKS ... 154 
 
Time-Saving Forms 
 
 at 
 
 Money Saving Prices 
 
 From 50 to 200 per cent saved on your local dealers' 
 prices. We print these forms in large lots, and give 
 you the benefit on such quantities as you need. 
 
 A Few of Our Accounting Specialties that 
 SIMPLIFY GARAGE ACCOUNTING 
 
 Time Cards Material Requisitions 
 
 Time Stamps Duplicate Order Blanks 
 
 Stock Record Cards Duplicate Billing Forms 
 
 Triplicate Storage Cards Loose Leaf Binders 
 
 Loose Leaf Record Sheets for : 
 
 Duplicate Statement System 
 
 Ledgers General and Customers' 
 
 Cash Received Journal Cash Paid Journal 
 
 Purchase Journal Sales Journal 
 
 Pay Roll Distribution General Journal 
 
 We have all the forms described and illustrated in 
 
 PRACTICAL GARAGE ACCOUNTING in stock for 
 
 immediate shipment; or if your imprint is required, we 
 can print to your order and ship within 48 to 72 hours. 
 
 Free Samples and Prices on Application 
 
 Garage Systems Company 
 
 110 North Main Street 
 
 Rockford, Illinois 
 
The 
 
 Automatic Cost Book 
 
 For Garages 
 
 A BLANK BOOK with full instructions, easy to 
 fill out, so that any garage owner can figure his Profit 
 or Loss EACH MONTH, in each department. 
 
 CAN BE USED WITH ANY SYSTEM of 
 Bookkeeping, in any garage, large or small. It is 
 
 Cost Accounting Simplified. 
 
 Contains Blank Pages for Two YEARS' 
 MONTHLY STATEMENTS. Handsomely 
 bound in buckram, with leather back and 
 corners; 
 
 PRICE $5.00 
 
 OUR GUARANTEE: 
 
 Money refunded on any of our pub- 
 lications proving unsatisfactory and 
 returned within five days of receipt. 
 
 Garage Systems Company 
 
 110 North Main Street 
 
 Rockford, Illinois 
 
THIS BOOK IS DUE ON THE LAST DATE 
 STAMPED BELOW 
 
 AN INITIAL FINE OF 25 CENTS 
 
 WILL BE ASSESSED FOR FAILURE TO RETURN 
 THIS BOOK ON THE DATE DUE. THE PENALTY 
 WILL INCREASE TO SO CENTS ON THE FOURTH 
 DAY AND TO $1.OO ON THE SEVENTH DAY 
 OVERDUE. 
 
 J-tB 13 1939 
 
 APR ft 1939 
 
 
 LD 21-95m-7,'3 i ; 
 
358846 
 
 UNIVERSITY OF CALIFORNIA LIBRARY