UC-NRLF B 4 SD3 Sflfi ChiH J 4l Jfl ■All BMH BH Hi lfi ffl w l^llS THk^^H H l!Jl|JI'i!;l(!i:|j :■ ■An ttUJUr'.Xr I Risque's Bookkeepin, and Business Management A complete guide to modern practice written so any one may understand it and with 70 forms filled in to show how the actual entries are made. Tells how to select a set of books to fit any business and explains how to open them, make all necessary entries, and close them. The reasons why are given in all cases. Good for individuals, part- nerships, or corporations. Gives special attention to financial statements for creditors, trade accept- ances, mercantile agency work, stock and pur- chase records, cost and price books, want books, etc. BY F. W. RISQUE NEW YORK U. P. C. BOOK COMPANY, INC. 243-249 West 39th Street 7 #lips of same put in Debit side of Merchandise box. For you received these goods from these dealers, consequently, they should be credited with them, — you delivered the goods to stock, or, Merchandise, hence, merchandise owes, or must be debited with these amounts. Freight Charged to Merchandise Account Freight is paid on these shipments amounting to $15.00. Slips made out "' Freight on goods " ( specifying particulars > and placed in Debit side of merchandise for that is an additional amount given for merchandise, and copy of this slip put in Credit side of Cash, for you received from Cash box the money to pay for freight, hence credit Cash. Personal Expenses You used money for household, or, personal expenses, then make out a ticket " Oct. 4 received cash on account John Wilson, $20.00.'' Place a copy of this in the Credit side of Cash, because you received it from the cash box and place the other ticket in the Debit side of the box "John Wilson," because $20.00 was paid John Wilson. Cash Sales The money received from Cash Sales amounting to $252.50 was in slips put in the cash drawer each night, and slips for the same amount put in Debit side of Cash, because this amount was given Cash box and as that sum received from sales slips or tickets for that amount, are put in Credit side of Sales box. Goods Sold on Credit Goods are sold on credit, or, open account, as listed below, and a slip for each bill is put in Debit side of the proper account, say: Wm. Cox, sold and delivered goods, 10/5, $87.50 Geo. Allen, " " " " 10/5, 48.80 Frank Welsh, " " " " 10/6, 74.00 Henry Moore, " " " " 10/6, 67.20 because the goods were given or delivered to these customers, and similar SIMPLE ACCOUNTING FOR RETAIL STORES 13 CoAT£NTS OFj3 OX £S X 13/\ LAHCErS ■SL I PI FOUNJ> IK TxaiT S/u CireDiTSnc HFBiTOAi.es c/iFUnBALCi ixrFEKCHCES arm f I: » / * ^Ca^h, JcUh fajid. crwt -few JAUinynq . , ' ,. -TccUl, 7 i -far 'fiu,U>/rW- ' /3/vo-j-m ClYG-ijl, ftA*,J~ TyitAcAAAMtu I _ « 'S3 farm \fK> o Sc £j'ui/oo II iSSc vfo /o£>S\ 4i uo % I i 8a o 20 CXctA^sm . Trio ZJA7/ fct ZV-O/y SDA-rr -r.. CS1£2>/ T #c/ «4 r/a^^ £m S-3 *7 ft, 1 Ot* '-' ~Gajtv / \£"c co *7 - Fig. 2A — Usual Form Ledger Ruling name . ,60^clCui J ryi/~(3(y>C- ,, 96 3>ATt FoL DIBIT \va B»L 3)AT t r 3 i CNtTir |cn TJA "- aa ^ c/ftle/j *t i %*} ft 3y •■- ffla i- : ^,A ,5? Mil / Fig. 2B Accounts Payable The next 30 or 40 pages for "Accounts Payable" or, firms from whom you buy, and, styled so, because we usually owe these firms for goods bought; hence, they must be paid, or, are payable, being creditors. Accounts Receivable The other pages, back of Accounts Payable or Creditors' space, we reserve for customer-' accounts, and, when we refer to this 1 lass of accounts we say: "Accounts Receivable," because they owe us, and we expect some day to receive the several amounts owing by them. They are also styled " Debtor-.' The books for keeping the accounts, say, of a business having a capital of SI ,0011. no, may be very simple, and the classifii ation of expenses BOOKS REQUIRED 17 be dispensed with, though should any particular class of expense need investigation, the items could easily be picked out from the cash book, and lists made for comparison. Let us presume that you, Air. John Wilson, pay all minor expenses promptly; that purchases of stock are paid for at maturity of those bills, and, also, that your sales, both for Cash and Credit, or, open account, are properly recorded. Cash Sales You may use a " Cash Register " to record Cash Sales, in which event you count the contents of the register drawer, and, after deducting the amount on hand to start the day with, compare cash with the record of the register. Sales Tickets If you use sales tickets, each clerk is supplied with his particular pad, having his number on each ticket, for identifica- tion. These tickets are in duplicate for carbon copies. When sale is made, he itemizes the articles, prices and amounts, and if deemed best, the name and address of purchaser, also noting on the ticket the amount received, if not agreeing with the sum of the sale, that there be no misunder- standing when change is returned ; he puts amount received in the Cash Drawer, hands customer the carbon copy with the purchase, and places the original ticket either in a special compartment of the Cash Drawer, or some other safe place agreed upon. Counting Cash At close of business these tickets are listed and totaled, and cash in drawer counted, to check agreement with amount sold. The amount of dav's cash sales is then entered on Cash Book. A.' . Add /' ' .. .. _.. . . Ml CUimi Mu»l be M.de IMMEDIATELY upon Receipt of Corrfl below is vouo account stated vo date . .: _ l •• 1 FQH*AHO 1 i 3 4 5 fi 7 a 9 [0 M 12 i3 14 15 27 16 SAVE THIS SLIP IT 13 YOUR ONLY RECORD. Fig. 3A — Sales Ticket Unbusinesslike Cash Drawer A very unbusinesslike method which is so often carried out, is to have a general cash drawer to which every one in the house has access, to deposit cash for sales made, make change for any customer, or, stranger who 18 BOOKKEEPING AND BUSINESS .MANAGEMENT requests it, possibly to pay out express or other petty charges, or even for farm produce such as eggs, butter, etc., without putting in any memoran- dum, on the theory that what remains in the drawer is not larger than would be there, even if a ticket for every item had been made out and put in. The first two plans arc both good, but the last, customary for so many generations, should not be allowed. It permits no check on errors in making change, nor checking what the balance amount should be. but rather undermines habit of accuracy, make- it impossible to fix responsi- bility in any particular quarter, and places temptation in the path of every clerk. Cash Book Every cent received, or paid out, should be accounted for and explained. Mr. Cash The Cash Book, which is the record of the Cash Account, is treated on the books as if it were a person ( say Mr. ( lash, or the Cashier), and, as all cash received, is turned over to Mr. Cash, he must be debited with the amount, for he owes it to the store until repaid. ( Fig. 6, page 31.) Similarly, as all cash paid nut is taken from Mr. Cash, or the Cash drawer, he, Cash, must be credited with those >ums. Credit From Whom Received — Debit To Whom Paid As you may remember, always en dit the per.-on or account from whom you receive any money, or other property; likewise, you debit or charge the account or person to whom you deliver any money or other property, and, as the cash book is the record of money disbursed by, or received from the cashier I Cash ) the amount- must be credited or debited that account. Cash Book As the Cash Book shows what the Cashier has received and been debited with, it also shows from whom, or what account he received it, and each person or account giving, or paying, the partcular sums, must have credit for the same; also, when Cashier pays out any sum lie should be credited with it and the account or person to whom paid should be debited. Receipts The receipts, or cash received, entered on the left-hand page of Cash Book, are either from " Cash Sale-," or, sales which at the time are paid; — from "Customers," or, payments for goods previously bought anil charged to their account; BOOKS REQUIRED 19 — from " Sundries," or, some other source, than the two mentioned above, which in this set of books we will term " Sundries." Disbursements The Disbursements, or, cash paid out, entered on the credit or right- hand page of Cash Book, are: for Merchandise, or goods purchased for cash, and freight on same; for Expense, or wages, rent, light, heat, taxes, insurance, etc., etc., which in a small business may all be grouped in one account called " Expense," and if at any time you need to inquire into any particular class of this account, the amounts or particulars can easily be picked out a«d listed; for Sundries ; or payment of cash to or for any person or account other than the two previously mentioned. Journal. (See Fig 7A, page 34.) The Journal is used for those entries which cannot properly be made in either the Cash Book, or Sales Book, the latter sometimes called " Sales Journal." The ruling of the Journal is very similar to the ordinary Day Book in general use. In this set of books, we enter in the Journal, the purchases of goods bought to be paid for by us later, so we can post to the credit of those firms from whom we have bought, the proper amount due them, and, charge the corresponding amounts to " Merchandise." Order Blank When a charge customer, or one who buys now, but expects to pay OA KVIllE . Mr Bought of TchnHiL^ON 19. . . SAlllMAH . - . . . . sex) By TERMS :»«<« .» GENERAL MERCHANDISE Ql/AKTjTV A n T 1 etc s PITlCf AMOUNT U* - -* — - — ^____ ^^/ Fig. 3B — Order Blank some time later, is sold, you take a block of order blanks, always using a carbon under the first sheet. There are many excellent forms, but a simple one is here suggested: 20 BOOKKEEPING AND BUSINESS MANAGEMENT Making Out Sales Tickets Plainly write the customer's name and address, and your name or initials in space for " Salesmen; " list the articles bought, and quantity, put in prices, make extension and foot the amount, get particulars of how and where delivery is to be made, and then send to office the two copies for approval of credit. When approved, have the goods gotten out, check items on bill as wrapped, and send goods with carbon copy to proper address, for- warding original copy to the office for entry in Sales Book. If preferred, you can use your regular Cash Sales ticket or check (Fig. 3 A, page 17), which you have for Cash Sales, by writing across the top " CHARGE," to distinguish from Cash Sales, though a separate and distinctive form is usually preferred. (Fig. 3B.) When a charge sale — or sale of goods which is to be paid for at a future date, is made, some merchants use one of the Cash Sales tickets for describing the sale and file this ticket to come up for attention or collection later. Some use a case with subdivisions or pigeon-holes lettered from A to Z, others use a pouch or box-file with lettered compartments. These charge sale tickets are each placed in its proper compartment, all A's in the A space, B, C, D, etc., also in their compartments, each hav- ing the first letter of the respective customer's surname. All the tickets of any one may be found, together with all tickets of other customers having names beginning with that letter or initial. At the end of the month the tickets of each customer are arranged in the order of date bought and on the back of the last ticket, listed by date and amount and the total then added. When all are so totaled they are listed in an ordinary Day-book and these amounts totaled, showing the amount of all charge sales. The amount of each customer is posted to his debit in his ledger account and the total of all of these bills credited to Merchandise or Sales Account. There are many variations of this system, each advocated by the man- ufacturer of sales tickets, who advises his own special method. Several large concerns have introduced a system using, for each charge customer, one block or set of tickets — beginning each with any balance owing by the several customers, and furnish a case of pigeon-holes, one for each customer or with lettered compartments — one for each letter of the alphabet. When a customer buys (see Fig. 3 A, page 17), he sees on the first line of his ticket the balance, if any, he now owes and to this amount is added the sale just made, the total being amount unpaid to date. BOOKS REQUIRED 21 The original ticket is handed the customer, the duplicate remaining in the book or pad. This new total is then carried to the first line of the next set of blanks or tickets, ready to be added to the next bill bought, as a total. If the cash is paid on account, it is noted on the ticket and deducted from the unpaid total and a new balance brought down. Thus you have at all times the balance or amount due by each customer and the customer also sees on each ticket of purchase the amount owing to and including that date. At the end of the month the total amount of goods bought by each customer as shown by the tickets is charged the respective customers and the total of all their sales credited Merchandise or Sales. The cash as paid having been credited the customers on the cash book and duly posted to their ledger accounts, the total of all customers' slips will agree with the total of all customers' ledger balances. JqJi?$(M^Jj*£rAA^s(3Um^ (Q<^7(j/$ £ DATf i-f MAMi A£D/?£5 5 SAMWAH Term; Amouhi OcM 8 ame course as with goods from National Hardware Company, checking goods, price, exten- sions, and initialing in the rubber stamp impression spaces (Fig. 5) and note exception, if any. The bills proving correct, we enter up, crediting " Goddard Gro. Co., Inv. 10/1," $545.00 " Brown Shoe Co., Inv. 10/1," 250.00 charging Merchandise $795.00. (See Fig. 7A.) Oct. 4th. (Sunday.) Oct. 5th. Received goods shipped by and credited Carlton Dry Goods Co., Inv. 10/2 $100. 50 Gau>s-Langenburg Hat Co., Inv. 10/2 95.00 charged Merchandise $195.50. (Fig. 7A.) Freight Paid The same day the R. R. Agent presented freight bills for freight on goods delivered 2nd, 3rd, and 5th, COMMENCING BUSINESS 27 On National Hdw. Co.'s shipment, $1.78 Goddard's " 6.17 Brown's " 3.72 Carleton's " 1.53 Gauss' " 1.80 Which we pay and charge to Merchandise $15.00. See Cash Book (Fig. 6, line 3, column N, page 31). The cost of goods is the invoice price, together with any charges for freight or delivery, or the total amount paid for the goods bought and laid down in the store, hence, as the freight is part of that cost, it is charged, in a small business, directly to Merchandise. In larger houses freight paid on goods bought is charged " Freight in " and freight prepaid on sales sold delivered is charged " Freight out." " Freight in " is charged finally to Merchandise or Stock, and " Freight out" is charged finally to Sales. Rent The landlord calls to see if we can spare the money for October rent, $30.00, which we pay, take his receipt, and charge to Expense. (See Cash Book, column O, Fig. 6, page 31.) Our announcements and visits have been working for we have been busy showing goods to some of the most valued of my old customers who had favored me while in my former place of employment. Our stock was fresh, our efforts to please were keyed up to that feeling way back in my head. " You-cannot-afford-to-let-up!-you-must-succeed-Hammer! "Hammer ! -but-do-it-on-the-soft-pedal-and-WIN ! " We won ; at least > started to winning. George Allen came in just to look around and see how we were fixed, didn't need any goods, etc. — you are familiar with such accidental calls, but I succeeded in booking his order. While I was busy with Allen, Brown, my clerk, was busy chatting with Wm. Cox, and seemingly relying upon his radiant smiles to draw out the order I knew he was after. At first it struck me as a pink tea gossip between two old, but gracious, hens, and I had a notion that I had better hurry over as soon as I was through with Allen, but I recalled the advice I had overheard old Mr. Clark give his new son-in-law just taken into the concern: " Don't disturb a probable pending sale by butting in; the customer's mind will be confused and he will then require careful leading to bring him back to the bridge he was about to cross; the salesman cannot but 28 BOOKKEEPING AND BUSINESS MANAGEMENT realize the implication of superiority on your part, with the result, that he will be rattled and the interruption end in a ' near-sale.' ' The momentary desire to help Brown died when my memory turned back to those words of the squarest, whitest, most successful boss a man ever had served under. A short time later I had gone to the office to look up some prices ; Brown came in smiling and handed me the order he had written up for Cox. The goods were quickly gotten ready, packed and orders entered up on Sales Book. (Fig. 4, page 21.) Charging Geo. Allen, $48.80 Wm. Cox, 87.50 And Merchandise will be credited $136.30, by posting total at end of month. Customers' Accounts Accounts were to be opened in that part of the ledger reserved for cus- tomers, any page between 80 and the back cover, but I had learned that if the customers' accounts had 220 pages at our disposal, I would allot a certain number of pages to each letter. I selected page 82 for Geo. Allen, indexed his account, turned to page 82, headed the page with his name and address, and then posted from the Sales Book, date, sales, salesman's name, page of sales book from which entry was taken, and last the amount, $48.80. (See ledger account, Fig. 8C, and sales book, Fig. 4, page 21.) We allotted page 96 to Wm. Cox, indexed the page, turned to page 96, and posted the entry in full, and the amount of bill, $87.50 (see Fig. 8C), and marked 96 in ledger folio column of Sales Book (Fig. 4, page 21). Near the close of the day we listed and added the Cash Sales, amount- ing to $20.00, and credited same on Cash Book (Fig. 6, Col. E, page 31). We do not post Cash Sales to ledger daily — only total at the end of the month. Personal Expense October 6th — I, John Wilson, needed money for household expenses, so drew $20.00 from Cash drawer, and put in a receipt for that amount, which was charged up on the credit side of the Cash Book (Fig. 6, Col. P), and then posted to debit of my account on the ledger ( lit,'. 8A, page 35 I. Brown and I broke nearly even today, as he sold a more profitable bill, though mine was slightly greater in amount, but had more staples. The bills sold were to Henry Moore, sold by Brown $67.20, charged on Sales Book - 4, page 21), posted ledger 132 (Fig. 8C, pa^e 36 I. Frank Welsh, sold by Wilson $74.00, charged on Sales Book (Fig. 4 ), po>ted ledger 137 (Fig. 8C, page 36). COMMENCING BUSINESS 29 These ledger accounts were opened, indexed and posted. Before closing for the day we listed and added the Cash Sales, recon- ciling this amount with the count of money in drawer, then credited the sum, $30.00, to sales in the cash book (Col. E, Fig. 6, page 31). Wages Paid October 7th — Paid cash to Brown, wages for week ending October 7th, $9.00, and charged on Cash Book in expense (Col. O, Fig. 6, page 31). Expenses As remarked, there is no wages " ledger account," because in this set we charge all items of Expense such as wages, heat, light, taxes, insurance, etc., to the one account — Expense (Col. O, Fig. 6). We put the figures in that column, do not post to Ledger daily, but at end of month add this column of Cash Book, and post total to ledger. If an examination for comparison is desired, the amount may be classified on a piece of paper, totaled by class or character, and memo made on margin of Cash Book, or ledger page, for further reference. Cash Sales tickets listed and totaled, then compared with the count of cash, amounting to $40.00, posted in Cash Book (Fig. 6, page 31) to credit of sales. October 8th — Cash sales listed and counted, and agreed with cash in drawer, and credited to sales in Cash Book, $62.50. (See Fig. 6, Col. E, page 31). Cash Balance for Change Of course, you understand that each day there should be a certain amount of cash in drawer, to make change, and this balance, or amount is always deducted from total amount found in drawer at close of day, to balance Cash. We think $20.00 in assorted denominations sufficient for change in the early hours, and have set that sum as the regular balance to be retained, and deposit the remainder and all checks received, daily in bank. October 9th — Cash sales listed and counted, agrees with cash amounting to $50.00, is credited on Cash Book, page 2, to sales. (Fig. 6.) William Cox called to say he had sold some hogs and wished to pay part of his account, handing in $50.00, which was credited to his account on Cash Book, page 2, and at once posted to his ledger account, page 96 (Fig. SC, page 36), on the credit side. Entry in Cash Book has that page 96 number, written in space ledger folio. October 10th — Cash Sales listed, totaled and compared with Cash as counted, are credited on Cash Book amounting to $90.00. (See Cash Book, page 2, Fig. 6, Col. E, page 31.) CHAPTER IV Closing Books for Month — Set 1 INSTEAD of multiplying entries and increasing the bulk of this work, let us imagine that the business done as shown in foregoing pages is for a full month and that we are at the end of, or on October 31. We will now close the month's work, — balance Cash Book and bring down cash balance for beginning next month, rule and close sales book, take off trial balance — close up for year, make a Balance Sheet showing results of business done, and how much we now owe and what we have, with which to pay it. Closing Cash Book for the Month — Debit Side of Cash Book The amounts received have not only been entered in their respective columns E, F & G, but also, for convenience, in the Total column H, so that, at any time, we may, by the footings of this column II. know exactly how much money we have received for the month. To prove it, we tan, at any time, foot the other three columns E, F, G and add their totals, which should equal the " Total " column II. Credit side of cash book may be proved the same way. At the end of the month we always rule up the Cash Book, to keep the cash transactions of that month separate from the succeeding month, and, for convenience, prove the totals, then by carrying into the Sundries column the footings of the other two and making a new footing of Sundries col- umn, which should then agree with Total column. Ruling Debit Side of Cash Book For example, we find pencil footing of Sundries column G is $1,000.00 We rule a red line under pencil footings Cash Sales E, write this in ink and carry over on line 10 to Sundries column. . . 292.50 ruling red line under and across columns E & F on line 10. We rule under pencil total customers, column F on line 11, putting footing 50.00 in ink and carrying to Sundries column G. Rule red line across columns F, G and H on line 11, and now foot " Sundries " G, " Total " column H, bring new totals down in ink on line 1 2, showing these totals prove and that you have received in October, Cash $1,342.50 CLOSING BOOKS FOR MONTH — SKT 1 31 2 3v ^&a&fi/- Jo{wvl(AU(m/ 7EfC£/ V£-& ^S? O '"> 2J£SC/?/'>r'o ' CUSTOM f^ SVND/?!£S FOTAL ■:■•/ 9m ;• •4 (WCia. -COtX4,o-!A~- /joX-Aas-(u. ct&Tt-yi. ca&h. tfflZc-j 7Ut day ,;, &0 oc <£ooc /poo 2?2 5Z •SCOG ,' 2 '(f Sc /ooot 7COO JOOO UOOO tiZSO 6c oo JZoc fcoo ;n*:So /2/esh G. 6 Left Hand yW mcm&fv qt $C&tf&i/ S ^^wcn-c^ "/> •/"-"*■ ^^ '"^ 2 - ^ '•/■? * ■£UU \ WW-^i — **>z — z ^. J ^f! '°/2. '»/J- _^Jc •SUi'i Zfo ^££o vfi- ■To \fWl /o 0\T] Fig. 7A hv»T*wt\ MSJf LCD ..JD M3>3f SVMCXtes ^ ^ >To 7V\fAsAjiAA*U* j. J2v •& y\-eaJL AfAAJiwei*^ Z* r #r-vo-i ;.,. '»/, rtx«j «•/*_ S ^ vTo / 3 ^ f «v ? / VtfcC«< a/t *iKX- t, "/3 «£ o!«ij OO ' : ?> 2^. C-" y^JUMa^ /£Lo O* 0„ Av «-v~ «%<«T £T i^«m- '"£ /c/3 3a ZvSo & o *r Il-r J "(J ?H£"Ctv{.^vvi.~lfL JrwtrL*^ /0 /i- *£- E /oo ■J^> *-ZaA<*,/nAj£js,!lv,JM£ -> /•«/»'. «/•- UL ^ <3£S ) s -1 3 C 3) E -F Fi< Fig. 7C CLOSING BOOKS FOR MONTH — SET 1 35 J> CtfawXtJXXd&T^ Oa-^r rot. || 33C 3)T ca^ *>-So'^ /ooc oo To^u^c/^a^A-ct/^je. 0c/ 3/ 7va>^Mzfco-. G ^/<2/&J 3} 1 o& J' c s *? 2 277 .So -^?££. oo ' e& Fig. 10 — Journal Closing Entries ^O^eTuc^uvrL&todJL lyf&courist T^ ~foo/r7l£B/T en EDIT Oc/ 3/ J /^Jj-jo Q-c/\3/ & 4?AS-/ t r,/t, K /zaAs W^. - £*At*i4-e- ' 7 /32 VS. /s/S-Qyy £6A :-. A'rjtlf ^(ckM OO /?3Aoe zJkv ir &J'l'to %£ 3 Qc4\3> 7yw&Kt.\vi '(ttt ~l-\'7\666\ oo T 7T J I L ^to/tZ^^rjj mdtfj. -jbwaylryytM. w-a /,?^ U ■ 3/ cfcou. o w, *z?r 17 ?VW0t//6UA cllL f Pf/l Sndoo | QcJ \?' I fovf/n«tr 6*> } 'fn m ■r.'n .!• 5idoa <%■$. &7Uf£- n S!b/.\3/ Weefaiyt 4ho'/6r'*f I Jabo y jeA J/ 1 m*u*Av> /6Lul, W? 1 3cf]o0 Fig. 11 — Ledger CI CHAPTER V Closing Books for Year—Set 1 WE now come to the closing of the year, presuming, of course, that the entries shown represent one year. (See Fig. 10.) We make Journal Entry E — giving to merchandise the amount realized from sales of goods which was furnished by merchan- dise, $570.00; and ask merchandise — Entry F — to pay all expenses of running the business, by assuming payment of the amount, $39.00, which is done by debiting merchandise and crediting expense — thereby balancing Expense Account. We have listed goods now on hand and not used for sales. Take these from merchandise, in part pay for what they owe, and turn them over temporarily to an account called Inventory, by making the entry G — debiting " Inventory " and crediting Merchandise, $666.00. Both sides of Merchandise account are now footed in pencil and on a scrap of paper, we figure Credits $1 ,236.00 Debits 1,104.00 A credit balance of $132.00 We treated merchandise as an agent — giving him a stock of goods, which he was to sell, and after paying expenses, pay first for those goods used, then any surplus he might have or profit; therefore, we make an En- try " H," debiting Merchandise and crediting " Profit and Loss," $132.00, the profit for the year. Posting is completed — accounts ruled up, balances brought down and a Balance Sheet prepared (as per Fig. 12). ( Explained in detail, page 47.) If we could now take an Inventory (Fig. 14, page 50), or, a list and the value of all goods in the store, and store room, we could know how much we had made or lost, supposing, of course, that our furniture and fixtures were as valuable as when we bought them, and that we can surely collect the whole amount due us as shown bv the books, without anv loss or expense in collecting. 39 40 BOOKKEEPING AND BUSINESS MANAGEMENT We devote our time to selling the goods bought and must depend on the Net profit we make on such sales, for our reward. It is, therefore, to our interest that we handle the most salable goods ami satisfy our customers in quality, and service, in order to increase the amount or volume of our sales, since the greater the sales, the larger the profit, if bought right and properly priced when sold. Necessary Expenses To this end we must incur the necessary expense, such as rent, light, heat, etc., etc., and to supplement our efforts, may have one or more sales- men, whose wages are also an expense. ^^/^^tcV ^C^^ycM^M WaXJOW 'J* 4- /o DEO II 6&6 1/&> -zoo CC CrttD/T /J2 0O / flccoumt ** _rv*T^_ 7y< J?fOI7 I jrvi~rc- ■:.. c/ra T 7kt6C/6tiJtfair*(bt* ?wJ 0uL) /ok' 00 OrJ.lt Jfi/lt- bnJ />OM f ■510 < » M * UkAmuj f- froth Mvitd J "/? 3a > , ^m/i4A^/rru ' $t 6 co V / "v °^ / io'<* ■oc f ' \ '^j& , a A m i/ /rtj/^/V/^cv - f*? 7J2 66 "■"•^ / «\ ' fl 1 ~~-\ ~~~^~^^ ^-\ ^^-^ ~~"\_ . i ~\ /23i io /zsL oo_ Fig. 13 Mr. Merchandise is honest, he gives back the exact amount of goods unsold or not used, to be turned over to another custodian, temporarily, or Mr. Inventory (Chapter VII), to be later turned over to the new Merchandise Account of this year. Mr. Merchandise also gives up at the end of the year, any profits made. (See p. 47.) After the books are finally closed, a Journal Entry is made closing Inventory account into Merchandise Account, or returning to Merchandise account the goods on hand, which were placed in Inventory account simply to arrive at results. CHAPTER VI Debit and Credit in Another Light IF you have read thus far, you doubtless understand what is a debit and credit, and why we divide all transactions into these two classes, but, to put it another way : Every debit must have a credit, since no property can be received or parted with unless there is one who gives — who must have credit, and one to whom it is given — who must be debited. You cannot have a debit, only, without a credit; nor a credit without a debit, because no one can part with or deliver any property, unless there is some one or thing to whom it is given, for without a recipient there can be no gift. As the total amount of all debits must equal the total amount of all credits, it follows that the total balances of all debit accounts, must equal the total amount of all credit balances, as shown in a statement called a " Trial Balance." (Fig. 9, page 37.) In your books should be shown the record of all property which comes in or goes out, also of any change of location, if taken from one account and placed in another, as transferring the debt due by a customer to cash account when the debt is paid. Merchandise and Sales If you receive goods from one who sells to you, these goods are placed in merchandise account and so recorded in the books by the entry debiting merchandise, on your cash book if bought for cash, and, on your journal if bought to be paid for at some future time. When any part of these goods are removed and delivered to a pur- chaser or customer, the location of the debt is changed, and from merchan- dise through sales the amount is then found to be due by the customer. Sales will settle its account with merchandise at the end of the year in one transaction, for the sake of convenience, as shown in the closing entries (page 42). 45 46 BOOKKEEPING AND BUSINESS MANAGEMENT What Composes a Sale If you have transferred from merchandise, the cost value of the goods, by debiting Geo. Allen with $48.40 (the amount of the sale), you have transferred to Allen's shoulders, the burden; or 1st. The value or cost of goods taken from merchandise. 2nd. The proportion of all expenses belonging to that sale. 3rd. The percentage of net profit. Instead of figuring the proportion of expense, and the proportion of profit on each sale, which would mean an endless amount of work, we allow the proportion of the expenses and the profit, on all sales as made, to remain in Sales account until the end of the year, when division is made by the closing entries, giving back, 1st. To Merchandise the exact amount, or cost of all goods taken from it. 2nd. To Expense every cent previously charged that account for carrying on the business during the year; and, 3rd. To Profit and Loss all the profits on every sale during the year When Allen pays his bill, the amount, $48.40, his debt, is canceled by crediting his account with the money received, and debiting cash, because the money Allen owed was handed in by him and turned over to the Cashier, who is now accountable, and the debt formerly due by Allen is now due by Cash. To exemplify the repayment by merchandise, as shown by the set of books, we have just closed: How Merchandise is Closed We turn over to Merchandise account the total amount realized from Sales, because all the goods sold came out of Merchandise stock. . $570.00 But any excess or difference between the cost of all goods bought, or $1,065.00 And the value as shown by the inventory of goods now on hand, or 666.00 Show actual cost of goods sold, or $399.00 which sum must be accounted for or repaid by Merchandise account. The total expenses incurred to make the sales. $39.00 must also be assumed or paid by Merchandise account. The total amount of cost of goods used and expenses therefore is $438.00 DEBIT AND CREDIT IN ANOTHER LIGHT 47 This amount, which mu.^t be repaid by Mer- chandise, is deducted from Sales $438.00 Leaving a balance of $132.00 which is Net Profit. , $570.00 or, (See page 42), Amount to be credited Merchandise because we take away the unsold goods $666.00 Amount to be credited Merchandise because we must transfer the credit balance of sales to credit of, or give Merchandise 570.00 Making a total credit to Merchandise of . . . . $1,236.00 From which we ask pay for or deduct the total cost of all goods $1,065.00 Also refund expenses by transferring the debit balance of expense 39.00 Or, a total debit of $1,104.00 $1,104.00 Which, deducted from the total credit, leaves a balance of $132.00 Or, the profit which must then be transferred to Profit & Loss account. CHAPTER VII Inventory IF you know the quantity and value of the different kinds of your property at any two dates, you could then by comparison of quanti- ties and values, or amount, be able to tell whether you had made, or lost, money during that period, and how much. It makes no difference whether you are just beginning, or have for many years been conducting a business, you could learn the results of your dealings between any two dates by having a correct account of your affairs, both at the commencement and at the end of the period in question. What Should Inventory Show? Your books should show the balance of: 1st. Cash on hand and in bank. 2nd. Accounts receivable or due you by customers and others; 3rd. Accounts payable or due by you to others; and, 4th. A list of all real and personal property, which should be listed in inventory form to give you the figures as a start- ing point. (Fig. 14, page 50.) Depreciation At the annual closing date, or when you close your books, the items of Real Estate, Machinery (if you have any), Furniture, and Fixtures, and every other account may be taken as it stands on the ledger, less such depreciation in value that has occurred, and which an examination of the actual property should disclose. Reserve for Bad Debts As experience has well shown, the Accounts Receivable are not all paid in full; either disputed or worthless accounts, in those now stand- ing on the books, may develop later, hence a sum is usually set a-ide, called Reserve for Bad Debts, which proportion, in the light of past experience, may be deemed sufficient. Depreciation is a loss and must be met, if you would be honest with 48 INVENTORY 49 yourself, and as the amounts standing to the debit of these property ac- counts should be their value, this value is decreased to its proper figure in each case by crediting it with the depreciation, and debiting that amount to profit and loss account. The list of merchandise needs no separate entry to bring the values into line if they are priced at " cost " — or market whichever is lower, and the total shown as merchandise on hand is, except when managed as depart- ments, placed on the books in one amount " Stock on hand," or " Inventory this day." There are several methods used in taking stock or inventory. One Method of Preparation Some merchants start several weeks before inventory time to straighten up scattered and broken stock, count the contents of the box, bin or tray, write on a slip of paper the contents, placing that slip in with the goods, and then list the articles again in a book marked on the outside " Inven- tory 19—." " Taken Out " List During the interval, between this preliminary count, and the date set for the final count, each clerk is instructed that when he removes, for sale or any other cause, any article from a box or bin which has been counted, that he make a note in a memo book of the quantity and descrip- tion of goods so removed. The book for that purpose is hung up in the department in which these goods are kept. At the round up, or final check of goods in stock, the memoranda in the "taken out " books are used to alter the figures originally listed and the slips then compared with the revised quantities in the first list, and if agreeing in toto, which has rarely occurred, the main or revised list is extended, totals reckoned, the figures entered in the Journal, and closing entries made. As errors are expected, unless there are serious discrepancies from the revised list, they are unnoticed. This method has gained in favor in man}- large retail houses, where the difference in style, quality, packing, etc., runs into many thousands of lots, but a " one day count" should always be had when possible. One Day Usually Sufficient for Listing The writer has superintended many large inventories and has always been able to list every item in one, or at most two days and evenings, and though the hours were long and the pace strenuous, the fact of its being 50 BOOKKEEPING AND BUSINESS MANAGEMENT Sh««l N Dipi/tir Locitlo Cfllsd / INVENTORY . /6 -o&e*- io M. 19 ._ P .,. / ..i -fto-ce^y M_J t, /OjtSt u ,.. ,...„. e> EtaW > Quantity wan. mid ricxuft. nc DESCKU-IION price i sa V ' EXTENSIONS TOTALS , 1 4 d& zf^, <^? "^."L 7 C f < . 42*s . t\ JW £# s /f.S. I '^ - t ,* K &UJ?,A^. fyau. "MA Soo3 6, \ * t't't 1 / S i / K yn „ /j?^ /£ 'l f A Z^lc /C" "6< . tenog- rapher, but if once indexed by the proprietor or an interested party, he will find the details of the stock so thoroughly impressed on his memory, and the results so valuable, that he will call this his own " special job " in the future. This index will save many valuable moments when comparing and figuring on present or future purchases. These index sheets may be placed at the beginning or the front of the inventory. If one has never had an inventor}- of his goods, he can hardly estimate the other advantages, in addition to arriving at his financial position. Advantages of an Inventory These are a few of those advantages, namely, he will find: 1 . Goods in stock which no one knew of, possibly how, or when purchased, cannot be recalled; 2. Stickers or slow sellers lost sight of, now brought to light; 3. A surplus of irregular numbers or si/.es of some article of which the popular si/.es are low, probably out ; 4. An overstock of some article which in ordinary judgment seems unaccountable ; 5. The quantity on hand, of good sellers, may be far below the average quantity which should always be on hand; 6. Many brands of same class, a common and costly fault with many a small or careless merchant; 7. And. many other surprises if honestly admitted. INVENTORY 55 There is a whole sermon in these two homely sentences, which are apt to come out in Mitchell's advice to any one of his many out-of-town visitors: " Do you take actual account of stock — or is it too much trouble? If you don't — don't blame anybody if you fail." He may not realize it, but he is a real missionary. A Case in Point One jeweler for whom the writer framed a system of monthly inventory, found that he did not know what he had in stock. He discovered much to his surprise that he had still on hand a quantity of special goods which he had purchased over ten years previously, and had entirely forgotten them in their secure and quiet hiding places. By enthusiastic co-operation of his clerks, he closed these out in less than two months, at a slight cut, though he had lost ten years' interest on amount invested. It is unnecessary to add that he now considers the inventory indis- pensable. Goods Should be Priced at Cost or " Market if Lower " The goods should always be taken at " cost " or " market " which- ever is lower, and no advantage taken in rise of price, for any profit taken into account on the books until realized should not be thought of, for you only have the profit when goods are sold, and deterioration or decline may even put the figures of realization lower than at present. Flat cost is the price you paid him who sold the goods to you; Prime cost, or cost laid down, is flat cost to which has been added freight or carriage; And if in as like good condition as when bought, to be priced at prime cost. Depreciation In valuing machinery and fixtures, proper depreciation should always be allowed, and to keep track of such items, the following is the usual method : Marking Furniture and Machinery for Future Identification Valuable tools are either stamped with a die or branded; machinery by painting on each machine its number or otherwise designating, and the furniture by using an ordinary druggist's label on which are the numbers, to be pasted on the underside or in one of the drawers. When these articles are once valued and entered separately by number and valuation in the inventory, an excellent record is furnished to check up this class of property, as each article retains its identity by its particu- lar number. Be just to yourself in taking inventory, for no man is as big a fool as one who deliberatelv fools himself. CHAPTER VIII Percentage THE written sign is 7°. Percentage is understood by thousands, but the fear that someone may read this who lias had no opportunity of previous explanation is the excuse for the following: " Per cent," which is a contracted Latin phrase, translated, " by the hundred," or percentage is the rate or proportion of the number of parts in a hundred, as ten per cent is ten of the hundred, etc. If you buy a lot of eggs, say 200 and find bad ones amounting to 40 and the remainder, 160, are good. Divide the bad eggs — 40 — by 2 (the number of hundreds in the lot) = 20 or 20' . Divide the good eggs — 160 — by 2 (the number of hundreds in the lot) = 80 or 80%. One per cent ( 1%) of the 200 is 2. Twenty per cent (20%) " " 200 is 40 or 2X20. Eighty per cent (80%) " " 200 is 160 or 2X80. Rule to Figure Percentage To find what percentage a smaller is of a larger number, divide the smaller by the larger after adding two ciphers to the smaller, reducing it to hundredths. But in figuring percentage in our money, we use only the even dollars (counting as one dollar any amount over a half dollar) in the larger amount and divide this into the full number of cents in the smaller, because we wish to know how many cents (or hundredths of a dollar) the smaller amount has to one dollar in the larger. To find what percentage is the net profits $2,796.25 Of the sales for the year 30,957.80 divide the cents 279625 in the net profits by the dollars 30958 in the sales. 56 PERCENTAGE 57 30958)2796.25(903 — or 2796.25 is 9.03% of 30957.80 278622 100300 92874 7426 Or, divide the cents in the profits by the dollars of the sales to find out how many cents profit there is on one dollar of sales. Rule for United States Money The rule is use even dollars to divide the even cents to find what the percentage of one sum of money is of another. Dividend On investments, such as stocks or bonds, the amount of dividends or earnings paid, are referred to as the percentage paid on the par value of the principal. Interest Interest on a Real Estate loan is also calculated at a percentage of that loan. Bank Discount Interest charged by a bank for a loan is collected at the time the loan is made, or termed discount, and deducted at once and only the proceeds available by the borrower. That is, if you have your note, January 1, 1916, for $1,000.00, pay- able four months after date, discounted by your banker at 6%, he will deduct 121 days at 6% — 20.17 $20.17 and credit your account or pay you the proceeds . . 979 . 83 and in four months you pay your note $1,000.00 This rule is universal among banks, and the example cited, that you may know how to check or prove such calculations. What is Percentage of Profits In the case above the percentage is on the investment, but when we speak of percentage of profits, it is not a percentage on the amount invested in goods which are only part of the sales, but upon the sales, which is the basis on which the Government figures when reporting on Imports and Exports — the basis on which many salesmen are paid, the basis on 58 BOOKKEEPING AND BUSINESS MANAGEMENT which a commission house will charge for selling your produce, the basis on which a city may license a jobber or manufacturer for the privilege of doing business. Error in Figuring Some merchants may know at the end of the year what proportion of sales is net profits and what is expenses, yet in selling goods, lose sight of the principle of figuring, and instead of figuring percentage on the price for which an article will sell, add a percentage to the cost of the article. The Wrong Way to Figure Selling Price For example, a merchant whose expenses 'are 25% of sales, intending to price his goods to net him a profit of 10' ' , buys a machine which costs $97 .00 He pays freight 3 . 00 $100.00 He adds to this cost 2^'' for expenses. 10% for profit, a total of 35',c 35.00 Making selling price $135.00 But the machine cost $100.00 he must meet his expenses, 25%, on sale, $135.00 33 . 75 Consequently the cash invoice price and expenses $133.75 For which he only receives 1 35 . 00 and makes as profit only or not quite 1 '.' on this sale $1.25 The Correct Way to Figure Selling Price If he had observed the proper method of figuring and taken the sell- ing price instead of the cost price as his basis of percentage, he would have made the selling price $153.85. If his percentage of expenses is 25 '< he should remember that out of every dollar received as sales, he must spend 25 cents to pay his expenses of doing business, and of every dollar of sales the remaining 75 cents must be sufficient to pay the cost of the goods and still leave 10 cents or 107° for his net profits. He should figure in this case that he must apportion for Cost of goods $0.65 For expenses .25 For net profit .10 For every dollar of sales $1 .00 PERCENTAGE 59 and as the goods costing 65 cents must sell for $1.00, the cost of the goods is 65% of the sale. The cost of the machine, $100,00, is only 65% what it should sell for, therefore, we divide one dollar by 65 cents to find what per cent 100 is of 65. If a sale is divided into 100 equal parts, or 100% and if your expense is 25 of these parts, or 25% and your desired profit is 10 of these parts, or 10% then the balance or cost of goods is 65 parts, or 65% As all these hundred parts are each one equal to the other, the question is simply to find out the value of one part, which is done by dividing (in this case) $1.00 by 65, and to know what 100 parts, or the selling price, amount to, multiply one part by 100. Example 65)$1. 00(1. 5385, or $1.5385 = $1.00, cost of goods, 65 and $153.85 = $100.00, cost of goods. 350 325 250 195 550 520 300 Proof: Machine cost $100.00 25% of sale, $153.85, is 38.46 = expenses. 10% of sale, $153.85, is 15.39 = profit. Selling price is $153.85 or, Rule Stated again, if sale is divided into 100 equal parts, or 100% If expense of doing business is 25 of these parts, or 25% And you desire to keep as your profit 10 of these parts or 10% There must be for this purpose, expense and profits, 35% and the balance, 65 parts, is the cost of the goods, or 65% as all these parts are each equal one to the other, the question is simply to find out what is the amount of one part, which is done by dividing the 60 BOOKKEEPING AND BUSINESS MANAGEMENT value of the 65 parts or cost price by 65 (the number of parts) and to find the amount of selling price, which is 100 parts — multiply the value of one part by 100. Example If your expense of doing business is 21' • of your sales and you desire to make a profit of 12/c on your sales, what would be your selling price of goods costing $1.22? Deduct expenses 27 and profit 12 — 3995 from 1009 = 61 r ;. Then $1.22 is 61% of selling price, or 1.22, is the value of 61 parts. 1.22 divided by 61 is 2 dollars, the selling [nice. Proof: Expenses, 27% of 2.00= .54 Profit, U c /c of 2.00= .24 Cost =1.22 $2.00 Percentage Figures Handy It may be well to note on the last page of your ledger or some other convenient place, the percentage of your expenses, with date, as the per- centage may change from year to year. With the memorandum handy for reference you can at any time figure the selling price of goods arriving. Of course, a book is kept in which daily, monthly and yearly sales are recorded, for comparison (Fig. 16A), and unless you wish the percentage of expenses kept from the gaze of others, this percentage, with the amount of expenses, may be written just at the bottom of the page on which the yearly >ales are footed. Expenses Expense Account Subdivided If so desired Expenses may be separated into: a. Buying Expense — To which account is charged all Expenses of the buying department, such as a proportion of the salary of the proprietor or manager, wage- of all clerks in that department, or proportion of wages of those partially en- gaged in the work and any other expense belonging to that branch. PERCENTAGE 61 Alta$i/y-/bbCwi&faM oTi^faAj and on/ io&&£ &AHS- Cost AS'A A 'A /6 A 'A ' 7 'A J AA /$ % 'A 'A *A 2o 2/ 'A 'M 'A 'A : jowo 1c /z-l zest, tars 2/2/ 2/S8 2./.GS 22j|z 1-1 JO 13ty -- %S~.U<\ -- 2-^,77 - zbuS = 2-4^ - 27- = 27 3 9 - ryrc SAiss Cost <21 'A 'A % *** 'A 'A* 'Ax % 'A A <$ '16 'A 'A J M ' 'A '/*■ ■& ■A ■A - 2 2-8. 7 ?' 3b Y-tl J/ ■& o / 32. <3Z. 33 20 23 3*-\68 3sy4- 3£.\oS JA,jrz\ J*. u 7 o 93 as SAirs. Cost '& 3a , '/* 'A ■W \3A 'A A &A ** J ft? 'A\ '/*■ 'A L Ti«i J T\u4\ 1 0+1 z J.2_rr<3 1 2- /Af 00 \ Apt z a O^k 7 00 1 dm- 1 So 1 OeAiJ O* ^V/2 n \ X <7vT7 5-C J /*Ot{tf t >* i6'o *"" / VreVii. I type*// ^ an 22 li>. \ Taqms 3 ■>63 7* ft> _] _y Fig. 16A Fig. 16B 62 BOOKKEEPING AND BUSINESS MANAGEMENT b. Store Expense — Rent, light, heat, repairs, taxes and insur- ance accrued, telephone, washing windows, sweeping, etc. c. Office and Management Expense — Proportion of proprie- tor's or manager's salary, wages of office force, stationery, office supplies, etc. d. Selling Expense - — Wages of all salesmen, advertising, pro- portion of proprietor's or manager's salary and any other items belonging to this account. e. Delivery Expense — Wages of driver and boys, expense and care of teams, trucks, stable or garage and such other expenses properly chargeable to this account. The proportionate distribution of salaries may be arrived at by esti- mating the time that anyone is employed in the different departments. Thus, if three-fourths of the time of one clerk was taken up by selling goods and one-fourth packing and shipping — the distribution could be made on the pay roll as charged, three-fourths to Selling Expense, one- fourth to Delivery Expense. (Fig. 39, page 135.) In subdividing the Expense Account as above, separate ledger ac- counts are opened for each, and charges posted as usual, and at the end of the month cross entries are made crediting each with the total charges to its account for the month and then charging the total of all expenses to the account, " General Expense," by means of a journal entry. It is advisable to map out your system or determine just what sub- division of Expenses is to be followed and continue the same classifica- tion, when possible, so that in the months and years to follow you may have the same class of Expenses grouped and by comparison be better able to judge whether in line or out of proportion. I CHAPTER IX Books for the Retailer — Set 2 F you would know how much you owe, how much is due you, how much you have made, etc., a simple, inexpensive set of four books should give you these particulars. Cash Book One would show the dates and amounts of cash received and from whom, the dates and amounts paid out, for what and to whom, and all such entries should be in this book called the Cash Book. The Cash Book, which furnishes or should furnish a complete record of cash transactions, is one that may at once refresh the memory of a complainant should a dispute arise. (Figs. 21, page 92; 22, page 93; 32, page 126; and 33, page 127.) Sales Book One a list of charge sales or bills sold to be paid at some future date, serially by date, by name, by address, and by amount, and usually by salesman and his order number, called the Sales Book or Sales Journal. (Fig. 23.) The customers' accounts are charged and posted from Sales Book to their accounts daily and the total credited Sales Account at end of the month. It is possible to use part of the regular journal for charge sales, but the small outlay, about $1.00, will amply repay you for the convenience of having one book solely for charge sales. Journal Another book in which is kept a record of purchases by date, amount, name of seller, and for such other entries that are not cash nor charge sales. (The Journal, Fig. 20, page 90.) Ruled Up Each Month These three books are regularly ruled up at the close of each month to separate the transactions of one month from another, and other advantages. 63 64 BOOKKEEPING AND BUSINESS MANAGEMENT Ledger The last of the four suggested is the ledger used for summing up each class of accounts, and to show the condition of each open account on your books, and may be small or large, plain or elaborate, ^t36E33B, as you may desire to choose from any stationer's stock. (Figs. 24, page 74; 25, page 95; 26, page 96; 29A, page 100.) Sales Tickets Sales tickets of numberless varieties are carried in stock by those houses which make a specialty of such work, and are not expensive. (Figs. 3A, page 17; 3B, page 19.) With such an outfit, costing about $15.00 or less, you could answer any reasonable question about the financial or material condition of your business, except, possibly, the exact quantity or value of stock on hand, which can only be accurately arrived at by taking an inventory, which should never be at longer intervals than one year. Estimating Stock on Hand If, however, your profits have had a uniform average, for several years, you might come quite close in your figures of amount of stock on hand by adding to your inventory of the first of the year — All purchases of merchandise since And from this total deduct your sales from which you have first deducted that percentage which we call gross profit (or expense and your average net profit). See percentage, page 57. The advantages of a correct and simple system are so self-evident, the cost of the books so insignificant, and the time to study these few pages so brief, that it should appeal to any merchant who would prefer to be in that class of five who succeed rather than in the company of the ninety-five who, by reliable statistics, are known ultimately to fail or give up. A small set of books of the kind described will be used to illustrate the system. Our Work Starts. Set No. 2 Let us suppose that Robert Bell & Co. took inventory December 30, 1915, last year. All entries were properly made and balances brought for- ward on November 30, 1916, and from that date or on December 1st our labors commence. (Fig. 19, page 89.) In this case, Robert Bell keeps a diary of daily transactions in past year, styled a Day Book, and has an outside bookkeeper come to the store one evening in the week and write up his books. (See pages 76 to 82.) BOOKS FOR THE RETAILER — SET 2 65 Bell preserves all receipts and documents necessary to check his memoranda. To close up the year's business it is necessary to have a record of prop- erty on hand at the beginning of the business year, or the inventory, and a record of purchases, etc., since. Trial Balance to Start This Set The trial balance as of November 30, 1916, shown here will be taken as correct, and the inventory balances of January 1, 1916, will appear in merchandise account. (Fig. 24, page 94.) (See Fig. 19, page 89.) Trial balance November 30 — Robert Bell & Co. (Set No. 2.) Closing Explained If we know how much the stock amounts to at the beginning of the year, and the cost of goods bought since, we deduct the present inventory or all of the goods that now remain unsold, and the remainder is the cost of all the goods which were used during the year for sales. If we know the cost of goods used, and the expense of buying, hous- ing, handling, and selling, together with the depreciation and losses, in fact, the total expense of doing our business, and deduct this total cost of goods used together with the total expense, from the sales, the remainder will be the net profit. The difference between the cost of goods used to make sales, and the sum which those sales amount to, is termed the gross profit, out of which must be paid the expenses. For example, see " Merchandise " and " Trading Account." (Figs. 29A, page 100 and 29B, page 101.) If our inventory January 1st was $3,967 .80 and our purchases Jan. 1st to Nov. 30th $20,042.23 and our purchases in Dec. . . 1,353.41 Total purchases 2 1 ,395 . 64 or a total cost of goods $25,363.44 and we deduct goods now on hand per in- ventory 4,185.62 it leaves cost of goods used for the year's sales $21,176.82 which we deduct from total sales of 30,957 .80 Leaving gross profit $9,780. 98=31.60% of sales 66 BOOKKEEPING AND BUSINESS MANAGEMENT From this gross profit must be deducted all expenses 6,717 . 22=21. 70%of sales Leaving net trading profit $3,063 . 76= 9.907° " " From this trading profit we de- duct interest on capital S360.00 Less profit made on dis- count $'36.60 Less profit made on Bray Cons't 55.89 92.49 267.51 showing total net profit or gain $2,796.25= 9.03% " " (See page 99.) Comparative Sales Record Books are usually carried by stationers with a great variety of rul- ings, 2, 4, 6, 8, 10 and 12 columns, and are not expensive. It may be well to select one of six or eight columns, which may be used to keep a comparative record of daily, monthly, and yearly sales; though there is a small book published with rulings and headings for the purpose. See Record of Monthly and Yearly Sales. (Fig. 16A and B, page 61.) CHAPTER X Partnership IN writing up this set of books, the month of December, 1916, is chosen. Robert Bell has had a prosperous business and concluded to grant the request of his clerk, A. L. Davis, who had served him long, faithfully and with good judgment, to take him into partnership, commencing January last. Partnership Agreement Bell had $5,000.00 invested, and Davis could raise $1,000.00 cash, so an attorney was instructed to draw up a partnership agreement. Among the clauses it was agreed to divide the net profits as shown by the books upon closing each year, five-sixths to Bell, one-sixth to Davis, allowing each 6% interest on his investment, providing that Bell receive $25.00 and Davis $15.00 per week salary. Selling prices were to be calculated upon the basis of the average of the last two years' expenses. The inventory at the beginning of the year showed goods on hand at inventory cost of $3,396.80 (Merchandise Account, Fig. 24, page 94), and business was conducted along the lines Bell had found successful, until Nov. 30th, when the transactions are taken up in detail and hereafter continued until the closing of the year's business. The usual transactions taking place upon the books of the average retailer are shown, and it might be well (or advisable) to check each entry as mentioned and follow it through to last posting, that familiarity with the methods pursued may be more easily acquired. Duties of Partners Bell is the active manager and among his duties are passing upon or determining whether the credit of charge customers is satisfactory, order- ing all goods and supplies, of course, consulting those most qualified to suggest, and such other general duties as belong to that position. Davis is assistant manager, and, in the absence of Bell, takes over his duties. Both, of course, are active in waiting on customers. 67 68 BOOKKEEPING AND BUSINESS MANAGEMENT Duties of Clerks Cashier M. E. Denny is bookkeeper, cashier, and office clerk, and about 2:30 every afternoon counts and balances the cash, compares cash sales list, deposits all checks and surplus cash in bank, reserving the usual S20.00 cash for change in the drawer. Balancing cash is comparing the balance shown by the Cash Book (the difference between the two sides ) with the cash on hand, which should agree. Cash on hand is the total amount in bank and cash drawer. Entering Cash Sales The amount of cash sales then shown is entered up on the Cash Book, and any cash sales made later are counted in the next day's results. The charge sales sold and billed up to closing time are, however, entered for that day. To O. K. Orders Orders for goods to be charged are submitted to Mr. Bell, for his approval, these orders O. K.'d, then are passed to the clerk whose duty is to fill, and after that the duplicate of each is sent to the office for entering in the sales book, the original goes with goods to customer if delivery is made by driver, but mailed if shipped out of town. Entering Charge Sales The carbon copy, which is the duplicate of the bill, of course, is checked, if not already done, as to extension and footing, by the book- keeper, and then entered on the sales book, using but one line for date, name, address, salesman's initial or name, his order number and the amount of the bill. (Fig. 23, page 91.) Monthly Statements At the end of the month, if necessary, send statement, only dates and amounts of bills, and total of account with any credits that should be on the account, which the customer may check from the bills he has had, ren- dered when sale was made. There should be no necessity of itemizing monthly statements, if the customer understood that he should retain his bills for checking his statement, and by so doing avoid much unnecessary work and long hours by the bookkeeper. Statements Kept Written Up It is customary in one large store with which I am familiar, to head all statements as bills are bought, and add such other charges, taking the figures from the sales tickets and continuing until the end of the month, then comparing with ledger and entering balance due and unpaid on the PARTNERSHIP 69 first of the month as well as cash paid on account during the current month. In many houses the bookkeeper is instructed to hand the manager a list of all past due accounts, giving name, due dates and amount. From this list they are entered on the Diary for dunning. This comparison is an excellent check on the charges, the footing, etc., and proves a splendid aid in catching any errors made in posting and footing customers' accounts in the ledger. Many customers call and pay their bills before the end of the month, and, as all statements are written up except the cash paid and the footings, it takes but a moment to compare with ledger and hand out the statement. Such promptness always pleases. Returned Goods When goods are returned for any reason, an occurrence which, unfor- tunately, cannot always be avoided, a credit memorandum is made out showing name of customer, date, articles, and amount ; why returned, and when possible, the date of purchase. This memorandum referred at once to Mr. Bell, for his approval. If passed, the customer is paid the amount, if on a cash sale, or, if on a charge sale, is, through entry in the journal, credited his account and charged sales. As the goods came from stock through sales, which account was credited when charged to customers, they are now charged back (Figs. 20, page 90 and 34, page 129) to sales and go into stock to be accounted for by stock or merchandise at end of the year, when closing entries are made. If goods are spoiled or unsalable the loss will show in the round-up of closing entries. Buying A requisition, or Purchase Order (such as may be bought from any good stationer) is made out in duplicate, by car- bon, and mailed to the whole- sale house when ordering goods, unless bought through a traveling salesman at the store; should be the list by articles and price, and also time wanted and shipping instructions. Each requisition is numbered and the shipper requested to put that number on each package shipped on that order, and also put the number on his bill of lading and invoice to facilitate identifying the shipment on arrival and checking, which is done by comparing with the duplicate pur- CREDIT HAEIvAO. a^verti Ha i rUI ftacredit yoS 0£LO<* VIA placinc ovrr TiEquistTion el\ fSfrvu, »? .-rfe sttnvof 7" '..,:,< rktMJoWvH y>#/c Mi* l ,Lu ^Vw- /te 7 i) 7 FlG. 55 — Bill Book These notes also should be numbered and entered in the diary on the page of date due. If only an occasional note is given or a bill receivable taken, there is no need for a special book of record, as the ledger may then be sufficient, because the note numbers are stated in the entry on posting of each one. Notes the Most Particular Class of Debts Always bear in mind that your notes are the most important class of debts due by you, and must be promptly paid when due. They are in this respect not like debts due on open account for mer- chandise, even though bought to be paid on a fixed date. Must be Paid Promptly Notes must be paid on date promised, or your name suffers by protest. Debts due for merchandise should be paid when due and are just as sacred, in fact, as notes made by you, but in the latter case the exact date of payment is agreed and fixed by your written promise, while in the former, a day's delay docs not have the same legal consequence,* A certain amount of capital is necessary to carry on any business, but character is the most valuable asset of a merchant. Performance not promises make a reputation, and when experience has proved to others that his word is as good as his bond, he will find fewer obstacles to success. The Golden Rule still sums up the whole code of good business and can- not be improved. * For the accounts as written up, see Figs. 19 to 29D, pages 89 to 102. CHAPTER XI Robert Bell & Co 's Books IF we are to follow the different business transactions of Robert Bell & Co. during the month of November, it may be well to put them in diary form or somewhat like the " Day Book," which was used many years ago. Any merchant who cannot keep his own books could jot down the daily transactions as below and have some outside bookkeeper come in one or two evenings each week and write the books up, which means making the entries in proper form, and then posting to the right accounts; at least, until the merchant could master the problem and do this work himself or have it done by one of his regular clerks. The Trial Balance, page 89, had been prepared by the bookkeeper. The diary or records made by Bell as shown on the following pages are jotted down as they occur on the left-hand page of an ordinary " day book," which may be found in any book store, stated in his own way and language and later used by the visiting bookkeeper in writing up the books. (See Figs. ISA to 18G, pages 16 to 82 inc.) That Mr. Bell may be able to understand where and how these entries have been made, and check them off if need be, the bookkeeper states on the page opposite each memorandum of Bell's the book and page of same on which the entry may be found. If the reader is interested in following the entries or wishes to familiarize himself with the manner of entering, posting, etc., he will find this exercise will materially aid him in following the accounts, and very soon be able to know where such entries belong without depending on the bookkeeper's explanation. As an experiment follow the first two pages of the diary, then endeavor to locate the book and page of the entries which should be made of Bell's next sheet, putting down on a sheet of paper just how you would enter and then compare the result. If mistakes are made follow the entries of the next page of the diary and the explanation and try to properly locate the entries on the page fol- lowing. Instead of being a dry lesson you may find it an interesting game. 75 76 BOOKKEEPING AND BUSINESS MANAGEMENT M /0Z^ 1 Jo 8. Jo *4S fS\< 3-F6.fS Ji*+id* - « J yOnAj JfZ fJ Ac&4vt fcL/tm. i(icUi^ ¥-2 2o3 205 3/ 2a U 2o2 4/ 1 S &-CtU-&J 6L\* V j/i^ut- *SeL>?L &l 4- -h^sJ/c J&tvea4.A ifqq&m -9-. ly.G Acoyivy/fa^&OC. "/if. ■4-uv -do Z>a\ Cqqa (p-AJ^cUk^, ~&£-C, 8~* ~ /2/ 9* (\e^)Ut^ £ZJZw^ ,^~-. CaUL /2/c /SS /■Sd Atn/-cf A /U,' &uJ~\£.j>* 7/ 28 8 o /6 to \S'^0 5iSlL d#a/suJ &r€ &*/.&L frJ*^ flm//&t} Gr{ £*y,A£# 202 2o: 2o2 2°Z /c ? ass U3 /^Ai<> /fi^i' <«^t> -cn> 'dJtfal' oot-J 2oS Fig. 18B — Robt. Bell Co.'s Diary. 78 BOOKKEEPING AND BUSINESS MANAGEMENT 10 z. /*fa£u4sJa* tz*/ At^ grt kernel 'xhvwu, <£ rtt't&drfa $Mfl1^dc^ %jLQ, /d^ KTAMA^d tyLcLA-f/ Z)ze/^^ 977° fK 3 $\3 6 &ct4^A(*u. frits. 0k£^L*Cu-*/ £)£-CL /£™ 7* "~£-*^-0 ^*">-v cu<^<_ 3o d% (S3 /f % ■hrfK^Uu) &UuZ'*> /JrAylZ^ & ■/o \zeXZ , j4rtfe6s vT/drrt- ofe* /WeJ/i dA* fiiXy (Sv.^ *t°J±J '¥;■ it #> 2o3 ioi. M /8 Fio. 1SD — Robt. Bell Co.'s Diary. 80 BOOKKEEPING AND BUSINESS MANAGEMENT &e&? ?n<* ■s\ ^k^f^Oy /}£e^. /&£■ 2.Q- ~7t V^C f7 23-2- vTvT /3 &/3 SS. JlrGrf.illaftAA^ Ail jryioA^ iv ^aA.JU. *v ' yOJ b/// 6 a Z33 & l$4C4n^-JG^2 6V* I^AL NT la \/fa '■'/o \/S~C A^ 2 2- 6mI^ #t)-Lu< /lAsihJo, CttyltvuJti 7. lo 2e>i- 0>- 3 Fig. 18E — Robt. Bell Co.'s Diary. ROBERT BELL & CO.'S BOOKS 81 J^}U. 2- r Mjt_6-crvfc£c&/^L*-t A-rr^LcU^^ 'it-l^tTc^ Z) 4~<2 Z 2 - lT<77i/£-7-7^c^ <) duct &f£ &w?v\ yw £ £t^U-<^Uj 7 -&&,C*r**~S '2S8 7a c ) pmMl /4>'*Ceji* faa/oK, ' 6< / eJ~- 2oi Wa£c^'#^y &jL&. Z3- l°d£ (Pad. <£/6z/eJ»fe> £/us^- e/*t*.c* -55**: S/l $o3 ?0Z Jtt&^^US X).j£^L. 26- A tfS'o oCeJ~ PjUS UuAia 6r»--C 4 i^v6C \jr*>/i-2 /-o y/&Jb* ?#&/■ - aC^> /tfro '.C^f'L §fau, C*-l -A*£„dnU.-&*/bt £.t-T- H ' I 1 -filed u+V. A v^ i y^cc^f r7Y-cy£6- c^^c/cu^r AhmcA**^. /AT 4=1 ) ■2c3 ■ft* to 3 6? Fig. 18F — Robt. Bell Co.'s Diary. 82 BOOKKEEPING AND BUSINESS MANAGEMENT <^7t>^-t-<-<^eJ dtt- /U> 2- (ct?(<. ^rn7/*/£2yCc*_* 'Cc^-aJZ^n^-y /fVid*a^st#sy 2Ue zy- /t T *9 8/r ■s -fan*, fh^kv. Cttfitf &S "n^ &/OsU, /ftzr/t 6a*a tfaA* /<^6j ecrtytA^J'*. SJ%<4A4 1 6 / -'Z<-y '^^C-.^ .'ff.— 1 f_ raft. *7 jgW^^y &£-£. 2. ?■ (&>3 2o3 $05 d7 Fig. 18G — Robt. Bell Co.'s Diary. ROBERT BELL & CO.'S BOOKS 83 Closing the Books Sales Book The bookkeeper is called in to make the closing entries as follows: The Sales Book (Fig. 23, page 91) is ruled up for the month, footed in ink, making a total of $2,226.10 — this being the total of charge sales for December. This amount is posted to credit of sales in the ledger (Fig. 24, Led. Fol. 24, page 94) and this ledger page number is put in the ledger folio column of Sales Book and the Sales Book folio No. 47, in the ledger. Cash Book Ruling Debit Side of Cash Book. (Fig. 21, page 92.) — The Cash Book columns have been footed daily in pencil as soon as all entries for each day are in, so that the figures can be used in the daily balancing of cash. At the end of the month they now show — Cash sales received in December, of which none has yet been posted to ledger $1 ,187 . 90 as only the totals are posted. Paid to customers — each amount posted as paid to its proper ledger account 1,281 . 70 Received from other sources — Sundries — also posted as paid (plus balance from Nov. 30th, $817.60), equal. . . 1,104. IS The footing of Cash Sales is made in ink just below the pencil totals and carried in ink over on the same line to the Sundry column. The footing of " Customers " in ink is made on the line below and also carried in ink to " Sundry" column. . . These figures in the " Sundry " column are now added, showing a total of $3,573 . 75 The interest column is ruled, totals made in ink on the line below, and then carried in ink to " Sundries " column. . . 75 And deducted, because the interest paid on Bills Payable was counted in, though not received, and thus deducting gives us the amount $3,573 . 00 which includes the " balance " received at first of month from previous transactions, $817.60. To find the actual cash received during the month, we deduct this balance with which we started, or 817 . 60 which gives the exact amount of net receipts for month $2,755 .40 and in the left-hand margin, this amount is placed for posting. (Fig. 21.) 84 BOOKKEEPING AND BUSINESS MANAGEMENT By carrying in a separate column all interest deducted on loans by bank or paid on loans, interest can be totaled and posted in one amount at the end of the month, instead of making a journal entry each time, and this method saves much extra work. The net receipts, $2,755.40, is posted to the debit of cash in the ledger. (Fig. 24, page 94.) Ruling Credit Side of Cash. (Fig. 22, page 93.) As the columns show pencil footing — Merchandise bought for cash $13 . 12 not posted until a total at end of month. Expense paid cash 663 . 00 not posted until a total at end of month. Sundries posted, as entered, during the month 2,212 .44 The several totals are carried to the Sundries column. Merchandise column is ruled, footed in ink and carried on same line to Sundry column. Expense column is ruled, footed in ink, and carried to Sundry column on line below, being the Expense total. Then Sundries column is posted, showing a total of Sun- dries column $2,SS8 . 56 Rule " Discount " column on line below the last footing of Sundry column $2,888.56 put total in ink and carry to Sundry column below the footing of Sundry column and deduct 36 . 60 showing $2,851 .96 footing of net cash paid out, which total is posted to credit of cash account, " Cash paid in December." (Ledger Fol. 10, Fig. 24, page 94.) The balance between the credit side or cash received $3,573 . 00 and the debit side or cash paid 2,851 .96 shows the balance of cash on hand $7 2 1 . 04 which is put in ink under the " Total Paid " column, and then footed. This total should equal the total of credit side or be " in balance." The Balance of Cash is then placed on first line, under the ruling of the month's receipts on the debit side in both the Sundries and "Amount Received " Columns, ready for the next month's work. At the end of the month the cash balance shown by the Cash Book should agree with the balance as shown by the ledger account of cash. The Discount total, $36.60, being amount received during the month, is deducted and to be posted to the credit of Discount in the ledger. This ROBERT BELL & CO.'S BOOKS 85 column proves of the same convenience as the Interest column on debit side, in avoiding extra work. As the Merchandise payments were not posted during the month, the total, $13.12, is now posted to Merchandise ledger account on ledger folio 18 (Fig. 24, page 94), and for same reason, Expense total is posted to Expense Ledger account. (Fol. 34, Fig. 24, page 94.) The sundries paid out are posted daily and at end of month need no further posting. Bills Payable The full credit to Bills Payable of the face of the note should be entered on the Cash Book, because that amount should stand on the ledger as the amount due, and as only the proceeds, in the case $149.25, are given by the bank, by being entered in the pass book as available for use, the interest is placed in a separate column as noted, and being a charge, must finally be debited to interest account. Discounts The discount deducted from remittances for goods bought, is a gain and must be credited to Discount account, and the full amount of the bill charged when paid. Proving Footings of Cash Book At all times the correctness of the footings of cash can be proven, because the total cash sales received and amounts paid by customers and Sundries should equal the footing of the amount received column, unless there is deduction for interest paid, in which event the total received must be added to that column's footing to equal the other three. The same rule holds good with the credit side. Cash Balance Shown by Cash Book The figures of the amount on hand, or the balance at the end of pre- vious month are placed in the " Sundries column " and "Amount Re- ceived " column on the debit side, that the footings made later will agree in the proof. At any time cash is balanced during the month, the differ- ence between the footings of Amount Received and Amount Paid columns, should be the total cash on hand, or currency in the drawer and amount of bank balance as shown by the check book, to make this total on hand. CHAPTER XII Closing Entries (Fig. 28, page 99.) AFTER all the current posting lias been finished it is customary to take off a trial balance (Fig. 27, page 9S), or a list showing all debit balances, and all credit balances, which when footed should equal, showing that the books balance and all entries have been properly posted. Profits Other Than Trading Next, all other revenue accounts, as Bray Consignment a/c, are bal- anced by debiting them and crediting the respective balances to Profit and Loss account, because the gain or profit, made on such an account is not in buying and selling goods in the course of your regular business, but as in this case, a speculative venture which may result in loss instead of profit. Taxes Then Tax account is examined, and, as the taxes or license for doing business in many cities are assessed at beginning of the year, the tax is paid ami charged " Taxes," and the account gradually reduced each month by charging to expense or some proper account one-twelfth of the year's license and crediting license or taxes. If taxes are only paid at end of year for the year past, then a certain estimated amount usually based on the bill of year previous, is to be provided, which will at end of year apply on liqui- dating the tax hill. To accomplish it one-twelfth of the estimated yearly tax is charged taxes at end of each month, and credited to an account usually termed "Reserved for Taxes'' or "Taxes Accrued," and to this account is charged the tax bill when paid. In the present case we are using up a sum paid at the beginning of the year which has been reduced monthly until now it amounts only to $7.60, or one month's proportion. Insurance and Interest We find that of the insurance in force, ?5.2S, or one-twelfth of pre- mium, is due or used, so we charge that amount to expense and credit insurance. We charge off balance paid for interest, 75 cents. 86 CLOSING ENTRIES 87 Depreciation We estimate 20% depreciation on Dray Stock, or wagons, harness and horses, as just, and we charge that to Expense, crediting Dray Stock to reduce the value $93.00. In the larger cities auto trucks are rapidly displacing horse-drawn vehicles, and, in the estimation of auto insurance companies, are subject to a larger rate of depreciation. Furniture and fixtures have a fixed depreciation of 10% in our judg- ment, hence we charge 10% of the balance to Expense and decrease furni- ture and fixtures balance that amount, $78.03, by a credit to Furniture and Fixtures. The credit to Dray Stock and Furniture and Fixtures of amount depreciated, is an allowance on those accounts because they had shown wear and tear and were not as good as they were the year before. This is similar to allowing a customer a certain sum because the goods sold him later proved defective, or depreciated in quality while in our stock. In both cases it is an allowance or loss and must have a credit — which amount must also be debited to some other account, and in case of Dray Stock and Furniture and Fixtures, charged to Expense. Reserve for Bad Debts We wish to provide against erroneous valuation of accounts receiv- able, which, before collection of all, may show some failures or unfore- seen claims, so we decide that 2% on the balance, $2,672.20 outstanding, is about correct and open an account " Reserved for Bad Debts," and charge expense 2%, $53.44, and credit the amount to Reserve for Bad Debts. In case of failures the loss is to be charged to this account, " Reserve for Bad Debts," and credited the customer who has failed to close his account on the books, or wipe out the account. Interest on Capital We must compensate the principals for the use of their capital, so 6% interest for the year is credited Bell on his $5,000.00 and Davis on his $1,000.00, and these amounts $300 and $60, respectively, are charged Profit and Loss. For these entries, see entry " PROFIT AND LOSS," to Sundries on Journal. (Fig. 28, page 96.) 88 BOOKKEEPING AND BUSINESS MANAGEMENT Trading Account (Fig. 29B, Led. Foi. 19, page 101.) What is It? The account, now used conveniently to show the results of the business dealings, is called Trading Account, and may be likened to choosing some agent or mutual friend to whom you hand all bills for your expenses and bills for merchandise bought, and also the proceeds of the sales, with the understanding that he will pay what is due and hand you. the balance, which is profit. The balance shown by Merchandise Account is charged to Trading Account and credited to Merchandise. (Fig. 28, 5th entry, page 99.) The balance shown by Expense account is credited Expense and debited Trading Account, thereby balancing Merchandise and Expense Accounts, which are ruled up. (Figs. 28, page 99 and 29B, page 101.) The balance of Sales Account is charged Trading Account and cred- ited Sales, thereby balancing the latter account. (Figs. 28 and 29B.) Discount Credited to Profit and Loss The balance of Discount Account, and Bray Consignment Account are closed out to Profit and Loss Account, because they are profits on cash in hand, and not on trading in goods. (Figs. 29B, page 101 and 29A, page 100.) Closing Merchandise and Trading Accounts We await the completion of pricing, extending and footing the inven- tory, when finished showing goods on hand. We charge Merchandise with that amount, showing goods on hand, and credit Trading Account, because when we charged the total balance standing to the debit of Merchandise for goods bought, including what was used for sales and also the balance still unsold or what is still on hand, we credit Trading Account. This would have been the same as crediting to Merchandise in the first place, the amount of goods used, which could be calculated by deduct- ing the amount unused from the total balance of Merchandise, and charg- ing this difference or balance used, to Trading Account. The method shown allows the books to be closed thus far and await the results of the inventory. (See Figs. 28, page 99 and 43, page 140.) Trading Profits A balance is now struck in Trading Account and this balance (in this instance, $3,063.76) credited to Profit and Loss, showing Trading Profits for the year, and Trading Account is then ruled up as balanced. (Figs. 28, page 99; 29A, page 100; 29B, page 101.) CLOSING ENTRIES 89 *Zu*st/$ '/J '/*' '/if c /, Si. 3 fyMP/rtQ Co. Total Bif/lovA W< Jo Total & / 2L (P S3 Slt \ssr So Cs/ Co. J>U"i- ,uwrrvc£_ '*//*> /8 ii Jo £ ' Fig. 20 — Journal Entries CjEHlRAL ACCTij CUSTOIItni IDJ? CR //#O0 o'vivc yl 9 /2c? 2M/vA Lk /: vt ¥7- JIC7J- //MOO 2?o You will note that the above ruling separates the General Accounts from the Customers' Accounts, though this form need not necessarily be used, unless the reasons below appeal to you. If at any time it is desirable to prove up the trial balance, the col- umns of both classes of accounts are footed, debits, and credits and to the debits and credits of the other books which have been footed are added the respective amounts which will show the total debits and credits which have been posted during the month. As your preceding trial balance showed the total debit of customers you add that debit to total customers' debit footings and deduct the total credit footings, which gives the debit total of Customers' Accounts, thus checking if correct or showing a differ- ence if an error has been made. Eikewise the General Accounts can be proven. The writer has been able on many occasions to prove in which class of accounts an error has been made and consequently know which class to check for the error. CLOSING ENTRIES 91 -3,Avi_E_<5Tr5ooic 4/ -^ATll ir» /tOOrficSS /^ AhAE. -Salesman g SHlPPto AMOUNT *bi Imitial N? 0y Die 1 i'7 6 J ¥0 is 20 J~ X). rfcujlcrY f^K (, 21/ 6. Jcfrrf 6 apo 7 2L1 U.2 aS /? nrf So 2iJ" ^ . / . SA-0-f-r 7 6 20 "f lb 25l Z 7 iAvvcUT^y 7 7-i-2.e>/o . ■ Fig. 23 As the same transactions occur in both Sets 2 and 3 — - the customers' accounts in both are the same, hence Fig. 35, page 128 is similar to Fig. 23 except that the ledger page is different, see Fig. 24 in Set 2, page 94 and Figs. 41A, B, and C in Set 3, pages 132 to 134. 92 BOOKKEEPING AND BUSINESS MANAGEMENT 202 ■Z>7? . ~6a*& /fcktt rfxlt h^ DAT£ \jjft 7T£C£/V£Z> */fO/-r Z*4 ' / 2 £/ So t If a a M &CUZ4 7l/SC/T//>7'OAr \CAJtfSMS '"J tff oa .v 33 to *A-4ArT3H. * Co* A fa/*, S* 38 70 ■^■S 42 J3 A. /Z6M//S $Jjdo fa GitO- /i OJL^v^z*- 0*.4*t**-b S i '7 6 « 2ySS At-o fnStiMc 3/ ///Yo 4f/S "?1& /oo?S S'oyc ho //S 7 4 ■ •H //o a fyfc /2S/ 7 d /2S fr~A /So //i-j /Tg/ 3S-7 3S-,3 7 Z - ■ 7 37S 7 J M AMTZm ■ S/76C 3b?t 4/Sm 33>4> OS2S 4//te Soya J&23 J7& 36 06 /iou-S 3721 v5v/o 333S / 2-8 00 #6/o\ A3o4 //0 /0 00 b JX73 >S3c^\ fi 7f /// - ■V/n JOic' Si 9 // * // •t 22- u it h i sS TAf2> TQ faq/a* 4^ G ObHM /I- £ <£ o -£0-6,6 ££qo*L JfC •f'J " 2w».c Milc<> G Pj^Cfia^ntjG Jyyvcrx,'lt/\jAAs) £. . "/a y. « goaf C Ou- AAA,Ct_ Ms/ M/t-Jm. aJ -d/rfl/c fiLfo, Qua A, /j^'ZccA&i -W. / If / 8 .T.Qz-ftn XrtyA/ 6UZ Pe-AUf Ow £./. . -Uc/(Z^ Oofajt A a**\ 4y 3 '6 zgr/ 7 z/ * m J£73 t>'-Z& 2SS 4 #2. Til Fig. 22 — Right Hand 94 BOOKKEEPING AND BUSINESS MANAGEMENT ¥ y&rtU- /9tll {PaSLcSo-I /tc&t Foi DEBIT ¥\ CREDIT \S~oa o Ut,\^\ /o, 3, Ck**K \U<"Uo\ /j. ~i f 7^-oiooii r \/&.\3o\ /<>aU ~~[ II ^/6 vTIo ol] I lU*'!.*"! ^Go^£ li 7 ^J-J-C «* |: IT: 7 Ke pic J- J- 1 //-oil 2>.. B /(&<£/ Ctf&ce^A^i-dt /■S~o \ c>o \ |ioi.l| /vi~<3 I c? O I U.sl icW/ 7*Wt t?6o Jfi/6 1 ' Hw #0 ftft'/l-"/><, Xmc.UJ.1-3 J ***£>/« o3 2*c /» >-» 1/ Jo faJ-en* f » • iff /If /j sx 9-> /2- 1SJ6 3 -M S^Z^V S<\ 2tti* fff> % ^ 2 o o /Ye* 3' 3o JiKi. (72c|J»l /te.t.ii^./lT.< ■3a \ I I ^^ Uo I 2>*<-l 1 I Ca^/i |/*-o^l3, | /3, (.'- V Jo |oo T~r 32, iz>3 3J-& 9? Ale Jo h 3rt ^2 - S5 flu. 8- XI. •• ioj 1 20/ /2. 9 3(, Afo> Z)*c 3o /S /7>aJL . . to/ /2f 6 9 L?3 I 0^ V Atr 2cc 3 a V3tU TGcf 7 7 "^ 6 7? J \ ffi^l^O W^siJ} Ci/iKs^c. Co SSi A&L 8 2o3 •1 3zo 2.0 7^ fret XTte 3o 2-0 ? l-ioj I '°z %\ CatA. I Jo CajA. <&AsoU. ttLd-t?^- ioi |l yjj. /04|| /3<2^ I ll <>*<. 1 6 CostA^ i/vs \/o 'lol\ (fo\jo \\ /oS\\ \Av\Jo flat. \acA3o COsilA, gs\6a\au.\S' b>\A /z/ 'on /3A3o titu. Ca&4^ y&t^ot &/y^&u lo //2| \4i» \3* /3*Z |/J3'l2o| I j 4/-?^"k^f" \/tVr\3o titu I \/2S \A-o\a U\xq Caat^- "41 If \Avr\3o /3 a*. Urv lie I 1 //o \£s\/ ru\7 1 •■ K7 I) ^^jooll I 1^711 qo\os\ p t r g2? ACCT5 ■MCE1V*QLI StTS 3. A»»J CLOSINCx ENTRIES 97 /eafaar- /JccHfteceirtvi-U.- Can+mu-XLy SjtC 1 ^ 1 <3£U±4 U 7 11 c?o iTbl i J 7 . -i&CcUsLCL^« \// x?a^c4 \-#7 II 7-J-l/olj 1 1 1 » 1 II \tO€C 1 /-z-1 *?Os£d U 7 II ^ol^oll 1 1 1 II 1 II 237JI 1/3^1/ J ■<7asCz* |-« ? I) y-£\oo\ 1 1 1 II 1 HI 2 2«|| IiA^cJaV*. */aJji*r \"7 \ 97 ^7°^ ' 1 1 II 1 II 229,1 l/J^cl /./"I xyasCc* ' 1 H 2.30I 1,4^1 / \\/>4*-l/ 6 \mct/i^6- y.\6?^ '/^ |*c\/q Jcz&l, I ^7 II ^«?l/o l| 1 i 1 1 1 1 2 33,1 \/n*.\'2-o ■ / \6?\ a loo II 234 || \jOJ^\ 2-' -y ■i i « 1 II 2.3511 |/>~.l i. 7 1 •^t. \" 7 \ 78\/*sr\ 1 i i I 1 II 23511 lA^l^f 1 y/aM^, 1-^7^ /ovlooll 1 i i \ 1 11 24011 \/>^e.\ 2^ \ /?ec if4. '/o 3/ S5 Pi ?7 N N mr 2 St "J M e.sccrf- yj. *Y>£-0'C%Jys^ //'-Aoc ZSbi&W ~jCo\oo / 2. s \fooo\oo /ooo'oo /Scoo Fig. 27 — -Trial Balance before Closing — Set 2 This is the " Trial Balance before Closing " or the trial balance to prove the correctness of all postings and footings of the books before mak- ing the closing entries. Unless this is taken off properly and shows both sides in balance, no attempt should be made to close the books for the year. Some bookkeepers force a balance by opening an " error account," to which they post the amount to make the two sides agree, but it is well known to any old bookkeeper that a seemingly small error in his trial balance may be the difference of two or a dozen errors made, and no dependence is placed on that difference being only one error. A book- keeper who uses an " error account " to reconcile his books is unworthy the confidence of his employer — only honest and patient work will detect an error, and a lazy man is neither patient nor thorough. CLOSING ENTRIES 99 h §u. *&)tJri - toy. * „ . jsai-S ■3>0 3c, JrtldvKG {Zee/ . A\ £?yW\A^J %. 3a Jo — " Xjv 3o - qiA/t-fiAl ACCoonrt 36 io 23$ >o 3L JZoPo $6 Sofa yd 3oo <4o 9'*9 93 /So3 Jo f-SyPo 3od3 zilozi CCSTOM/-/7S X>* C* Fig. 28- — Journal Closing Entries — Set 2 A page should be set aside for closing entries at end of the year and should be headed as shown that attention may be called to the fact and no other entries allowed to go on the page. It is like the End of the Chapter — the closing of a definite period and deserves emphasis. Explanation of why or for what purpose accounts are closed, trans- ferred, increased or diminished should be clearly stated. Rather err in writing too much of an explanation than leave the meagre details to be later unraveled by some unfortunate successor. Nothing is more confusing and irritating than the absence of the why and wherefore. 100 BOOKKEEPING AND BUSINESS MANAGEMENT &o4vU /deU -<2u-cZvi.-' r T ■ \ ~ I fJZAoob i f I IT ^.^T^M-ic 1 ■ '■ /■: ^ ,•,!.; J/iS^PC 35 6i/£M/ - (UJjrtciati / J'vSi/C "/$ - -, ■ ; yo Tuv 'Jo 2t63o J'-StA /.If J Ou/ '/:< oOi'x /dcU rfu'd#H Ate. 7r: /daL <2jJWf-d \ L-'O. 7-: / f~ 2/\&tA ■ tu>vUn\ /JO/ . -^7^ 'M/cr^U/dif*77 /? // ./A c '■& Wc 3a /?s//-~Au<<;{ai,/»oc 6c 2 3 'Jo 3/st ou 2/ 2^' 75F< 9/3 <3~o6J 9'ft£%cJvam ftid^- 13 7=^5 Jo /& '8 lo •'■■ BtujU'l, y/.-"/s. 2oeayii ®fftu we (Sty-Mot G ij/sia tc 3S "sm ill efczfaf -24 Jo AiASo Ca^fySiut* csi tot. ZjiSv-SSa cP?Ts4sCCA/6vtt4L£- -3/ S34 Z>4?. 70 33 oL Zt 3u] SyfUAMt.- froAuJ'&mi Q 7 °\\ iV>° — J — ~~<£>Z&t&S^~ 33\ fez J |7- s | a * 3 ° &fau"- ~!X*»uUvu3> fba] j E ate ca&t' A?&/^l^A^k; 49^ &cfiz*T^J4. *Vc ■34 70 V don Z-L 22 An I OtuA^. Ft)tf*JLJ,Tts- /tfsUZ^ Co-rLS^L ■ 2.Q/ n ny TflZeA/f /VfcJU "SI €^^C<^ (R <7 -S4 7kc\ 8 I c-^ «V 00 Uojil J^el^ r/Otdl^o 7VMsu-_- ^w. '^ |3< _/§-aX '. ■ ■■ '. C ACfOU"''.' f*>*y *OL£ /■/ <^Z9 £ Arrs* c i3S/Hf~ SSr /^a^a^tcc ^dUO- - /LriU/?^n£- /J2e Jo"-, * * * ir #.SSC/v ^r J./ a^6> ////cs ■ 7 2/ oj 1 /WM £*/USa^ <¥c \f*6 /2jLo6-£t- i AtUO^OJjtcJ-U- /•6~o 00 4/ tZUc* JUitirtP- /tfii -0 iki /^S 1a ^"^ too /&7 JO T- 14/ #6 r/> /"cacti Ctft/''^ /■A3 ^0 "7 •J3 ## *>7 7-5- i 3/o6 IS liz ■0. x?c*4<£ k.U r J*. Ky^-C^y f~ CfO ^ \ lli ^.uJ .^ \fA£-. J^r^- yo\2c, y*sc \ nl Z 1 . J c^v*w \ //^sO 1 \ 1 \ Uj <7.J rv^JL^C- \ -J #.J~rn.iS7i- \/^fO^ \ 'J K. \J ^LH^J^t^v^ ! (PJ /o \ ul /y.Jy^o-^f 71? •«f i \ " so/ 0* \ i ~ 6jo& \ l-JI Z . J f-^ASts/\~ 6» .VJ ?<<72 20 \ /» ?VUsbc4sc*w>.c?lyCt<. -V/cfo 6 2 \ J SLuu tk-/-C^o appear on the trial balance, with which we start: (Figs. 32A and 41A.) Dept. A Inventory, 1/1/16.. $2,218.40 Purchases from 1/1 toll/30/16 9,981.68 -$12,200.08, bal. 11/30, StockA 3,082.24, " " " B Dept. B Inventory, 1/1/16.. $415.75 Purchases since... . 2,666.49 Dept. C Inventory, 1/1/16.. $464.61 Purchases since. ... 3,111.22 Dept.D Inventory, 1/1/16.. $869.04 Purchases since.. . . 4,282.84 3,575.83, 5,151.88, " " " D Total amount of $24,010.03 standing as debit balances to stock. All purchases, sales and expenses are kept by departments, necessi- tating four accounts for each, as will appear later, because we must keep all debits and credits of each department separate to arrive at results. The goods bought and freight on these goods are easily distinguished and can be charged direct, each to its own particular department. (See Voucher Record, Fig. 38, page 130.) Wages and Expenses Apportioned Wages can also be apportioned, but general or miscellaneous expense, rent, light and heat accounts can only be segregated at end of month by percentage; in this case we divide as follows: (Fig. 39, page 135.) Dept. A. 50 7° of all expenses not otherwise apportioned. Dept. B. 12^2% of all expenses not otherwise apportioned. Dept. C. ISYif of all expenses not otherwise apportioned. Dept.D. 22 % of all expenses not otherwise apportioned. ORGANIZING SET 2 INTO DEPARTMENTS AS SET 3 109 " Rent, Light and Heat " expense is totaled and at the end of month charged in one account for convenience, and then by journal entry this general account is closed by charging each its proportion. (See Journal, Figs. 34, page 129; 43, page 140.) Rent, Light and Heat, Dept. A Rent, Light and Heat, Dept. B Rent, Light and Heat, Dept. C Rent, Light and Heat, Dept. D and general expense is also handled in this method. This apportionment takes but a few seconds' figuring and can be put in the books with other monthly figures and soon grows into a most inter- esting comparison. Voucher Record What is Voucher System? (See Figs. 38A and B, pages 130 and 131.) In this set we use a voucher system which is nothing more than enter- ing up each bill to be paid in a simple, logical manner, as soon as the cor- rectness of the bill is established. Instead of folding the bill and writing BELL and DAVIS, - Dr. V7, C^ru^s\^> Jr r XsL^ ^tJUM I £l, /2i. c/Y? t sr^c," DATE PARTICULARS AMOUNT f6i^ 2o Av fWV- '"-ti - £« - /'& h *\»Ze£ / s.t-AcJvM 2?^ j j ?£*. *AJ l /. 7/" Ents«d I Aj /£W*-/£yy, DISTRIBUTION i/nTT/i RECEIVED OF BELL and DAVIS oO -g-e^-^cP n IN FULL OF ABOVE ACCOUNT. -^fc^l^ ^-/U»A fy/rrrLiti. Or /a* V Fig. 30 — Voucher. 110 BOOKKEEPING AND BUSINESS MANAGEMENT on the back the name, date and amount as our grandfathers did, and plac- ing in a pigeon hole to be remembered if it so happened, or to be rudely reminded by a sight draft that we had forgotten its existence. Blank Voucher A uniform blank is used, on which is written the name of the seller, or to whom to be paid; the date; a brief description such as Invoice, Groceries, Dry Goods, etc., the amount to be paid, the terms, discount, if any, and the signature of the clerk who makes it out, in space marked " Correct." (See illustration on page 109.) This voucher is of convenient size, the entries or written matter in uniform arrangement, and can be examined quickly. When a bill or invoice is received a rubber stamp impression i Fig. 5, on page 25) is made on the bill, compared with purchase order or requisition ( Fig. 17-B, page 70), and held for arrival of goods. Making Out Voucher When goods are received the proper notation in spaces of rubber stamp are made, and in space " Charge " the department letter placed, if known, and then entered up on a blank voucher. The clerk, after mark- ing it correct, then hands voucher and bill vouched to the party authorized to approve the voucher ( in this case Mr. Bell). If the bill is one of man} small bills bought locally, these bills may be held until the 15th and then listed on one voucher blank, totaled and paid in one amount, and again, on the 31st all bills of that house bought since the 15th. This does not apply when bills are of large amounts. Marking Bills Vouched and Filing Same The bills from which voucher is made are marked with date the voucher is made, and number of voucher, and then filed in a vertical file under proper letter, or in some other suitable place. In some houses the.-e bills are pasted on a sheet of a manila scrap book, using one sheet for each house from whom you buy, so that all bills from that house will be together and following each other by date. Some use a loose leaf invoice book of manila leaves, and being loose leaf, allows the insertion of extra leaves at any part of the book, should the other sheets be filled. There are many advantages in keeping the invoices of each house together for quick refer- ence and if no price book is kept, to facilitate pricing the inventory, or refreshing the memory on any occasion, it is very valuable as a time saver. In many large concerns, the bills vouched are permanently attached ORGANIZING SET 2 INTO DEPARTMENTS AS SET 3 111 to the voucher that they may be examined quickly when examination is made by an outside auditor — though in small houses this may be unnecessary. Entering Vouchers The voucher, when approved, is entered in the Voucher Record, using one line (Fig. 38, page 130) and the voucher numbered, using the num- ber, on the line as shown by Register. Ready for Payment These vouchers are then ready for payment, and if not due, a brief pencil memo, made on due date in the diary of voucher number, name of creditor and amount. If the bank account may warrant discounting this bill, a memo, is made in the diary on date to be remitted. Distributing and Posting On the Voucher Record the total amount of voucher is entered in column "Amount," and also in any of the other columns to which it is to be charged. " Sundries " is any account not named in heading of a regu- lar column and these amounts must be promptly posted to the account named in the voucher. Wages is distributed from pay roll on the voucher when made and after wages entered in Amount Payable column, must be entered each proportion as mentioned, in its respective column. The other columns have their respective amounts entered in like manner. The accounts in Sundries column having been posted as occurring, the totals only of the regularly headed columns are, at the end of month, after ruling, posted by debiting totals to their respective ledger accounts, and the total of "Amounts Payable " column credited to Vouchers Audited. This last account will always show, by balancing in pencil, the amount of vouchers unpaid, which may be verified by listing the unpaid vouchers, in the safe, which total amount should agree with ledger balance of Vouch- ers Audited. Ruling Voucher Record The Voucher Record is usually ruled up as per (Fig. 38, page 130) to bring all column footings in " Sundries " column, and after new foot- ing, " Sundries " total should then agree with total of "Amounts Payable " column. Paying and Posting As the Vouchers are paid the number of the check drawn in payment is entered on the upper right-hand corner of the voucher. 112 BOOKKEEPING AND BUSINESS MANAGEMENT If discount is deducted the memo, of discount is then made on the face of voucher that the party, to whom sent, may readily understand your figures; the charge is made on the Cash Book to " Vouchers Audited," and amount of voucher is put in " Vouchers Audited " column, not posted to the ledger as charged, but posted in one total at end of month. ( Fig. 33. ) Discounting If a voir her is subject to discount, charge on Cash Book in " Vouch- ers Audited " column, the full amount of voucher, in "Amount Paid " column the actual amount paid, or the face of the check, and in " Dis- count " column the discount deducted. The total of the "Amount Paid " column together with the total of " Discount " column added, will equal the addition of the other columns on the credit side of the Cash Book. (Fig. 33, page 127.) By this arrangement of the Cash Book, one posting at end of month answers for all vouchers paid, and is a great saving of time over the old way of posting each payment as entered. Marking Voucher Record as Vouchers Are Paid On the voucher record is noted in " Date Paid " column, the day on which each voucher is paid, and a reference to this column shows vouchers unpaid, and is another check both on the ledger account and on the vouch- ers remaining in the safe. No Letter Needed to go with Voucher By using vouchers, letter writing when paying a bill, is unnecessary, as a voucher with check enclosed is sufficient. If a stamped return envelop'.' i- enclosed with the check and voucher, a prompt return of voucher duly receipted is insured. But, many houses VOUCHER NO. St. Louis Material and Supply Co. GENERAL OFFICE 314 N 4tm STREET St. LOUIS. MO 19 NO. Pay to the ORDER OF_ .DOLLARS To LIBERTY BANK OF ST. LOUIS, ) 4-14 ST. LOUIS. MO. T(.«sum« : ORGANIZING SET 2 INTO DEPARTMENTS AS SET 3 11. "date* memorandum TOTAL DEDUCTION ri»E«OMT DISCOUNT "I«H ITCMS TOTAL NET AMT, THE tNCOIKMCNT D« PATCC CONETLTUTCC A WCCEIPT IN fULl Of THE ACCOUNT AS ABOVE STATED NO OTHCN RECEIPT NECESE A"' do not send their vouchers out for fear of losing one or more through careless- ness of payee who might forget to sign and return them, and instead use the fol- lowing plan: (See Figs. 30A and SOB.) In addition to the usual serial check number — the cashier notes on the face of the check in ink — the number of the voucher which the check pays and in the printed space which appears on the reverse of the check, notes the particulars, and Fig. 30B — Back of check. simply mails the check, which requires no other receipt, because the endorsement of the check establishes the fact of payment of that voucher. Check Number on Voucher and Voucher Number on Check It is also usual to note on the entry in the Cash Book when paying a voucher, the number of the check enclosed and on the check the voucher number. From many years' experience the convenience in tracing up a payment is most satisfactory, as vouchers show check number used, and on check the number of voucher which it pays. Sales Book Department Sales Book The Sales Book in this set may be similar to the one used by Robert Bell & Co. (Figs. 23, page 91, and 35, page 128), and distribution of department goods used on each sale made on a separate columnar book, or, if preferred, a columnar book with one column for amount of bill and one column each for the respective department may be used and from the carbon or office copy, the distribution made (Fig. 36, page 12S), or in each column of the proper department put the total amount of goods of that department used on each sale and at the end of month credit the sales of the respective departments, A, B, C, and D, with total shown, which when added should agree with total of "Amounts Sold " column. The " Total Sold " has, as entered, been debited or charged to the customers' accounts, and by crediting the respective departments' Sales Account, the debits are equal to the credits, as in a journal. Sales of Each Clerk Should it be desirable to know the amount sold by each clerk, and also the amounts sold by them of each department, the columnar book is used, 114 BOOKKEEPING AND BUSINESS MANAGEMENT giving each clerk a page, hut if only the department. Cash Sales, and a check, to see that all sales are to be accounted for, the columnar book may be used as ( Fig. 37, page 129), and a similar page for charge sales. The sales of each salesman and his usual sales ticket are shown that no tickets may be overlooked, but if a ticket is spoiled from any cause, that ticket turned in and so noted. ( Fig 37, page 1 29.) Monthly Record of Sales by Departments 'Fhe columnar book may not come ruled, just as it appears in this illustration, but with a rule and red ink, .-mall columnar divisions may be made and thus avoid the expense of a book made to order. At the end of the month the monthly totals of sales, and by depart- ments, cash as well as charge sales, may be entered on a page of the book set apart and headed as (Fig. 34, page 129). The total columns A, B, C, and D, added, should equal the total foot- ing of Total column, which is also the sum of charge and cash sale-. Unless special sale tickets are used for each department the salesman should mark or letter on the bill of such goods, when making out his ticket, or put the department mark on the line with last of the several articles of that department. Distribution of sales should be made as soon as convenient and may be noted in pencil on one corner of the carbon copy of each hill, as it may be, and later entered in the distribution column. Using Lull in Business to Advantage If a regular cashier handles the cash sales as made, he could in pen- cil on this columnar book, distribute the sales during a lull in the work, and by using this time judiciously, find at the end of the day all sales so distributed, and a footing of these departments and a proof of the total.-, by comparing with the total cash sales, can be quickly made. In this set No. 3 of department books, the ruling of the debit or left- hand side of the Cash Book may be similar in every respect to that of the Cash Book used by Robert Bell & Co., set No. 2, and entries similarly made, but in this set (Fig. 33, page 127) the credit side has rulings to record, voucher number, vouchers paid, instead of Merchandise and Expense, but other column similar to Cash Book of set No. 2. ( Fig. 22, page 93.) Paying and Charging Voucher When a voucher is paid, the charge is to " Vouchers Audited," as that account assumed payment of all invoices and bills to be paid, as soon as ORGANIZING SET 2 INTO DEPARTMENTS AS SET 3 115 these bills were credited on the voucher record in the column "Amounts Payable," and the debits to the several accounts for which they were bought, made when the distribution totals are debited their account from the voucher record. Discount or Deduction from Voucher. (Fig. 33, page 127.) The column " Vouchers Audited " paid must contain the full amount of vouchers as recorded, so that the "Vouchers Audited" ledger account may be balanced and any deduction after the voucher is made, say by discount entered in discount column. But, if a deduction other than discount to be made, is later discovered, a journal entry is made, either debiting the Vouchers Audited account and crediting the account to which it was origin- ally charged, and so noting plainly on the voucher that the proper amount only be later paid; or if the amount is for a voucher already paid, by charg- ing the amount of deduction to the seller through the journal, requesting that seller to remit by check, or if not so done, deduct from the next voucher due that house, charging the full amount of voucher later paid, crediting the house on debit side of Cash Book for amount deducted in the Sundries column, and in the Amount Paid column on credit side of cash, write the amount actually paid. (Fig. 33, page 127.) Some prefer to keep a memo, of any such deduction until an invoice is received later, make the deduction from the face of that invoice, explain the deduction on the voucher, and enter up this voucher for this difference or the face of bill, as it shows after the deduction is made. Bills Payable Bills payable are not usually included in the vouchers, but paid separately, the note being the voucher and charged in " Sundries " column; though, if preferred, a voucher may be made, describing the note and taken with check to bank, when it is to be paid and listed and treated as the other vouchers. Canceled Notes Preserved As all canceled notes kept in the safe can be easily produced, and as some banks may object to signing such a voucher, the Bills Payable are sometimes treated as shown in the Cash Book. (Fig. 33, page 127.) At the end of the month the Cash Book is ruled as shown, the totals posted, balance brought down, and the Cash Book ready for the next month's entries. CHAPTER XIV Both Sets Have Same Customers — Set 3 AS the transactions shown in both sets of books, Xo. 2 and 3, are of like amounts, with the same persons, the same customers' ledger account (Fig. 26A and 26B, pages 96 and 97) are used bor both sets, and only the general accounts show any difference in treat- ment. In this set the Voucher System plays an important part. Instead of Crediting the Creditors on the Journal the accounts pay- able are written upon the vouchers and so recorded and the debt due a seller or creditor is transferred to Vouchers Audited and so remains until paid. When paid Vouchers Audited account is charged or debited that payment. The same customers as in Set 2 owe the same bills, though in Set 3 the sales are departmentized. Instead of preparing new names, new transactions and dates, the previous ones are used that the comparison between the two may more fully be accentuated and the transition so clear that any merchant may be able to change at any time from general to department books when proper inventory is taken. When possible a business should be departmentized. The time and extra work is a small price to pay for the satisfaction in being able to see, like the Texas Solon, " Where you are at," and which is the useless depart- ment, or, better still, start the investigation which may disclose why the department is not making money. An intelligent man wants the truth and some men will insist on knowing all they can about their business and whether they are big enough for the job they fill. We start with Trial Balance Xov. 30th (Fig. 32A ) arranged by departments. (See page 125.) In this set of Bell & Davis it may be as well to use the old style diary day-book as in the set Robert Bell & Co., and note the difference as we proceed. On the extreme right are the pages of Cash Book, Journal, Sales Book or Ledger of the entry. (Figs. 32 to 50, pages 125 to 145, referred to on page 125 follow the diary, Figs. 31 A to 31H, pages 117 to 124.) 116 BOTH SETS HAVE SAME CUSTOMERS — SET 3 117 /?(>&*£ j8*/& ^^ M£tf4 /3y /Jj-j.* ^ Worts /it r3e*Kitee.ff/r 4Sit2 /did frtuJlA fifc/uffrT? /te£z JHJot dz^^t z/s^S ^/O^/ fays ftl£& fal£ltjfroo/!i$/kj/, au*j aUcA, * /leAta. enfant 441 Ca^hi jUa/n-^t- ? c 'fiaiJ Jaw*- 6y i^tc/c * O Jfr 3 ® cJaaa^a/a^l/ ~Z)isC. vi * CZUsU '&, great ?■ A ^2^ &IAA*/oAAs- &n*AA&A^r A/fS (ZLaAZA: ^zAo >4 li/o&t &*i/c*L Ac* 4/c &ifA. 09 Jo2 /A >? /&( viz. c^u^/i^u/ 7) ac £^- Aicd t/^ud /b?A£- cAAc/c -4- ?Asb^C /2/f£~ Aiu d_ O/-#£0 AlAUvu* c^./ &aAA/<- -4- -rt-S&sc oSpo vauftfo V£h>yiAid fibs' Ja/ei S/o/ /Lt/ / Mitt-&a^&6? fan dldU-cA-K/dAtteH** t/.J/- 7 /hi) flu 4ft ~ S^uJin. /? 77 /u 6y cAe~., ■23/ /i>r-&&* /ua4 /<*. #z A^ My 2c/3£ AAM AA/ , r77/^- £$3o3 7Al — Continued. BOTH SETS HAVE SAME CUSTOMERS — SET 3 119 ^3/ii i AAf A*c, /fotfr / fj&f fa'&vy C^t>^S 7* , tt±UYCA£e/c I G&t*A.f4ct frtnt&Ll*-, JLutL&i Co &J **7 CS/lJaz c^a^^^c T^-cAm^ tZsCtJctiJ. c/3 3t>S SujU*±Z Aw- ft^e/u^. &+- - Vr*. fb-q . S'b fa&.&wUd /4 37.22 v- 7 ^7 «Gj 1-2.6 Fig. 31C — Diary of Robert Bell, Third Set — Continued. 120 BOOKKEEPING AND BUSINESS MANAGEMENT A^f-zQ.^/ ^iO^y &*M~ut<^J~ f$£LLS A^flAAg, =© <<£<. 227 •/* ^7 C/) Jo 2. Q&/£i.j€/us Zuc/6* s *7 /UaU> H^AjtA^A' ^Im^ia-^Ksia^. j X/HAJ /y?u, - + A*Uj~fa d/jUst V.?0 YtvLAj-Afn*- ^AOslJ fa fyUi*. uA/Scu. /ur& Wo*. 1/7 3 xfe&L c^&ulV* 6lfl ///Sec ■^t^/i- 3,2*^ &ri-*-L^f "<& 230 ■If^ e'y ,^'A "y**l '-*-»& 7\4-v~ Fig. .ilD- Diarv of Robert Bell, Third Set— Continued. BOTH SETS HAVE SAME CUSTOMERS — SET 3 121 /&** 4&ll/ AfOAAf &nUvvtct*C ss7 3> & MALI'S A*\.tf -«*\*; /3QQ K *■£.!£/*£/? J SS fyvGwi JcUjl* /3o-otL Pei&d JAorh dUi/ #7 cftdZ3> CI BiiJ-eAjJ JaamcO &rf.u*». Vcia /hut. SB 1 nvcuj rCWi'«(vwiW •S^? Very. RjLttti) S3 dulrUruXiuq lu [focJfUAs €cHu^wni C^C^qjJ Vdu..CliA-7Uei C/3 JcJ V OTA fa*- 0$ &J&u3 htydfjlA- &dc££ /^— ■ / (5to?i-4-->iS9'c S/./o pt&UZ £twu cll6££20^ Av»ii '7/1- CAjuaU) O/c J2i MjuU K«ia- Ma 0?U facta C6n htotudf CnuytVMJ4*A>' j // - wcUttd flvau OnxiiQhwtoJ-V. O 3oz. Qd 3oi Posted. •/> Am a/c *&} zsb 0Lit£z J%Uh JrytuJl /J o -Pnte> SeB 2.33 C/.AA.41I JaA, ^ ,. >'yo ^Mtc - 2n ^&mU/UUoa£A.h-Sj i acAt J Fig. 31E — Diary of Robert Bell. Third Set — Continued. L22 BOOKKEEPING AND BUSINESS MANAGEMENT Cft&tttfljlt/ cd/OAA/ ¥L 7* y3c /h.zo /'tied Clti Hffc^/f da* kdtXy /3 G^> 23^ 6ie/du/a6. ■^ CVJbi AoM A** deAs* <*£? lit 3ult^> fern. <%JL£erT) - ciu/ri4idw* ' duetdcuf 2>^e^a- /Uc'cL ££ 2 &*&*/* sSf& ~V. jtkuy 0C&1, dz// <&3/o 6-ui eo /U ClifU T-V&KJk^c* fisted c/<.2 G@ 3d J yyu.it. titw-ZU- ?H fi* dz. <7AsKsM 6>L#-y cP^e-t?- C& J'2. (Fa^u// ZljZ^^* C4 Jaz 4^ A, tyj^aX* 7/^k/- ^7 Fig. 31G — Diary of Robert Bell, Third Set — Continue! 124 BOOKKEEPING AND BUSINESS MANAGEMENT 33^-zii M/*io (D /6 <&Lc+v osi&c/c- paZCif syitU^ f fr^g&c/iu. ttfAA'- /OsUd ^y pAeU. fa c 4/<4o X '' f t&~Z/dMAjL ^O /x£/<■ Hi' >tt lo V l-i 13 S 6 7 3/ h */ Jo\?2 8/7 irs •So to oc oo J 8*3 80 24o/o, y-So oc /2j/6'26 /6'f. W/6 i \ ■-fi /i w & nf. 1 fl. *4 Gil z£ / ft i-i : C uioi ' •Scoc, /OX 3 St 7 C jM 64 go oCOCCO / - /StMX A tin 0*K /Sll /3cUCVu.cj. CcuA JcUlj Ct4J /iOj/VUU t*ncvu2 ■ftcrrv\ fVo-v 3o- *?& aM^v/i^ '< uJUiAk C^ iu* /3 k. -4 c^at /'a(Ju4i*< « fet^A. 2eJL/ *frhUAjU'e(SUi1j<-s;*h> A cth'ZU.cSo- I 3Sbd '■/Mi 3733- Z606 47 2 Jj M *£W2- 6c /o to /o if 4/ 4S SSZS 2/7 OS Au/40 LilSS. Jo Fcbo /?/?J t?S /■30 4S //S7S- t/o Si' 6<}fo //6 J2£Vc /as 1 60 4s 36 2£L s-n /2g /Sd 1 /Si 17 2 I fp. 8 7' /oo 33\/J4 ■': ^7 /*/ fj /3o 63W0 U2 do //J7J '27. /O SSS OS or tfel 35yo 7 X ' ou 2S /U .--■; % 46 Vo / /o yS/ /O ^3 /■VG 3S //6 /2-SVAC VA"/i JZ/ 5 6a r 33 7J /2S"jO /O OSS oz oJ 6S 04 S5S 'T- IS OO 1 c Fig. 32B - Set 3. The debit side of Cash Book, Set 3, is similar to that of Set 2 (Fig. 21, page 92). The receipts of cash from customers is not affected by the departmentization and the Cash Sales which include goods from each department are here entered without distinction, later segregated as shown (Fig. 37, page 129) and after segregating charged sales (Fig. 36, page 128), and transferred to their several departments by Journal Entry (Fig. 34, page 129.) BOTH SETS HAVE SAME CUSTOMERS — SET 3 127 Pzc tfd/tfOdws - ~6 ( ypf. O.U* /JOA C^Oyv ?Afavt "fro C riJAf GL/X, S'Jol/O^ CXajs^-cAs fi /CO /Ol lOT- /o3 /Of /oS lob lo l /of loCj no in i/i- //3 f/4 l/S\ 1/6 7/1 'At it i hi 122 /za /2S /U '28 "]■ •soo J£c\ &>% So 3 AtQO ■SbS *>l •SoS S/o S/i •S7S •tr/l S/& S/S -S2.0 S-q iz/\ £i.S S-26 S la 8¥ '10/ Vs /SiS <$VUb iS6 9& /34S-2- S er> 00 So 36 /*/■ 80 20 U el 9, 8f-s 6 /2 9 /oo // /o bzahs /u 7 /Ol/ 9 v5do &\/o o b S~o 3S 00 21 So /So 5uG /3o 8 S4 ySoo 3oloo SuSo /$68f /SSo// if/ /si /oo //ys /o OO 3/U3Z /U- 2 Su-So ZS U\/o 00 S¥0 ■£S-o 72 /I 00 Sb co 2"zJ /ousts Jfo Mof- At/ J 2 3/ 3 /6 U8 2S3 6iSi Fig. 33 — Set 3 The credit side of Cash Book — Set 3, is radically different in arrangement from that of Set 2 — (Fig. 22, page 93). In Set 3 merchandise bought is entered on vouchers and segre- gated at time oft Voucher Record. Expense and Sundries are also treated in same manner, so that instead of 'being posted to the respective accounts from the Journal, they are posted in the totals from the Voucher Record. In the column "Vouchers Audited." above, are charged all vouchers as paid and only posted to the ledger in one total, $2,738.56, at end of the month. The sundries column is used for such payments as are not paid by voucher, though some bookkeepers make a voucher for every disbursement. The procedure is optional and carried out according to the views of the user. 128 BOOKKEEPING AND BUSINESS MANAGEMENT -3^i_E- , s~&c = >oi<. 4/ ■a^ATJi ire A DOTES 5 Af A *-/\ t^. 1 -SALEif-AN S*fPP£0 AfiAo\j*rr fvi. iMttiAL KV Pv Dec / 7- *'7 /3.dtM*.?>Ss^> 6 j *o &'o 7 S // C . o CO /# 22$ /" . JA£-£tZ£ S3! 20 13 X3L •-^v \/>»m^- OO l£ 2->7 •^ J-i^-cLi^ -2-ii-blO ■ — . — J This is similai iri every respect to Fig. 2.i, page 91, except that in Set 3 Sales Account is mi page .'" of Ledger and must be separated into Departments later. JALETi S£.CJf?£qA-TEX> 33y HJiJ^fTMEKrl -S£.X_3- JDATC /J a E.TA15tM E_r< -r s *•«. 33 e= 13 ■D*S- 52 So L fytfcJrtl' 62 O o 2<7 ^P /U kSo 2V o a 7 -?S£*ZJw ? a OS A-Z Z«T 2-/ 7-f /4 OS z CO # -jZ^C?j^r-n*JT *7#. /<~) S3 /O // CO /a ^ / . =■ — — •Jo TLJAcuJc- 66 Ja St 3o /o So Jerf-aJ cM^^ax. J&/L, ziz<£ /o ^m^o^j^m^-^ca. / /->6 Z.S 2 4& fO !i~U SO && ^J- T ^ f 1 Fig. 36 — Sales by Department It may lie more convenient to use a Sales Book ruled as Fir. 35, later segregate the department goods, and use the figures in transferring from General Sales account to Departments as per Fig. 34. If, however, it is preferred, Fig. 36 may be used, entering tbe amount of each sale in the first column that no delay need occur in posting to customers' debit and later segregate and credit sales by Department from the department column. This, of course, is done if it meets the views of each manager. When the principles of segregation are understood the practice admits of many variable and time-saving arrangements. BOTH SETS HAVE SAME CUSTOMERS — SET 3 129 CASK SALES -5.EPATiA-rJi.D- 33y S-ALttS AAAl/^c JIEWSTM ELHT 0*0 Tl CKET Af o. To ta iCA>r« Saw iAi-E.5M i=.»-l TDEPAffTMCNT S "OFU ?At« T; v ' t BUi r "T T-^ATiT r.,Ay SfLL DAVIi hkkm »EM*» SKJA* A. O d B / JJ- / r^ 4 rj / 7.r »7 2 t,j y I _ z - « 3 o o ..■ - / _ Z _ A* / fa / Co / .So // / - / - 1 - /r. Jo Co £ '7 n- - -4 - I 1 Z 11 -- 70 3 7o / 2 7l7 j" rf ■ ■'" > r JU 2 Z - Z '* / ZO / JC / 20 /J / - / - t - Jo ^ 4 - ^ 6 T / z-r _l U / 2J- ?7_ J 'a 3 /o J /to 7 ,0 So Ji /» 2C to It- -a i / l - _L _ <^ « is *T AT f{5 11 6S ^ ^ '•T u ^ f J-J 10 3£ lo 3 J 7a 'Z Go _2 7° ,s fr, tt pa U <... /, C > >/ i&v.so „ /77.7s •X. //uoo 3*!t. /U s* 3S -f£+U -&4*J : fyU-'7/£4X (ftetoSYri^taJ CL id-J^-^t^t*^ *j /63.20 ^ A-u_ f^|^/iMA«. CL l/Zjhjftori'tt^ H^/ 7 3° tilt. 3 6~' /2 /6 72 5- /z 2Z\'J oa £0 /3 6A 66 C T C£/ST0ASl/E:f7S J?sr c '? 462 /S3?. 7' /03 ZO /o/iO 6$ ■2.A //uoo loo Fig. 34 — Journal — Set 3 130 BOOKKEEPING AND BUSINESS MANAGEMENT 85 Voucher Yyccor-d /StlL ^ /}~JUt4 i to 3 :/ Tmou of oi at Oi [f/c // /: ■"■ s a; a 2 i ?a ! i .-• U :> ... /%/}Cy Cat A,- S(Uc^\^>o- Co /feck /°aisrut'i-r> q Co AQZAA. 6<7q &fy Co i rv^-c WeU (Syr^/vo* Co S>,C?^. /?./£-. /°.c&t/ Ca^r/L- GtyYiyAJ^P.Co c * z> <3 C -0- ??£- fir C rn&iov^ thJ/iTaofia^ '. £crtlS< en-cCt^^O 2J~- ■Ci^tu^. +-6*.t£ Atsu& / CA« £ **e>ctse-Os tih ~?To-iS7 fee*. ZJ-cYCc/a co-o^L- OUNTS VABLE So* (akJLU 1 Vmc/wn (taikttS 8 4 /o *6~oo S*c AiO fo Sb vo SO &<% 7^ ■so /. 6 -3 2C oo / O 5 5 7 o 5 < c oo 2^" :«|oo «5o u re i / ■OUMDffl j= S 3/ ^"o JJO ¥3 iS 10 II 21 23 /c / J - so OS/ [So ,-aH 7W/ 20 i 'V s ■ i In. 38A Voucher Record, Left Hand. The above ruling, or such as may suit, need not be confined to a folio page (two pages facing), but may extend over four or more pages, by the arrangement usually described as " The Short Eeaf Book." If four pages are considered necessary, two wide and two narrow pages, about three inches of every second sheet is trimmed off, the left hand margin is used. The columns, date of voucher, voucher number, favor of, followed by description and amount, on the first short page, on which may be ruled also space for Sundries; on next page wages A, B, C and D, and on the fourth or wide page the other columns as needed. BOTH SETS HAVE SAME CUSTOMERS — SET 3 131 jd£C&m>&txs Sb Vv S\ CX E— £~. fTfNT LKJHT X HFflT qwiiAi EXPfNSt -ETCOK Imrc /ft a c ■* A I B c 3D PAID £ 7< «/5- 7-s OO // A2 Si so 7 s /2 7* /g 5b rs ■■c •^ .< 'ys A2 Si /c 7* /2 --■ /8 So 23 IO OO <£*A6 42 5c /s 7S '* 74 27 $o /*/ OO // /o 3,5 ©6 //J / 3d ^7 8 <■/ '^6 42 ft /s 73 ?o 76 22 jr /M 20 ? :?w VJ = -??: So — • — - ~ Fig. 38B — Voucher Record, Right Hand. A voucher may be entered and the distribution of that voucher may be made across any one or more of the pages, upon the same continuous line, just as if it were one wide sheet. The ruling may be arranged to suit the details of the business. The totals of the columns are all carried to the " Sundries " Column at end of month and when "Sundries" Column is then footed and that total should agree with Account Payable Column. The regular accounts are posted by monthly totals. The Sundries or occasional accounts each posted promptly after entering. 132 BOOKKEEPING AND BUSINESS MANAGEMENT /todt^-fizZL (PtL/i^S-aU- tlca* rprp |/v«v|3ol /3a^_ Foi. || C/TfilT \/Vcr\3o /ooo\oo \ 31 ipv^lTT O^Tl^o /3T|l | /h£c\11\ Ccu>L */8 "PI I If /)XC 1 1 X J/&-ocgA£^v 6CudsC£et<- /3ax *"9 /\6~o\oo\ \&£c- Jo /3 CLt ■do 2, /yu- J, /3ajL rtaj YtZj-£&~ "\ J/^c 1 /6 \ -JlUUeU "1 7 1 1 /2S oolefa.o\/S'\ CaaAs ** 7 6 M- /zioo 1 '/¥ oo\ II jrf/vrSt 6L »_ />. 1. ft ■ Mt.,1 /27oc 6 Si OS yA-lrf / -WWihy **'S!jJ Jo&2 02 tf"7 / 2V A*. Jo SmmU 35yf '9 ? ' 7 7vS jrffav/c /Or £2, fil /■O JT.7* 1 it So <7'/> >7o Jff'W 2 xTj^rsnrd /£dfs* Accrt etr*f* Cioi/^f S3£ll jrVAV'S. SiTJ BOTH SETS HAVE SAME CUSTOMERS — SET 3 133 s^^^ e 27 DA-fc rot HtB|T_ tDATr. Fol c r?^Dix iOtt. u ^KtlL. "uS^fimt, 3-']o 2\oo do Jo £'70 4LX x?a-&j /0~ as j vtnv Jo A)>UL- So /oOJZ ^0 7/^ ■33 6es\$ '3 ^.^U^a^ 'z/a/zj /)jlc •34/// OC ■3u./^\ao />£*. *> ^i//U 73 7° /o o&-t* co-vtsny ' 6L(lc/ -o I 9** 3o\oo \UM3o\ /JaJ I \ y\6o w £c\3o\ ftsTA- /ht-cu-rd \- -I 12 25 2<7^ -Cu~Cl^a OJ OUf-df 6 <_ 4 C 3i*^aj^-ouj, yto\ 3o\ •2/o\&- /6V 3 /4<£*U &&U 'JfcaS <$ USt ■JO 2 22 9 J ■jf2^r\'Sc> •So ^3 ^SW-o vT-S 6 / ££ btx. >?o ncu. 2o7- ^"2 7^ 6/ v*\T 221 Fig. 41C — Gen'l Ledger Accounts Before Closing. Bell & Davis — Set 3. BOTH SETS HAVE SAME CUSTOMERS — SET 3 135 1 23£J»i-r T.U CREDJT RMt OtUk^U'SH Vc .-.? CO 1 Atfo/J/J/ff/vu/aliUr ■3oaoci, f H,s.cU Stfate 7-Sc or. 2 0X7)a#i4 ' ■■ / 066 M t 036 60 ■ dQ/l/Qjf*£/Oc/C 4&So 1 S /9j •■//* PavaA&. /Scoo -' Sfrttn-dfat* * &#£u*a* 7 gO I YJ. 2«J US 'Vbtu^eA/ dcu/^je.d Zv/vj; to Cosi-fv 721 OJ, (Zfates C^ tS'/li ig 1! (M/UTliiaUnraMa. "4 66 /b •;• ■■'," it 1 .i Sl£oc*c? n ^S6f t C *j S6 7 V o /b 5 2Sy .O (, w&& M?- f - 21 ♦ C 3 7j~f '. i <&iA,cm*rv£ ^>6ic i .'^ . "Z> r -.-r liyu 1 in Ml 4A /3nxi/ CtmS/an,nieA/ */c ■ss ■'. j^vs. 3/ ,J>7^ ■P?ir*+,f,-'£- 7 i fd fif \ » ~$£ 1 .- 3 ■■' ft** ■•'<■ 4 OJ$ ? i \ uS ■NtA,1fJ1/ia/fA, ■>"-,* Oi' ' \ Ofi , a >9i / 1 \ tr f r 7 ' 7< < *A \ •wf :. lo- 12S So 1 »*n i * #7riCA JH C^-h* tier-. OoieJi 2lS\, /& /o I 7 £V~Sh o a a a «6 a o So oo oo oo AS't Ur. -Jo o '- o o) ■ro $J~o /o r c T-i re H oc c o /2 7>n ^^ 2 Jo Zoo / c o Z -To ^To Fig. 39 — Pay Rol CHAPTER XV Closing Books for the Month SALES BOOK footed in ink and total posted to credit of General Sales in ledger. (Figs. 35 and 41B, pages 128 and 133) S2.226.10 ( lash Book — " Cash sales " posted to credit of General Sale-. (Figs. 32 and 41B, pages 93 and 133) 1,187.90 " " " Interest Paid," total posted to debit of interest account. ( Figs. 32-41B, pages 93 and 133) .75 " " " Vouchers Aud.," total posted to debit of Vouchers Aud. (Figs. 33-41A, pages 127 and 132) 2,738.56 " " " Discount Rec'd," total posted to " Credit Disct." (Figs. 33-41B, pages 127 and 133) 36.60 Cash Received, total $3,573.00, less $817.60, balance to debit " Cash Acct." (Figs. 32- 41A, pages 126 and 132) 2,755.40 " " Cash paid out, total posted to credit "Cash." (Figs. 33-41A, pages 127 and 132) 2,851.96 " " Carried cash, " Bal. on hand," forward to Jan. 1. (Fig. 32, page 126) 721 .04 Balanced cash, counting contents of drawer $20.00 Balance in bank 701 .04 $721.04 Compared Vouchers unpaid per Voucher Record (Fig. 28, page 130) with balance ledger ace, "Vouchers Aud." (Fig. 41A, page 132) 241.45 and found as yet unpaid — Voucher 22, favor Edgar Dry Goods Co. . . $173.32 Voucher 23, favor Ely Shoe Co 67 . 93 $241.45 Closed "General, Rent, Light and Heat," $103.20, into De- partments (Journal Fig. 34, page 129) in ratio agreed at beginning of year, 136 CLOSING BOOKS FOR THE MONTH 137 A 1/2 of balance, $103.20 $51 .60 B 1/8 of balance, $103.20 12.90 C S/32 of balance, $103.20 16.13 D 7/32 of balance, $103.20 22.57 103.20 Closed General Expense into Departments General Expense. (Fig. 34, page 129.) A 1/2 of balance, $101.30 $50.65 B 1/8 of balance, $101.30 12.66 C 5/32 of balance, $101.30 15.82 D 7/32 of balance, $101.30 22.17 Sales for month, Charge sales. (Fig. 35, page 128) $2,226.10 Cash sales. (Fig. 32, page 126) 1,187.90 distributed on segregation sheets. (Figs, 36, 37, pages 128 and 129.) Crediting results to "Sales Dept. A" $1,784.74 B" 451.68 C" 462.25 D" 715.33 $101.30 3,414.00 ■ 3,414.00 by Journal Entry (Fig. 34, page 129) and will take off " Before Closing Trial Balance," or trial balance after all month's work is in, to prove the books — before closing entries are made. The reason we take off the Before Closing Trial Balance at end of the fiscal year is not only to prove by balancing that the accounts have all been properly entered, but also to facilitate transferring of the correct balances, which would prove a tiresome and difficult task to do otherwise, and tax the ability and patience of any one who attempted it. CHAPTER XVI Closing for the Year WE debit Genera] Expense (see Journal Entry, Journal p. 171. Fig. 43, page 140), $238.10. To Dray Stock depreciation, 20%. To Furniture and Fixtures depreciation, 109 Taxes balance used up. Insurance used up. Balance of interest paid for year. Reserve for bad debts Z7> on outstandings and then, Close General Expense in proportion outlined (Journal 171, Fig. 43, page 140), $238.10, into General Expense, A, B, C and D. Bell is credited interest on his capital, $5,000.00 $300.00 Davis is credited interest on his capital, 81,000.00 60.00 and Profit and Loss debited $360.00 Trading Account. (See Fig. 46, page 144.) To have a clear-cut statement of results in trading, or buying and selling goods, we open a Trading Account, and, as the inventory is now all figured, we can do so. " Trading Account " is only a convenient account, used once a year, or when we close the books, though some bookkeepers use it frequently. We close Dept. Sales A, B, C and D, by crediting these to Trading Account. (Fig. 43, page 140.) We close Dept. Stocks A, B, C and I) by charging these to Trading Account. (Fig. 43, page 140.) We close Dept. Wages A, B, C and D by charging these to Trading Account. (Fig. 43, page 140.) We close Dept. Rent, Light and Meat A, B, C and D by charging these to Trading Account. (Fig. \3, page 140.) We close Dept. General Expense A, B, C and D by charging these to Trading Account. (Fig. 43. page 140.) 138 CLOSING FOR THE YEAR 139 Then, taking the figures of the inventory of goods on hand of each department, charge these, Stock A, B, C and D, the respective amount (Fig. 43, Journal) and credit Trading Account (Fig. 46, page 144) because Trading Account gives back the stocks to those departments with which they can commence the year, to use for sales. We now take from Trading Account the profit on each department (Fig. 43, Journal), by debiting Trading Account and crediting profit on these departments to Profit and Loss. (See Trading Account, Ledger, Fol. 19, Fig. 46, page 144.) And, as the profit shows a credit from Sundry sources of a total net profit, $2,796.25, we apportion five-sixths to Bell and one-sixth to Davis (Journal, Fig. 43), debiting and thereby closing Profit and Loss Account. The Ledger Account of Trading Account may be arranged by taking a full folio or double page of the ledger and ruling addiitional red lines to accommodate the different departments. After these entries have been made, we take off a balance sheet (Fig. 50, page 145) which shows the condition of each account on our ledger and with these balances we start the new year's business. On pages 89 to 102, the entries are shown for set 2, and except that this No. 3 set is departmentized and set 2 is not; the totals are the same. 140 BOOKKEEPING AND BUSINESS MANAGEMENT <;&.■*£ /TAL. ACCt>L."Tf CvlTer*£*s ^>/r C^> ^>* c r -*» -V 'J.jyreiy (fi4rcsiL ?(f/. oitjueiaturH. n M.//f6fv - i4/> /O *) | • ' 1 ■■ PzM^ij^tuAjC. ~3t*&&i*J /6v. ' •• ~ yec 1 -! ffl Pi k. . JOAUsil faUdtim* 'Utut tu sOtc ' 7 .... rt . Jh%dM*.a^GL. /Zm /Hssrtb- UfsJ £~ .. 0- 2 A M . a?n£tsl&4l^.- Arf>/0/iA.el *~ r" > ; L . -#/U<4*aJ£ij/Let*Js- d Jli~ JAj Aterft^rr&tn* J. ~*~ T- /1 /ho£u-<' jCera *jv ~ )U oc j a. ff^Hr /3£&. faj/waA. */<■ /V/iu. hAiuX 6%*. Mas Sl^c v^ , ,. ^ . cr./sa^Li ., .. / . _ c-i. . '. /<.<,o 6 ■ ',- -*"■ £ jOidcOLtrftJ &1 /t«A«.(i ctucS\zcs/£~ yta*. H ^0 42 /3/kajf CtTMt/'e/iAH/Mj- ■% .. aeiMt, m ffJ. ■K/. •■, fS\ C£ /: ■St. P'r&iU- '- ScrAJ -&Oa*i ^ «G <7 An is P?a//S 6L XV •4-aJtmCjL. AttostjJ/sistx.e( '$ •■,.' /,f u /?) . ,. . / * w r.. 27 fi. - T4j >^ a ■. t&~ » » *> 6 ffi - M Jo 7/va,d-(s?V4 A,£CJ .V .(-, ^ 0, » '. -? l& ■ z :z » c . . ■ , J tA -jf n £ 4- (iA y,n ' } J/La,/£tsrL^,/Hcey /%■ t - ''I ZJ ,r 7t> -CUa-tfA* /U . "A/Lia^iej. trf/lttA Q/^Ta/imZmsjC - ~/2 -;- <7 .' /?> " /.. J-.^ f..< » f ■-,V (V V 1 * P/l '0 ~.S H ../t//n/h'/haJ a. ^ • "-,.' -?^" 4 f ^3 • * .. -.- . 7 *7 r St -,« *'jl nO- =:. y. ,H^ >s 1. A 7& ~fi ^ n&— » • .', s ? ■nnw ^^ ... iff dtcr-A Ci. uy> jA'^: (?h X av ^r> iw/i^>y 'V^ ; ;~o rx.s J?-<0M>ai/rni4c* /u&/*6 &* /Q/L 1 Rif ?/ 3 .. / fh- ^ . > 7 / .. 7 . rr-j tffi ii id «„ ") fM JC z Jo Proved 'j£&4 ^."..i.'/a/V t>nf ,i*...-?.\£. J .^ ^ 1 foof.A 'JOtnd £*■ 7 W4 J~ VZfrh; fdcll /1 mO& "£.- Auitrimtien -ft 1 1 yaiifinM 2 r*j V . C.f.4&a*u ' .. .-.''.. >/t. ^■fft.'S ' ,-!■ ^ 1 / Fig. 43 CLOSING FOR THE YEAR 141 /io&ir./dtlL Ccx/uJ-cU OsC&t - \ \£~&Oo\ o o I \/ : ol I £/P^X> ~'/3*U- c Jo /itU. J ° ' 1 3~f%c ' A (, vT 'o o ^l-i.S'oc P«.lJc) /3 «Z 1 372.1 1 \ i -V-.-. ^okvJT I J»a3 yor 7i-l 7cfo z-r 7Tc>'oo • i r I 4 t^J^L. */ J^3o cP' 7 '6 o I -Oze j ? o Jo 2. =77^" 1-l-SSM-O 3*r-i3 00 ! •7 2 / ,OrU /3t^£/ /Zicx^v a*£&- ! il M /2J /UeT /vTJ OaZJi^JT ~Tsoz] /2g ~fri.e*iU-4- T&xU A^W ^Qv 1. *Zun dux* 3o o\po do o o 3 I S~6,Z*S~ J-eeJ Jo 63 j & S/S-g.'i^ CVilt e 'At-c/t c^ JhOJJ %^nuJ^>-\ i] e% it-ttr v-c c fOi'/. (>■$ 11.10 o o (■fi',2-8 / 7 i-Ti [3 C 12.2 JO OS fiiu- 3o ■3* aJuju> a/c /2S-T& \/2gt~& 3~& iA Fig. 44 — Ledger Accounts 142 BOOKKEEPING AND BUSINESS MANAGEMENT cy/^-cA^ <<3 \f«l I X3CQtT x>*-rt zh Fo, C9£C'r ■ M ■ So YJldSd CHulin-iJ % - r^nvPn^trru J(i;/ S3 '■: - ate J"3 ■ 2 Jrndi'n.a °/c ) iji 3 zSj 3JS2. ''.- :i aJ/ch'A^ 42^- 22 PuacTvMU tula. 3ii i 11 frod/KCf 77-r 22S : 9 u, m*o Jmd- '5 J 2 2 M UtAlo S¥7U\ \ ZxruCovi,? /i/c ~7W\ * 7' S4?4 f ^S ST ?s ^^act^n-q "Sc 1 /S/6i /S Htr\3e Dimo /3CU. >X '337S /4 (o .':.; 2& JvatUvia £ C /Qjtz/^4 t£ j3 TSaTL Jo| K/a/tjf 6ii.^ vJccO-4 -fy&rLtsv-ct^ e/gj£ ^n Z>!/;/i I ?l^o li Fig. 45 — Ledger Accounts CLOSING FOR THE YEAR 143 -f^lZ <5*A*SU<4< I^COH^^'.-U---/ JS rz>AT^ I F3L X>Z(3/T X>AT£ 1 \FOL || CREV/T Die 30 t # ipi /oi \?o 23S \>0 lc\io ~l3duL . 17A IS SO 4v \&S ■ OS iS&SlUi A: Jo\ J.'UXdvTLO £bCot , y fss stem. -tS^yvzutS Sz/l&W . ' C- S3 3 ^ Pie Jo JO * 1^^ ^ y ■fyisrrf &/ . dun dtj- r /oj 12 2? 94 66 7& DiASo tjAsOstCurLg, £c£df J- >7\ ISO 5&\ 1 II /SO 34 /So 16 TWJo 7)£c 3o /2>a/ f&nfoy/). Jwn,c/<7 ' . I ! 'l II - ■ 1 ;■• in 76 8Z 176 36, 9C '7&W8 Die 3o J./u^eCcru? (Zee/ n '78 4tf '78wt ~& -t/^-n&iA^ Sy^^t^-e. "Z> 7iri\3a\ /3al 7>££\3a f&nZc%/> 1 8 /fa v52 3g 2S6\30 Dteio JA,a,0Ltsri'f (let/ ~T /;// 2S6 30 ZS6 K -60-Qup^' CL- M n^\36 /ZaZ DtCSQ -you . /ttCOr-tx. « / 8oC\2 3 2/ZSo\ 2Q/Z\73* flic 3d iTA^UCc^rz^o aacJ 20I2X/3 ?lav\id ■^£/y?^ /3 ■41 '■2c-U_ BlA^d verLAs /iccovxL 13 #6&z8 _Mzs Z)M sc y/uidMno ace/ * iy. S3 COS S5o oj, CL- 42 7lov\3d\ 7)U\30\ /SO/ -ycru. /UcavcL \83 55i34. \&2Z\o \/8j\6o lOil VodSb S!V/o\ Zl£e\30 J/t,adisruf face/- * 43 snW m t& ~4l> -f^ize-i^x/ /f^Hj- °Sk4A^t*7/.eGA3- \7)lc\50 i r&u, /loc-trr-aL ~~ \2*k \ioAz^ 7)ec\3o \_^/)^aiiJrrr£^va 3 $.\'p/j_ '103 iQ. Fig. 48 — -General Ledger Accounts After Closing — Continued — Set 3 144 BOOKKEEPING AND BUSINESS MANAGEMENT 12k OrccouTbt' /$ DlC ?c A. ,. /flto/ frt ,. nt pL*-9$~ ia/£^J- /S-/&3/Z l&U^tL. /23S-Q' /JU3 3Z3 /juhii-Z, ^75~ 75es_ So dtocJc ft lis-//?- Zi^cJo f fa£s /3 tyt /j.W36o \fdoo3_ /qz oz. tn*» *7t 342,35 /&Q3& SSiuo_ 46?6f A 46?6rtU/^ ' n/ /J6Jy& ^ , 52j^2J _ s£2plZ%— i, Op- guaM * nt 1. - Swen/tsTu 1, n/ 1MJZE ■ < \r>* 8&6R4- 2? " n> 32SSO •ftUOtfi 4 2563,0 J1L 3 ii-C Dzc g£ 3C J/^a-Oii^ru/ dec? P '7' ■yvjyq y«3 m /UrU-C^M"/^cgyC- SB dec Jo ^ Tlov Z)tc Jc /3a/ '7' '7,9] = /£2 /2 z?A <7 dccS- % /j i /y2oi /?2QX /l&n£ St^/U" v7fca£ c UZc *y fUv Jo /3a£ nic\io\ ;£sW J^nt ftf/ /* 2/o3S\ 1S_ /3 'ziO^S <30 ?4,did4^G dec/ \, '7' 22&V2 22& ws /rLfrrit JC-if/it- */ ^::iC Tin Die Jo Jo ■^■e^ uA^ni f-// OA 7 v302 27 32S\tt\ 7)1 d Jo t/zisCictorT-o {Zfc/jiiii 37S5b 3 ?S\5d /icsftx.^-c fen. /3aa. &C-6-C6 *9\ \0tc\io\ ~fjynl6x/U4», J\/ ? A SZ^/A /dra at Me 30 2/ /3GJ CaoA- 3>C2 \52?a/ ATM Fig. 49 — General Ledger Accoounts After Closing — Set 3 O^T-V Af~ /^(^M^m^^^Uz/ /)-XsU^yiJiyf 3o/*- /£?/£ & /3 &uz/> P72 7Q 2 22-10 OS • 5-V333 -7 So /On*/ 72/ / /u- ~ /8-(> 33 <7* fSS/ CO Oi/- 00 6% Ho '// ~^a^o/ot■ AiA.rftU^#A«SlC- fycffnet/uiutd tvlrffoJc &i £aS at-i-n Gfo 'fa ns ?/a<'j 6? /fA K s( */z£ ./Ou Vc-k Si 7 Ofi-aJaiuA/^Z"^ *6.r ■'c /4-lc g-f/fC Back of Stub Fig. 52 Face of Stub is the amount of checks that had not then been presented to the bank for payment. To check up or reconcile your check book with bank, arrange your canceled checks by number, compare with the stubs, and with a blue or red pencil mark with a check (V) those paid. After checking them all off, turn to the stubs, and, commencing with the lowest number of those unchecked, list those unpaid by number and amount on the back of the stub below the last balance (J), total the checks unpaid and add to the balance as shown by your check book. This last total then should agree with the balance as shown by the bank, if no error has been made. Now draw two heavy lines on the stub under the last check drawn, to separate those of last month from the present month. The checks drawn for the next month are footed in pencil as drawn, starting with your first checks of current month. The checks of previous month are not included, because each month must be kept separate. The balance as shown by your books (E) is carried forward to back of next new stub 148 BOOKKEEPING AND BUSINESS MANAGEMENT and under it are listed the daily deposits as made and the same procedure as before. Of course, any collection made for you or the proceeds of a discount or loan to you by the bank must be entered on the stub with the deposits, just as if you had made a deposit of that amount. The checks noted as not paid (J) will be paid by the bank during the month and appear among the checks at the next balancing by the bank. In many large houses the checks are simply in pads of 50, all prop- erly numbered and except the pad in use, are kept safely locked up. There are no stubs to the checks, but the particulars which are usually noted on the stubs are written on the Check Record, which is usually a loose leaf book, of 52 lines to a page and each line numbered. The left-hand page lines are numbered 00 to 49, the right-hand page 50 to 99, and by pre- fixing the hundred to the figures on the first lines would indicate the num- ber of the check. Thus, 1 before 00 is 100, and before 50 is 150, and no further numbering of that page is needed. The succeeding pages have each its respective prefix. The pages are usually ruled in columns to show date of check, No. of check, favor of, for what drawn, amount of check, Voucher No., amount of deduction, Date of Deposit, amount and balance. Thus you have stubs of 50 checks on each page or 100 stub- on a folio page. If the business warrants it and it is once tried no return will be made to the old-fashioned check book. CHAPTER XVIII Corporations AS many of the smaller concerns have become incorporated com- panies it ma}- be well to touch on the subject. Thirty years ago there were comparatively few small cor- porations. Those then in operation were usually banks, railroads and large manufacturers. As the advantages became more generally known, such as limited liability, a continued business which does not terminate with the death of an officer or stockholder, many hundreds of small con- cerns changed from firms to corporations. Death Terminates Partnership In the case of a firm the death of one partner terminates the business unless otherwise specially agreed upon in writing. A general partner in a firm would alone be liable for all the debts of the business, but a stockholder in all but a few of the States is not liable for the debts of the corporation beyond the amount of the stock he owns; he may lose what he has invested but no more, except in National Banks and certain other special corporations. The amount of capital contributed to carry on the business is known as Capital Stock, divided into shares of the amount agreed on when the articles of association are drawn up, say $1.00, $5.00, $50.00, or as is usually the case, $100.00 each. Each stockholder is given a certificate showing how many of these shares he has subscribed or paid for or the proportionate interest he owns in the corporation. According to the State laws there must be at least three stockholders to organize a corporation. Let us suppose that Bell & Davis have concluded to change their busi- ness on January 1, 1917, to a corporation, to be styled the Bell & Davis Mercantile Company, with a capital stock of $6,100.00, divided into 61 shares of $100.00 each, of which Bell contributes $5,000.00 Davis contributes 1,000.00 Decker contributes 100 . 00 for which shares are to be issued, 149 150 BOOKKEEPING AND BUSINESS MANAGEMENT To Bell, 50 -hare.-, J100.00 each S5.000.00 To Davis, 10 shares, $100.00 each 1,000.00 To Decker, 1 share, $100.00 each 100.00 These certificates of stock may be issued for any amount from one up to the amount owned. Hell may have certifii ates of 1 share, 2 shares, 20 share- and 27 shares i equals 50 I, or any other quantities, provided the total is for the actual amount due him and no more. Shares Are Personal Property Thesi shares may be disposed of by gift or sale like any other sonal property — such as a bond or a horse, the only requirement being to sign the printed transfer on the back of the certificate before parting with it. Title to the horse passes by delivery, title to real estate by decA, and in either case only the title really owned can be given. In the case of the horse as well as the real estate, the seller must satisfy the buyer as to his title. The title to a certificate can be quickly and easily verified by con- sulting the office of the corporation where a record is kept of the name, address, number of the certificate and number of -hare- owned 1>\ stockholder. This certificate is for a certain number of -hare- of equal parts of the capital stock and is simply the evidence of the stockholder's interest in the company. The amount of that certificate in dollar- and cents cannot be with- drawn at will from the capital of the corporation, as could any part of the capital of a partner in a firm and can only be realized upon, by sale to some one else, or the dissolution of the company and a division of the assets, should any remain. The capital stock account is one account on the ledger usually car- ried in one total, but the -lock certificate book show- every -hare issued, the date, to whom, the number of the certificate and the number of shares of each cerificate. For Example Three men may wish to buy a horse valued at $200.00, and none of them has sufficient money alone to buy on his own account, yet agree to make the purchase jointly, the revenue from the use of the horse for a term of years to be divided according to the investment of each. Papers are drawn up stating the facts and each receives his document showing his particular interest and conditions agreed upon. CORPORATIONS 151 In the meantime, one of the three, who had invested $50.00 in the purchase, becomes dissatisfied at the revenue returns and prefers the cash he had invested, but finds that he can only secure the cash by sale of his interest, as evidenced by his paper or certificate, to some one else. When he is able to sell, the purchaser takes the paper showing that the interest, duly assigned, to the other two owners, and has a new paper issued showing the interest he now has in the horse is upon same terms as that of the man from whom he bought. Thus, you see the amount of money invested is not transferred or given, but only the proportion owned, which can be realized in no other way than either selling the interest to some one else or at end of the term sell the horse, if still alive, and divide the proceeds in proportion. Let us see what entries must be made in the books to change from a firm to a corporation. As all State laws demand cash or its equivalent, we prefer to use the Cash Book for the entries in the case. No new books are necessary for the corporation, as those which have heretofore been used can be continued after the closing entries have been made, just as entries of one year follow the closing of those of the one passed. Of course, you use a book of certificates of stock, and if the ledger account of capital stock is not sufficient to record the list, a special stock certificate register is used. First a bill of sale is made by Bell & Davis to Bell & Davis Mer- cantile Company of all property and accounts as shown by the balance sheet of December 31st and in that bill of sale a proviso that the corpora- tion as successors will settle all debts as shown by the last balance sheet. A copy of the bill of sale is made in the journal in the first space following the previous year's closing. Bell draws a draft on the company for $5,000.00. Davis one for $1,000.00, and hands to the Treasurer to pay for the stock to be issued, for, as the firm owed these amounts to both Bell & Davis, the new company assuming the debts, owes them now. These drafts are entered upon the credit side of the Cash Book. 7bco5Ju ^M, 30? \ JjATf Jit- CK V ,vo VPOtl'*" SuNPt't J Am'tWiP I'XT 5^ 1 / 0&<>mi£C &a^lA/% Ptlid'k<* e^-tuA tSc&fr f,(, ■Shoo or 7 „ , r /OOO •--r /ooo CO Fig. 58 152 BOOKKEEPING AND BUSINESS MANAGEMENT These entries as posted on the ledger to the debit of Bell, $5,000.00, of Davis, $1,000.00, and closes the capital account of each. The amounts received by draft and currency are entered on the debit side of cash. ( 30 *2>a/ -6a*4s CAS M 5- •. L i '. Cusrcvinri Suxuntn % ' fi(d-&AVU &mpAb tftn^Dicio -Z^i r*f 72/ 04 '/ / -Geuuta/ 'Jtc-cJc i/AtiOU/JLSBa t / ■ */.. '.Cr/> ai -l . *>. .-c-co (■ o /aoo » / <*. rDt&ert - '- /oo oo /oo vo ~ _ Fie. 59 These entries on the Cash Book are payments on Capital Stock. Capital Stock Account is then opened in the ledger on page 1 . a- there is ample space under the now closed account of Robert Bell Capital Account. 'fofit< &2AUa/. tic&Kon^ 1\ <*J. COyli. ■ /> cu lJAij rtraff bajM & £ Z^t-Tc.'fr 4 ia*J. m £jZ£S4l«U-fii>-fZ*i 7. . /tS fi 'So.f ea ~&~V 'xruw £ M/StM fQSfin fyi SAhAi. Fig. 60 Ledger page showing Robert Bell Capital Account closed or ruled up, and Capital Stock Account opened and two heavy red lines ruled across the page. X — ■ - X Capital Stock Account rarely changes unless there is an increase or decrease, which is the only event. This account is footed for present in pencil, showing a total to the credit of Capital Stock, $6,100.00. These two sets of entries complete the change or transaction of Bell & Davis, a firm, to Bell & Davis Mercantile Company, a corporation. Unless the balance sheet is very long it is advisable to let it be copied on the journal just after the Bill of Sale, being the amounts transferred — the property turned over and the debts to be paid, that there arise no disputes over it in the future. CORPORATIONS 153 Pardon personalities, but one day the head bookkeeper of a firm of $200,000 capital called at my office and said the firm would on the 1st of January change from a firm to a corporation and that he had bought new ledgers, cash and sales books, etc., in anticipation, and had been study- ing the easiest way to rule up the 5,000 and more customers and the other accounts, before transferring or opening them in the new books, but the more he pondered the bigger grew the job and now wanted to know if I could suggest an easier way. I told him in a few words the substance of above and made a pro forma entry in pencil. It is just such cases that suggested going into details and not presuming thorough knowledge in every case. A proposed corporation has no legal existence and cannot carry on business until it has been granted a charter by the State. The legal requirements are that three or more persons (stockholders) contributing the capital, must agree on the kind of business to be done and at what place, the amount of capital stock, the number and par value of the shares, etc., and have this agreement, called the Articles of Associ- ation, written up in proper form and duly sworn to. This paper must be recorded at the County Seat and sent to the Secre- tary of State to be approved by him. Upon approval he issues the charter. Thus you see the State creates the corporation and as a logical deduction has a perfect right to supervise and regulate its own creature, hence the liability to the State for any unlawful acts of the corporation. As each State has its own corporation laws and the Federal Govern- ment has general laws applicable to interstate business, legal advice is necessary on many questions of procedure. Dividends The Capital Stock of a corporation corresponds to the Capital Accounts of the members of a firm, but the division of profits is dif- ferent. The annual profits of a firm are usually divided proportionally among its members, but the whole, or part, of the profits of a corporation is divided among its stockholders according to their holdings, in the shape of dividends. Usually a part of the profits is credited to " Surplus " account, to be left, for the time, in the business, and the balance credited to Dividend Account, for distribution among the stockholders, in which case the pro- cedure is as follows: After ascertaining the amount of net profits, the Board of Directors 154 BOOKKEEPING AND BUSINESS MANAGEMENT meet to consider its disposition and may decide (as would be done if Bell & Davis were a corporation ) that, As the net profits amount to $2,796.25 they will use for dividends 1,830.00 and place to the credit of Surplus Fund the balance 966 . 25 The entry in this case would be, Dec. 30 Profit and Loss, Dr $2,796 . 25 To dividend No. 1, equals 3095 dividend, declared payable $1,830.00 To Surplus Fund, balance of profit, 1916, trans- ferred 966.25 $2,796.25 As the dividends arc paid they are charged " Dividend Account"' Xo. 1, which account will show no balance after all dividend checks have been issued to the stockholders, as dividend checks are charged this account. Xo interest on the capital stock other than dividend-, is paid the stockholders, as in the case of a firm, in which each member is first credited with interest on the capital he contributed, before any earnings are distributed. In a corporation the dividends are not only expected to equal a rea- sonable interest on the capital, but also a further proportion of the earn- ings, in addition. CHAPTER XIX Financial Statements for Creditors HAVE you ever been requested to furnish a statement of your affairs? I doubt if any business custom ever had more good reasons to justify it and so few against it and yet none is more generally misunder- stood or misconstrued than a request for a statement. Banks Require References Before Loaning If you happen to be in some distant city and in need of funds, with no acquaintance there, and should apply to one of the banks for a loan, would it be granted at once without question? or would the banker ask for reference; how you expected to pay it and what is your condition? Would you not cheerfully explain, not only your financial condition in detail as fully as possible, but tell him with whom you dealt and give such other references and be satisfied that his course is the only good busi- ness procedure under the circumstances? A Sale on Time is a Loan When you buy from a house with which you had no previous dealings, you ask for a loan of the value of those goods, to be paid at some future date and if that house should simply do as the banker did, is it not acting on proper business lines? Would you deliver goods on the order of some stranger unless good reasons had first been given? In either case the buyer or borrower, for that is his position, should by facts and satisfactory references show that he is worthy of the credit asked and the seller on his part, has the right to know whether he is justified in parting with the goods. No honest man would ask the loan, for that is what it really is, if he doubted his ability to meet it when due. If a merchant, whose account with some house may be out of propor- tion or past due, be asked for a statement and promptly complies, he may 155 156 BOOKKEEPING AXD BUSINESS MANAGEMENT not always receive immediate and large advances, but the house in ques- tion can and does generally suggest some remedy or reform that proves most valuable and if in good faith complied with, extends very cordial and valuable assistance which bridges the chasm and leads to success. It may be a caution against continued overbuying, failure to collect up closely the outstanding accounts; or to cut out certain heavy and unnecessary expenses, to install a simple and satisfactory system of book- keeping or some other remedy justified by the conditions, that is suggested. Be frank and open with those who are, in fact, first your friends and next your bankers. True confidence makes no reservations. When a statement of your affairs is requested send a copy of the last monthly trial balance — such as (Figs. 9, page 45; 19, page 89; 32A, page 125), If during the current year, together with the last annual bal- ance sheet. If requested during January and February send the previous D< ber balance sheet (as per sample Figs. 29D, page 102, and 50, pa.ne 145. i The following, from a leaflet issued by the National Association of Creditmen, embraces the whole subject in the fewe>t words of classical English, and should sink deep in the mind of every merchant. " The Reciprocal Value of a Signed Statement " " Good credit in the markets of the world enables the merchant to add to his ability to do business. It gives him the use of enlarged capital, thus enabling him to carry a more complete stock, increase his sales and mag- nify his profits. Large assets are not always necessary to the creation of credit; what is most desirable is, that credit be in relative proportion to the actual assets, and in harmony with condition- which create and maintain it. .1 mer- chant's capital is the sum of his net available resources plus his cred The giver of credit is a contributor of capital, and becomes, in a certain sense, a partner of the debtor, and, as such, has a perfect right to complete information of the debtor's condition at all times. Credit is given a merchant because of the confidence reposed in him. Requesting a statement when credit is asked is not a retlection on one's character, honesty, or business ability, but is done to secure information to enable business to be conducted intelligently. When a statement is made it should be absolutely correct. To make it so necessitate^ the taking of at least an annual inventory and the keep- ing of an accurate set of books. Statement giving, therefore, will tend to make a debtor a better buyer, because more familiar with his stock, more FINANCIAL STATEMENTS FOR CREDITORS 157 careful in giving credit, more conservative in incurring debt, and will result in a better knowledge of his business generally. A merchant who desires to serve his own best interests should recog- nize that his most valuable possession, apart from his actual assets, is a sound, substantial and unquestioned reputation as a credit risk, and that, under the prevailing conditions and demands of business, the most effect- ive, and eminently the best way to prove his basis for credit is to be willing to submit a statement of his financial condition." Guess-work Statement Among the many unnecessary problems which daily tax the gray mat- ter of the credit man, none is so perplexing as the " guess-work statement " received from some customer who could and should have books, to show an intelligent statement of his condition. A Case in Point Instead of that he may possibly come near duplicating the case of a merchant in one of our small towns whom I visited in the matter of his past-due account. When asked: How much do you owe other houses? He "guessed" about $400, but upon investigation he had unpaid invoices of $1,270.00. How much is owing you by your customers? He " thought " about $2,000, and our search disclosed memos, of all sizes and shapes — bills of about $1,000. How much stock on hand? He " judged " it would amount to $3,000, but as it was all in sight I " might make a closer estimate." When was last inventory taken? None since he started three years ago. We found on one hook-file dunning letters, unpaid invoices, state- ments and trade market circulars; on another memos, of bills sold on time, some penciled on scraps of wrapping paper, some on bill heads and a few on old used envelopes. The paid invoices and receipts were in an old box where they had been tossed as through with. This was the worst case in my experience, but if you can persuade any old credit man to talk he may recall some very interesting, and as we say, " raw " cases, and let drop his opinion of how dangerous such incompe- tent, shiftless men are to the merchants of the community. No system will run itself, but if any merchant desires advice on the subject of improving his present methods he will find a ready response by his wholesale friends and receive most valuable suggestions. 158 BOOKKEEPING AND BUSINESS MANAGEMENT PROPERTY STAI I MINT BLANK r rut ■ ■ ■ . . ■ ' C'-l cmd« m llM it. .fir: ( . **!**, and ,. l ^irt ***•* Jfc iv< tinny nwciu') 'u t)w Cfeal»'W »f wd« ( wkal ■ mutl .Jc*r t.k- is llal • re* " I _ . i . . ,. ■ I ■ . Whrn ■. ... ■ ■ . - . J will KH.lt i 'filly. A meirium - i.- i ..... l ■ ■ . . 1 ,. , c dul h.. IBD 1 i ■ ' . i :. ,',., 1 : u ,) enuneottr ihc be* »ii r.. i row I r . awmeni ■■( h,i financial i ■ ml KrtT>' I IG. ,^3\ 3Zt 3 . C itO ALTIVK UL'SINLSS A.SSKT* Pn««i (*•*! valm <■' mcrchanatu* is fcaad «, cuk value Hitturri. inj<\itwry. Ih.r. Wm 2.Q I I a i. ..- i lUMfllll Unu ■ ■ ■ Al**~— tttl W«d . . ..P3 SI i [UR ASsKTS I . . . y&o— rr-v.A (m-jar-ir fttand *«ai n*t ■**»■ io »■.■! aul »* Ruun**< ■ ■ What pnrUoo <■! r»al idd ll»r* yam .or ■*»« drf*a _ 7-- . o/l.o Jay«i Uk* Minatory of «acfcriZ40M*><'' > -fJ~ DaM of laat nn» '^ *-*- r& . " If yea fcar* borw— d aw la tto liwfimi. -ut. mbi It Hnnl awl In vital «t '■J'O '- f*n-*. £•»»*<__- < r*«u.ulo( ukIot y™/ t<«lr>J. aula ar»MM tiw»<4*ba MMM me.in!. of ■ •a mmiI of aact pladc* ar traufar *f«- A^**- u--i-^(-u>- K.. WhaOariaafaew.rtJayaha.ffT^dAufe^.-. /-"-.- Jftwi, *Zjy~. Omf pnactfultgr froai NAnln ('*» , .;- r^- Th« abui« iUUrkoI, lM4h prtalarf anJ «rtlt«a. Km b«ra c*r*f*Hy rv»d by lh« unri>«], *nt U a tall and qpfTCM tdiniwiit of tn> or oar flo.nh him with a paper, on which a bank would advance the money, with which the wholesaler could pay for the goods parted with, for the wholesaler must also pay his debts. The customer is not asked to pay one cent of the bill until due, and, as the acceptance is due on the same date that the bill for which it is given would have been due, no favor is asked bv the wholesaler. TRADE ACCEPTANCES 165 If you have been favored by a loan of goods, reciprocate by furnishing paper which the seller can use. For example: If the Enno Hardware Company ships to Robert Bell & Co. a bill of November 29th for $158.20 — 60/2, and Enno draws a draft as follows: N kJ/c/v 2 w z 1 sUS : TOTlfE ORDFH OF OHRSIOLVKS 2» 191 No. 2S~ &C&AJ' TMJJ.IjARS 0HK OBLHi'toayi OI-^'JIUR AUDITOR HEREOF A KIKES OUT OF THE! PCBOHASB OF G*X>n>i FROM THR DKAWER ». syyi >jj|3 ,v|_ &***«* rfh*j\ 'Z*/~tk**t- ■4^. Fig. 54 — Trade Acceptance If goods are shipped " to order," Enno mails the draft to Exchange Bank, Columbia, with instructions to present for acceptance and return, unless Bell prefers to discount same, in which event there may be 2 per cent deducted from face of the draft, which may then be surrendered to Bell, as $155.04 cash and $3.16 discount pays the $158.20. Entered on the Books If Bell does not wish to discount, but take full time, the procedure is as follows: Upon presentation Bell compares amount and date of draft with invoices, notes on invoice " Paid by Acceptance," 1/15, 60/d, No. 25, and on bill book: BILL3 PAYABLE Date No. Maker or drawer Favor of Whera payable Amount Time Due Remarks OUh Is /aa^am ■'nrW^to rklMAlUvH fit/W<. M lo &«18 ^tUv- A_ J o> 7 — r- b- Fig. 55 — Bill Book 166 BOOKKEEPING AND BUSINESS MANAGEMENT and across the face of the draft Bell writes " accepted,*' signs the firm or corporation's name, as the case may be, and dates it. Bell then returns the draft to the bank. messenger and enters on the due date of his diary, or page of January 28th: ' No. 25 — Enno acceptance, 1 1/29 — S158.20 due to-day." Journal Entry He enters on Journal : December 8th Enno Hardware Company, l)r SI 58.20 To Bills Payable: For acceptance No. 25, 11/29/60, d/d, in payment for invoice H/29 ' 158.20 , Posting and, 6 Posts the entry, debiting Enno on their ledger a/c 158 . 20 Crediting bills payable 158.20 Bills Payable is credited, because, when a draft is accepted, it is a written promise to pay or a Bill Payable and assumes the debt. Discounting; Set No. 2 On the other hand, if Bell prefers to discount it, he sends check to the bank for $155.04 having deducted discount, 2'/< , per agreement 3.16 to settle the draft, which is handed Bell 1 58 . 20 and charges in this case in Cash Book same as (Fig. 22, page 93), 12/8, Enno Hardware Co. paid acceptance for. . . . $158.20 put in Amount Paid column 155.04 put in Discount Received column 3.16 Same; Set No. 3 or, if using voucher system charge on Cash Book ( Fig. 33, i page 127), " Vouchers Audited," No. 494, Enno '"Acceptance " $158.20 put in Amount Paid column 1 55 . 04 put in 1 Hscount Received column 3 . 1 6 and voucher marked " Paid by Acceptance," and canceled draft pasted to voucher. TRADE ACCEPTANCES 167 If not Paid Until Due When the acceptance is allowed to run or only to be paid when due, after having made out the voucher, a journal entry is made as follows: December 8th Vouchers Audited, Dr $158.20 To Bills Payable 158.20 Voucher No. 494 settled by acceptance No. 25 158 . 20 Enno, 11/29, and voucher marked " Paid by Acceptance " and filed, crediting Bills Payable, because you have shifted the burden of your debt to Bills Payable, and debiting " Vouchers Audited," because that voucher which assumed the debt is no longer responsible for it, since the burden is now assumed by the acceptance which must be paid. When the acceptance is due, it will be found at the bank to which it was sent for collection, and when paid, is charged on the cash book to "Bills Payable " account, just as any other note paid. CHAPTER XXIII Stock Record to Show Purchases, Sales and Stock on Hand THERE are many elaborate methods of keeping account of the articles bought and sold, also the stock on hand, and a simple one is shown. ( Fig. 56A.) Any loose leaf cover, most convenient for your needs, of a stock size, that sheets to fit may at any time be procured, is suggested. Columnar sheets are usually kept for sale by all first-class -tationers. If ruled in columns of dollar.- and cent.-, u-e for quantities that por- tion ruled with unit lines or for dollars and use the cents column for dates. The dates are usually in figures, as "ill for July 2nd, 10 IS for October 15th, etc. In the left-hand corner write the headings or designation, as follows: First Line, Stock, being stock on hand. Second Line, Received or Bought, being quantity purchased or received. Third Line, Total, being amount of stock, and quantity bought, in one total. Fourth Line. Sales, being the sale- since the last count. Fifth Line, Stock, being the count of stock, just made. -&OA p La u >j x? f? y XXX A C- l^/l l£ P/TI M |r" EA^LE 5tocH SO /' 4 /; J 7} & '/ ^rcEivfj s ■Aj ^f A s 'h 'M TOTAL /s s $ 2V .5a L £5 % 4 '7 ■Stock. /3a v5 > 4 '/>* t* HfCf i \'£6 Jo V28 / ToTA\- -Sal£s 6 %8 Stock 4 -£_ s Fig. 5 6.\ — Stock Record 16S STOCK RECORD TO SHOW PURCHASES, ETC., ON HAND 169 And continue this order by writing the same sets of four on the lines all down the page, so that if the page has thirty-three lines, you are pre- pared to record eight different counts of stock, at eight different dates, for any one of the columns or stock on every fourth line after the first balance. Starting with the inventory count, enter on the first line stock the date and quantity on hand, and when goods are received enter on second line the date and quantity received, then add " Receipts," line 2, the amount of "Stock," line 1, writing on line 3 the Total, which would be the stock then on hand, if no sales or withdrawals had been made. On the 5th line, " Stock," enter date and quantity of stock now actu- ally on hand or just counted and deduct that amount (the present stock) from the " Total " on line 3, putting this difference or Sales, in line 4. Because if you started with a certain quantity line 1 and add what has been " received since " " 2 the total would be the quantity on hand : " 3 but if you count your stock and deduct that quantity " 5 from the total " 3 the difference will be quantity used for sales or taken out of stock " 4 The stock in any one column being for that separate article can be taken and entered independently of; or without conflict with any other column. Usually goods of same class, but different brands or weights are put on same page in separate columns for the purpose, or may follow on the pages of the same subdivision. Thus, we had (Fig. 56 A), Stock 10 Boxes xxxx Soap when inventory was taken. Received 5 " " " on January 27. Total 15 "or stock and quantity received since. Stock 6 " on January 30th, as checked up by one of the clerks, and by deducting 6 from 15 we find that we have sold 9. Sales ~9 " " " We sold between Jan. 1 and Jan. 30, 9; but instead of putting the figure 9, the amount sold, under the 6 on the Stock Record, we place it on the line " Sales " or " Sold." When a box of soap is opened and contents put on the shelves for sale, we consider that box as having been taken out of stock, so far as the record goes, because we take a box as the unit and do not count the separate cakes or part of the contents of any original package, as it would be end- 170 BOOKKEEPING AND BUSINESS MANAGEMENT less detail, but by taking count only of original packages or cases, the task is light and the results of any one period embraces all the goods sold. The small quantity or the broken packages on hand at the beginning will about equalize the amount at end of the period. If, however, we handle articles which are valuable or bought singly, or wish to check any stock by article, it can easily be done if desired by arranging or listing by article on the Stock Record. Can Order Intelligently When we know how many cases or packages have been sold in a given time and how many are now in stock, we can regulate our purchases, or contract for supplies to cover a certain period, with much greater accuracy. Relying on Traveling Salesmen I have known merchants who not only had no idea of the quantities sold, but did not know their immediate requirements, and when some trav- eling salesman would arrive, he was asked to " go back and look over the stock and send what you think we need." In many such cases the salesman's judgment and experience may have been of great benefit, but in others, it might be expressed in the old Arab saving: " Save me from my friends, for they have done me up." You must rely upon your own judgment if you would be successful. Shows Slow Sellers The stock record acts as a dragnet to bring to light the " stickers " or slow sellers, the experiments, the goods which fail to repeat and cases of ■ mistaken judgment. Minimum and Maximum Many merchants try to fix a minimum or the lowest quantity which must be on hand, and a maximum, or the largest quantity, above wli it should never accumulate, and note these figures in the upper corner that the buyer may see when in line. More Detailed Record Should the business justify -bowing every purchase, the article on everv sale and the balance at all times, which should be independent of taking stock or count, though capable of easy proof by comparing at any STOCK RECORD TO SHOW PURCHASES, ETC., ON HAND 1 7 1 time with a count of stock, we could have a more detailed record, with special rulings and use a page for each separate article to be traced or watched. (Fig. 56B.) X y X -5o>\ r '^iH.y-'/iYS 'VS/Hy /O //V /3/JL OCT .X>AT£ Punt/". Frgi*. tyt/AwTiry- On Hand ©Alt" SHIPP/MC Sta/try ® ■/< • JnvMofoyu /o /o 1 M 1 2 V , 2/o 3 *2- J 2- 'h H/fo taJ&rir J- / ivT d*>o / Fig. S6E — Stock Record ^J Is The ruling like a ledger has a debit or " goods received " space on the left-hand portion of the page and goods out, or withdrawn from stock, on the right-hand of page and in the center a column for balance or stock now on hand. In this case the deliveries, or " goods out," are taken from the carbon copies of bills shipped and the balance or difference between receipts, or " goods in " and the withdrawals or " goods out," made daily. In the space " received from " is usually written the purchase num- ber and sometimes the name of the seller as the " goods received " are entered from the invoices. In space " Order No.," on the credit side, the number of the shipping order, if every article is to be accounted for, or the number of the stockman's report which he issues when original packages are to be accounted for. This requires a report from the stock clerk whenever a package is opened for supplying the shelves or to be shipped. If each article of the contents of a case is to be followed the detail is too great for a small business, but can be arrived at by the form. (Fig. S6A, page 168.) T CHAPTER XX I Y House Cost and Price Book HE majority of merchants rely almost solely upon memory for prices and often pay very dearly for it. Description A little loo>e leaf price book, of a size and capacity depending upon the requirements, with index sheets, is ideal for the purpose, as the sheets are removable and may be inserted where needed and no disappointment re>ult. as in a bound price book, where the estimated apportionment of sheets to any one letter, often prove.- insufficient. The sheets usually have four ruled columns, though any other stock ruling could be selected. Arranging All articles or classes beginning with the same letter are on one or more sheets just before the index of that letter; thus " soaps " would be just before the index letter " S," " coffee " just before the index " C." The index sheets are simply guides to separate the others and are never written upon. They should outlast several sets of other leaves. ( Fig. 57.) These four columns are used according to the judgment of the user. Many begin at the left-hand side of the sheet, write the date that there be no <|iie^tion when it was placed there, next the name and description of the article, and In the First Column the invoice cost; In the Second Column the cost and expense in one amount; In the Third Column the selling price in cjuantities as dozen, case, hundreds, etc.; In the Fourth Column the selling price at retail or for one or a few of the articles. Others Use The First Column for list price; 172 HOUSE COST AND PRICE BOOK 173 The Second Column for trade discount; The Third Column for net invoice cost; The Fourth Column for selling price. If desired leaves of six columns can be purchased. Similar brands of goods are usually written one below the other. -vD-^covrLLzC ~v7&c, which results. When results arc tabulated, showing totals and carefull) analyzed, such as appears out of proportion, may be examined to find the cause and have the remedy promptly applied. Depreciation "is the gradual decrease in values of an asset, from any cause. It may be a permanent decrease in value, not merely from use but from any other cause. The reason for charging depreciation of assets, is that they may appear in the balance sheet at their true value at that date, other- wise the assets would be overstated and the balance sheet a false statement of affairs. ( Also see Fluctuation.) (D.) " Discount "is an allowance off the price of goods, or off the amount of an account, also the interest deducted when a hank 'discounts' a note. (See Interest.) Cash discount is a deduction allowed for a payment to be made, at a date prior to the time when the full amount is due. Trade discount is an agreed amount of discount allowed dealers from the face of the published catalogue price or rati-. -\- (P.) " Dividend. "A share of the profits of a corporation, -f (P.) " Draft. "An older of one person or firm on another to pay a certain sum of money at a specified time." Enter. "To write or copy an entry in some hook; when carried from another lumk to the ledger, it is termed posting." Entry or Entries. " The facts and figures written or to he written." Fixed Assets. Those assets which it is expected to keep in the busim ss for the purpose of earning income or profit, such as store and other build- ings, machinery, horse and wagon, etc. (Also see Assets.) ± (D.) " Fluctuation "is merely the accidental variation, owing to external causes, in the value of certain property owned. By fluctuation, the cost of fixed assets is affected by the loss or depre- ciation due to use, and such loss is an expense and should be deducted from the original cost. (See Assets.) (D.) " Foot. "To add two or more sets of figures and write or check the total amount of same." D. — Dicksce-Montgomery. P. — Pitrman-Porters. D ;+; Dicksce-Montgomery. P. + Pittman. GLOSSARY 183 Index. " Pages alphabetically arranged, on which the names of accounts and pages on which they may be found, are listed, each under its proper letter in logical order for ready reference. In many smaller ledgers the index consists of the first few pages properly lettered, in other cases the index is a separate book. In loose leaf ledgers no separate index is required, because the leaves are all arranged alphabetically and the sec- tions designated by lettered division sheets." Interest. " The allowance given by the borrower to the lender for the money lent. (P.) " Inventory. "A list of goods or other property and their values properly totaled. The inventory value of goods is the invoice cost plus the freight and carrying charges necessary to place them on the shelves. All other expense is running the business or Shopkeeping Expense, therefore, the inventory should be taken at the net laid dozim cost price, unless the market is lower, then, at the latter price. Ignore cash discounts in pricing the inventory, as that amount is not an allowance on price, but premium on cash payment or interest for the use of funds. Trade discounts are, of course, always deducted. (See also ' Cost.') (D.) " To List. " To write in one column several sets of figures or description and amounts, one below the other, to be totaled or added." Led. Fol. " The page or folio of the ledger to which the entry is posted." Note. " Used for promissory note — or a written promise to pay a certain amount at a future date." To Open an Account " write the name of an account in the ledger on a page in the space so reserved and then enter the transaction or post the entry. (P.) " An Open Account. "An account showing a balance. (P.) " On Open Account. " Goods sold to be paid for later and the account not closed by note or other credit. (P.) " Per Cent. " Percentage from the Latin phrase ' per centum,' meaning by or for each hundred or the proportion in a hundred and written %. 5% loss means that 5 parts in every hundred parts are lost, and 95% or 95 parts, the remainder of each hundred, are not lost." Post. " To write in a book, usually the ledger, the date, description in brief, the number of the page of the book from which these facts are taken and the amount so carried or transferred." Posting Column. " The column or space set apart in all books of account in which the page number of the book to which you post the entry or from which it is brought." Price Mark. " See ' Cost Mark.' " Profit. " Gross profit is the difference of amounts paid for goods and the Selling price. Net profit is what is left after all expenses are paid. (P.) T>. — Dicksee-Mbntgomery. P. — Pittman-Porters. 184 GLOSSARY Profit — Continued. The Century Dictionary says of Net Profit: ' What remains as clear gain to any business after deducting the capital invested in the business, the expense incurred in its management and the losses sustained in its operation.' Percentage of either profit or expense must not be taken on the cost of goods laid down, but upon the amount of sales, because your investment has been not only the amount paid the manufacturer or jobber for the goods plus the freight, but you have also paid a large amount for carrying on the business. You must remember, therefore, that your investment is the invoice cost together with the freight and a proportion of all other expenses. (P.) " Profit, continued. " The proper basis of figuring is upon the total sales as shown by the Trial Balance, before closing, as it is upon that the total profit is made, this being the case it is the amount of the sales that should be taken as the basis on which all profits and expenses are computed in making prices. The common error in marking goods is made by adding a certain percentage based on invoice price instead of the real cost, which is cost laid down plus expense. Many merchants make this error, and though firmly believing that they are making a handsome profit, really incur a loss. All expense must be paid and true profit only is what remains after all expenses have been repaid. (D.) " Quick Assets or Current Assets. " Cash and those assets acquired for the purpose of sale and subsequent conversion into cash. (See Assets.) (P.) " Rule up an Account. " Put in the balance, if any, under the side which sh< iws the smaller total ; rule red lines, opposite each other, under both sides of the account ; then foot the two sides, bringing down the totals in ink; rule red lines under these totals and bring down the balance. (See Balance.) (P.) " Returned Goods. " Goods or merchandise bought by a customer and for some reason returned to the concern from which it was bought. In such cases, either cash is returned the customer for amount of goods so returned, or a credit memorandum is given him, to apply as a credit on his account." Stock. " Used for stock of goods bought and to be used for sales, formerly termed Merchandise. Stock, in Department Stores, is separated by class into departments thus: A Stock may be Groceries. B Stock may be Dry Goods, or departments being numbered, 1 may be Groceries; 2, Dry Goods, etc., etc. D. — Dickscc-Montgomery. P.— Pittman-Porters. Index Acceptance — Trade Accounts Payable Receivable Approving Orders Vouchers Bad Debts — Reserve For Balance Sheet Balancing Cash Balancing Ledger at End of Year Balances on Trial Balance, Debits Must Equal Credits.. Bank Account and Check Book Bank Discount on Loan: How Figured Barclay, Geo. R. Reason for Insuring Your Goods.... Bills Payable Receivable Books and Magazines on Selling Management Broken Cases Not Counted on Stock Record Buying Goods Through Traveling Salesmen " Checking and Noting Condition " Depending on Traveling Salesmen to Re- plenish Stock " Purchase Order Canceled Note Preserved Canned Goods — Date Marked to Know How Old Capital of Owner — Interest to be Paid on Capital Stock — -Corporation Books Cash Balanced — How? " Book Closed and Ruled for Month " Footings Proven Considered as a Person, Mr. Cash " Drawer — Danger If Not Properly Kept " on Account from Customers " on Hand for Change Paid Out — How Entered " Petty, How to Account for " Posted — Total for the Month " Received — How Entered " Sales Check Book — How L'sed and Reconciled with Bank.... Check Number to be Put on Voucher Whioh It Pays.... Checking Condition and Count of Goods Received Claims for Errors or Shortage on Goods Bought Closing Books for the Month " " Year " Consignment Account Discount Account for the Month " Discount Account for the Year Closing Entries — Set No. 1 (t tt it tt 9 (( II If (( -7 Mdse. a/c " " 1. '.'.'.'.'.'.'.'. ..'.'.'.'.'.'.'.'.'.'.'.'.'.'. a a a it tt -j Collect Past Due Accounts Commencing Business Comparative Sales Record Comparing Canceled Checks with Bank Book Consigned Goods or Produce Sent to Commission House Consignment Account Closed Corporation — Dividend Declared — How Entered Corporations — Entries to Change from Firm to Cor- poration Cost Book and How to Keep for Cost and Selling Price. 185 Forms Pages 54,55 163 14,16 14,16 22 110 48,87 50 40 32, 68. 72, 84 32, 103 32 52 146 57 161 55 74,85,115,166 73 106,176 166 18 69 5,18 11,25, 7'0 170 18 69 115 173 87, 103 60 149 32. 68, 72, 84 21, 22, 32, 33 18, 83, 85, 126 30, 83, 85, 126, 136 85 18 11,17 15 29 19,72 40 72 32, 127 18 3 A 12,17,23,126 52 146 61 A 112 5,18 11,25,70 5 25,70 30, 33, 136 39, 65, 86. 138 86,88 84 88 10 41,46 28 83, 86, 98 43 138 41,46 65 68 24,64 16 66 52 146 73 86 153 58, 59. 60 149 57 172 186 INDEX Forms l Goods Used for Saks — Mow to Figure or Market Price Whichever is Lower-pricing In- ventory Count and Condition of Goods Received to he Xoted on Invoices Cndit Balances Should Equal Debit Balances on Trial Balance Explained — A Debil Musi Have a Credit Memorandum and It* Uses Cross Entries — \\ hat Arc They ? Customers' Accounts I 'art I 'ayment on Dates Notes are Due to be Entered on Diary Debit What Is Received- I r< .lit What Is Paid Out Deduction of Discount or Claim from Voucher Department Books — What Are They? Decided on Expenses Goods on Hills— How to .Separate Inventor] Sales "Stock" instead of "Merchandise Acct."... Deposit All Receipts and Pay All Bills by (.'heck Depreciation i hi Furniture, Dray Stock, etc Diary and Its Uses of Daily Transactions, Set 2 " 3 Discount Account closed Gain But Xot Trading Profit i mi Vouchers Paid — I low Entered " Paid on Loans from Bank — Haw Figured and Entered " Received for Month Posted in One Total Disputes on Purchases Dividends — What Are They ? of Corporation- — Mow Declared and Entries. Dividing Profits for Year Draft for Acceptance Drawing Money for Self Due Date of .Votes Watched Date! oi Invoice- Watched Duties of Partners and Clerks Each Clerk'-. Sales Kept Separate Easy Separatioti of Goods on Bill by Departments Entering and Posting Errors on Invoices of Goods Bought, Xoted Estimating- Stock on Hand at Any Time Expense Account Closed for the Year " into Trading Account by Departments " Charges " Percentage of Sales Expiration of Fire Insurance Watched Explanation of Terms Used by Bookkeepers Extending Figures on Inventory Figuring Profits — Right Way and Wrong Way Filing Invoices After Goods Are Received and Vouched. Filling and Shipping Orders Financial Statements — Reciprocal Value of Requested and Dow to Prepare.. " " Sometimes Guess Work Fire Insurance — Expirations Watched " " Reason for Insuring " " Leaflet of Xat'I Ass'n of Credit Men. Forms or Figures — 1 to 60 List Freight Paid and Entered Full Cases, Only, Counted on Stock Record Furniture — -Depreciation on " on Inventory, How to Identify Xext Year.. General Accounts — What They Are General Expense Apportioned to Department 17 46 36 36 23 54. 55 37 36 5,18 53 Pages 58 55 11,25,70 3i 10, 18,33,45 69 42 28, OS. 116 15. 21. 29 71 10.45 ,115, l"> 111. 108, 111: 107 107 lio 113.128 108 113. 129 107 71.146 55, 87 71 76.82 117. 124 84, 88 88 112 57 84 25, 70 57. 153 153 103,139 103 12,28 73 71 67 113 113.128 22,24.103 25, 70 04 41.43 88,104 62, 106, 136 29, 37 58 71 179 53 58 110 OS 156, 157 156 157 71 161 160 185 12, 20 166 55. 87 55 42 136,62,105,108 INDEX 187 Forms Pages Glossary or Explanation of Bookkeeping Terms 179 Goods Bought Through Traveling Salesmen 70 Received — Stamp for Noting Count, Condition, etc 5 11,25,70 " Returned 69 " Shipped to Commission Houses 73 Gross and Net Profit 65,104 ' " Percentage of 65, 104 House I ost ami Price Book 57 172 Ignorance of Stock on I land Costly 17-4 Index to Forms or Figs. 1 to 60 185 Indexing Inventory 53 Ledger 16, 26 Insurance 86. 160 Interest — How Charged and Posted 80 on Proprietor's Capital 87 Inventory — Advantages of 54 " Assigning Space to each Team of Caller and Lister 51 Can Often Be Taken in One Day 49 Extensions Checked 53 How to Take 14 52 Identifying Furniture or Machinery on.... 55 Indexed 54 Location of Goods Xoted on Each Sheet... 52 Prepare for 51 Pricing at What Cost? 49,55 Quickly Taken by Team Work 51 Sheets to be Initialed by Takers 53 " Stock by Departments 52 Taken by Teams 51 What It "Is and What It Shows 48 Invoices — Due Dates Watched 71 Entered on Journal 26 " Voucher Record 110,111 Goods Checked as Received 5, 18 11, 25, 70 of Goods Bought — Filing 110 to be Promptly Paid When Due 71), 164 Journal Described and Its Uses 7, 10. 34, 43 19, 63, 129. 140 Ledger — Arranging Space in 16, 29 Described and How to Post 24, 25, 26, 41, 44 15, 132 " Indexing 16, 26 Opening an Account in 16 Ruled at End of Year 32.103 Machinery Marked for Inventory Identification 55 Making Claims for Shortage or Errors 25,70 Management, Buying and Selling. See Books and Trade Papers 176 Marking Furniture for Inventory Identification 55 Maturity or Due Date of Invoices Watched 71 Memo of Daily Transactions on Set No. 2 76-82 " " " " " " 3 117-124 Mercantile Agencies 159 Mdse. as Person Mr. Merchandise 44 " Bought for Cash Posted in One Total at End of Month 22 " By Department Called Stock 107 " Charged to Stock Account __ 107 " Closed into Trading Account 65, 88, 138 " Closing Set No. 1 41,44.46 •' 2 . 88,138 " Condition of Noted When Received 5 11,25, 70 " Given Back to Inventory 13 43.139 " Not Credited with Sales 40, 45 " on Hand at Any Time — -How to Estimate 64 " or Stock Account Charged with Freight 12,26.27 Returned 17 69 " Used for Sales — To F'igure Cost or Amount of.. 58.65.104 Miscellaneous Expense Divided Between Departments... 108,136 Money for Change in Drawer 29 Personal Account — How Entered 28 hSN INDEX Monthly Sales for Comparison Posted as one Total " Statements Always Written Up National Association of Credit Men Leaflets Neatness — Advantages of Needed Goods Left to Judgment of Traveling Salesmen. Nfi i r i- No Debit Without a Credit and Vice Versa Notation on Invoices as to Correctness Notes Due — Date Watched Given or Received to he Serially Numbered " Given You by Your Customers to be Promptly Paid When Due O. K. Stamp for Invoices When Goods Are Received... Open an Account — How to Cash Drawer Dangerous Order Blanks — Hovi Filled Up Orders to be Appro\ ed Ordering Goods for Stock Original Game of Debit and Credit Overlooking Due Dates of Invoices Can Be Avoided.... Owner to Receiver Interest on His Capital! Part Payment of an Account by Customer Partnership Agreement of Bell & Davis Past I'll' innts Pay Roll — Putting Up Percentage — How to Figure and Examples What It Is of Expense and Profits on Sales Perishable Goods Watched ('ash and How to Keep It Correctly Posting Totals at End of Month Price and Cost Book — Advantage Of and How to Enter " ' Noting Changes Prices — How to Figure Selling Price Pricing Inventory Produce Shipped to Commission Hhum- Profit and Loss — Set 1 1* 11 t( tt O 3'.".'.'.'.'.".".!!".'.'..'.'.'.".!!'.'.!!'.!'.!!!'.! Profits Divided at End of Year " Figured on Sales Not Cost of G I- ' and Wrong Way " Gross and Net " Other Than Trading Profits " Other Than Trading " Not Uniform on Ml Goods Prompt Payment of Bills Proprietor to Receive Interest on His Capital Protect Yourself and Your Creditors by Fire Insurance. Proving "Vouchers Audited" Account Purchase Orders Purchases Kepi Separate from Sales Jul;" and Checkin ■ G Is Reconciling Check Book with Bank Relative Percentagi on Cost and on Selling Price Remittance by Voucher Needs no Letter to Accompany it Representative \ccounts : \';\t\ 1 )i Ills Return I Goods Right i ' Rough Notes of transactions -Set 1 •• ■■ > •• u 3.! .'.'.'!. '..'!.' . Ruling l> and Closing Cash Book for Month " Sales Book Ledgei Sales — What Goes Into a Sale " Hi. ok — Set No. 1 Forms Pages 66,114 32 68 156, 160. 161 176 170 65, 104 10,45 5 11.25,70 73 73 73 74 5,18 11,25.70 16,24 17 3B 22, 68 18 70 10 71 87, 103 1? 67 69 39 71 58, 105 56 104 173 40 72 16,22.24.103 22,32,127 57 172 172 56. 58, 105 40. 55 73 47 103 43 139 103 57 56, 58, 105 104 86 86 106 70.74 87, 103 161 111 70 18 22 5 11.25.70 52 146 15 61 51 112 42.62 48.87 17 69 58, 105 10.24 117.124 6 30. 83 4,23,35 21,63,128 32. 103 40. :-•> 4 21 INDEX 189 Sales Book — Set No 2 3 " — ■ How to Enter t " by Departments by Months " —Cash Sales " Closed into Trading Account " Closing at End of Year " Not Posted to Mdse. Account " of Each Clerk Kept Separate " on Time or Charge Sales " Tickets " to be Approved Before Filing " Total Posted at End of Month Total Posted at End of Month Set of Books No. 1 — John Wilson " 2— Roht. Bell & Co " " " " 3 — Bell & Davis Selling and Buying in Trade Papers and Books Selling Price — How to Figure Separating Department Goods on Sale Tickets Shortage or Errors on Goods Slow Sellers or " Stichers " Caught Spoiled Goods — To Guard Against Stock of Starting Business Statement of Your Own Affairs — How to Make Sometimes Guess Work to Customers Always Ready to Mercantile Agencies Stock — A Term Used for Merchandise Inventoried by Departments on Hand — How to Estimate Record Running Low — How Watched Store Keeping Books and Trade Papers Valuable Strangers Get No Credit Without Satisfactory Reference Sundries Column Cash Book Explained Taxes — How Entered Total Posted at End of Month Tracing Paid Vouchers Trade Acceptance Trade Journals — Advantages of Trading Accounts — What Is It ? " Closing Set 2 " 3 Entries Proved Another Way Profit — What Is It? Trial Balance — How to Take Off Set No. 1 " " " » 2 " " 3.".'.'.'.'.'!.'!.'.'.".'.'!!!!.'!!!'.!!!!! Traveling Salesmen's Judgment of Your Needs Must Not Be Depended On Voucher System and How to Make Up " Made to Bear Check Number with Which It Is Paid Number on All Invoices Vouched Record and How to Use Distributing Columns, etc " with Discount Deducted — How to Enter " Audited Totals Posted at End of Month from Cash Book Traced Vouchers as Paid Are Noted on Voucher Record Wages Distributed to Departments Want Book and When and How to Use It to Advantage. " " to Watch Stock Running Low Watching Due Date of Invoice to be Paid What a Sale Is Composed Of Wrong and Right Way to Figure Selling Price Forms Pages 23 63 35,36 113,128 68 36 113, 128 16 66,114 12,17 28,43 88,137 41,88,137 11,22 37 113, 129 3A 12,68 3A 17,20 22 22,32 23,32 21 63,75 107 106, 176 56. 58, 105 113,128 5, IS 25,70 54 173 24,64 S3 156 157 68 159 107 108 64 ,A,56B 158,171 56B 170,174 106, 176 155 25 86 22,32 113 54,55 163 106, 176 29 88. 138 88,104 46 138, 144 88 104 88 32 1,9 14,32 27 8S.98 31,42 125, 135 170 38,51 109, 130 110 111 110 111.131 111,115,166 33 127 113 112 39 108, 135 174 174 71 46, 59 58 "**nr o*. oat.t, •- UNIVERSITY OF CALIFORNIA LIBRARY BERKELEY Return to desk from which borrowed. This book is DUE on the last date stamped below. N0V 28 ,947 29 Jul'57fl! REC'D LD JUL 1419S7 1.1) '-'l-lOOm-9, '47 (A5702sl 6)476 -Vs^ YD 05864 48;*375 UNIVERSITY OF CALIFORNIA LIBRARY