BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Gift THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA HENRY RAND HATFIELD MEMORIAL COLLECTION PRESENTED BY FRIENDS IN THE ACCOUNTING PROFESSION HENRY R. HATRELC 2695 LE CONTE AVENUE BERKELEY CALIFORNIA BOOKKEEPING SYSTEM for DELCO-LIGHT DEALERS A Descriptive Booklet Price, $1.50 By ROBERT D. FUNKHOUSER Copyright December, 1919 By Robert D. Funkhouser Dayton, Ohio U. S. A. All rights reserved HFS(pdC SSff CONTENTS Chapter p a?e I. General Reasons for Keeping Accounts ------- 5 II. Why Delco-Light Dealers Should Keep Books of Account - - - - 9 III. General Description of Dealers Bookkeeping System ----- 11 IV. Fundamental Bookkeeping Terms -------- 13 V. Suggested Card of Accounts --------- 20 VI. Explanation of Accounts _________ 30 VII. The Bookkeeping Set Proper --------- 49 VIII. The Transfer and Financial Statement Binder ------ 57 IX. Customers' Invoices ___-_----- 58 X. Inventory Cards ----------- 60 XL Work Orders ----------- 61 XII. Financial Statements ---------- 64 XIII. Other Records Required _________ 68 XIV. The Right Way to Keep Books _____--- 72 XV. General Suggestions ---------- 74 XVI. Pertinent Quotations ---------- 83 XVII. Reproduction of Forms ---------- 97 XVIII. Example of Complete Financial Statement - - - - - - 116 Page 3 ta51i£0£ BOOKKEEPING SYSTEM FOR DELCO- LIGHT DEALERS CHAPTER I GENERAL REASONS FOR KEEPING ACCOUNTS There are always at least three principal reasons why business men should keep proper books of account. These are — 1. That the business may be conducted profitably. 2. That an accurate and acceptable financial statement may be made when credit is sought. 3. That necessary tax reports may be intelligently prepared. 1. Profitable Conduct of Business The primary object of all business enterprises is to make a satisfactory net profit; and since it is true that, as a rule, an accurate knowledge of facts is essential to the profitable conduct of a business, then it is certainly right and proper that sufficient time, energy and expense be devoted to the building up of essential records in order that the owner of the business may be in possession of actual facts. Page 5 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS It has recently been said by a writer in one of the credit magazines, that "more country merchants fail because of faulty bookkeeping — or worse yet, no bookkeeping at all — than from all other causes combined." In Great Britain, the failure of a man engaged in business to keep books of account, is a statutoiy offense ; and the relative indifference to date of American busi- ness men to this most important subject, is difficult to explain. It may possibly be due to the general belief that bookkeeping or accounting is a highly technical and precise science which only trained bookkeepers can be expected to understand ; and it is undoubtedly true that "the art of applying arithmetic to business, requires more study and discrimination than does the science itself" ; however, a considerable misapprehension of the facts in this respect commonly prevails, as it is true of bookkeeping and accounting, at least in simpler forms, as well as of many other practices, that very much of the imaginary mystery with which these operations are ordinarily regarded, disappears when a little intensive study and close application are applied to the principles involved. Statistics of the Government and of the mercantile agencies show that over eighty per cent of the business failures are due to preventable causes — chiefly business inefficiency caused by lack of knowledge of fundamental laws and procedure ; and it is somewhat startling to realize that this condition prevails not only in business enterprises conducted by small merchants and manufacturers, but by partnerships and corporations as well. The Federal Trade Commission is authority for the statement that most American business men do not know enough about the operations of their business to furnish even elementary statis- tical information ; and it is only reasonable to suppose that business embarrassment and disaster Page 6 BO OKKEE PING SYSTEM FOR DELCO-LIGHT DEALERS are a direct result of ignorance of conditions, due, in a large measure, to the absence of proper books of account. The author of a recent article on the subject, "Why Business Men Fail," states that "the greatest error made in business is the refusal to face facts." Books of account record facts; therefore, it is necessary for a successful business man to keep books of account to enable him to know what his business is doing. 2. Presentation of Accurate and Acceptable Financial Statements Practically all business men find it advisable, if not absolutely necessary, to borrow con- siderable sums of money, at least during certain seasons of the year. Of course, they might be able to handle their business in a less progressive and less expansive way, by not borrowing money and by restricting the volume of their business to capital which they actually possess. This, however, is not the modern method of doing business. If large corporations with millions of capital invested in their business find it advantageous to borrow large sums of money, it seems reasonable that smaller enterprises can do a larger and more profitable business by fol- lowing a similar practice. When it becomes desirable to borrow money at a bank, almost the first requirement is the presentation of an accurate financial statement. This is, therefore, an additional and very valid reason why proper records of all business transactions should be maintained. Page 7 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 3. Preparation of Tax Reports In addition to state and county tax returns customarily required, all manufacturers, mer- chants and, in fact, business men of every character, have been required for a number of years past to prepare and submit annual income tax returns to the Federal authorities ; and this duty cannot possibly be fulfilled without recourse to books of account which accurately reveal the transactions which have taken place during the previous year. The keeping of books has, therefore, become an absolute requirement by Federal tax authorities ; and this alone is a suffi- cient reason for the establishment and maintenance of correct records. PaR.' S CHAPTER II WHY DELCO-LIGHT DEALERS SHOULD KEEP BOOKS OF ACCOUNT All of the reasons given in the preceding chapter certainly apply to Delco-Light Dealers, as well as to business men engaged in other undertakings. An additional reason also applies, namely, that Dealers may determine what their net operations covering any given period have been, so they may know whether or not the business in which they are engaged is profitable and to what extent. This is especially important in a new business such as ours. Since this business is profitable for Dealers, as has already been demonstrated in hundreds of instances, there is no reason why every Dealer should not be successful, provided, of course, the principal requirements are fulfilled. A danger always exists, where proper books of account are not kept, that household ex- penses, personal investments, the payment of old debts, or other similar expenditures, may be absorbed by the business proper and an otherwise profitable undertaking may thus show an unsatisfactory net result. This is manifestly unfair ; and the Company is extremely anxious that all Dealers engaged in selling Delco-Light Products correctly determine for themselves the profitableness of the business in which they are engaged, by the establishing and keeping of records which will reveal the true situation at any time. It is rarely right or proper to judge a business alone by the amount of money that may be on hand at the end of the year. Page 9 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS The Delco-Light business in all its complexity and diversification, offers a splendid chal- lenge to its Dealers, to become real, all-round business men, one chief attribute of whom is the ability to read and understand financial statements, especially those pertaining to the business in which they are engaged. Page 10 CHAPTER III GENERAL DESCRIPTION OF DEALERS BOOKKEEPING SYSTEM In order to supply a quite general demand on the part of Delco-Light Dealers for a method of recording financial facts in an approved accounting manner and at the same time in a simple and convenient form, a complete Dealers Bookkeeping System has been devised which we believe is suitable, or at least readily adaptable to the requirements of any Dealer in the business, either large or small. It must be borne in mind that, as a matter of fact, there is no such thing as an absolutely simple bookkeeping system for any business which is at all complicated and is involved with any considerable number of details; however, "if accuracy is the twin-brother of honesty," and "if right methods are necessary for the attainment of any desirable thing," we believe the "Bookkeeping System" herein presented, if properly kept, will make possible the determination of all essential features of the business with the minimum expenditure of time and energy. The complete system, in addition to this descriptive booklet, consists of the following: 1. The Bookkeeping Set Proper, with standard loose-leaf binder and 200 ruled and printed sheets, properly assembled under eight different section headings, with appropriate index tabs, Page 11 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 2. A Transfer and Financial Statement Binder , which, in addition to providing index leaves under which all sheets taken from the current binder may be permanently filed, contains ruled and printed Balance Sheet and Profit and Loss Statement blanks, good for twelve months' operations, 3. A Supply of Customers' Invoices, 4. A Supply of Inventory Cards , 5. A Supply of Work Orders, 6. A Supply of Financial Statements, all of which are later described in detail. For the benefit of those Dealers who are interested in having some of the mystery of book- keeping dissolved and before proceeding with the detailed explanation of this particular bookkeeping system, we will repeat here a few elementary and fundamental bookkeeping principles and statements which are important. Page 12 CHAPTER IV FUNDAMENTAL BOOKKEEPING TERMS There are only four really different kinds of accounts: 1. Assets — What you own. 2. Liabilities — What you owe. 3. Income Accounts — Revenue derived from operations. 4. Expense Accounts — Operating costs. The excess of Total Assets over Total Liabilities represents the Net Worth of a business ; while the excess of Total Income over Total Expenses represents the Net Profits for any given period. The excess of Liabilities over Assets would, of course, show the extent to which any busi- ness was insolvent ; and the excess of Expenses over Income would show the loss or Deficit in operations for the period. Income and Expense Accounts are always closed into Profit and Loss Account at the end of the fiscal period, at which time the Profits, if undistributed, become a part of the Net Worth of the business. Asset and Liability Accounts, that is, net balances shown therein, are, of course, always carried over at the end of the fiscal year to the following year's operations. Page 13 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Bookkeeping is the organized act of recording business transactions in terms of money. Accounting is scientific bookkeeping. A Trial Balance consists of the listing of all open ledger balances in respective debit and credit columns, usually at the end of a month, quarter, year, or other accounting period, for the purpose of determining that the sum total of all debits equals the sum total of all credits. When this equality is ascertained, the books are said to be "in balance," and the mathemat- ical accuracy of all transactions involved is assumed. A Balance Sheet is the orderly, systematic arrangement in approved accounting form, under respective headings, of all Asset and Liability Accounts appearing in the trial balance. It is designed to reflect the true condition of a business on a definite date and to make con- venient a ready determination of the relation of all essential values represented therein. Total Assets must, of course, always equal Total Liabilities and Net Worth. A Profit and Loss Statement is the logical arrangement of all Trading, Income and Expense Ac- counts in such form that it conveniently shows the net result of the operation of a business during a given fiscal period, usually a month, quarter, or year. The excess of Income over Expenses constitutes a Profit; the reverse, a Loss or Deficit. Gross Profits or Total Earnings are the total of all income. Net Profits or Net Earnings are the residue of Gross Profits, after deduction of Total Expenses. Page 14 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Books of Account Are Opened by entering in the journal a record of all assets possessed or acquired and all liabilities outstanding or incurred as of a given date. This record is usu- ally determined by taking an inventory of such values. Books of Account Are Closed usually only at the end of the fiscal year, by closing out all Income and Expense Account net balances to Profit and Loss Account. After this is done, only Asset and Liability Accounts remain, whose net balances are always carried over to the subsequent fiscal period. In order to insure the fact that the books are "in balance," it is customary and desirable to take trial balances both immediately before and after clos- ing the books. A Debit is a bookkeeping account indicating either: 1. Value owned (Assets), 2. Expense incurred (Expenses), 3. Loss sustained (Deficit). Debits are the opposite of credits and are always carried on the left side of ledgers or other books of account. Two General Rules: 1. "Debit on the left what comes in." 2. "Debit the account that stands for the thing received, or for the person or thing that costs value." A Debtor is one who owes or is in debt to another person or business. Page 15 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS A Credit is a bookkeeping account indicating either : 1. Debt owed (Liability), 2. Investment (Capital), 3. Income received (Income), or 4. Profit realized (Profit) . Credits are the opposite of debits and are always carried on the right side of ledgers or other books of account. Two General Rules: 1. "Credit on the right what goes out." 2. "Credit the account that stands for the thing given, or for the person or thing that produces value." A Creditor is one to whom an account or a debt is due by another person or business. A Receivable Account or Note is one due or owing to the business in which it is so shown. A Payable Account or Note is the opposite of the above, or one owing or due by the business in which it is so carried. Page 16 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Posting is a bookkeeping term indicating the transfer of an account from a book of original entry to a ledger. Depreciation is decrease in value of any asset due to impairment as a result of age, use and ordinary wear and tear. A Reserve Account is a credit established on the books for some special future use. Its usual purpose is to absorb anticipated or contingent charges which cannot be accurately deter- mined in advance of the actual expenditure. An Accrued Account is a credit created on the books to provide for a future charge or dis- bursement which has been or can be definitely determined in advance. A Controlling Account is a general ledger account which represents in total a number of indi- vidual component accounts which are usually recorded in a subsidiary ledger. It provides the advantage of freeing the general ledger from a multiplicity of accounts of the same tenor and effect and facilitates the promptness and ease with which general ledger bal- ances may be secured. Controlling accounts always require double posting — one to the controlling account in the general ledger, the other to the controlled account in the subsidiary ledger. Page 17 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS The Production Cost of an article consists of all material, labor and expense incident to the manufacture or production of such an article. Overhead Expenses in a mercantile business consist of all operating expenses of the business — not including, of course, the cost of goods handled or sold. The Turnover is the total cost of all goods sold during the year, divided by the cost of the average stock of goods carried on hand during the year. Inventory in bookkeeping may have three different meanings : 1. It may refer to an account otherwise called a Stock or Stores Account; 2. It may refer to the record as a whole of all goods on hand ; and 3. It frequently means the act of counting and weighing all goods on hand at a stated time, for the purpose of determining the actual cost value of all such goods. Sales in accounting terms refers to the volume of merchandise or manufactured products shipped and invoiced to bona fide customers during any period. Sales, in this sense, are frequently alluded to as "Sales Billed," to definitely and clearly distinguish them from "Sales Booked," meaning the total sales value of bona fide orders received, or booked, during a period. It should be carefully noted that "Sales Billed" and not "Sales Booked" is the Trading Ac- count upon which the determination of Gross Profits and consequently of Net Profits, is always based. Page 18 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS A Card of Accounts is an arrangement in Balance Sheet and Profit and Loss Statement order, of all Asset, Liability, Trading, Income and Expense Accounts. The purpose of the card of accounts is to provide a pattern for the shaping and construction of the bookkeeping sys- tem with which it is concerned. It anticipates and contains all principal and subsidiary ledger accounts with which the business is expected to deal and in this way greatly facil- itates the intelligent and accurate keeping of the books. It is quite customary to have all the accounts numbered in serial order with reasonable provision for new accounts which it may be necessary to add under proper headings from time to time. Cards of account re- veal at a glance a true perspective of the accounting system to which they apply and con- siderably facilitate a recognition and an understanding of the relation of all accounts to each other and to the system as a whole. Page 19 CHAPTER V SUGGESTED CARD OF ACCOUNTS The following card of accounts has been designed for use in connection with the bookkeep- ing system for Delco-Light Dealers herein described ; and it is believed it furnishes practically all accounts with which any Dealer's business will be concerned. The object has been to provide sufficient details to make the system complete and satisfactory, although considerably greater amplification of accounts could have been made. Of course, those accounts which it may not be desirable or necessary for any Dealer to use, can easily be omitted from the system which he operates. Its general classification is as follows : ASSETS These accounts are divided into three main divisions: 1. Fixed Assets, with detailed accounts numbered from 11 to 29, inclusive. 2. Current Assets, with accounts numbered from 31 to 79, inclusive. 3. Prepaid Assets, with accounts numbered from 81 to 89, inclusive. Page 20 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS LIABILITIES AND NET WORTH These accounts also are divided into three main classifications : 1. Fixed Liabilities, with accounts numbered from 101 to 109, inclusive. 2. Current Liabilities, with accounts numbered from 111 to 129, inclusive. 3. Net Worth, with accounts numbered from 181 to 189, inclusive. TRADING ACCOUNTS Trading Accounts dealing with sales, cost of goods sold and gross profits on sales, are clas- sified under Accounts 201 to 301, inclusive. PROFIT AND LOSS ACCOUNTS These accounts are sub-divided into two main classes : 1. Income Accounts, numbered from 301 to 309, inclusive. 2. Expense Accounts, which are sub-divided into Selling Expenses, Accounts 401 to 499, inclusive; and General Expenses, Accounts 501 to 599, inclusive. The complete card of accounts follows : Page 21 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Fixed Assets Detailed Card of Accounts for Delco-Light Dealers ASSETS Account No. Name 11 _ _ _ Land 12 - - - Buildings 13 _ _ _ Permanent Fair Exhibit Buildings 14 - - - Building Improvements and Betterments 16 - - - Machinery and Shop Equipment 17 - - - Furniture and Fixtures 18 - - - Demonstrating Equipment 19 _ _ _ Automobiles and Motor Trucks 26 - - - Reserve for Depreciation of Fixed Assets (Credit) 27 _ _ _ Good Will and Development 29 - - - TOTAL FIXED ASSETS Current Assets 31 _ _ _ Cash in Bank 32 - - - Cash in Bank 33 - - - Imprest Fund 34 - - - Postage, Car-Fare and Revenue Stamps Page 22 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. Name 36 - - - Accounts Receivable (Debtors' Accounts) 37 - - - Notes Receivable 38 — - - Trade Acceptances Receivable 39 - - - Prospective Commissions Receivable 40 - - - Credit Balance with Distributor 41 - - - Advanced Expense Accounts 42 - - - Personal Accounts 43 - - - Debit Balances on Creditors' Accounts, or Accounts Payable 46 - - - Reserve for Uncollectable Receivables (Credit) 51 - - - Inventory — Plants and Batteries 52 - - - Inventory — Pumps 53 — — — Inventory — Accessories 54 - - — Inventory — Wiring Material 55 - - - Inventory — Fixtures 56 - - - Inventory — Service Parts 57 - - - Inventory — Miscellaneous 59 - - - Goods in Transit 60 - - - Consignment Inventory (Belonging to Others) 66 - - - Consigned Goods (In Hands of Others) 71 - - - Investments 79 _ _ _ TOTAL CURRENT ASSETS Page 23 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Prepaid Assets Account No. Name 81 - - - Interest Prepaid 82 - - - Insurance Prepaid 89 - - - TOTAL PREPAID ASSETS 99 _ _ _ TOTAL ASSETS LIABILITIES AND NET WORTH Fixed Liabilities 101 - - - Mortgages 102 - - - Long Term Notes 109 - - - TOTAL FIXED LIABILITIES Current Liabilities 111 _ _ _ Accounts Payable (Creditors' Accounts) 112 - - - Notes Payable 113 _ _ _ Trade Acceptances Payable 114 _ _ _ Prospective Commissions Payable 115 _ _ _ Credit Balances on Debtors' Accounts, or Accounts Receivable 118 - - - Consigned Goods (Belonging to Others) Page 24 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. Name 121 - - - Accrued Salaries and Wages 122 - - - Accrued Taxes 123 - - - Accrued Interest 129 - - - TOTAL CURRENT LIABILITIES Net Worth 181 - - - Capital or Investment — Original 182 - - - Capital or Investment — Additions 186 - - - Profit and Loss 187 - - - Surplus 189 - - - TOTAL NET WORTH 199 __ _ TOTAL LIABILITIES AND NET WORTH TRADING ACCOUNTS 201 - - - Sales of Plants and Batteries 202 - - - Sales of Pumps 203 - - - Sales of Accessories 204 - - - Sales of Wiring Material 205 - - - Sales of Fixtures Page 25 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. Name 206 - - - Sales of Service Parts 207 - - - Miscellaneous Sales 209 - - - GROSS SALES (BILLINGS) 211 - - - Cost of Plants and Batteries Sold 212 - - - Cost of Pumps Sold 213 - - - Cost of Accessories Sold 214 - - - Cost of Wiring Material Sold 215 - - - Cost of Fixtures Sold 216 - - - Cost of Service Parts Sold 217 - - - Cost of Miscellaneous Sales 219 _ _ _ TOTAL COST OF GOODS SOLD 221 - - - Gross Profit on Plants and Batteries 222 - - - Gross Profit on Pumps 223 - - - Gross Profit on Accessories 224 - - - Gross Profit on Wiring Material 225 - - - Gross Profit on Fixtures 226 - - - Gross Profit on Service Parts 227 - - - Gross Profit on Miscellaneous Sales 301 - - - GROSS PROFITS ON SALES Page 26 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS PROFIT AND LOSS ACCOUNTS Income Accounts Account No. Name 301 - - - Gross Profits on Sales 302 - - — Interest on Receivables 303 - - - Interest on Bank Deposits 304 - - - Income from Investments 305 - - - Cash Discount on Purchases 306 - - - Miscellaneous Income 309 - - - GROSS PROFITS (TOTAL EARNINGS) Selling Expenses 401 - - - Salary of Dealer (Part) 402 - - - Salaries of Salesmen 403 - - - Commission to Salesmen 404 - - - Prizes and Awards to Salesmen 405 - - - Traveling Expenses 406 - - - Conventions and Schools 408 - - — Advertising and Printed Matter 409 - - - Posters and Signs 410 - - - Fairs and Exhibits Page 27 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. Name 412 - - - Service Salaries and Wages 413 - - - Service Material 414 - - - Service Expenses 416 - - - Shipping, Warehouse and Drayage Expenses 417 - - - Freight, Express and Parcels Post 418 - - - Garage Expenses 421 - - - Breakage, Claims and Adjustments 429 - - - Miscellaneous Selling Expenses 499 __ _ TOTAL SELLING EXPENSES General Expenses 501 _ - Salary of Dealer (Part) 502 - - - Salaries of Bookkeeper and Clerks 503 - - - Office Expenses (or Store) 504 - - - Rent 505 - - - Light, Heat, Power and Water 506 - - - Telephone, Telegraph and Postage 507 - - - Insurance 508 - - - Taxes Page 28 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. Name 509 - - - Interest, Discount and Exchange 510 - - - Repairs and Renewals 511 - - - Depreciation of Fixed Assets 512 - - - Uncollectable Accounts 519 - - - Miscellaneous Administrative Expenses 599 - - - TOTAL GENERAL EXPENSES Page 29 CHAPTER VI EXPLANATION OF ACCOUNTS FIXED ASSETS Accounts Nos. 11, 12, 13, 14, 16, 17, 18 and 19— Land ; Buildings; Permanent Fair Exhibit Build- ings; Building Improvements and Betterments; Machinery and Shop Equipment; Furniture and Fixtures; Demonstrating Equipment; Automobiles and Motor Trucks, respectively: Debit these accounts with the value or cost of such permanent investments as may be owned or at any time acquired, likewise credit these accounts respectively with any sales of such permanent equipment when they take place. The balances are always debits and represent respectively the money invested in these so-called fixed or permanent assets. Account No. 26 — Reserve for Depreciation of Fixed Assets (Credit) : This account should be credited monthly, quarterly or yearly with a certain per centum of the value of the fixed assets, at which time Account No. 511 should be debited with the same amount. The basis of this entry should be determined by the anticipated life of the various fixed assets,— depre- ciation of such equipment usually running from five to twenty-five per centum per year. This account in the balance sheet should be subtracted from the sum total of all fixed assets preceding it, — the remainder being the net value of such fixed assets at the time the state- ment is rendered. Account No. 27 — Good Will and Development: This account should only be used in exceptional instances, — it being provided for the purpose of taking care of any money outlay which Page 30 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS takes place at the time Dealerships change, provided a real, tangible good will and devel- opment account has been created. This is an intangible account and is usually looked upon with considerable question by bankers; therefore, do not use it unless absolutely necessary. Account No. 29 — Total Fixed Assets: No ledger account by this name will be carried, — the sum of all fixed assets always appearing as such, as a sub-total on the balance sheet. CURRENT ASSETS Account No. 31 — Cash in Bank: All original cash capital, all cash additions of capital and all cash receipts from the business should, from time to time, be deposited and kept in a bank account, at which time this account will be debited with such deposits. Likewise, all money should be paid out by bank check, at which time this account will be credited. The balance of this account should always be a debit, representing funds remaining in the bank account. When, if ever, this account shows a credit balance, it indicates an over- draft in the bank account. Account No. 32 is provided in the event a second bank account is maintained. Account No. 33 — Imprest Fund: In order to provide cash as an office or petty fund, it is desirable to withdraw $10, $25, or $50 from the bank by check and carry same con- stantly as an imprest fund, out of which all petty disbursements should be made. It is ad- visable to take receipts for such sums paid and as the fund becomes depleted, replenish it Page 31 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS by drawing a check on the bank for the amount of the receipts on hand. Naturally, this check should bring the amount of the fund back to the original amount, while the ledger account itself is not affected. Debit this account with the amount originally or subse- quently applied for this purpose and credit same with any reduction in the fund which becomes advisable. Account No. 34 — Postage, Car-Fare and Revenue Stamps; This account should be debited with all postage and revenue stamps at time they are purchased. The account should be credited by journal entry once or twice a month as the stamps are used. Any street-car, interurban, or railroad tickets can also conveniently be carried in this account in the same way. Account No. 36 — Accounts Receivable : This is a so-called controlling account and represents the sum total of all individual accounts receivable, which individual accounts need to be carried on separate ledger pages under index provided. The monthly footing only of the first column in the Sales Register section, should be debited to this account; while the indi- vidual items in this same column should be debited to the individual customers' accounts carried. Similarly, this account should be credited with the monthly total of the first col- umn of the Cash Received section ; while the individual credits in this column are posted to the respective individual customers' accounts. Account No. 37 — Notes Receivable: This account should be debited by journal entry with all notes received from customers in settlement of their accounts, at which time Account No. 36 Page 32 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS (Accounts Receivable) and the individual customers making such settlements, should be credited. This account should be credited with the amount of notes when, and as, paid. If any considerable number of notes are acquired, it would be advisable to keep a separate note register which can be secured from stock at any stationery store. Account No. 38 — Trade Acceptances Receivable: This account should be kept similar to the method prescribed under Account No. 37 (Notes Receivable). Account No. 39 — Prospective Commissions Receivable: This account is provided for record- ing any amounts that may be due the Dealer for shipments made by the Company or the Dis- tributor direct to a customer, where the Dealer is not expected to look after the collection. This account should be debited by journal entry at the time notice of shipment is received, at which time Account No. 201, 202, 203, 204, 205, 206, or 207 would be credited, according to the circumstances. This account should be credited at the time the commission is actu- ually paid to the Dealer. Account No. 40 — Credit Balance with Distributor : This account should be debited with any required balance which the Dealer is asked to carry as a standing credit with the Distrib- utor, as established. The account should be credited with the amount by which the balance may be reduced or eliminated. Account No. 41 — Advanced Expense Accounts : This account should be debited when expense money is advanced to salesmen, servicemen, or others when a later accounting for such sums Page 33 BOOKKEEPING SYSTEM FOR DEL CO-LIGHT DEALERS is expected. It should be credited with the amount of funds actually accounted for, at which time some individual or expense account would be debited. This account may be treated as a controlling account and individual accounts maintained thereunder, if desired. Account No. 42 — Personal Accounts : This account can also conveniently be treated as a con- trolling account, if desired, and salesmen's individual commission accounts, or other per- sonal accounts, kept thereunder. Account No. 43 — Debit Balances on Creditors' Accounts: It sometimes happens that individ- ual creditors' accounts will show debit balances, due to overpayments, return of goods after payment, or other similar causes. In such cases, it is preferable to show under this heading the sum of all debit balances on such accounts. Usually no ledger account by this name is kept, but such balances are shown when the balance sheet is prepared, the amount being- taken direct from the trial balance of individual accounts in the Accounts Payable ledger. Account No. 46 — Reserve for Uncollectable Receivables (Credit) : When credit is extended to miscellaneous customers, it sometimes happens that accounts cannot be collected and losses result. If any considerable amount of credit is thus extended, it is a policy of good bookkeeping to provide a so-called reserve for losses on uncollectable accounts and this account is intended for this purpose. This account should be credited with whatever monthly, quarterly, or yearly sum may be deemed advisable and in proportion to the ac- counts, notes and trade acceptances receivable outstanding, at which time Account No. Page 34 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 512 (Uncollectable Accounts) should be debited. This is a feature of conservative book- keeping which is looked upon with favor by bankers and other credit men. Account No. 51 — Inventory — Plants and Batteries, Account No. 52 — Inventory — Pumps, Account No. 53 — Inventory — Accessories, Account No. 54 — Inventory — Wiring Material , Account No. 55 — Inventory — Fixtures, Account No. 56 — Inventory — Service Parts, Account No. 57 — Miscellaneous Inventory; These accounts are all self-explanatory, with the possible exception of Account No. 57 (Miscellaneous Inventory). This is intended to pro- vide for inventory items of a miscellaneous character, for which no specific classification can reasonably be assigned ; for example, any goods for resale acquired in any manner and not strictly belonging to our line of business, should be carried in Account No. 57. All these accounts should be debited with respective goods purchased, at which time the creditors or sources of supply are credited with the same amounts through the use of the Purchase Register. These accounts should be respectively credited at cost prices when such Page 35 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS goods are sold, the credit entry arising through the cost price columns in the Sales Reg- ister. The balances should always be debits and would represent the cost value of such goods as may be on hand. Freight, express, or parcels post paid on account of the inbound shipment of such goods to the Dealer, should properly be debited to these accounts respec- tively, and due allowance made therefor in costing these goods at time they are sold or inventoried. Book inventories should be verified and if necessary, reconciled periodically, at least every three months — preferably at the end of each month where the volume of goods is not too great to make this impracticable. A complete inventory should always be taken and incorporated in the records at the end of each fiscal year. Account No. 59 — Goods in Transit: This account is used as a temporary repository for the debiting of goods purchased, when it becomes necessary or advisable, on account of cash discount or otherwise, to pay for them before they are actually received. This account should be debited when such goods are paid for in this way and should be credited by journal entry when the goods are received, at which time the proper inventory account should be debited. Account No. 60 — Consignment Inventory (Belonging to Others) : This account is the Asset Contra (or opposite) of Liability Account No. 118 (Consigned Goods Belonging to Others) under which account an explanation of its use is made. Page 36 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. 66 — Consigned Goods (In Hands of Others) : This account may be treated as a controlling account if desired and is intended to make record of any goods shipped out on trial, on approval, or on a loaned basis. Debit this account with the cost value only when such goods are shipped out, and credit this account when goods are returned. In the event that such consigned goods are turned into a regular sale, an entry should be made debiting proper inventory account and crediting Account No. 66, after which proper sales invoice and record should be made in the regular way. Account No. 71 — Investments: This account is intended to provide for investments — Liberty Bonds, War Saving Stamps, or other securities which it may become advisable to acquire. Debit this account with the cost of such investments and credit same with the cost value when sold. Any interest or dividends received, or any value realized over cost when sold, should be credited to Account No. 304 (Income from Investments). Account No. 79 — Total Current Assets: No ledger account by this name is carried, but it ap- pears as such in the balance sheet and represents the sum total of all Current Assets. PREPAID ASSETS Account No. 81 — Interest Prepaid: This account should be debited with interest on loans paid in advance and is credited pro-rata as the time expires over which the loan extends; at which time Account No. 509 (Interest, Discount and Exchange) is credited. Page 37 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. 82 — Insurance Prepaid: This account provides for all kinds of insurance pre- miums paid in advance and should be treated in a manner similar to that described under Interest Prepaid. The debit for pro-rata insurance, as it accrues, should be made against Account No. 507 (Insurance). Account No. 89 — Total Prepaid Assets: No ledger account by this name is carried, but it ap- pears as such in the balance sheet and represents the sum total of all Prepaid Assets. Account No. 99 — Total Assets . FIXED LIABILITIES Account No. 101 — Mortgages : This account should be credited with any mortgages that may be carried on any Fixed Assets. It should be debited with any principal payments made on account of such mortgages. Interest on a mortgage should, of course, be treated as an ex- pense account and charged to Account 509 (Interest, Discount and Exchange). Account No. 102 — Long Term Notes: This account should be treated similar to Mortgages Account, No. 101, described above. Long Term Notes classify as such only when given in settlement for Fixed Assets. Account No. 109 — Total Fixed Liabilities: No ledger account by this name is carried, but it appears as such in the balance sheet and represents the sum total of all Fixed Liabilities. Page 38 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS CURRENT LIABILITIES Account No. Ill — Accounts Payable : This is a controlling account and is established by crediting it at the end of each month with the sum total only of the first column in the Purchase Register, while the individual items recorded in that column are credited to the individual creditors' accounts carried in the Accounts Payable Ledger section. This ac- count should be debited at the end of each month with the total of the first column of the Cash Paid section, while the individual creditors' accounts recorded in the same column are, of course, debited with the respective amounts of such payments. Account No. 112 — Notes Payable: This account should be credited with all notes given by the Dealer to banks, Distributor, or other creditors; and when a considerable number of notes are given, it will be advisable to secure a Notes Payable Register from stock at any station- ery store and keep a detailed record of such notes. This account should be credited with the principal amount of whatever notes are given at the time they are given ; and whatever account is affected by the giving of notes, should be, at the same time, debited ; that is, if money is borrowed at the bank and a note is given therefor, Bank Account No. 31 or 32 should be charged. If the note is given in settlement of goods purchased and previous record has been made of such goods under Accounts Payable, then the account of the cred- itor to whom the note was given would be debited at the time the note was given him. Notes Payable account should be debited at the time such notes are paid. Interest paid at matur- ity or discount paid in advance, should be treated as an expense and charged to Account Page 39 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS No. 509 (Interest, Discount and Exchange), or Account No. 81 (Interest Prepaid), as the case may be. Account No. 113 — Trade Acceptances Payable ; This account should be handled similar to method described under Account 112 (Notes Payable). Account No. 114 — Prospective Commissions Payable : When a salesman works on a commis- sion basis, this account should be credited, at the time shipment is made of goods sold, with the commission due him on the transaction and should be debited with the amount of com- mission when paid. This account can be treated, if desired, as a controlling account and individual accounts kept thereunder. This will be found advantageous when more than one salesman is employed on a commission basis. Account No. 115 — Credit Balances on Debtors' Accounts: This account will not ordinarily appear as a ledger account, but is provided for use in the balance sheet so as to record the sum total of credit balances that may appear on the individual receivable accounts. Credits on such accounts usually arise from advance payments at time of signing the order, over- payment, or return for credit of a purchase which had been previously debited. It is de- sirable, in such instances, to record this total on the balance sheet under this heading. Account No. 118 — Consigned Goods (Belonging to Others) : This account should be credited with the cost value of any goods belonging to others, received by a Dealer on a trial, ap- proval, or loaned basis, at which time Consignment Inventory Account (No. 60) would be Page 40 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS debited. Above account should be debited when such goods are returned to their owner, or at such time as a payable invoice for them is accepted, indicating that they have been definitely purchased, whereupon Consignment Inventory Account (No. 60) should, of course, be credited. Lamps consigned to a Dealer by his Distributor should be handled in this account when received. The cost value of the consigned lamps should be credited to this account, while Account No. 60 (Consignment Inventory) should at the same time be debited. When con- signed lamps are sold by a Dealer, Account No. 118 should be debited with their cost value and Account No. 60 should be credited, in order to reverse the entry made at the time the goods were originally received. Thereafter, the transaction would be handled the same as any other goods bought and sold; that is, entries should first be made debiting the value of the lamps actually sold, to the proper inventory account and crediting the source of supply in Accounts Payable Account, No. 111. (The entry just spoken of will likely need to be made from memorandum slip, as no separate payable invoice for the exact num- ber of lamps sold would probably be in hand.) The sale of the lamps to the Dealer's cus- tomer should, of course, be handled the same as any other sale ; that is, proper customer's invoice should be rendered and consequent bookkeeping entries made. The above routine, although somewhat complicated, is nevertheless the correct principle to follow. Doubtless some Dealers will prefer to conduct their lamp transactions during the month on a strictly memorandum basis and consolidate the necessary bookkeeping entries at the end of the month. Page 41 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. 121 — Accrued Salaries and Wages ; This account should be credited with the amount of all salaries and wages which have accrued and have not been paid as of the end of the month or other accounting period. The same account should be debited when such salaries and wages are actually paid. Account No. 122 — Accrued Taxes ; (See next account.) Account No. 123 — Accrued Interest : These accounts should be handled in a manner similar to that described under Account No. 121 (Accrued Salaries and Wages). Account No. 129— Total Current Liabilities: No ledger account by this name is carried, but it appears as such in the balance sheet and represents the sum total of all Current Liabil- ities. NET WORTH Account No. 181 — Capital or Investment — Original: This account should be credited with the amount of money with which the business is originally started, at which time Bank Account No. 31 or 32 is charged. Account No. 182— Capital or Investment— Additions : This account should be credited with later sums devoted to the business, either in the form of additional cash employed, or profits definitely diverted from Surplus to the Capital Account. Page 42 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. 186 — Profit and Loss ; This account is ordinarily used on the ledger only at the end of a fiscal period, at which time all income and expense accounts are closed into this account by journal entries — the income accounts being credited to this account, at which time such income accounts are debited, in o-der to close them on the ledger; and the expense accounts being debited to this account, at which time such expense accounts are credited in order to close them on the ledger. A credit balance in this account reveals a profit, while a debit balance indicates a loss, on operations. The final balance in this account at the end of the year, whether a credit or a debit, should properly be closed into Account 187 (Surplus). This account always appears in the Profit and Loss and Balance Sheet state- ments as same are rendered at the end of each month or other period. Account No. 187— Surplus : This account, as explained under Account No. 186 (Profit and Loss), is credited at the end of a fiscal period, with the net amount remaining in the Profit and Loss Account (No. 186) and it is debited with permanent withdrawals of profits or dividends from the business; also, with any deficit that may accrue during a fiscal period. Surplus account is intended to represent undistributed earnings which have accumulated during previous fiscal periods through Profit and Loss Account. Account No. 189— Total Net Worth: No ledger account by this name is carried, but it appears as such in the balance sheet and represents the sum total of all Capital, Profits and Surplus. Account No. 199 — Total Liabilities and Net Worth. Page 43 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS TRADING ACCOUNTS Account No. 201 — Sales of Plants and Batteries, Account No. 202 — Sales of Pumps, Account No. 203 — Sales of Accessories, Account No. 204 — Sales of Wiring Material, Account No. 205 — Sales of Fixtures, Account No. 206 — Sales of Service Parts, Account No. 207 — Miscellaneous Sales: Sales billed at time of shipment or delivery, not sales booked at time orders are received, should be recorded under the above respective ac- counts — the record being taken at the end of each month or other fiscal period, from the totals of the Sales Register. These accounts are always credits, although credit memo- randa issued to customers at list prices for the return to stock of any plants, pumps, acces- sories, or other sold material should be entered as debits to the above-mentioned accounts. Account No. 209 — Gross Sales (Billings); No ledger account by this name is carried, but it appears as an item in the Profit and Loss statement. Page 44 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. 211 — Cost of Plants and Batteries Sold, Account No. 212 — Cost of Pumps Sold, Account No. 213 — Cost of Accessories Sold, Account No. 214 — Cost of Wiring Material Sold, Account No. 215 — Cost of Fixtures Sold, Account No. 216 — Cost of Service Parts Sold , Account No. 217 — Cost of Miscellaneous Sales: These accounts are debited at the end of each month with the cost of respective goods sold, including due allowance for inbound freight which the Dealer was obliged to pay at the time the goods were purchased. The totals of the cost price columns in the Sales Register become the debits to these accounts — the cost of such goods having previously been shown on the sales invoices and entered in the Sales Register. The cost value of any goods returned from customers to the Dealer should be entered as a credit to these accounts — the entry being made from the Sales Register after such credit memoranda, properly costed, are entered following the invoices, which accumulate during the month. Account No. 219 — Total Cost of Goods Sold: This account is not a ledger account, but a Profit and Loss account representing the total of the cost of goods sold. Page 45 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. 221 — Gross Profit on Plants and Batteries, Account No. 222 — Gross Profit on Pumps, Account No. 223 — Gross Profit on Accessories, Account No. 224 — Gross Profit on Wiring Material, Account No. 225 — Gross Profit on Fixtures , Account No. 226 — Gross Profit on Service Parts, Account No. 227 — Gross Profits on Miscellaneous Sales, Account No. 301 — Gross Profits on Sales : These accounts are not ledger accounts, but show on the Profit and Loss Statement and represent the difference between sales and cost of same goods sold, or, in other words, the difference between sales billed at selling prices and goods sold at cost prices — the difference being gross profits on such goods sold. INCOME ACCOUNTS Account No. 301 — Gross Profits on Sales : This account has previously been described under the heading, "Trading Accounts," and is not a ledger account. Page 46 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. 302— Interest on Receivables: This account is a credit— the entry originating from the second column in the Cash Received section, or from the journal, if a journal entry has been made, for the amount of interest which has accrued on receivables during the month or period for which the entry is made. Any overcharge of interest, when re- funded, would be debited to this account. Account No. 303— Interest on Bank Deposits : This account is a credit— the entry originating from the second column of the Cash Received book. It is usually advisable to hold the cash received book open for a day or two after the close of the month, so as to permit entries of such items as interest on bank deposits, if interest credits are allowed, which usually can- not be learned until after the expiration of the month. Account No. 304 — Income from Investments : This account is a credit and represents the interest or dividends received from such investments as Liberty Bonds or stocks owned. The entry originates from the second column of the cash received section and is always a credit. Account No. 305— Cash Discount on Purchases: This account represents cash discount on all goods purchased and the entry originates from the third column of the Cash Paid section — the amount being the sum total of that column for the period. Any cash discount on pur- chases refunded should be debited to this account. In handling this account, CASH DIS- COUTS and TRADE DISCOUNTS should never be confused. Cash discounts should be treated as an income account as herein described, while trade discounts should be used to reduce the cost of the goods purchased. Page 47 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Account No. 306 — Miscellaneous Income: This account provides for recording miscellaneous income receipts, such as the sale of scrap material and the recovery of unclaimed wages previously charged. Account No. 309— Gross Profits (Total Earnings) : This is not a ledger account, but is a Profit and Loss Account, representing the sum total of all income accounts. Gross profits are sometimes spoken of as Total Earnings or Gross Earnings. SELLING EXPENSES Accounts Nos. 401 to 429, inclusive: These accounts provide for the reasonable segregation and classification of the more important selling expense accounts which help to show the details of this branch of the business. These accounts are always debits and as such they can be treated as subsidiary ledger accounts rather than main ledger accounts, if desired. In other words, as far as these expenses are concerned, Account No. 499 (Total Selling Expenses) only needs to be used in the Profit and Loss statement in arriving at the net result of any period's operations. The detail of the total selling expenses will be provided by the above-mentioned accounts and the sum total, of course, should agree with the con- trol account, No. 499 (Selling Expenses) . GENERAL EXPENSES Accounts Nos. 501 to 519, inclusive: These accounts provide for the recording of the general or administrative expenses of the business and are always debits. These accounts likewise may be treated as simply a classification of the control account, No. 599 (General Expenses). Page 48 CHAPTER VII THE BOOKKEEPING SET PROPER This bookkeeping set proper has been prepared in eight different sections, all conveniently contained in the same loose-leaf binder (Tatum Stock No. 8158). These are as follows: Section 1 — Cash Received. Section 2 — Cash Paid. Section 3 — Journal. Section 4 — Purchase Register. Section 5 — Sales Register. Section 6 — General Ledger. Section 7 — Accounts Receivable Ledger. Section 8 — Accounts Payable Ledger. It will at once be seen that these sections are all fundamental divisions of any standard bookkeeping system, the principal difference being that instead of having eight separate bound or loose-leaf books, the forms have been accumulated under proper index tabs in one loose- leaf binder. It is believed that considerable economy in cost and convenience in handling are thus secured, while at the same time it becomes possible to provide additional binders for any one or more sections which in time become too bulky for convenient handling. The size of the sheets, punchings, and the binder itself, are standard construction, and no difficulty should Page 49 BOOKKEEPING SYSTEM FOR DELCO- LIGHT DEALERS be experienced in securing transfers or other desired accessories from almost any stationery store. It will also readily be observed that some of the forms appearing under these sections have been devised to meet the specific requirements of a Delco-Light Dealer's business, while others are purely standard. The following is a general description of sections: Section 1 — Cash Received : This form (DLD-1, reproduced on page 98) provides the follow- ing headings : Date; Customers' Names; Invoice Numbers or Items; Account Number ; Posted Column ; Accounts Receivable Credit; Other Accounts Credit; Discount, Exchange and Collection Debit ; Bank Account Debit : all of which we believe are self-explanatory. Entries on this form originate from the col- lection copy of the customer's invoice form later described, or other-wise from memoranda whenever cash remittances from any source are received. All cash credit accounts, other than Accounts Receivable, should be entered in the second column of this form and the account number, as per Card of Accounts previously described, should be entered on the same line in the Account Number column. Every entry is self-balancing, in that debit entries are made for every credit account. All receipts should be deposited in the bank on the same day received; and before deposits are made, they should first be verified and made to agree with the amounts recorded in the Bank Account debit column. Each month's transactions should be separately recorded and totals established for all accounts entered Page 50 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS during each month. Individual credit items in the first and second columns should be posted to individual accounts in either the Receivable or General Ledger and the monthly totals only of the first, third, and fourth columns should be posted to their respective accounts in the General Ledger direct ; that is, no necessity exists for journalizing any entries in this form. Section 2 — Cash Paid: This form (DLD-2, reproduced on page 99) provides the following headings : Date ; Payees' Names ; Check Numbers or Items ; Account Number; Posted Column; Accounts Payable Debit; Other Accounts Debit ; Purchase Discount Credit ; Bank Account Credit. We believe these accounts are also self-explanatory. Entries on this form originate from the stubs of the bank check-book on which should be recorded sufficient details of the disbursement to make an intelligent and complete entry. All debit accounts other than Accounts Payable should be entered in the second column of this form ; and the account number affected, as determined from card of accounts, should be indicated on the same line in the Account Number column. All entries on this form are self-balancing. Individ- ual Accounts Payable debits and all Other Account debits should, of course, be individu- ally posted to proper ledger accounts. Each month's entries should be totaled at the end of the period and the totals only of the first, third and fourth columns should be posted direct to the respective General Ledger accounts. Page 51 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Section 3— Journal : This form (DLD-3, reproduced on page 100) is headed with the following column captions: Date; Accounts; Account Numbers; Posted Column; Debits; Credits. The arrangement of this form is quite conventional and provides facilities for the making of all necessary original entries which are not otherwise provided for by the other sections of this book. It is customary to enter each debit item on one line and the credit item of the same amount on the next line. The numbers of all accounts entered in the journal as per Card of Accounts already described also should be shown, in order to facilitate the post- ing of the individual items to the ledger. The debit and credit columns should be respec- tively totaled at the end of each month to prove the accuracy in amount of all entries. To- tals, of course, are not posted. Section 4— Purchase Register; This form (DLD-4, reproduced on page 101) is headed with the following designations: Date; Creditors' Names; Posted Column for Credits; Posted Column for Debits ; Account Numbers ; Accounts Payable Credit; Fixed Assets Debit; Current Assets Debit; Prepaid Assets Debit; Selling Expenses Debit; General Expenses Debit. Page 52 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Entries herein originate from creditors' invoices received from time to time covering goods purchased by the Dealer, expenses incurred, or otherwise. It is desirable, in this connec- tion, to have invoices presented promptly for all values delivered, in order that a com- plete and satisfactory record of such accounts may be made. It is especially important that at the end of the month all goods received and expenses incurred are properly recorded in the Purchase Register from invoices rendered, in order that a complete record of the month's transations may be insured. Omissions of any original entries in this or any other section, constitute errors which should be conscientiously avoided. Any credit memoranda received from creditors for the return of goods or otherwise, should be separately recorded on this form, either at the close of the month after all invoices have been entered, or on a page or set of pages especially set aside for that purpose. It is suggested that such entries be made in red ink, which will immediately sug- gest to the bookkeeper the necessity of reversing entries for such credits at the time they are posted in the ledger; that is, credit memoranda from a creditor are debits to his account and credits to whatever distribution accounts are affected, while invoices are always credits to the creditor and debits to the distribution accounts. Individual postings to proper ledger accounts of all credit and debit items entered on this form are necessary and the columns, of course, should be footed at the end of each month to determine that the sum total of the debit columns agrees with the total of the credit column. The total of the Accounts Pay- able column only should, of course, be posted at the end of each month to the same account in the General Ledger. Page 53 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Section 5— Sales Register: The Sales Register (Form DLD-5, reproduced on page 102) is the only double-page form provided in the set, and the main headings of these columns are as follows : Date ; Customers' Names ; Invoice Numbers ; Posted Col- umn; Accounts Receivable Debit; Total Cost Prices; Plants and Batteries; Pumps ; Accessories ; Wiring Ma- terial ; Fixtures ; Service Parts ; Miscellaneous Sales. The headings, Plants, Pumps, Accessories, etc., each are provided with sub-headings over columns entitled Cost Price and Sales Price. Entries on this form originate from the book- keeper's copy of the sales invoice, which is described later. Provision is made on the in- voice form for distributing both the sales price and the cost price for each transaction and these correspond with the column headings on this form. From this record, the total amount of sales under each classification is conveniently ascertained and the respective cost prices are also readily determined. The grand total of all Sales Price columns must equal the total of the first column, Accounts Receivable debit, while the grand total of all Cost Price columns for balancing purposes only must equal the total of Column 2, headed Total Cost Prices. The only individual accounts posted from this register are those appearing in the Accounts Receivable debit column. The totals of all Sales Price columns at the end of each month are posted direct to respective accounts in the General Ledger, Accounts Nos. 201 to 207 inclusive ; likewise, the totals of all Cost Price columns at the end of the month are posted as debits to respective accounts Nos. 211 to 217, inclusive, in the Page 54 BOOKKEEPING SYSTEM FOR DELCO- LIGHT DEALERS General Ledger. The same totals of the Cost Price columns at the end of the month must also be posted as credits to respective Inventory Accounts, Nos. 51 to 57, inclusive, in the General Ledger. Section 6 — General Ledger: The general ledger form (DLD-6-7-8, reproduced on page 104) demands no detailed explanation, aside from the suggestion that a separate ledger page be provided for each general ledger account used, as shown in the Card of Accounts. These should, of course, be filed in serial account number order, as this greatly facilitates the drawing off each month of the Trial Balance and the preparation of the Balance Sheet and the Profit and Loss statement. Debit and credit entries originate in manner described in detail under previous sections. The debit or credit balance on each account should be determined at the end of each month and recorded in the proper column. Section 7 — Accounts Receivable Ledger: This so-called Subsidiary Ledger provides for the individual record of each customer's account on a page by itself (Form DLD-6-7-8), or a number of accounts may be put on the same page if desired. Debit entries arise principally from the first column of Section 5, Sales Register, while credit entries almost entirely are made from Column 1 in Cash Received, Section 1. Control of all individual accounts in this ledger is maintained by the Accounts Receivable account in the General Ledger; that is, the net total of all individual open account balances must always be the same as the General Ledger account No. 36 balance. Page 55 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Section 8— Accounts Payable Ledger: This, also, is a Subsidiary Ledger, and provides for the individual record of all creditors' accounts, a separate page being provided for each cred- itor (Form DLD-6-7-8), or if desired a number of accounts may be entered on the same page. Credit entries on this ledger are posted, principally, from Column 1 in Section^, Purchase Register; while debit entries largely emanate from Column 1, Section 2, Cash Paid. The net total of all balances on open accounts in this ledger should at all times agree with the balance of General Ledger Account 111, Accounts Payable, which, as previously de- scribed, is a controlling account and should be handled accordingly. Page 56 CHAPTER VIII THE TRANSFER AND FINANCIAL STATEMENT BINDER Transfer Binder (Tatum Stock No. 9001) : In addition to providing facilities for holding sheets under respective headings, which it becomes desirable to remove from the bookkeep- ing set proper, the Transfer Binder contains ruled and printed Balance Sheet and Profit and Loss statements— Forms 9, 10, 11, and 12, illustrated on pages 106-113 inclusive— which are good for one year's operations. These sheets are provided for the purpose of readily con- verting the trial balance into a complete and satisfactory financial statement in which all the accounts carried in the General Ledger are shown. The method of recording these figures on the forms provided, furnishes all such infor- mation in comparative form, which will be found highly advantageous and desirable in studying the changes which take place from month to month. The Profit and Loss sheets provide for the recording of both monthly and year-to-date figures and the value of such a record is greatly enhanced by the continuation of the same method year after year. In other words, the amount of business for any month or any period of one year may be readily compared with the same month or period's operation in one or more previous years, providing, of course, the records have been maintained. Trading Account Blanks, so designated, are really a part of the Profit and Loss state- ment. From this entire record a monthly financial statement in condensed form can very readily be drawn and entered on Form No. 16, entitled "Financial Statement," illustrated on pages 116-119 inclusive. p a ge 57 CHAPTER IX CUSTOMERS* INVOICES This is a multiple form (DLD-13, illustrated on page 114) with four copies— the first one consisting of the Customer's Invoice; the second consisting of the Bookkeeper's Copy ; the third, Shipping Department Copy; and the fourth, the Collection Copy. The Customer's Copy of this form is, of course, intended to be mailed to him at time of shipment or delivery of goods. The Bookkeeper's Copy not only provides a duplicate record of the invoice which goes to the cus- tomer, but also the bookkeeping entries which are required to be made in the Sales Register and Journal. The Shipping Department Copy provides necessary shipping or delivery instruc- tions; and the Collection Copy, when filed alphabetically in an unpaid file, affords a convenient means of closely following and getting in collections as they become due. This same Collection Copy also provides facilities for recording the kind and amount of settlement received, as well as for journalizing any commission due a salesman from "prospective commission" to "per- sonal account" at time full settlement is made. After settlement has been received, this Collec- tion Copy should, of course, be withdrawn from the unpaid file and preserved alphabetically in a closed file. This same form set may readily be used as a credit memorandum by the use of a rubber stamp with large letters reading "Credit Memorandum." This impression, of course, should be put on all four copies of the Customer's Invoice and credits should be issued when goods orig- inally purchased from the Dealer are returned, with his consent, for credit. The bookkeeping entries for credit memoranda should preferably be made on the Bookkeeper's Copy in red ink, Page 58 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS so as to indicate that these entries, when recorded on a separate page of the Sales Register, or immediately following the month's entries in the Sales Register of all Customers' Invoices, should be reversed in effect from the manner in which sales invoices are recorded ; that is, the value of goods returned from a customer is treated as a credit to the customer and a debit to sales, as the case may be. The other entries with reference to commissions, cost of goods sold and inventory accounts, would also need to be reversed from the manner in which invoices are entered. Office copies of this form may conveniently be filed on Shannon arch files. Page 59 CHAPTER X INVENTORY CARDS This card (Form DLD-14, illustrated on page 105) is provided for keeping an accurate, indi- vidual record of all goods carried in any inventory account. The heading of the card provides space for recording the bin number, the inventory account number under which it is classified, the name of the article, piece number, from whom bought, with address, the unit cost and the sales price. The lower part of the card provides for the entry of the following information : Date, Invoice Date, Units Received, Work Order Number, Units Delivered, Balance in Units, Balance in Cost Value. These cards, when properly kept, provide a so-called perpetual inventory record of all goods handled and the physical inventory taken periodically as suggested under explanation of term "Inventory" (page 105) should, of Course, agree with the card record. It is not necessary to extend the cost value in the last column on each individual trans- action of units received and units delivered, but the balance can and should be readily extended at such time as an inventory is taken, or otherwise, as may be desired. Page 60 CHAPTER XI WORK ORDERS This is a multiple form (DLD-15, illustrated on page 115) with three copies; the first one being the workman's copy, the second one the bookkeeper's copy and the third one the perma- nent file copy. The heading of this form provides for the date ; the name of the workman ; the order num- ber (which should be serially assigned from 1 up) ; the name of the customer and his address; the kind of work to be performed ; and an indication as to whether the customer or some expense account is to be charged with the cost of the work performed, with space for showing final dis- position in either event. The lower part of this form provides for the detailed record of the cost of each order under three main classifications: 1. Material, 2. Labor, 3. Expense. The various classifications of MATERIAL are indicated on the form and provision is made for the entering of all material taken out, returned and used, with the unit cost, cost value and sales price of such material used. Under heading of LABOR, columns are provided for the names of workmen, the time they start, the time they return, the hours used, the rate, the labor cost and the sales price. Page 61 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Under heading EXPENSE, provision is made for recording such items as automobile or livery hire, railroad or interurban fare, or hotel expenses attached to the performance of the order. Provision is made for extending the TOTAL MATERIAL, LABOR and EXPENSE cost and for adding thereto any desired percentage of profit— the result being the sales price at which the work performed should be properly invoiced to the customer on Customers' Invoice Form DLD-13. In the event that some expense account is to be charged for the total amount of the work performed, the entry should, of course, be made at cost. When the proper expense account is debited, proper inventory accounts should be credited for all material used and labor and ex- pense costs should be credited to whatever expense accounts have previously been charged, or subsequently will be charged, with such expenditures. It is suggested that if a Dealer wishes to keep a very complete and satisfactory record of all outside transactions, a Work Order should be made out for every kind of work performed, including installation of plants, pumps, wiring material and fixtures, the delivery of accessories, and the rendering of service of every kind. The adaptability of this form to all classes of out- side work makes its use quite desirable and advantageous. The head workman should be required to submit to the bookkeeper on workman's form, a complete record of all material, labor and expense devoted to each job and such reports should be permanently preserved for reference by attaching same to the bookkeeper's copies of respec- tive customers' invoices. Page 62 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS The bookkeeper's copy can advantageously serve as his record of all uncompleted orders outstanding and the file copy should provide a permanent, serially numbered record of all orders issued. Labor and expense items on any customer's invoice prepared from a work order, will clas- sify in the bookkeeper's entries as a Miscellaneous Sales item, while material, of course, will naturally fall under its respective heading. If at the end of a month or other fiscal period a considerable number of orders remain un- finished and consequently not invoiced to customers, it may be desirable to ascertain their ap- proximate value and establish a representative account for them on the books and financial state- ment for that period. In this event, a so-called inventory or appraisal of such unfinished orders may be taken and their cost value may be reflected in an inventory account styled "Unfinished Work Orders." This account should be debited with the cost value of such orders and proper material and labor accounts credited. If a formal book entry is made at the end of the month in instances of this kind, it may be reversed at the opening of the following month's accounts, thus nullifying the original entry. If preferred, a foot-note can be made on the financial statement stating the approximate value of all unfinished work orders at that time. It is customary to value unfinished orders at cost only, and the inclusion of any profit in the calculation is contrary to good business practice. Profit on work orders should, of course, be incorporated only when the work has been completed and proper invoices are rendered. Page 63 CHAPTER XII FINANCIAL STATEMENTS Financial Statements: Forms 16A and 16B illustrated on pages 116-119 inclusive.) The ultimate object of all bookkeeping systems centers in the financial statement that should be prepared at the end of each month or other fiscal period, for the reason that such statements reveal in figures a picture of the business as a whole in connection with both its present condition and the progress that has been accomplished during an accounting period of one or more months. All financial statements customarily provide at least a Balance Sheet and a Profit and Loss Statement, and these forms have been supplied in connection with this bookkeep- ing system. The Balance Sheet furnishes a detailed listing of all Assets sub-divided into their three classifications — Fixed, Current and Prepaid — and Liabilities and Net Worth also sub-divided into three divisions — Fixed Liabilities, Current Liabilities and Net Worth. The Profit and Loss Statement lists income from sales, operating expenses, net profit on sales, other income, total net income and surplus accounts. The order and method observed in the Card of Accounts is now readily made plain in contemplating the preparation of the financial statement along the lines above indicated. Balance Sheet: The Balance Sheet proper of any financial statement is designed to readily show in addition to the individual value of each separate account and all the different groups of accounts embodied in the statement, the following more important features: Page 64 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 1. That the business is solvent. 2. The present net worth of the business. 3. The total resources of the business. 4. The amount of the owner's investment or capital employed in the business. 5. The character and the validity of values indicated. 6. That the business is being properly financed. 7. That the receivables are being promptly collected. 8. That proper depreciation reserves are being established. 9. That provision has been made for debts incurred but not yet due. 10. That due allowance is being made for doubtful collections. 11. That borrowed money is being used for temporary rather than permanent needs. 12. In short, the exact condition of the business, considered from all angles, and analyzed in all constituent aspects. Profit and Loss Statement: The Profit and Loss Statement, in addition to showing the item- ized classification and amounts of all income, expense and profit accounts, is intended to readily reveal the following more important considerations : 1. The fact that the business is earning a profit and to what extent. 2. The gross volume of business transacted. 3. The frequency of turn over. 4. The ratios borne by cost of goods sold, expenses, profits, etc., to net sales. Page 65 BOOKKEEPING SYSTEM FOR DELCO-LIGH T DEALERS The combined Balance Sheet and Profit and Loss Statement, when critically analyzed and intelligently studied with reference to a number of important ratios, disclose some rather sur- prising information which ordinarily is not discovered by the casual observer or the hurried reader of any financial statement. The more important considerations along this line are as follows : 1. The ratio of current assets to current liabilities which, from a banker's viewpoint, ' should always be 2 to 1, on the theory that bank credit is extended on the strength of "current," "quick" or "liquid" assets as they are frequently called— the excess amount of assets providing ample margin for shrinkage in the event current liabilities need to be unexpectedly met. 2. The ratio of receivables to inventories. Inventories are shown on the balance sheet at cost, while receivables include profits and this is the consideration that makes a study of their relation to each other interesting and valuable. 3. The ratio of net sales to receivables, which indicates in a general way the frequency and promptness of collections. 4. The ratio of net sales to inventories, indicating the "liquidity" of the goods handled. 5. The ratio of net worth to fixed assets, indicating the extent to which the owners of the business have supplied working capital. In other words, the excess of the net worth over fixed assets is the amount of capital provided for working requirements. 6. The ratio of net sales to net worth, indicating either a normal, too rapid or too slow turnover of capital. Page 66 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 7. The ratio of total fixed and current liabilities to net worth, which discloses the propor- tion of the total capital used that is being supplied by all creditors and by the owners of the business. These various ratios indicate to a certain extent the manner in which financial statements may be critically tested for accurate determination of the method of conducting the business and of the proper relationships of all the various accounts. It must be clearly understood that a studied investigation of these various relationships is not absolutely essential to the reading and practical understanding of financial statements, especially when the business is in all respects in good standing; however, the methods sug- gested indicate some of the inquiries that may be applied in the examination of any business that is not in satisfactory condition or is not producing acceptable results. In other words, they suggest the probable and most productive procedure in diagnosing business ailments. It will readily be seen — and this is a very important consideration which would become increasingly valuable as time goes on — that if a large proportion of Delco-Light Dealers would adopt and consistently maintain a uniform bookkeeping system such as is herein presented, a fund of statistical information would thus be created from which any Dealer in the business could undoubtedly secure some very helpful suggestions by comparing his own operations and his balance sheet relations with either the average Dealer in the business or with the most suc- cessful ones, according to the circumstances and the purpose he has in mind. The value of comparative statistics for purposes of this kind is almost immeasurable. Page 67 CHAPTER XIII OTHER RECORDS REQUIRED A few other auxiliary records are required to make this system complete, and some of these have already been referred to : 1. Bank Pass Book : This book is furnished by bank where the Dealer's account is kept and in it are recorded the deposits, as they take place, of all money received. It may be con- venient to record in the pass book the names of the individual customers from whom money is received, or a desirable substitute for this practice is provided by keeping always on file duplicate deposit tickets with customers' names listed thereon. The total of all bank de- posits recorded in the pass book must agree with the total of the Bank Account column in the Cash Received section. Attention is called to the importance of having the bank pass book regularly balanced by the bank at the end of each month. At this time the cancelled checks previously issued and returned to the bank are returned to the Dealer for permanent filing. Promptly upon securing back from the bank the balanced pass book, the first duty of the bookkeeper should be the reconciling of the bank account shown by his books with that shown by the bank pass book. This is accomplished by subtracting the sum total of all outstanding checks (that is, all checks which have been entered on the Dealer's record but have not yet been received by the bank) from the Bank Balance, upon which the remainder should agree with the Bank Balance shown by the Dealer's books. Page 68 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 2. Bank Check Book : This book is provided usually by the bank where the account is kept and may be obtained in a variety of forms, with either one, two, or three checks to the page. Reference has already been made to the importance of accurately recording the detail of disbursements on the stubs of the check book in order to provide full data for making cor- rect and intelligent entries of disbursements in the Cash Paid section. 3. Receiving Record : It is usually very desirable to keep a record, in a detailed and method- ical manner, of all goods received and a standard blank-book with cash-book rulings can be advantageously used for this purpose. Columns should be headed as follows : Date Received, Source of Supply, Invoice Date, Invoice Number, Kind of Goods, Number or Quantity of Units, Method of Delivery, Transportation Charges. Such a record makes possible the accurate checking and verification of all payable invoices for goods, when received. Page 69 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 4. Shipping Record : It is often advisable for the shipping-clerk to keep a separate record in a bound book of all shipments made from time to time. This record should be independent from any loose-leaf form such as the Shipping Department's copy of customers' invoices, which is required in the operation of the bookkeeping system. The headings on this record should include the following: Date of Shipments, Consignee, Order Number, Kind of Goods, Method of Delivery. Number or Quantity of Units, This record is desirable as an auxiliary to other forms provided and frequently it will be found serviceable in tracing shipments and checking deliveries in a convenient and acces- sible way. 5. Daily Record of Bank Account: Another very useful record is one providing for the daily listing of all bank deposits, bank disbursements and net bank balances. Any bound or loose- leaf record providing date and three money columns is suitable. Preferably the page should be long enough to contain a full month's record with a line to each day. The date column should, of course, be so headed and the headings of the columns should be in order- Page 70 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Deposits, Disbursements, Balances. The reverse side of this form can very conveniently be used for reconciling the bank balance at the end of the month in the manner described under "Bank Pass Book" on page 68. These sheets should, of course, be preserved from month to month, as they provide a valuable comparative record for quick reference. Page 71 CHAPTER XIV THE RIGHT WAY TO KEEP BOOKS "The right way to keep books is to keep them always up-to-date, orderly, legible, neat and accurate." Such an accomplishment will naturally require the expenditure of considerable ef- ford. It has been said that "the gods sell everything to everybody at a price, and that price is EFFORT." Nothing can be accomplished without it ; nothing worth while is ever very easy. The Bookkeeper's Importance The term "Bookkeeping" at once implies and suggests the word "Bookkeeper" ; and while it is not contended that a person must have graduated from a commercial school or otherwise have attained a complete technical knowledge of accounts before he is qualified to keep books, the point is made and emphasized that books will not be kept without some one to keep them. Some one must be the Bookkeeper, or probably more accurately stated, the "Account Recorder." As a rule, the proper keeping of a set of books in any business of reasonable volume, re- quires at least a large part of the time of some one individual ; and personal, intelligent, and fre- quently exclusive attention is essential to the successful operation of a set of books. It must be borne in mind that the mere purchase of a bookkeeping system, or even its installation in a business will not produce satisfactory results; the work once started must be consistently and assiduously maintained. Neither this system nor any other similar thereto, is Page 72 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEA L ERS automatic, except in one respect — stopping! That is one function which we are sure this system and probably many others, will perform perfectly ! Nevertheless, we are equally sure it will serve a very useful purpose and reveal some very interesting and instructive information if it is given the time and attention which it rightfully deserves. If it is true that "bookkeeping is just good, common sense applied to accounts," and if "after correct principles are ascertained, the rest is a matter of detail," then we believe any young man or woman with high-school education can, by close application and intensive study for a short time, become competent to keep this bookkeeping system in an accurate and satis- factory manner. In the event it is impossible or impracticable to secure an all-time bookkeeper, we strongly recommend and urge a Dealer to engage a bank-clerk or some other outside person with book- keeping experience to keep his accounts by means of this system, during evenings or Saturday afternoons. Results thus attained, while not commensurate with those probably secured through the employment of an all-time bookkeeper, will, we are sure, well repay any Dealer for so hand- ling this important branch of his business. Page 73 CHAPTER XV GENERAL SUGGESTIONS The following suggestions, viewed largely from a bookkeeping standpoint, will undoubtedly be found advantageous in the successful operation of a Dealer's business: 1. The Dealer's premises — office, store, warehouse, stockroom, etc. — should always be kept clean, orderly, and well-arranged. 2. The stockroom proper should be enclosed and kept under lock and key and some one person should be placed in charge and held responsible for all goods therein contained. 3. The Delco-Light business should be kept separate and distinct from all other undertakings of every kind, both from an operating and bookkeeping standpoint. 4. Office equipment providing security of money from theft and books and records from fire, should, of course, be provided. 5. Letters, checks, invoices, bills-of-lading, shipping memoranda and papers of every kind, should be systematically filed to admit of convenient and ready reference. 6. "Store sales" or "cash sales" should be carefully recorded on small sales books, which are especially provided for that purpose and can be purchased at almost any stationery store. An individual, detailed record should be made of every transaction, one copy of which is permanently retained in the book. Such records can be converted into book records at the end of each day, week, or month as may be found advisable. Page 74 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 7. Payable invoices for all goods received or expenses incurred, should be required of creditors promptly, even to the extent of tracing the creditors for such papers when necessary. 8. The Dealer should charge the bookkeeper with the responsibility of keeping his books right and to this end he should make all employees, including salesmen, servicemen, stockkeepers, clerks and wiremen accountable to him for necessary clerical records which the successful operation of a book- keeping system requires. In other words, the Dealer must give the bookkeeper his unqualified sup- port in conducting all operations and in securing essential details which form the basis of bookkeep- ing entries, otherwise his hands will be tied and unsatisfactory results will follow. 9. A distribution stamp for all payable invoices will be found advantageous. 10. An endorsement stamp for bank checks, to be imprinted on the reverse side of all checks, provides a very good simple voucher system. 11. It is sometimes helpful in contemplating the true meaning of books of account to think of accounts as persons who are responsible or accountable to the owner of the business for whatever value they may show. 12. The posting of books by bookkeepers should, as far as possible, be kept up-to-date each day. All clerical work should be promptly performed and books should be closed and financial statements drawn off promptly after the close of each month. 13. Attention to correspondence should be a daily duty of either the Dealer or his bookkeeper. The punctual answering of mail and telegrams is a splendid indication of the efficiency of an office. 14. Pages of each section of the bookkeeping set should be numbered serially beginning at 1. Page 75 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 15. Trial balances should be taken at the end of each month just as soon as original entries for the month have been made and posted. Of course, it is highly desirable to have each month's entries include, as far as possible, all business belonging to that month. 16. Enter orders on customers' invoice forms when received, as far as the information at hand makes possible. File such orders under proper delivery due date on a "month and day" file. This makes possible ready reference to all unfilled orders and facilitates punctual deliveries. 17. Bond your bookkeeper and hold him responsible, if competent, for not only the proper keeping of accounts, but for all cash, bank and inventory transactions. It is a splendid plan for the bookkeeper to at least countersign all bank checks. 18. It is very desirable for a Dealer to pay himself out of his business, or at least credit his personal sal- ary account with a certain stipulated weekly or monthly salary in the same manner as other em- ployees are paid. In this way the business is not subjected to spasmodic withdrawals for the Deal- er's personal needs and the bookkeeper can plan more successfully to have funds in hand for regu- lar pay-roll withdrawals. 19. Each different class of goods sold — that is, plants, pumps, accessories, etc. — should always be in- voiced on a consistent price basis ; that is, the sales price used on all invoices and entered on the books should be preferably at prevailing list price and any different net sales prices should be pro- vided for by different rates of commission or discount which, of course, are treated in this set of books as expenses. "Consistency is a jewel" in bookkeeping, quite as truly as in any other practice. 20. Physical inventories should always be priced at cost, or at market if the market is lower than cost. Inventories should never be priced at market if market prices are higher than actual cost. 21. Undelivered orders on hand, or sales booked as distinguished from sales billed — that is, bona fide orders covering goods which have not yet been shipped — may be properly shown on a financial state- Page 76 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS ment only as a foot-note. It is never right to count unshipped orders as sales, or to incorporate them in the main body of a financial statement. 22. The subject of insurance is one which should always be given careful attention by Dealers and an adequate amount of fire insurance covering all permanent assets and inventories should, of course, always be maintained. At least the following kinds of insurance on all automobiles and trucks are recommended : Fire, Theft, Public Liability, and Property Damage. 23. All employees handling cash, securities, or convertible assets should be properly bonded. 24. A memorandum file or tickler, for recording daily duties, maturity of notes, or other obligations, the fulfillment of promised installations or deliveries, will be found very useful and such a record can be readily purchased at almost any stationery store. 25. Credit memoranda received from Distributors for installation reports as now issued, should be treated as a part of the sale price of the plant ; in other words, the credits should be journalized when received, debiting the Distributor and crediting Account No. 201 (Sales of Plants and Bat- teries). 26. When a salesman is employed on salary and commission, or on a commission basis with a drawing account privilege, all commission credits and all salary and commission payments to him should be handled through a personal account under Account No. 42. In this way a complete and satisfactory record of all commissions earned and all payments made to him can be conveniently maintained and a definite and satisfactory understanding can always be provided by the rendering of frequent statements of account. Page 77 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 27. The following is an example of the opening entry in starting a Dealer's Bookkeeping System. The values indicated in their relation to each other or to a Dealer's business as a whole, are not to be taken in any sense as a criterion. The sole purpose has been to illustrate the clerical entry without critical regard for values involved. DEBITS January 1- Land, Machinery and Shop Equipment, Furniture and Fixtures, Demonstrating Equipment, Automobiles, Cash in Bank, Accounts Receivable, (Detail) Notes Receivable, Trade Acceptances Receivable, Prospective Commissions Receivable, Personal Accounts, (Detail) Inventories, (Detail) Consigned Goods, Investments, Interest Prepaid, Insurance Prepaid, Account No. 11 Account No. 16 Account No. 17 Account No. 18 Account No. 19 Account No. 31 Account No. 36 Account No. 37 Account No. 38 Account No. 39 Account No. 42 Accounts Nos. 51-57 Account No. 66 Account No. 71 Account No. 81 Account No. 82 $ 1,000.00 100.00 200.00 500.00 1,000.00 500.00 3,000.00 800.00 400.00 120.00 35.00 2,000.00 150.00 500.00 25.00 25.00 $10,355.00 Page 78 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Reserve for Depreciation, Reserve for Uncollectables, Mortgages, Accounts Payable, (Detail) Notes Payable, Trade Acceptances Payable, Prospective Commissions Payable, Accrued Salaries, Accrued Taxes, Accrued Interest, Capital, Surplus, CREDITS Account No. 26 Account No. 46 Account No. 101 Account No. Ill Account No. 112 Account No. 113 Account No. 114 Account No. 121 Account No. 122 Account No. 123 Account No. 181 Account No. 182 $ 150.00 245.00 500.00 1,500.00 1,000.00 200.00 75.00 200.00 100.00 75.00 4,350.00 1,960.00 $10,355.00 For opening the books of account of Dealer in Delco-Light Products, as determined by inventory of all Assets and Liabilities taken on. 192 Page 79 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Successful Dealers — Real Financiers 28. A successful Dealer in this business, at least to a certain extent, must be a real financier; and book- keeping may logically be regarded as the fifth of five distinctive financial features involved in prac- tically every sale of Delco-Light products. The four preceding considerations are as follows : a. Credit, b. Terms of Sale, c. Collections, d. Banking. These are briefly called attention to as follows: a. Credit : Customers must be known to be responsible; in other words, to be good for the amount of their purchases. When this fact has not been definitely and satisfactorily established, steps should be taken to secure absolute protection on the sale by mortgage, conditional sale contract, or other security. There is no profit in selling goods to purchasers who are unable or unwilling to pay their accounts when due. Local bankers are, as a rule, splendid credit references and are able to give Dealers very reliable information with reference to the responsibility of almost any rural resident in their communities. b. Terms of Sale: Delco-Light products are high-grade goods and terms of sale should be strictly confined to cash or bankable note, or a combination of the two. Good-sized cash-with-order pay- ment is an important requirement of many successful Dealers. While cash is, of course, always to be preferred and should be secured whenever possble, it is, nevertheless, a questionable policy to arbitrarily require nothing but cash in settlement for products. It is undoubtedly true that a larger and more profitable business can be carried on where a Dealer is in a position to accept a Page 80 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS reasonable amount of business on a time-settlement basis. Local bankers are extremely valuable in assisting Dealers in properly financing those time sales which they are not in position to carry themselves. Terms of sale are frequently a matter of mental attitude. Dealers and Salesmen must believe in good terms in order to secure them. More liberal sales terms are sometimes offered in connection with the sale of inferior products. It is important for Dealers and Salesmen to remem- ber that they are selling DELCO-LIGHT and NOT terms. c. Collections: Complete payment or settlement for Delco-Light plants should be secured no later than when the lights are first turned on and for other products at the time of complete installation. It is always advisable to make sales with this understanding and to insist on settlement as indicated. A poor business man is usually a poor collector, while a good business man is always a good regu- lator of his receivables and a good collector of all amounts due him. It is well to remember that the best satisfied customers are usually the ones that have paid in full ; also, that a good many imag- inary troubles and resulting service calls develop where the purchase price has not been fully paid. d. Banking: Bankers are usually of great assistance to Delco-Light Dealers in promoting their business in at least the following respects : a. As users, b. As advertisers or promoters of their business, c. As credit references or counsel, d. As lenders of money, and e. As advisors. Dealers, in order to do business with a bank satisfactorily, must comply with he following requirements: Page 81 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS a. They must be good moral risks, b. They must be willing to allow the bank to make a reasonable profit out of their business, c. They must meet their obligations to their banks punctually, d. They must be successful in their undertakings, and e. They must establish themselves as business men in their communities. Any business man may possibly do a small business without using the advantages and benefits of a banking connection, but a business of considerable size and profitableness is always conducted with the aid of at least one bank. Aside from the mere convenience of using a bank as a depos- itory, the credit standing and the ability to borrow money, when needed, are, of course, prime considerations. It is increasingly important, as a business grows, for the owner or manager to build up a satisfactory relation with his banker. The careful observance of the four financial features mentioned above, in addition to that of keeping proper books of account, will be highly conducive toward the success and satisfaction of any business man's undertaking and this is, of course, just as true of Delco-Light Dealers as of any other class of business men. Page 82 CHAPTER XVI PERTINENT QUOTATIONS The following quotations from competent authorities are peculiarly pertinent to the subject matter previously presented ; and as they contain some very valuable truths on the subjects of bookkeeping, profitable conduct of business, personal efficiency, causes of failure, organization of business and business methods in general, they are regarded as an appropriate conclusion to this descriptive booklet. We believe all Dealers should read and review these quotations until they become thor- oughly imbued with the constructive ideas and the progressive viewpoints which they present. "The first principle of efficiency is RECORDS; and the intelligent and discriminating use of rec- ords, the ability to analyze and investigate through their use, is the first fundamental to efficiency." "It takes moral courage to face facts." "Bookkeeping is a business fundamental." "It is very important — indeed, absolutely essential, for a successful business man to realize the full meaning of his books of account." Page 83 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "Self-deception is often disastrous." "Among causes of failure within a business itself, probably the first is the owner's inability, or unwillingness, to divest himself of details and to trust to the judgment of others." (This certainly argues for a bookkeeper charged with the responsibility of accurately keeping the books.) "Another cause of business men's failure is due to their neglect to study their books, to analyze their expenses and to examine into the truth about their finances." 'Another frequent cause of business failure is BAD bookkeeping." "Eternal vigilance is the price of business safety." "No merchant can be easy in mind or fair to his business creditor or bank, or even the business public, who cannot tell whether or not his business enterprise is making a profit." "The only way a merchant can tell whether his business is or is not making a profit, is by keeping certain records- — commonly called 'Books of Account.' " Page 84 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "Most failures and bankruptcies are due to a lack of information as to how the business is prosper- ing or suffering. A simple bookkeeping system would supply the necessary information." "It is a credit man's duty to see that his customers have a system of bookkeepng suitable to their individual requirements." "Without keeping books of account, a merchant unconsciously 'goes on the rocks' or loses the chance of making his business profitable." 'Business methods are constantly becoming more and more necessary in every enterprise." "Lack of adaptability and training are the chief contributing causes for failures in the merchan- dising field and, though independence of action has been the controlling spirit of our nation, and we have permitted and condoned wastes which in the older and more thickly populated countries would not and could not be tolerated, yet we are beginning to understand that economic waste where avoidable should be prevented by reasonable and proper means, and that there can be no greater economic waste than a human failure. Native shrewdness may supply abilities for successful merchandising without incorporating in the enterprise a bookkeeping system but there would follow a vast saving in our mer- cantile enterprises if they were operated under a bookkeeping system, of a type and character conform- ing with the character and extensiveness of the enterprise." Page 85 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "A real business man always keeps books of account. Every Delco-Light Dealer should be a real business man. Therefore, every Delco-Light Dealer should keep books of account." 'Correct records of all transactions are a fundamental basis for the effective economic regulation of affairs of every person, partnership, corporation and government." "Just judgments are rendered only when based on a correct knowledge of facts." "Incompetent accounting is the cause of more failures than all other causes combined." "Incompetent accounting is also the cause of retarding economic development. It fails to show where economies may be effected that may enhance profits and give advantages in meeting competition." "System means to a business what good tools mean to a craftsman. A merchant can no more do good work than a craftsman can do good work unless he has the mechanical means, and the mechan- ical means of a business is System." Page 86 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "The ways of judging your business, past, present and future, are many and devious — in fact, to judge your business fairly you must review the past, know the present and judge the future from what you have done and what you are doing, coupled with a careful survey of the field in which you operate." "The following principles for the conduct of business apply to practically every enterprise : "1. Get a comprehensive view of the whole field of your business. "2. Make a list of all the factors involved in your problems. "3. Weigh each factor in relation to all the others. "4. Determine which ones are the major factors in the situation in which you find yourself. "5. Get a detached view of yourself and of your business. "6. Concentrate on the essential things." "The man who does not, every now and then, go down to the foundations of his business, to the fundamentals of his personal capacity and performances, to find out what he has of real value and to look himself squarely in the face, is playing luck against law." 'A man must have the facts — all the facts — before he can think about them correctly. Half knowl- edge of facts, or whole knowledge of misinformation, means poor thinking and incorrect conclusions. We must get the facts of things before we can evolve laws to govern our actions with respect to those things." Page 87 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "Get down to it and study your business." "One great trouble with many men is that they do NOT see their business as a whole ; or, rather, they do not see the whole field of their business. A man is prone to concentrate his interest and therefore his effort, on one factor, but without making sure that it is the essential one." 'Business is a science which is being formulated more and more definitely." "Every man conducts his business on some theory or other. To evolve correct theories through study and comparison and analysis and experiment, is the essential thing." "ANALYSIS is a very important business tool. The faculty of resolving any business prob- lem into all its component parts and then concentrating on the essential features, is absolutely funda- mental in any involved proposition." "Another tool of which business men do not avail themselves as they should is one of BUSINESS STATISTICS. The mere mention of the word 'statistics' is enough to frighten the average person. But there should not be any such feeling, for statistics are really human experience told in brief. They are full of interest often surprising, even dramatic and the man who pays no attention to the statistics of business is getting along without one of the most helpful implements of his trade." Page 88 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEAL ERS " 'Keeping your eye on your business' (as a whole) , is quite as important in BUSINESS as 'keeping your eye on the ball' in a GAME. " 'Wastefulness in commerce is one of our weakest spots." "Many men resent being awakened . They like the morning nap with its vague dreaming, when the world is neither wholly present nor wholly absent, but swims in a haze of floating phantoms and reality. But the alarm-clock of science clatters on intermittently, until the man arises, or does^what is much worse— he sleepily and petulantly turns over, turns off the alarm, and goes back to sleep!" "Of all the silly, childish cants in this world, the cant, ' My business is different.' is the most torment- ingly provincial." "Revenues increase arithmetically, but expenses increase geometrically. " "No man can stand alone in life or work alone in business , and at the same time obtain for himself the same rewards in money, or satisfaction, or influence, or happiness, as when he works with and by and through the house, the department and social body for the good of that all, of which he is a part. Bees don't ignore this law; man fails when he does." Page 89 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "There are literally thousands of retailers failing to make money because they haven't a book- keeping system that tells them what they are doing." '"You must put your whole body's spirit into doing a thing." "Loyalty to things worth while is made up of three parts: "1. A definite thing worth while to be accomplished. "2. An abiding assurance that our utmost satisfaction lies in the accomplishment of this defi- nite thing. "3. A persistent effort for its accomplishment." "I have had occasion to say what has been often said by others, that a man can see in a thing only what he knows about it, and this particularly applies to the problem of the education of ourselves and our men." "He who every morning plans the transactions of the day, and follows out that plan, carries a thread that will guide him through the labyrinth of the most busy life. The orderly arrangement of his time is like a ray of light which darts itself through all his occupations. But where no plan is laid, where the disposal of time is surrendered merely to the chance of incidents, chaos will soon reign." Page 90 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "In order to succeed , a man must have imagination. He must definitely see in the near or distant future the perfect thing which he wishes to obtain. He must IMAGINE the ultimate results of his endeavor." "The uncertain man produces the uncertain results." "There must be definite thinking about definite work, as the first essential to a realization of it. After definite thinking about our own work comes the arrangement of our daily lives in a way effectively to accomplish that thing." "A careful analysis of the working methods of over six thousand retailers, showed that but ten per cent of them maintained any records that could tell them: "1. What they had in stock. "2. What profit they were actually getting on any line of goods. "3. What the expenditures for salesmen, advertising, or special sales were actually producing in profit or loss. "4. What the percentage of expense was upon any distinct body or class of sales or merchan- dise." "It is the curse of the retail merchant in this country that he hasn't a definite conception of the kind or amount of work he must do with a given environment of neighborhood, prospective custo- mers, equipment of employees, stock, capital, etc., in order to get a certain result. Therefore, he does not keep any record of what he does. Every time a retailer fails, we find the same condition — he didn't know what he was doing and did not know how badly he was doing it." Page 91 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "How can a man determine what he must do until he knows definitely what he or others like him can do or have done? Most men are hopeless because they are thoughtless. Just as soon as a man knows that he is working in harmony with the eternal laws of success, just as soon as he is convinced that the thing which has made others successful is the thing he can do, he will work with greater certainty and without the paralyzing dread of that unknown preventable thing which he suspects is lying in wait along every road he travels. Give him the vision of things worth while and he gains confidence in the law and he works with the hope of doing better." "In business, the Devil and Dame Chance are blamed for much that is plainly due to ignorance of the rules of the game." "The real man is loyal to the truth because he wants the truth and nothing but the truth, no matter how much it hurts him or the other man." "Many business men are never happy unless they have a finger in every detail of their organization. This is not executive control. It is executive interference and it has very far-reaching results in any business - It robs the departmental managers of responsibility and initiative. System is the soul of busi- ness and is the living spirit of any concern whether large or small. I believe that the business executive should systematize everything down to the smallest detail. It is the small details in business which are so apt to be overlooked ; and yet at the end of a year, they have a way of affecting profits to a very ma- terial extent. But executive care for details is entirely different from interference in details." Page 92 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS 'Rules for Success in Retailing: "1. Keeping, as an ever-present necessity of a healthy business, an accurate knowledge of credit , both in buying and selling. "2. Taking precautions not to overbuy , by having a thorough knowledge of both buying and selling conditions and merchandise. "3. The successful merchant makes business by energetic and intelligent hustling; he never waits for it to grow. The average business man may use a lot of energy in soliciting busi- ness, but he does not study intelligently the conditions of his territory or the wants of his prospective customer in order that he may effectively apply the energy. "4. The successful business man advertises in some form or other. "5. The successful business man has always placed the accent on head work instead of hand and foot work. A special investigation of nearly five hundred retailers showed that but thirty-one of them had any system of accounting that would be accepted by the insurance people as prima facie evidence in the adjustment of loss in the case of fire. The proprietors of most stores were busy ten to twelve hours a day at work which a three-dollar to nine- dollar-a-week clerk could do just as well. Their window displays were changed but once a month ; they left their advertising to the local newspaper man ; and in but few cases ever had even a visiting bookkeeper tell them what the real condition of their business was. Mere busy-ness isn't business, or a pig's tail would be the most efficient part of the pig." "More than one business has found itself in the bankruptcy court through an unnoticed leak that had had free play during a long period. The remedy for this state of affairs is an efficient system of con- tinuous analysis of the financial records of a business." Page 93 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "Records kept in a haphazard way, or not kept at all, don't mean 'less office expense' ; they mean chances missed, sales lost, efforts wasted." "Usually when a man falls short of success, the trouble lies in some specific direction; it may be bad judgment in buying; it may be poor selling methods it may be improper handling of people; it may be bad bookkeeping, or no bookkeeping at all. Whatever the fault, I believe men could educate themselves out of it, if they really resolved to do so and went about it intelligently." "Beware of misinformation!" "One of the first things that a man has to learn in business is how little he can do by himself. When he finds that out, he begins to look around for people to do what he can't." 'Round numbers are the cloak of ignorance ; definite figures form the basis of action." "Build your system and your facts to give you not the approximate, the probable, the perhaps — but the precise, the actual, the definite." "Ignorance spells weakness. Knowledge is power." Page 94 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "A great number of business men refuse to apply the principle of CONCENTRATING ON THE ESSENTIAL THING . In applying this principle, there are certain tools which should be used. "It is perfectly simple to know the amount of goods on hand, the gross sales, the accounts payable and receivable, the amount of the rent, taxes and insurance, the wages paid and so on. Quantitative measurements can be applied to these and other items. But in order to apply it scientifically, we need a very practical tool, perhaps the most practical one in business — a good bookkeeping system . "It is an amazing fact that very many men attempt to carry on their business without this tool. Scores and hundreds of business men have no bookkeeping system whatever. All they have to show them where they stand financially is a pile of bills! Others have a sort of crude, 'home-made' system which is almost as inadequate as none at all." "Modern bookkeeping is built around this idea of testing the various parts of business so that youf shop or store may be expanded in profitable directions and any sign of unprofitable business can be cured before it spreads to serious dimensions. "When you install a new set of books, study your business carefully and guide yourself not by the forms of bookkeeping routine, but by the principles . Aim to secure the least involved system which gives you absolute accuracy, promptness and the figures which you must build for success. Look beyond the forms and get records that are accurate, balances that clear your vision of details and spotlight the par- ticular totals which prove your success, your mistakes and your standing, with, finally, such statistics as give you a picture of your tendencies. " Page 95 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS "The prime requisite, therefore, is to find the facts, be sure of them and then let the facts lead you where they must. You must make your personal preferences step aside; you must forget yourself; you must wish with all your heart to find the truth, no matter how hostile the conclusions may be to your own idea of what the truth should be. Be fair to yourself and to your work. "If you want to learn whether you are making money on any particular thing, look for the truth about it — but be sure it is the absolute truth, for that is the only way you can ever make money. It is a baffling mystery why there are so many business men who make absolutely no effort and thereby refuse to know the whole truth about their work or business. The scientific standards of truth enforce continued self- criticism. There is no place for 'maybes' or 'almosts,' or indefinite approximations, but only for the facts, the bald, raw, bare, unblushing facts. Therefore, get the facts!" Page 96 CHAPTER XVII REPRODUCTION OF FORMS Page 97 p.,« DBLCO.IIOHT DEALERS BOOKKEEPINC CASH RECEIVED SYSTEM o.,c -SMSS— T • MMuKSll .cSSST,. E .?- sc .°^:, ,»■;;„ l O" en O.T ot °" OEB.T DC O— " " ___ r^- L^ _^^=^^^_^=- DLD-l Page 98 DELCOLICHT DEALERS BOOKKEEPING SYSTEM CASH PAID P>«* . . — . , =o d.te "-a Bar-. '«' =l__ n ^_^~- r 1 , ! I. , ...j.. DLD-5 Page 102 DELCOLIGHT DEALERS BOOKKEEPING SVSTEM SALES REGISTER r«c =o Accessories W.R.NG M.TER..L F..TURF.S SCRV.CI PARTS MiSCELLANtOUSS.LtS B.LMPR.C* 1 =n - w Page 103 DLD-5 DELCO-LIGHT DEALERS BOOKEEPING SYSTEM LEDGER sheet no Name of account account No. .... ■ TE„ ';? .... / OE„,T S OEB,T — CEO EO.TS "o' ,TE» O.TE |" 1 - ^~> -\J 1 _ I , DLD-6-7-8 Page 104 o O a < £ o > g O 1 £ l ! S -111 ------------------------------- DLD-14 Page 105 DELCO- LIGHT DEALERS BOOKKEEPING SYSTEM BALANCE SHEET— ASSETS .COT N.MF.OF FEBRUARY MARCH APRIL MAY JUNE r^— no | Accounts ACCOUNT | TOTALS ACCOUNT TOTALS ACCOUNT TOTALS ACCOUNT TOTALS ACCOUNT TOT.CS ACCOUNT TOTALS Ls~ II I Land T 1 12 | Omldinos 13 I Fair Exhibit Blags. 16 1 Machines Shop Eq 17 I Furniture 8 Fiilures 18 Demonstrating. Equipl 19 Automobiles & Trucks 26 Reserve (or Dep- 2? i";i i W i | B Evelp I 29 Tola! Fiied Assets 31 Cash In Bank 33 Impee... Fund 34 Postage, Carlare. etc 36 Accounts Receivable 37 Holes Receivable 38 Trade Acceptances flee 39 Prospective Comm. flee 40 Credit Bat with Dis «l Advanced Ftp Accls. 42 Pi ni Accounts 43 Detail Blltncef. etc 4C fleserve tor Unc. flee. 51 Inventor/. Plants £ B 52 Inventory. Pumps 53 Inventory, Accessories 54 InventoT. Wirino Mat 55 law tnfvrf, Fbmrti 56 Inventory, Service PtJ, 57 Inventory, Misccll 60 60 Cnnsianed Goods 71 Investments r^ ' 79 lolsl Ciiireat Ailet-. C r- 01 lltltrttl PrBM ' 82 Inturini ■ Prepild 89 Total Preen* Assets 09 traod Tatal Assets DLD-9 Page 106 DELCO-L1GHT DEALERS BOOKKEEPING SYSTEM BALANCE SHEET— ASSETS JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER ^o ACCOUNTS OUNT II TO T.US J ACCC UNT TO TALS =co, NT [I TC T.LS KCCO, NT I! TO ALB NT F TOT " S AC TALS It Und !j 1 ! T 12 Buildings 13 Fjir t»ruuil Biuo- 16 Machinery Shop Fq 17 Furniture & Fixtures IS Oemonstratino Equip) 19 Auiomob.les & Trucks ■a Reserve lor Dcp 27 Good Will & Develp'l 29 Total Fued Assets 31 Cash In Bank 33 Imprest Fund 34 Postacje Carlare, etc 36 Accounts Receivable 37 Notes Receivable 38 Trade Acceptances flee Advanced Fip Accts. 42 Personal Accounts 43 Debit Balances, etc 46 Reserve tor One Rec 51 Inventory, Plants & B 62 Inventory. Pumps 53 Inventory, Accessories 54 Inventory. Wiring Mat 55 Inventory, Fiitures 56 Inventory, Service Pis 57 Inventory. Miscell 60 Consirjnmenl Invenlury 66 ^—N " Investments =o » Total Current Amis •■ 82 Insurance Prepaid B9 Total Prepaid Assets - 99 Stand Tilil Amlt u. Page 107 DLD-9 DELCO-LIGHT DEALERS BOOKKEEPING SYSTEM BALANCE SHEET — LIABILITIES and NET WORTH AMOUNTS JANUARY FEBRUARY MARCH APR,L - s~\ "° ACCOUNT | TOTALS AC ™»T J TOTALS ACCOUNT TOTALS ACCOUNT TOTALS | ACCC "" TOT ILS ACCO JNT TOTAL o 101 Mortpaoes T 102 Una Term Noies 109 Iilil Fuel Liabilities III Accounts Payable 112 Notes Payable 113 Trade Acceptances Pay 114 Prospective Comm Pay 115 Credit Balances, etc III Comioned Goods 121 Accrued Salaries 122 Accrued lam 123 Accrued Interest 129 Total Current liaklitie 181 ClplUl— Original 182 Capital— Additions 188 Profit £ Loss 189 Toui He) Worth J Ot= ^ > — 1 DLD-10 Page 108 DELCO- LIGHT DEALERS BOOKKEEPING SYSTEM BALANCE SHEET — LIABILITIES and NET WORTH N Tu O, JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER =o -1 TOTALS J ACCOUNT TOTALS ACCOUNT TOTALS ACCOUNT TOTALS ACCOUNT TOTALS ACCOUNT TOTALS 101 Mortgages T 102 Long Term Notes 109 Tola! Filed Liabilities 111 Accounts Payable 112 Notes Payable 113 Trade Acceptances Pay 114 Prospective Comm. Pay 115 Credit 8alances. etc 118 Consigned Goods 121 Accrued Salaries 122 Accrued Tales 123 Accrued Interest 129 Total Correal liabilities 181 Capital — Original 182 Capital— Additions 186 Profit & Loss 187 Surplus 189 Total «et Worth I Grand Total 1 Liabilities S Mel Worth —' Page 109 DLD-10 DELCO-LIGHT DEALERS BOOKKEEPING SYSTEM TRADING ACCOUNTS JANUARY 1 FEBRUARY MARCH APR.L JUNE r\_ NO ACCOUNTS ONT„ YEA- MONTH | ,«. monthJ VEfR "™ ,„ | ""1 || s*"""" « " M 3 NT„ u> O— 207 211 Cost Ol Plinls & B. 219 ItUI Coil of boll Sail | 221 Bross P.olil on P. ( B. 222 223 doss Prol 1 on A 224 . 226 GfoSS Profit on Ser. P. 227 Cross Prolil on M S. 301 /~^ ^ i — l ll DLD-ll Page 110 DELCO-LIGHT DEALERS BOOKKEEPING SYSTEM TRADING ACCODNTS A^ol^S JULY AUGUST SEPTEMBER NOVEMBER DECEMBER =o »»«'» YEAR MONTH YEAR MONTH YEAR MONTH YEAR MONTH «»« MONTH "" 201 T 202 Sales of Pumps 203 Sales of Accessories 204 205 206 207 Miscellaneous Sales 209 Gran S|!es 211 212 Cost of Pumps Sold 213 215 216 1 217 Cost of Miscel Sales 219 r 221 222 224 1 225 Gross Prolil on Fill. 4- | T\ 227 Gross Prolil on M. S. : , t- _^ =T) Page 111 DLD-11 DELCO-UCHT DEALERS BOOKKEEPING SYSTEM rear 192 PROFIT AND LOSS STATEMENT Form DLL. C.U UCI N.MEOF JANUARY FEBRUARY MARCH APRIL MAY JUNE NU Accounts MO,. T„ YEAR .ONTH TEAR 1 MONTH YEAR MONTH VE.R MONTH .£«» MONTH YEAH o 301 Gross Profits on Sales 1 302 Interest on Reeeivbls 303 Interest on Bank Deo. 304 | Income from Invest 305 Cash Discount on Pur. 30S Miscellaneous Income 309 6nJis Pram. 401 Salary ol Dealer— Part 402 Salaries ol Salesmer, 403 Commission to Salesm. 404 Prices and Awards 405 Iravelinrj Ejpenses 40G Conveniens I Schools 4 408 Advertising T 409 Posters & Signs 410 Fairs & Exhibits 412 Service Salaries 413 Service Material 414 Service Expenses 416 Shipping, elc. 417 Freight, Express, etc. 418 Garaoe Expenses 421 Breakage, Claims, elc 429 Miscellaneous Sel. Ex. 499 Total Sellina Eioensci 501 Salary ol Dealer— Pan 502 Salaries ol Clerks 503 Olfice Expenses . n 504 Rent 505 Linht. Heat. elc. 500 Telephone, etc. 507 Insurance SOS Tans 501 Interest, Oij. 8 Ex. tin lUpaIn f. Benewili 511 Depreciation 512 Uncllrctable Accounts f~Y_ 518 Mi i elbflMttl U n 1 > >W 590 Total Gtacral Eiprnsri i» m lolal Expenses 180 Prolil aid lost 1 1 ! TTT l DLD-12 Page 112 DELCO-LIGHT DEALERS BOOKKEEPING SYSTEM PROFIT AND LOSS STATEMENT JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER =o AMOUNTS 3NTH .»« MONTH EAR DNTH I *EAR »»'» EAR 3HTH <" "°" YEA T I . 30S Go-. Pi lis T S.l.rv ,| Or.lef Pin 1 Salaiitt ol Salesmen Comm'ssonloSaltsrn m Print ■ <0! In (|n & (ns( (06 Poslerj 8 SI ns ' ilaali u Ml (17 FftlfifH E.press tK EL . LL . LL . 502 SalnietltCMrb - 503 OB te L. ensts 504 Rem I 4- U-- 505 Uohl, Heal. etc. I- 4 508 T__ 1 1 Rettirs S Rene».l LL_ Op reel =S~} Q- i U c lit libit Acco i 1 1 — k_> — II Mrn E, 599 Til.l GcDer.l Eitensct 1- — T __. i - - - H~ 186 ! Prtlit ant Lata 1 H4t Trnf ■ Page 113 DLD-12 -J < u J 7 3 H -J c H 3 U P e z £ - 8 1 1 Q a * tf a a g a | o o PL, Pi U P- £ w & H W -1 s S3 u a: a: = < u Q T3 e c I M • „ d Z d z o 55 a E £ c j -C ■1 | 1 w _] H O Q B (3 Q < 1 u. $ 2 to S3 g O 3 8 i c & .5 § & (3 51 a D to r . ■ ' ° """ DLD-13 Page 114 1 ! I H Z 3 1 | | Z D u u < -; 1 5 < ^ t E 5 ! s E £ | < c s £ c E | X r i £ L 1 t - 1 I S 1 3 S 1 i a ■ 3 * " 6 ; 7. X - G t- z a 5 | in z 3 u < ■•; j! c B 5 < ?■ s g 3 a - i I W i « § o g g I * 6 a Q 3 pa < 2 f 1 - r ~ " > 3 J 3 1 | 1 ^ •0 5 X T3 E P •c g so 2 1 •J < £ H < • 1 " I 5 55 1 < i <2 1 2 < 2 H < < s - < - 1 1 a! EC < -J -J w 5. H g '« 1 ^ 1 ° 11 z X s h < w < •J < o !| Z z l 1 Page 115 DLD-15 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS CHAPTER XVIII BALANCE SHEET Dated December 31, 1919 Fixed Assets: ASSETS Land, Buildings and Improvements, Office, Shop and Demonstrating Equipment Automobiles and Trucks, Less Reserve for Depreciation, Current Assets: Cash on Hand and in Bank, Accounts Receivable, Notes Receivable, Trade Acceptances Receivable, Prospective Commissions Receivable, Other Receivables, Less Reserve for Uncollectables, Inventories, Consigned Goods, Investments, Prepaid Assets: Interest Prepaid, Insurance Prepaid, TOTAL ASSETS: - $1,000. 800. 1,000. 2,800. 150. 500, 3,000. 800. 400. 120. 35. 4,855. 245. 4,610. 2,000. 150. 500. 25. 25. $2,650. 7,260. 50. $9,960. Page 116 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Fixed Liabilities: Mortgages, Long Term Notes, * BALANCE SHEET Dated December 31, 1919 LIABILITIES AND NET WORTH $500. $ 500. Current Liabilities: Accounts Payable, Notes Payable, Trade Acceptances Payable, Prospective Commissions Payable, Other Payables, Consignments Payable, 1,500. 1,000. 200. 75. Accrued Salaries and Wages, Accrued Taxes, Accrued Interest, 200. 100. 75. 3,150. Net Worth: Capital, Surplus, 4,350. 1,960. 6,310. TOTAL LIABILITIES AND NET WORTH Contingent Liability for Receivables Discounted, Unfilled Orders on Hand, $2,750. $3,635. $9,960. Page 117 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS Gross Sales, Less Returns and Allowances, Net Sales, Cost of Goods Sold, GROSS PROFIT ON SALES - Expenses: SELLING EXPENSES: Sales, Salaries and Commissions, Other Sales Expenses, Advertising Expenses, Service Expenses, Shipping, Freight and Garage, Miscellaneous Selling Expenses, GENERAL EXPENSES: General Salaries; Office Expenses, Insurance, Taxes and Interest, Repairs and Depreciation, Uncollectable Accounts, Miscellaneous Administrative Expenses TOTAL SELLING AND GENERAL EXPENSES PROFIT AND LOSS STATEMENT For Six Months, Ending December 31, 1919 $30,000. 250. 29,750. 22,600. NET PROFIT ON SALES $7,150. 2,100. 120. 150. 900. 75. 10. $3,355. 1,350. 220. 100. 175. 25. 20. $1,890. $5,245. $1,905. * Percentages .25 .03 4.5 .7.°. .3;; .59 .08 .07 100. .83 99.17 75.34 23.83 11.18 6.30 17.48 *6.35 Page 118 BOOKKEEPING SYSTEM FOR DELCO-LIGHT DEALERS * PROFIT AND LOSS STATEMENT For Six Months, Ending December 31, 1919 NET PROFIT ON SALES _____--- $1,905. Other Income: Interest, $10. Income from Investments, 15. Purchase Discounts, 25. Miscellaneous Income, 5. TOTAL OTHER INCOME ------- $55. Total Net Income (For Six Months) ------- $1,960. Surplus from Previous Operations (For Years Months) - - . SURPLUS TO DATE, December 31, 1919, ------ $1,960. 'NOTE — Although the figures used in the Balance Sheet and Profit and Loss Statement should not be taken as a criterion of an individual business, it is particularly important that a correct understanding, especially of the percentage figures, be had. so that they can be applied to an individual business when working with actual figures. The percentages mean that for every 3100. worth of GROSS SALES (not Invested Capital) which a dealer makes, he has $6.35 NET PROFITS after paying for the goods and all expenses of operating, including his own salary paid to him or at least charged against the business. Interpreted in dollars and cents, and computed on a monthly basis, these figures illustrate the following principal points: Gross Sales $5000. Gross Profit on Sales 1191.50 Total selling and general expenses, including an allowed Dealer's salary of $200 874. Net profit on sales, after deduction of Dealer's Salary 317.50 Page 119 YD 24499 L