*i LIBRARY in University of California. Class ■ V4jj/7t*v w 1 sat- ■ - 'mWk - ■■::■■ ■ : 'HEBAV THE Business Man's Vade Mecum A text book for those who desire to combine in their work ACCURACY, EFFICIENCY, SPEED, SHORT CUTS In Nine Parts. *. Coftyriglited 1903. OF THE UNIVERSITY PUBLISHED BY The Book-Keeper Publishing Co., Ltd. DETROIT, MICHIGAN. #$? ' CONTENTS. How to do without a Trial Balance — or, Popular Checking Systems. Also the science of Lightning Addition. Equation of Payments — The simplest and quickest methods of Aver- aging Accounts. PART III. Cost, or Manufacturers' Accounts. Explanation of principles and ex- amples fully worked out. PART IV. Accounting for Municipalities, Waterworks, Public Institutions. De- benture and Sinking Fund Tables. part v. Accounting for Corporations, explaining organization, use of Stock books, opening entries, transfers from partnerships, treatment of capital account, etc. PART VI. Accounting for the Wholesale Grocery and Hardware Business. Illus- trated by forty forms. Special attention given to vouchers, order blanks, slip checking system, time records, etc. PART VII. Accounting for Retail Stores, such as coal, bakeries, creameries, drugs, ice, etc. PART VIII. Time Record and Pay-roll Systems — up-to-date methods of keeping account of time on salary, day-work, and piece-work in businesses of dif- ferent kinds. PART IX. The Voucher System. Designed for the assistance of those who wish an up-to-date system of recording their accounts payable and securing an efficient check on same. 1G01.14 PRESS OF TWB NJfedr«CP LTHS. DETROIT MICH. PART I How to do Without a Trial I'alance. OF THE "^ UNIVERSITY OF Popular Checking Systems* THE following methods are principally intended for the book-keepet who does his work without assistants, or with not more than one junior. They are intended as a help in the way of showing the book- keeper how to obtain complete assurance that his work is correct, in advance of proving it to be correct. They are published with a view to alleviate and remove the troubles of the Trial Balance by illustrating and describing the various methods devised for the purpose. They are published to show that any book-keeper can, if he wishes, with very little trouble, prove his work each day and have his balance com- plete directly the last item for the month has been posted, and are designed to show how the Trial Balance may be absolutely dispensed with except as an ornamental statement. CHAPTER I. The Check Figure. This is an effective but laborious check. As a matter of fact, all checks are laborious, and the inventor who will COMBINE THE CHECK WITH THE WORK, so that no extra labor is involved, has yet to be introduced. We do not present any mathematical explanation of the check figure, because such an explanation is quite unnecessary, the modus operandi being simple and easily understood. The check figure we illustrate is "eleven." Take two amounts of five figures each. Starting at the right hand, add the first, third and fifth figures and deduct the second and fourth. If the latter exceeds the former, add ii and then deduct. The result is the proof figure. (3 (3 s ^ - /o = /o - f # / 7 J S"f-/f^/9-/c - &&£ This illustration merely shows that the footing is correct, the footing of the check figures giving the same check figure as the footing of the amounts. But if these amounts are posted to the ledger the same operation will prove the accuracy of the posting. We will suppose that our book-keeper is enlightened and progressive, and desires to prove each day's work as he goes along, so as to be able to get his balance promptly without trouble on the first day of the month. He will post from his sales-book, or ticket, $484.26. As he posts the amount in the ledger he extracts his proof figure "4," and writes it in the sales-book in a column which he arranges for the purpose. The proof figure of the footing of the sales-book will then prove the accuracy of the postings to the ledger for the day by agreeing with the footing of the column of proof figures in the sales-book which represent the postings of the ledger. The same operation will prove the accuracy of the day's postings from cash book, journal, purchase record, or any other book, so that it is within the reach of every book-keeper with extraordin- arily little trouble to prove each day's work as he goes along, and to be free from all bother and trouble of errors when he endeavors to obtain his monthly trial balance. In order to make this matter perfectly clear*, we append an illustration representing one day's work from the cash book and its proof. The amounts posted to the ledger from the sundries column of the cash received side of the cash book are represented by the check figures in the check column, the footing of which is 29, or 9 — 2=7. The check figure extracted from the total of the sundries column — $12,578.68 — is also "7," thus proving the postings to be correct for the day. The postings No. 1 Cas K P eceived. Date- Nc^rne& [olio ChecK Sundries Cev&K Sales factory Int&i Diact July 1. Amounts fopci. f. EL.Bpi'sco. C.Chur=chill A.MilleP - AT"Canfield 45 176 13 96 4 2 7 1 O 6 12 198 193 165 6 ■!3 DO 81 A& 117 20 345 26 .56 oO 7 Ha 573 06 from sales-book, journal, etc., are treated in like manner, each section of the work being thus proved separately and easily. In entering balances from the ledger into the trial balance book the check figure should be extracted first, and the amount copied from the ledger after. The footing of the check figures will then check the correct- ness of the amounts in the trial balance book, which have been copied from the ledger, and any errors will be promptly located. But the check figure, unfortunately, is not infallible. It is, of course, quite possible to make a mistake in extracting it, but the check figure is not proof against all errors, even when correctly extended, as the follow- ing example will show : No. 2 Series Boo K. Dale Names Fblio Ch ecK Amounts Julvl A.& Little & Son 87 9 126 15 / . F 7 Dpowh o{ Co. 228 A AO 63 tlammond M-fo.Co. 229 1 A5 J.O^ndfbr^d ! IO IO 1 O 2 21 1 3& The postings are represented by the check figures, the footing of which amounts to "2," which is the check figure of the total of the amounts posted. The postings are therefore supposed to have been correctly made. This is the way, however, in which the postings appear in the ledger: The check figures are inserted here merely for the purpose of com- parison with those in the sales-book. In such a case, it is evident that the check figure certifies the work as accurate when it is $34.65 out of balance, $45.10 having been posted as $10.45. This is a very simple illustration, but quite good enough for the purpose. In order to get over this difficulty it is now proposed to A.b.LittteUSory Leddien /^ S . FT D nown Date Folio Debits CpediteJDalS folio Deb.tS Oedite Julyl Mide-e. ® 122 1 26-15 Julvl Mcdse. <&> 122 40 63 / / . Mammond M'fc£. Go Date! foliolDeb.13 Cpedifej|Do.te iFoHo Debits Cpedite Julyl Mdse © I22 4^ Julyl Mctee & 122 10 7 ' . .. . extend the last unit posted, by the side of the check figure, footing these units and comparing with the footing of the same units in the book of original entry from which the postings are made. (See illustration.) If $45 is posted as 45 cents the figure "5" would be extended to the left of the check figure, the addition of these units would be "13," instead of "8," and the error would be immediately discovered. But if 10 cents is posted as $10.00 or $10.00 is posted as 10 cents, a cipher would be ex- tended to the left of the check figure in each instance, and notwithstanding all the checks, the books would be out of balance $9.90. Thus, if $45.00 is posted as 45 cents, the footings of the columns of N0.3 Sales booK. Date Names. Folio ChecK Amounts Julyl A E> Little ^5on 87 5 9 126 15 / S.f^ E>Pown&Go. 228 34 AO 63 flammond Mfo.Co. 229 1 A3 «J. Sand fond. ! IO °IO IO ^2 2 1 1 66 units would discover a disagreement of 5 cents and promptly locate the erroneous posting. But, on the other hand, if $10 should be posted as 10 cents, or $50 as 50 cents, this additional check would be labor lost ; and as in 6,000 postings in a week it would require the writing of 6,000 addi- tional figures, and as the writing of 6,000 figures takes a great deal of time (as any book-keeper may prove for himself), we unhesitatingly denounce this additional check as worthless, taking into consideration the extra labor involved. The check figure itself we believe to be a great boon to book-keepers, and those who use it with care and intelligence undoubtedly derive solid advantages which they are only too glad to appreciate and acknowledge. CHAPTER II. The Slip System, or Reverse Posting and the Check Ledger. This is a very effective, but also laborious, check. The labor, how- ever, of finding errors in a trial balance is greater, and is the most unsatis- factory labor a book-keeper can possibly have to perform. The great end in view is to abolish the trial balance as an important factor in accounting. As an ornamental statement to produce to employers it may be all right, and, to that exent, useful; but so far as book-keepers are concerned, progressive accounting leads to the ability to prove the work on the books to be in balance at any moment. By the Slip System, the books can be balanced every day, and a trial balance can be produced whenever required. It is particularly applicable to the needs of book-keepers for concerns of comparatively small magnitude. The modus operandi is very simple and is as follows : Rule a sheet of paper with debit and credit columns for each book from which postings are made. It is best to have separate sheets for debits and for credits. If the books of original entry are merely: Cash Book, Sales Book, Journal, Invoice Book, your "slip" will be ruled as per illustration. The credit sheet will be ruled similarly. When posting debits the book-keeper will place the "slip" at his right hand side and will copy his postings from the ledger into the column which represents the book from which he has posted. At the close of the day the book-keeper will foot the columns of his "slips" and compare the foot- ings of each column with the footings of the charges and credits in cash book, journal, sales book and invoice book for the day. If the footings agree he will know that his postings are correct and that his ledger is in balance. If the footings of any particular column do not agree he will check back, find his error, and correct it. And when he takes his trial balance, if. it does not come out exactly right, the book-keeper knows that the error must have occurred in drawing off the balance, and consequently can find the error with facility. Progressive book-keepers who use columnar cash books and journals DEBIT SMCET CAS/i ^OUtfNAL SALES | P(S/ZC/7AS£S \ will, of course, provide the same columns on their "slips" as their cash books and journals contain. When a mistake occurs they will thus be able to locate it not only to the book, but to the column of the book where it will be found. • Out of this "Slip" or "Reverse Posting" has been evolved the extra- ordinary idea of a "Check Ledger." This ledger has not a very large patronage, but has been tried by some large corporations. It is a small Ki ledger ruled with the regular debit and credit columns, and a clerk is pro- vided whose duty it is to open accounts in it which will correspond with the accounts in the real ledger. The check ledger book-keeper goes over all the items already posted to the real ledgers and posts them (the figures only) again in the check ledger. He then compares his balances with the balances on the real ledgers and adjusts the differences. We do not suppose any more inefficient check was ever devised. The majority of the mistakes made are usually found in the check ledger, the postings to which are always made hurriedly, and are therefore more than usually susceptible to error. CHAPTER III. Sectional Ledgers, Cash Book and Journals. This article is addressed to a suppositious book-keeper who keeps the books of a mercantile house dealing in hats, gloves and hosiery — three de- partments. It does not matter particularly what system of book-keeping is used, our remarks can be applied equally as well to one system as another. Hav- ing obtained a ledger and journal of some kind, the book-keeper will divide his ledger into sections — one section for city accounts, one for country ac- counts, one for purchase accounts, and one for sundry accounts. He will also divide his sales journal into three sections — one for hats, one for gloves, and one for hosiery. If the president of the company will not stand the expense of a proper cash book, the book-keeper will purchase some kind of a book which has only horizontal rulings, and will rule for himself, day by day as required, the following columns. On the debit side : City Country Accounts". ||Accounfs~ FuncKaea Accounts. Sundry .A, c counts. Me.-rsr Gloves Mosieny. On the credit side of the cash book the book-keeper will provide similar columns, together with such expense columns as he can find room for, post- ing the totals of the expense columns monthly instead of posting individual items. The cross-entry, or pro and con, journal, should be similarly arranged. All department sales on credit should be entered in their respective columns in the journal to the credit of such departments. All department sales for cash should be entered in their respective columns on the debit side of the cash book. All department purchases on credit, or returns from, or allowances to customers, should be entered in their proper columns on the debit side of the journal. All department purchases for cash should be entered in their proper columns on the credit side of cash. We have stated that the ledger will be divided into four sections. The sundry account section will be the sun around which all the other sections revolve — the pivot of the constellation, the key to the system. This section 11 will contain accounts with the other three sections. The account with the city accounts section will charge that section with all city debits, and credit it with all city receipts, allowances, etc. The balance of this account will equal the total of the balances in the city accounts section. The balance of the account with the country accounts section will equal the total of the balances in the country accounts section. The balance of the account with the purchase accounts section will equal the total of the balances in the country accounts section. The sundry accounts section will be self-balancing. To illustrate how this is done we will take the hat department for the month of June, 1898, and show a trial balance of the sundry accounts section. Purchases of hats on credit during month, $800. This will be the total of journal credits and it will be debited in hat column — one posting at end of month. Purchases of hats or hat material for cash, $178. This is total of hat column credit side of cash. Cash sales of hats, $750. This is total of hat column debit side of cash. Credit sales of hats $620. This is total of sales book credited to hats and debited to city accounts account or country accounts account on journal. At the close of the month the totals of all columns in cash book and journal (except sundry columns), will be posted to their respective accounts in the sundry accounts section. The totals of each section of ledger column are posted to the debit and credit of each section of ledger accounts. The results will be as follows: HAT ACCOUNTS WILL SHOW : DEBIT. Hats on hand June 1st $ 485 00 Hats purchased, cash 178 00 Hats purchased, journal 800 00 Bal. to gain and loss 250 00 $1,713 00 CREDIT. Hats sold, cash $ y^Q 00 Hats sold, journal *6 2 o 00 Hats on hand, July 1st 343 00 $1,713 00 CITY ACCOUNTS WILL SHOW: DEBIT. Customers' balances June 1st $ 765 48 *Hat sales 620 00 Glove sales 378 r Hosiery sales ^89 75 $2,353 73 12 CREDIT. Hats, cash $ 7 2 5 oo Gloves, cash 360 00 Hosiery, cash 625 00 Customers' balances July 1st 643 73 $2,353 73 Gloves and hosiery accounts, country accounts account and purchase accounts account will be similarly arranged. The method of checking the total balances of city accounts, country accounts, and purchase accounts sections of the ledger have been previously described. These sections having been balanced, it only remains to take a trial balance of the sundry accounts section, as per following illustration : DEBITS. City accounts receivable $ 643 73 Country accounts receivable T >947 20 Cash 246 25 Bank 4,750 00 Fixtures and fittings 600 00 Hats, mdse 343 00 Gloves, mdse 295 50 Hosiery, mdse 450 00 Expense 265 00 Freight 78 50 Wages 1,250 00 $10,853 18 CREDITS. Capital $5,000 00 Purchase accounts 3,200 00 Bills payable 1,000 00 Surplus from mdse 1,653 J 8 $10,853 18 (Inventory taken monthly.) This system can be carried out to any extent. If the book-keeper will provide himself with cash books and what are called trial journals, with sufficient columns, he can divide each section of his ledger alphabetically, and prove each section separately, opening an account in his sundry ac- counts section with each alphabetical division instead of with each section. This will be found very useful in some businesses where the number of customers' accounts is very large. The departmental accounts will show the gross profits made in each department for each period when inventory is taken. CHAPTER IV. Self-Proving Accounting Systems. This is the title now generally used to describe the "Boston Bank Bal- ance Ledgers," and mercantile ledgers arranged on the same principle. The Boston Bank Ledger is arranged as follows : 13 — -*: . m Turanflr: (ill - 1R0 WFDNFRr>*y - -'- .. TnuRSOM i» FRinnr m SaTURDAt w I T= -.:. rzzr -..'J ;:;;- „. SZ ~ f ■ : Nil 1 ' - : i hi i • \ MM 1 1 1 The Mercantile Balance Ledger is arranged as follows: MARCH IB99 To prove the correctness of your work in any section, add your bal- ances at the commencement of the period to the total debits, deduct the credits, foot the balances at the conclusion of the period and the result should show thus : Total balances of Ledger A, January ist $19,504 72. Total debits, January 2d 4,872 92 $24,287 64 Total credits, January 2d 5,809 80 Total balances of Ledger A, January 2d $18,477 84 The total balances on January 2d are proved in two ways: • ILLUSTRATION Or LEDGER PROOrS • Names. "Total Balances -fr°om Monday Jan. I§T Bal. fbpd. fclio Dek.itS fghol Ci»e^es " 1* 4434.60 Discounted 37890 UouPneM DebilS. " r 348.32 Jour=n».l Allowances ] RetuPOfc etc. etc. J 240.65 lolal Balances | -fop'd.lb Jan, ^ ) 1847784 2428764 2428764 footing of the debits and credits of the accounts posted to that particular page of the ledger. In the ledger, arrange tfce debits and credits in sections, and provide separate columns for the balances, as shown by the illustrations. If you are a bank, keep your debits and credits in sections of days. If you are an ordinary mercantile house keep your debits and credits in sections of months. If you do not do very much business keep your debits and credits in sections of periods of three months, etc. CHAPTER V. Lightning Addition. Lightning addition can be acquired by hard work, just as Schaefer and Ives learned how to play lightning and accurate billiards; but in each case it is necessary to kow how to learn. The average clerk might have nothing to do all his life but add 7 and 9, or 5 and 6, and do it all his life at the same rate of speed, only accelerated by his familiarity with the work. By the method we append we offer the means of becoming "lightning additionists' if students will only work hard enough and long enough. The capacity to add rapidly is really the capacity to group the figures to be added. Thus, you must not think of 2, 7, 9, as 2+7+9—18, but you must see at a glance that it reads— "8." You must put the "8" into one pocket and the "10" into another pocket. If the next three figures are 9, 6, 5, you must read them as "o" and put the "20" into your other pocket along with the "10.". In order to acquire this satisfactory habit, which will enable anyone to foot a column of ordinary size in less than the twinkling of an eye, the best plan is to get some plain cards ad mark them thus: Make a set for each numeral, shuffle them well, and then throw them down as fast as possible one after another, calling the total without tens. Thus, the 4 and 9 combination is to be known as "3." After the student is sufficiently familiar with the first combination, let him make out another set of cards on the second combination as above illustrated, viz : 15 444444444 i i i i i i i i i 123456789 By the time this second combination has been thoroughly mastered it will probably be found necessary to proceed to the third, as the speed obtained will be sufficient, not only for all commercial purposes, but to place the possessor far ahead of any ordinary business competitor. PART II. Equation of Payments. Averaging Accounts, CHAPTER I. How to Average an Account. THERE are many methods of "averaging accounts," which is one title of that arithmetical formula known as "equation of payments"— the deter- mining or finding of the balance of interest due on an account, or find- ing the common time of maturity of bills due at different times. The general principle involved is simple. Charge interest from due date on amount owing; credit interest on amounts received in payment, or part payment ; the balance will be the interest due. On large accounts with numerous charges and credits it is a laborious task to obtain this balance, and hence, mathematicians have devised many methods which were more or less shortcuts. In fact, so many methods have been devised that it is quite confusing, and a thankless task, to study them all and follow up the different reasons for the different rules. The rules apper.e.d for Single and Double Averages are simple, good, and easily borne in mind, and will answer every purpose. SINGLE AVERAGE. Set down the items in their order of due date. Calculate the number of days between the first and seconds items, and multiply the amount of the second item by the number of days. This is called the product for average. Proceed in like manner with each succeed- ing item. Foot the items and products for average. Divide the latter amount by the first. The result will give the number of days forward from the date of the first item, which added to that date will give the average due date of the account. Calculate interest at the required rate on the sum of the account from the average due date to the date of rendering statement. I-atg of |g'E>,li I A-.^-^^g fcby Mi'k I oo AO eo 9<3 AOOO feooo 9QQg E>- 360 day* "fe. yean ^19000 lay-d fon>wAr^d fr*orr\ fcB> 47-1 d Avcps 1.5 due do-fe /Xpl.Z'/z „,, PROOF. Interest on $100.00 at 6 per cent from Feb. 15 to June 1 . .$1 75 Interest on $100.00 at 6 per cent from March 25 to June 1 1 08 Interest on $100.00 at 6 per cent from April 15 to June 1 75 Interest on $100.00 at 6 per cent from May 15 to June 1 25 $3 83 DOUBLE AVERAGE. Assume as the basis for finding the average the ist of the month in which the first charge is made. This is called the "Focal Date." Calculate the number of days from the Focal Date to the date of each charge, or to the due date if it is a time charge. Multiply the amount of each charge by the number of days obtained. This gives the "Product for averaging." Add the debit items of the statement and the "Product for averaging" column. CREDITS. Calculate the number of days from the Focal Date to the date of each credit. Multiply the amount of each credit by the number of days obtained, which gives the "Product for averaging. Add the credit items of the statement and the "Product for averaging" column. Deduct the total of the credits from the total of the debits, and the total of the credit "products" from he total of the debit "Products." Divide the balance of the "Product" columns by the balance of the "Items" or "Amount" columns. This will give the number of days forward from the Focal Date when the balance of the account was, or will be due. This is the average Due Date of the Account. Calculate interest on the balance of the account for the period of time elapsed between the Average Due Date and date of rendering statement. Da-fe of 5<:1tl; Toe at Dtfc [c by. l e ? Matured Arr\ourV»~ D<: Dati of O.I rSb'y McK Apr=> May ioo IOO IOO IOO S3 Dafc I500 .5.500 7300 IQ5gQ vo IOO 1 30 7000 \oooo 6500 23500 AOO I50 25000 23500 250 I O days feow^r>d fr>onr\ feb'y I*" ; Dtfrz F£b'y IO** „ + „ c ^ r> *loO • f«om Rby lO 1 * "to d v lv l#- *3 >5 - Total time— Feb. 1 (Focal date) to July 1 (date of settlement)— 5 months = 150 days. Divide total "product" of debits by amount of charges. Deduct result from total days and calculate interest on total charges for balance of days obtained. Divide total "product" of credits by amount of credits. Deduct result from total days and calculate interest on total credits for balance of days obtained. The difference between debit interest and credit interest will be the amount of interest due. Total Chores. 4ooob Total Cnedife 2..SO 00 Tbtoi Product I 2-3QOO OO "To1i>l Pnodi \ 23 .^OO OO 1 1 me I50 days „ QT7 '/z day» a~7 /z Denoe. v5€> d^y.3 rtt&r»caSt"@©%> e>'> OE&IT& -4oO-° - *> s5.©3 - - CQCDi T<5 ■ 2ao °° = ■#■ 2.33 IrytcncJSt- due Uj^ly l-ST =fr.3,50 As a matter of fact the formula of the proof is as good, if not better, than the formula of the original, because it seems more complete. A further illustration is, therefore, given, showing the double average thus obtained. Total days from Jan. 1 (Focal date) to May 1 (date of settlement) 120 days. Debits— Total days 120—55^=64^. Interest at 6 % on $230 oo=$2 47 Credits — Total lays 120 — 85 =35 . Interest at 6% on $100 00= 58 Interest due May 1 $1 89 What is called the "Interest Process of Averaging Accounts" is so gen- erally used that an illustration is hereto appended in order to complete the subject. By this method the interest is separately extracted in each calcu- lation, the credits are subtracted from the debits, and the result is the same with a little more labor. C > a"te- of ^>«»++lcnae r St" M ^ y I' DEBITS ooE.Di-r-3 Date. Amount D^iStr.^ lnf«Pc»t Date Amount Dafc May 1 Interest R=.b 15 McK 15 Apl 15 60 BO 4o 50 L la* r 105 75 45 15 ' 5 30 1 ? N/tek 10 Apl 10 ss 6"/. 20 42 2 it* A -7 5-3 ur. May 1 * 1 - There are numerous other methods of obtaining average due dates, and amount of interest due at a given date, but the methods above described will answer every ordinary business requirement. In cases of "freak" averages, where the average due date will be found prior to date of first charge, it will be well to bear in mind that where the preponderance of weight is all on one side no average can be struck. The average due date of an account is the theoretical time the NET BALANCE must have run to produce at a given date the correct amount of interest on that balance. Date of settlement assumed as Focal Date. Nov. ist date of settlement. 1894 DR. 1894 CK. May 14, $500 X 166 $83,000 July 9, $40oX 1 1 1 $44,400 June 16, 800X134 107,200 Sept. 11, 600X 49 29,400 July 21, 300X98 29,700 Oct. 29, 200X 1 200 1,600 $219,900 $1,200 $74,000 1 ,200 74,ooo 364 days back of Nov. ist. $400 $145,900 Average date, Oct. 26, 1893. Credit amounts in excess of Debit amounts. May ist, Focal Date. 1894 DR. 1894 CR. May 14, $500X14 $7,000 June 9^400X69 $27,600 June 16, 800X46 36,800 Sept. 11, 600X131 78,600 July 21, 300X81 24,300 Oct. 29, 200X179 35,8oo 1,600 $68,100 1,200 142,000 1,200 68,100 400 $73. 9°° 4/739/184 days back of May ist Average date Oct. 26, 1893. 365 days' interest at 6% on $400.00 $24.20 Proof. May ist to Nov. ist date of settlement — 180 days. 1600/68100/43 days. . 1200/142000/ 118 days. 6400 4100 180 — 43=137 days interest on $1,600.00 at 6% $36.54 180 — 118= 62 days interest on $1,200.00 at 6% 12.40 Interest due $24.14 CHAPTER II. Another Method of Averaging Accounts and Computing Interest. SIMPLE AVERAGE. Arrange the items in order of date. Use due date, if any. Carry out balance of account on each date after items on that date have been entered. With every new entry there is, therefore, a new balance. Multiply each balance by the time intervening between its date and the next succeeding entry. Add amounts so obtained and divide by balance of account. The quo- tient will be the number of days to count backward from latest date, which will give average due date. Compute one day's interest on total of "Amounts" column (if time has been computed in days- which will be the balance of interest due at latest date. Int. rate 5%. 1895. Dr. BKes Da * s Amounts Dec. 23 $1,000 $1,000 15 $ 15,000 (Dec. 23 to Jan. 7.) Jan. 7 500 1,500 20 30,000 Jan. 27 2,000 3,500 14 49,000 Feb. 10 200 3,700 15 55.500 Feb. 25 300 4,000 10 40,000 March 7 1,000 5,000 $5,000 74 $189,500 $189,500-^5000=37.9 days back from March 7=January 28 equated due date. $189,500® 5% for one day=$25-96, interest due, March 7. Total due March 7, $5,025.96. COMPOUND AVERAGE. Proceed as before, but deducting credit "Amounts" from debit "Amounts" and dealing with the balance. Required amount due Feb. 19, '96. Int. rate J%. Dr. Cr. Dr. Bal. Cr. Bal. Days Dr. Amts. Cr. Amts Dec. i $1,000 $1,000 7 $7,000 Dec. 8 $800 200 12 2,400 Dec. 20 500 $300 20 $6,000 1896. Jan. 9 600 300 9 2,700 Jan. 18 700 1,000 32 32,000 Feb. 19 $44,100 $6,000 44,100 — 6000=38, ioo-w 000 (net Dr. balance)=38, 1-10 days back from Feb. 19 — average due date, Jan. 12. 38,100 @ 7% for one day=$7-3i, interest due Feb. 19. Total due Feb. 19— $1007.31. CHAPTER III. • The Conto Currento Method of Computing Interest on Accounts Current. The method illustrated below is still largely used by European banking and commission houses in figuring the interest of accounts current rendered at certain intervals. Date of statement April 15, '96. Int. rate 6%: 18S6. Time. Due. Days. Numbers. Debits. Jan. 17 6od. Mar 17 29 ' 800 $2,758.63 Feb. 4 Feb. 4 71 355 500.00 Mar. 1 6od. May 1 16 292 1,823.59 Mar. 15 Mar. 15 31 244 786.26 Mar. 31 Mar. 31 15 48 319-80 April 2 6od. June 2 48 89 186.39 Debit numbers from Cr. side 455 Balance of numbers 1,402 3,304 $6,374.67 Jan. i Dec. 31 106 598 $ 503.75 Jan. 15 Jan. 31 75 1,875 2,500.00 Feb. 15 Mar. 1 45 45° 1,000.00 Mar. 14 April 15 1,000.00 Mar. 14 May 15 30 150 500.00 Mar. 14 June 16 61 305 500.00 Credit numbers from Dr. side 381 6% on balance of numbers (1402)- • 2 ^-37 Balance carried forward 287.55 3,304 $6,374.67 EXPLANATION. Multiply the principal (debit or credit) by number of days, point off last four figures at right and enter number left in "Number" column. Thus 2758.63X29=800.0027. Number to be entered— 800. On coming to items 3 and 6 on the debit side we find the date of matur- ity to be May 1, sixteen days after date of equation. The numbers for these items should therefore be written in red ink, not included in the footing of the column, but transferred to the credit side, as shown in illustration. Similarly on the credit side we enter the 5th and 6th items in red ink and transfer them to the debit side. Enter the balance of the "Numbers" column on the side to which it may belong, and compute interest due by dividing it (the balance) by 60, point- ing off the second and third figures of the quotient to the right to get dollars and cents, as follows : Balance of numbers (Cr) i402^6o=$23.37. CHAPTER IV. A Symposium From The Book-Keeper. November, 1896. I have been trying to discover why I cannot find the average due date of the following statement of account : 1895. DR. Terms. 1895 CK. Jan. i $247-34 30 da y s Feb - 5 $100.00 Feb. 10 225.50 10 days March 8 100.00 March 5 243.20 60 days April 15 200.00 April 20 178.20 30 days Dec. 31 200.00 $600.00 Balance due Jan. 1, 1896 294.24 $894.24 $894-24 I don't want the amount of interest due. I want the average due date. U. P. B. ***** January, 1897. To pass muster, it seems to me that an answer to the problem in "Aver- aging Accounts," published in your November number, should be one more of language than of figures. Thus, in figures I answer: the account in ques- tion averages due September 20th of the preceding year. Then you would ask: "How can the account be due at a time preceding the date of any single item?" 8 So, to answer in a way that shall both solve and explain the solution, I submit: The balance, $294.24 averages due Sept. 20, preceding year. The credits, $600.00, average due June 22, current year. The balance, $294.24, average due Sept. 20, preceding year. And this average date is taken as a basic date in bringing down a bal- ance; that, at any time this balance may from that new basic date produce the same interest as if the account had been duly charged with interest on the past due debits, and credited with interest on the payments and unex- pired time of non-due debits. The common expression, "Average due date of an account," will, in the special example given, lead the novice to wonder how the balance could be due before any of the items even date ; but, if he will reflect that the ex- pression is the proper one for the date (never mind the word "due") of an average account, in an abstract, mathematical sense, just as he knows that two subtracted from one does leave something, viz. : minus one, so he will better understand that it does not mean due in the sense of a certain bill, but the theoretical time the net balance of an account must have run to produce at any time the correct amount of interest. This is the precise method used in finding the average date of balance of account. Thus : 1. Calculate interest to any assumed date after due date of latest item on each debit from its due date. 2. Ditto, for each credit. 3. Substract the total interest credits from the total interest debits ; the remainder is, of course, the interest due on the account as a whole, to the assumed date. 4. Assuming the balance of the account as a principal (average date of account, meaning average date of balance of account) we know from (3) the interest due, and thus find the theoretical date for this new principal, which becomes a basic date for subsequent calculations, without the neces- sity of again going over the old account in detail. For want of a better name, this is called the "average due date of the account." E. R. B., Chicago. 3jc s(c ^c a|e sfc April, 1897. I have read the question of "U. P. B.," in your November issue, which was answered by "E. R. B." in a subsequent edition in so able a manner that I do not believe it necessary to indulge in any further comment. The system of averaging accounts, which I render below, is in nowise original, but appreciating its simplicity it is submitted for the benefit of those who believe "averaging accounts" an obstacle difficult to overcome. Jan. 3, 30 days $130 Jan. 4, $250 Jan. 4, 60 days 258 Jan. 7, 180 Feb. 9, 10 days 159 Jan. 12 100 OPERATION. Find the date when bills are due, setting opposite each respective sum, also credits, thus : Feb. 2, $130 Jan. 4, $250 Feb. 3, 258 Jan. 7, 180 Feb. 19, 159 Jan. 12, 100 Now, take the first date as a basis, same being indicated by a line drawn around it, and find the number of days between each item and the basis, then multiply the item with the number of days thus found : Feb. 2, $130X28 days $ 3.640 Feb. 3, 258X29 days 7482 Feb. 19, 159X45 days 7.155 $18,277 $547 Jan. 4, $150 Jan. 7, 180X3 da y s 54° Jan. 12, 100X8 days 800 $430 $i>340 Find the sum totals of all bills, payments and gross amounts as above. Subtract the sum totals of the credit side from the debit side and divide ; the quotient will represent the amount of days from Jan. 4, at which time the balance of the account would be due, or May 29. 547 18,277 430 I.340 117 -f- 16,937 =145 days from Jan. 4. L. B., New York. * * * * * June, 1897. I desire to offer a solution of the problem presented by "U. P. B.," as follows : In averaging accounts it is proper to consider and include only such credit items with dates falling within the radius of the original terms, and to discard those which come in irregularly and thereby lose all connection with the original transaction. In a compound average this rule is of par- ticular importance, as will be shown in solution No. 2 ; therefore credit item of $200, dated Dec. 31, 1895, is left out of solution No. 1. Solution No. 1 — Basis, January 1, 1895. Jan. 1 $247-34 30 Feb. 1 3i@io%=$ 2.13 Feb. 10 225.50 10 Feb. 20 5i@io% 3- l 9 March 5 243.20 60 May 4 i24@io% 8.38 April 20 178.20 30 May 20 140(0)10% 6.93 Total $894.24 $20.63 Time counted forward. Cr. Days Int. Feb. 5 $100 36@io%=$i.oo March 8 100 6y@io% 1.86 April 15 200 105(0)10% 5.83 Total $400 $8.69 Debits $20.63 Credits 8.69 ToBal. Debit Int $11.94 10 Balance of account is $494.24, and will have to run 87 clays from Jan. 1, 1895, forward, to earn balance of interest, which is March 28, the average date of equation. Now, from March 28, 1895, to Jan. 1, 1896, is 278 days, and $494.24 at 10 per cent equals $38.16 interest, and the account will stand as follows : Jan. 1, 1896, balance of account $294.24 Interest on $494.24 equals $38.16 Less int. for I day on $200, paid Dec. 31, 1895 06 38. 10 Balance due Jan. 1, '96 $332.34 Solution No. 2 — Basis, January 1, 1896. Jan. 1 $247-34 30 Feb. 1 344 $22.95 Feb. 10 225.50 10 Feb. 20 314 19.67 March 5 243.20 60 May 4 241 16.28 April 20 178.20 30 May 20 224 1 1.09 Total $894.24 $69.99 Time counted backward. 1895. Feb. 5 $100 to Jan. March 8 100 to Jan. April 15 200 to Jan. Dec. 31 200 to Jan. Total $600 $31. Debits $ 69.99 Credits 31-89 I, '96 329® 10% = =$ 914 I, '96 298® 10% 8.25 I, '96 260(g) 10% 14.44 I, '96 l@lO% .06 Bal. debit interest $ 38.10 Bal. account Jan. 1, '96 294.24 Total, as stated above. . . . $332.34 Solution No. 2 shows that it is only additional labor to find average date of equation of an account after it lapses into innocuous desuetude without deriving any benefit from the effort. C. G., St. Louis. June, 1897. A number of rules for averaging accounts have appeared in The Book- Keeper, but some of them, I think, are too much encumbered with figures. The method below illustrated has been adopted in our office, where the book-keeper is often asked for the equated time of the balance of an ac- count at a moment's notice. 1897. Jan. 5, 60 $350 Jan. 8, 90 $240 Jan. 30 60 200 Jan. 23, 90 150 Feb. 7, cash 140 Feb. 10, cash 100 Mar. 10, 60 no April 5, 30 290 The book-keeper draws the account off on a statement blank, filling in as he goes the due date of each item, using 30 days as a month. For con- venience in reckoning he uses the first day of some month for his basis. In 11 this case he takes Jan. I, '97, and computes interest on each item, using the 36 per cent one thousand day method. This method is deduced from the lact that any amount at interest for one thousand days at 36 per cent equals the principle, so that moving the decimal point to the left one, two and three places, gives interest for 100 days, 10 days, and 1 day, respectively. Thus : Interest on $350 for 65 days. Interest for 10 days $ 3.50 Interest for 50 days J 7-50 Interest for 5 days 1.75 Interest for 65 days 22.75 After calculating the interest on the various amounts shown on the original account the book-keeper proceeds to arrange the following state- ment, which shows the balance of account and balance of interest. Statement — Focal Date, Jan Jan. 5 March 5 Jan. 30 March 30 Feb- 7 Feb. 7 March 10 May 10 April 5 May 5 r. 1, 1897. 65 $35o $22.75 90 200 18.00 37 140 5.18 130 no 14.30 125 290 36.25 $1,090 $96.48 98 $240 $23.52 113 150 16.95 40 100 4.00 $490 $44.47 CREDITS. 1897. Jan. 8 April 8 Jan. 23 April 23 Feb. 10 Feb. 10 Balance $600 $52.01 .60-^52.00=87. 87 days from Jan. 1 is March 28; due date March 28, '97. W. F. A., Oklahoma City, L T. ***** July, 1897. The subject of averaging accounts has frequently been presented of late in The Book-Keeper, but being under discussion in the local society to which the writer belongs it was suggested that the paper he read might present a useful illustration to your readers generally. The figuring should be direct to the purpose, which is, a statement, or settlement. For statement June 1, 1897, subject to 6% int. after maturity. 1887. Jan. 22 30 days net Jan. 29 60 days net Feb. 12 60 days net March 4 30 days net Dr. 1897. Cr. $ I33.84 March 21. $ 500.00 24O.I4 April 13 400.00 530- 2 5 Balance 223.43 219.20 $1,123.43 $1,123.43 12 The first question is, will we gain in this instance by averaging direct to June i, the date for our statement ; or by averaging first to April 13, the latest date in the account, and figuring interest from there on? I will say the latter, as we thereby keep our time figures smaller by 47 in each case. We now restate the account as follows : DEBITS. 36i-9 6 April 13 530-25 April 3 219.20 10 2,192.00 $1,123.43 75 $12,379.80 CREDITS. 1897. March 21 $ 500.00 23 $11,500.00 April 13 400.00 $ 900.00 23 $11,500.00 Total Debits $1,123.43 75 $12,379.80 Total Credits 900.00 23 11,500.00 $ 223.43 52 $ 879.80 $223.43 into $879.80=3.9+ or, say 4 days. This means that balance of account would have four days to run to April 13, or in other words, that the average date of balance of account would be April 9. We therefore, make statement June 1, 1897, as follows: Balance of account $223.43 Interest on balance from April 9, average date, or 52 days at 6 per cent i-94 $225.37 To prove the above, divide 52, the balance of day totals, into $879.80, thus obtaining $16-92, the average amount, which at interest for 52 days will equal $223.43 for four days. W. C. P., Chicago. September, 1897. In the June number of The Book-Keeper, "W. F. A." says the best system is that which requires the fewest figures and the least mental work. The way I shall now illustrate will be to take the first date as "W. F. A." does, simply to illustrate that if you take the same date, figuring at 1 per cent per month is easier than 36 per cent per year. 13 Statement, Focal Date Jan. ist, 1897. DEBITS. Due. Days. Am't. Int. Jan. 5 March 5 65 $ 35° $ 7-58 Jan. 30 March 30 90 200 6.00 Feb. 7 Feb. 7 37 140 1.72 March 10 May 10 130 no 476 April 5 May 5 125 290 12.08 $1,090 $32.14 CREDITS. Jan. 8 April 8 98 $240 $7-84 Jan. 23 April 23 113 150 5.65 Feb. 10 Feb. 10 40 100 1.34 $ 490 $14.83 Total $ 600 $17.31 We now divide the $600 by 30, and get 20. We divide the 17.31 by this 20 and get 86>4, which we call 87. Counting forward from Jan. 1 gives us March 28 as the date when the $600 is due. In dividing the balance of dol- lars due it is best to cut off the cents and the units of dollars and divide by 3. The above interest is 12 per cent a year, or 1 per cent for every 30 days. By removing decimal points two places to the left in the principle we have the interest for 30 days, and removing it three places we have it for three days. Take the first amount of $350 for 65 days. Sixty days is $7, three days 35 cents, and two days one-third less, or 23 cents. S. H. T., San Francisco. II PART III. Manufacturers' Accounts. Factory Cost Accounting, CHAPTER I. General. THE growing appreciation of the value of correct accounting methods in business is responsible for the demand throughout the United States for a standard method of treating factory costs. There are different conditions to be provided for in every business, but, nevertheless, certain fundamental principles can be laid down for the guidance of book- keepers which will be of assistance and value in almost every conceivable case, and this is the principal object of this article. It is not presented to its readers as a complete encyclopedia on the subject of factory costs, but more as a work preliminary to one we hope shortly to publish on more com- prehensive lines. Neither is it our intention to generalize extensively on the theory on which such accounts, or system of accounting, should be estab- lished. We will endeavor to make our information as plain and concise as . possible, and to give as much as we can within the limits of an article of these dimensions. * * * In these days of keen competition it may safely be said that in a manu- facturing business of any kind it is absolutely necessary to keep an accurate account of the actual cost of the article manufactured, and to establish such a system of estimating costs that contracts shall not be taken at a loss, and that goods shall not be ignorantly sold at a loss. Numberless failures can be traced to an inefficient system of estimating or recording manufacturing costs, the merchant being unable to discover where he was losing money, and consequently being unable to apply the required remedy. The merchant should be in a position to ascertain at any time the actual cost of production of any article manufactured, and to check the cost of production of such articles by a comparison with previous costs. It should also be possible for him to receive a report at any time required of the raw material, articles in process of manufacture, and manufactured articles on hand, without the tedious process of taking inventory, and the method of arriving at this estimated inventory should be so perfect that it will agree with the actual inventory whenever the latter may be taken for purposes of verification. Some authorities consider that into this question of cost of production should also enter storage of manufactured goods, rent of factory, erection of plant, manufacture and depreciation of machinery and tools, and similar expenditures. 3 We believe, however, that it is best to include only those expenditures which vary in proportion to the volume of production, afterwards pro-rating capital expenditures in fixing the prices at which the manufactured articles are to be offered for sale. Generally speaking, therefore, our cost records must provide for: Purchase of raw material. Returns and allowances claimed on account of imperfections, etc. Labor. Other factory expenditures. Manufactured stock. In a factory of any size the best plan is to arrange for a separate set of books to be kept there, the main office simply charging the factory with cash paid out, and crediting it with expenditures accounted for. Thus, the main office will debit factory account with currency for wages or expenses, or checks in payment of raw material, and credit factory account with its report of "Wages paid, $ — ," "General expense, $ — ," "Accounts payable, $ — ." The trial balances of the factory and main set of books will be as- sembled for the purpose of compiling balance sheets, etc. If the factory is small the factory accounts can be carried in the main office books, but it is not such a convenient arrangement. In the first place, we will predicate an example where only one kind of raw material is used and only one class of articles manufactured. In this case we will require a factory journal which may be ruled as shown in form A. Do Fopm A F&tzfora y Oc-nar°a/ cJo(-jn>r\£>l CQ- rVlaicv on, tc Mi.H Gencrol ELxpxrnsc Labor" Row Aoc'rife Pfcyable 5und«a Elio Narrescff t;,k SundVa Accnta. Rsvoble M,\t<-r'i.-J Ubc MfdSfocKlorf.ee |fo»5tor»=} J When the raw material is received it will be debited to raw material account in the column provided for the purpose and credited to the concern from whom received in the purchase account column. From the periodical reports received from foremen or workmen, labor will be charged with the time expended on manufacture, and manufactured stock charged with the material used, "raw material account" being credited. Labor and expense will also be closed into manufactured stock account in order to ascertain total cost of goods manufactured. When manufactured stock is delivered to the store (T. H. & Co.) the store is debited and manufactured stock account is credited. When a balance sheet is prepared a report is required from the factory of all unfinished manufactured stock on hand and the labor so far expended on same, and the total incorporated as an asset. The general expense of the factory, such as manager's and office sal- aries, coal, horse feed, engineer's wages, etc., etc., should be charged to a separate account, and pro-rated where there are different kinds of products. The raw material account will thus show the amount of raw material which should be on band; manufactured stock account will show amount of manufactured stock not delivered to store; unfinished manufactured stock account will show amount of raw material and partly manufactured stock in factory in the hands of workmen, and cost of labor so far expended on same. The appended diagram may be found useful in assisting to a thorough comprehension of the plan. The factory reports of material used and time occupied are generally made on blanks specially devised for the particular business for which they are required. They specify quantity of material received and used and hours spent on the job. Such reports are sometimes turned in to the office daily, sometimes weekly, sometimes as a job is finished. A book of record is kept of raw material received and issued, and the statistics in this book can be checked by the factory report blanks and by taking inventory. In the latter case the stock on hand should agree with the balance shown by the record of material received and issued. The above are the fundamental principles on which all factory costs are ascertained, but the application of these principles is carried out in an infinite variety of ways in accordance with the conditions to be satisfied. There may be twenty different kinds of raw material, a separate account of each of which must be kept, and also of the labor on each kind of material. There may be all kinds of extraneous operations, the cost of which must be carefully recorded, as in the case of a coal mining company, or a manu- facturer of electric motors and appliances. These present an opportunity to the accountant for the exercise of his skill in adapting his various forms to the special requirements of the case. One of the most important features in the system of factory accounting is the pay roll. A great deal of time is usually spent in perfecting an efficient system of recording and paying wages, and a great deal of time is invariably wasted wdiere efficiency has not been obtained. Such a system should afford a guarantee against stuffing the rolls, or charging up unearned wages. Tt should also furnish a simple method for accur- ately obtaining statistics of costs of articles manufactured. The actual number of hours and minutes should be recorded, as the workmen enter or leave the premises, by one of the modern "Time Re- corder" machines. Where possible it is best to use one on which the writing of the signature makes the required record, as this prevents one man from registering both for himself and a friend who may be late or absent alto- gether. Each workman should be furnished with a blank ruled to suit the peculiarities of the business, on which will be entered the description of the job, or contract, and on which the workman will record time occupied and amount of individual production. The forms we now present are not expected to be suitable tor every business, but are intended to illustrate the fundamental principles on which an efficient cost system should be based. y. i is a Stock Record, showing disposition of material received and quantity on hand. This record should be partially or completely verified at certain intervals in order to show that the goods called for are actually and. STOCK Boon - ric i Nl.£5nn,c of~A//c ptTor\_ Q^rvtrfj, A^oortf Dife QuC>\ ORDER No To ^tbPcKcepep' Deliver to becswrp1t\c fbllowir\a or\ Shop order No ^ipt. Each workman is furnished with a cost card (Fig. 3), on which he records particulars of time consumed and material used on* the contract, or job, on which he is engaged. When the job is completed this card is (cost cadd no^) Narr\e oferryploye. Tl-IE AMERICAN MANUFACTURING CQ, Mo Shop 0-=>d<=P o«_.t- ~T7me Date fTr\isKecl Ouantily D cp t used Ppime CjOST- II Labors Sundries "fetal Cost / turned in to the cost clerk, who figures out on it the cost of material, labor and sundries and enters it on the Cost Record of Summary (Fig. 4). A separate page is allotted to each contract or job, and the total cost of same ascertained. This amount is then posted to the contract account in the . which is credited with contract price, the difference being the amount of either loss or gain. V in staple articles are manufac- i comparative statement of cost of manufacture should be main- tained, in order to ascertain that such costs are not excessive or excep- tional in any way. 6 FIG A aosT~ 5UMMADY Dctfe Coat Ca>n>d No Name of Wof^Krr\arv- Dep+ Qu^Ktny Cos-t Labop Sundries folio Co^|| In Figure 5 we show a form of Pay Roll Book, the particulars of which are obtained from the Time Recorder. If the Pay Roll Book is com- pared with the workmen's cost cards a very good check is obtained on the total time reported. Some establishments still have their employes sign the pay-roll, but where the hands are very numerous this is found laborious and inconven- ient, besides exposing to the view of the person signing the amounts paid to others. FIG. -o" PAY DOLL- BO( D/f Nar^e •VI T W Th r 5 lb1h\ TTrrys ,Rste Amount Adv Raid i ' 2 --■ =*, .1 A ■3 Fig. 6 shows a very good form of combined wages card and voucher, which can be used with advantage. (f-io.e} w* Ti-ieAMERlCAN MANUrACTURING CO. Cas>i-iiep*: I90O c»r. : ir\ payment 0? H£^ca du»«aa follow*: Morsday . . . . TKunsdcy" . fV.day . . . laal....!!* .£>upf. Received of Tke Arr\<£i»icar>M&r\u(actai»inft Co. 1tSs Above omoor i J--,ofJlofollcl £ >.m & 1K;» -dcyoT _.ISOO Oiciridtarse) . All goods manufactured will be made in accordance with instructions given the foreman of the department, or the superintendent of the factory. •On completion of the goods the shop order will be returned to the office, and the goods delivered and billed. We append an illustration of shop order referred to above (Fig. 7). When completed it is usual to transfer the goods from factory to store, the factory charging store, with cost, and the store crediting factory and debiting manufactured stock. The rela- Notice . Dvso ndeP 1b b e pglOr n ed to c ff.ee. ate un ped wilr . dale cf completTors 5MOO OQDEQ IFio 7) No OrdeoDooKNo "... To r&nerrsar* (on 5udcpi r^fervdtrtf) "The American M^ .nufecT(-ii»inei Co. tionship between the store and factory accounts may be conveniently illus- trated here: FACTORY BOOKS. Debit — Credit — Raw material. Accounts payable. Labor (paid). Store. Sundries (paid). Store. Accounts payable (paid). Store. Store. Manufactured stock (delivered). STORE BOOKS. Debit — Credit — Labor. Cash. Factory sundries. Factory. Accounts payable. Sales account. Manufactured stock. Customers. In a great many establishments it is usual to add a certain percentage '.o manufacturing cost to cover factory general expense, maintenance, de- preciation, etc., so that on the store books the factory account will show even. If a customer orders a suite of furniture separate shop orders should be made for each article as the separate cost of each is required to be tabu- lated. Fig. 3 can be used for piece work if such a system of labor is employed, but a special form of pay roll would be necessary to take care of the amount of piece work done instead of the number of days or hours employed. The invoices of material received will be O. K.'d by the stock-keeper to vouch for goods duly received, by the purchasing agent to vouch for correct price, and by the book-keepe" to show that amount is correct. All expenditures other than those incidental to the process of manu- facture will be separately classified and recorded. CHAPTER IT. Furniture Business. In the many articles and discussions published in rgeard to "Cost Accounting" very little attention is paid to the manufacture of "stock" articles, i. e., goods not made to order but in certain standard sizes and qualities. As an example we will take a furniture manufacturer who makes chairs, tables, couches, ornamental stands, etc. It is not necessary in such a case to install a complex system of time records, as a certain standard of ma- terial used and time occupied can be established. One chair of a certain kind and style should cost exactly as much as another chair of the same kind and style. The first thing the manufacturer should do, therefore, is to fix the standards, and then hold the foreman, or superintendent, respon- sible for maintaining the standard. The accounting department has now to provide a check on the cost of production which is accomplished by means of a cost ledger. In this ledger open an account with each line of goods manufactured. In the general ledger open two accounts — a raw material account and a manufacturing account. All bills of raw material are debited as they come in to raw material account. Each shop order, on completion, will show amount of raw material used and time consumed. Debit cost to account in cost ledger and record com- parison with standard, thus : No. 5 Upholstered Chairs. Standard $3.15. S. O. 5719 Material $1642 Labor 1625 3 . 267 No. 5 upholstered chairs account will always show whether orders are above or below standard, and as a separate "key" will be kept to the stan- dards, showing proportion on which established, the cause of any disparity can be instantly ascertained. At the end of the month the closing entries will be on the following order : Debits. . . Credits. Raw Material . .$5,500 00 $5,500 00 Manufacturing Account. For material used as per shop orders Nos. — to — Wages $9,250 00 9,250 00 Manufacturing Account. For time reported on shop orders Nos. — to — . These entries will correspond with the cost accounts in the cost ledger. The balance of raw material and wages accounts will represent assets ; ma- terial on hand and used on uncompleted shop orders ; time employed on un- completed shop orders. CHAPTER III. Tool Manufacturing. Stock received from suppliers is purchased by means of triplicate orders, and if necessary a special Stock Purchase Order is also issued. For a full description of similar forms used for stores, see September Book- Keeper. Quotations received are kept on record by means of a card index, on the same lines as the Store Quotations. Stock ordered is also indexed exactly as Stores on Order. In a small concern all quotations received, whether for stores or stock, might be kept in the same index, and Stores on Order and Stock on Order (from suppliers) in another index. If this plan is followed it will be found well to use a different colored card for stores and stock. The stock-keeper being responsible for keeping on hand a proper quantity of the various lines required, requisition upon the manager for anything he may want manufactured by the shops for stock. It will be seen that Requisitions for Stock (Form 200) have a liberal space for remarks. This is in order that the Stock-keeper when calling for manu- factured stock may give the management the benefit of any knowledge he may have as to the best or probable future demand for the goods for which he is asking, and may put on record any suggestions he may wish to offer as to increasing or decreasing the quantities to be made, as com- pared with previous orders issued to the factory for the manufacture of similar goods. As a matter of convenience the Stock-keeper will make requisition for the same class of goods only upon the one requisition, and not use the same sheet for different classes of such stock as may be required. These requisitions for stock (Form 200) are in duplicate, bound in books of 100 each, the first or original perforated for removal, and also punched at the top for an arch file. The Stock-keeper must be careful to have his requisition for stock bear the date he actually sends it to the Manager. The latter issues Factory Orders (Form VI.) for the manufacture of the lines of which he may approve, and notes opposite such lines the number of the order covering same and quantity ordered. With regard to other items upon the requisi- tion, he notes any decision or remarks lie may wish. This being done, the requisition is returned to the Stock-keeper, who notes upon it the date of such return, and with a colored pencil marks prominently on the duplicate in his book the same date. The original is then placed upon an arch file with other requisitions for stock, each class of goods called for being separated by a guide card indicating the nature of goods asked for. It must be understood thai this file is for the convenience of the Stock- keeper only, and while not to be regarded as a record further than of the issuing of certain factory orders For stock, will yel well repay a little atten- tion on the part of the Stock-keeper. It will be noted thai the Manager fills in opposite each item the number of the stock order, and the quantity 10 such order calls for. As goods are received into stock on account of such order, the Stock-keeper draws a line through the quantity, and substitutes the balance due. There is no check or balance upon this quantity so, as I have said before, these figures cannot be used as the basis of book entries, but they will prove of very great value to the Stock-keeper, enabling him to keep a proper supply of various lines of stock, both on hand and in pro- cess of manufacture. The duplicates of these requisitions for stock are simply to prevent the very frequent error of asking for the same goods when thy are already on order in the factory, and also of keeping the Stock- keeper posted as to what lines of stock required he has or has not called for. For almost all purposes the information found on these requisitions, and on their duplicate will be all that the Stock-keeper is likely to require! Should, however, he need closer information as to the various lines of stock being manufactured in the shops, he has reference to the card index or Factory Stock Orders. O THE M. Pi. Co., Ltd. QEQU/5/T/O/V r OA 3TOCK. /] / TO f~7Ars/s4 <0£C /F Quantity ARTICLE ORDERED QZMAQK5 Offofff na QUANT/TY z 00 -zoo 50 / " 0i£ ^^Mf, £fa. /5Z/ Z" ' .. - « 5" xf&a™/J/a"at4,JZw. /&Z7 ff/7 /JO 2,00 1/ ^nytxri' XAl^Mf^^"^ Book foo Quotat/ohs O h/£/v V PP/CE 3$0~£ac/, AEMAPK5 fr 2 70" Tut fie* Zf (foci/ (P,ntn/ *■//'/<» No matter how strictly a firm tries to carry out the "orie price to all" idea, it is few firms who in the present day do not, more or less frequently, sell exactly the same goods to different customers at different prices. In view of these facts the time expended in keeping accurate records of selling prices and quotations given, while to some appearing to be wasted, may be of great value in the results obtained. Unfortunately the results of such work, though very real and tangible, may be almost invisible, while the labor expended to obtain them may be very evident. The system here described may or may not suit individual cases, but the rule that no quotation shall be made without being put on record where, if an order is given or the quotation asked for again (no matter after what length of time), it may be accessible — is sound. Discounts and selling prices of such goods as appear in the company's catalogue, are listed, preferably in private mark in a catalogue bound with a blank leaf between each illustrated or printed page. This catalogue is kept at the Order Clerk's desk. After this plan has been in vogue for some time, and the selling prices of most of the firm's product is listed, many inquiries received by mail or phone can be answered from the information there obtained. The Billing Desk being provided with a desk phone, a Memo Book of any convenient size, called the "Quotation Given Book," is kept beside it. This is simply a memo book — the only ruling being a line marking off a column about one and a half inches on the left hand side. When a quota- L3 tion is asked for over the phone which cannot be given from the informa- tion contained in the catalogue, the details of the article called for are entered in this book with only the name of the party inquiring in the left hand column. This results in the loss of a certain amount of space, but //& %*us AJmA^ct^tx. ii /C£AyxI£?/<.5 J^ ^tk^r-rrt^U^^ /r-f £?■/.{/ /U 23 zs l/zi/o/ / /0"j6&u~, Cu/04 JoO U up. Each morning the quotations in this book and also those which may have been made by letter, and a copy of which will, of course, be found in the Letter Book, are entered upon a "Quotation Given Card ( Form 203). This card is filed away (alphabetically) in an index drawer called "Q1 tions Given Index" with what guide cards may be necessary, [f desirable 1 I this index may be arranged according to towns — the cards for each town being classified alphabetically by customer's name. At first sight it would appear as though this plan would result in a very large accumulation of cards containing quotations given. If, however, the firm is in possession of a pretty complete catalogue of goods of their manufacture, and the Order Clerk's copy of this catalogue used as and to the extent it should be, it will be found that by using both sides of these cards, very few customers will require more than one card a year. When a new year begins cards of another color should be used, and at the end of say six months all cards of the previous year may be taken out and filed away — classified and indexed on the same lines. It will thus be seen that the current index will always contain, at least, six months' quotations, while quotations given previously will all be together in such shape as to be immediately available for reference if required. customers' orders. The ideal system of keeping and handling of customers' orders consists in the making out of a card for each order received, filing this card in indexes arranged according to province, town, and alphabet, and on this card noting all transactions in connection with such order — from the time it is received until the last item is either shipped or cancelled, or the customer advised to that effect. Except in exceptional cases such as a business having branches located in various parts of the country, and each branch doing a large business, this plan is too cumbersome, expensive, and complicated, and will result in too much duplication of work to be a wise one to adopt. Oc?7e. Jj&7. /90/ THE M.&.Co.,LTD. ^H/PP/NG ORDER SOLD 8V 3 #W I NVO,CE N0 /4/l \Jf. i. C The alternative plan is to make the order itself after it has been issued to the sbhipper bear on its face all the information above spoken of, but to also keep in the office accurate and promptly obtainable information as to the exact location of any given order, and to show not only in whoso ir> possession such order may be found, but also its exact location among the other orders which the same employe may have, and if filed away, to show the number of the page of the book of which it has become a part. The term "Shipping Order" is hereafter used to designate written instructions to the Stock-keeper or Shipping Clerk to ship or deliver certain goods to a named party. Such shipping order bears a number with the THE MQ. Co.. Lie/. D * r f OEL-I^Ep-y St- IP Jtiu./foi Please. ffECB/VE foom The MP Co,/.*/ //v cooo oaoE& Afi/o condition as Follows: $0 J:/4 /o/s. foa/i £03 6. r\L£P Tfl/S SulP> prefix "R" and emanates only from the office. The rule is that no stock must be shipped or delivered without such written instructions from the office. In most businesses it will be found impracticable to strictly live up to this rule, but the only exception that should be made is the giving to the Stock-keeper a certain amount of authority to ship such stock as may be sold by him or his assistants personally. In such event he charges them out on a form exactly similar to the Shipping Order, but bearing no register number. Such forms are handed to the Billing Clerk at certain times, and by him entered in the register and given a number. This form is exactly the same as the Shipping Order, but is padded in such a way that by the one writing the Stock-keeper makes out a Ship- ping Order (Form 203a), Delivery Slip (203b), and Receipt (203c). A reference to these forms shows that they each take only such information as properly belongs to them — for the purpose for which they are used. In most convnient access to the Order Clerk is a cabinet containing as many drawers as may be required, labeled as may seem best either acording to customr's name, or of alphabetical divisions. The drawers in this cabinet are about 9"xi2". Each drawer contains a set of manilla sheets so cut for index purposes as may be decided upon. These manilla sheets are kept in their place by rods running through perforations at the extreme inner c(\^e and held together by an easily released spring. As soon as a shipping order is made out or received upon the proper form it is entered in the "Shipping Order Register" (Form 204) and given the first blank number therein. 16 Given the above appliances and the necessary forms, the proper and complete carrying out of this system in all its details should make the "Shipping Order Dept." one of the most smoothly running branches of all the clerical work in the entire business. If, however, the detail or routine work of this system is allowed to run behind, or if certain details appa- rently useless and unnecessary are not carried out, then, when the informa- tion which ought to be obtainable from this department at a moment's notice is asked for, it will be useless to expect the results which alone can THE MP Co. Liz/ 3 .iff. /fO/ QEaE.IVE:0 foom TheM Q C0..L*/, /" oooo 0ffD£O A/YD CO/VD/r/O/V A5 FOLLOWS: JO 6a& ^^oc^KI J?4. '0'3 roa/v Z03 C ■D'Qn and ne^O/^r/t prove the value of this plan. If the plan is in all its details carried out as intended the cabinet of drawers referred to will show at any time. A. The date goods called for and all other details of all orders on hand to ship, or simply supply stock to any named person, and, which not having been entirely shipped or cancelled may be called "Uncompleted Shipping Orders." B. On such orders there may be one or more register numbers, if only one the order is still in the Shipping Clerk's hands. If more than one, the last one contains such articles as have, not vet been shipped and is in possession of the Shipping Clerk. The others are part ship- ments and have become pages of the Binder called the "Day-Book Details." C. On these uncompleted shipping orders there may be found one or more numbers with "F. O." before them, This indicates "Factory Orders," and shows the manufacturing order numbej r >n which certain required articles are being made up in the shops. Before proceeding to describe in detail the forms required and course followed, it must be distinctly understood that with the exception already mentioned of goods sold directly in the Stock-room, this cabinet receives the original authority for all Shipping Orders issued by or from the office to the Stock-keeper, classified as may be found best and each class arranged alphabetically. This cabinet retains such original authority until all the goods called for have either been supplied or the order cancelled. This original authority may be : A. A customer's written official order. B. A letter. 17 C. A telegram. D. A Memo order (Form 202). The first three will reach the firm in the ordinary course of business ; the last, the memo order, is used when none of the other three are received by the company, or when being received they contain more than the actual order and are, therefore, required by other than the Order Dept. In some cases memo orders may be used to supplement or explain a letter or telegram, in which event they are attached to the letter or tele- gram as the case may be. Memo Orders (Form 202) are put up in pads of about 100 each, and are supplied to any employee who is likely to take an order from a cus- tomer, either verbally or by telephone. As I have said, these memo orders TH£ M.Q Co,LicJ FiEG/STEQ OF Ofl/PP/A/G OQDEQ3 50LDBY 5H/PPED P>E/1ADK5 '<].: 1 . d %KnaJ % (So. Qjea&4 hJ/u> Jx -OtfT jMy /3rder < !lerk is provided with a similar basket, in which he places all orders, whether for Stock-keeper or Factory Clerk. This basket is emptied at stated hours, and the contents delivered to those for whom intended. ( >n re ip1 of a Shipping Order the Stock-keeper firsl ascertains if any of the goods called for will have to be specially manufactured, and also if he can supply enough to make a part shipment, or if the entire order will await such manufacture, hi the latter event he marks in the space for remarks, F. O. (Factory Order), opposite such lines as will have to be manufactured, and puts the order in the correspondence basket. If. how- ever, his intention is to make a part shipment, he puts the order on his tile alter marking the necessary items as above. When a shipment i^ being made ready, he checks off each item as it 20 is packed or laid out ready for shipment, and if the entire quantity called for of each item is marked in the column headed quantity shipped. This denotes that that particular line has been entirely supplied. If there is any difference in quantity between what he ships and what the order calls for, he marks plainly the quantity which he actually ships or delivers. If the balance is to be shipped at a later date, he marks B. O. (Back Order) in the space for remarks, and places the Shipping Order in the correspon- dence basket for transmission to the office. In the case of out-of-town shipments a duplicate Bill of Lading is made out, and this also goes to the office, and from there is forwarded to customer. If the Stock-keeper makes a sale direct from stock, he makes out a Shipping Order without a register number, which order is also placed in the basket intended for the office. On receipt by the office of these Shipping Orders, etc., the register number of each which contains such number is looked up in the register and the date (and in large businesses possibly the hour also) of receipt by the office is noted in the column ruled for that purpose. Such orders as the Stock-keeper has filled without a register num- ber are entered in rotation in the register, and the numbers thereof noted on their face. The Order Clerk then selects such orders as, owing to a part shipment having been made, the balance must be transferred to another Shipping Order, or such as require Factory Orders to be issued for one or more items upon them. A back order is exactly the same as an ordinary Ship- ping Order, but is, of course, made out for such lines or quantities only as remain unsupplied, and are given the next blank number in the register exactly as though they were new orders. Back orders are of the same color as the original from which they are transferred. For convenience in sorting or looking up a particular order, it is well to have them of an entirely distinct shade. This plan will be found better and more satisfactory than using four colors. A very satisfactory arrangement has been found to be the following: Original city orders — cream color; Back city orders — canary color ; Original country orders — pale blue ; Back country orders — medium blue. On this system we have four distinct classes of orders, distinguishable at a glance. The fact yet remains that city orders are always yellow, and country orders always blue. This, of course, applies only to the Ship- ping orders ; the Memo orders may be of any color preferred. As back orders for balance of order or Factory orders for certain goods ae made out, the "original authority" for the Shipping Order is taken from the file, and the new numbers noted thereon. The "original authority" for such orders as are completed is removed from the file, stamped with an adjustable date, Shipment completed 22nd March, 1901, and filed away in index boxes with the date of contents noted thereon. The Order Clerk then selects such of the Shipping orders as he is 21 unable to charge to the customer without knowledge of the cost of the article supplied. These he hands to the Pricing Dept. The costs of the orders on which the articles supplied were manufactured is at once made up and the shipping orders returned to the. Order Clerk. These shipping ordrs are then arranged alphabetically; city and country in separate 'lots, and here will be seen the advantage of having the "original authority" for orders arranged in the cabinet alphabetically, instead of by travelers' route, or by district. The prices at which the various goods are to be billed to customer is then filled in by the Order Clerk, and the shipping order handed over to the Invoice Clerk, to whom has been previously delivered all duplicate Bills of Lading. By this clerk the extensions are checked, the entry and invoice number noted on the shipping order, and also in the register opposite the numbers of such shipping orders. The shipping orders then go back to the Pricing Dept., where all the costs of the items shipped arc entered in the column for that purpose, and the class of goods or division of stock which is to receive credit for the sale is indicated in the column for that purpose. In the case under consideration let M represent goods manufactured by the firm, and P represent stock purchased from outsiders, and A, B and C the different classes of stock handled. The proper use of these letters in the columns devoted to that purpose would enable the Factory Accounting Dept. to show at the close of each month what quantity of the total stock shipped was purchased or manufactured stock, and also the value of the shipments for the month of the various classes of stock, both manufactured and purchased. In the event of any stock being delivered and sent out for which no charge is made to customer, the regular routine is followed in every respect and detail, except that no selling price is extended on either shipping order, invoice, or Day Book entry. These are all made in the usual way, the invoice, however, being marked "no charge." This plan, carefully followed, enables the stock-keeper to make sure that no stock leaves his possession without being recorded. It remains for the Accounting Dept. to charge the value of such shipments as are not to be billed to a customer to the account to which they properly should be debited. On the face of it this system appears to have considerable detail work which might be avoided. In practice it will be found not more than necessary, if the object is to keep track of all orders, shipments, and deliv- eries is to be obtained. The Order Clerk must be particular whenever he receives an order from the Shipping Dept., for which no back order is required, to remove the "original authority" from his cabinet. If this "original authority" i> then filed away ly, and distinct from other correspondence of the company, the Order Clerk- can immediately procure all orders from a given customer. A glance on the face of the-- orders will show at once which are complete, ami which are still remaining partly or altogether unshipped. From the information on these orders, and the folios obtainable by reference to the register, the Order Dept. can turn up al once the Day Book entry for any or all items required, and from the register can also see at a glance if the ord< uncompleted, whether it is in the possession of the Shipping Dept., awaiting fulfillment, or of the office awaiting prices and i harging. CHAPTER V. Billing and Charging. The system which I have described may he used with an ordinary Day Book, the Billing Clerk simply making the entry in the usual way from the shipping order, the extensions of which he checks as he makes the entry, and afterwards writes out an -ordinary invoice, the number of which he notes on the Shipping Slip. A better plan is to use one of the several good forms of loose leaf Day Books, by which Day Book entry and invoice are made out by the one writing. The saving of time by this plan is considerable, but the greater gain lies in the fact that the Day Book being a loose leaf binder, the Invoice Clerk requires only such pages as may constitute that day's work, the pre- vious charges are at the disposal of the Ledger-keeper, who should then be able to keep his posting perfectly up-to-date. A loose leaf Credit Book should be kept on the same lines as the Day Book. The credit entry and note are made out, given the next consecutive credit number, which is noted on the Memo or letter under authority of which credit entry is made. Such credit memo or letter is then filed away with the completed shipping orders. It is essential that neither shipping order nor credit note be made out for any amount or quantity without written authority, for such entry being in possession of the Order Department, and such written authority posi- tively must under all circumstances be such that it may remain in posses- sion of the order department, and not be required by any other department of the business. CHAPTER VI. Delivering and Shipping. The chief idea in connection with the shipping and delivering of stock has been in all cases to keep an itemized record of articles delivered to invariably obtain a receipt for such, and to do this with the least possible amount of clerical work by stock-keeper or shipper. As regards goods sold and delivered to purchaser or his representative, personally in the stock-room, we have already seen how the Delivery Slip to accompany such goods, and the receipts for same are made out by the one writing with the Charge Slip. For city shipments the Stock-keeper makes out similar Delivery Slips and Receipts— which the carter takes with him. The former is given the customer, and the receipt brought back by the carter. It will be noted that these receipts are perforated for filing on a binder. It is not necessary that they should be permanently put away in this form. Two binders may be kept in the stock-room, each containing receipts for one month. At the end of the second month the receipts are taken off the binder, and put away (labelled with the month they are for). The Stock-room will thus be always in possession of receipts for at least one month's deliveries, — older 23 receipts than two months being filed away, labelled by the month, and thus easy of access. The chief advantage of this plan is that the carter carries only receipts for the current day's delivery, so if he loses his book the loss is confined to as small a number of receipts as possible, also if a receipt for goods delivered on a certain date is asked for, all receipts of that date will be together, and there will thus be no necessity to look through several books.' Instead of the ordinary form of Bill of Lading supplied by carriers, many firms find it to their advantage to supply their own — even at the addi- tional cost involved. These Bills of Lading are padded in such a way that by the use of "full carbon" three copies are obtained. The first signed by the carrier remains in possession of the stock-keeper, and is filed away similarly to the receipts described above. The second, or flimsy, copy is placed in the stock-keeper's correspondence basket — thus reaches the office and is forwarded to custo- mer, either with invoice, or for reference, by mail on the day shipment is made. For deliveries to retail branch three slips are required. These may be made out with one writing. The retail branch being supplied cost price, plus a percentage for handling goods. Such deliveries are only a transfer, not a sale. The delivery slip and receipt are treated in the usual way. The Charge Slip goes to the Cost Department, where the cost is extended, percentage added, and the slip then handed to the Invoice Clerk. The Invoice clerk then makes out a Memo Invoice, but makes no book entry. This invoice is sent to the retail branch and the charge slip turned over to the accounting department. The book entries made from these charge slips will be described later. CHAPTER VII. Stock Ledger. In a business such as we are considering the question of Stock Ledgers is both important and a much disputed one. The mere deciding between unwieldy and bulky books or, on the other hand, too many books of similar sizes requires some thought. The advantages of a stock ledger as a per- petual inventory, are but very small in actual practice, but it has advantages as a record of the salability or unsalability of various lines as shown by past transactions which can hardly be estimated. If a stock ledger is kept all entries for manufactured or purchased goods of a similar kind must be care- fully kept apart, and to do this involves the disadvantage of keeping similar goods in different ledgers, or else the serious risk of confusing two classes of stock handled. These ledgers are, of course, records of quantity only, not of values. At time of inventory an inventory sheet is used, and upon this form the inventory, as shown by the books, is taken. This form should be provided both for price and extension of values, and should approximately agree with a physical inventory of same date. If the costs of the various goods are noted on the accounts in the stock-keeper's ledger, a very close average will be obtainable at closing of the year's business. Whether the information or results obtainable from a stock ledger are sufficiently valuable to justify time and labor required to properly keep them is a question each management must decide for themselves. If kept, however, under no circumstances must a debit or credit entry be made without quoting the authority therefor. In this case, if physical and book inventories are far out of balance, adjusting same would only be a question of time, checking all entries, and granting that the inventory at opening of ledgers was correct, as also the year's charges and credits, the difference would then resolve itself into a simple question of stock taking or of shipping without charging. In no department of a manufacturer's account does the old rule hold better than in this much disputed question of stock ledgers: If a thing is worth doing at all, it is worth doing well ; if it is not worth doing well, it is not worth doing at all. CHAPTER VIII. Pro-rating Expenses. The distributing or pro-rating of Shop and Factory expenses upon the cost of the goods produced is one of the most important Ac- counting questions a manufacturer will be called upon to face. He may install a necessarily complicated system by which some manufac- turing expenses are pro-rated on the L. & M. cost of the article produced, some on the value of productive labor, some on the number of hours used, and some on the value of a given machine, the length of time it is worked, and its probable life. On the other hand he may decide on the simpler plan of lumping everything in General Expenses, and providing for such expense by a percentage on the gross direct cost of output. The days when the latter plan could be safely followed are past, and it is not every concern that could justify by the results obtained, the adoption of the former. Before outlining any plan I would like to call attention to an important point which I think is frequently overlooked. There is a general impression that it is a safe and conservative plan to advance costs of product sufficient to cover other expenses than those incurred as a result of manufacturing. Some firms go so far as to provide for selling expenses in this way, so as to be "on the safe side." In the case of a concern manufacturing only for customers orders' and not for stock, or in the most improbable event of sell- ing each year all product of such year, such a course, though wrong, might not be dangerous. In the case, however, of the company manufacturing and carrying stock, the danger of such a course is not limited to the question of wrong costs. It goes right through all the books, affects the balance sheet. and results in an inflated and misleading statement of the company's assets. To make this more clear, suppose an extreme case, using, for convenience, even figures. 25 A furniture company make up a tabic at a prime cost of Labor $ 5-°9 Material 5-°° ;i« i.i ,<> The actual expenses incurred by the factory during manufacturing of this article are, say ioo per cent, on productive labor, thus giving an actual cost Ex. Shops of . . Labor 3 5-°° Material 5-°° Proportion of manufacturing expenses 5.00 15.00 Suppose the firm's expenses, other than the manufacturing, arc our hall the amount of what may be correctly called Manufacturing Expenses. This table would be charged to Stock at a value of Labor $ 5-oo Material 5-°° Proportion of expenses 7-5° Total $17-50 If it were sold before the end of the year, Stock would be credited and Sales Account charged with- this value, and the difference between this amount and the selling price would be the correct profit, so that the error would have no result. If, however, it were inventoried at this figure, the assets of the company would show $17.50, composed as follows: Material $ 5-°° Wages 5°° Actual increase in commercial value on account of ex- penses which would be incurred to replace table 5.00 Fictitious increase of value owing to expenses incurred in order to sell 2.50 $17.50 The first three items comprising this $17.50 are legitimate assets, but the folly of including the last item as an asset is evident on its face. As long as funds held out or credit remained good, this plan liberally carried out, and the office and selling expenses figured al a high rate, any manufac- turing business could be made in show a constant increase 1y- No Oty Nl Oty M G>Ty rcrA / ' rv>r>d. FoT-m 3ol Torn fond, fond. for>d fffrd, for>d. fS™d. manager, who examines them, and referring to the record of goods on order, governs himself as seems best. Form 301 shows each receipt or issue of the article— the former in black ink, the latter in red. The column on this card headed "No." is used to in- dicate the number of the page or invoice from which the entry is made. A list is kept in a convenient place of such lines of stock as have been given stock card 301, and salesmen enter such articles as sold or received in a book provided for that purpose, and from which the entries are made on the card. Occasional city purchases— i. e., such purchases as may be found neces- sary from time to time, but are not actual purchases for stock, are made by a purchase order similar to Form 104, and the accountant is authorized to charge the retail department with such articles by means of a Retail De- partment Voucher (Form 303). These vouchers— 6"x4"— are bound in book form, numbered in duplicate. They are written out with carbon 29 paper— the copy is a card and is perforated for removal, and transmission to head office, and is the accountant's authority for all charges against the retail branch, except those for goods supplied direct from the factory or ex- penditure- made by it on account of Retail Department. These vouchors are made out, their number noted on the invoices cov- ered by them and sent to the accountant at such intervals as may be found most satisfactory and convenient. The blank column on the right hand side of this Eorm is used for the manager's signature on the card which Tl-lS. M. R. CO. LTTO. RETAIL. ^>TOCK CARD 6x4 .STOCKS ON HAND loie sS oil at- Size )U^n. SJao lSJ 29jan. 5f^b IS Feb 19 Feb £6 Feb A A A 9, 2. 6 5 3' ?>% 6 , ft A lr> ir> IO s A A'/z & J A- O cie oun rder i Form 304). These orders are pul up in pads numb* red in duplicate, the original of paper and the copy-card. The latter is filed away in a card index, classified according to supplier's name or ..Is as may be Found best. On receipl of acknowledgement of order (no1 required in case of the factory), the promised date of shipment is noted on the card. When goods are ordered Erom other sources than the ,ry the seller is given a form called Retail Debit Note (Form 305), and ::<) the order is only given ji» condition that this form is filled out and enclosed with the invoice to head office. In cases where goods are purchased through travelers a copy of the order is obtained and pasted in a guard book, and a regular purchase order (Form 304) is made out, covering "goods as per copy of order filed in Guard Book No. page ." On receipt of Form 305 with invoice by head office, the proportion of charges (freight, duty, etc.) on each item is entered in the proper column, and the total cost extended. The debit note is then sent to Retail Depart- ment, by which it is treated as an invoice from Factory for the gross amount on its face. It is not, however, charged to the Retail Department, nor the invoice which it represents passed to credit of supplier until certified cor- rect by a Retail Department Voucher (Form 303). When the goods come to hand the debit note is checked and the Pur- chase Order Cards (Form 304) removed to another drawer and arranged according to goods. The accountant is then duly authorized by Voucher (Form 303) to charge Retail Department with the amount of invoice and charges on same as shown on the Debit Note, the number of such voucher being noted on its face. It is then filed away on a binder, paged and indexed, the page number being noted on the corresponding Purchase Order. It will be seen that should a new manager be called upon to take RE.TAIL, &TOCK ORDER ?roc?c» fr>orn. No To be. Shipped V/.2>_- - - - . Shipment pnorn i-S&d FOF1M -30-4 Dt-ir=> 1-1 GATE. CAFiO OK*i- charge, he will have immediately available full information as to the pur- chases of his predecessor. The Purchase Order Card (Form 304) will show the date and quantity and by whom supplied. It also shows the Debit Note number, which has now become a page in a bound book, and on which he will find an exact copy of invoice, and also the charges to lay the goods down in stock — in other words, the price and the cost. If information regarding small city purchases should be required, the indexes of the duplicates of vouchers issued will enable him to supply the head office with the date and name of supplier, when they can readily look the invoices up. The original of the retail voucher is retained by head of- fice and filed away numerically. It will thus be seen that any desired change for stock purchased for the retail department can be at once looked up from either name of article or supplier. Stock sold to city customers or to Factory is entered on a Charge SHp (Form 306). These slips are numbered consecutively and are padded with Delivery Slips (Form 307) and Receipts (Form 308), bearing the same number. The Delivery Slip is of tough "flimsy" so that by using "full" car- 31 bon the three forms are made out with one writing. Reference will show that Nos. 307 and 308 are perforated about \y 2 " from the left hand side. The information appearing in this space should not be required on these forms. This plan is adopted to allow the filling of prices, etc., on the Charge Slip before removing the forms from the pad, and to insure all charges reaching the invoice clerk. After removal this portion of Delivery Slip and Receipt is detached and given to the invoice clerk, and are retained by him until the original charge slip has been priced and reaches him, when he makes the entry, noting the invoice number on the slip. The delivery slip and receipt are sent out with the goods, the one to be retained by customer, the other signed, brought back and filed away. The charge slip goes to the office. As regards shipment to out-of-town customers, a Charge Slip (Form 310) with a "flimsy" copy and a Shipping Advice Note (Form 309) are R^TAiU 3TOCH: OfZ/DEfZ? D<^r5__ _ _ _ _ _ _ r^o, —<2&&y To.. Please >ship To u & *4-,_ _ _ as to\\o\/v£> 5hi'p i/'a '-r. &£.£>! T Mo~TE^ TneM.R.Co. Ltd, Gentlemen, % Dafe ___-_ — We b'lll youfeday on <3ccT. Retail Dept in luDilmenT ^fen opden No,_ cUTed. -- - -, ~ d& P en> <^ c!o ^ J ^invoice, Copy oT wKick p!e.o<&e. 'find beJow. Klo «ShiK>pe !i £± Cbcp^S". Tola •«=■.*» blanK Reman>K: 5: «T filed away on a binder, arranged numerically according to such number, the totals, both cost and selling being listed from day to day, and added up at the end of the month. aETAr/-. DEP'T. CM ARC £ *SL/f=> y C /TV Mo .Sold +5. D^»t^ Add i «S©!d by ror»woe> No ~T&t*m& — - RerT7<3r>Ke> In v. No. -h ^oU ki> V«a. !<_«. The great advantage of this system is that it enables the head office to be promptly supplied with all the pages of the day book, except those of the current day, thus keeping the posting up to date, without the constant sending of the day books back and forth, and the consequent loss of time. At the same time if a customer makes any inquiries of the Retail Depart- ment regarding past purchases the Charge Slip is a copy of the day book- entry, and can be at once looked up, either by invoice number or by date. All accounts being payable at head office, the handling of cash by Re- tail Department is a small matter. The simplest way is to keep a Petty Cash Book, and forward to the Accountant a daily report of all receipts or disbursements with vouchers for the latter, taking a receipt for such vouch- ers. The entries are put through the regular cash book at head office in the usual way. At the close of the month the accountant is notified by the manager of the Retail Department of the total cost of his sales, as shown 33 by the binder holding charge slips for the month. All other information required by the accountant for the proper treatment of the accounts of the CJEL-TAll— DEPT DEUVERY -SL-in No M. Date_. Addne&£> — p^ ? ,.. 'I Ple«sis>e cecewe as> follow.£. , iq ^ood ondep &rra conartTcn. lu '■& 1 $ I £ 1 Q roat-i •sot Ke.&P> Tt-ti^ vS/—/^ 9 Retail Branch is cither originally in the possession of Head Office, or has been forwarded from the Retail Department from day to day during tin- month on the lines described — returns from customers being treated on the R^-TA/L. DC&T. CtCCC/^T rOfk GOOO^ No D«ate M. f3 . RECEIVED iotfood opder* ae. folic 5/CW >IN£) RETURN ~Trtl& SL-I& ill. LO— INVOICE. CJ-ERtf TO riOLD THIS SUP UNTIL, ENTRV IS MADE. I A/ DA V EioO*\ 'e : same systems as sales — "credits for goods returned" taking the place of Charge Slips, and a loose leaf credit book that of the day book already described. As will be shown later the accounting system used provides for all en- tries against any of the Retail Department Accounts going through a Trans- fer Entry Book instead of being posted directly to such accounts from the various books. The Cash Book alone is an exception to this rule. At the close of each mouth the manager of the Retail Department is supplied with a copy of all Transfer entries affecting his department, including, of course, what proportion of general expenses may have been decided upon, and also with a memorandum of all cash entries, charging or crediting any of his account-. For his own information and guidance, no1 as a matter of book-keeping, small ledger containing the following accounts : R< tail Stock. Expenses. " 34 " Returns from Sales. " Revenue. " Accounts Collectible, and what few others may be required, and also an adjustment account called Head Office. At the beginning of the year "Head Office" is credited and Retail Stock debited with the amount of inventory. From month to month as the Trans- fer Entries are received from the accountant they are posted to the accounts in this ledger— Head Office representing all outside persons, except cus- tomers to whom goods have been sold. Head Office Account thus represents the total purchases of the Retail Department. Sales Account being charged with the cost of stock sold, plus a percentage sufficient to cover expenses, ^fHIPP/NG y^DVICG /VOTE- No Datf^ ^ m z~s_zrz it Boxes. — ' k e>b!^ ftck.d k y —-l i Oales, Ckecked by_ 1 jt vSh'.ppe.J Via t| iNvo/ca o-erh rfOL-o SHIPPED IN aOOO 0*?0£f3 A>S ]°£R . I TH/S^CIP aHTH-CMC. 0£TAtA.& JGOve; THE. f~OLLOW/NO . .mas ac£/v e.nteri=.i-> 1 lh/ DAY SOOf+ , and credited with the price charged customer, the difference will represent actual Profit or Loss — the profit or loss on each individual sale being shown. The amount of percentage added to cost of goods sold is credited to Retail Revenue Account, and should be sufficient to cover all expenses in a given length of time. Of course, it cannot be gauged exactly, but at close of year all expenses are closed out to Revenue, and the balance of that account then transferred to Profit and Loss. As" has been stated, this plan will result in each sale standing on its own merits, its profit or loss being shown on the face of the Charge Slip (From 306 and 310). At the close of each month a statement (Form 311) is taken off. A statement is also made on the same form showing total debits and credits from the first of the year up to date, instead of the monthly totals. A series of such statements for even one year will give most valuable guidance for future actions. Their value, however, can be greatly increased by a supple- mentary statement showing the percentages the various amounts bear to one another. A close watch must be kept upon revenue and expense ac- counts, to see that the rate of advance at which stock is charged out to sales is neither too high nor too low. I know that many managements prefer to keep as much as possible such details as expenses and profits of departmnts even from the manager of such department. In many cases they do so to their own injury. A man 35 competent and qualified for the position of manager of the Retail Depart- ment should possess the entire confidence of his employers in regard to that CHARGE. SLIP FOR COUNTRY ISf-tiPMENT o No D<*Tcr M«ame Adclpeis _ Boxes BbU. p^ c k c d by_ 1. " Cr^fSe, cheoKed ±y Shipped Vi<3. Mo Ter>m& ■Sol a by Ra»is>n»c g. Pieman K>»Sr- Dp C r=» D r^ Or» Acafe. Oo H , He^d Office &/t cisions proven unwise by their results are often condemned, in the light of such results, as poor judgment, when in reality they were formed upon the soundest possible judgment, in view of the limited and often misleading in- formatiin upon which they had to be based. K. FALCONER. CHAPTER IX. Electric Manufacturing Co. h is not claimed for the system herein described that it is perfect in all its details, nor that it is as thorough in its operation as a more elabor- ate system might be. Nor is it claimed to be entirely new or differenl from other plans For obtaining factory costs. It is merely the result of an effort to adapt features of other systems to local conditions which it has occurred to the writer may be very similar to those confronting other read- ers of The Book-Keeper. On that account it is hoped this may be of some interest. It might be well in the beginning to mention some of the conditions for which we have attempted to provide. In the Factory where this is in opera- tion we manufacture electric dynamos and motors and have a line of about 36 thirty different sizes of frames, on each of which is built machines of three standard voltages and three speeds to each voltage. The limited capacity of the factory (employing 100 men) makes it difficult to work up pan stock on such a large line of machines, most of the work being done machine is sold. Some of the smaller parts, however, are made in quanti- ties, and a good many more are interchangeable, being used on machin different sizes. These parts, after having been completed for one order, are liable to be "stolen" for use on another. In addition to a large line of stan- dard machines we also do a great deal of special and repair work, and make a great many special tools, etc., for our own use. An extensive use of the apprentice system also causes labor costs to vary, as a handy apprentice can do a piece of work, at much lower cost than a regular workman or an ap- prentice who has just been put at that particular work; and it is plain that under neither of these conditions alone could be obtained reliable figures for labor costs. Besides providing for these and other conditions, it was necessary to arrange a system that could be taken care of by the book-keeper at such times as could be spared from his regular work. The first step taken was to classify and number the different parts of the various machines. In doing this we indicated the sizes by letters and the parts by numbers. The iron and steel castings which are the principal parts, were given the first numbers, while the copper, brass and bronze cast- ings were given the next larger numbers, leaving, of course, sufficient blanks for possible changes in design and construction. These letters and numbers are cast on the parts. Thus "Ai" is the base for smallest size ma- chine, "Br" the base for next larger, "A2" the frame for smallest ma- chine, etc! For machines for special purposes we double letters — thus for motors for driving printing presses "PA" represents the smallest size, "PB" the next larger, etc. In cases where more than one pattern is used for any one part, those not standard are represented by adding a lower case lettr to the number of the standard part, thus "Ala" is a special base for the smallest machines, etc. Forgings and other parts which cannot have numbers cast on them are given still higher numbers, thus "A160" is the shaft for smallest machine, "B125" is 500- volt field' winding for next larger, etc. Now, for recording time we use a "Daily Time Ticket" as shown in "Form A." Each man turns in one of these tickets every day, and after it Ho 13. D-.ly TlmeT.cWef. ORDER HO. Pcj R«~*rlv 5 T,m« C- 3 4 <\ 1-14^ ft/Cbrv S\Oa -HMfCJy 1 form V *TVTil |0"c r, bTToiT. Wor-Kman. Twv* Tot»\ Rati fW 7 T l^^^- 3 V T TL a <\£ '"WW^J^^cr-. q U'4 II u xS L &\ i. s^Xj uv 5 "\ ^ \ 3 1 3o« oS" \ 5\ ^CJUJU^.r^ u 4 a H 4 \0 1*1 X So Vh oM^jx^ 3 1 >-\. \ v ^. H It 05" 1° f y y / To- ft Twl *l 1 — 1 \\ tl 88 work are removed from the active files as soon as completed, while those with the standing numbers for expense items, as noted above, are renewed at end of each month. Now, on the date when we were ready to put this plan into operation, we took a complete inventory of all finished parts on the premises,— whether in the stock room, in the testing room, or on the floor of the machine shop, whether in a completed machine or on a shelf did not matter. This in- ventory was taken on sheets like Form C. These sheets were then classified and filed for future use. On and after that date, as explained before, all work on any part was charged by the workmen to the number representing that part and posted to Form B at the convenience of the book-keeper. Also beginning on the same date we have a card record (Form D) of Labor Labor Labor P,rt fi V Ati Date Co»t Date CeU Paf« Cost 1 3 7 ,< 7-y 3> %7 X ^ v, s 7,,.. 3 % m •%♦» JJr. i v 4 — . 5 7 \ '7■ 7 - #i ll i W^l*. 9 ^M pf Ul fS ^r ^'7 153 — Ifeo 4 Ifl U 162 U no -. 171 L '4a "%ri 17* 3 '%»* fernC machines and parts sold. This is compiled from the sales book and of course does not include parts sent out to replace defective work, etc. Blanks like Form E are also filled out regularly covering periods of one, six and twelve months. Besides being interesting as comparisons of differ- ent periods this form gives us the per cent or proportion to add to net labor costs for expense. The method of obtaining labor costs from the equipment we have now gathered together can best be made plain by an illustration. Suppose the plan has been in operation four months and it is desired to know the labor cost of "C3" for that period. The stock-keeper or fore- man reports eight of these finished in stock. (By in stock we mean all that can be found in the premises, whether in the stock room or elsewhere). Our first inventory shows two of these on hand, while our Form D record of sales shows that sixteen have been sold in the interval. This indicates that 39 twenty-two have been finished in the period covered and on figuring Form B for'the same period we find they have cost $11.67/ or $-53 apiece. This result is then recorded on Form C as indicated, and when at any future time it is desired to obtain new figures on this part it can be done in the same way and an average obtained either from the date of the original in- ventory or date of last figures. Thus if on a later date we ascertain that there arc nine on hand, and our record of sales shows that twenty have been DiSBURS£nenT5 j^i-^*-^ PUhVN? q\.»^pme(\\ IfVl TocU 1 Si"* 1 T.*U«,^ P^tWn* j u5 7* Omw^^N^IWC,) 7 vl 1 * 111! 1 1 7!K,y E ipen&e £n«,-,atUom \>,V<1 1 V StuOf.'N fWluHX »^v Ina Reyu n«.\,. 1 IV |0 Too\°> 3i x. V O OtV^r L«W<- 0|b ■) V TA\*,c 1 <*S --» 4<\t»S 5 S Cleal I |M?e«*«. Re,r v» XSSo 0^-« EfV« bOo > -; Fre'ufll* T vq 1 S U»(.«»ei xss Tr„v EM. HJO , < Comm.5»'.On 345 11 lt&V«rt'.t..| 6 o 3x L3b< 141-^ '7 f.^t sold, it is evident that five have been finished since date of last figures, or twenty-seven since original inventory. Form B shows the labor for this last period to be $3.18, or $0.63^2 apiece, while the cost for the twenty-seven would be $14.85, or $0.55 apiece. When total cost of a given machine is required, it is readily obtained by adding to the sum of the costs of the various parts the cost of erecting, painting and similar operations as found by the same method. For convenience in recording results and obtaining totals and com- parisons of different periods we use a card like Form E, one of these being Idled out for each part and the whole group properly classified and indexed for reference. Where a part is used in more than one machine its card is under the machine for which originally intended and a plain card of a different color is placed in its stead under each of the other headings. These plain lain only memorandums referring to the location of the or- iginal card. At the end of each group or .machine is placed a "Miscel- laneous" card, giving a list of material used on that machine not covered by Ki the regular cards, — such as screws, bolts, paint, boxing and packing ma- terial, etc. The last card in the group is a "Recapitualtion" card like "Form G." This form is self-explanatory and is filled out as often as changes in frame. Jb <r \ v \ \ - UOVair SS> Oa-^-oJ^-^- rAav a J) urve 3 \ . a. -C^^xu^c, >uW 4 JW^ \ ^ | M^c^_ 5i^r. Ocv rw Occ -NoVaV form O price of material, design of machine, methods of operation or the desires of the firm may necessitate, the old cards, of course, being preserved for com- parison when new are filled out. The per cent added to labor footing on Form G is of course obtained p«w.rto q-]5 r\a.Wei4it » *|,'o. 53 B»e. 0^ *f.s°< 55 CoA" l*U Wraw ^ o<5 Labor ToU\ fofw r '. 41 from Form E for the same period. I presume there will be some of the readers of The Book-Keeper who will criticise this, because no distinction is made between "general" and "selling" expense. It is hard for us to make this distinction, as we have no regularly organized sales department, this tt»m.e .y ^"^Vvlvte ^oVY^W- Wt ?<•- Materval Lstor ToVa\ \ tvoxv CoufcVwv \ 3 b" 7- •4jT ^v«uuo^> ■1 yc ^0 i \ V ftvOs.& ''v v4 iU J£ "p^vwvoW^ Corv 5 "bH>° "5 1 m &Aw*V\~ 05 \ \ *■' C^ovto \ CM \ i v ^ottmvu^AVu QiaAA^ \ ^? \ t l?3 1A/XAS af> 5 FaaXX- Coi^*/ b 3 ?o FaxAXs-'ixUV ♦ \ 2> bl TK^waX) %< IA^»fi- t- 7o (, vv ~ \V\&\ 16 ^1 17 03 5W>v>EfV> 5S^ s qfo aen\ " ^1.° % l 7 OeV>^M oa 1 c c ^° 1 « t 48 f4 Foc-rrx CX . part of the business being attended to largely by the officers of the com- pany in connection with their other duties. However, where conditions will permit, the system can easily be adjusted to make the distinction be- tween these two items. The last item on Form G, "Depreciation and Bad Accounts," is figured on the basis of the record for the previous year and is added more as a memorandum to comply with the desires of the firm that the card show the complete and total cost of marketing the machine and handling the account. It will be noticed that this system is based on averages all the way through, and that the labor on parts that are junked after being partly com- pleted, because of defective work or material, is automatically pro rated and added to cost of parts that are used. We also find we get the time more correctly recorded and at a great deal less expense than under the system of issuing arbitrary shop-order numbers, as the men nearly always have the numbers before them on the drawing and casting, and in other cases each man has only a few numbers to remember, and they do not change. Besides being more accurate, this saves very much time both for the men and for the foreman, and also removes the temptation to "load" the time onto the general numbers in order to cover up defective work or forgotten numbers. Another feature of this system thai will commend itself in a great many cases is that fact that the work can be kepi up at one's convenience. Afer the Daily Time Tickets have been compared with the time register and checked off to see thai all are turned in, they need not be posted until it is 12 found convenient, and if there is not time enough to attend to the whole system, part can be left out without detracting from the value or correct- ness of' the part kept up. For instance, if one or two machines or lines are thought sufficient and satisfactory, the time spent on that portion of the work need not be posted. As intimated in the beginning, we believe the principles of this system can be adapted to other lines of manufacturing where similar conditions are to be met with the same satisfactory results we have experienced. A. C. WARD. CHAPTER X. Cost Cards. The intention of this article is not to outline a specific system for as- certaining exact factory costs. . Instead it simply suggests a general plan for such a system and is rather an exposition of the superiority of card systems over books for this particular form of accounting. So broad and general is the suggested plan that modifications and ad- ditions must be made to fit it for any business adopting it. /'slfveos 4i»cn \ iu. of Assets over Lia.biii.iea Designed by F II. Macpherson. C- A. It must be remembered that in the description of any model or system, it is essentially necessary to include more in items and detail than will be found requisite in any one municipality. If the illustration is to be of any service it must of necessity be exhaustive and complete in all its details, local conditions governing as to selection in individual cases. ASSETS. The assets are again subdivided into four classes- and passive. -active, reserve, fixed, Active assets comprise cash, which includes the amounts in the treas- urer's hands, and the balances due from the bank on account current; taxes current, outstanding; tax arrears, outstanding; water rates; electric light rates ; rents ; advances on account of permanent public works or local improvements ; and miscellaneous. Reserve assets include sinking funds on general, or local improvement accounts, and other specially invested funds. Fixed assets are subdivided under two heads, viz: necessary invest- ments, and speculative investments. The first includes all permanent in- vestments, as waterworks system; electric light system; fire hall and ap- paratus ; market ; school buildings and equipments ; city hall and furniture ; public library; parks; real estate; public works equipment; and other in- vestments of a like nature. The second includes stock held in railway or gravel road companies, or such other enterprises of a public nature as are permitted by statute. Passive assets represent investments which, while somewhat perma- nent in character, are intended to be written off as the debentures issued to cover the cost thereof are redeemed ; the life of the work and of the deben- tures intending to be concurrent. In this class is also included the item of local improvements, of an amount equal to the debenture indebtedness outstanding on that account, an annual reduction being made, equivalent to the yearly redemption of debentures. Advances by way of bonus also come under this head, the amount to be written off annually running concurrent- ly with the retirement of the debentures which produced the original amount of the bonus ; in cases where certain conditions, as, for instance, the employment of a certain amount of labor, are involved, then the sum to be written off annually will depend on the extent to which the stipulations upon which the granting of the bonus was based, have been fulfilled. LIABILITIES. The second division of the balance sheet — the liabilities — is divided into three classes, viz: bonded, floating, and capital. Bonded liabilities is subdivided under two heads, (i) debentures, gen- eral, and (2) debentures issued on account of local improvements, this lat- ter being a direct liability, but secured by collateral. Floating liabilities comprise debentures due and unpaid, coupons due and unpaid, loans current, loans on local improvements in progress, and accounts payable. Capital liability represents simply the surplus of assets over liabilities. REVENUES. The municipal revenues for each year consist of the debts accruing due by levy or otherwise from all and sunudry to the corporation, although these may not necessarily be collected within the period. Land taxes, water rates, electric light rates, licenses, school grants, and fines and fees, form the ordinary sources of revenue ; while the extraordinary revenues are de- rived from sale of debentures, temporary loans, sale of public property, franchises, and the like. The details of the various sources of revenue having been ascertained, they should at once be made a matter of record, in books especially designed for the purpose, with such accompanying particulars as will, either at the present or in the future, give all needed information. These records are in the form of registers or rolls, as the tax roll, water rate roll, electric light roll, license register, market fees register, and such other hooks as are found to be necessary or convenient to cover the various forms or sourcs of reve- nue- All these registers or rolls should be susceptible of proof as to clerical correctness within themselves, the better plan being by the use of the columnar system of debits and credits. Accounts for each roll should find a place in the general ledger, the sum of the debits being entered at one operation. The counterbalancing entry will be to the credit of "revenue account." After the credits, in the form of collections, rebates, allowances, etc., are entered, the balances will represent the amounts appearing opposite the various items in th statement of assets, and should agree in each case with the amount of the outstandings appearing in the various rolls. EXPENDITURES. Ordinary expenditures are such as are incurred in the daily conduct and maintenance of municipal government, otherwise called operating ex- penses. The extraordinary expenses are in the nature of the redemption of debentures, and payment of interest thereon, repayment of temporary loans, construction of permanent buildings or other works, purchases of real estate, and so forth. The expenditures of a municipal corporation for a given year, are the debts contracted by the corporation within the par- ticular period, even though they may not have been satisfied by payment. It is safe to say that while in the average municipality, the revenues will be exhibited at their true value in the financial statement for the year, the ex- penditures will be found to be rarely so. The desire of the representatives of the ratepayers to show a surplus by omitting, often by deliberate design, to include in the expenditures debts contracted but unpaid, is the rule and not the exception. If a true and faithful statement is to be presented, all the accounts for debts contracted within the period should be passed by the council, and, if immediate payment is not possible, carried by the treasurer to the credit of the individuals, the debits being made to the proper ac- counts of expenditure. These debts will then be recorded as ledger liabili- ties, and will appear in the balance sheet as such, and the expenditures of the year will present a true statement of the condition of affairs. CHAPTER II. The Cash Book. The book of prime importance in all municipal accounting is the cash book. Other books of account are necessary and requisite, but the cash book is the central figure of the group — the final results culminating in the ledger entries. In many rural municipalities the cash book is practicallv the only one kept by the Treasurer, and the periodical analysis of the ac- counts falls generally to the auditors. As is well known, these officials have even a less intimate knowledge of the affairs of the corporation, than the treasurer, the result being that "confusion worse confounded" is the order of the day. In the province of Ontario considerable progress has been made along the line of an improvment in this dirction, by the introduc- tion of a uniform system of cash account, the use of which has been com- pulsory. In the system adopted by the Legislature — and designed for use in rural municipalities, villages, towns, and cities having less than 15,000 population — the main considerations sought have been simplicity and cor- rectness — with a minimum of labor, the completed result being an abstract statement of receipts and expenditures fairly well analyzed. In the illustration given herewith, is found the form for counties, the ruling being practically the same for city, town, village and township ac- counts, changes in the headings being made to suit the different require- ments. The opening entries in the illustration give the balance on hand and in the bank, these being carried to the total column. The various re- ceipts have their various columns, and the additions to the total column exhibit with each entry the whole amount of income from all sources, while the additions of the individual columns gives the exact receipts in each de- partment of the accounts. The balance in the bank account is also carried continuously. Distribution of the payments is made as the charges are en- tered, the gross payments being carried in the total column. The correct- Do Ccpor. atfi ., , of DSfe Co urtf? of _ DK D - <= c , pT No lTZ\ L.«.«« -. i .,;. o?r '_' ' ' £.'; '.."'.;.'' . M r?™ QMhi l.~„ M.^.M,-,. p--^ Tdtai. ' , "»»9 Form 2 — "Receipt" page of Government Cash Book. ness of the clerical work is proved by the addition of the balance of cash in hand, balance in bank and total payments, and these should agree with the gross receipts as recorded in the total column. The principles of the pro- vincial cash book are well exhibited in the illustration given, the limits of the page being too circumscribed to permit of a full page illustration. c po-fitrorv of 1K. C ou ^K- rf Co Nome af«i DajCficuldOA '.■•■> fri:^:; 0.»J. a. 3.b.~-t-.. *!_*, ■' •*■'';' Ti1»l. 'V.I i i p, k nil-t- .,. , , Imperii BtinK PffiT 1SQS -, Form 3. — "Payment" page of Government Cash Book. The headings showing the divisions of account as they appear in the various books are as follows : TOWNSHIPS. Receipts: (1) Resident Taxes, (2) Non-Rersident Taxes, (3) Arrears of Taxes, (4) Dog Tax, (5) Fines, (6) School Purposes, (7) Licenses, (8) Debentures, (9- Bills Payable, (10) Loans, (11) Miscellaneous, (12) to (17). In blank for such other accounts as it is found necessary or desirable to exhibit individually. Payments: (1) Salaries and Allowances, (2) Stationery and Printing, (3) Law costs, (4) Roads and Bridges, (5) Charity, (6) County Rates, (7) School Purposes, (8) Interest, (9) Board of Health, (10) Debentures, (11) Coupons, (12) Loans and Notes paid, (13) Deposits in Sinking Fund Ac- count, (14) Drainage, (15) Miscellaneous, (16 to 20) in blank for such other accounts as it is found necessary or desirable to exhibit individually. VILLAGES. Receipts: (1) Bills Payable, (2) Resident Taxes, (3) Non-Resident Taxes, (4) Dog Tax, (5) School Purposes, (6) Licenses, (7) Fines, (8) Rents, (9) Debentures, (10) Loans, (11- Miscellaneous, (12 to 15) in blank. Payments: (1) Bills Payable, (2) Salaries, Allowances, etc., (3) Printing, Postage, Advertising, (4) Interest, (5) Law Costs, (6) Roads and Bridges, (7) Charity, (8) School Purposes, (9) Debentures, (10) Coupons, (11) Fire Protection, (12) County Rates, (13) Loans Current, (14) Street Lighting, (15) Town Hall, (16) Deposited in Sinking Fund Account, (17) Miscellaneous, (18 to 20) in blank. TOWNS. Receipts: (1) Resident Taxes, (2) Non-Resident Taxes, (3) Arrears of Taxes (4) Dog Tax, (5) Water Rates, (6) Rents, (7) Licenses, (8) School grants, (9) Debentures, (10) Loans, (11) Fines, (12) Market, (13) Miscellaneous, (14 to 17) in blank. Payments: (1) Salaries and Allowances, (2) Printing, Advertising and Stationery, (3) Insurance, (4) Fire, Water and Gas, (6) Law Costs, (7) Roads and Bridges, (8) Charity, (9) Debentures, (10) Coupons, (11) Bills Payable, (12) Interest, (13) Waterworks Capital account, (14) Water- works Maintenance, (15) County Rates, (16) School Account, (17) Market, (18) Board of Health, (19) Sinking Fund, (20) Miscellaneous, (21 and 22) in blank. CITIES. Receipts: (1) Bills Payable, (2) Debentures, (3) Resident Taxes, (4) Non-resident Taxes, (5) Arrears of Taxes, (6) Interest, (7) Water Rates, (8) Market Fees, (9) Market Rates, (10) Police Fines, (11) Licenses, (12) Free Library, (13) Public Schools, (14) Miscellaneous, (15, 16 and 17) in blank. Payments: (1) Bills Payable, (2) Interest, (3) Board of Works, (4) Free Library, (5) Public Schools, (6) High Schools, (7) Printing, Advertis- ing and Stationery, (8) Fire, Water and Gas, (9) Police Commission, (10) Parks and Trees, (11) Market House, (12) Salaries, (13) Debentures, (14) Coupons, (15) Board of Health, (16) Charity, (17) Water Works Main- tenance, (18) Sewer Maintenance, (19) Deposited in Sinking Fund, (20) Miscellaneous, (21 and 22) in blank. COUNTIES, Receipts: (1) County Rates, (2) Land Tax Account, (3) Licenses, (4) Schools, (5) Registry Office, (6) Roads and Bridges, (7) Administra- tion of Justice, (8) Magistrate's Fines, (9) Debentures, (10) Loans, (11) Redemption of Lands, (12) Division Court Fund, (13) Miscellaneous, (14, 15 and 16) in blank. Payments: (1) Administration of Justice, (2) Land Tax Account, (3) Roads and Bridges, (4) Miscellaneous Grants, (5) Municipal Government, (6) School Purposes, (7) Registry Office, (8) Gaol, (9) Printing, Advertis- ing and Postage, (10) Redemption of Lands, (11) Law Costs, (12) De- bentures and Coupons, (13) Loans Current, (14) Interest, (15) Deposits in Sinking Fund, (16) County Property, (17) Insurance, Heat, Light, etc., (18) Division Court Fund, (19) Miscellaneous, (20, 21) in blank. Objection is sometimes made to the labor involved in the carrying of the continuous balances. There might be force in this objection if the of- ficial were to follow slavishly the bringing down of the balances with every entry. While such a proceeding was necessary in the pro-forma sheet which is embodied in each cash book, it is not really expected or required in actual practice. The sum of all checks entered at one time, or of all de- posits, may be readily deducted from or added to the balances, at single operations. So long as the totals and balances are recorded at the con- clusion of each day's business, the modus operandi whereby this is effected is of small moment. THE TWO VOLUME CASH BOOK. In the larger municipalities where the accounts are kept in greater de- tail, another form of Cash Account is recommended. In this the principles embodied in the cash books already described, are followed, with the colum- nar analysis reduced in some degree, in view of the fact that the ledger will be utilized to a much greater extent than is usual in most of the munici- palities where the cash books previously described are used. It is preferable that the general cash book should be in two volumes, the receiving cash book to contain all revenues, with analyzing columns for the representative sources of income. The form (4) fully exemplifies the idea. Ciccivir-srt C'^sK, tt)ook_-- ; ■■• fctJ, ■X of AcccxjrsJ^ iMt- t^^H^j 0»*euU> '■:'" Oebd ^«f &Av« - T —h L.,h,t >.w.-' L_.Gcr*e: Qcrcte|Cb«Tix SS U»n. " ".1 Ir-t To^lo / | 1 Form 4 — Showing Page of Receiving Cash Book. As deposits are made in bank, credit is taken in the proper column, and the remainder in the balance column, exhibits the cash in hands of the treasurer. The paying cash book contains the bank account in ordinary bank de- posit ledger style, with the distribution of accounts following. Form (5) makes further explanation unnecessary. ftyy C^Book. eJU ^.io^ of Accxaur^* CMt U.__J >-A...r **-• 52 as «b «»v PL. J rwJ.f ,.L -,.,|y _'« n 1 fei f.\ s vA Form 5 — Showing Page of Paying Cash Book. Where the volume of business requires a division of labor, the two- volume cash book becomes a necessity. ABSTRACT REPORTS. The prime advantage of the Columnar Cash Book is that the official is enabled to prepare with a minimum of labor, a daily, weekly or monthly abstract of receipts and disbursements for transmission to the council or auditors. C©r»por»atior\ e>i ip5s Co«jr^K?' or S , *tSterr\enT' of D< ceipfS ttrvd Di.»bvirvsenry=r\te «ftf >-^- tc ' ■ \&& 1 DeceiptS Belaroe or\ hand ■ r, e>or\K L-orvoJ Tax Account Lost Deport Total Oi»bo rae rr\e r\TS AdrnWitnafen oF JuSfe. Land Tax Account" Doodo end B>rldcje& M*jrMC.tpttl GoAKtS As at~ LaSi Deport Last Deport Tot Licer\ce» ScKoola D^ia.tPV Office. Dosds and Bridg,e» Admin, »tr=a*bn of Justice Macsistrofea Hnea De-beKtCT-e© l_oar\.» Irxtereat" DedemptTor, of Lands Qivoiom Court food 5cKool LAjrpoae— > Gaol ^ Printrrjo). Stationery. «tt QedemptTon of Landa Law Cosjta DebenTure.3 fi-Coupons Loena e«f- e>irvKir\o> fLr\d! Co<_jr\ty. Properly Ineunence. Meat Liflhfetc D.v.olon. Court furxd Miocelloneous Miscel lar\e.o<_i& Balance due from DanK Balance or, Knr\d 9 ft ft C*W?«d Cc Co. Tre; Form 6 — Abstract Statement of Receipts and Disbursements, as Applicable to Counties. The form above is fairly full and comprehensive, being to some extent comparative, when taken in conjunction with the previous report. CHAPTER III. The Journal. The aim of many book-keepers of the present day is to do away alto- gether with the journal, and, to accomplish this, matter entirely foreign to the cash account, is often introduced therein. While it is desirable to use the journal to the least possible extent, yet it cannot be altogether dis- pensed with, it is necessary that the introduction of rates and revenues should be recorded in the journal, the transfer of entries, the correction of errors, which may occur, the collating of the municipal "profit and loss" account, and the closing entries of each fiscal period. CHAPTER IV. The Ledger. The ledger does not differ from the form in use for commercial pur- poses, nor do the principles involved in the keeping thereof differ in any ma- terial point. The material for a perfect balance sheet should be contained between the covers of a properly kept ledger, and such a balance sheet will show in concise form the exact financial position of the municipality. In the allocation of the various accounts in the ledger, regard should be had to the position which they occupy in the balance sheet and revenue account. Much time will be saved, both to the officials and the auditors, if the details of all transactions be fully set out in the ledger. If, as properly should be, the treasurer were compelled by the auditors to prepare the annual state- ments and submit the same to them for inspection, the advantage of giving the particulars of each entry in the ledger would be much more deeply im- pressed upon that official. CHAPTER V. Subsidiary Books. It is of great importance that the utmost facilities should be provided for internal checking, in the preparation of the various subsidiary books, as the water rates, electric light, and collector's tax rolls. In the case of the collector's roll, a form largely statutory must be used. In the other depart- ments mentioned, such records may be kept as are prescribed by the coun- cil or adopted by the officials, and these are perfect or imperfect, accord- ing to the ability of the designer. THE COLLECTOR'S ROLL. As stated above, the form for this is largely statutory, and one is bound to admit, speaking from the accountant's standpoint, there is much room for improvement. I have prepared a sketch which I am inclined to say would much better fill the requirements of the municipality, and satisfy the accountant, than the stock form ordinarily in use. Provision is made for a complete internal check. As many columns would be required for special rates as there are local improvements. Colled©* Qoll • "?oc - City- oT .. si^ g^kggg. m m ba&fec" 5^ r- ■Sr S3 :-" -'. ?: ■ :• '•-: ~ •' ;- " •z *f*J ;- « Form 7 — Showing Improved Collector's Roll. collector's cash book. The collector's cash book should be ruled so as to show in its various columns the moneys collected for arrears of taxes, for percentages, and the current taxes should be analyzed in accordance with the divisions which have been made in the posting of the several items to the ledger, with a column for credits, as payments are made to the treasurer, also for date of payment, and signature of treasurer- THE ASSESSOR'S ROLL- Being statutory in form, and covering pretty accurately the necessary data required for the preparation of the collector's roll, no changes are sug- gested in the ordinary form. WATER WORKS ACCOUNTS. The forms presented herewith cover the principal books of account- ing in a waterworks department, and are more especially designed for use K) where the waterworks, though under corporate ownership, are controlled by a commission. With slight changes they may be utilized and made to form a part of the system if under the control of the treasurer, the prin- ciples involved in both cases being the same. The water rate register contains on one page the house number, assess- ment roll number, office progressive number, name of occupant, owner, street, ward, etc., in detail ; then comes the assessed value, upon which is based the property charge, and the special rates for which charges are levied. These, of course, vary with the different methods of imposing rates. The various rates are totalled in the column for that purpose. The right hand page is of the most importance to the accountant. The pro- gressive office numbers are repeated for ready reference purposes. Next comes the "arrears from previous year," with the "pro-number" for that year, and next is the "rate for half year,"which is just one-half the rate in the total column on the page opposite. It may be said that the writing in of this column each term is unnecessary work, but the internal check cannot well be provided in any other way ; and for the further reason that rates may vary term by term. The headings of the columns which follow are self-explanatory. In the cash columns will be entered in the upper left hand corner the cash book folio. In the deduction column will be entered all abatements or allowances made on account of "no horse," "no cow," no "double tenancy," etc., the receipt of which abatements must in all cases be acknowledged by the signature of the recipient to a "deduction slip." The percentage column i's called into use immediately upon the expiration of the date set for payment of rates without the imposition of the penalty, when each delinquent's account is charged with the additional rate. While the percentages are being added, the closing up of the individual accounts is being proceeded with, by the carrying forward of all unpaid amounts to the "arrears forward" column. This accomplished, the various columns are footed and checked, when the sum of the debit columns must equal the sum of the credit columns. fU TCD WATCH QCCMTra VrADD NO 3uB-av/*o V£Af> rslDIHG DCC. 31 ISO rfcux! ftr*: >*., 0»i7*» eU ■fifrfl ,^u» .1 OtrW- ,\- r ..l ..... Dfj.cr.pf.on of Dot** 7,,;' : i.-- .,* Clnorl - .-,„.: Sp«<=I.RrirHtU=, ■ TblOcoftbOatt . Form 8 — Left-hand page of Water Rates Register. ATri ivATea at 'OI3TCO WADD NO oua a I'M). YCX\a Ch/DilvO DCC 3i /a o Qrmoi-Ks f, Ho ','/'' ft:::: njr -™, p.^bl* Apr jo nJfv-no. ..tJ. Oct so Arrrar-s -fc De<- 31 fbn~o! B-o No Pernor t\ a tW .r •■.(' t ['.V»,.r iw3 l.'.J. 1 .. "KT" ■'," •"'■'■ %7™ Ar«~ 0«U.« Form 9 — Right-hand page of Water Rates Register. Form io illustrates the "receiving cash book," and requires no explana- tion from me. In the case of a Commission the "credits" column records the bank deposits, and if the payments are handled through the treasurer's office, the amount transferred to the general cash book. The gross rates levied are charged to water rates account half-yearly, the contra entry being to revenue account. At the close of each term, the deductions, discounts, etc., are credits to water rates account, and a corre- sponding debit is made to water rate discounts, which ultimately finds its 11 way to the debit of revenue account. Percentage is a debit to water rates account and a credit to revenue. WINDSOR WATCD COMMISSION CASr-i RECCIVtD Dale f^r>tieu(caA» fro No 5pcc»l VMtifor Ar,- OSHJ Wrtt»r 190 ArrUCurrj-f R-W Wafer RtJ Wafer Cred.fe, Balarjce DiscoMntit Deduct.» Nlo Deb.+ CreJ;4- Dr>. E>a,lar^:*l«»r?ce /INDSOR WATEB D^TPtfiuTlON or COMMISSION Off.« R^p,,* ^>t= Di»V,bot,o^ 5>^+trrv a< nenal • .-..»• -- S-i, - .->;*,.-, Sdar,,. •...■! ftr .- . . .,.,). , Wod»=> Bepolw '' 1", ,, .),, OrWrftt lot ! - .,: :^li"" m.„ Tola - ^C Form 12. — Voucher Cash Book and Register. TAX RECORDS. In the matter of keeping records of the arrears of taxes there is great diversity of method. The larger corporations are usually more careful in the keeping of these accounts, but there is yet a lamentable lack of an et- ficient means of "ready reference." An index prepared in three parts, each of which relates to the other, while some trouble to prepare will be found to prove of great value as a time saver. Part one is an alphabetical index of the streets, referring to part 3, as seen in the illustration. Part 2 is a list of the different plans, commencing with the Crown or Government survey, and also referring to Part 3. Part 3 is the index proper. Each lot is given a line to itself, and every parcel of property in the corporation is gathered into the index under its pr< iper street and plan. When the uncollected taxes have been returned to the treasurer, an account is opened in the lot ledger (if one be not already opened) for each L2 1 v z 3 50 5- r> E- 0' ' ( J"? » T 1 5, £? ?3L <»o -J 3 t: 9 5*7 o 3 a:^ ?0 0> r tl So SO "I N ? n z - j i I"? 4 \ ^5° 61 ^ o'D> T * ft Si** 1 3 J I] /I 3 I/ 1 si -o 75' property against which there is arrears, and the ledger folio entered op- posite the lot in Part 3 of the index. As the arrears are paid the ledger folio is marked off. When a search is required, reference is made to the index. STREET INDEX Name of street Index Pol 105 Adelaide 15 17 IZ 23 14- Z.9 65 67 Aurelia 65 66 67 66 Arnold 93 95 96 Baldwin 3Z 53 34- 3b 36 Baxter 59 90 Carleton PI 92 Form 13. — Street Index (Part. 1). If there are no folios against the lots, or if crossed off, there are no arrears, and the search is completed ; always presuming, of course, that the work is PLANS No 2 3 37 46 |40 For whom Purveyed Old 5urvey Thps. Beat tie fO. Wood G. Thomas Read &Pegley Jno. Nortnwood )y whom Purveyed Crown A.P.5alter R.Parr do Salter & Jones W.G.Mc.Genze Form 14. — Index of Plans Index rolios 15 27 31 39 43 04J105 Z7 29 38 43 49 faithfully done, upon which foundation the value of any system must de- pend. When posting from the collector's roll to the lot ledger, the posting folio should be entered in each book for ready reference. OLD SU/?IS£Y Noof Naof fronting on Street Ledper Polios BlocK Lot 1 N.Water 2 b. Stanley 60 J Stanley E.Nmth, 4 N.Water Ll.Ninth, 3 N.Water W .Ninth, 39 6 5. Stanley WNintt\ 7 5. S tan ley do 8 N.Water 9 N.Water 10 ^.^tanley 10 Form 15. — Index to Lots. In a paper read before the Institute of Chartered Accountants some years since, by the late Mr. Powis, is was suggested that in case of minor 14 municipalities, arrears of taxes should not be reported to the county treas- urer "unless and until the arrears have reached that point when the land is liable to be sold for taxes." In this suggestion I most heartily concur. This phase of municipal government as it stands at the present time is most pro- lific in loss, trouble and annoyance. My sentiments also are practically voiced in his remarks as to the proper method of procedure prior to sale. "After the time has passed dur- ing which taxes ought to be paid in each year, a return should be made by the minor municipality to the county, showing what properties are then liable to be sold for taxes. Only between such date and the day of sale, and only concerning such properties as are liable to be sold, should it be neces- sary to apply to the county officer at all- A sale should be held by the county officer only once in each year, when there is any property liable to be sold. Such sale should be held before the time for striking the rate by the municipality. Immediately after the sale the county officer should make a return to the minor municipality, showing the result of each sale, and remitting the money collected, after deducting his charges. The trans- actions of each year should thus be closed and balanced. The only record necessary then on the part of the county officer is a full account of the cir- cumstances connected with each sale and the result. And it is not neces- sary that the county officer should keep any further account concerning ar- rears of taxes. This system and process should go on from year to year, the county officer acting each time solely on the new report handed him from the minor municipality." There would then be no mixing up of the township and county business. Full remittance would be made to the minor municipality for the proceeds of the tax sale, and the local municipal- ity should then remit in full to the county treasurer for the county rate. In cases of redemption the county officer's receipt would be a sufficient vouch- er for the township treasurer, upon which to return the purchase price to the vendee at the tax sale. Till such time as our legislators may be brought to see the necessity for simplification of the methods as at present prescribed by the statutes, these methods must be followed. In the majority of rural municipalities, great carelessness exists in keeping the records pertaining to these arrears. In most townships absolutely no account is t taken of the arrears, once they have been sent to the county treasurer, and no check is had thereafter upon either official. County auditors in a number of instances have declined to go into the county treasurer's accounts relative to these arrears, on the ground that such was outside the scope of the audit, and that the county treasurer in keeping these accounts was the agent of the rural municipali- ties and not of the county. If a systematic record upon the following lines be kept, no difficulty will be experienced in maintaining a perfect and accurate account of tax arrears. The clerk of the minor municipality to prepare the non-resident roll in duplicate, sending one copy to the county treasurer and the other to the treasurer of his own municipality, who will, upon receipt thereof, enter in a properly ruled lot book or ledger, the charges against each property af- fected. Upon receiving the return of "uncollected taxes" from the collector the treasurer should, in like manner, and in the same book, enter all prop- erties returned, with the amounts against each. Upon May ist in each year, (the date set for the statutory addition of 10 per cent.) the county treasurer should prepare a statement in detail of the percentages added by 15 SE zr L OT 73 CO/V 2 (NOA/-fi£s/Dfnrj May N.P.Taxes/894 10% \0% 1450 145 1450 59 Nov Co Tresis 17 54 LL 54 Form 16. — Ledger Specifications for "Non-Resident' for Taxes. Lands in Arrears him to the various arrears, transmitting the same to the several treasurers of the minor municipalities, who in turn will enter the amounts so reported against the respective lots in the lot ledger- As payments are made to the county treasurer, he is required by the law as it now stands to prepare re- ceipts in triplicate — one of which goes to the payor, the second to the /Vy LOT 7 CO A/ /O CjOhn j>M/rrtj Date Particulars Ch,aroe5 Total Date Particulars Amnt. Total Ma/ 9J 1 96 I 97 1 98 1 Taxes 1894 10% 10% 10% 61 6 6 7 00 10 71 38 61 67 73 ftl 00 10 81 19 Ma/ 98 Co Treas. fti 19 81 19 Form 17. — Specification for Resident Arrears Ledger. county clerk, and the third he retains. What good purpose the sending of the receipt to the county clerk is intended to serve, I have never been able to discover. He files it away and that is the end of it. If, instead, the second receipt were sent to the clerk of the municipality interested, by that official to be carefully filed for the future use of the auditors, a better purpose would be served. Then, quarterly, the county treasurer should remit to the local treasurer, by check, the full amount of taxes collected during the pre- ceding three months, together with a statement showing the dates of pay- ment, and the amounts of several collections, when the necessary entries should be made in the cash account and lot ledger of the minor municipality. The accounts of the local treasurer would then at all times show the exact standing of the municipality as regards arrears of taxes. The triplicate receipt is now not necessary — a duplicate receipt being sufficient — one copy going to the person paying the taxes ; the other being retained in the treasurer's office. 10 DEBENTURE REGISTER. A complete record of the debenture indebtedness of every municipality is of absolute importance. Before the debentures leave the hands of the treasurer all particulars relating thereto should be entered in a debenture register, a very comprehensive form for which is herewith submitted. It will be observed that the fullest information is required to be entered as to the amount, years to run, dates payable, place of payment, annual payment of principal and annual payment of interest as represented by the coupons, dates due, and payments to the sinking fund, when the debentures are is- sued upon that plan. Other particulars, as to the number of by-law au- thorizing the issue, date of sale, persons to whom sold, date of delivery, amount received, divided as to principal, premium and accrued interest. Then the total amount to be raised annually by assessment, with particulars as to how much is from the individual property owners, in case the work on account of which the debentures are issued, is in the nature of a local im- provement. The specification given illustrates the idea for a ten-year de- benture. The register should be ruled so as to cover twenty-year issues. Qegvfen of C at ' Couporv for »n1ert or\1f< doy of cbenfar*ez> \ issued by 1he. Ten-rTY ' >•«*» e. or> 1ne. day oT >t at percent, payable yearly I© Egual annual payn\en+ on occoont 3+ of> annual pavmertf t& £*nt\ir\a fundAccI * of Cfebrn1ur»e» issued uryfcp *fce Do* of .»uc lO Ol.vc«cd (p _^ ^a CcoKOooh 6l,o fe^T*" T AjIRo.^- of Dy Law No . Tblol OTNourtt onnool levy • ArrvXjrlt pflieed by Mor\.opolrty • _ Amour* le^ed ors p-ooc«y o~,-«~» ■ - /w* £gL ,' "-•' '.l"f C O - dJ IMo« C B :;;., ' P. NoO P*»«l u„ 4 B Nolo Oc-4 d„i C O Clt s » : : ,' 2 I 2 j \ ^ ^ ' - J.L. _ga _^ a ■ — 1 Form 18. — Specification for Debenture Register. GROSS DEBENTURE LIABILITY SCHEDULE. To enable the treasurer to readily ascertain the total debenture indebt- edness of the municipality at a glance, as it matures year by year, a sched- ule prepared after the specification exemplified in Form 19 will be found to be of inestimable convenience. The footings are carried in pencil, until the s& ir. nto f Debefit jr-eDcb ...-.dfe-*. c / c Municif J ByLow No 173 fo**5ooc peaoed July l^~ 099pa v *bleir 1 3Y"& Irsfe"eat6%p *3oooo passed Jan 1 Coupoo© payOblr July 1 C Jar* 1^ - i- C°"E- ' •» .an > K " '."<, w'-. « La " "" Li S« =* 1 - Li w~ _^-. J_^J. t as Form 19. — Schedule Showing Gross Debenture Liability- amounts have been raised and the debentures retired. As new issues occur the particulars are entered from time to time and the pencil footings are corrected. The careful keeping of matured debentures is a matter of some im- portance, and one much neglected. A large book, similar to the ordinary 17 invoice book used in the commercial world, and ruled after the manner of Form 20, arranged to accommodate twenty coupons, is about as convenient a method of keeping these as I have seen. As the coupons mature, and Debcr\fcji Foil pe>p~tK:ul wn>'tffeny hcf=e.ir\ <^S> ~io deber\te payable. , eTte,. wo, 00 9 ]00H 12 13 ED •• 16 \~7 13 IQ 20 Form 20. — Filing Book for Cancelled Debentures and Ciupons. are paid and cancelled, they are pasted in the book upon the block corre- sponding to the number (the highest number maturing first). At maturity the page contains the coupons and the original debenture, all in order. CHAPTER VI. Passing Accounts. With the exception of those payments which are authorized by by-law or by statutory enactment, all others should be passed upon and authorized by the council previous to payment. In cities and towns it is usual to pass the accounts first through the several committees having to do with the expenditure, being finally checked by the Finance Committee, and pre- sented in their report to the full council, which sanctions payment. Another method is to have all accounts first come before the council, where they are read in detail and referred by that body to the proper com- mittee. This plan necessitates a longer wait before payment of the ac- count can be had, but has the advantage of a publicity which is often whole- some. In the case of minor corporations and township councils, where the meetings are held less frequently, accounts are usually received and dis- posed of at the same session. All accounts should be certified to by an official of the corporation, the chairman of committee, or a member of the council, previous to presen- tation. Accounts having been acted upon and payment authorized by the coun- cil, a warrant or order upon the treasurer is drawn and signed by the mayor, reeve, or clerk. The usual form of warrant runs as follows: No. Sandwich, 189 The Treasurer of the Municipal Corporation of Sandwich,, Please pay to _ or order, the sum of_ __ dollars, chardinq to Account Mayor Form 21. — Ordinary Warrant Form. This warrant is handed to the person in whose favor it is made, and he presents it to the treasurer- That official generally takes up the war- rant and cancels it, after issuing his check for the same amount arid to the same order. This operation necessitates a duplication of work by the clerk and treasurer, and a multiplication of vouchers altogether unnecessary. The substitution of a form of warrant which also operates as a bank check- No. Sandwich, 189 The Treasurer of the Municipal Corporation of Sandwich Please pay to or order the ^um of Dollars charging +o Account Mayor Form 22. — Combination Warrant and Check. when countersigned by the treasurer does away with the double labor and provides a single but comprehensive voucher. Ill With this warrant in his hand the payee applies to the treasurer. The treasurer takes the warrant, enters it in his cash book, and, signing it in the place designated in the illustration, returns it to the person to whom pay- able and he proceeds to use the same as an ordinary check. If, by inad- vertence, the treasurer omits to enter the amount and particulars of the warrant in his books, he is bound to discover the error and rectify it at the end of the month, when he proceeds to verify his cash and bank accounts. SHEET SYSTEM OF VOUCHER. An excellent system and one which will prove labor-saving, as well as providing a means for the further multiplication of vouchers is the fol- lowing, which may readily be adapted to the requirements of township and village corporations. Upon a form as shown in 23, a list of all accounts passed should be entered, the accounts briefly numbered consecutively, the bill itself being given the same number. When the other business of the session has been completed, this list of accounts should be formally acted upon, by the pass- ing of a resolution "that accounts numebred 30 to 37 be passed and that the reeve issue his order to the treasurer for payment of the same." At the foot of the form, as will be seen, is an instruction to the treasurer to pay, which is made operative by the signatures of the reeve and clerk. In writing up the minutes the clerk copies, in detail, the list of ac- counts, with their respective numbers, and he carefully files the original bills, which have all been properly endorsed with a number corresponding to that opposite the account in the list. The original list is then transmitted to the treasurer, and he proceeds to pay. Stale mr.nf of Account? passed by 1f?e Couoc/ o f ff/e Toivo of on /SO No J N*tn« !%,- Wbi+ Ac<5t 0,rfd AmounijSi^rTjStcjr^r t£ Pec.pierjt fbl.o Da-feof [No. of / 1 I 1 1 The Tr« 5u » fjur7vber>i ii 11 11 p ass •• _ Less O-S Cheques: No. 230— I ones " 332-Smith " 333 — Thomson " 375— Harum & Co... " 380— Fulton -Reconciliation Statement. Form 24. Upon receipt of the February account with checks, the treasurer again checks up, and after clearing off the business of the month just closed, he finds that the bank has charged two or three items not in the current month's business. Without searching back through hundreds of stubs to ascertain what these items represent, he at once turns to his reconcilia- tion account for the preceding month, and finds that of the outstanding checks at the close of the month Nos. 330, 375 and 380 have peen paid. Of the old checks, Nos. 332 and 333 are still outstanding, and these are brought down to the next account, which will look as below: The outstanding checks of the longest duration also come first on the list, and thus a quick reference tab is kept upon them, and after a sufficient length of time has elapsed, duplicates may be issued, or steps taken to can- cel the payment of the outstandings, as the circumstances may require. Feb. 28 Bank balances per Cash Book. " Pass " . Less O-S Cheques- No. 332— Smith " 333— Thomson ■' 396— Meeking " 402— Somers " 417— Mitchell Form 25- — Reconciliation Statement No. 2. 21 The account may be kept in another way, by taking totals instead of balances, as the following formula shows. The result will be the same by either method, the first method being, to my mind, much the more practical. IV. HI Jan. 1 '• 31 $137 50 1731 37 $1868 87 i498 87 " 31 $370 50 " 31 $42 00 37 M 70 00 20 00 33 33 $ 573 83 202 83 Less O-S Cheques: 370 50 Form 26. — Another Form of Reconciliation Statement. CHAPTER VIII. Vouchers. It seems almost unnecessary to say that every payment must be sub- stantiated by voucher, upon which should be endorsed the authority under which payment is made. It is be not convenient to utilize the check num- bers, then all vouchers would best be numbered consecutively, and the num- bers should find a place against each item, irrespective of the number of books through which it may pass. Reference thereto is thus much facili- tated. Although but few treasurers so regard it, yet it is of equal import- ance that good and sufficient vouchers shall be preserved in the case of re- ceipts as well as of disbursements. Just here I may interject that it is sur- prising to find how little attention is paid by the rural auditor, and in many instances by the auditor of urban accounts as well, to checking the receipts as against their various sources. It seems to be taken for granted that there can be nothing wrong with the receipt side of the cash book, but the greatest care must be taken to see that the treasurer, in making disburse- ments, has not tampered with the funds of the rate-payers. In cases of de- fault, experience goes to prove that the trouble most often arises from fail- ure to charge, rather than from manipulation of the funds once they have been entered in the books of account. In every municipality there should be an official form of receipt, and these should be numbered consecutively. For every dollar received on civic account an official receipt should be issued. Every receipt in the book should be accounted for. In case of an error being made and a receipt cancelled, the spoiled form should not be de- stroyed, but should be securely attached to the stub or counterfoil of the receipt book, for the benefit of the auditors. The same remarks apply to checks. Checks from the corporation book should never be taken for other purposes, and every form should be accounted for. Explanations to the auditors are thus rendered unnecessary. The records contain their own explanations. 22 CHAPTER IX. Striking the Rate. In many municipalities too little care is taken in the preparation of the estimates. It may be that although the whole requirements of the munici- pality are provided for, yet by looseness in the keeping of the records, the moneys levied are not applied as was originally intended and authorized. Greater expenditures are made in some directions than are provided for in the estimates, and to meet this contingency, some other fund is made to suffer. Usually the sinking fund, if there happens to be one, is made the scapegoat. I call to mind a recent audit where in twelve years, although the sinking fund levy was placed in the estimates and was raised each year, yet in only eight of the years was the sum deposited to the credit of the fund. When the original estimates were asked for they were not forth- coming; had not been preserved after the by-law striking the rate had been passed. An analysis of the entire tax levy was thus necessitated. Had the es- timates been filed, and the amounts levied in the tax roll been carried to the proper accounts in the ledger, such a laches could not well have occurred. I recommend that the statement showing the estimates, upon which the by- law striking the rate is based should be incorporated in and made a part of such by-law, or, otherwise, that it should be copied in full in the minutes of the meeting of council at which passed. The statement should show, first the sums required to meet the several fixed charges, or uncontrollable expenditures, and next the amounts which it has been estimated will be required for the carrying on of the municipal government. Against these should be placed first the anticipated revenue exclusive of the tax levy, and, second, the amount which must be raised by impost. CHAPTER X. Local Improvements. When a public work has been decided upon, the necessary statutory preliminaries having been observed, there are two methods which may be followed to provide funds for the carrying on of the work, (i) by issuing debentures and disposing of the same in bulk at the outset of the undertak- ing, or by partial sales as the necessities of the work require ; or (2) by ef- fecting temporary loans as the work progresses, charging capital or con- struction account with the interest of these loans, to the offset later on by the interest which will have accrued upon the debentures, if they are dated con- currently with the initiation of the work. Very often it is impossible to tell at the outset the extent of the expenditures which may be requisite upon a contemplated work. The architect or engineer will furnish an estimate, generally an outside figure, and upon this is based the amount for which the debentures are issued. It may be that when tenders are called for, much less than the sum estimated will be needed, and if so then the full issue of debentures will not be necessary. The method of providing the requisite funds by temporary loan would seem to be preferable, if only for this rea- son ; but where the work under construction is of the nature of a "local improvement" (part to be paid by the municipality and part by the owners of the properties to be benefited) there is an added reason for refraining from issuing the debentures till the completion of the work. In such case 23 the construction of the improvement is in the nature of a partnership, and, properly, the greatest care should be taken to keep the transaction separate and free from other matters of a like nature, and from works in which only the corporation is interested. I use the word "properly" advisedly, for un- fortunately the average municipal official is not careful in this regard and works are often undertaken and carried to completion, moneys advanced, and debentures sold without the slightest regard being had to the equities of the various interests concerned. I have been unable to find any method of procedure in undertakings of this kind better than the one I shall shortly outline. It certainly has the advantage of simplicity. When the funds are required, arrangements are made for special advance from the bankers sufficient to meet the cost of the proposed undertaking, this advance to be carried in the way of an over- drawn account, guaranteed by a demand note, for the approximate re- quirement, if the bank rules require it. All checks and payments made on account of that particular work, are entered to a special account, and in- terest is periodically charged upon the advances. When the work has been completed, and the actual cost arrived at, the time for the disposal of the debentures will have come, and these will then be issued to an amount ex- actly sufficient to cover the cost of the work. SPECIAL ASSESSMENT REGISTER. The methods of keeping the records of these local improvement assess- ments are almost as varied as are the classes of work done under this system. City of W/ndsoro Register c£ Special Rales bviedonder»1tTe autfTopityof lofel cost" of iTTippovement $> Awual Rayrr^ot # 3trcdt l +II rfceT LoT ponW ce>! IS lib To-tel Assessrfft Total _ Qommcjf'q N£arc5 ioQun Annual Paymt Grty^ fnopor»tror>4p FVafcpa^e C/fy cf Yl/znc/sor* Law Nlo. Rassed l&O DcbcTtaPCs issued o> =«„ WWMCrs.TJ. ' """ ' Dat, Na.Ty.viJa^Lv. v„„,t„ D„lo~ Stalan.* r-.,i.„.-. 6.35;.. r~ c*w '■;■]■'■■' ^£. 1 n.M^ 5ujr,« P. TSLI Form 29. — Public School Accounts. CHAPTER XIII. Debentures. Debentures and bonds are ordinarily issued upon either one of two methods : "Sinking Fund" and "Instalment or Annuity." Which of these methods is the better has been a moot question, and it depends altogether upon whether you are the purchaser or the seller of the securities which position you may feel disposed to take. For myself I have very decided views upon the subject, looking at it from the standpoint of the muni- cipality. SINKING FUND. In the case of "sinking fund" debentures, no part of the principal is repaid to the holder or purchaser during the currency of the bonds. The full amount of interest and a portion of the principal is annually collected. The interest is paid to the debenture holder. The principal is paid into an account known as the sinking fund, which fund must be made to earn a rate of interest equal to that calculated at the time of issuing and this is compounded yearly or half yearly during the whole period of existence of the debt, so that at maturity of the debentures there will be in this fund just sufficient to repay the principal. With the rates of interest varying, it so happens that often it is not possible to make the sinking fund earn the amount contemplated, or it may be that too high a rate of interest was allowed in the calculation. 27 Each year, before placing in the estimates the amount required to be raised for the sinking fund, a valuation should be made to ascertain whether the existing investments have amounted to the sum originally intended as that which should be on hand at that date. If deficient it must be aug- mented by adding the necessary amount to the ordinary yearly appro- priation. If precautions are taken, and fractional adjustments are made from year to year, there will be no possibility of finding the sinking fund short when the debentures mature. A common practice is to calculate the interest earning power of the sinking fund at the same rate as the debentures bear, and this is a pit into which many municipalities stumble. There are many reasons why it is not possible to make the sinking fund earn interest equal to that which must be paid on the debentures, chief among which is lack of investment. The amounts being small and accumulating annually, it is impossible to keep the fund continually invested at a rate of interest higher than that which can be obtained by deposit in the ordinary savings bank. It follows that no matter what rate of interest it may be necessary to make the deben- tures bear, it is well that the sinking fund's interest-earning power should not be calculated at a rate higher than ordinary savings bank interest. INSTALLMENT OR ANNUITY. The "instalment" or "sliding scale" debentures are figured so that equal payments during the period which the debentures have to run of principal and interest, will be made. The first year's payment will obviously be largely interest and very little principal. The second, a little less interest and more principal. Each year the interest decreases and the principal increases, until in the final year the payment is mostly principal. It will be observed that the difference between the two forms of debenture is, that in the first case the investor accepts only the interest earned each year, leaving the principal in the hands of the municipality for reinvestment. In the second case the investor is himself under the necessity of finding his own source of reinvestment for the principal which he receives year by year. The system of sinking funds originated because investors were averse to buying debentures which provided for the return yearly of a portion of the principal, necessitating the trouble of the reinvestment of small amounts. At any rate, debentures of such a character brought a less price in the market, and hence the introduction of the sinking fund idea, which placed the onus of reinvestment upon the shoulders of the persons or corporations obtaining the loan, thus giving the capitalist the advantage of a longer and, to him, more satisfactory investment. This condition of affairs originated when rates of interest were much higher than now, and money less plentiful. The day of the sinking fund is past, however, the difference in the price obtainable for debentures of the two kinds being so slight that the trouble of maintaining the sinking fund largely exceeds the paltry difference in the proceeds of the sales. With a thorough sense of the responsibility attaching to the position which I take, I have no hesitation in saying that the sinking fund is a curse to the average munici- pality. Lack of knowledge of finances, inability to keep the sinking fund profitably invested, the manipulation of the fund by designing and dis- honest officials, ignorance in computing the earning power; these arc •is principally the causes which lead to the conclusion voiced in the preceding sentence. In these days of cheap money, with capitalists on the alert for safe investments, and with the keen competition that exists in the money market, it makes but little difference which kind of debenture is issued, in-so-far as the sale of the securities is concerned. Indeed, however, as the following illustration will show, the issuing of sinking fund debentures is the more expensive method of providing funds : Let us take a loan of $25,000 for twenty years at 4 per cent. On the annuity plan the sum of $1,839.55 per annum will require to be raised for twenty years, to cover both principal and interest. On the sinking fund plan your annual interest payment will be $1,000.00, and for the sinking fund, calculated at 3%, $930.40, or $1,930.40 in all — which is $90.85 in excess of your requirements under the annuity. This means, with interest, compounded, for twenty years, a direct loss to the rate-payers of over $2,500.00, or 10% of the entire loan. And even here we are pre-supposing the prompt deposit on the exact date , of the annual amount in the sinking fund, and that not one day of interest-earning power shall be lost, something which we know to be so rare as to be practically impossible in the average municipality. THE RATE OF INTEREST. Many municipalities are in the habit of issuing debentures bearing a higher rate of interest than the money can be obtained for. This, presum- ably, is done in order that a good premium may be obtained, the officials laboring under the misconception that the obtaining of a large premium gives the public a more exalted idea of the excellence of credit which the municipality enjoys in the financial world. A careful study of the money markets at the time the debentures are ripe for sale will enable the officials charged with that duty to decide pretty accurately upon the lowest rate of interest which the debentures may be made to bear, in order to find a purchaser at par. A low rate of interest and no premium is much preferable to a large premium with a corresponding increase in the interest rate. As a matter of fact investors often take advantage of the ignorance of officials not familiar with calculations of this character, and,, under the cloak of an apparently large premium, they pay less for the debentures than if they had been compelled to bid on an issue bearing the current rate of interest and netting par. THE QUESTION OF PREMIUMS. There is also a greater evil than this in connection with the question of premiums. Many councils and officials are possessed of the mistaken idea that premiums of whatever sort are the cimmon property of the munici- pality. The consequence is that in the case of local improvements, the general funds receive the benefit of the premium while the interested prop- erty owners pay the piper. It is obvious, therefore, that the obtaining of a premium is not always a benefit to those most immediately concerned. The natural application of any premium or surplus arising out of the sale of debentures issued on other than general account, is toward the payment of the first principal or interest which falls due on account of* these particular debentures, a pro-rata reduction being made in the assess- ments against the various property holders for that particular year. 29 SINKING FUND INVESTMENTS. The statute authorizes municipalities to invest the sinking funds in government securities, municipal debentures, their own or their neighbors, and first mortgages, at the pleasure of the investing body. The fullest information should be kept of all such investments, and a ledger should be provided, which will furnish all the facts. It matters not particularly what the form, if information be given as to date of loan, amount, descrip- tion of property, certificate of valuation, and of solicitor, and such other details as the circumstances surrounding each particular case, and the nature of the investment, may seem to require. CHAPTER XIV. Tabular Computations. In every municipal corporation public works are undertaken requiring the issuing of debentures or bonds to provide the necessary funds for the carrying out of the works. It becomes of the greatest importance, there- fore, that the officials charged with the issuing of these securities should be possessed of the information to enable them to quickly and correctly make the necessary calculations as to the annual amounts to be levied. SINKING FUND TABLES. In the Sinking Fund Table herewith is shown the amount of sinking fund necessary to be set aside annually to provide the required amount to any rate of interest from 2 to 6 per cent, for any number of years, at the end of which debentures are ordinarily made payable. Purchasers of deben- tures are, by recourse to this table, enabled to ascertain at a glance whether proper provision has been made in the by-law, under which the bonds or debentures have been issued, for the necessary amount of sinking fund. INSTALMENT OR ANNUITY TABLES. By far the greater part of the debentures issued at the present time are upon the instalment or annuity plan. In this way an equal annual payment is made. It is thus necessary to know what amount of principal must be paid off in each year, in order that the principal so paid, together with the interest, shall each year amount to the same sum. The tables which are presented in this volume are prepared to show the exact amount of interest and principal respectively, payable each year, in order to reduce to an equal annual sum the amount to be levied. To financiers generally, and to municipal clerks and engineers especially these tables will prove of inestimable value, enabling them to make the necessary calculations required in the issuing of debentures or bonds, in any sum, for periods of 5, 10, 15, 20, 25, and 30 years, at rates of interest of 2, 2 l / 2 , 3, y/ 2 , 4, 4 l / 2 , 5, $y 2 and 6 per cent. Special tables have been prepared for 2, 3, and 4 years, at rates of inter- est of 2, 2^4, 3, y/ 2 , 4, 4J/2, 5, 5J/2 and 6 per cent. These will be found useful more particularly in the case of school sections, where short term debentures are frequently issued. 30 COMPOUND INTEREST TABLE. (One dollar interest.) Included in the list of tabular computations is a table which shows readily the sum to which One dollar principal will increase at compound interest in any number of years from I to 40, at rates of 2, 2.y 2 , 3, 2> l / 2 , 4, A l /2, 5, S l A an d 6 per cent, per annum. Instructions for the finding of the sum to which any given amount will increase at compound interest at any of the rates of interest, and number of years expressed in the table, are also given. COMPOUND INTEREST TABLE. (One dollar deposited at end of each year.) It frequently becomes a necessity to ascertain whether or not a sinking fund is being maintained at its proper standard. To do this in the ordinary course means a deal of figuring. By the use of the table appended the proper status of the fund at the end of any year may be obtained by a simple sum in multiplication as exemplified at foot of this table. PROOF OF ANNUITY PAYMENTS. Purchasers of bonds and debentures invariably require to satisfy them- selves of the correctness of the sum provided in the by-laws as being required to be raised annually to meet the interest and principal of the debentures for which they are negotiating. The table on page 37 furnishes a simple means to this end; and it may furthermore be used to prove the correctness of his calculations by the clerk or financier issuing the bonds or debentures. TABLE TO SHOW THE INTEREST-EARNING POWER OF STOCKS, BONDS AND DEBENTURES BOUGHT AT VARyiNG PRICES, EITHER ABOVE OR BELOW PAR. In these days of close competition in the money markets of the world, the purchaser of securities is called upon at almost every turn to bid for bonds, stocks and debentures. The table on page 38 will enable such to tell at a glance the interest which investments will net, at varying purchase prices either at a discount or a premium, ranging from 50 to 150. The rule for ascertaining the value at any rate not included in the table is also given. These tables are printed from plates revised by the author, so that there need be no question as to their correctness. F. H. MACPHERSON, C. A. ::i Debenture Instalment Tables, Showing amount of Principal to be paid each year in order to reduce to an equal sum the amount to be levied each year for payment of Principal and Interest on an issue of $1,000,000. 2 Per Cent.— 5 Years. Debentures bearing 2 per cent. Interest, Payable in 5 Yearly Instalments. EQUAL ANNUAL PAYMENT, $212,158.41. 2 Per Cent— 15 Years. Debentures bearing 2 per cent. Interest, Payable in 15 Yearly Instalments. EQUAL ANNUAL PAYMENT, $77,825.47. 2 Per Cent.— 20 Years. Debentures bearing 2 per cent. Interest, Payable in 20 Yearly Instalments. EQUAL ANNUAL PAYMENT, $61,156.72. Each Year. Interest. Principal. Each Year. Interest. Principal. Each Year. Interest. Principal. $20000 00 16156 83 12236 80 8238 36 4160 06 $192158 41 196001 58 199921 61 203920 05 207998 35 $1000000 00 2 Per Cent.— 10 Years. Debentures bearing 2 per cent. Interest, Payable in 10 Yearly Instalments. EQUAL ANNUAL PAYMENT, $111,326.54. Each Year. Interest. $20000 00 18173 49 16310 43 14410 10 12471 78 10494 68 8478 04 6421 07 4322 96 2182 85 Principal. $ 91326 54 93153 05 95016 11 96916 44 98854 76 100831 86 102848 50 104905 47 107003 58 109143 69 $20000 00 18843 49 17663 85 16460 61 15233 32 13981 48 12704 60 11402 18 10073 71 8718 68 7336 54 5926 76 4488 79 3022 06 1525 98 $57825 47 58981 98 60161 62 61364 86 62592 15 63843 99 65120 87 66423 29 67751 76 69106 79 70488 93 71898 71 73336 68 74803 41 76299 49 $1000000 00 $1000000 00 $20000 00 19176 86 18337 27 17480 98 16607 36 15716 38 14807 57 13880 59 12935 06 11970 63 10986 91 9983 51 8960 05 7916 12 6851 31 5765 20 4657 37 3527 38 2374 79 1199 06 $41156 72 41979 86 42819 45 43675 74 44549 36 45440 34 46349 15 47276 13 48221 66 49186 09 50169 81 51173 21 52196 67 53240 60 54305 41 55391 52 56499 35 57629 34 58781 93 59957 66 $1000000 00 By giving the figures for an issue of $1000,000, exact amounts are ex- hibited. For amounts less than a million it is only necessary to take the same proportion of the above sums thus : $10,000 requires exactly one-hundreth of above figures, viz. : For 10 years at 2 per cent : 1st Payment— Interest, $200.00; Principal, $913.26 ; total, $1113.26. 10th Payment — Interest, $21.83; Principal, $1091.43; total, $1113.26. 2 Per Cemt.— 25 Years 2 Per Cent. -30 Year* 2 1-2 Per Cent.-5 Years. Debentures bearing 2 per cent. Debentures bearu g 2 per cent. Debentures bearing 2\ per cent. Interest. Payable in 25 I nt n est, Payable in 30 Interest, Payable in 5 \ early Instalments. \1. ANN!" U. P WMENT, EQD 'early Instalments. Yearly Instalments. EQU; VL ANNUAL PAYMENT. EylAL ANNUAL PAYMENT. $51, 220. 44. $44,649.93 $215. 246. 88. Each Year. Interest. Principal. Each Year. Interest. Principal. Each Year. Interest. Principal. 1 $20000 00 $31220 44 ! $20000 00 $24649 93 1 $25000 00 $190246 88 2 19375 59 31844 85 2 19507 00 25142 93 2 20243 S3 195003 05 3 18738 00 32481 75 3 19004 14 25645 79 3 15368 75 199878 13 4 18089 06 33131 38 4 18491 23 26158 70 4 10371 80 204875 08 17426 43 33794 01 5 17968 05 17434 41 26681 88 27215 52 5 5250 02 209996 86 6 16750 54 34469 90 6 7 16061 15 15357 96 35159 29 35862 48 7 8 16890 10 16334 91 27759 83 28315 02 $1000000 00 g 9 14640 71 36579 73 9 15768 61 28881 32 2 1-2 Per Cent.— 10 Years. 10 13909 12 37311 32 10 15190 98 29458 95 Debentures bearing 2h per cent. Interest, Payable in 10 11 13162 90 38057 54 11 14601 80 30048 13 12 12401 74 38818 70 12 14000 84 30649 09 yearly Instalments. 13 11625 37 39595 07 13 13387 86 31262 07 14 10833 47 40386 97 14 12762 62 31887 31 EQUAL ANNUAL PAYMENT, 15 10025 73 9201 84 41194 71 42018 60 15 16 12124 87 11474 37 32525 06 33175 56 $114,258.78. 16 17 8361 46 42858 98 17 10810 86 33839 07 Each Interest. Principal. 18 19 7504 28 6629 96 43716 16 44590 48 18 19 10134 07 9443 76 34515 86 35206 17 Year. 20 5738 15 45482 29 20 8739 64 35910 29 1 $25000 00 $89258 78 21 4828 50 46391 94 21 8021 43 36628 50 2 22768 53 91490 25 22 3900 67 47319 77 22 7288 86 37361 07 3 20481 27 93777 51 23 2954 27 48266 17 23 6541 64 38108 29 4 18136 84 96121 94 24 1988 95 49231 49 24 5779 47 38870 46 5 15733 79 98524 99 25 1004 46 50215 98 25 5002 06 39647 87 6 13270 66 100988 12 26 27 4209 11 3400 29 40440 82 41249 64 7 10745 96 103512 82 $1000000 00 8 9 10 8158 14 5505 62 2786 99 106100 64 108753 16 111471 79 2 1- 2 Per Cent. -25 l'enrs. 28 29 2575 30 1733 80 875 82 42074 63 42916 13 Deben ures bear in ,erest, Pays r early Insta g 2\ per cent, ible in 25 lments. 43774 11 In 30 $1000000 00 $1000000 00 : 2 1-2 Per Cent.— 15 Years. Debentures bearing 2J per cent. Interest, Payable in 15 EQU Ai ANNUAL $54,275. < PAYMENT, 13. 21 Debent In 1 -2 Per Cent ures bearin terest, Pay Nearly Insta 20 Years. ^ 2i per cent, ible in 20 lments. Each Year. Interest. Principal. Yearly Instalments. EQU al ANNUAL $64,147 PAYMENT, .13 EQUAL ANNUAL PAYMENT, 1 2 $25000 00 24268 10 23517 90 22748 95 21960 78 21152 90 $29275 93 30007 83 30758 03 31526 98 32315 15 33123 03 $80,766.45. 3 4 5 6 Each Year. Interest. Principal. Each Year. Interest. Principal. 1 $25000 00 $39147 13 1 $25000 00 $55766 45 7 20324 82 33951 11 2 24H21 32 40125 81 2 23605 84 57160 61 8 19476 04 34799 89 3 23018 18 4112s 95 3 22176 82 58589 63 9 18606 05 35600 88 4 21989 95 42157 18 4 20712 08 00054 37 10 17714 30 36561 63 5 20936 02 43211 11 5 102 lo 72 61555 73 11 16800 26 37475 67 6 19855 75 44291 38 6 17071 83 63094 62 12 15863 37 38412 56 7 18748 46 45398 67 7 16094 46 64671 99 13 I 1903 05 39372 88 8 17613 49 46533 04 8 14477 W3 66288 70 14 L3918 73 40357 20 9 16450 15 47696 98 9 12820 45 67046 00 15 12909 .ho 41300 13 10 L5257 73 48889 40 10 11121 80 69644 65 16 ! is;.", 65 42400 28 11 I1D3.-. 49 50111 04 11 03SO OS 713S5 77 17 10H15 64 43460 29 12 L2782 70 51364 43 12 7500 03 73170 42 18 9729 13 14546 80 13 1140S 59 52648 54 13 5700 77 74999 68 19 8615 46 45660 17 14 10182 38 .-,.•{001 7--> 14 3891 78 76874 67 20 7 tT-i 95 46801 98 15 8833 26 55313 S7 15 1000 83 78796 02 21 6303 90 17072 03 16 7450 11 .-.oooo 72 22 5104 60 3875 32 10171 33 50400 01 17 18 6032 99 4580 ll 58114 14 69566 99 SIOOOOOO DO 23 24 2815 30 5iooo 63 19 3090 96 61056 17 25 L324 25 52951 68 20 L564 63 62582 50 $111(1(1(1(10 DO 11000000 00 ftl- J Per Cent. - :»t Years. 3 l'er Cent.— 5 Years. 3 Per Cent.— 30 Years Debentures bearing 2! per cent. Debentures bearing 3 per cent. Interest, Payable in 5 Debentures bearing 3 per cent. Interest, Payable in 30 Interest, Paya »le in 30 Yearly Insta ments. PAYMENT. Y EQU.A early Insta ments. PAYMENT, Y EQUA early Instalments. EQUAL ANNUAL L ANNUAL l, ANNUAL -PAYMENT. 847.777.65. $218,354.58. 851 019,26. Each Year. Interest. Principal. Kaeh Year. Interest. Principal. Each \ ear. Interest. Principal. 1 $25000 00 $22777 65 1 130000 00 $188354 58 1 £30000 00 $21019 26 2 24430 56 23347 09 2 •24349 36 194005 22 2 29369 42 •J 1049 84 3 23846 88 23930 77 3 18529 20 199S25 38 3 28719 92 22299 34 4 232-18 61 24529 04 4 12534 44 205820 14 4 28050 94 22968 32 5 22635 37 25142 28 5 6359 90 211994 68 5 27361 so 23657 37 22006 83 25770 82 6 26652 17 24367 09 6 7 21362 56 26415 09 SI 000000 00 7 25921 10 25098 10 8 20702 18 27075 47 8 25168 22 25851 04 9 20025 29 27752 36 3 Per Cent.— 10 Years. 9 24392 68 26626 58 10 19331 49 28446 16 Debentures bearing 3 per cent. Interest, Payable in 10 10 23593 89 27425 37 11 18620 33 29157 32 11 22771 13 28248 13 12 17891 40 29886 25 Yearly Instalments. 12 21923 68 29095 58 13 17144 24 30633 41 13 21050 81 29968 45 14 16378 41 31399 24 EQUAL ANNUAL PAYMENT, 14 20151 76 30867 50 15 15593 43 32184 22 $117,230.51. 15 19225 74 31793 52 16 17 14788 82 13964 10 32988 83 33813 55 16 18271 93 17289 51 32747 33 Each Interest. Principal. 17 33729 75 18 13110 76 34658 89 Year. 18 19 20 16277 62 15235 37 14161 86 34741 64 35783 89 36857 40 19 20 12252 29 11364 16 35525 36 36413 49 1 $30000 00 $87230 51 21 10453 82 37323 83 2 27383 08 89847 43 21 13056 14 37963 12 22 9520 72 38256 93 3 24687 66 92542 85 22 11917 24 39102 02 23 8564 30 39213 35 4 21911 38 95319 13 23 1(1744 18 40275 08 24 7583 96 40193 69 5 19051 80 98178 71 24 9535 93 41483 33 25 6579 12 41198 53 6 16106 44 101124 07 25 8291 43 42727 83 26 5549 16 42228 49 7 13072 72 104157 79 26 7009 57 44009 67 27 4493 45 43284 20 8 9947 98 107282 53 27 5689 30 45329 96 28 3411 34 44366 31 9 6729 51 110501 00 28 4329 40 46689 86 29 2302 18 45475 47 10 3414 53 113815 98 29 30 292S 71 1486 18 48090 55 49533 08 30 1165 74 46611 91 $1000000 00 $1000000 00 3 Per Cent.— 15 Years. Debentures bearing 3 per cent. Interest, Payable in 15 $1000000 00 3 Percent.— 2 Years. 3 1-2 Per Cent.- -20 Years. Deben tures bearir g 3 per cent, ible in 20 Debentures bearin g 3i per cent. In ierest, Pay. Nearly Insta Yearly Instalments. Interest, Pay. ible in 20 1 lments. Yearly Instalments. EQU AL ANNUAL $67,215 PAYMENT, .71 EQUAL ANNUAL PAYMENT, $83,766.58 EQUAL ANNUAL $70,361 PAYMENT, .08 Each Year. Interest. Principal. Each Year. Interest. Principal. Kaeh Year. Interest. Principal. 1 $30000 00 $37215 71 1 $30000 00 $53766 58 1 $35000 00 $35361 08 2 28883 53 38332 18 2 28387 00 55379 58 2 33762 36 36598 72 3 27733 56 39482 15 3 26725 61 57040 97 3 32481 41 37879 67 4 26549 10 40666 61 4 25014 39 58752 19 4 31155 62 39205 46 5 25329 10 41886 61 5 23251 82 60514 76 5 29783 43 40577 65 e 24072 50 43143 21 6 21436 38 62330 20 6 28363 21 41997 87 7 22778 20 44437 51 7 19566 47 64200 11 7 26893 28 43467 80 8 21445 08 45770 63 8 17640 47 66126 11 8 25371 91 44989 17 9 20071 96 47143 75 9 15656 68 68109 90 9 23797 29 46563 79 10 18657 64 4S.-.5S 07 10 13613 39 70153 19 10 22167 56 48193 52 11 17200 90 50014 81 11 11508 79 72257 79 11 20480 78 49880 30 12 15700 46 51515 .25 12 9341 06 74425 52 12 18734 97 51626 11 13 14155 00 53060 71 13 7108 29 76658 29 13 16928 06 53433 02 14 12563 18 54652 53 14 4808 54 78958 04 14 15057 90 55303 18 15 10923 60 56292 11 15 2439 81 81326 77 15 13122 29 572::s 79 16 9234 84 57980 87 16 11118 94 59242 14 17 7495 41 5703 80 59720 30 61511 91 $1000000 00 17 18 9045 46 6899 41 61315 62 18 63461 67 19 3858 45 63357 26 19 4678 26 65682 82 20 1957 89 1 65257 82 20 2379 46 67981 62 l$1000000 00 $1000000 00 3 Per Gent.— 25 Years. 3 l--. Per Cent. ."> Years. S 1-2 Per Cent- -30 Years Debent ires bearin ,' 3 per cent. Debentures bearing 3$ per cent. Debentures bearing 3i per cent. Interest, l'.iv. 1 >li- in 25 [nterest, Payable in 5 . Interest, Payable in 30 \ early Insta incuts. PAYMENT. Yearly Instalments. EQUAL ANNUAL PAYMENT, EQVJ early Instalments. EQUAL ANNUAL lL annual PAYMENT. .$57.427. ss. $221,481.38 $54 371,34. Each Year. Interest. Principal. Kuril Year. Interest. Principal. Each \' ear. Interest. Principal. 1 $30000 00 $27427 88 1 • §35000 00 $186481 38 1 $35000 00 $19371 34 2 26177 16 28250 72 2 28473 15 193008 23 2 34322 00 20049 34 3 28329 hi 2! M Mis 24 3 21717 86 199703 52 3 33620 28 20751 06 4 27456 09 29971 19 4 14726 14 206755 24 4 32893 99 21477 35 5 26557 55 30870 33 5 7489 75 213991 63 5 32142 28 22229 06 6 25631 44 21077 .".,") 31796 44 32750 33 6 31304 26 23007 08 $1000000 00 7 30559 02 2972.') 59 28862 98 23812 32 24645 75 25508 36 8 9 23095 04 22683 06 33732 84 34744 82 3 1-2 Per Tent.— 10 Years. 8 9 10 ■_'ltiin 71 357S7 17 Debentures bearing 3£ per cent. 10 27970 19 2ii40l 15 11 20567 10 36860 78 Interest, Payable in 10 11 27046 I-". 27325 19 12 19461 27 37966 61 Y early Instalments. 12 • 26089 77 28281 57 13 14 18322 27 17149 11 39105 61 40278 77 EQUAL ANNUAL PAYMENT, 13 14 25099 91 24075 41 29271 43 30295 93 15 15940 74 11696 13 41487 14 42731 75 S);i^0,"Z41..5i. 15 16 23015 05 21917 58 31356 29 16 Each Interest. Principal. 32453 76 17 13414 18 44013 70 Year. 17 20781 70 33589 64 18 19 12093 77 10733 74 45334 11 46694 14 18 19 19606 06 18389 28 34765 28 35982 06 1 $35000 00 $85241 37 20 9332 92 48094 96 2 32016 55 88224 82 20 17129 91 37241 43 21 7890 07 49537 81 3 28928 68 91312 69 21 15826 46 38544 88 22 6403 93 51023 95 4 25732 74 94508 63 22 14477 39 39893 95 23 4873 22 52554 66 5 22424 94 97816 43 23 13081 10 41290 24 24 3296 5S 54131 30 6 19001 36 101240 01 24 11635 95 42735 39 25 1673 13 55754 75 7 15457 96 104783 41 25 10140 20 44231 14 8 9 11790 54 7994 76 108450 83 112246 61 26 27 8592 11 6989 84 45779 23 $1000000 00 47381 50 10 4066 17 116175 20 28 5331 48 49039 86 3 1- JPerCent,- -25 Years. 29 30 3615 09 1839 17 50756 25 52532 17 Debent ures bearin g 3i per cent. $1000000 00 In terest, Pa}- l t early Insta ible in 25 lments. 1 31 2 Per Cent.— 15 Y ears. $1000000 00 Debent In ures bearing 3A per cent, terest, Payable in 15 EQD \L ANNUAL PAYMENT, 4 Per Cent- JO Years. $60,674 .04 t Nearly Instalments. Debentures bearir g 4 per cent. Each Year. Interest. Pav< ible in 20 Interest. Principal. EQU AL ANNUAL PAYMENT, $86,825.08 Nearly Instalments. 1 s:;.-,i ii mi mi $25674 04 EQUAL ANNUAL $73,581. PAYMENT, 2 34101 41 33171 37 32208 77 26572 63 27502 67 28465 27 Each Year. Interest. Principal. /5. 3 4 Each Year. Interest. Principal. 5 6 31212 4!t 31 11, SI 33 29461 55 30492 71 1 $351100 00 33186 12 $51825 08 53638 96 2 1 $40000 00 $33581 75 7 29114 o«.i 31559 95 3 31308 76 55516 32 2 38656 73 34925 02 8 28009 -lit 32664 55 4 29365 68 r.7459 40 3 37259 73 36322 02 9 •JIM ill 23 33807 81 5 27354 61 59470 47 4 35806 85 37774 90 10 25682 96 31991 08 6 25273 14 61551 94 5 3429.". 85 39285 90 11 24458 26 36215 78 7 231 IS 82 03706 26 6 32724 41 40857 34 12 23190 72 37483 32 8 20S89 II 6593r. 97 7 31090 11 424! 11 04 13 21878 80 38795 24 9 isr.sl 35 68243 73 8 29390 45 44191 30 14 20520 97 40153 07 10 16192 82 70632 26 9 27022 SI 4595S 91 15 19115 61 U558 43 11 13720 69 73104 39 10 25784 15 47797 30 16 I70.il H7 43012 97 12 11162 03 75663 05 11 23S72 56 49709 19 17 Mil.-,:, (il 44518 i:i 13 8513 S3 78311 25 12 21 ssi 19 51697 66 18 1 1597 17 46076 57 14 r.772 93 Slo.VJ 15 13 [9816 29 537<>5 46 19 12984 7M 17689 25 15 2930 31 838SS 77 14 L7665 07 .-..-.916 08 20 21 ii3ir. (it; 9588 12 7800 M 19358 38 51085 92 52873 93 1 - 15429 03 13102 92 58152 72 60478 S3 S no on 16 22 17 10683 77 62897 98 23 5949 •"'••; 54724 51 is si 07 85 05 113 91 24 1034 17 66639 87 19 .-..-..-.1 29 68030 47 25 2(ir. 1 97 58622 07 $1000000 00 20 2830 07 70751 69 $1000000 00 4 Per Cent.— 5 Years Debentures bearing 4 per cent. Interest, Payable in 5 Yearly Instalments. EQUAL ANNUAL PAYMENT, $224,627.11. 4 Per tent. 35 Years. Debentures bearing 4 per cent. Interest, Payable in 25 Yearly Instalments. EQUAL ANNUAL PAYMENT, $64,011.96. 4 Per tent.— 30 Years. Debentures bearing 4 per cent. Interest, Payable in 30 Yearly Instalments. EQUAL ANNUAL PAYMENT, $57,830.10. y aC Interest. Principal. $40000 00 32614 92 24934 42 16946 71 8639 50 Year Interest. Principal. $184627 11 192012 19 199692 69 207680 40 215987 61 $1000000 00 4 Per Ce»t.— 10 Years. Debentures bearing 4 per cent, Interest, Payable in 10 Yearly Instalments. EQUAL ANNUAL PAYMENT, $123,290.95. Each Year. Interest. $40000 00 36668 37 33203 46 29599 96 25852 33 21954 78 17901 33 13685 75 9301 54 4741 96 Principal. $83290 95 86622 58 90087 49 93690 99 97438 62 101336 17 105389 62 109605 20 113989 40 118548 98 SUM 39039 52 38040 62 37001 77 35921 36 34797 74 33629 17 32413 86 31149 94 29835 46 28468 40 27046 66 25568 05 24030 29 22431 01 20767 77 19038 01 17239 05 15368 13 13422 38 11398 79 9294 27 7105 56 4829 30 2462 00 $24011 96 24972 44 25971 34 27010 19 28090 60 29214 22 30382 79 31598 10 32862 02 34176 50 35543 56 36965 30 38443 91 39981 67 41580 96 43244 20 44973 96 46772 92 48643 84 50589 59 52613 18 54717 70 56906 41 59182 67 61549 97 $1000000 00 $1000000 00 4 Per Cent.— 15 Years Debentures bearing 4 per cent. Interest, Paj'able in 15 Yearly Instalments. 4 1-3 Per Cent.— 35 Years. Debentures bearing 4^ per cent, Interest, Payable in 25 Yearly Instalments. EQUAL ANNUAL PAYMENT, $67,439.03. EQUAL ANNUAL PAYMENT. $89,941.10 Each Year. Each Year. Interest. $40000 00 38002 36 35924 81 33764 16 31517 08 29180 12 26749 68 24222 02 21593 26 18859 34 16016 07 13059 07 9983 79 6785 50 3459 28 Principal. $49941 10 51938 74 54016 30 56176 94 58424 03 60760 98 63191 43 65719 08 68347 85 71081 76 73925 03 76882 03 79957 31 83155 60 86481 82 $1000000 00 Interest. $45000 00 43990 25 42935 05 41832 37 40680 07 39475 92 38217 58 36902 61 35528 47 34092 50 32591 91 31023 78 29385 10 27072 67 25883 19 24013 17 22059 01 20016 91 17882 91 15652 89 13322 51 10887 27 8342 44 5683 09 2904 08 Principal. $22439 03 23448 78 24503 98 25606 66 26758 96 27963 11 29221 45 30536 42 31910 56 33346 53 34847 12 36415 25 38053 93 39766 36 41555 84 43425 86 453SO (12 47422 12 49556 12 51786 14 54116 52 56551 76 59096 59 61755 94 64534 95 Year 1 Interest - Principal. sin to 39286 80 38545 07 37773 66 36971 41 36137 06 35269 34 34366 90 33428 38 32452 31 31437 20 30381 48 29283 54 28141 67 26954 14 25719 10 24434 66 23098 84 21709 59 20264 77 18762 16 17199 44 15574 21 13883 98 12126 13 10297 97 8396 69 6419 35 4362 92 2224 23 $1783010 1854330 1928503 2005644 20S5S69 2169304 22560 76 23463 20 24401 72 25377 79 26392 90 27448 62 28546 56 29688 43 30875 96 32111 00 33395 44 34731 26 36120 51 37565 33 39067 94 40630 66 42255 89 43946 12 45703 97 47532 13 49433 41 51410 75 53467 18 55605 87 $1000000 00 4 1-3 Per Cent.— 30 Years. Debentures bearing 4^ per cent. Interest, Payable in 20 Yearly Instalments. EQUAL ANNUAL PAYMENT. $76,876.15. Each Year. $1000000 00 Interest. $45000 00 43565 58 42066 60 40500 17 38863 26 37152 68 35365 12 33497 12 31545 07 29505 17 27373 47 25145 85 22817 99 20385 37 17843 29 15186 81 12410 79 9509 84 6478 36 3310 46 Principal. $31876 15 33310 57 34809 55 3637."» 98 38012 89 39723 47 41511 03 43379 03 45331 08 47370 98 49502 68 51730 30 54058 16 56490 78 59032 86 61689 34 64465 36 67366 31 70397 79 73565 69 $1000000 00 4 1-2 Per Cent.— 5 Tears. Debentures bearing 4.\ per cent. Interest, Payable in S Yearly Instalments. EQUAL ANNUAL PAYMENT, $227,791.64 4 1-2 Tor Cent.— 30 Years. Debentures bearing 4\ per cent. Iiit'-n-sl , l'ayalilr in 30 Yearly Instalments. EQUAL ANNUAL PAYMENT, $61,391.55. 5 Per tent.— 5 Years. Debentures bearing 5 per cent. Interest, payable in 5 Yearly Instalments. EQUAL ANNUAL PAYMENT. S'230,974.80. Each Year. Interest. 845000 (Ml 36774 38 28178 60 19196 01 SlSii'l 21 Principal. $182791 64 191017 26 199613 04 208595 63 217982 43 51000000 00 4 1-2 I'er Cent.— 10 Years. Debentures bearing 4i per cent Interest, Payable in 10 Yearly Instalments. EQUAL ANNUAL PAYMENT, $126,378.83. Each Year. Interest. $45000 00 41337 95 37511 11 33512 07 29333 06 24966 00 20402 43 15633 49 10649 95 5442 15 Principal. §81378 83 85040 87 88867 71 92866 75 97045 76 101412 82 105976 39 110745 33 115728 87 120936 67 SlOOOl 10 4 1-2 Per Cent —15 Years. Debentures bearing 4i per cent Interest, Payable in 15 Yearly Instalments. EQUAL ANNUAL PAYMENT, 893,113.81. Each Year. Interest. $45000 00 42834 88 4(1572 33 38207 96 35737 20 33155 25 30457 L2 27637 56 24691 13 21612 11 18394 54 15032 17 l l ;, I s 61 1 7846 71 4009 69 Principal. $48113 81 50278 93 52541 48 54905 85 57376 61 59958 56 62656 69 65476 25 68422 68 7150] 70 7 17 III 27 78081 64 81595 31 85267 I" 89104 L2 $1000000 00 Y^ 1 Interest. Principal. $45( Mil 1 1262 39 43491 57 42686 "7 41844 33 40964 71 40045 50 39084 93 38081 13 37032 16 35935 99 34790 49 33593 44 32342 52 31035 32 29669 29 28241 78 26750 04 25191 18 23562 16 21859 83 20080 91 18221 93 16279 30 14249 24 12127 84 9910 97 7594 35 5173 47 2643 66 |^J Interest. $16391 55 17129 16 17899 98 18705 48 19517 22 20426 84 21346 05 22306 62 23310 42 24359 39 25455 5(5 26601 06 27798 11 29049 03 30356 23 31722 26 33149 77 34641 51 36200 37 37829 39 39531 72 41310 64 43169 62 45112 25 47142 31 49263 71 51480 58 53797 20 56218 08 58747 89 85UI) i 40951 26 31 150 09 21473 85 10998 80 Principal. SI 80974 80 190023 54 199524 71 2i 1951 Ml 95 219976 00 ! 1000000 00 5 Per Cent.— 10 Years. Debentures bearing 5 per cent. Interest, Payable in 10 Yearly Instalments. EQUAL ANNUAL PAYMENT, $129,504.58. sioooooo no 5 Per Cent.— 20 Years. Debentures bearing 5 per cent. Interest, Payable in 20 Yearly Instalments. EQUAL ANNUAL PAYMENT, ssi »,242. 59. Each Year. Interest. $50000 00 48487 87 ^6900 14 45233 02 43482 54 41644 53 39714 63 37688 23 35560 52 33326 41 30! ISO 60 28517 50 25931 25 2321.". 68 20301 31 1737U 42 I 1221 i M 10! 120 03 7460 20 382] (is Principal. $30242 59 31754 72 33342 45 35009 57 36760 05 38598 06 40527 96 42554 36 44682 07 46916 is 49261 99 51725 0!) 54311 34 .-.7(120 ill 59878 25 62872 17 66015 78 69316 56 727S2 39 70121 51 SlOOOOOO 00 Each Year. Interest. Principal. 1 $50000 00 $79504 58 2 46024 77 83479 81 3 41850 78 87653 80 4 37468 09 92036 49 5 32866 27 96638 31 6 28034 35 101470 22 7 22960 84 106543 73 8 17633 65 111870 92 9 12040 11 117464 46 10 6166 89 123337 68 $1000000 00 5 Per Cent.— 15 Years. Debentures bearing 5 per cent. Interest, Payable in 15 Yearly Instalments. EQUAL ANNUAL PAYMENT, $96,342.29. Each Year. Interest. sr.oooo oo 47682 89 45249 92 42695 30 40012 95 371! 16 48 3123!) 19 31134 04 27S73 63 24450 19 20855 59 1 70s I 25 131 is 20 8956 99 4587 73 Principal. $46342 29 48659 40 51092 37 53646 99 5032!) 34 59] »:> si 02103 10 65208 25 68468 66 71892 10 75486 70 79201 04 S3224 09 87385 30 91754 56 $1000000 oo 5 Deben In Per Cent.— 25 Years. Aires bearing 5 per cent, terest, Payable in 25 Nearly Instalments. JAL ANNUAL PAYMENT, $70,952.46. 5 Per Cent.— 30 Years. Debentures bearing 5 per cent. Interest, Payable in .*}(l Yearly Instalments. EQUAL ANNUAL PAYMENT, $65,051.44. 5 1- Deben In EQl 1 Per Cent.— 5 Yearn, urea bearing 5i per cent, terest, Payable in 5 [early Instalments. EQl AL ANNUAL PAYMENT, $234,176.44. Each Year . Interest. Principal. Each Year. Interest. Principal. Each Year Interest. Principal. 1 2 3 4 5 6 7 $50000 00 48952 38 47852 38 46697 37 45484 62 44211 23 42874 16 41470 25 39996 14 38448 32 36823 11 35116 65 33324 86 31443 '48 29468 03 27393 81 25215 87 22929 04 20527 87 18006 64 15359 35 12579 70 9661 06 6596 49 3378 69 $20952 46 22000 08 23100 08 24255 09 25167 84 26741 23 28078 30 29482 21 30956 32 32504 14 34129 35 35835 81 37627 60 39508 98 41484 43 43558 65 45736 59 48023 42 50424 59 52945 82 55593 11 58372 76 61291 40 64355 97 67573 77 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 $.".0000 00 49217 43 48457 23 47627 52 46756 33 45841 57 44881 08 43872 56 42813 61 41701 72 40534 24 39308 38 38021 22 36669 72 35250 63 33760 59 32196 05 30553 28 28828 37 27017 21 25115 50 23118 71 21022 07 18820 60 16509 06 14081 94 11533 46 8857 56 6047 87 3097 69 $15051 44 15804 01 16594 21 17423 92 18295 11 19209 87 20170 36 21178 88 22237 83 23349 72 24517 20 25743 06 27030 22 28381 72 29800 81 31290 85 32855 39 34498 16 36223 07 38034 23 39935 94 41932 73 44029 37 46230 84 48542 38 50969 50 53517 98 56193 88 59003 57 61953 75 $1000000 00 1 2 3 4 5 $55000 00 45145 30 34748 59 23780 <•<) L2208 25 $179176 44 189031 14 199427 85 210396 38 221968 19 $1000000 00 8 9 10 11 12 5 1- Debent In EQU £ Per Cent.— 10 Years. ures bearing 5.^ per cent. /erest, Payable in 10 Nearly Instalments. 13 14 15 AL ANNUAL PAYMENT, $132,667.77. 16 17 Each Year. Interest. Principal. 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 $55000 00 50728 28 46221 60 41467 06 36451 02 31159 10 25576 13 19686 09 13472 09 6916 33 $77667 77 81939 49 86446 17 91200 71 96216 75 101508 67 107091 64 112981 68 $1000000 00 119195 68 125751 44 5 1- i Per Cent. ures bearin terest, Paya iTearly Insta —25 Years. 1 5^ per cent, ble in 25 lments. PAYMENT, 36. Debent $1000000 00 1 51- Debem In EQU i Per Cent.— 15 Years. ures bearing 5| per cent. 4.L ANNUAL $74,549. EQU 5 1-2 Debent In EQU Per Cent - ures bearin, .erest, Paya "early Insta iL ANNUAL $83,679. 20 Years r :H per cent. Lie in 20 lments. PAYMENT, 33. terest, Payable in 15 Nearly Instalments. Each Year. Interest. Principal. AL ANNUAL PAYMENT, $99,625.60. $55000 00 53924 79 52790 44 51593 70 50331 14 48999 14 47593 87 46111 32 44547 23 42897 11 41156 24 39319 62 37381 98 35337 78 33181 14 30905 89 28505 50 25973 08 23301 39 20482 75 17509 09 14371 87 11062 11 7570 31 3886 46 $19549 36 20624 57 21758 92 22955 66 24218 22 25550 22 26955 49 28438 04 30002 13 31652 25 33393 12 35229 74 37167 38 39211 58 41368 22 43643 47 46043 86 48576 28 51247 97 54066 61 57040 26 60177 48 63487 24 66979 04 70662 89 1 2 Each Year. Interest. Principal. 3 Each Year. Interest. Principal. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 $55000 00 52545 60 49956 19 47224 38 44342 31 41301 73 38093 92 34709 67 31139 30 27:<72 ->.l 23398 63 1921 Hi 15 147S3 08 10116 74 5193 75 $44625 60 47080 00 49669 41 52401 22 55283 29 58323 87 61531 68 64915 93 68486 30 72253 05 76226 97 80419 45 84842 52 89508 86 94431 85 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 $55000 00 53422 64 51758 52 50002 87 48150 67 46196 59 44135 (14 41960 11 39665 "'•"> .S7244 79 34690 89 31996 53 29153 97 26155 08 22991 25 19053 40 16131 97 12416 87 S197 43 4362 43 $28679 33 3H256 69 31920 81 33676 46 35528 66 37482 74 39544 20 41719 22 44013 78 46434 54 48988 1 1 51682 80 54525 36 57521 25 60688 08 64025 93 67547 36 71262 46 751 SI 90 79316 90 20 21 22 23 24 25 $1000000 00 $1000000 00 $1000000 00 5 1-', Percent.— 30 fears 6 1 Vr Cent.— 6 Years. G 1 er Cent— 25 Years. Debentures bearing 5£ per cent. Debentures bearing G per cent Debentures bearing 6 per cent. Interest, Payable in 30 Interest, payable in 5 Interest, Paya tie in 25 Y early lust a! ments. WYMKNT. Y EQU early Instalments. Yearly [natal EQUAL ANNUAL ] ments. EQIJ \i- ANNUAL \L ANNUAL PAYMENT. •AYMENT, 168,805.39 §237,396.40. §78,226. 72. Bach \ ear. Interest. Principal Each Year. Interest. Principal. Each Year. Interest. Principal. j -.V §1 3805 39 1 £60000 00 §177396 40 1 §60000 00 §18226 72 2 54240 70 L4564 69 2 49356 22 1 ssi 140 18 2 58906 40 19320 32 3 53439 65 L5365 74 3 38073 80 199322 60 3 57747 18 20479 54 4 52594 .V! 16210 86 4 20114 45 211281 95 4 505 IS 41 21708 31 5 51702 93 17102 Hi 5 L3437 53 223958 87 5 55215 91 23010 81 6 50762 30 18043 09 6 53835 26 24391 46 7 49769 93 19035 41 i SIIMMKIIII) (Ml 7 52371 77 50820 48 25854 95 27406 24 8 48722 98 20082 41 8 9 47(518 44 21186 95 G Per Cent.— 10 Years. 9 49176 10 29050 62 10 46453 Hi 22M52 23 Debentures bearing 6 per cent. 10 47433 06 30793 66 11 45223 79 23581 60 Interest, Payable in 10 11 45585 44 32641 28 12 43926 80 24878 59 Y r early Instalments. 12 43626 97 34599 75 42558 48 26246 91 13 41550 98 36675 74 13 14 41114 90 27690 49 EQUAL ANNUAL PAYMENT. 14 39350 44 38876 28 15 39591 92 29213 47 §135,867.96. 15 37017 86 41208 86 16 17 37985 18 36290 07 30820 -21 32515 32 16 17 34545 33 Ml 924 45 43681 39 46302 27 Each Interest. Principal. 18 34501 73 34303 66 Year. 18 19 20 29146 31 26201 48 23079 97 49080 41 52025 24 55146 75 19 20 32615 03 30624 56 36190 36 38180 83 1 §60000 00 §75867 96 21 22 28524 61 26309 17 40280 78 42490 22 2 3 55447 93 50622 72 80420 03 85245 24 21 22 19771 16 16203 83 58455 56 61962 89 23 24 23971 88 21506 03 44833 51 47299 36 4 5 45508 01 40086 41 90359 95 95781 55 23 24 12546 06 8605 22 65680 66 69621 50 25 18904 57 49900 82 6 34339 52 101528 44 25 4427 93 73798 79 16160 02 52645 37 7 28247 81 107620 15 26 27 L3264 53 55540 86 8 21790 60 114077 36 120922 00 128177 32 §1000000 00 28 29 10209 78 6987 02 3587 01 58595 61 61818 37 65218 38 9 10 14945 96 7690 64 6 Per Cent.— 30 Years. Debentures bearing 6 per cent. Interest, Payable in 30 30. 561000000 00 381000000 00 ■5 EQU Nearly Instalments. 6 Deben Per Cent.— 15 Years. ;ures bearing 6 per cent. AL ANNUAL c Percent.— 20 Years. PAYMENT, Deben area bearing 6 per cent, terest, Payable in 20 Nearly Instalments. In EQU terest, Payable in 15 §72,648.91. In Nearly Insta Iments. Each Year. Interest. Principal. EQU AL ANNUAL PAYMENT, AL ANNUAL PAYMENT, 1 160000 00 $12648 91 887,184.56. §102,962.77. 2 3 59211 07 58436 60 13407 84 14212 31 Eaeli Year. Interest. Principal. Each Year. Interest. Principal. 4 5 6 7 8 57583 86 5lifi7!» % 55721 82 64706 20 58629 63 15065 05 15968 95 16927 09 1 §60000 00 §27184 56 1 §60000 00 §42962 77 L7942 Tl L9019 29 2 58368 93 28815 63 2 57422 24 45540 53 9 524SS IS 20160 44 3 56639 99 30544 57 3 54689 81 48272 96 10 11 12 51278 85 49996 65 48637 51 21370 07 82658 27 24011 41 4 54807 32 32377 24 4 51793 43 51109 34 5 52864 68 34319 88 5 48723 27 54239 50 13 IT 196 S2 25459 10 6 50805 49 30379 07 6 45468 90 57493 87 14 15669 70 86979 22 7 B622 75 38561 M 7 42019 27 60943 50 15 16 44050 94 12335 07 28597 98 30313 85 8 16309 04 40875 52 8 38362 66 040110 1 1 17 40516 23 32132 69 9 13856 .".I 43328 05 9 34486 65 68476 12 18 88588 :.'T 84060 65 10 41256 82 45927 74 10 30378 08 72584 69 19 20 21 86544 'it 34378 38 32082 15 36104 28 B8270 54 10566 77 11 38501 L6 18683 10 11 26023 00 76939 77 12 35580 15 51604 II 12 21406 62 81556 15 22 29648 11 43IMH) 78 13 32483 89 54700 07 13 10513 25 86449 52 23 87068 09 46580 83 14 29201 85 57982 71 14 LI 326 28 91636 49 24 25 84833 24 21434 30 48315 68 51214 62 15 25722 s«t 61461 07 13 5828 ii! i 97134 68 86 18861 19 54887 50 Hi 22035 19 651 19 37 27 ir.iiu it ;,T. r »44 75 17 L8126 22 L3982 72 69058 34 73201 84 §1000000 00 28 2!) 30 11651 19 799] M 4112 81 60997 43 64657 28 18 68686 Tl 19 9590 62 77593 94 20 4934 98 82249 58 TllNHH Ill $1000000 00 PROOF OF ANNUITY PAYMENTS. To ascertain the amount of annual instalment or levy for repayment of a loan of any amount with yearly interest as given hereunder. Years. 2 per Cent. 2£ per Cent. 3 per Cent. 5 Divide amount of Loan by 4.7134 4.6458 4.5799 10 8.9826 8.7526 8.5302 15 12.8492 12.3814 11.9379 20 16.3514 15.5892 14.8775 25 19.5235 18.4244 17.4131 30 22.3965 20.9303 19.6004 Years. 3^ per Cent. 4 per Cent. 4i per Cent. 5 Divide amount of Loan by 4.5150 4.4518 4.3899 10 8.3166 8.1108 7.9127 15 11.5174 11.1184 10.7396 20 14.2124 13.5903 13.0080 25 16.4815 15.6221 14.8282 30 18.3920 17.2920 16.2889 Years. 5 per Cent. 5^ per Cent. 6 per Cent. 5 Divide amount of Loan by 4.3251 4.^703 4.2123 10 " 7.7217 7.5376 7.3601 15 « 10.3796 10.0376 9.7122 20 " 12.4622 11.9504 11.4699 25 « 14.0939 13.4139 12.7833 30 " " 15.3724 14.5338 13.7648 Purchasers of debentures and bonds always require to satisfy themselves that the annual payment upon the debentures which they are buying has been correctly calculated. The above table furnishes a quick and certain check as to this. Example: Debentures for $10,000 at 4 per cent, 20 years, requires an equal annual payment of $735.82. To prove this by the table given: $10,000^-13. 59Q3=$735-8ifV TABLE 3HOWINO THE ANNUAL INTEREST TO BE REALIZED FROM Stocks, Bonds and Debentures Bearing the interest given along the top, when purchased at the rate in the first or "price" column. Example: Stock paying annually 5 per cent if purchased at a 102 will net 4.90 per cent on the investment. Price. 3 per Cent. Si per Cent. 4 per Cent. per Cent. 5 per Cent. 6 per Cent. 7 per Cent. 50 6.00 7.00 8.00 9.00 10.00 12.00 14.00 55 5.45 6.36 7.27 8.20 9.09 10.90 12.72 60 5.00 5.83 6.66 7.50 8.33 10.00 11.66 65 4.61 5.38 6.15 7.00 7.69 9.23 10.76 70 4.28 5.00 5.71 6.43 7.14 8.57 10.00 75 4.00 4.67 5.33 6.00 6.66 8.00 9.33 80 3.75 4.37 5.00 5.62 6.25 7.50 8.75 85 3.52 4.12 4.70 5.29 5.88 7.05 8.23 90 3.33 3.88 4.44 5.00 5.55 6.66 7.77 95 3.15 3 68 4.21 4.73 5.26 6.31 7.36 96 3.13 3.64 4.16 4.69 5.21 6.25 7.29 97 3.09 3.61 4.12 4.64 5.15 6.19 7.21 98 3.06 3.57 4.08 4.59 5.10 6.12 7.14 99 3.03 3.54 4.04 4.54 5.05 6.06 7.07 100 3.00 3.50 4.00 4.50 5.00 6.00 7.00 101 2.97 3.46 3.96 4.45 4.95 5.94 6.93 102 2.94 3.43 3.92 4.41 4.90 5.88 6.86 103 2.91 3.40 3.88 4.36 4.85 5.82 6.79 104 2.89 3.36 3.84 4.32 4.80 5.77 6.73 105 2.86 3.33 3.81 4.28 4.76 5.71 6.66 110 2.73 3.20 3.63 4.10 4.54 5.45 6.36 115 2.60 3.00 3.47 3.91 4.35 5.21 6.08 120 2.50 2.92 3.33 3.75 4.16 5.00 5.83 125 2.80 3.20 3.60 4.00 4.80 5.60 130 2.70 3.08 3.4(5 3.84 4.61 5.38 135 2.65 2.95 3.33 3.70 4.44 5.18 140 2.85 3.21 3.57 4.28 5.00 145 2 76 3.10 3.45 4.13 l . 82 150 2.66 3.00 3.33 4.00 4.66 Rule to find the value at any rate not included in this table: Multiply the rate per cent the stock is bearing by 100 and divide by the price you wish to pay. The result will give the interest the investment will realize; or, divide by the rate of interest you wish the investment to realize, and the result will give the price to be paid for the stock. Illustration: Stock bearing 4 per cent is wanted to realize 5 per cent: 4x 100 = 400-^5 = 80, the price .it which you must buy to realize 5 per cent; or etock bearing 6 per cent is porchaaed ut in;,, what will it realize: Ox 100 = 000-^105 = 5.70 per cent. COMPOUND INTEREST TABLE. Compound Interest Table, One Dollar Principal. — The sum to which one dollar principal will increase, at compound interest, in any number of years, not exceeding forty, at 2, 2i, 3, 3^, 4, 4^, 5, 5^ and 6 per cent per annum. 09 2 2i 3 3£ 4 ih 5 54 6 c3 (0 per Cent. per Cent. per Cent. per Cent. per Cent. per Cent. per Cent. per Cent. per Cent 1 1.020 1.025 1.030 1.035 1.040 1.045 1.050 1.055 1.060 o 1.040 1.051 1.061 1.071 1.082 1.092 1 . 103 1.113 1.124 3 1.061 1.077 1.093 1.109 1.125 1.141 1.158 1 174 1.191 4 1.082 1.104 1 . 126 1.147 1.170 1.193 1.216 1.239 1.262 5 1.104 1.131 1.159 1.188 1.217 1.246 1.276 1.307 1.338 6 1.126 1.160 1.194 1.229 1.266 1.302 1.340 1.379 1.419 7 1.148 1.189 1.230 1.272 1.316 1.361 1.407 1.455 1.504 8 1.171 1.218 1.267 1.317 1.369 1.422 1.477 1.535 1.594 9 1.195 1.249 1.305 1.363 1.423 1.486 1.551 1.619 1.689 10 1.219 1.280 1.344 1.411 1.480 1.553 1.629 1.708 1.791 11 1.243 1.312 1.384 1.460 1.539 1.623 1.710 1.802 1.898 12 1.268 1.345 1.426 1.511 1.601 1.696 1.796 1.901 2.012 13 1.293 1.378 1.469 1.564 1.665 1.772 1.886 2.U06 2.133 14 1.319 1.413 1.513 1.619 1.732 1.852 1.980 2 116 2.261 15 1.345 1.448 1.558 1.675 1 802 1.935 2.079 2 . 232 2.397 16 1.372 1.484 1.605 1.734 1.874 2.022 2.183 2.355 2.540 17 1.400 1.521 1.653 1.795 1.949 2.113 2.292 2.485 2.693 18 1 . 428 1.560 1.703 1.858 2.027 2.208 2.407 2.621 2.854 19 1.456 1.599 1.754 1.923 2.118 2.308 2.527 2.766 3.026 20 1.485 1.638 1.806 1.990 2.192 2.412 2.653 2 918 3.207 21 1.515 1.679 1.860 2.060 2.280 2.520 2.786 3.078 3.400 22 1.546 1.721 1.916 2.132 2.371 2.634 2.925 3.248 3.604 23 1.576 1.764 1.974 2.206 2.466 2.752 3.072 3.426 3.820 24 1.608 1.809 2.033 2 . 284 2.565 2.S76 3.225 3.615 4.049 25 1.640 1.853 2.094 2.363 2.667 3.005 3.386 3.813 4.292 26 1.673 1.900 2.157 2 . 446 2.774 3.141 3.556 4.023 4.549 27 1 . 706 1.948 2 221 2.532 2.885 3.282 3.733 4.244 4.822 28 1.741 1.996 2 . 288 2.620 3.000 3.430 3.920 4.478 5.112 29 1.775 2.046 2.357 2.712 3.120 3.584 4.116 4 . 724 5.418 30 1.811 2.097 2.428 2.807 3.245 3.745 4.322 4.984 5.743 31 1.847 2.150 2.500 2.905 3.375 3.914 4.538 5.258 6.088 32 1.884 2.204 2.575 3.000 3.510 4.090 4.765 5.547 6.453 33 1.922 2.259 2.652 3.111 3.650 4.274 5.003 5.852 6.841 34 1.960 2.315 2.732 3.221 3.796 4.466 5.253 6.174 7.251 35 1.999 2.373 2.814 3.333 3.948 4.667 5.516 6.514 7.686 36 2.039 2.433 2.898 3.450 4.106 4.877 5.792 6.872 8.147 37 2.080 2.493 2.985 3.571 4.270 5.097 6.081 7.250 8.636 38 2 1 22 2.556 3.075 3 696 4.441 5.326 6.385 7.649 9.154 39 2. 164 2.620 3.167 3.825 4.619 5.56G 6.705 8.069 9.704 40 2.207 2.685 3.262 3.960 4.803 5.816 7.040 8.513 10.286 To find the sum to which a given amount will increase at compound interest, at any of the rates per cent and number of years expressed in the above table: Multiply the given amount by the sum to which one dollar will increase at the rate and for the number of years required, marking off as many decimals from the product as there are decimals in the multiplier and multiplicand. SINKING FUND INVESTMENT TABLE. Compound Interest Table— $1.00 per annum, deposited at end of year. This table gives the sum to which one dollar per annum, paid at the end of each year, will increase at compound interest, in any number of years up to forty, at 2, 2£, 3, 3|, 4, 4£, 5, 5£ and 6 per cent per annum. 00 2 2i 3 H 4 *h 5 54 6 a) 3 per Cent. per Cent. per Cent. per Cent. per Cent. per Cent. per Cent. per Cent. ser Cent i 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2 2.020 2.025 2.030 2.035 2.040 2.045 2.050 2 055 2.060 3 3.060 3.076 3.091 3.106 3.122 3.137 3.153 3.108 3.184 4 4.122 4.153 4.184 4.215 4.246 4.278 4.310 4.342 4.375 5 5.204 5.256 5.309 5.362 5.416 5.471 5.526 5.581 5.637 6 6 308 6.388 6.468 6.550 6.633 6.717 6 802 6.888 6.975 7 7.434 7.547 7 662 7.779 7.898 8.019 8.142 8.267 8.394 8 8.583 8.736 8.892 9.052 9.214 9.380 9.549 9.722 9.897 9 !) . 755 9.955 10.159 10.368 10.583 10.802 11.027 11.256 11.491 10 10.949 11.203 • 11.464 11.731 12.006 12.288 12.578 12.875 13.181 11 12.168 12.483 12 808 13.142 13 486 13.841 14.207 14.583 14.972 12 13.412 13.796 14.192 14.602 15.026 15.464 15.917 16.385 16.870 13 14.680 15.140 15.618 16.113 10.627 17.160 17.713 18.287 18.882 14 15.973 16.519 17.080 17.677 18.292 18.932 19.599 20.292 21.015 15 17.293 17 932 18.598 19.296 20.024 20.784 21.579 22.409 23.276 16 18.639 19.380 20.157 20.971 21.825 22.719 23.657 24.641 25.673 17 20.012 20.864 21.762 22.705 23.698 24.742 25.840 26.996 28.213 18 21.412 22.386 23.414 24.499 25.645 20.855 28.132 29.481 30.906 19 22.840 23.946 25.117 20.357 27.671 29.064 30.539 32.103 33.760 20 24.297 25.545 26.870 28.279 29.778 31.371 33.066 34.868 36.786 21 25.783 27.183 28.076 30.209 31.969 33.783 35.719 37.786 39.993 22 27.299 28.863 30.537 32.329 34.248 36.303 38.505 40.864 43.392 23 28.845 30.584 32.453 34.400 36.618 38.937 41.430 44.112 46.996 24 30.422 32.349 34.420 36.066 39.083 41.689 44.502 47.538 50.816 25 32.030 34.158 36.459 38.950 41.646 44.565 47.727 51.153 54.865 26 33.671 36.012 38 . 553 41.313 44.312 47.571 51 113 54.966 59.156 27 35.344 37.912 40.709 43.759 47.084 50.711 54.669 58.989 63.706 28 37.051 39.860 42.931 46.290 49.968 53.993 58.403 63.233 68 528 29 38.792 41.856 45.219 48.911 52.966 57.423 62.323 67.711 73.640 30 40.568 43.902 47.575 51.622 56.085 61.007 66.439 72.435 79.058 31 42.379 46.000 50.003 54.429 59.328 64.752 70.761 77.419 84.802 32 44.227 48.150 50.503 57.334 62.701 68.666 75.299 82.677 90.890 33 46.111 50.354 55.078 60.341 66.210 72.756 80.064 88.225 96.343 34 48.034 52.013 .-.7.730 63.453 69.858 77.030 85.067 94.077 104.184 35 49.994 54.928 60.462 66.674 73.652 81.497 90.320 100.251 111. 435 36 51.994 57.301 63.276 70.007 77.598 86.164 95.836 106.765 119.121 37 54.084 59.734 66.174 73.458 81.702 91.041 101.628 113.637 127.268 38 56.115 37.222 69.159 77.029 85.970 96.138 107.709 120.887 135. 904 39 58.237 63.478 72.234 80.725 90.409 101.464 114.095 128.636 145.058 40 60.402 63.740 75.401 84.550 95.026 107.030 120.800 136.606 154.762 To ascertain the amount which should be in a sinking fund at any given time, multiply the annual deposit by the amount which $1.00 earns in the time required at the rate per cent as found in the above table. Example: Required to find amount which should be in a sinking fund (maturing in 20 years) at the end of the tenth year; annual deposil $250, at 3 per cent. One dollar for ten yean at 3 percent produces $11,464, and tins multiplied by $250 = $2866.00, the amount which will be in the fund if it has been maintained at its proper standard. SINKING FUND TABLE. Amounts to be set aside and invested yearly, for the following number of years respectively, at any rate of interest from 2 to 6 per cent, in order to produce ($1,000,000) one million dollars. 'Interest earned payable yearly. RATE OF INTEREST. $ 19-2158 158526 134512 116509 102515 91326 57825 41156 31220 24649 16555 11823 8767 6667 5855 5160 4406 3202 2i 41 191200 00 1 157534 44 $ 183707 149817 125652 107564 93529 82330 49020 32719 23214 17098 9918 6060 3811 2439 1960 1578 1027 1335(10 115484 101481 90287 56788 40142 30235 23699 15677 11018 8035 6004 5225 4563 3511 2725 4i $ 182791 148878 124701 106609 92574 81378 48113 31876 22439 16391 9343 5602 3454 2165 1721 1370 873 558 2h % 190246 156549 132495 114467 100456 89258 55766 39147 29275 22777 14836 10258 7353 5397 4653 4026 3038 2311 22 $ 88 189298 $ t 181880 147945 123757 105661 91628 80436 47221 31050 21685 15709 8796 5174 3127 1919 1509 1188 740 462 155570 131497 113457 99440 88239 54759 38171 2833!) 21884 14031 9540 6720 4842 4135 3543 2621 1954 22 188354 841154597 46 130506 3 112456 98433 87230 53766 37215 27427 21019 13262 8865 180974 147017 122819 104721 90690 79504 46342 30242 20952 15051 8278 4776 2828 1699 1321 1029 627 383 6132 4336 3667 3111 2255 1646 51 $ 180073 146095 121888 103789 89760 78581 45477 29452 20240 14416 7786 4406 2555 1502 1156 890 530 316 34 $ 187415 153629 129522 111462 97435 86231 52788 36278 26539 20181 12527 8230 5589 3877 3247 2726 1936 1383 5* $ 32 179176 c ! $ 60 186481 97)152668 041128544 63 110476 55 96446 07 85241 58 51825 88 35361 33 25674 72 19371 11827 7633 5088 3460 2869 2384 1657 1159 51 31 5 185551 94 94 145178 120964 102864 88839 77667 44625 28679 19549 13805 7320 4061 2307 1327 1010 769 447 261 178284 144268 120046 101946 87926 76763 43787 27923 18878 13216 6879 3741 2081 1171 881 664 377 215 151712 127573 109498 95465 84261 50875 34462 24831 18587 11159 7074 4626 3084 2530 2081 1416 968 6 $ 177396 40 143362 63 119135 02 101035 95 87022 24 75867 42962 27184 56 18226 72 12648 92 6461 54 3444 29 1875 73 1033 13 768 67 572 55 318 37 177 36 $ c 184627 12 150761 91 126609 62 108527 84 94493 00 83290 95 49941 10 33581 75 24011 97 17830 10 10523 49 6550 20 4201 85 2745 07 2229 01 1814 08 1207 76 808 00 Explanatory: For amounts less than a million, the proportion of the above figures will give the required sum. Thus, for $20,000, payable in 20 years, the interest on the sinking fund assumed to be 3 per cent, take $37215.71 as that required for $1,000,000, and dividing by 100 we get $372.15| for $10,000, which multiplied by 2 = $744.3H, the amount required for $20,000. In other words, the annual sinking fund given in the above table, multiplied by the amount of the debentures and divided by 1,000,000, gives the sinking fund required. Attention is again called to the fact that it is unsafe to calculate on the sinking fund earnintr more than Savings Bank interest. SHORT TERM DEBENTURES. 9 Per Cent.— 2 Years. EQUAL ANM ai. PAYMENT, 1515,049.51. 3 Per Cent.— 2 Years. I.. ,n \i. wsi AL PAYMENT, $522,610.84 Per Cent.— 2 Years. l.i.H \1, ANNUAL PAYMENT, $530,196.07. Each Year. Interest. Principal. Kadi Year. Interest. Principal. Each Year. Interest. Principal. 1 o $30000 00 15221 68 $ 492610 84 507389 16 1 2 $40000 00 $ 490196 07 1 2 $20000 00 10099 02 $ 495049 51 504950 49 $1000000 00 $1000000 00 SI 000000 00 3 Per Cent. -3 Years. EQUAL ANNUAL PAYMENT, $353,530.36. 4 Per Cent.— 3 Years. 2 Per Cent. —3 Years. $360,348.53. EQUAL ANNUAL PAYMENT, $346,754.68 Year. Interest. Principal. Each Year. Interest. Principal. Interest. Principal. 1 2 3 $30000 00 2H294 08 lie". 17 00 s :{2:{.-,:«i 36 333236 28 343233 36 $1(100000 00 Each Year. 1 2 3 $40000 00 27186 05 13859 54 $ 320348 53 333162 48 346488 99 1 $20001 L3464 90 67W 14 $ 326754 68 333289 78 339955 54 2 sinoHioo nn 3 3 Per Cent.— 4 Years. EQUAL ANNUAL PAYMENT, $269,026.87. •$1000000 00 EQUAL ANNUAL PAYMENT, 2 Per Cent.- 4 Years. EQUAL ANNUAL PAYMENT, §262,623.64. Each Year. Interest. Principal. $275,490.24. Each Year. Interest. Principal. 1 3 4 $30000 00 22829 14 16443 26 7835 08 $ 239026 87 240197 73 253583 61 261191 79 Each Interest. Principal. Year 1 2 3 4 $40000 00 30580 39 20783 99 10596 ;>8 $ 235490 24 244909 85 254706 25 1 s-jnnnn mi 15147 52 10198 00 5149 04 $ 242623 64 217476 12 252425 (14 257474 60 2 3 $1000000 00 264893 66 4 3 1-2 Per Cent. -2 Years. EQUAL ANNUAL PAYMENT, $526,400.49. $1000000 O'l §1000000 00 4 1-2 Per Cent.— 2 Years. 2 1-2 Per Cent.— 2 Year*. EQ1 AL ANNUAL PAYMENT, $518,827.16. Each Year. Interest. Principal. $533,996.47. Each Year. 1 2 Interest. Principal. Each Interest. Principal. '^ ear. 1 2 $35000 00 17800 98 $ 491400 49 508599 51 $1000000 00 S45I 22992 94 $ 488996 47 511003 53 2 $25000 00 12654 32 $ 493827 16 506172 84 $1000000 00 slim nn 3 1-2 Percent.— 3 Years. EQUAL ANNUAL PAYMENT, $356,931.59. 4 1-2 l'er Cent.— 3 Years. 2 1-2 Per Cent.— 3 Years. EQUAL ANNUAL PAYMENT, $350,136.63. EQUAL ANNUAL PAYMENT. $363,773.86. Each Year. 1 2 3 Interest. $45000 00 30654 95 15666 63 Each Year. Interest. Principal. Each Year. Interest. Principal. Principal. 1 2 3 $25000 00 16871 58 8538 31 $ 325136 63 ' 333265 05 341598 32 1 2 3 $35000 00 2:;7:;2 39 12062 38 $ 321931 59 3331! Ml 20 344869 21 S|( (Mill (III $ 318773 86 3331 IS ill 348107 23 slum n nn $1000000 00 2 1 2 IVr (fn( 1 Vrars. BQ1 \i. ANN! w. PAYMENT, $265,817.62. 3 1-2 IVr Cent.— 4 fears. EQUAL wm \i- r\\ BIENT. $272,250 17. 1 1-8 l*er Cent.-4 Years. EQ1 \i. INN1 u. P \t \n;\r, $278,744,49. Each Sfear. Interest. Principal. Each Near. Interest. 1'iincipal. Each Year. interest. $45000 00 34481 49 23489 66 L2O08 8] Principal 1 2 8 4 $25000 00 L8978 56 12808 60 6482 32 | 240817 62 246838 06 253009 02 259335 30 1 2 3 4 $35 1 00 26696 21 18101 85 92(i2 49 - 237250 17 245553 93 2541 is 22 263(»I7 68 1 •_> 3 4 $ 233744 49 244263 no 255254 83 266737 68 $1000000 00 81000000 00 sinnoooo on 5 Percent.— a Years. EQUAL ANNUAL PAYMENT. $537,804.87, 5 1-2 Per Cent.— 2 Years. EQUAL ANNUAL PAYMENT. $541,518.00. 6 Per Cent. — 2 Years. EQUAL ANNUAL PAYMENT. $545,436.88. Kacli Year. Interest. Principal. Each Year. Ineerest. Principal. Each Year. Interest. Principal. 1 2 $50000 00 25609 74 $ 487804 87 512195 13 $1000000 00 1 2 $55000 00 28216 00 $ 486618 00 513382 00 1 2 $60000 00 30873 76 $ 485436 88 514563 10 $1000000 00 $1000000 00 5 Per Cent.— 3 Years. EQUAL ANNUAL PAYMENT. $367,208.56. 5 1-2 Per Cent.— 3 Years. EQUAL ANNUAL PAYMENT. $370,654.57. 6 Per Cent.— 3 Years. EQUAL ANNUAL PAYMENT. 8374,109.81. Each Year. Intarest. Principal. Each Year. Interest. Principal. Each Year. Interest. Principal. 1 2 3 $50000 00 34139 57 17486 11 $ 317208 56 333068 99 349722 45 1 2 3 $55000 00 37638 99 19324 72 $ 315654 57 333015 58 351329 85 1 2 3 $60000 00 41153 41 21176 02 $ 314109 81 332956 40 352933 79 $1000000 00 $1000000 00 $1000000 00 5 Per Cent.— 4 Years. EQUAL AXNUAL PAYMENT. $282,011.56. 5 1-2 Per Cent.— 4 Years. EQUAL ANNUAL PAYMENT. $285,294.82. C Per Cent.— 4 Years. EQUAL ANNUAL PAYMENT. $288,591.80. Each Year. Interest. Principal. Each Year. Interest. Principal. Year. Interest. Principal. 1 2 3 4 $50000 00 38399 42 26218 81 13428 01 $ 232011 56 243612 14 255792 75 268583 55 1 2 3 4 $55000 00 42333 78 28970 92 14874 58 $ 230294 82 242961 04 256323 90 270420 24 1 2 3 4 $60000 00 46284 50 31746 05 16336 65 $ 228591 80 242307 30 256845 75 272255 15 $1000000 00 $1000000 00 $1000000 00 PART V. Corporation Accounting. Corporation Accounting* CHAPTER I. a. a. General Description of Corporations and their Objects. WHAT IS A CORPORATION? A PRIVATE corporation is a collection of individuals under a special denomination authorized by law to act as one person for certain specified purposes, and endowed by law with the capacity of perpetual succession, so that the corporate body remains the same so long as it exists, notwithstanding the changes in its individual membership. Corporations are aggregate or sole. An aggregate corporation, as its name implies, consists of several persons united in one society, preserved by a succession of members. A corporation sole consists of only one person, who is made a body corporate and political, in order that he and his suc- cessors may possess that legal perpetuity which is denied to natural persons. These are few in number, being mainly officers empowered by statute to maintain action as successors, such as judges of probate and county treas- urers. A minister of a parish, seized of parsonage lands in the right of his parish, holds the same to himself and successors, and has been held in law to be a sole corporation for that purpose. The grant, however, of corporate powers to one person and his associates, although not requiring him to take any associate before exercising the rights conferred, and thus virtually con- ferring upon him the power to exercise alone all the corporate functions thereby granted, does not make of him a corporation sole. The State has, in this case, created a corporation aggregate, and such it must remain. The governor of a state is also a quasi corporation sole, and other instances will doubtless suggest themselves to the reader. CORPORATIONS ARE PUBLIC OR PRIVATE). The chief distinction between public and private corporations is that over the former the legislature has exclusive and unrestricted control. As the guardian of public interests, it may create, modify or destroy such insti- tutions. They are only the auxiliaries of the government in municipal rule, and nothing like a contract can be claimed to exist between them and the legislature, their objects and duties being incompatible with anything of the nature of a compact. Private corporations, on the other hand, are created by the granting of a charter, either under the general laws of the state or by special act of the legislature, which, in connection with the acceptance, by the corporation, of such charter, is regarded as a compact, binding upon the state so long as the body corporate faithfully fulfills its part. Generally speakng, public corporations are towns, cities, parishes, etc., existing for political purposes only, with powers to be exercised for the public good. Private corporations are such as banks, insurance companies, railroads, furnaces, mining or other organizations in which the stock is owned by individuals for their personal profit. Railroad, turnpike, steamship and some other companies are frequently called quasi-public corporations, because of their public utility, and because the public have cerain rights therein, but nevertheless, they are private cor- porations. The state may own an interest in a company as one of the corporators, but does not. by such participation, identify itself with the corporation. Perhaps no institution in the world is so generally misunder- stood in this respect as the Bank of England, which although so closely con- nected with, and so important a factor in, the financial politics of that coun- try, is entirely a private corporation. Chief Justice Marshall says : "It is a sound principle of law that when a government becomes a partner in a trading company, it divests itself, so far as concerns the transactions of that company, of its sovereign character, and takes that of a private citizen." But where a corporation is composed exclusively of officers of the govern- ment, having no personal interest in such corporation, and only acting as the organ of the state, for the public good, it is a public corporation. The general meaning of the word public must not be confounded with its legal sense in this connection. A turnpike, for instance, is for the public use and benefit, but the turnpike company is a private corporation. A hospital founded by private benefaction is, in point of law, a private corporation, although dedicated by its charter to public charity. And a college, founded and endowed in the same manner, though for the general promotion of learning, is private. A private corporation is further distinguishable from a municipal corporate body, by the irresponsibility of the members for the corporate debts beyond the amount of their interest in the corporate fund. Towns, etc., being established only for political and civil purposes, hold each member of the same liable in his private estate, his individual property being subject to taxation to meet the corporate needs. Private corporations are of several kinds, the first division being into ecclesiastical and lay. ECCLESIASTICAL CORPORATIONS Are such as are incorporated for the promotion of religion, and usually established for the advantageous management of the property belonging to the church. They may be either sole or aggregate. LAY CORPORATIONS Are divided into eleemosynary and civil. ELEEMOSYNARY CORPORATIONS May be described as incorporated charities, their object being the perpetual distribution of benefits as directed by the founders: Under this head are such institutions as hospitals for the poor, asylums for the insane, etc. Also those colleges or schools whose members receive, from the funds of the institution, pecuniary assistance in meeting the expenses attending their academical course. Angell and Ames mention, as an instance of eleemosynary corpor- ations, "Dartmouth College, in New Hampshire, because it was founded by private benefactors for the distribution of private contributions." But most of our larger institutions of learning are not eleemosynary corporations, although they may owe their existence to private or public donations, because their funds are paid to professors and others as remun- eration for services rendered, rewards for special proficiency, etc.; so that the benefits are earned by those who receive them, and by no means accepted as gifts of charity. Take, for example, Harvard College, the earliest known institution of the sort on this continent, whose invested funds have increased from the $2,000 (£400) given in A. D. 1636, by the English colonists, to the comfortable sum of about $4,000,000, almost entirely the result of private munificence. Notwithstanding the fact that its 14,000 alumni are decidedly the beneficiaries of these generous gifts, it is not eleemosynary, in our sense of the word. Nor it is a public corporation, although its charter of A. D. 1650 declared its object to be "the education of the English and Indian youth in knowledge and godliness," and its present alumni are gathered from every state in the Union. CIVIL CORPORATIONS. These corporations are sometimes public, as towns, etc., but they also embrace those numerous private corporations created for the building and operating of railroads, mining, smelting, banking, insurance, and an almost endless variety of other business, in the interest and for the profit of their stockholders. The term "Joint Stock Company" is frequently, but erron- eously, applied to these institutions. Although in the statutes of Massachu- setts those words meant a corporation, yet, generally speaking, they are a dangerous misnomer. A purchaser of stock in a joint stock company, properly so called, becomes a partner as well as a stockholder, and is as fully liable for the debts of the institution, and is a member of an ordinary co-partnership for those of his firm. Cook says a joint stock company is "an association of persons for the purpose of business, having a capital stock divided into shares, and governed by articles of association which prescribe its objects, organization and pro- cedure, and the rights can not release the members from their liability as partners to the creditors of the company." The definition given by Beach is, "A partnership whereof the capital is divided into shares which are trans- ferable without the express consent of all the co-partners." I would advise anyone doing business with a joint stock company, to acquaint himself with the laws governing such bodies in the state wherein that particular company is located ; for although they are now very generally recognized as legitimate organizations, yet this was not the case from 1720 to 1826. and I believe that in at least two states, Illinois and Louisiana, they are still held to be illegal. On the other hand, some state, New York for instance, have conferred upon these associations such extensive statutory privileges that they are almost corporations. LIMITED PARTNERSHIPS. A limited partnership still more nearly approaches the character of a private corporation. The statutes generally provide that limited partner- ships may consist of one or more general partners whose liabilities are the same as in a common partnership; and of one or more special partners, who shall contribute to the common funds a specific sum in actual cash, after payment of which sum they shall not be further liable for the debts of the partnership. A deed or certificate setting forth this agreement in full, signed by all the partners, is registered in the public records of each county where the business is to be carried on, and publication made thereof in the news- papers or such other manner as the statutes may prescribe. We have now seen that corporations are public or private ; that private corporations are ecclesiastical or lay ; that lay corporations are eleemosynary or civil ; and how these last are to be distinguished from joint stock com- panies and limited partnerships. 4. 4. 4. 4. CHAPTER II. 4. X Organization of Corporations. WHENEVER a corporation is to be formed it is usual for those inter- • ested to draw up certain papers, called articles of incorporation, and forward them to the secretary of state. He issues a permit of organization and after some preliminary steps the company is given a charter and is allowed to proceed to business. One of the most common steps to be taken before operations can be commenced is the announcement of the object of the company and also the amount of capital stock. The money contributed is called the capital stock, or the capital. Each member receives a paper, called a certificate of stock, signed by the officers of the corporation, stating what proportion of the capital is his. This amount need not all be paid in at one time, however, though, of course, at some time the whole amount of the capital must be paid into the company. The reason is obvious : persons doing business with the company have a right to know just what the powers of the company are, and also they trust the company on the strength of the capital stock which they naturally suppose has actually been at some time in existence, though it need not all have been paid at one time. An illustration will make this a little more clear. Suppose that five persons wish to form a corporation, each one to take 20 shares of $100 par value each, making in all a capital stock of $10,000. Upon filing the articles with the secretary of state and getting permission to organize, each one of the five pays into the company 10 per cent of the amount he subscribed for. This might possibly be sufficient to start the business and possibly there would be no further call for payment on the stock. Perhaps after some years the corporation might get into difficulty and then the stock- holders, whoever they might be at the time, would be liable for the unpaid portion of the stock, or at least sufficient of to satisfy the claim. The fact thai the holder supposed it to he fully paid up, and paid value for it accord- ingly, does n.it render him the less liable. Of course the company can purchase at a fair value any patents or other tangible effects and issue stock to pay for them, 6 The corporate body existing only in a legal sense must necessarily have some one to act for it, and this is accomplished by agents usually called the "Board of Directors," or "Trustees." Although by no means absolutely essential it has been the custom of the law to permit the stockholders to elect the directors, but it is only a matter of convenience and the fact does not change the relation of the stockholders to the corporation, which is solely a contract relation. They contribute their capital and in return get a share of the profits. The Board of Directors generally appoint the executive officers. This brings us to a consideration of the powers of the officers of a cor- poration. The officers are empowered to act for the company in all matters within the scope of the object of the corporation, but beyond this they act only on their own responsibility and the company is not bound by their acts. It is right that this should be so as the stockholder advances money to the corporation to be used for a specific purpose and any business outside of that can only be a personal matter between the officer and the person doing busi- ness with him. Therefore before going into any extensive transaction with a corporation it is well to carefully ascertain the nature and extent of the corporate powers, or possibly after a considerable amount of money, etc., has been expended, some stockholder may come along with an injunction claim- ing that he contributed his money to the company for the purpose of railroading, or whatever the object might be, and not for trading in grain or making bicycles. Then the person doing business as he supposed with a corporation of unlimited credit hies him to a lawyer and soon discovers that the particular transaction in which he is interested is "ultra vires," or beyond the power of the corporation. He certainly has increased his knowledge of law and possibly his vocabulary, for which his lawyer charges him a good price (the more difficult and uncommon the name the higher the fee is usually) . The officers may not even be liable, or if so, they may be worthless individually. Sometimes it is not desirable to appear as the holder of stock in a cor- poration. Possibly the company may have been carelessly organized, or perhaps the stock has not been fully paid up. Of course if a person was contemplating purchasing the stock he would look to these and similar matters before closing the deal, but possibly he is only to become interested in the company to the extent of holding the stock as security for a debt. In such cases the better way is to take the certificate and a writing pledging the same and have such security entered on the books of the corporation. This effects the object desired and does not render the holder liable. It is surpris- ing how many persons will take certificates of stock as security and simply hold them instead of going tc ^he office of the corporation and seeing that the transfer is properly made, for in most cases unless this is done there is a possibility of considerable trouble and loss arising, as the records of the company are presumed to be correct. A corporation is possessed of a perpetual existence, unless, as is usually the case, the law provides the time during which it can exercise the privileges accorded it. The charter may, however, be voluntarily forfeited, or under certain conditions it may be compelled to relinquish its privileges. Should all individual members withdraw or die. naturally the corporation ceases to exist owing to the lack of an agent to act for it. CHAPTER III. Corporation Stock Account Books. *. A. WHAT most troubles a novice in corporation book-keeping is, not in what book to make the entries, but how properly to make them, or how to make them at all ; and inasmuch as no coherent method, aside from illustrative examples for the guidance of tyros, appears in the text books, our object is to attempt to formulate some general rules which will be helpful to beginners. If the secretary or book-keeper of a corporation is uncertain as to the book in which he should enter the record of a particular transaction or class of transactions, he ought to make it a point to ascertain, if possible, the best practice in that regard. Is it the best practice to make the entries of the Capital Stock account in the "Stock Books" or in the "Books of Account?" Before a satisfactory answer could be made, the inquiry would be: What rue "Stock Books" and what "Books of Account?" It is to be taken for granted that the corporation to which reference has been and is being made is : A private tion for pecuniary profit. That only one set of books of account are kept to show the results of the business; and That the only books in which the stockholders' names exclusively appear are those which will show the officers of the corporation who are its stock- holders and who are entitled to vote at stockholders' meetings. In the United Kingdom the laws with respect to corporations are uniform, and are more stringent in their regulations than with us. It appears that certain books must be kept : that the books must be audited annually by \ chartered auditor, and that the auditor's suggestions as to how the books fhould be kept are followed as a rule. The Corporation stock books required by an English Public Company Ire as follows : i. Register of Members. 2. Diractors' Minute Book. 3. Minute Book of General Meetings. 4. Register of Transfers. 5. Register of Mortgages. 6. Register of Documents. 7. Share Certificate Book. 8. Seal Book. « >. Annual Summary of Capital Book. 10. Directors' Attendance Book. Those required by an American Private Corporation are as follows: 1. Bool: of By-Laws. 2. Minute Book. 3. Stock- Certificate Book. 5.. Transfer Journal. 5. Trnu if 1 r Ledger. 6. Bond Register, The Canadian practice as to the use of the "Stock Ledger" is thus explained : "Stock Ledger." The use of a stock ledger will be apparent if you consider how difficult it would be to keep an account in the general ledger with the individual stockholders of a company who hold stock to-day and part with it to-morrow, as is done with the individual partners of an ordinary business whose interest is permanent. This hook, therefore, contains nothing but the name and address of each shareholder, the number of shares of the "capital stock of the company held by each, and the installments that have been paid upon them. As a matter of fact these corporation stock books are very seldom used by small companies. In large companies where the stockholders are numer- ous and especially where shares have a market value they are undoubtedly unnecessary. Under our system of incorporation through general laws, a corporation is created upon the execution, by persons desirous of incorporating, of articles of incorporation, the filing of such articles in certain designated offices, and the certification of same by specified public officers; when this instrument is executed, filed and certified to as required, the corporation instantly comes into legal existence. Although now regularly formed, the corporation cannot act ; being an artificial person, it must act by means of agents, and it has no agents. Incor- poration must be followed by organization. Organization means : i. The adoption, by the stockholders, of by-laws for the government of the corporation. 2. The election, by the directors, of officers to transact the corpora- tion business. 3. The providing for payments to the capital stock, and for the issu- ance to the shareholder of evidences of their holdings, and the taking of such further steps as may be necessary to endow the legal entity with capacity to carry on the business for which it was created. The Book of By-Laws is evidence that by-laws have been adopted. The Minute Book is evidence of who the officers are, and of all other acts and proceedings of the Board of Directors. The Transfer Journal and Transfer Ledger are evidence of who the stockholders are. Upon the original issue, and any subsequent transfers, the Stock Certificate Book, Transfer Journal, Transfer Ledger and seal are brought into requisition. The registration of stock required by statutes serves a two-fold purpose, viz. : To provide the corporation officers with a record of who are the mem- bers of the corporation ; and To provide creditors with a record of those who are individually liable in case the corporation becomes unable to meet its obligations. The general rule is that the books of the corporation furnish evidence as to what persons are entitled to the rights and privileges of stockholders, and as to \ creditors may look for payment in the event of the insolvency of the corpora- tion. Creditors of a corporation are presumed to have relied upon the books. 9 CHAPTER IV. Illustrations of Opening Entries 4. *. EXAMPLE NO. I. FOR THK sake of greater clearness in the entries let us assume that the authorized capital of the company is $100,000, divided into 1,000 shares of $100 each, that B. Brown has subscribed for 400 shares, S. Smith 300 shares and J. Jones 300 shares. We "open" the stock books by entering- on the stock daybook: Subscription $100,000 00 To capital stock $100,000 00 For subscriptions as follows: B. Brown, 400 shares @ $100 $40,000 00 S. Smith, 300 shares @ $100 30,000 00 J. Jones, 300 shares @ $100 30,000 00 Sunds to Subscription.*. $100,000 00 B. Brown, yr. sub. 400 shares 40,000 00 S. Smith, yr. sub. 300 shares 30,000 00 J. Jones, yr. sub. 300 shares 30,000 00 Or subscription account may be omitted and the several subscribers charged with the amount of their subscriptions and capital stock credited direct. If we dispense with the stock day book, enter the same facts in full on the several accounts in the stock ledger, making it a book of original entry. Our books are now "open" and record the facts. The several sub- scribers are indebted to the company for the amount of their subscriptions and the entire authorized capital of the company is invested in these accounts. All future entries are merely records of actual transactions or changes in position or form of the assets of the company. ■ When the capital (or these accounts) is paid, we enter : Paid-up capital $100,000 00 B. Brown, yr. sub. paid in full $40,000 00 S. Smith, yr. sub. paid in full 30,000 00 J. Jones, yr. sub. paid in full 30,000 00 The stock ledger then has but two open accounts. Capital Stock, which is credited with the amount of the authorized and subscribed capital and "Paid-up Capital," which is debited with the amount of cash paid in. The closed accounts make a full and complete record of how, when and by whom the authorized capital was subscribed and paid up. The "Paid-up Capital" is placed in the charge of the treasurer and we open our "Books of Account" by recording that fact : J. Jones, treasurer $100,000 00 Paid-up Capital amt. cash capital $100,000 00 All future entries are records of actual transactions. The subscribers having paid their subscriptions are entitled to stock certificates in the usual form, which are transferable by assignment and delivery. It is unnecessary to waste space in describing these certificates or their stubs. Lithographed or printed forms are on sale by all stationers and any one of ordinary intelligence can hardly make a mistake in filling the blanks. The records must show original issues and subsequent transfers. 10 Upon the surrender of the receipts (if any), given by the treasurer, when the cash was paid, certificates are issued, signed by the president and secretary, and we enter on the stock day book : Sunds to Stock Certificates $100,000 00 B. Brown, Certificate No. 1 $40,000 00 J. Jones, Certificate No. 2 30,000 00 S. Smith, Certificate No. 3 30,000 00 Should Brown sell 100 shares of his stock to R. Robinson, certificate No. 1 would be returned to the company and cancelled, new certificates being issued, showing the new ownership and recorded thus : Stock Certificates $40,000 00 B. Brown $40,00000 (Certificate No. 1 cancelled.) Sunds to Stock Certificate $40,000 00 R. Robinson, Cert. No. 4 (For part of No. 1 cancelled) $10,000 00 B. Brown, Cert. No. 5 (For part of No. 1 cancelled) 30,000 00 In the case under consideration, it is sometimes thought best to have the record of organization, subscription and payment of capital stock kept on the "Books of Account" and only use the stock book to record the issue and transfer of stock certificates. We would then open our book of account as follows : Sunds to Capital Stock $100,000 00 B. Brown, yr. sub.. 400 shares 'at $100 $40,000 00 S. Smith, yr. sub. 300 shares at $100 30,000 00 J. Jones, yr. sub. 300 shares at $100 30,000 00 And when these accounts were paid : J. Jones, treasurer, to $100,000 00 B. Brown, stock sub. paid in full $40,000 00 S. Smith, stock sub. paid in full 30,000 00 J. Jones, stock sub. paid in full 30,00000 A trial balance will now show exactly the same facts as the combined trial balance of the "Stock Ledger" and "Account Ledger" under the plan first suggested, viz. : Capital stock credited with amount of authorized and subscribed capital and treasurer debited with same amount, all other accounts being balanced, and our record of stock subscription and their payment is complete. In this particular case this is perhaps the better method. It is, however, for reasons which will be hereafter apparent, only available when the capital stock is all subscribed and all paid. Should this plan be adopted the issue and transfer of stock certificates may be entered on an ordinary stock day book and ledger in regular double entry form as before suggested or a "stock register," such as is sold by stationers, may be used. This regis- ter is ruled about as the following example in which the issues and transfers before illustrated, are filled in. A column headed remarks might be added, in which are noted to whom certificates are transferred and what certificates are issued in place of certifi- cates surrendered. There are some objections to this form and I prefer the regular double entry form before described. All this is very simple and is the obvious method of proceeding when the capital is all paid in cash. But some one is sure to ask : "Suppose some or all of these subscriptions are paid by transfer of property, accounts or notes?" This does not alter the fact that the subscriptions are made and paid, and only changes the form in which they are paid and therefore the 11 form of entry when they are paid. If they are paid in notes we would charge bills receivable instead of treasurer; if in property, charge real estate, merchandise, machinery or whatever account may be selected to represent the particular property acquired by the company ; in each case crediting, as a matter of course, the individual or firm from whom the property, note or account receivable was received. If the company assumes liabilities they are of course debited to the person or firm previously liable and credited to the account selected to represent the particular form of liability assumed. The transaction and the form of the entry is exactly the same whether property is bought by the company from one of its stockholders or from a stranger to the organization. The "company" is an entity or individual; it deals with all other individuals or firms as an individual and without refer- ence to whether those individuals or firms do or do not have among their assets some of its stock or shares. Many old business men and capitalists insist that the capital of all com- panies in which they are interested, shall be paid in cash or bank checks, and all property bought or acquired by the company shall be paid for with the check of its treasurer. In my judgment this is the only correct course. It makes the record clear, and the facts that subscriptions have been paid by the subscribers and the property in its possession paid for by the company stand out so plainly that they are practically unassailable. Nor does this involve the use of actual "cash." If the subscriber gives a check on his own bank to the treasurer for the amount of his subscription, and the treasurer gives a check on the company's bank in payment for the property acquired by the company; then if the checks are of equal amounts and each deposits the check received in his own bank, both checks are good and each party has a cancelled bank check as a voucher if the transaction is ever questioned. We are well aware that many book-keepers, even some who call them- selves accountants, object to what they call the "extra work" and endeavor to make modern books of account a sort of "clearing house," in which only balances of indebtedness are entered. But stationery and book-keepers are both low-priced commodities and the clearing house method, as a rule, makes more, instead of less work in the end. The corporation accountant, as such, has nothing to do with closing the books of the parties from whom his company purchases property, but if it should happen that the reader keeps both sets of books he will easily close the old books if he sees the facts as they are, and recognizes that firms are not and cannot be changed into corporations. Corporations are created and purchase property. The transaction is a sale at agreed figures, and is entered just like any other sale. It makes no whit of difference in the form of the entry in either old or new books whether the members of the old firm do or do not own stock in the newly created corporation or whether the interest'? of the old partners are the same in both concerns. The two concerns are legally and in fact separate and distinct entities. It is of no interest to the seller how the buyer enters the transaction if only he receive credit or is paid for the property sold ; nor to the buyer how, ai what value or in what name, the seller carried the property on his books, so long as he conveys a perfect title to the property and gives a receipt for the consideration agreed to be paid. 12 K.VAMIM.E NO. 2. Capital all subscribed but to be paid in at future dates already fixed or to be fixed by the directors. If the dates are fixed in the original agreement, the case may be treated substantially as in Eample I, but the charge to the individual subscribers must show the date on which the respective installments are payable. If the capital is subject to "call" by the directors, I deem it much better to use a stock day book and ledger. A typical case would be authorized capital and subscriptions as before, 10 per cent payable at organization, balance subject to "call." The opening entries are : Subscription $100,000 00 Capital stock for sub. as follows $100,000 00 B. Brown, 400 shares at $100 40,000 00 S. Smith, 300 shares at $100 30,000 00 J. Jones, 300 shares at $100 30,000 00 Sundries to Subscription $10,000 00 B. Brown, 10 per cent on 400 shares 4,000 00 S. Smith, 10 per cent on 300 shares 3,000 00 J Jones, 10 per cent on 300 shares 3,000 00 Note that the subscription creates a present liability of the individual subscriber for only 10 per cent of his subscription. The remaining 90 per cent is in the nature of a contingent liability. It may be converted into an actual present liability, in whole or in part, by the future action of the board of directors or of a receiver, should the company be unfortunate enough to be thrown into a receivership. We therefore leave the uncalled part of the subscription in the "subscription account" and charge the individual sub- scribers with the 10 per cent which is presently payable. When these accounts are paid we enter as before : Paid up capital to Sundries $10,000 00 B. Brown, 10 per cent on 400 shares $ 4,000 00 S. Smith, 10 per cent on 300 shares 3,000 00 J. Jones, 10 per cent on 300 shares 3>°oo 00 Should the directors order a call for a portion of the unpaid subscrip- tions payable at a named date in the future, say 20 per cent payable April 1st, we would enter on our stock day book : Sundries to Subscription $20,000 00 B. Brown, first call 20 per cent on 400 shares, due April 1 $ 8,000 00 S. Smith, first call 20 per cent on 300 shares, due April 1 6,000 00 J. Jones, first call 20 per cent on 300 shares, due April 1 6,000 00 And as payments were made credit the individual and charge paid-up capital with amount of payments. A trial balance of our stock ledger will then show : Capital Stock $100,000 00 Subscription $ 70,000 00 Paid-up capital 30,000 00 The stock day book and the closed accounts on the stock ledger will show just when the "calls" were made and paid. Should any of the sub- scribers fail to pay the "calls" or assessments when the same are due, the unpaid amount will stand to the debit of his account on the stock ledger and Paid-up Capital account show that much less debit. The company can, in 13 that case, either sue the delinquent for the amount as a debt past due and for which it has a lien on his stock, take the course prescribed by the statutes of the state in which the company is organized and the by-laws of the company itself for forfeiting and selling the shares of stock on which default has been made, or it can let it stand as a debit account on its stock ledger. Since the shares of stock are not fully paid no certificates of stock can be issued. In place thereof the treasurer gives receipts, stating that the pay- ment is, first 10 per cent, first call of 20 per cent as the case may be. It is a familiar principal of law that a debtor cannot transfer his liability without the consent of the creditor. It follows that a subscriber for stock cannot assign or sell that stock so as to relieve himself of responsibility for the unpaid part of his subscription without the consent of the company. Therefore all assignments or transfers of partly paid stock are made upon STOCK REGISTER. Number Name. Issued. No. of Shares Par Value. Surrendered. Jan. 1, 1897 ■' l! " Apr. 1, " " 1, " 400 300 300 100 300 40000 00 :i(KHX) 00 30000 00 10000 00 30000 00 Apr. 1, 1897 2 3 4 5 a book kept for that purpose in the office of the company. It may be an ordinary record book or a book of printed forms. The original subscriber, or present owner signs an assignment and transfer naming the assignee and the number of shares ; the purchaser signs an acceptance of the stock and an agreement to pay all unpaid portions of the original subscriptions when legally "called" ; and the company by its president and secretary signs a formal consent to the transfer. We enter such an assignment on our stock day book. Subscription $ - B. Brown, unpaid subscription for shares of stock assigned to Robinson $ See transfer book folio We also make a foot note on the original subscription paper (with star or other reference opposite the original signature) reciting same facts and referring to folio of transfer book where assignment is made. "What responsibility or liability would attach to the officer or director assenting to the transfer of partly paid stock from a responsible original subscriber to an irresponsible assignee?" is an interesting legal question. It is, however, for the consideration of the persons damnified and the consent- ing officer, not the accountant. If tin- company or its directors are not satisfied with the responsibility of the assignee they may refuse consent to the transfer and thus retain the company's claim against the original subscriber. Whether the original sub- scriber can transfer his interest in partly paid stock so as to resign his rights without divesting himself of his liability for future calls is another fine legal point which might he decided either way by the courts of the several states. Our interesl as accountants, is how to record such an assignment, for if made or attempted to be made, we must enter it on our books. The situation is not very likely to arise, but is certainly among the possibilities. If I were 14 secretary of a corporation and was notified of a transfer of partly paid stock to which the company refused consent, I would merely "note" the fact on the original subscription and on Subscription Account on my Stock ledger. Then if a dividend were declared or other proceedings taken which involved the ownership in the rights and benefits accruing to that stock I should refuse to pay that dividend or take any other action in the matter until the question of ownership had been decided by the courts. Should the directors (or officers having authority) order any different course I would obey orders, but should make the books and records show clearly not only what had been done, but that it had been done "by order." The books of account in the case under consideration are opened exactly as Example i, when Stock ledger is used, i. e., treasurer is charged with all money received on account of capital stock and Paid-up Capital credited. The remarks as to payment of stock subscription by transfer of property or things other than cash, in discussing Example I apply with still more force to Example No. 2. Because it is of even greater importance to make the records show clearly exactly when and how payments are made on sub- scriptions and how much is still "subject to call" and who is responsible or liable when such "calls" are made. The uncalled and unpaid subscriptions are considered by the banks and other creditors as an addition to the respon- sibility of the company over and above its actual present assets. They operate as an endorsement or guaranty by each subscriber to the amount of his unpaid subscription, of the indebtedness of the company. 4. A .1 A CHAPTER V. A. & Illustrations of Opening Entries. -1 A. ANOTHER METHOD. SO MANY book-keepers of experience and skill in partnership accounting find themselves utterly at sea when confronted with the task of opening the books of a private corporation that a word in that connection may prove of use to some readers. All the ordinary books of account being the same in corporations as in partnerships, it is only necessary here to treat of those recording the transactions in capital stock, and it is presumed that a few simple suggestions will suffice. The capital stock of a corporation is fixed in some instances by the char- ter which gives it existence, in others by the corporate officers. In either case, after the amount is once fixed, it can not be changed without authority of the state. It therefore follows that the "Capital Stock" account in the ledger, as representing such fixed amount, should itself stand unchanged either during the entire existence of the company, or until an amended charter authorizes its increase or decrease. The book-keeper must inform himself first as to the amount of the authorized capital stock, which information he can obtain from the record (or minute) book, which should always contain a copy of the charter and the 15 resolution under which it was accepted as such by the corporation. We will suppose that, either by charter or resolution, the capital stock of the "Wilkins Manufacturing Company" has been fixed at $100,000, to be issued in shares of $100 each. By such charter, or resolution, a latent value has been created, which, until disposed of, remains in the treasury of the company. These facts are rec< irded by the first journal entry, as f< »llows : Treasury Stock $ioo,oco oo To Capital Stock $100,000 00 with suitable reference to authority. The writer does not propose, here and now, to discuss the objections which some accountants urge against this form of opening, but confines himself to the statement that in many years of experience, with numerous corporations, he has found it the simplest and best. It is usual, immediately upon organization, to determine by resolution how the stock shall be disposed of. If subscriptions thereto are to be taken, the incorporators may decide whether such subscriptions are to be paid at one time, or in installments, and upon what terms ; or they may depute that power to the next board of directors. We will presume that in this instance it is decided that 25 per cent shall be paid November 1, 1897, 25 per cent in two months from that date, 25 per cent four months later, and the remainder when called for by the board of directors ; and that business may be com- menced when not less than $60,000 shall have been subscribed. A subscription list is then opened in form as follows, and we will sup- pose signatures, etc., to be secured as thereon entered : Date Name and Addl i ! s No. of Shares Amount 1897 Oct. 25 •• 25 .. ._,,; " 26 " 29 " 29 " 29 300 100 120 115 10 Ml 5 BOOOO (X) 10000 00 ( larksville. 12000 no 115 <» Nashville, " 1000 mi C. Flisher lames ("larks 5000 mi 500 00 SUBSCRIPTION LIST. We, the undersigned, severally subscribe to the capital stock of the Wilkins Manufacturing Company in the amounts and for the number of shares set opposite our respective names, and agree to pay for the same as follows: Twenty-five per cent November 1, 1897; 25 per cent January 1. 1898; 25 per cent May 1, 1898; and the remainder when called for by the board of directors. It is resolved now to commence operations, as we have $70,000 sub- scribed. The list, being of the utmost importance, is carefully preserved and the next journal entry follows: Stock Subscriptions • '1\. Treasury Stock 00 with a list of subscribers and amounts. By this process we have disposed of $70,000 of the Stock : $30,000 remains in the treasury for future disposition. and the capital stock remains properly al $too,i It is advisable to keep a small subsidiary ledger with the subscribers, credit Stock Subscription accounl in the general ledger, with all payments thereon, and credit the individuals in said subsidiary ledger. Almost any in small book with money columns can be used for this purpose, or some of the pages at the end of the general ledger may be reserved for the individual subscribers accounts. If the latter plan is adopted, which we do not advise, care must be taken to omit these accounts when taking off a trial balance. The aggregate of all the balances in such subsidiary ledger (or in such reserved part of the general ledger) must always be the same as the balance of the Stock Subscription account. If all the stock had been subscribed for there would be no occasion at present to open a Treasury Stock account, as Stock Subscription account would serve the purpose, with less book-keeping. As each share carries with it one vote at the stockholders' meetings, it is necessary to have a record showing the voting power — number of shares — of each stockholder. The laws also require that such list be kept. For this purpose the following form of shareholders' ledger is the simplest and best known to the writer. In it all unnecessary matter is omitted. Shares are entered, but not money, so that the balance shows always the number of shares or votes ; and, having that information, anyone can at once tell the amount in dollars if it should become necessary. At stockholders' meeting, where the representation has frequently to be accurately ascertained and reported in very short time, this simple form will be found invaluable. The transfer journal leading thereto is so simple and so plainly sug- Stockholder's N No. of Transfer Shares CERTIFICATES Balance of Shares Acqird Trans Issued Surrendered Held gested by the form of ledger that description is unnecessary, further than to say all transfers are entered on the transfer journal in numerical order, as they occur. & ^ &* $* CHAPTER VI. Capital Stock and Capital, i. X THE difficulty which looms up quite formidably before a book-keeper when he first undertakes to make entries relating to capital stock is largely due to the treating of the expressions "capital stock" and "capital" as synonymous terms, whereas, strictly speaking they are not so, and I have therefore thought it expedient to attempt to draw a clear distinc- tion between the two. Let me state at the outset that a corporation having a capital stock is called a "stock corporation" and that its component parts are called stock- 17 holders ; and that a corporation having no capital stock is called a "non-stock corporate >n." and that its component parts are called members. It is evident, therefore, thai a corporation may exist without having a capital stock. The capital stock of a corporation is the amount, in money or property, subscribed and paid in. or secured to be paid in, by the stockholders. The amount of capital stock, the number of shares into which it is divided, and the par value of each share are determined upon by the original subscribers, and embodied in the articles of association, and the amount of the capital stock so fixed remains invariably the same, unless changed by the stock- holders in pursuance of legislative authority. The directors who are to manage the affairs of the corporation for the first year, or until their successors are elected, are named concurrently with the fixing of the amount of the capital stock, and it follows that they could not have had any voice in the fixing of the amount of the capital stock, nor can they subsequently, by resolution or otherwise, increase or diminish or in any wise vary the amount of the capital stock as set out in the articles of the association whereby the corporation was created. The powers of the corporation being in the board of directors, it can, however, take the initiative and call the stockholders together for the purpose of deciding whether or not the stockholders deem it desirable to have a change made in their original holdings in the corpora- tion ; the law in such case made and provided, must be closely followed, and if any change is made in the capital stock, notice to the world must be given by the filing, in the offices where the original articles of association were filed, of a certificate of such change. The capital stock of a corporation is considered as a substitute for the personal liability of the individual members of a private co-partnership, and the law implies a promise on the part of the subscriber to pay its par value when called for. Capital stock therefore differs from capital in these particulars : ( i ) That it remains invariably the same as fixed by the articles of association, unless changed by legislative authority; and (2) That the term capital stock is never properly used to indicate the value of the property of the corporation. The capital of a corporation is the estate, whether in money or prop- erty, or both, at its actual value, owned by the corporation, and is subject to fluctuation; in other words, it is the investments of the stockholders in the corporation, together with the gains and profits realized from such invest- ments; or, if there have been losses, then the capital is the residue, after deducting such losses from the investments. The ownership of the capital stock is in the stockholders, but the owner- ship of the property is in the corporation; and all of the stockholders can sell all of their stock to other persons, but all of the stockholders, jointly or otherwise, could not transfer the corporate property. The stock need not be sold precisely at par; it may be sold above or below par, and is more frequently sold below than above. In California the right of a corporation to sell its stock at a price less than par and to receive the contract price in full payment is an established proposition. Where the capital stock has nol been paid in full, resorl is had to a ments to provide funds for the corporation. Two kinds of assessment are recognized by law; one, on accouni of unpaid subscriptions; the Other, for the purpose of raising money to pay debts. In California, the latter kind of 18 assessment may be levied notwithstanding the subscription price has been actually paid in full. And the fact that certificates of stock have printed or written thereon, "Fully paid and non-assessable," does not waive the right of the corporation to make assessments. These words are construed to mean that no assessment will be levied on account of the deficiency in the subscrip- tion price; as otherwise, the courts have held, a corporation, at the very beginning of its existence, would be voluntarily depriving itself of file only means of protection afforded it in the raising of money other than by loans. The laws of many of the states, and the by-laws made in pursuance of 1 such state laws, provide that each director, as a qualification for office, shall hold one or more shares of the corporation, the object being that the affairs of a business corporation shall be entrusted only to those having a pecuniary interest in its welfare, and conservative corporation managers are careful to see that each director, in case he is not already a stockholder, shall have a certificate for the proper number of shares, issued to him upon the very day and date that he becomes a director. The directors named in the articles of association must be so qualified. X .1 & x CHAPTER VII. The Distribution of Dividends. AT THE end of the fiscal year, and oftener if required, the net result of the business is ascertained in the manner used in "closing the books" of any business. It is desirable to take more than usual care in valuing both the property and the accounts receivable of a corporation, because most of the states make directors who assent to dividends which have not been actually earned, personally liable to the creditors of the corporation. Assets of a corporation which have been distributed among stockholders so as to leave an amount insufficient to pay liabilities may be pursued into the hands of the holders by creditors of the corporation. Some corporations set aside from the apparent profits of the current year a sinking fund to provide for accounts receivable, which may afterwards prove to be uncollectable either in whole or in part. When this has been done all accounts discovered to be "bad" during the current year (but which were left on the books by the last preceding "balance sheet" as good or even doubtful) are charged to the sinking fund. By this means each year's business is made to take care of its own bad debts only. All these details are strictly within the province of the board of directors, who are legally responsible for the management and the accountant only carries out its orders, and only makes entries of this kind by its direction. A balance sheet showing the gains and losses of the year's business and the net result of the same, also such trade statements as are required, giving the fullest possible information of the sources and causes of those gains and losses, should be prepared by the book-keeper and sub- mitted to the board of directors. The board by formal resolution makes such disposition of the net gains as it thinks best. The usual course, after first providing for doubtful assets and such other sinking funds as the case 19 requires, is to direct the balance of the gains to be carried to "surplus" or "rest." This account, by whatever name it is called, represents the undi- vided earnings of the "paid up capital." These earnings are distributed among the stockholders by the directors at such time and in such amounts as the directors, by resolution, order. This order of distribution is called "declaring a dividend," and is gen- erally in the discretion of the board of directors. The accumulation of a "surplus" fund is usually thought good business policy, and for certain elasses of corporations is required by law. There are many very successful corporations whose "surplus fund" largely exceeds their "capital stock." Dividends must be equal upon all shares of stock of the same class and with- out preference. If the corporation has issued preferred stock, those shares constitute a class by themselves and are by the terms of the preference entitled as a class to dividends in preference to shares of common stock. But as between holders of stock of the same class there must be no discrim- ination and funds set aside for dividends upon any class of stock must be evenly divided among the holders of that class of stock according to the number of such shares each holds. Dividends are either a named sum per share or a named percentage on the "paid up capital." When the board of directors have declared a dividend, whether payable at once or at a future date, the book-keeper transfers the amount required to pay it from "surplus" to "dividend" account by an entry as follows: Surplus $ Dividend account, $ For div. No $ per share. Dividends when declared or ordered become at once a debt due from the corporation to the ten owners of stock without reference to the ownership at the time the profits were actually earned or at the time the dividends were payable, if payment is deferred. The corporation is protected in paying dividends to stockholders of record on the day dividends are declared, with- out requiring production of the certificate of stock, but it is probable that a purchaser after the transfer books were closed and before dividend was declared, would be entitled to collect a dividend in the absence of any agree- ment that the sale was "ex-dividend," provided he notified the corporation of his purchase before the dividend was actually paid to the stockholder of record. Dividends are usually paid by special dividend checks or orders on the treasurer, payable to the order of the stockholder of record. They may, however, be passed to the credit of the individual stockholders or paid in any other convenient manner. In any case the amount paid is charged to "divi- dend account" and credited to the source of payment. Should there be more than one elass of stock, that fact is recognized in the resolution declaring the dividend by stating the amount to be paid on each class, and the book-keeper must have as many "dividend" accounts as these classes of stock upon which dividends are declared, distinguishing them by appropriate names. Since the method of distributing < >r disposing of profits is the only prac- tical difference between the books of account of a corporation and those of a natural person engaged in the same business any further discussion of such books seems superfluous. 20 CHAPTER VIII. The Sectionalization of Ledgers. IT IS now very generally understood in the larger business corporations oi the United States that it is advantageous to sectionalize the various accounts carried as much as possible. It is not, however, so generally understood in the smaller business houses, and it is for that reason we desire to call our readers attention to this very useful method. Let us take, for instance, a business in which a number of traveling salesmen are employed, each having certain territory. In this case the sales ledgers should be subdivided, so many pages being allotted to the customers of each salesman. Separate columns should be provided in sales book, cash book and cross-entry journal for each section, and a representative, or adjustment account opened with each section in the general ledger to which the totals of columns in sales book, cross entry journal, and cash book are posted at the close of each month. If practicable, it will be found more convenient to provide a separate ledger for the section covered by each traveler, and the loose leaf system is admirably adapted for this purpose, as it can be made just the size to suit the number of accounts to be carried, and enlarged and diminished at will. The form of ledger we recommend (where exceptional circumstances do not alter cases) would contain the following columns: Date. Items. Fol. D'bts. Mo. D'bts. D'bt. Bal. Date. Items. Fol. C'dts. Mo. Celts. Celt. Bal. The purpose of the "Monthly Debits" and "Debit Balance" columns will be explained a little later on. The representative, or adjustment, accounts in the general ledger will at the close of each month show as follows : j. E. robins' ledger account. Dr. i 9 oo. Folio. Debits. Mo. Debits. Balance. March 31. 7,846 19 April 30— Journal 28 6,75120 Cash 160 129 60 6,880 80 7,631 24 I9 oo. Folio. Credits. Mo. Credits. April 30 — Cash 160 5,967 80 Journal 28 1,12795 7,095 75 The credits are carried underneath the debits here for convenience of printing. This account, you will note, displays the total business of J. F. Robins, salesman, and its result, and it can be made still more useful by a little more itemizing. Sales can be kept separate from cross entries on the debit side, and on the credit side returns and allowances may be particularized. The increase of "Monthly Debits" shows an increase of business, and the increas- ing or decreasing "Debit Balance" shows how the customers are paying their accounts. So that this account becomes a valuable comparative statement of J. F. Robins' business. 21 In taking- the trial balance of the J. F. Robins ledger, draw off monthly debits, monthly credits and the balances, and foot all three columns. Then, if the total of the individual balances does not amount to $7,631.24, you can- see at a glance whether your total debits posted are $6,880.20, and your total credits $7,095.75. That means that ninety-nine times out of a hundred when there is an error it can be located to the side on which it occurred, which is a tremendous advantage. The principle above outlined can be successfully carried out in any busi- ness with manifest benefit. In enterprises of considerable magnitude it will frequently be found convenient to have separate cash books, sales books, etc., as the use of columnar books in such cases will necessitate books of an unwieldly size. The accounts may be sectionalized in many ways as may be found most suitable to the requirements of the business. Some houses sectionalize terri- torially, as : New York ledger, Pennsylvania ledger, Ohio ledger, etc., etc. Some sectionalize alphabetically, as A-F ledger, G-K ledger, L-R ledger, S-Z ledger. A very frequent sectionalization is by departments, as Wholesale Ledger, City ; Wholesale Ledger, Foreign ; Retail Ledger, etc., etc. Where sales tickets are used it will be found useful to have different colored tickets for each section. Where there are a number of sections it is also found useful to carry the separate adjustment accounts in the general ledger, and group them in the private ledger for the benefit of the principal, or officers of the company, thus : Folio. Debits. Mo. Debits. Dr. Balance. Mar. 31. Balances — N. Y. ledger 9,562 75 Pa ledger 2,758 92 Ohio ledger 6,87560 April 30. Journal — N. Y. ledger 178 10,78590 Pa. ledger 178 4,560 25 Ohio ledger 180 8,972 60 Cash — N. Y. ledger 235 475 35 Pa. ledger 235 Ohio ledger 235 96 50 24,890 60 Balances — N. Y. ledger 10,940 11 Pa. ledger 4,44662 Ohio ledger 7,7i6 25 1900. Folio. Ci edits. Mo. Credits. April 30. Cash — N. Y. ledger 234 8,765 1. Pa. ledger 234 2,219 75 Ohio ledger 234 7,550 20 Journal — N. Y. ledger 178 1,118 75 Pa. ledger 178 652 80 Ohio ledger 180 678 25 20,084 89 CHAPTER IX. X 4 The Transfer of Accounts from Partnerships to Corporations. 4 a. MANY book-keepers who are otherwise entirely competent appear to be afraid to take charge of the detail pertaining to the transfer of accounts from a partnership to a corporation. We are not referring now to large interests, or trusts whose stock is open to public subscription. We have in view merely a small commercial concern, rated in Dun's at $100,000, the two proprietors of which wish to introduce additional capital 1 in order to extend their business. There is no question of stock ledgers, or subscription ledgers, preferred and common stock, debentures or bonds, or anything of that kind. As an example we will take the incorporation of the firm of Schneider & Schroeder, who have arranged with Mr. Schuettler that he should invest $35,000 in the business, taking an active interest with the position of vice- president. The balance sheet of Schneider & Schroeder on December 31, 1898, was as follows : Cash $ 1,866 50 Bills Receivable 10,783 12 Accounts Receivable 25,638 46 Inventory , 20,7 JP 42 Real Estate • • 5,88i 93 $64,890 43 A. Schneider, investment $28,120 50 B. Schroeder, investment I7JI9 33 Bills Payable, investment 8,500 00 Accounts Payable • ".150 o° $64,890 43 The net assets of the partnership were therefore $45,239.83. The new company was organized with a capital of $75,000, the stock to be subscribed as follows: A. Schneider, $25,000; B. Schroeder, $15,000;^. Schuettler, $35,000. The company was incorporated under the name of "The Schneider & Schroeder Co." A new set of account books was purchased for the new company and the first entry made was as follows in the journal : Subscription Acct $75,ooo 00 To Capital Acct $75,00000 This entry records the fact that the company was incorporated with a certain capital, and that the stock is waiting to be subscribed. It was preceded by the following explanation : "The Schneider & Schroeder Co. Incorporated under the laws of the S tate of , 1 st January, 1899. Authorized capital, $75,000, 750 shares, par value $100 each." Messrs. Schneider, Schroeder and Schuettler having subscribed for 250, 150 and 350 shares respectfully, the following entries were made in the journal : B. Schroeder, Dr., 150 shares @ $100 00 each 15.000 00 A. Schneider, Dr., 250 shares (a) $100.00 each $25,000 00 C. Schuettler, Dr., 350 shares @ $100 00 each 35.ooo 00 To subscription account, cr 35.000 00 The stock having all been subscribed the subscription account is closed and the subscribers arc charged with the value of the stock for which they have subscribed. At a meeting of the board of directors of the new company it was resolved to purchase the business of Schneider & Schroeder at the par value of its net assets. A bill of sale is accordingly drawn and the following entries made in the journal as a record of the purchase: "To transfer of the business of Schneider & Schroeder (consisting of sundry assets and liabilities as hereunder shown) by bill of sals dated ist January. 1899, duly executed and acknowledged, and pursuant to a resolu- tion of the board of directors at a meeting held on the first day of January, 1899, and entered on the minutes, pages 2 and 3. Cash $ 1,866 50 Bills Receivable 10,783 12 Accounts Receivable 25,638 46 Inventory 20,720 42 Real Estate 5,881 93 To Bills Payable $ 8,500 00 Accounts Payable 11,15060 Schneider & Schroeder 45,23983 In the meantime Mr. Schuettler has paid by check for his stock, the receipt of which is duly recorded in the cash book. It is not necessary to pass checks between the old business and the new, as the following journal entries will fully answer the purpose : Schneider & Schroeder $45,23983 To A. Schneider, stock acct $25,000 00 B. Schroeder, stock acct 15,000 00 A. Schneider, personal acct 3, I2 ° 50 B. Schroeder, personal acct 2, 1 19 33 To pay for stock subscribed by A. Schneider and B. Schroeder in The Schneider & Schroeder Co., and to transfer the balance of the credit to Schneider & Schroeder to their respective personal accounts as authorized this day by the said A. Schneider and B. Schroeder. The balance sheet of the new company will now show as follows: ASSETS. Cash $36,866 50 Bills Receivable 10,783 u Accounts Receivable 25,638 46 [nventory 20,720 42 Real Estate 5.881 93 $99,890 43 LIABILITIES. : il .... Bills Payable 8,500 00 Payable 11,150 60 A. Schneider, personal 3.1-0 50 I;. Schroeder, personal 2,11933 $99.8o<> 43 The closing of the books of the old company is a very simple matter. First, credit as^ct accounts with amounts of balances of such accounts. $64,890.43. I )cbit trade liability accounts with amounts of balances of such accounts, $19, 650. 60. Debit Schneider cc Schroeder with the difference between the assets and liabilities, with an explanation that this is the pur- chase price of the business transferred, $45,239.83. The only accounts left on the old ledger are the debit account of The Schneider & Schroeder Co. and the credit accounts of A. Schneider and 15. Schroeder, so, second, close these accounts by crediting- The Schneider & Schroeder Co. $45,239.83 .and charging A. Schneider $28,120.50 and B. Schroeder $17,119.33 to stock certificates received from The Schneider & Schroeder Co., $40,000 in part payment of purchase money and cash $5,239.83 to balance. 3* *«U &* <$* CHAPTER X. Transfer of Accounts from Partnerships to Corporations — No. 2. A JOINT stock company, in the definition of the Century dictionary, is declared to be "an association, the property or capital of which is represented by stock issued in shares to the members respectively; the object being that changes in membership shall depend, not as in part- nership, upon the consent of all the members, but upon the transfer of shares, which (when fully paid up) any member may make without the consent of the others, and also that the death of a member shall not dissolve the associa- tion, as in case of a partnership, his right being simply transferred to his executors or administrators." Then follows a further statement to the effect that "in the absence of any statute, the liability of a joint stock company and its members, and its means of enforcing its rights as to third parties, are nevertheless precisely those of partners; all the members must join in suing; all are liable for its debts, and all must be joined when sued." The latter portion of this definition may be correct as to joint stock com- panies in the United States. In Canada, however, and especially in Ontario, it is entirely erroneous. With us a company is, in a legal point of view. distinct from the persons composing it; and these persons are not personally responsible for the company's debts or engagements, unless expressly made so, and their property is affected only to the extent of their interest in the company. The owner of shares upon which all has not been called in, or if called is still unpaid, is responsible to the creditors of the company for the amount of his stock so remaining unpaid. In the case which has just passed through my hands, the company was formed for the purpose of taking over the assets of a partnership. I use fictitious names and amounts. I have treated the conversion in a method somewhat different from anything I have seen stated in the works on account- ing; and to my mind in a simpler way. The letters patent of the company gave an authorized capital of $200,000. Seven provisional directors were named with power to go on and organize and carry on the business of the company. It having been decided as of advantage to have a certain amount of preferred stock, with certain privileges attached, the first operation of the directors was the creation thereof. The statute provides that where prefer- ence stock is created, it shall be done by by-law of the directors, which shall then be unanimously sanctioned by all the holders of shares — both common 25 and preferred stock subscribers — at a special general meeting called for the purpose. Or, if the sanction of all the shareholders is obtained in writing to the by-law passed by the directors, the necessity of a special general meeting is obviated. The latter course was with us the easier, and was the one pur- sued. The preferred stock carries with it the privilege of a fixed, cumulative dividend of 6 per cent, which, in plain Anglo-Saxon, means that dividend of 6 per cent shall be paid annually upon the preferred stock out of the net earnings of the company, before any dividend can be declared upon the com- mon stock, and if in any year there is insufficient profits to pay the 6 per cent, then the amount required to make up the deficiency shall be a first charge upon the net earnings of the following year's business. When the full amount of the dividend on the preferred stock has been provided for annually, then any balance of net earnings will be applied toward the payment of a dividend on the common stock up to 6 per cent. Should there still remain any undi- vided profits, it can either be divided pro rata over both the preferred and common stock, or be placed to the credit of a reserve account out of which future dividends may be paid. In the formation of the larger corporation or trusts, those "judicious combinations of capital" of which we hear so much, provision is generally made that before dividends are paid to the common stockholders, a certain amount shall be annually paid into a reserve account, which will stand as a guarantee that the holders of preferred stock will receive their stated dividends as regularly as the years roll by. This precaution is generally taken by the controlling interest — usually the pre- ferred stockholders — who care very little for the poor common stockholders. In the case I am discussing, with one or two exceptions, the preferred and common stockholders are identical, so that the interests of the one class are the interests of the other. • The opening in the journal of the new company for the preferred stock is as follows : Sundries, Dr.: Capital stock, preferred $40,000 00 Thos. Jones, 50 shares $ 5»°oo 00 David Harum, 100 shares 10,000 00 Richard Carvel, 40 shares 4,000 00 R. L. Stevenson, 50 shares 5.000 00 E. H. Beach, 160 shares 16,000 00 It will be observed that no attention has been paid to the fact that the authorized preferred capital stock is $100,000. In the majority of works on accounting, especially American, the entry would be something like this : Subscription $40,000 00 Treasury stock (preferred) 60,000 00 Capital stock (preferred) $100,000 00 To my mind an entry in the books showing the amount of the authorized capital is totally unnecessary, besides being misleading to the public having business with the company. The unsubscribed or treasury stock, as it is called, has no value whatever as an asset of the company. It is not an asset in any sense of the word. Its only value is one of availability for subscription in case it be found necessary to interest an increased capital in the business. Placing an account with such a high sounding title upon the books and in the annual statements of a company, can only have the effect of deceiving the unsophisticated and those not familiar with accounts, and serves no useful 26 purpose whatever. The subscribed, or paid-up capital of the company is all that the public wishes to know anything of, and no entry should be made in the books which would in the slightest degree becloud the real facts. One authority suggests "that the charter or act that brings into being the corpora- tion also creates value, or a latent value, in the shares of stock authorized by the company." The latent value of a million dollars worth of unsubscribed stock will not pay one dollar of the liabilities, unless a purchaser of that stock can be found, and to say "that the principles of accounts and the logic of ethics both permit the debiting of treasury stock to represent unsubscribed stock," is beating his Satanic majesty around the bush in a manner for which I should not care to assume the responsibility. The only kind of stock that can be truthfully termed "treasury stock" is where stockholders return a certain number of shares of the company (which they have already paid for either in cash or by transfer of property) into its treasury to be sold again, for the purpose of providing a working capital. The next entry in the journal is : Sundries, Dr.: Capital stock, common $30,°°° oo Thos. Jones, 30 shares $ 2,250 00 David Harum, 133 1-3 shares 10,000 00 Richard Carvel, 13 1-3 shares 1,000 00 R. L. Stevenson, 26 2-3 shares 2,000 00 Robt. Thomson, 66 2-3 shares 5,000 00 Adam Hope, 30 shares 7,500 00 Discount upon shares issued 7 500 00 In the case of the common stock, it was decided that of the authorized issue, $30,000 should be offered to the preferred stockholders at $75 per share, the nature of the business being such that although dividends would be earned, none will likely be paid to the common stockholders for the first two or three years. And here comes in another of those anachronisms in accountancy literature. In a well-known text book a discount on stock is treated in such a way that the following would be the entry : Subscription $22,500 00 Working capital 7,50° 00 Capital stock, common (or treasury stock) . . . $30,000 00 Why the discount on shares is debited to "Working Capital" is beyond my apprehension. The author says that many book-keepers "feel justified in debiting Loss and Gain account instead of 'Working Capital,' " and points out that the company does not practically, or otherwise, lose anything by the transaction, and therefore that it is not properly a charge to Loss and Gain. In this he is right. But why debit Working Capital ? It is not an accretion to capital or assets of any sort. On the contrary, it really represents a loss, to the extent that the capital actually invested must earn a dividend not only for itself but as well for the $7,500 of rebate made on the stock. It sounds better, I presume, and really this is the only excuse or justification that it seems to me can be offered for debiting "Working Capital" rather than "Discount on Shares Issued" or "Rebate on Shares Account." For my own part, I prefer to call a spade a spade. As a matter of fact, according to the statutes of Ontario there is some question as to whether stock (except min- ing companies) can be sold at a discount, and in case of forced liquidation, it is possible that holders of stock bought at a discount might be successfully 27 placed upon the list of contributories in a winding up proceeding, to the extent of the amount of discount so allowed. Capital account having been credited with subscriptions, and the persons subscribing having been debited, we now proceed to a consideration of the transfer of the assets of the business. An inventory of the real estate, plant and merchandise having been taken under the supervision of a committee of the directors of the new company, and an arrangement arrived at as to the amount of stock to be taken by the respective partners, the question of the liabilities of the partnership was next to be dealt with. Here, too, I recom- mended a departure from the ordinary mode of procedure. Instead of the company assuming any of the liabilities of the partnership, I arranged that the amount which was to be paid for the assets, less the stock which was to be taken by the partners, should be paid to a trustee, who should be authorized and empowered to pay off the partnership indebtedness according to a list to be furnished him by the partners. This proceeding materially simplified the book-keeping connected with the transfer, and the only entry required to get the assets on the books of the company was : Real estate $10,000 00 Plant account 9,7°o 00 Mdse. account 35,7 20 00 J. H. Brown & Co $55,4^0 00 Of the amount of credit of J. H. B. & Co., $30,420 was to be paid over to the trustee, and this was accomplished by an entry : J. H. Brown & Co $30,4-^0 00 Henry Jones, trustee $30,400 00 For transfer of account to cover liabilities of J. H. Brown & Co. Of the above $30,420 one creditor agreed to take preferred stock for his account of $5,000, hence the ensuing two entries : Geo. Johnson $5,000 00 Capital stock (preferred) $5,000 00 For 50 shares of preferred stock. Henry Jones, trustee $5.ooo 00 George Johnson $5,ooo 00 For preferred stock taken in exchange for notes held against partnership. To close the account of the partnership by exchange of stock for the equity of the partners in the assets of the partnership, this entry was necessary : J H. Brown & Co $25,000 00 J H. Brown $10,000 00 E. B. Ward 7.500 00 T. Burns 7.500 00 Capital stock (common) $25,000 00 As payments were received on account of stock, cash was debited, while payments to the trustee were credits to Cash. The book debts of the partnership were divided by mutual consent amongst the partners. Thus, very simply and expeditiously, was the conversion of the partner- ship to a joint stock company effected. Chapter XI. The Treatment of Discount on Treasury Stock. THE following point recently occurred in practice : A, B, C, D and E formed a corporation for the purpose of manufacturing and selling a patented article. The capital stock is $100,000, being 1,000 shares at $100 per share. The incorporators contribute $2,000 each in cash, and A receives for his patent right nine hundred shares at par, "full paid and non- assessable." As part of the contract, A transfers to the company three hun- dred shares to be held as treasury stock and to be sold at not less than fifty dollars per share. Subsequently the company sells one hundred shares of Treasury Stock at the limited price, namely, fifty dollars per share. The entry "discount on treasury stock" would be at variance with the shares being "full paid and non-assessable." It is also desired to avoid this item, "discount on treasury stock," appearing in the balance sheet. The following entries are suggested to meet the difficulty : Cash $10,000 00 Patent right 90,000 00 To capital stock $100,000 00 Treasury stock • 15,000 00 To patent right 15,000 00 Cash 5,000 00 To treasury stock 5,000 00 The resulting balance sheet shows as follows : Assets: Patent right $75,000 00 Treasury stock 10,000 00 Cash 15,000 00 Liabilities: Capital stock $100,000 00 The main point is that the treasury stock is entered and carried on the books at its proper value of fifty dollars per share, instead of its nominal value of one hundred dollars per share. & A & A CHAPTER XII. 4. & Sales of Stock at Discount for Working Capital. i. i. REFERRING to the practice, so common amongst mining companies, of selling shares of the par value of $1 at ten cents or fifteen cents per share — a discount of 85 or 90 per cent, there can be no question but that it is perfectly legitimate, although considerable doubt exists as to whether shares in any other form of company can be disposed of by the direcors at a discount. Or, rather, that n cases where such sales are made, if the holders of 29 Such shares are not responsible to the creditors 01 the company to the extent of the discount so allowed, should stress of circumstances make such a recourse necessary. No question arises as to how the discount on shares is treated by the originators of a mining company. The usual course is to value the mining property at the par value of the capita] stock, be it $5,000 or $5,000,000. The capital stock having been divided among the promoters according to their interests, the first entry which finds its way into the books of the mining company will read : The Golconda Mine $5,000,000 00 Capital stock $5,000,000 00 The above will be posted to the general ledger, while the stock ledger will contain details as to the holdings of stock by the promoters. Cash being required now to develop the property, the usual course is to make a return to the treasury of a sufficient amount of stock to be sold to the public to provide the necessary working capital. Let us suppose, for purposes of illustration, that $500,000 of the hold- ings of the promoters is returned by them to the treasury. Then : Treasury stock $500,000 00 Working capital $500,000 00 So far so good. Of course the disposal of the stock at par value is out of the question, and it is placed upon the market at, say, 10 cents per share, realizing in cash $50,000. The entry which covers the transaction usually runs as follows : Cash $ 50,000 00 Working capital 450,000 00 Treasury stock $500,000 00 In this case stock is presented to the company of an alleged value of $500,000, and it is perfectly legitimate and proper when, at the disposal of the stock, it is found that it has been overvalued, that the loss arising from the sale should be charged back to the account in which it originated. The question of the discount on shares issued is, in the case of mining companies organized upon this plan, thus easily disposed of. Let us now take the case of a company formed for the purpose of pur- chasing a mining property. The property can be purchased for $45,000 cash. The capital stock (authorized) of the company is placed at $1,000,000, in shares of $1 each. Of these the promoters take 450,000 shares at 10 cents each, thus realiz- ing the $45,000 needed to purchase the property. How is this to be got upon the books of the company? In the natural order of things the entry would be : Cash $ 45,000 00 Discount on shares 405,000 00 Capital stock, subscribed $450,000 00 The directors decide now to sell 200,000 of the $1 shares at 25 cents on the dollar to provide a working capital of $50,000. They succeed in doing this, and then would follow the entry: Cash $ 50,000 00 Discount on shares 1 50,000 00 Capital stock, subscribed $200,000 00 30 The balance of 350,000 shares is left unsubscribed, or, as the literary accountants delight to call it, as "treasury stock." By the above treatment of the subscribed capital stock you have a plain, unvarnished statement upon the books as to the position of the company in respect to its capital. An account in the ledger must necessarily be opened for the "Discount on Shares," and the query is as to how this shall appear in the balance sheet of the company. To my mind, there are several ways of treating it. The object of show- ing the amount of subscribed capital stock in the balance sheet is to furnish information as to the value upon which dividends are being paid. The fact Asscis. Lie>bili~h< Mirvrs Accourch N/tacKi r\c-F»y Ones "irv dump 05oooo v5ooo GO - .5 OOP 00 00 00 00 00 00 that there is an account upon the books of the company known as "Discount on Shares" does not affect the company's credit adversely, while to carry the account under the heading "Working Capital" would be to deceive the creditors of the company. How is the average individual who studies the balance sheet of the company, finding thereon on the asset side an entry — Working capital $555,000 00 to know that such is not an asset at all, but merely a fictitious account intended to give the company an appearance of substantiality which it lacks entirely — although, as a fact, the concern may be perfectly solvent and healthy? I think the preferable way to dispose of the item is to call it what it really is in the balance sheet, but to make a subdivision of the statement as between the capital and trade assets on the one side and the asset known as "Working Capital (discount on shares)" ; and on the liability side a similar division as between trade liabilities and the liability on capital account. Another way of treating it, keeping it in the usual "report" form ot balance sheet, would be : Assets — Mines account $45,000 00 Machinery account 15,000 00 Ores in dump 10,000 00 Cash on hand 40,000 00 $110,000 00 Liabilities — Bills payable $ 5,000 00 Ledger balances 5,000 00 Capital $650,000 00 Less discount 555-ooo 00 95,000 00 Surplus $105,000 00 5,000 00 -$110,000 00 3] CHAPTER XIIL 4. 4. The Treatment of Bonus Account. IN THE organization of a corporation it is often the case that the original incorators desire to pay for their stock otherwise than in cash money. In order to meet the difficulties presented by this situation such accounts as goodwill, bonus, franchise, etc., are opened on the ledger and represent what the company has received for its shares of capital stock in the way of consid- erations other than money or tangible assets. Let us consider some special cases. A company is organized with a capital of $50,000, and the promoter is to receive for his services fifty shares of the capital stock at a par value of $100 per share. The usual entry is Bonus to Capital Stock or Bonus to Treasury Stock, $5,000. Bonus is thus carried as an asset on the books of the company, whereas, as a matter of fact, Bonus is an expense account pure and simple. In the organization of the company the services of the promoter are just as necessary and legitimate as the services of an attorney or an accountant. For such services the company may pay in one or four ways. It may pay in cash, or it may give the promoter credit on open account, or it may give its promissory note, or it may give a certain number of shares of its capital stock. The first three methods of providing for a claim are familiar and need no special discussion. The fourth method, which is the one usually adopted, seems to present some difficulty. The first point to be made clear is that this is a perfectly legitimate mode of paying the promoter for his services rendered. It is true that this method may be abused. The promoter may receive a great many more shares than he is entitled to. But so may any other method of payment be abused. The payment by way of shares in the company stock is the most equitable in that the value of the payment is dependent upon the future success of the company. If the company succeeds the promoter may, if he chooses, sell out his shares and thus turn his stock payment into cash money. For the company the stock payment is the more advantageous in that it does not require the outlay of cash money and is practically a lien only on possible profits. From the point of view of the accountant the difficulty is to make a proper disposition of the "Bonus" account. The entry "Bonus dr. to Treasury Stock" is simply a short way of telling a long story. An accountant understands at once from the entry and from the brief explanation in the journal exactly what has been done, nut it is not always so plain to the general public. It is said that "Bonus" appears as an asset of the company when, in reality, it is not an asset at all. It is more correct to say that as against the creditors of the company it is not an asset and is not intended to be stated as such, but as against the stockholders of the company it is an asset. In settling with its stockholders the company may use the Bonus account as an asset to offset its liability on account of the capital stock, or to offset its liability on account of any undivided profits. If there arc 110 undivided profits, then the capital stock is impaired to the extent of the Bonus account. If there are undivided profits exactly equal to the Bonus account then in settling witli the stockholders the company will offset its liability on account of capital stock by the amount of the Bonus account. 32 As a matter of accounting, herefore, a certain amount of the profits should be reserved each year to equal the amount of the Bonus account. When the reserved profits equal the Bonus account, the one may be used to offset the other and the Bonus account taken off the books. ■3% IV* «*« J*» CHAPTER XIV. a. a. Some Useful Definitions. x a. PERSONAL ACCOUNT.— An account which records the transactions of a business with its customers, creditors, or debtors. An individual account. Such an account comprises all charges or debits, and all credits of whatsoever nature, the excess of debits over credits, or of credits over debits, showing the balance of account. An account representing indebtedness of or liability to a person. An account containing charges on which no profits are made, such as personal accounts for salaries, dividends, traveling salesmen, etc., as dis- tinguished from accounts with customers or creditors. * * # Impersonal Account. — An account which represents conditions, and records the profits, losses, receipts or expenditures of a business, but does not represent persons. Examples : General expense, manufacturing expense, freight, discount, interest, repairs, advertising, postage. * * * Current Account. — An active, or running account. An account wherein all transactions are itemized. ^ * ^ Summary Account. — An account dealing with totals and not with items. As the use of columnar cash books, journals, and auxiliary record books increases, the number of summary accounts tends to outnumber item- ized impersonal accounts. Balance, or adjustment accounts, are good types of the summary account. Representative Account. — An account — preferably — whose func- tion it is to complete the double entry by representing the transactions described or recorded by personal accounts. Thus sales account furnishes the double entry for the customers' accounts, and purchase account that for the creditors' accounts. Also called "nominal account." * * * Adjustment Account. — A summary account devised to render per- sonal ledgers self-balancing, so that errors may be localized and a great saving of labor effected in tracing them. 33 The principle involved is to make a contra posting for every item posted to the ledger to be balanced, but to make such contra postings in totals and not in detail. This necessitates separate books of original entry for each ledger, or separate columns, the latter being the plan more generally used. * * :|: Negative ACCOUNT. — An account which reduces the value of some other account. Thus treasury stock is a negative account to capital ; returns is a negative to sales. * * * Comparative Financial Statement. — A comparative financial statement exhibits totals of purchases, manufacturing expense, general expense, output, sales, etc., at stated successive periods, thereby securing a comparison of cost of production, gross profit, and selling expenses on amount of turnover, and facilitating the detection of excessive charges for labor, or decrease of efficiency in other departments of the business. * * * Fixed Assets. — Fixed assets are those which form a permanent and essential part of the business carried on, such as real estate, machinery, land and plant of a mine, roadbed and rolling stock of a railroad, etc. They are subject to appreciation and depreciation. * * * Floating Assets. — Floating assets are those which vary from day to day from sale, realization, or exchange, etc., such as stock-in-trade, cash, accounts and notes receivable, land of a real estate company, etc. * * * Speculative Assets. — Speculative assets are those which fluctuate in value from day to day — such as stocks, bonds, and "futures" in different kinds of products dealt in by the Exchanges. Such assets as patent rights, goodwill and advertising devices are more or less speculative, the latter often losing its entire value the moment a business is suspended or closed out. * * * Balance Sheet. — A statement of actual assets and liabilities at a given date designed to exhibit the financial condition of a business. It consists of the balances of assets and liabilities accounts extracted from the ledger after inventory has been taken and the nominal accounts have been closed into profit and loss, and of outstanding resources or liabilities not included in the books of account. The excess of assets over liabilities represents the profit made by the operations of the business during the period covered by the statement ; the excess of liabilities over assets represents a loss. This surplus, or deficiency, is the balance of the balance sheet, and must agree with the balance of the current profit and loss account. Items such as "surplus." "reserve." "undivided profit," etc.. having separate accounts in the ledger, are in reality sections of the balance sheet, and should be classified accordingly. 34 The components of a balance sheet are, in our opinion, best classified as follows : Assets — Cash and property, personal, speculative. Liabilities — Negatives to property, personal, proportion of wages, taxes, etc., capital, reserve, profit and loss. * * * Treasury Stock. — Capital stock unsubscribed, or of which a corpor- ation has acquired possession from its original owners. Stock set aside for sale in order to raise working capital. * * * Reserve Fund. — An amount set aside out of profits to provide against unforeseen contingencies. A sum set aside to provide for depreciation of specified assets is con- sidered a charge against assets, and as such, should be deducted on the balance sheet from the amount of the assets involved. * * # Sinking Fund. — An amount set aside to provide against anticipated losses on redemption of debentures, expiration of leases, etc., and specially invested. While, therefore, a reserve fund appears among the liabilities and is simply a portion of the surplus of assets over liabilities, a sinking fund as an investment is an asset and is so shown on the balance sheet. The sums so set aside and invested should be sufficient, with interest, to amount to the total outlay the sinking fund is designed to cover. * * * Suspense Account. — A summary account to which are transferred the balances of doubtful accounts from the customers' ledger, and in which account they are retained until such time as they can be definitely disposed of. In this way they are not lost sight of, and can be estimated in the balance sheet at their proper value. Common Stock. — The ordinary stock of a corporation on which divi- dends are paid from the surplus earned. * * * Preferred Stock. — A special stock issued on which a specified divi- dend is guaranteed and which dividends must be paid prior to the holders of common stock receiving any distribution from the profits of an enterprise. Where a business is very prosperous common stock may be a much more valuable investment than preferred stock, as it may receive larger dividends according to the increase of profits available for distribution, whereas, pre- ferred stock can never receive more than the specified percentage. Cumulative Preferred Stock. — Preferred stock which is entitled to all arrears of unpaid dividends prior to any distribution of profits among the common stockholders. Non-Cumueative Preferred Stock. — Stock the holders of which lose any unpaid guaranteed dividends which the earnings of a company were insufficient to pay at date of payment. Deferred Stock. — It sometimes happens that some portion of stock is issued on the understanding that it shall receive nothing from the profits of a business until after the common stock holders have been paid a dividend of a certain amount, after which deferred stock shall participate. * * * Fully Paid Non-Assessable Stock. — Stock the face value of which lias been paid by the holders on the agreement that it shall not be assessed by the officers of the company for any purpose. * * * WATERED Stock. — When a corporation desires to evade its State or Municipal tax or other obligations by reducing its showing of profits, it reorganizes with an increased capital stock, arbitrarily increasing the values of its assets to correspond. By this means the percentage of profits on capital invested is apparently reduced and the stock is "watered." * * * Funded Debt. — A liability or liabilities secured by bonds. Unlike debenture bonds these bonds are themselves secured by mortgages or equally substantial security. * * * Working Capital is the amount available to provide the necessary expenditures for running the business. This amount may consist of : a. Capital stock subscribed and paid. b. Capital stock sold by stockholders to raise cash. c. Dividends or surplus undistributed. d. Part of purchase money of business allowed to remain unpaid. e. Loans from banks or otherwise. f. Proceeds of accommodation notes. g. Assessment on stockholders. Etc., etc. * * * Debentures are unsecured bonds issued for sale for the purpose of securing working capital, and interest on same is a first charge on profits — that is, in priority to preferred or other dividends. PART VI. Accounting for the Wholesale Grocery and Hardware Businesses. ACCOUNTING SYSTEMS FOR THE Wholesale Grocery and Hardware Businesses. The system given below is designed for a house with a business of a million a year. I have made it for a large business, because I think it is an easy matter to fit a plan which covers the operations of a large concern to the needs of a smaller one. For instance, if the business only required one debit or sales ledger, the posting would be made direct from the sales book. There would be no journalizing of sales at all. The reason for journalizing is that in this business there are four ledgers, it is necessary, in order to be able to balance separately. We will begin with the original ,o O/ \r> wa^on A a - fH Ave,. WEPMEQ £,CO, a % r.cj.p ea& & *3.oo 1 Ebb! Gn><3r\. 5u«iaP @ *5,43 1 £><^ Pfeurvea 1 ys. Dai 5 y M'.lK. ® a* *4.4o order or sales ticket, as it is also called. (See Fig. i.) This is a ticket which is made out by the salesman taking the order. It goes direct to the credit man, who, if the customer is good for it, "passes" it by putting his initial or private mark on it. From the credit man the ticket goes to the head salesman. He checks the prices and sends it to the bill office. This office is divided into two depart- ments — city and country. Each department takes their orders and copies them on to loose sheets of the sales book. These sheets have the common journal ruling and are perforated so that they can be fastened temporarily with a McGill fastener. In charging, two men work together. In the city department, one calls off and charges at the same time and the other takes the dictation and makes the invoice. They figure separately and prove before taking up the next charge. The invoices are handed to the shipper. He orders the goods called for and checks off each article as it is placed on the wagon and gives the driver the invoice. Every customer receiving goods by wagon must insist upon an invoice for the same. One of the largest houses in the country follows out this plan and has never had a dispute with a customer about not receiving goods. When the customer accepts an invoice from the driver it is understood that he received the goods the invoice called for. In the country department one charges and calls off and the other makes the railroad receipts. The freight receipts are made in duplicate by the use of a carbon sheet. These receipts are handed to the country shipper and checked on the wagon in the same manner as the city deliveries. The country bills are made out in spare moments or the next day on the typewriter in the main office. If the business is very large, by using loose sheets three, four, or as many teams as are necessary, can work at one time. At the end of the day these sales sheets are fastened together and sent to the main office. The next morning they are figured and in a general way the prices checked. The sheets are then paged, taking up the last number of the day before, and so on every day up to 1,000. When 1,000 is reached these sheets are bound into a book and numbered I, 2, 3 and so on up to 100, when they start at I again. The Sales Journals. — Each ledger has a journal of its own. We are supposing that the business requires four ledgers — A to K City, L to Z City, A to K Country, and L to Z Country. At the beginning of each month in the sales journal two or more pages are left for journal items, cross entries. «aTO« c/T-v- jO(/««-u. Nlcw^r-K rvi ,_j j or , 3i=l+ 1900 Thr-^^J IB 0.0 IS 2S44S ,. .,-' ~ O TA^^old DO 32 Tkos r K.ng -r«.eod- aa Dou^Sc-ty £-Co Molasaei 9od*> ='• •' j. etc. For ruling of sales journal, sec Fig. 2. The ledgers men have assist- ants whose duty it is to take the sales book and write up the charges for their ledger. (See illustration of sales journal.) All packages that are return- able and such memo, as time on certain goods are posted into the ledger. The sales book is then "called" back and the journals checked. The four journals are footed and must agree with the footing" of the sales book. At the end of the month the totals of the several journals are credited to sales merchandise in the general ledger. Credit Journals. — Each ledger has also a credit journal of its own, and is ruled in common journal ruling, with the addition of a line to keep the checks (') regular. All credits for discounts, merchandise returned, charged packages returned, etc., are put through «"his book. The returns are copied from the receiving clerk's book of returned merchandise. The totals of these journals are debited to sales merchandise at the end of the month. At the beginning of each month two pages are reserved — one for interest account and the other for bills receivable. The headings of these pages read "Sundries Dr. to Interest" and "Bills Receivable Dr. to Sundries." This does away with making a journal entry every time there is an item for these accounts. The totals of these two pages are posted to their respective accounts in the general ledger. The bills receivable items can be posted separately if desired, but the intelligent use of a bill book makes it unnecessary. Sales Ledgers. — These are loose-leaf, but are not indexed as is custom- ary. They are paged. A customer has the same page as long as he deals. When one page is full another is paged with a numbering machine and put in its place. It is necessary to carry a separate index with this plan. The reason for paging the ledger is that by this method a salesman's accounts are kept together. Every salesman has 50 or 100 pages. For instance: Per- kins' accounts run from 1 to 50; Wilson's from 50 to 100; Jones, having a greater number of customers, has the pages from 100 to 200, and so on with the other salesmen. Probably Perkins' accounts take only 24 pages. The next page in the ledger will be 50, the first of Wilson's accounts. If Perkins gets a new customer, page 25 is put in. The ledgers are ruled as per Fig. 3, and explains itself. The sales are posted by the sales book page and not by journal page. See illustration of sales journal, also of ledger, which shows sales book number and page. As bills are paid they are checked off along O.r ■ eo . ■•/» -','■ t)Of> a 32 IO • O r-c 1 O 58 31 '?.'; , O 9 1 ae Si r el . ^ eo $01 <3 0.5 IZ& t>- C. 52 1 S.S A -7 is "9 ' CJ I03 ' O -. i-a ~>3 with the credits balancing them. (See Fig. 3.) All charges and credits open should make up the "balance." With all cash turned in the salesman must give the book-keeper a settlement slip showing- just what bills are paid- (See Fig. 7.) &C-rTL-FM£/V7 F- q w;U<-,r-s . H-h A /no ^««" v FWKir,* . isoe / 4. 3l i_«»» J ;»='■}•. 1/31 1 105 SO 02 ise .52. OS 1 2.5- 47 The Cash Department. — To begin with, the bank account is kept on the stub of the check book. The books used are as follows : ( 1) blotter cash, (2) daily cash, (3) auxiliary cash, and (4) a memorandum book called C. O. D. and cash sales. The blotter cash is a common book into which is written in pencil all receipts (of all kinds) and payments of cash. There are two blotter cash books, used day about. The Daily Cash. — (See Fig. 4A and 4B.) This book is a copy of the blotter cash and of the regular check book. All postings are made from this on ■ZASti Date i-eo „*„* £,%Z l. r& -z. I! A /a aa £** Y -S^i-CS GEHEOAL. 1 AMOUNT 100 d«n 1 To Balance 35820 07 ' 32 I T. F,& 32 32 OO ' ©0 252 ' 35 ' I 252 35 ' 93 P/R W.rDose 3SO 1 3S ° ' \50 \r& 1 32I 1 32 . CA£>n C« DATE- rcuo IVAMA^ c,"?£ e"~$ eoJS-TOy <_ rt> 3. r*D^E GErslEOAL- AMOUKIT ISO > MJae Am. S>uA R % Co 1 1 02 5043 3 2 1 I02 50S 00 "•1 CxpWI Deed wp waaois Mcfse PP.R rn+.Su^ao TTPeJohnaon, pro.ck.et Kldac. exp.&rpt. P r ABC Exp*. Cxp.Crnt " Expense " S>v Balance .S3 ■T5 e 1 235 38 240 308 2 OOO 4892 OO sa OS 240 ©4 53 285 32. 30s a e>oo 4392 3CVlftO 00 3a as so OS ae book. An assistant writes up the daily cash and must be familiar with the accounts in the several ledgers. The stubs of the check book state the account to which the charge belongs and the amounts are extended in the proper columns. The "merchandise column" is posted in total to the Dr. 8 of merchandise in the general ledger. (The footings of the columns are carried on day by day to the end of the month and a summary made.) The auxiliary Cash Book. — (See Fig. 5.) This is a cash book with only one side. It could be called, just as well, the auxiliary disbursing cash AUX.IL-IAOV CA5n £>OOK CASn o«a o*yc ^ noi-10 paranoic /-ox «f«o "££££ uA.aoa +MOUHT IOOC 31 e>s P.D.R. b',11* Mafewarv DarxK Exck &>*>>, Roll WT roster. Exp Deo To Doily Cask DooK ■3 a OS> ' as ■ 3>A OS SO \OA-Z 4 OO SO OO lOA-Z 3A 50 33 OO OO 36 285 00 32 5 2 2>082 50 6O0 OS .;.-■ 4892 86S632 AS. _ 93 ;>.-. o.«. book. It is handled only by the cashiers and the general book-keeper. Items of cash or checks given which come under the division as illustrated are put through this book. Items of a private nature, such as payments of salary to officials, heads of departments, etc., and checks for dividends, or anything which it would be better not to put through the daily cash book, can be put through there. There is a posting column and items can be posted direct to their proper accounts in the general ledger from here. At the end of the month the totals of the columns are written into the daily cash book and posted from that book. The balance of the auxiliary cash book, which has been posted direct, is written into the daily cash book as "sundries" and marked "||" in the posting column, which shows they have been posted else- where. (See illustrations, Figs. 4A and 5.) This will make the daily cash book at the end of the month show the actual cash on hand. A separate check book can be kept for the payments of a private nature spoken of, the footing to be carried into the regular check book where the bank account is kept. The cash sales and C. O. D. items are credited in one sum to "cash sales" and extended into that column at the end of each day. The total of this column at the end of the month is credited to "sales merchandise." A number of pages of the sales book is reserved each day for charging C. O. D. and cash sales. The name, carrier and amount is copied into a book for that purpose and the charge "lined out." As they are paid, they are checked off. Purchase Department. — This department checks all bills and pays them. The items of the invoice are checked by the receiving clerk's book — "goods purchased." The bills are kept on file until checked, when they are placed in a cabinet with 31 pigeon-holes numbered from 1 to 31. These numbers are the dates of the month when bills are clue. For instance, a bill is dated Jan- uary 10th and due on the 20th. That bill is placed in pigeon-hole No. 20. On that date all bills in that compartment are taken out and paid. The general books are ledger, journal and cash book. The trial balance shows the accounts in the general ledger. There are no accounts kept with the sales ledgers in the general ledger. With so much transferring, cross entries, etc., between these ledgers and the general ledger it would require considerable "journaling" to keep them. Their balance sheets are sufficient, which are proved as per Fig. 6. As the cash postings have been made from the daily r*b. ZQ-/0OO vJinv.3i/oo ■a&.zso Cask 3ae47 ■ A 5aUe. 34^02 Cask 266 O S 932 692 : a 13 25 c ,s O0 ( * 2 as X " •/ 2SO 39 32 1 X M 65 a SO ^ 13 0 36,564 s e V3S2 •-: 809I4 70 3S564 Sfi B^l r c L> 2a/oo A. 2 350 '■;> AmouO'& rnonKed wife X arc 7r>or\o cn+nies and Hkc oike^s. fe»»S a,fFe-o+- C»p.-h.l 5WK 300000 - Qe~=-~e. ./„ SOO 2 20 .0 200000 Plant" rviAoK.rve.w-y «4e .3 3-aO 53 300 iO B.Me Rece..~.oble; ■ 5 95^216 B.IU P* y *bl = • OOOO L-abort 100 360 32 Inte^ooT" .'OC6 >~ k.u.»ce ("-~e.p.r.ed«32* ) 16O8 03 Cpen.se "/^(^.^t^ytea,,'^ 1 96 7 78 . O 193 as 620 o.=.K 37-35 S^ndny CrtJfe.1 «/~ 35020 A*.K C.+y Ud«en per bol booK JfZ3SO « 3 7D52 .'.3 l_ iiZ ' * ' 5-3K2 T3 and auxiliary cash books, the general cash book will deal with totals only — each day's total Dr. and each day's total Cr. marked "j|" in the column to show it has been posted. All the bills for goods received before the end of the fiscal year and counted in the inventory but not paid, are journalized — charged to merchandise, expenses, etc., and credited to "sundries" (credit- ors') account. Later when these bills are paid the amounts are charged to "sundries" account, thus balancing it. The Trial Balance (Fig. 8), the P. and L. Statement (Fig. 9), and the Balance Sheet (Fig. 10) need no explanation. L033 •S TA TCMEMT -5cl«. Me »okAncl.A«v *&&a"4&ll MePC-Nandiae • 600 220 / 2-ao 120.6 W«r e.e>f 1 626 32 2^7 7j,4 l—Un •ioa.300.32 In«-ononc« • 606.03 ln~onTor-y ... J2.iO • A33.9» C.pen — ©e.7 vs. 10 lrwe.nfe.y- eseooas Sole^en- c 'f 6 1 934S A^e-Tr-.n.* Dono77br\« 020. 1_ OM or. oceoorAc. 3 700 e> r. Depr«»+f<, rx PU4 70 750, rnC.WA4onc.eic. 1 500 2.9 I93W Met prof.r /Oeoo/ClTon cj /n* &o*tnn+ MAoK.neoy efe- Ttoms Waoom'e ncrntss 14790 OS eos.o so 92 .OS 1 .'> Cxpen.se Stbc K (feed ete on Kind) 691 1 a. Incuecnoe. Lrupu'eo) 22 1 Cash on V\And 4V in De-nKy 57 135 1 1 D.lla Rrccvablc 23858 1 5 Acct&Rece.voblc, prnLcddc^a ■oooeo 1 ' 0»p.ti»l StIocX 500000 Ho C »vc V- 1 U.03 1 1 D"C Sundry CneJ.-fe^O 33020 1 i D.llj. Poyakle. 10000 D.v.derxd */^ :■"■>■-. •-■ In the following system of accounting the necessary books are : Pur- chase Journal, Check Register, Order Register, Journal-Cash Book, Pur- chase, City and General ledgers, separate honks, and three Country Sales ledgers, in which the accounts are classified by States. For instance. "A" 10 ledger will contain accounts in Wisconsin and Michigan; "B," Minnesota, North and South Dakota; "C," Iowa, Montana, and miscellaneous. If col- lections are made by travelers, we would classify our accounts by travelers' routes, but a salesman is handicapped by giving attention to collections, and they do not usually make good collectors anyway. As collections are to be made from the office, we classified accounts as first mentioned. A labor-saving system is not where all your books are bound in one or two. Some prefer only two books — a bound ledger large enough to hold accounts that may be opened for all time, a 200-pounder, requiring a ware- house truck to transport it and a derrick hoisting apparatus to handle it ; a sixty-column journal to match that requires a plumb line to guide your eye across the page. In such a journal, when you have a certain class of entries to make, for instance, a page of creditors' invoices, you use two columns, the balance of the page goes to profit and loss. As we must buy before we could sell, one of the first questions that suggests itself is a method for handling invoices of goods purchased. Please note form No. i, purchase journal, a PUDCHASE. .JOUDNAL Name- DemanK* Oredi"tbr.s» Pa.d Date. A Pay Cu.»Jbrr\ere> Gerjeral sq] £," IS" 2-S - book in which all purchase invoices are entered — name, date and amount, and from which all postings are made direct to the purchase or creditors' ledger, except, of course, any items that might appear in the other two columns, customers and general. They are there for a purpose, which will be explained later. This purchase journal embodies a feature also for keep- ing track of invoices to pay, assuming that all bills shall be discounted. It is desirable that certain days be set aside for settlement of purchases, and as most all grocery goods are discountable in from ten to fifteen days, the 5th, 15th and 25th of the month are good settlement days for "out-of-town" pur- chases. To clearly illustrate I will give an example. Presuming we have entered a number of invoices from different firms, dates ranging from the 1st to the 15th. Opposite each amount of those invoices dated from the 1st to the 10th we place an X check mark in the column headed "15th," and opposite invoices of a later date we check in the "25th" or "5th" column, as the case may be, figuring ahead about ten days from the date of the invoice. It will be seen that when we refer to this purchase record on our settlement days, the invoices due to pay or discount are indicated to us at a glance, and 11 we turn to the invoice clip for the desired bills, which have now been through the buyer's hands, prices OK'd, extensions checked, etc. We will settle all city accounts once a month, checking the statements rendered to us with our ledger accounts, and, of course, examining all the bills and attaching them to the statement, which shall be our voucher for the disbursement. Let us follow a creditor's invoice through the "mill." It is received, recorded in purchase journal and settlement date checked. We then copy into a freight receiving book (which shall be nothing more than a book with horizontal rulings, 200 or 300 pages about 8x12 inches), the name of shipper, car number, if any, routing, then the items any other information that the receiving department should know. We stamp the invoice with a rubber stamp something like this : Price OK , Extensions OK , Items OK , Receiving Book Page Note the receiving book page thereon and pass it to the buyer, who OK's the prices or makes note of any overcharges— notes that freight is to be deducted perhaps— after which extensions are checked and the invoice put on the clip for settlement in due time. Post all invoices to your ledgers just as they are rendered, errors and all, if there are any. W r hen you pay, make your remittance statement from the invoice, and charge back any errors, overcharges, freight allow- ances, etc., through the check register at the time you charge the account with the check, referring always, of course, to the ledger account to ascertain that there are no debit items to be deducted in settle- ment and which would not show on the invoice goods returned perhaps. When an invoice is paid, so mark it with a paid stamp, note the check No. thereon, and stamp "Paid" opposite the amount in your purchase journal with a neat little rubber stamp. A blank statement (for No. 2) on the back of the check is a good idea, and nothing more will -H*, ~,tU Jk Jv '»~-J "> fo« **«lmri of — .+„V.J t.l.~. , , , IF fourjd .^correct p)*»=« ret-ufr) cbec k ~ i 'd> ,. be needed for most settlements. It is well, however, to have a separate blank remittance form, and when this is used take an impression and note the copy-book page on the back of the check. Our checks will be made with Stubs, and nol bound in book form, but put up in tabs of 100 each. We will not often have use for the stub, for when we draw checks for settlements, L2 we will make our entries in the check register direct from the check. How- ever, we will have the stub there in case it is needed. It may be more con- venient sometimes for the book-keeper to make a stub memorandum tem- porarily, or, a member of the firm might draw a check, in which case we would not want him to make entries in our books. Order blanks will be ruled like form No. 3. Salesmen should be fur- nished with pocket order books for their convenience, but we will require DATE SOUD &n/ °r> to roL.10 DATE. OECD TOWISI •Snip ov REMA.QXS •SALESMAN •STATE.. DATE SILLED etArririG PH0.DM.HBCO TEHMO U/MIT OW..1.SA O.tC.O L3-T CfiEO/T 1 r -,,-)- i. CMKVTJM RactVg). Ope-ck, Quart" I "title e. I RcQ'.-^rcr* No We.^t Price •5&)^&rp\cn rr*J^i not ~S «?lo / 1 ■ ... I them to send all orders in on regular order blank forms. Before they start out, drill them well on the subject of writing orders legibly, to use special care in spelling names and places, and little trouble will be experienced from that source. When orders are received they should be stamped with date of receipt and passed to the desk of the credit man, who, if he passes favorably upon it, would put his official OK thereon in the proper space for it. The order should then be passed to an entry clerk, that date, name of customer, town and state, may be entered in the Order Register (form No. 4), which OPlDEFi REGf&T/zQ And •SAUZ3,P>ZCOf>D- Da^c No Name towr\ stak ^5a)jT3r7v«rv£> S.S>Ve-£» AW.M sore-a WAMarr W.M.Duroo M »'.) M 1 1 1 [ " 1 i will serve also as a Salesmen's Sales Record, as we are to base their salary somewhat upon the volume of their sales. It will be observed that the lines are numbered numerically, and when an order is entered the register number is stamped thereon with a numbering machine or pen, as preferred. 13 'To keep a copy of all orders In the office for fear that one may be lost in the shipping room is a waste of time and money. Furnish the shipping department with a supply of order holders (there are a number of excellent ones on the market), impress upon shipping department and packing room men the importance of returning all orders that pass through their hands, and I would not be surprised if there never was an instance of a lost order. We have it registered, and if it does not come back promptly, let it be the duty of some of the office force to ascertain the reason. Now, while it is probably not desirable to keep separate department accounts on our ledger, for shipping purposes we will have what we might call the bulk and shelf-goods departments. In the shelf-goods department we will keep candies, cigars, pipes and all small box goods. The original order should go to the department which is to supply the larger number of articles. To illustrate : If an order called for two barrels sugar and quite an assortment of cigars, candies, etc., the original order would go to the shelf-goods department, the sugar part would be copied off on a memoran- dum slip and given the same register number as the original. The slip could be smaller in form, ruled with quantity column, for name of customer, town and state, but used only to facilitate getting out goods for shipment, the slip going to the bulk goods department when the original went to the other department, and vice versa, the original always going to the depart- ment supplying the most goods on the order. When the shipment is com- pleted, the order, with the memorandum slip pinned to it, if any, is returned to the office and compared to ascertain that no item on the slip is crossed off as being out of stock, and if so, must be crossed off the original and back- ordered. It will be found that the majority of orders can be filled from the original, and by this order method we obviate making more than one bill for a shipment, which is frequently done by many large houses. The order is now ready to be priced, if prices do not already show, figured, the extensions checked and billed. Billing on the typewriting machine is the neatest and most rapid way. Orders are now stamped A, B, C or D, as the case may be, for its respective ledger, and it is "up to" the book-keepers, and we ought to have about three, including the cashier, for 5,000 accounts, or about 1,500 accounts to a man. Mail orders will, of course, have to be copied, but we can furnish our better customers with blanks and reduce order copying to a minimum. The Sales Ledger will be the loose-leaf style, ruled as shown by form No. 5. In most grocery accounts the debits exceed the credits two or three times, and to save space and make the account more compact we will have two debit to one credit column. Each ledger is self-indexing. That is, to each letter of the alphabet is apportioned a certain number of pages and 14 each division has its index page, with its tab bearing a letter of the alphabet marking that division. By exercising a little ingenuity a book-keeper can so arrange and classify the accounts on the index page that to locate a name is almost instantaneous. ' DATING HAME Date DocR l.lllO rvb.+ W-Ac DooK loin:,: L cb,l Credit f&l.o DooK Date Due o r o We will not take off monthly the -balances of our sales accounts in detail, but by the use of a separate column for customers, creditors and general ledger items in all the books of original entry, we ascertain at the end of the month the total debits and credits that have been posted that month to customers or creditors accounts, and we post these totals to cor- responding accounts in the general or private ledger, which represent the balances on our sales and purchase ledgers. By this method our trial balance is confined to our general ledger, and if we have proved during the month our postings to our sales and purchase accounts, the taking of a trial balance is the least of our troubles. There are numerous schemes for proving postings. Suffice to say that any book-keeper with a "proof of postings" hobby, can ride it as freely with this system as any other. Where more than one book-keeper works on the books, it is not a bad plan to use slips for posting, dropping one slip in the ledger for each amount posted, then one calling back the items to another who takes them down with a pen or on an adding machine. By this method we can have debit and credit slips for each sales ledger, and for our purchase ledger as well, thereby making it possible to prove each ledger independent of the other, whenever it is desired to take off the balances of accounts in detail. One quite important feature of the sales ledgers needs an explanation — that of the due column. The terms on which most goods in the grocery business are sold is 30 and 60 days, and accounts are usually quite active ; that is, here are numerous charges each month. We would render a state 15 merit of all unsettled accounts once a month only. Statements are printed with a foot-note: "Above is a memorandum of your account, of which $ is due We send each customer a statement at the end of every month for comparison of accounts. If NOT correct, please advise us at once. If not otherwise advised, we will consider ourselves at liberty to draw AFTER MATURITY without further notice. "Yours respectfully, "TWENTIETH CENTURY GROCERY CO." If an account is past due, we will leave the space after "is due" blank; if it is due on a certain future date, we so mark it; if several bills are due at different future dates not far apart, we assume an average date; if an account should show two bills, for instance, one due the 5th and the other the 25th, we would mark the two items and the two dates on the statement. Then these amounts and dates, as shown on the bottom of the statements, are noted in the due columns of the respective accounts, about on a line with the last credit item. Then, after our work incidental to the first of every month is out of the way, we will go through the ledgers and stamp the current month before the due amount, using a neat little rubber stamp and a red ink pad. Now, on the 10th and 20th of each month, we will make sight drafts for all due or past due accounts. In running through the ledgers our eye quickly catches the items stamped the current month, and by reason of the credit side of the account being reversed, the amount column to the left, the close proximity of the last credit date to the due amount indicates at a glance that a payment has or has not been made since the 1st of the month, which determines whether we shall make a draft or not. One reads the name and amounts to another, who writes them in a Collection Register, with numbered lines, and calls back the No., which will be the draft number. This number is noted across the due amount in red ink. When amounts have all been drawn off, the name of banks are filled in on the register and the draft is then made from the register. Drafts and remittance letters are written at the same time by the use of pen carbon paper. The draft and remittance forms are put together alternately in tabs of 100 each and the printed matter so arranged that when the draft is written the remittance blank is filled in at the same time. Collections are sent direct to country banks. Good rating does not always mean good credit. The manner in which a customer meets his bills is an excellent criterion to be guided by in granting credits. And this scheme of keeping a record of due amounts on the ledger has many advantages. It enables the credit man to tell at a glance how promptly accounts are paid, how long an account is past due. whether cus- tomer pays drafts or not, and whether there is one out for collection. 10 The Check Register (form No. 6) is a reversal of the usual order of things in book-keeping. The right-hand page is all debit columns. We get the debit and credit of our bank account from the two left-hand columns, and if we keep them footed in pencil on the same line, the state of the CrfECK PEO/5TEA Deposit's Checks Drawn To Fo o cptDiTona Accounts Cuslomers Accounts Deduci'on& D «■!=.. + Date A nourjt Am ount Nqj Date Cat>bD.a|5b+CMis fF-^M Dc-b,+ De ,;t j- ^ 3 ^ bank funds is plainly shown. The right-hand page provides columns for a distribution of all funds disbursed through the bank. A check is seldom drawn that is chargeable to a sales ledger account, but we will make pro- vision for an emergency and have such a column in the check register. Reference has already been made to settlements, but perhaps the three col- umns, cash discount, overcharges, and freight, under the head of creditors, need an explanation. After entering a check in check column, crediting bank, we enter the same amount to the right, debiting creditors, and on the same line in their respective columns, cash account, overcharges, and freight, one or all, as the case may be. We post to the individual creditor's account each of the last-named items separately. In fact, we post separate items from all the columns in this book, excepting only from the bank columns, which are posted in total at the end of each month. As heretofore mentioned, we must keep the equilibrium of our general ledger ; we therefore post also the total of the four columns under the heading of creditors to the debit of creditors account in the general ledger, credit returns and rebates purchases, and credit discount account, credit freight with the totals of their respective columns. It will hereafter be explained that all totals are recapitulated in the journal, and that from there they are transferred to the general ledger. Freight items should all be paid by check, and all the expense bills covered by a check pinned together with a slip attached bearing the date and number of the check, and then filed in a file with a division for each railroad. Make it a rule to pay freight expense bills every Tuesday. Check up bills in the meantime and have checks drawn for each railroad ready for collectors when they call. Post the total of each bunch of expense bills to freight account, using for an explanation in the ledger the R. R. initials and checks number. 17 Form No. 7 is the Journal Cash Book, and I believe needs no special explanation. Its use will be principally to record the daily cash receipts and for the closing entries each month. At the end of each month we will gather the totals from the sales binders, credit memorandum binder, check dOUDNAL CASH BOOr^ ■^ ■ Qerr\arke> Customer* Date rMa»rne,& Towr\ afefe. De.b.f Cred,+ CREDIT Dis ttxm Collection* , — 1 JOURNAL CASH 2>OOK\ Ger?.Led<$.Ace"te. Creditors Sales. Credit l n t &> Di*. Cask Debit Credit Debit Credit Time C aeh Debit" Credit Debit Credit and purchase registers and recapitulate them in the journal. As each mail brings remittances they are passed to the cashier and cash discount or other deductions investigated to ascertain their correctness. Remittances will not be entered immediately, but without separating the remittance letters from the drafts, will hold them until an hour or two previous to the bank closing hour. The entire lot should then be arranged alphabetically according to the accounts, then separated in piles for the different ledgers, keeping them in alphabetical order, and the whole lot entered at one writing, entering the town and state, as well as the name of account. After comparing deposit slip with journal footing, we debit and credit cash and enter the same amount in the check register. Column headed "6 Credit — Dis. and Ex. on Collec- tions," is a credit to customers, a debit to regular Int. and Dis. account. Nearly all cash receipts in a wholesale business are in the form of checks or bank drafts — very little currency — but all cash receipts to a cent, of what- ever nature, shall be deposited in the bank each day. Cash sales for one day are held till the following morning and included in the deposit for that day. Nearly all disbursements should be by check, but for petty expense items, for such other items as is more practical to pay by currency, and to supply the cashier with change, checks are drawn to his order and charged to an account with him in the private or general ledger. He takes vouchers for 18 all disbursements and carries them as cash items to the end of the week, or month perhaps, at which time he numbers and lists them according to the dates and turns them in for credit, after having them OK'd by some member of the firm. General expense items are charged to that account in total, other items in detail to their respective accounts, and the cashier credited with the grand total. A cash column in our journal is in fact not a necessity, for the cashier will keep a blotter in which he enters in detail petty disburse- ments, and cash sale items from salesmens' cash return slips. Our general ledger is the old style bound book, double-double ruling, with good, wide explanation columns. The stock ledger was a common form. The idea in this system has been to eliminate "blind" total from expense accounts. What is meant by blind totals is the footings of expense columns in a journal or cash book for a month; footings that are made up of many, many items. An expense account — and I do not mean general expenses only, but traveling expenses, freight, insurance, etc. — cannot be dissected without blundering through four or five hundred pages of a journal and cash book, and several, perhaps. While by our method the general expense account will show a total of petty expense disbursements, it bears a reference which directs us to the cashier's approved vouchers for a certain month. Our insurance account shows each separate insurance bill, the name of agent or company, number of check that paid it, on the back of which is a state- ment showing policy No., etc. The same scheme should be carried out through all expense accounts, thus making an audit of bills and an examina- tion of the books a more simple matter than is usually the case in many business houses. To make an audit of bills and an examination of purchase accounts, a simple matter, we will adopt the numerical system of filing invoices. The plan includes the use of the letter file, or transfer cases, with numerically arranged indexes. Each account is assigned a separate division and the number of this division entered on the ledger page of that account. Thus, your ledger becomes the index to the invoice file. If the buyer should desire to refer very frequently to the filed invoices and it should not be convenient to come to the book-keeping department for the file numbers, he can easily be supplied with a small book index, which he can keep in his desk, and as new accounts are opened the names added to his index. In this method we have a close second to the voucher system of handling invoices, and does away with much of the labor required by the latter method. As mentioned heretofore, each invoice, or bunch of invoices paid at one time, bears the date of settlement and check number. 19 ANNUAL FINANCIAL STATEMENT. RESOURCES. Debit. Credit. Accounts Receivable $242,463 9° Notes Receivable 4-683 87 Stocks and Bonds 10,000 00 Cash in First Nat. Bank 26,369 40 Cashier's Cash 242 06 Furniture and Fixtures 6,000 00 Accrued Interest on Notes Rec 262 00 Merchandise Inventory 210,325 40 $500,346 63 LIABILITIES. Accounts Payable 680 63 Present worth, Dec. 31, 1901 499,666 13 GAINS. Sales, net 644,71446 Purchases, net 642,624 20 Freight added 36,526 40 679,150 60 (Less Inventory 210,325 40 468,825 20 175,889 26 EXPENSES AND LOSS ITEMS. Rent 10,000 00 Insurance 3,7^7 90 Officers' Salaries 18,000 00 Salaries of Office Employees 24,462 08 Salesmen's Salaries 18,000 00 Salesmen's Traveling Expenses 16,63845 General Expense 3MI7 93 City Delivery Expense 1,494 65 Profit and Loss (bad debts) 2,44212 126,22313 Net Gain, year ending Dec. 31, 1901 49,666 13 TWENTIETH CENTURY GROCERY CO. Capital paid in 450,000 00 Net Gain 49.666 13 Present Worth 499,666 13 DISPOSITION OF GAIN. Gain 49,666 13 Dividend, 10 per cent 45.000 00 Surplus Fund 4-666 13 $ 40.666 13 49,666 13 Our credit memorandum "returns" are similar in form to our order blanks, but of different colored paper. All rebates, allowances for short- 20 ages, etc., shall not be credited to accounts in sales ledgers except they come from these slips, which shall be OK'd by the credit man or member of firm. Traveling men are credited with their salary each month, and paid by check as the) make requisition. A separate traveling expense account is kept with each traveler. They use the "common sense" weekly expense books, and the total expenses of each man for a month, as shown by these books, is credited to his traveling expense account, using as an explanation the dates of the weekly books. Traveling expense is debited, using as an explanation for each amount the name of traveler. Railroad shipping receipt books were the duplicate form, bound, and a separate book for each road, the name printed on top cover and back edge. The name of road and barrels, boxes, kegs, sacks, etc., printed in the form. Office and warehouse employes were paid once a week in currency, a check being drawn for amount of pay roll and the money put in envelopes. The annual sales of a wholesale business may be $100,000, or perhaps less — they might be 1,000,000 a year or more. A system of book-keeping for the former would be somewhat different in its details from a system designed for a business of the latter proportions. The foregoing outline is suitable for a business employing about ten or fifteen salesmen, with annual sales amounting to from $500,000 to $750,000. The system of accounting here described is intended for a wholesale hardware company carrying all lines of shelf goods, also a stock of yard goods and implements. Doing all their own cartage to and from yards and warehouses, they employ considerable unskilled labor. The system is designed to give the management each month j>rompt and accurate statements of the business done and expenses incurred, as well as to show each month the actual position of the company as regards assets and liabilities, and the profit and loss on the sales of each department ; also to clearly indicate the cause of any sudden or abnormal change in the con- dition of affairs from time to time. For our present purpose we will assume the business is divided into the following seven departments. The first four we will call stock and the others operating departments : A — Shelf Goods. F — Shipping and Receiving. B — Warehouse Goods. G — Stable and Yards. C— Yard Goods. H— Office. D — Implements. At the outset it may be well to note the difference between stores and stock and between wages and salaries as the terms are hereafter used. Stores we assume to represent all material except stationery and fuel, intended for the actual use of the company. Stock represents material and goods ready for sale and delivery. Transfers of one to the other are provided for by means of "working orders." The difference between wages and salaries is that the former represents payment to those whose services are valued by 21 the clay or hour, and who are required by time tickets or other means to report upon what work or class of work their time has been expended. Salary is the payment made for an employe's time in bulk and to a much greater extent than wages is supposed to insure his sympathy and interest, as well as his efforts, for the best interests of his employer. The time of all employes is recorded by themselves by means of a time register clock. The time clerk enters the time as shown by the clock each day in a time wages book for employes paid wages and in a time record book roa~ , TIME WAGES' BOOrt ■ 1-IAL.F MONTM ENDING. No N^mc TotaJ Ti'm.e Rate W^e&Duc Rcrna n Ka Nlote:~ Waios be "mas pa.'d "fw.'w a monft,*ier>e are spaces. allSSvcd for. I-S ds.yS>. for all others. It is his duty to see that all the time entered in the time \\ ages book each day, and paid for twice a month, is accounted for by a time card showing to which of the various working orders the time is to be charged. He then extends the time for each order at the employe's rate ron~ TIME PtECOFiD BOOK • f-IAUE MOMTt-1 ENDING Mo Na m& Tme l_o.e>+- Tirne To-tal Loat At RemapK*' A/ot^ :~ • Rrncenfecj-e of Ifrpe lo*i~ by saUpJ«d cmployece per hour and posts it to the working order cash sheets. Material used upon such orders is charged out to them by means of charge slips made out by those responsible for the various stores. These slips often being priced and extended, are also entered upon the cost sheet of the order upon which they rv.p+- TIMS CAyFtO WopKmaa Rate, pen day Or-de^No Mi»*. Mia. Pi<=.rr^r?>Ka FWfed V* , * are issued, any surplus material being returned to stores and credited to the order upon which it was drawn by means of credit slips. These credits are entered on the cost sheets in red ink and deducted from the gross charges when the latter are totaled up at the end of each month. The time record book is merely for the information of the officers of the company as to the regularity or otherwise of employes. WOPiniNG OQDSO COST <5t1£ET r°*>~ a Dai TVj Wopdiaci oV Orsclcre C-U&& of Account" Account Mafe.al Wag—- Qoaotrty Ar.-fele P^.ce 5fer, = & 5fecK fl.I fe=d at-av M.sci). r^io Nama Time In Voice Exfensior, / / For the purpose of keeping distinct the expenses of the various depart- ments orders are issued from time to time to the heads of each department specifying what shall be charged to such order and also the account to which the cost of such order shall ultimately be posted. These orders cover the WOQHING OQDELO CrtAJ=lGE. SL-I& 1 H^\/«. *+Ki.» d-ay \-£>&u^."tS.p>'isl No oaaccounlaLove INo OuaKTi'Hy A* r=TTo 1 e. Pp'ici Valu* Signed the accountant, what accounting they shall bear. Though they have the same number all year, the cost sheets are closed out each month, the amounts thereon posted to debit of the correct account and credit of wages and stores and new sheets opened for the following month. The total debit to these 23 various amounts for wages should of course exactly balance the wages pay roll for that month, and the total stores charged out will, if correct entry of all charges has been made, show the exact amount of material used by the com- pany for a given time. the m.p.co.Lt'd. ^tandino woonrna pctbER /-<_«'-., ChA^S,* -fe -m;» omler all \ Mo. . O 1 . 4 _, w^3«r.£> £*■ f^Iarter>ial u&*A fore J NoiS:- .Specify fully, nafcjrse ofexpenst cove pod iy ClaeiofAc .A. ttou r\.+" "lb Depf. •5$^- Acct, RemapRs; , __ . , __ , As regards such special work as will not be continued from month to month, special orders are issued and follow the same course, except that they Tt-t£ M.O.CO..L.-TD.. d / ' AVo7fe .' — Speo'fV fc_))v- wopK "+o be- cJorje oncier- Re-fcjorx to Office when = orr\ple.ted Claea of Accour\+ Ac.coi_.r-d- "To De.p h -Sg'd.. Acdr f = L,r.r,''*kod !?wt>. ^S/pnafune of head of£)c/ it are returned to the office as soon as completed and the cost made up and put on record. If the expense of a working order is chargeable to any one ~~a THE. M.G.CO.LT'O. CIT-Y PURCHASE OCID£R RO, t\&9 wo. n<-+e- -S>.0. r\o+e^ Plca-ae. delis/e-ra wi"ff-i invoice ( /VoTe. - TKcae. numbens _s>e filled ia !faWof»Kind or» v_>hi'ppin<3 Or*_er» ) ^ +_ TKo M.D.Co.Ltd Date. un ^^ .'-Invoices for> Tfie above canaof be paa«e.d +£> youra croedif" 'e»e> ir beopo. "tt^e. above nurnbeP - :.r->.s> department it bears as a prefix to the number the initial letter of that depart- ment. If it is a general expense covering more than one department the number bears the prefix "M." 24 Stores and stock are purchased by the chief stock-keeper. All pur- chase orders, however, with the exception of those calling for goods required for immediate shipment to a customer must be initialed by the manager before being sent out. Orders for repairs or work to be done by outsiders are subject to the same rule. The stock-keeper is largely guided in his roar* <3. A T/7£ M « CO., t-TD. .^-r-TEC) F>UI=tC.nA3E OPlDEPi kit .fellc (/Wo/c ■'— Theae nc-a -SHippindcr» ) purchases by information given him by the salesmen of the stock depart- ments, who are expected to promptly notify him of any lines they might think it advisable to order. He also keeps a close watch upon stock ledgers of the various departments. In the event of the order clerk requiring the purchase of goods for a customer's order, he draws a requisition upon the stock-keeper for what he fO/=>M Q AiEOUI-SrriON f=op> P>UDCHA^S£ Of= MATE&IAL. To Oklttf Siook ^eepep D-aTfe— If approved, pleag><= pur>cha.se f^ora Dgpt".. »«.'tsi!c *3jgnrt J requires. The head of each operating department needing supplies also requisitions for what is required. By this means all the buying is done by one man (subject to the approval of the manager), which in actual practice is invariably found to be the b st plan. These requisitions for purchases are bound in books of ioo each, numbered in duplicate and the first sheet of each number perforated for removal. The party requiring goods thus has a foar* /o ■fe. TRAVEL-EDS oaotsFt OATfe. /Vo Tervn.a O.n.forfreJi'-i- Mo Ar o+7^l^ Ouooti ¥y Ppicc Rema r»K.& / copy of what he has requisitioned for and thus avoids the frequent error of asking for the same goods twice. Immediately upon the receipt of goods the invoice is checked and handed to office to pass to credit of supplies. If they were purchased specially for a customer's order they are sent to the shipping room and the order 25 clerk advised of their receipt. If they were for a working order they are delivered to the party having charge of the work called for by such order and charged out by means of a charge slip as described above. The travelers are provided with triplicate order books, one copy being left with the customer, one remaining in the traveler's book, and the original roan n QEPT. SHIPPING OGOC& To..._ Mo.:-;_.._ ; 5tocK Dept The Onden of #>.'=» No oalb.fonltTe. following jgooda. Tf*om your* De-pb 1 ■Select' ifcem. and Send wTttnlfti.e. onden "fe ^K.pprr^ »oom '"'" aTonee- ^ p ne .p aPc for> ^kiprnen.1~ - fill in. we^nfe.o^ ^uercti+i'es. - OhecK sff Hem-e. neady and ^.end ^fi\s, opdep -to ^ippin4 cJer=>r\, Yoo dv ; PP ^ Ndfe Cheek V Ar^.-ol. • I. "Tj-iio fbr> ^ucK 3>o la -s>h"ipP'nj§ Poom 2.Thi\s for* -suck _^ Ji'pecT fr=>orn, ^>l< PeaJv for> ssHtpn-venT ir\i pped Wej^Kt-oo Quantity d,s ^e. .an* , Dod& cK d< .Sold O o>.s~l "to be p nd noT rtK P a dv| too >=.)- *$« be h' '1T£* Booirv. being forwarded to the house. On receipt of either a traveler's or letter order from a customer, or of an order by telephone or wire, it is entered in the order register and given the first blank number. The order clerk then makes out out department shipping orders (in the case of all orders except travelers' he previously enters them upon forms similar to travelers' orders), and sends the main orders to the shipping clerk. The department shipping orders, which bear the same number as the main order from which font* izt The N' 7var mg.co.istd. voucrrea ,U.Co, L_+c). To Jf-J a Creclif- Debit l C.roeJjf-'fHc above DcLt 3jgn<-.d_ they were drawn ( and also the letter of the department) are sent to the various salesmen in each department. The goods are laid out for shipment and in the case of small goods are sent to the shipping room. As regards heavy goods, the weights and quantities are filled in, a check mark put in the column opposite each line that is ready for shipment, and the department orders then sent to the shipper. As soon as he has the various goods shipped he puts a plain cross mark on the check mark, which now shows that the different lines are actually in carriers' hands. Before shipping the depart- 26 ment orders are compared with the main order of the same number. They are' then all handed to the invoice clerk. The main orders are filed away and the day book entry made from the department orders. These orders having been priced and extended, the invoice is made out and customer billed by means of a loose-leaf system. By this system the invoice and day book are written at the same time, by means of chemical paper. The invoice is then detached, leaving the duplicate, which is virtually a page of the day book, ready to file upon a binder for which it is already perforated. On the fact of it it appears as though only one entry could be made on a page of the day book. The M. Pl.Co.L/tcJ., PuACHA.SE3 fc.r=> Mon* • of *=» VoucKe. r= On«=d,4- De.fc.H~ Name, AinourvT A/oTk:— This b "*- -da. r\s> or .e-cek'.+ c oL -no. f!>r» t-acK G-ol.LeJ, --. This is overcome by having various sized invoices and so arranged that either one, two, three or four invoices will be on a page. This system, besides the saving of time for the invoice clerk, has the added advantage of enabling the ledger-keeper to keep his books posted right up to date. The invoice clerk using only the pages of the day book containing that day's entries there is no delay when other employes require the day book. The cost column having been filled in in the department orders, they are filed away on binders. The amounts on each order or of each entry in the day book are not added, but at the end of the month they are taken off on total sheets. The M'.R.O< Ltd THE M.OCO.LTD, TP>AN3f^EP ENTRY The total sheets for the day book will show the total amount charged to cus- tomers during that month, divided into city and country amounts. The total sheets of the order binder will show the same grand total, but this sum will be divided among and show the amount of the sales from the various departments. This will be seen to be a check not only upon the additions in the day book, but will also go far to prevent the chance of any shipment being made and not duly billed to the customer. In addition to this the total sheets of the order binder show the cost of each sale in each 27 department. The information to be had from these two books, taken in conjunction with the expense accounts of each department, enables the management from month to month to make accurate comparisons not only of the expenses, sales and profits of each department, but what in many cases may be found even more valuable to compare the percentage such expenses, sales and profits bear to one another, as well as to those of other departments. Credits to customers are made only upon the authority of a credit for returns signed by the stock-keeper, or a credit man's signed by the secretary- treasurer. These forms are treated by the invoice clerk exactly as the department shipping orders and filed in a similar binder called "credit binder." The credit book is on exactly the same principle as the day book, already described. The cash book is ruled to keep distinct cash received or paid out for accounts in the various ledgers. The amounts in the three columns bearing the names of the ledgers are posted in detail to such ledgers and at the close of the month the totals of the other two columns are posted to the accounts bearing the names of the other ledgers. fOGM lis TflAlsl.SF'E.n £NTflY &OOK /The M. R.Co. Ltd.. T"aAN.2>F=EF=i Entdies, MontKof is> Cr^dlt- Account" Amo urrj- / /ois :- TKIe. booH rife coolains del >TT~ ccli "5or= each GenLed^, Supplies accounts are credited by means of a voucher which is entered in a purchase book. To this voucher are attached the various invoices which it is desired to pass to the credit of supplies account. The face of the voucher only shows the total amount to credit and the debit to the various main accounts, to each of which a column in the purchase book is allotted. The ledgers used are : Ledger A — Accounts Collectable. Ledger B — Accounts Payable. Ledger C — General. The two former are ordinary loose-leaf ledgers of any of the modern pattern. The names of ledgers A and B are sufficient indication of the class of accounts they contain. In addition to such accounts, they carry each two adjustment accounts, bearing respectively the names of the other two ledgers. This renders them, as far as commercial and book-keeping use is concerned, each independent and capable of proof by balance without reference to the other ledgers. The general ledger is a locked ledger in which all the internal or work- ing accounts of the company are kept, and also two accounts called respec- ts tively accounts collectable and accounts payable. Ledgers A and B are aS a matter of fact only details of the accounts of similar name in the general ledger, and as their names denote, are used exclusively for the accounts of the debtors and creditors of the company. It is of course with the general ledger that we have now to deal. The general ledger accounts are divided into groups, a number of blank pages being left between each group on which to open new accounts which may be decided upon from time to time. The accompanying "list of accounts" is in the nature of a suggestion only, as the actual accounts required for any one business must be decided by those best acquainted with the cir- cumstances. They cannot be based upon a list which has given proof of efficiency and good judgment under what appear to be similar circum- stances and surroundings. If there were many departments it would be well to have the accounts in the general ledger opened only under the heading of each group, a class of account, and by means of a subsidiary ledger divide such main account into as many sub-accounts as might be found desirable. Dale. pcn>. Afe^.'-'On Invoice above ^oods and iriall cor>Responder>ce, pe^andinA "Tri<^> opder» p'ea&e ouolc. above ni-irrvber».s>. D. O . I Z,T7 Thn M.R.Co.L.m.. NO. •s.o. R cTerarojrvg 1o youp opdep bear»iri^ above. nuTlkena, we be^ "te £> DT Of GEMEBAU UEDG£F> ACCOUr^T^ Group on Ola-s* N / l«ainIti>>rie , nc-<£. Acc-rf^ 1 r-l<3.-r,<= of Accounf. Wauehousea S*ta»b)<=- Eoc_.iprrve.rd- FL.r=nl'fcf=>e. <£»- F^i'xlTJ r=eol.e> <£• I rrv pi imcnfe -^Stable Eou'ipmeal". E •< pen&d Ac_c-4s> M •£-+&. rai'e. I A' C2.om.n-y: J Accde, (vl, a r—i •I. Open ,^ E: cpeo-i Office E Re-nt~. Taxes <£^ I r\.& Tpav. Cxpe Lejgal E.xp. Genenal E,: ■S>"fcahor->«r ~Tn__^c_Ie;r=r.£. -S>_3rr-ip] =d,napy »rrv on cor=po Returns a •x All Ihe ofafii Acct" rfe, commepcial sc,crj >atior\ and al&o,>5al«9 d Allow.anc-ei.s.-Accitai, ble.~A.nd Accfe, Colleclabl MaiePi< N07-e C=.«. Wagea Sala^ie.* (_ •3^le..» Accounfe Accfe <_o|» . StecK R«_"tTjr=n-s. ^/Allowances Accte.Coll. L/ar c5^=" WOA/TW/LV T/=>ANsr=££* ewmi£S Acdte , ^.^ -S^nc-ino, Opc}er=^ '* Secy.Tpeaa. IMemo. Accte. Collectable. "Total cKar»cSes 16 customcpS. RetOpna <&- A I low'o.5. " cpedfe &a>le^2>, "fofel co~s\~ oT Sales. SlocK r=efonn.£» Drt>. Dills. Rec, total of" notes and aec'ptnc;-.. frorrv. jatomerx Pa»ycsU« Pay Aco+S, ■>y Accla , as p«=r=> punchaaa bo<_.r<^, profit made thereon at any given time. The stock returns account will of course show a loss of the difference between the amount credited to cus- tomers for goods returned and the actual value to the company of same. A careful watch upon the accounts collectable and bills receivable and accounts payable and bills payable will sometimes give somewhat startling informa- tion. It is of little use having an efficient operating and selling organization 30 building up a big business and selling- at a fair profit if the financial organiza- tion fail to make the best of the favorable conditions created for them. It is quite possible to be making good profits and have nothing to show for them except perhaps a larger stock and increased book debts, neither of which, prehaps, will be found growing more valuable as time passes. At the close of the fiscal year a physical inventory of stores and stock is taken and compared with the book records of these accounts. Of course there will be a difference, but it should only be a slight one and an adjusting entry should be made. Buildings and equipment should be charged with the rate of depreciation agreed upon and which, of course, has to be decided after a full study of the particular conditions under which the company operate. All expense accounts closed out and a balance sheet taken off in the usual way. The accounts having been treated as above described, to all intents and purposes the annual closing of the books is but very little different from the work done each month. Though the accounts are not actually closed out, yet the statements furnished the management each month amount to about the same thing — and the same information is obtainable from them as from an actual balance sheet. In its essential features this system is neither a theory nor an experi- ment. On the face of it it may appear somewhat complicated ; in reality, it is simplicity itself. I have, of course, omitted a description of some of the details, but I would like to say that by means of card and loose-leaf systems the information I have spoken of may be increased and added to, subdivided and elaborated to almost any desired extent. At the same time it is quite possible by an unwise or reckless use of these modern aids to office work to defeat the very purpose for which they were intended viz., the best result for the least time and labor. — K. Falconer. 31 PART VII Retail Accounting. Accounting for Various Classes of the Retail Trade* OTWITHSTANDING the great advance made in recent years nin the science and practice of accounts, it is only to be expected that in some quarters antiquated and clumsy methods will be yet found, dear to the merchant's heart and the idol of the unprogressive book-keeper's stiff-necked fancy. Useless con- servatism is not entirely indigenous to Europe and the Philip- pine Islands, but nourishes on American soil right beneath the flowing folds of the star-spangled banner. The book-keeper for a retail dry goods store once com- plained of the overwhelming amount of work he was called upon to do. He had to deal with a large number of credit sales. Sales tickets were made out in duplicate, the original handed to the cus- tomer, and the duplicate to the book-keeper. From the sales ticket the book-keeper copied the items into a day book, and from the day book copied the items into the sales ledger, this latter being considered necessary because the customers required an itemized monthly statement. This naturally leads to the expected information that at the close of each month the items of each bill are recopied from the ledger on the monthly state- ments. Each sales item is therefore recorded four times in this up-to-date establishment, and with an average of six hundred active accounts the book-keeper's lot is not so happy as it might be. While the above is an extreme illustration of "how not to do it," there is undoubtedly a great need for improvement in the way in which the average retail merchant keeps his records. No one system can possibly be suggested which will answer all requirements and satisfy all conditions, but we propose in this article to describe the methods used in a number of different businesses, and from these methods many excellent, labor- saving ideas may be obtained. For general purposes a system as described hereunder has been found very efficient where there are not unusual conditions to be provided against, particularly in those cases where customers demand monthly itemized statements of account. It should be particularly noted that the pass-books mentioned are not given to the customer, but retained and constitute the sales-book of the business, and all the purchases of one 5 customer are assembled together, and for some business these pass-books may also constitute the customer's ledger, with a slight modification of the system. Provide a pass-book for each customer. Provide a suitable alphabetical file for the pass-books, with vowel and other indexical distribution to accomplish instant reference to the book wanted. Provide an ironclad ordinance that all pass-books not in use must be kept in the file. Have the pass-books made in the form of a sales ticket in triplicate, the duplicate and triplicate with perforations to allow of their being detached from the book. When the customer makes a purchase the salesman enters same in the pass-book and hands the duplicate to the customer, retaining the pass-book. The book-keeper posts the total purchases (not items) from the pass- book original, and also enters the account on a sales recapitulation sheet in order to obtain his monthly total of sales. p °capiTLiln ToKet No |c.O.D. Arnourtf ch-c^y. / /' At the end of the month the book-keeper makes his monthly statements from the ledger and attaches to same the triplicate copies of bills from the pass-books. By adopting this plan all the itemizing necessary is done at one writ- ing by the salesman who receives the order, ledger space is not unneces- sarily wasted, and the book-keeper will begin to have a little time to spare in which to make himself useful to his employers. Another method is: Have large sized envelopes made with statement form printed on front — debit and credit columns. Enclose duplicate bills in envelopes and post totals on statement. Use cash book with separate columns for cash sales and receipts from customers applying on account. Post from cash book to statement. File statements in convenient card-index file alphabetically arranged. Enter amounts of charge sales each day on "recapitulation" sheet. Use different colored sheets for merchandise credits, or allowances, and post direct to statements, making recapitulation as in case of charge sales. In small general ledger keep creditors' accounts, expense accounts, etc., also representative account entitled "Customers' Account." To this 6 account charge total sales from recapitulation sheets, credit total merchan- dise returns and allowances and total of special column provided in cash book for receipts. The balance of this account will then equal the aggre- gate of the balance shown on the statements and so prove the accuracy of the work. This system can be combined with the one previously described — as above suggested — by filing the pass-books in the envelopes. The recapitulation sheets above mentioned should be specially ruled so that total cash as well as credit sales may be recorded, and so that the sales may be distributed over the various departments to which they belong. The illustrations given below will show a very convenient form of Recapitulation Sheet and Comparative Record : <^/s 'T-Y } Gerx. McJse, Groccpics Doofe £/£>ko CS Dny QoocL 1 Tc^TzX aloe> C* & k o«d,t Tolfi Cask Cpcc),^ Total Cask Cred.t Total Cask |Cr«Jit XtalJICaoklCpccl.tlTotal 1 5 •75 365 9 lo 55 96 55 96 3 lb 7 64 1! 39 24 05 30 70 M 61I33 55 98 0)131 '*-, 2 o 4 A 36 ia:3 22 51 30 8o 93 45 124 L'5 2 60 6 10 9 30 6 50 53 14 hi: 64JU4 28 17! 42 21.570 1 1 I 1 The total yearly sales in each department may be kept in the same way by entering the total monthly sales instead of the daily as shown. The following is an excellent form of departmental comparative record, trading account, and profit and loss account combined: CxperNse D< Lr=>~Tfr-?e-o~ti A Gro55 P^of rJ-* Turn Ovei° vSoJJ Fi>r> Gen Exp.pepcerj,- 1^.oa'tZipr?ovep ) l°A> Nlet Ppofif- I965 2oo 1 324o IS I 6I3 ArO i33 \rre>z> 3S2 ^ A subscriber to The Book-Keeper describes a similar system as follows: The Original Entry Ledger System. A convenient itemized ledger is something desired by a large majority of small retail dealers, in which they can make the original charges without 7 the intervention of the journal. There is no reason why a person il account should not be itemized on the ledger rather than on the journal if the work can be done as quickly and as conveniently. The loose leaf system sug- gested the plan. I adopted the Yonker statements, double ruled and filed them in binders. It is only the work of an instant to put in or take out a new leaf from any part of the volume. Indexed sheets were used to keep the accounts under the several letters of the alphabet, but in separate groups. This arrangement enabled me to turn to an account more quickly than I could in the ledger, if I had to refer to the index. I used several binders to accommodate the business, subdividing the accounts both accord- ing to the alphabet and territorially. This plan enabled me to make the charges to the personal account as soon as the charge tickets were handed in. Then accounts were always written up and always ready for the customer. Whereas, under the old plan, it was impossible to be less than twenty-four hours late. I made the charges to the several accounts about as quickly as I could write the items in the journal. The items of an account were always grouped together, and when I came to enter them on the customers' pass-book (which it was necessary to do in almost all cases), it was the mere act of copying, and did not involve a search through many pages of the journal. As the pages were filled, new pages were added and the completed pages were removd and placed in convenient files. System for Bakeries and Creameries. For retail businesses where deliveries are made daily, and accounts are paid weekly or monthly, there is nothing superior to the tabular plan of record as shown below combining the features of sales book and sales ledger, arranged for days, with balance column to carry forward unpaid balances from week to week. Record books of this kind can be made to run horizontally across the page for a number of weeks without rewriting names of customers. By allowing one line to a name as many as eighty accounts can be accommo- dated on a page. A recapitulation of totals of pages will give amount of Names Dal.Dua D<3>^>2» of WceK T^r !v,Jj T 3m'A\ J50?- 1 2, 3 -4 5 6 7 11.95 *l.25 25 20 \5 25 2.0 2.0 2.0 sales per week. The total column can be dispensed with as the total charges for the week added to the old balance will equal the amount of the new balance added to t lie amount paid, provided the work has been correctly performed, and the writing of the total is unnecessary. 8 There is also the question of keeping track of the delivery wagons, SO that the amount of bread delivered can be checked with the amount charged according to the driver's reports and the amount returned by the driver. One method very much used in this connection is to furnish each driver with a ticket on which will be entered the amount of supplies taken out by him, with space provided so that he can record on his ticket the supplies delivered, where delivered, cash received, amount to be charged, etc. On his return to the store these tickets are checked over and the balance of supplies not accounted for compared with the driver's returns. Another method is to keep a record of these supplies in a book, charging the driver with the value of the supplies he takes out on each round, and crediting him with the value of the goods he returns and the amount of charges which he reports (on separate memoranda). Experience, however, shows that this method is more laborious than the first. Retail. The Adrian Coal Co. does a retail business, handling lump, egg, nut and slack coal, and purchasing in car-load lots. The principal accounting forms used are: Accounts Payable and Car Register. Delivery Ticket. Cash Book. Cross-Entry Journal. General Ledger. Sales Ledger and Stock Record. As the company has plenty of working capital, it is proposed to pay all bills on the ioth of each month, taking advantage of cash discounts.. The Voucher System is therefore used, and Accounts Payable are filed away by months in numerical order. Should payment of a bill be delayed, and thus be included in another month's payments, a blank voucher is inserted in the proper numerical order, referring to month and number after which the voucher may be found. Accounts Payable and Car Register. This Register contains the distribution of different kinds of coal pur- chased. An account is opened in the General Ledger with each kind, and the monthly totals of the "Received" columns posted to the debit of these A cc o<-ir*-r~s t=>A-vA.0t-C &, cstr* oeo s-r&Gi DoT~ Accounf of CapNo Conteofe Date, o ec d Empty | Nl a Arriounf i a- f5,fd sSU.,1 Billed Orcd r .':-.• I.V.J ~- «COU/VT .s o^y-iaiff £ e>««> »cc/v»7-c =3 , (vi w 1- Lf S^ocJr,.^^ 0 P^co^d OA Gw-Na Dote. n^Pd : A M.K.«lLr.i l_„ mp t«S ..vd M„-> = „1 >SI«c^ <=«*• sLcks D«o.«^K J> lnv.W* .,..'.■,- .-■ lr7V M IV '-,, ,-> l-wW+ ... vvl ■■■-. Payable or Voucher Record form, the above separate form of car record will be found useful. By both methods the totals of quantity columns are posted to the debit memorandum stock accounts kept with each class of fuel, these accounts being credited with reclamations and shortages. A separate account is carried for quantities sold, as hereafter shown, so that a perpetual book inventory results, which will show amount which should be on hand in the yards. I<> Combination Cash-Journal, Etc. The wholesale and retail business is frequently combined, in which case the car and quantity record may also be advantageously combined by the use of a form after the following pattern : Date Ti'cKei Order C»r» A6ent» Team. Ca & h As lea Where EYard .Sale*, ^ L. Wbole;*sle LT Rcti'. 1 N-^e, Addr^» n tmJ rn» ftrt P>rw TwatS.n » -SoF-t- r-f a r- d Co^t Wo od K.nd Lump Nut|auck Am'nt Kind 5)b« Cheat r.fio Grate ArrrnT Kind Nul Too Amn+ Corda .'..If M.nd Amount 1 It will be noticed that this is a combination Cash-Journal and out- quantity record, and it could therefore be completed by the use of Form 2, which is an in-quantity record. In many cases a further distribution is made on the memorandum stock accounts by opening an account with each car and crediting it with sales as indicated later. Delivery Ticket. For a delivery ticket a form similar to that appended is recommended. It is made in triplicate, two copies being handed to the teamster and one retained at the office, from which to post the charge. The teamster leaves Mo I7S8 .Sold -fe_ Alcolu I902 Te^rr>^te Car=> NJo, O *-•<=» r-jTiTy ur. D e.s> c r* 1 pt?o r»_ C O.D 1 Amoun+ opfeid of CKe. 1 Receivec J by / one copy with the customer, and the other is signed by the customer and turned in by the teamster as a voucher for the delivery of the goods. Where orders are very numerous a recapitulation sheet can be used from which to make postings as per sketch. The C. O. D. and Cash columns will show total receipts each day, and afford a check on the teamsters' collections. 11 Cash Book. — Journal. We show on a previous page a form of combination Cash-journal. Where in-quantities are recorded in an Accounts Payable book or Car Record, and out-quantities in the Sales Ledger, posted direct from Sales tickets, the Cash Book and Journal are much simplified. The Cash Book may be ruled like thin: Cash Received Dakte- Nc*rr?e Aclc(re.s.& L-.f\ Ledger General Ledtfer Cash vSales C.0.D.5 V / cwb r^\A Date. N^rrttfv Voucher No II I Voucher General Ledger Expense rpe'i^k"!" ^~ j / The Journal would be used for cross-entries only, such as allowances, shortages, etc., and beside the ledger columns would require on the Credit side columns for material affected, viz. : Lump, Egg, Nut and Slack. The Sales Ledger can be arranged on the tabular system to contain a record of out-quantities, the totals of which are posted monthly to the credit of the memorandum quantity or stock accounts above mentioned, thus completing same and giving approximate inventory on hand. Tabular Ledger. The Tabular, or Self-proving Ledger, is a ledger in which the names are written down the side of a page instead of at the top, a page or a certain position of a page being used for all the transactions relating to an account during a given period, these transactions being extended horizontally across the page instead of perpendicularly as in the ordinary ledger. It is provided Ua nod''/ I&OZ AS6-0 .,~ - 902. Ac«ou„+ DALHIC MTS ,^«. .-... i.U„* «*„ . - ««*» « t « e O.TC 3UK* ,.. ■ - ««» OCBrTJ cf<= 1bm > roth account 7<9 lines to /o coal aa "TollowvS- Top our« accour.1", v5ub.No. K.'nd Wberx To Deification lrrvotce a+ Rojjfe <$. Remar»Ke / M c A 1 e-^fe n Coal- M. Oo, f>e~ direct to retail customers, orders being billed to The Rochester Coal and 13 Mining Co., who, in turn, bill their customer. This system does not call for any complicated accounting, but there are, nevertheless, quite a number of forms used, and some of these it may be well to illustrate and explain. Form No. i is order blank sent to mine. Form No. 2 is advice sent to customer. Carbons of these two forms are retained, and the particulars entered in the Order and Shipping Record, which is also a daily trading account, showing gross profit on sales to date. This form is ruled in sections of FORM 2 O \< UVj^rr.^ \&>o coa) our» \^ n ~A u r whi'ck, &Ha\\ Have- prompt 2»tle r^1"i rt, . Th-^nKi"^ vou, we ape / M°AI. C. oH:Co„ three months, as all accounts are expected to be paid within that period. At the end of the month, Accounts Receivable Account is debited with total of "Amount" columns and Accounts Payable is credited with total of "Cost" columns. A new page is started for each month and unpaid items M'TUImT*- r» Coa >l and Mini rrj, Co., rw»* K,nJ A+ To" DaTi \ r .0 In.tal Wei$n+ Tin. Sold A-r>o„rVt- u..r '"nT" •Sh<-«-i -Sub Wh<-i Uan or. Confi»c-«1?d Addncsi, at the end of three months may be transferred by Journal entry, crediting Accounts Receivable and charging Sales, as the transferred entries will be included in the charge to Accounts Receivable of the total of the new page. By this method it will be observed that a Sales Ledger is dispensed with entirely, or we may say that this form is a combined Order and Shipping Record and Sales Ledger. The Order blanks are numbered consecutively, the column headed "Sub. No." referring to the mines to which the orders are sent. Thus orders sent to one mine are sub-numbered: Ai, A2, A3, etc. Orders sent to another mine are sub-numbered: Bi, B2, B3, etc. It System for Retail Ice Company. One of the greatest difficulties encountered in keeping the books of a business of this kind, is the large number of accounts to be handled. These, for the sake of convenience, are usually kept in territorial order, i. e., all the Michigan avenue accounts are kept together in rotation of numbers of houses. Thus, one account will be headed 1426 Michigan avenue, and underneath this the name of the tenant. The next account will be 1428 Michigan avenue, etc. Owing to the large number of accounts in a business of this kind it is usually necessary to open a new ledger every year, involving a large expen- diture of time and labor. Also if Mr. F. W. Jones of 4129 Buckingham avenue, owed a balance of $5.00 and removed to 2649 Michigan avenue, it is necessary to transfer the account and great confusion will ensue. Some ice companies, therefore, have adopted the card ledger system, and have found that it is much easier to keep cards in territorial order than is the case with ledger pages, index cards being provided for each street or avenue, the names of the streets arranged alphabetically, that is, Adams street would precede Bates street, the other streets following in alpha- betical order, Charles street, Division street, Ellis avenue, Frankfort street, etc. When a card is filled up, all that is necessary to be done is to add a new card. In a bound ledger, if the space provided for an account proves insufficient, the account must be transferred to another page, and if the space allotted to Michigan avenue is insufficient, part of the records of that avenue must be provided for in another part of the ledger. If F. W. Jones removes from 4129 Buckingham avenue to 2649 Michi- gan avenue, his card also will be removed from that portion of the file con- taining the accounts of customers on Buckingham avenue, the correct address noted upon it and placed in proper numerical order with the Michigan avenue cards. The cards can be so ruled as to provide for a large number, usually fifty- two, charges and credits on one side and fifty-two on the other. When the card is completely filled it is removed to a transfer file and a new card substituted. By this system the accounts with each customer can always be kept together and will not be distributed through several ledgers, as would be the case if they were recorded in a book-ledger. It is scarcely necessary to say in this connection that the original entries are made on the cards, the totals only being passed through the journal once a week, or once a month, as may be determined by the needs of the business. The debit being Ice Ledger Account and the Credit Ice Sales Account, or whatever representative account may be carried. 15 lie card ledger system, accounts with customers can be divided into as many sections as desired, each section being proved separately. This is a great convenience in cases where the volume of accounts is very large. Separate columns must be provided in the cash book and journal for each ledger section, and separate accounts with each ledger section being carried in the general or private ledger. The trial balance of the entire business can then be obtained in a few minutes at any time from the representative and nominal accounts. The accuracy of the balance of each ice ledger account can be deter- mined as found convenient by footing the balances of each section and comparing the total with the balance shown on the representative account in the general ledger. System for Retail Drug Business. A large drug store is usually divided into four departments, viz. 1. Proprietary medicines, toilet articles, etc. 2. Prescriptions. 3- 4- In order to show how statistics may be obtained with the least possible expenditure of time and trouble, we will describe the methods used in a large drug business recently established. It is an incorporated company capitalized at $30,000, in 300 shares of $100 each, of which A, the President, holds 200 and B, the Secretary and Treasurer, holds 100. There is both a Soda fountain. Cigars. PUnC/-fA5E. &£CORD Drffc of lr?v'ce • NJ a m R>l 10 Total ' Dep. 1 Dep.2 Dep .9 Dep A cash and a credit business, the credit sales being comparatively few in num- ber. The accounting details to be considered, therefore, consist of pur- chases and expenses on the one hand, and cash sales and credit sales on the other. A small purchase record is used, ruled for name of creditor, date of invoice, total of invoices, and four columns for distribution to the four departments. As invoices arc received, they are entered in this book and the bills arc then filed away under their due dates for rash discounts, no account- with crditors being carried in the ledger. At the end of the month, this purchase record is footed and the total of the total column is 16 credited to an account called Accounts Payable Account. The total of each department column is charged to an account carried in the ledger with that department. We have now provided for showing in the books the total purchases during the month and the total belonging to each department. The cash paid side of the cash book is provided with a column headed "Accounts Payable." When the bills are paid, they are entered in this Accounts Payable column, no postings being made until the end of the month, when the- total of that column is debited to Accounts Payable account in the ledger. The balance of this Accounts Payable account will, therefore, show at all times the amount of unpaid bills on hand. With regard to expenses, the cash paid side of the cash book is pro- vided with a column for each department so that whenever possible the Date Ms»me>s rbi.'o Accol rft Geri 1. Cash Sales Rec'vble LeJ^ero Dept 1 Dept.2 Dept.3 Dep.4| ii /- J expenditures of each department are charged against that department. General expenses, however, which cannot be charged to any particular department, should be pro rated on the basis of the turnover. With regard to the sales, duplicate tickets should be used, one color for cash sales and another for credit sales, so that the two kinds of tickets can be readily distinguished. The corporation in question used a cash register in each department. It was one of these new devices which, in addition to ringing up the exact amount of the bill, will record whether cash or credit, and identify the salesman who made the sale. The cash is, of course, handed to the cashier with the ticket. There are separate columns in the cash book on the cash received side for receipts from customers on credit sales and cash sales for each department. At the close of each day, the cashier foots up the amounts of the cash bills and enters the total in the cash sales columns, and the correctness of these totals is checked by the cash registers of the different departments. It is also checked again by the balance of cash. Another method of handling cash sales, where cash registers are not used, is to make each salesman keep his own cash sales account, giving them different books each alternate day, thus the book used yesterday will be taken up by the cashier and the total of the sales compared with the total of the receipts in the cash book. In this case carriers are usually employed from the different departments to the cashier's office. 17 With regard to credit sales, a regular account is kept with each customer on the Loose Leaf Ledger plan, which permits of the transfer of paid accounts to a separate binder, leaving only the live accounts to deal with, which is a considerable advantage. These accounts are kept in alpha- betical order on the self-indexing style, so that no index is required. They are posted direct from the salesman's credit ticket without the intervention of any other record. The cash register or the salesman's own record give the totals of the credit sales each day, and the grand total is charged daily to an account in the ledger called "Accounts Receivable Account" and credited in their respective proportions to the department accounts. Accounts Receivable account is also credited at the end of the month with the total of the column provided in the cash book for receipts from customers. This account thus shows the total outstandings due from customers. <^A£>M RAID Date J\l<3me-.& folio 1 Accts. Ger "1. Expenses Sy.ab!e Ledger; Dept 1 Dep2 Dep.3 Dep.4 | The accounts receivable account, the accounts payable account, the department accounts, capital account and any other representative accounts, should be kept separate from the customers' accounts, because the trial balance is taken entirely from the former as per the following example: Dr. Cash and Bank $11,562 00 Accounts Receivable 5-295 50 Furniture and Fixtures 2,17500 Patent Rights 10,000 00 Dept. 1 156 04 Dept. 3 559 68 Dept. 4 852 98 General Expense 1,248 80 $31,850 00 Cr. Capital Stock $30,000 00 Accounts Payable i,495 00 Interest and Discount 56 75 Dept. 2 298 25 $31,850 00 When inventory is taken, the earnings of each department can be ascer- tained by crediting each department account with the departmental inven- tory. The department accounts will then show as follows : IS DEPARTMENT No. Dr. Cr. Inv. Jan. ist $ 555 60 Cash Sales $1,85950 Purchases 1,68044 Credit Sales 97485 Expenses 864 42 Inv. June ist 780 50 Balance — Gross Profits 5*4 59 $3,614 85 $3,614 85 We have referred to the "turnover" on which general expense should be pro-rated, and now proceed to illustrate same : Inventory, Jan. ist $ 555 60 Purchases 1,680 24 Expenses 864 42 $3,100 26 Less Inv. June ist 780 50 Turnover $2,319 76 Sold for $2,834 35. The percentage of general or administrative expense, therefore, would be calculated on the total turnover of the four departments, after which the amounts to be charged against each department could be calculated in the usual way, the balance of the department accounts then showing net profit. Another method of taking care of customers' accounts, if they are not very numerous, is as follows : Obtain from a manufacturing stationer a sufficient number of boxes made to accommodate your bills. Place the duplicate bills in these boxes (which should be marked outside with the name of the customer and kept in alphabetical order) and place above them a form of statement, which should also be in duplicate, with carbon sheet between. On this statement enter date and amount of each bill as depos- ited in the boxes. At the end of the month go through the boxes, foot the statements, leave the duplicates in the boxes, and mail the originals to the customers with request for payment. Cash payments should be entered on these statements from the cash book, and when bills are paid, the papers relating to the accounts should be taken out of the boxes sj that they can be used for other customers. 18 PART VIII. Pay-Roll Systems. Pay-Roil Systems. Many different methods of arranging pay rolls have been devised with a view both of saving clerical work and obtaining a check on the accuracy of the pay roll. Pay rolls are frequently complicated by the employes obtaining advances on their pay, and being charged with goods or supplies. In the days when book-keepers transferred everything into the journal prior to posting to the ledger, they also kept their pay roll accounts in the lengthiest and most roundabout way possible. From the pay roll they copied all the names of the employes into the journal, and having opened an individual account with each employe in the ledger, they proceeded to post to those accounts from the journal. Now any proper system used will provide for but two postings to ledger accounts, the charge of the total to ledger account and the credit to cash. The pay roll book itself is so arranged with a system of short leaves following the names pages (see illustrations) that Weekly ^ -^^^ ^^""""^"""^^■O - * Pcy Doll _^-^ Jar^uaPV ^"~~ •*^"^ febPuary^^ Non^i Salary CIK.No. S" 12" ' 19" 2 6" 2J' 1 9' l€>' 23" W.Willmmn. IflOO i l."S nn \A fiO \n i p 10 Ifl nn K«5 QQ 6QO 2 6 nn 6 nn & nn e> O. ) HWGIiPT' 5?022 3 ?o nn 1 7 ',0 20 2.0 » J, Arnold. P/52 2 A 90. "^ ?fl \e> P/=5 .*5 7 , P> a IO WnnKlyBtnb ,K.s o io l<~? IT 5 o (=> 3 oo l( IO in IO ■■• -*> » /5 9 60 II F~QO/M.. .Me>_y.&. - To . _.MJs.y.. -Is3>— 189.9.... A/AMC N/1 T ' 3 w i o T 1 13 riouR-s Pro'.oa Arr?ouai~ Rernapki PYJone-s n S5 O <=; -=K r>n rl t Sn->VB=> '\ *5 & S fyO 1 hour of commencement the time-keeper distributes these checks on the check-board and takes a record of all checks not on the board, which represents the employes not present. The board is then kept in the time- keeper's office until the noon hour for closing, when the same operations are gone through as in the morning. If for any reason an employe desires to leave before the regular time for closing he procures an order for his check from his respective foreman, stating the number of hours he has worked up to the time of his departure. This order is presented to the time-keeper, who delivers to the employe his check and makes a record of his time on the list above referred to. Each foreman is required to make a daily report of his employes who are absent, and this report is checked against the time-keeper's record. This forms a safeguard for errors. This forms a complete record of employes not present and the balance of the employes on your pay-roll must necessarily be present. You are now ready to post to your time-book and here comes the economical feature of this system. You simply post the check numbers that were absent; those present taking care of themselves on the books, ■u will discover later. In order thai you may fully understand how this is done, I will give below an illustration of the method generally used by time-keepers, and one to the system I refer to. 6 For illustration, if Air. Jones in the above sketch, works ten hours the 8th, ioth, nth, 12th and 13th, you will simply leave the spaces under those dates blank, and if on the 9th he was not working- all day, you will place a cipher under that date. This would show that he worked 50 hours for the week ending May 13th. The next man on the pay-roll, J. Smith, works full time every day except the 13th, on which date he labors two hours. You enter the two hours under that date and leave the balance of the week blank; this shows a total for him for the week ending May 13th of 52 hours, and so on through the pay-roll. If there is piece-work to keep account of, this can be done by using the card system. Each person's account is kept on a card large enough to take in a pay-day. Each card shall contain the name and check number of the person for whom the account is kept; this should be placed at the top of the card. The balance can be ruled or printed to meet the require- ments of any business. These cards are filed numerically in a box or drawer suitable for the purpose, always keeping your live accounts only in this drawer. The total of each card is posted to the time-book every pay-day; the cards are then filed away for further reference, and new ones started for the ensuing pay-day. Many pay roll books or sheets are arranged for signatures of employes, acknowledging receipt of wages paid. The disadvantage of this is that on lTn\e Doo K and Pay Rollfep-fKew^eK e o d^ Safupda y- ^ L ,.^T 26lk 1899 :■! Names. - M T v. T r 5 "idfei || Rate "Time ReoDav An\our\T _ J-Surxdray' Ttffel CK-q S Balance Due. DecdPeyirtti^full ■L _L j_ a _ ! ^_ Q & 1 S> no , P? i fW£. M -M- 1 -4 oo 1 ^"^ i A j '-~ ■7 - 1 FWI.3 OC, -3 a *5~ -i FV,„W= . lo.^ ■A^ :- T. ^ -- -"■ 2 -O a ;o. ■ ' 7 ' 1 1 L- f>X? ie '--■] 16 ■''- r>^,«. m «=, 7-T 1 n • ; - 10 .- • ) D^.Ar^K C-o 1 • 1 ' 1 *« , 7 ~ .•-0 1 1 | ■ ,1 6 1 ' ' : D "''. V - r l£ nrrve DooK ar\d nay Uoll f "" n 1 U -iH>ftfc IA9C) Nc Narrys. 3 M T W T P £> l.-^l Pec'd Payn^fLII •■ AvJ.™™, A , 1 1 1 , 6 • / Aii.^-tsA n 1 1 1 1 <5 k a. FwMterv M 1 1 , 1 1 7 ^ ■ j 1 1 1 .«> 1- i '? O '■■ ?.fc ,, -" e „ 2 C.kol.^n^r, OI<- 1 1 1 Pflc«-. m. 1 1 1 1 1 6 s S. 1 1 1 , 5 s 1 1 1 <5 ^ ,i a signing the record each employe is in a position to see the rate of wages others are receiving, and this is frequently undesirable. While devices have been invented for the purpose of hiding all other entries on the pay roll except that of the employe signing it (see illustration), we think the best plan is to issue tickets to each employe, the tickets stating the amount of wages due and the instruction that on receipting same and presenting it to the cashier the amount will be paid. These receipts can then be filed away as vouchers or pasted on the pay roll book or sheet. PAY ROLL SYSTEM FOR HARDWARE MANUFACTURING COMPANY. The following method of handling the labor account of a large manu- facturing concern, will perhaps be of interest The company is engaged in the manufacture of builders' hardware and employs about 300 men ; the labor is subdivided into departments, beginning at the pattern department, and ending with the packing and shipping depart- ment, each department having a foreman, who, in addition to their other duties, keep the time of the men in their respective departments. The fore- /QOrs/ rou/vDnv RoanoKe V^.Mch 13 - ie>99 Time Report ^r» c)ohn s^mrfK _ W.tfi Trie Virginia MaFdwdPe Mf© Co. 1+e. rr\^> ^7 i« <& Trnc ,0 10 © *e>Ao Caps fi-Shcll* ifc» e>y 20 A '3/1 7 LoIcK & Key Doffe • * 2>2. Catches * 10 R_ll x rrames '6647/> r>=or,-te ^,3-ts»,^e» • * " Lev«r.»£S&pa • * ©€>0 Escutcheons Q Pur- rtry^ "for*err\a'-v^ man reports the time of them to the time-keeper twice a week, Thursdays and Saturdays, on slips specially ruled for this purpose (see form No. i). These slips are written up by the time-keeper on a specially ruled book (see form No. 2), the letters D and J after the names of the workmen indicate whether the work is day or job. iFiorv rou/s/nny Afec/1 cndina /Wc/j /.•1/.9P Names «.«» >.< T XV T r c- T;W Zrnt cJno Sm.+H = . ,. 64oCops & Shells 347 LalSh &K DortS 3 2 Cofeheo 1© FLIIcv' rSa,rr>e>» S^-d-7 '/a F"oor)ts &, .STK» Lc«» aatops 66O CsejJlcheons Deri Dave D cJ »/7-Sb«l's &Capa i4o 1 35 1/5 ifa2 2e» 1 OS 20 .0 So, P-1 •O II -it) a 32 40 a 10 -1 10 e a Mi © 3i6 00 99 1 73 ?e ^o IS 1 26 1 045 1 3S 2 5 1 1 15 1258 560 After the week's work is all entered up, prices put in, extensions and footings made, etc., the totals are entered in the pay roll ledger (see form No. 3) with the parties' names and number of hours made. The job hours are entered in red ink and the day hours in black ink, thus readily showing the kind of work each man has done at a glance. After the pay roll is completed, a recapitulation is made showing the amount of day and job work of each department, which should tally with the V/OO//V/A rtADDWAQE. 'A-rro Cos. ,/^ay Poll fbr> ween ery/,^ Mc'h. >3 - 199. N! M T Vv T r 5 dob rfoups Day '■■ fy. J Arr>t" 1 Arnt, V|D0\i0\ .o|25[2s|2a| 2s|2^| 25 25 SO No &A F&aooKe \4a.MGh. ,3 /99 1 The Vir>i«infc3 PlapdwdPC Mf<$ Co.. SO 1 — Com/77'^s>ivoy Z?epani^7e/?/ —~ SO 1 Drlivep lo ^IdhnSmim' c<"OF»c/ep SO , "cW. "~ Dollar «or#\ of merchandise s N&t fa}/}3fr/=>a6/ Ji Jwjtho^-faymaifc* s - s\s\ S\s\t>\*\ -5|^| -5 s After all of these tickets have been cashed, they are filed away in some convenient place for reference and as vouchers for the money paid out for labor. By this method the men are paid off every Saturday evening, one week's wages being kept behind, as it takes this length of time to make up the pay roll. The actual time consumed in paying off the men being about thirty min- utes, this system was practically devised by the writer and used for several years with satisfactory results. — >S\ S. Burch. PAY ROLL, SYSTEM FOR A TANNERY. It would be impractical for large concerns, having many employes to keep the account of every employe on the regular double entry ledger. At the same time a system must be kept by which any possible errors in employes can be avoided. The following is a system which is now being used by a large number of manufacturers, and although one may call it double entry, it is auxilliary to the regular set of double entry books. The system is com- prised of only two extra or special books. One is the employes' time ledger, and the other is the coupon register. I will describe the former as follows: The pages are numbered in folio, that is, there is a right hand page and a left hand page for every twenty-five employes' accounts. (See cut No. I.) At & 93 MELLEN 7S.\\7'UY AKZZ.Z>V W IS99 E.D9 Nome 3 . ■ - | - - ' 3u-sd»v C-cd.tS . C<^-K = i 3 4 '. - M ■7 o 9 CM . - Lo the left of the left hand pages are written the employes' names, usually in alphabetical order. The space to be given for each name should be about nine- isixteenths of an inch. A page ten by eighteen inches should hold twenty-five names or accounts. (The names are rewritten and new accounts opened with each employe every month.) The balance of the left hand page, to the right of the names, is ruled off into thirty-one spaces or columns, a column for each day of the month. Then each employe's space is subdivided into three spaces by horizontal lines of a different color. Into the top the time is entered. Into the two lower spaces the charges are entered. Whenever a company store is operated in connection with other business, a coupon system is a simple method of charging employes up with what they may purchase in any one month at the store. Instead of charging up the employes' accounts with value of articles purchased, coupon books are issued to the employes in sums ranging from $2 to $20. These coupon books con- tain slips of different denominations, which are good in trade only at the store. In each book is also a receipt which is torn out when book is issued, and the receipt is signed by the employe to whom the book is issued. ( See No .^5Ci5_ $500 Mclle^, W,:-, rw 17" 189.6- Pecei ved of Fayette. £G/<5T~^/?-M£LLEN 72XNNC& MONTn Or May '^ i wKprrv cKare^gc BorK 1 Cxpcnsc AccouKtlAccoW- The first money column of the right hand page is for wages. The second column is for sundry credits, or for balances carried forward from previous month. Into the third column are extended the total charges for the month. Into the fourth money column is carried the balance due each employe at end of month, after deducting all charges. The next column shows when balance was paid. If paid on the regular pay day, the initials "P. D." are inserted. If paid any other time, insert the date. The last column is for remarks, and into which should be noted how balance was disposed of . After the time is all entered on time ledger, and figured and carried out, then all charges should be extended into the charge column. Then carry out the balances into the bal- ance column. Then add up the columns on the right hand page and prove as follows : Add the first column to the second column, then subtract the third column, and the remainder should correspond with the last or balance col- umn. Then the footings of all the pages of the same month are grouped together on one page and added up, and proved again, as above. The aggregate footings of the first column of any month constitute the pay roll for the month, and the footings of the last columns constitute the bal- ance due employes on account of pay roll, and should correspond with the balance of pay roll account in the double-entry ledger. After pay roll is all complete divide up the different labor items, and make a journal entry, say as above. * * * PIECE WORK. Where a piece work system is adopted, it is necessary to pay the strict- est attention to the question of the output, as the workman is liable to sacrifice skill and careful attention to his work for rapidity of production in order to complete as large a number of articles as possible and so increase the amount of his remuneration. Those engaged on piece work are also liable to be careless with machinery, tools and material supplied, sacrificing everything to the end of securing a large output. Labor unions do not, as a rule, look upon piece work with favor, because the employer bases his 12 rate for piece work on the amount of work performed by the strongest and most expert workman, thus rendering it impossible for the ordinary work- man to gain a reasonable living. Where both piece work and day work are employed in the one estab- lishment, it is useful to keep a record which shall allow of a comparison PIECE WOFtK ROCOFiD Pifoc Wor>K Da>y WorK D«ife Name d? Wophmao A i*>t"> o 1 c Co\*>T pep A pttc 1 e To1a| Cost Mps OiTe. Am+ R-ncr,-ti, e P/eoeWonKv or-Day VVorft PcmaoKi) DeicpiptTon No. made J / between the two methods, so that it can always be ascertained which is the most profitable method of manufacture of any given article. * * * COMBINED PAY ROLL AND LEDGER. Accounts with laborers form an important part of any system of accounting dealing with plantations. A combined pay roll and ledger should be adopted which will save all the trouble of keeping individual accounts with laborers, and at the same time prevent the writing of names oftener than once in about thirteen weeks instead of every week, as is NlArne Nlo Bal. Dak Debi'fe Dafe GroeJrfe B* fbraw'd. Cash Mdse Tot J Refcpntetc Wa^es T&kl top wo 7^ customary on most pay rolls. A combined book of this kind is arranged on the tabular system as per the following illustration : The laborer is given by the superintendent a ticket each day for value of work done, and vhis ticket he can exchange for cash at the company's office, or for mer- chandise at the company's store. The book-keeper posts the debits from these tickets and files them away for reference. The superintendent keeps an account of all tickets issued and at the end of the week makes a return o"f the total wages earned by each man, duly O. K.'d, from which the book- keeper posts the wages credited to the pay roll and ledger. The books should be ruled so that two weeks can go on left-hand pages and three weeks on rieht-hand pages. Then insert as many cut, or narrow leaves (without name and number columns) as may be considered practical, the books thus running for as many weeks as desired without rewriting the names. 13 TIME RECORD SYSTEM FOR A FACTORY. Each workman is furnished with a cost card i Fig. 3), on which he records particulars of time consumed and material used on the contract, or job, on which he is engaged. When the job is completed this card is turned in to the cost clerk, who figures out on it the cost of material, labor (cost cadd r/0^3) Name orernployc the AMERICAN MANUFACTURING CO., No .5Kop Mertepieil oct" Tirne Quantity Dept Ma~fepial used Pi».me CO£>"t~ Labors / and sundries and enters it on the Cost Record of Summary (Fig. 4). A separate page is allotted to each contract or job, and the total cost of same ascertained. This amount is then posted to the contract account in the ledger, which is credited with contract price, the difference being- the jFic:- a COST vSUMMARY Da"fe Coat C<=,r>d No Name, of WoraKrnaru Dep+ Qupistrly CWirr\e Cost Labon Sundries folio Ccot~ 1 Where certain staple articles are manufac- tured a comparative statement of cost of manufacture should be main- tained, in order to ascertain that such costs are not excessive or exceptional in any way. In Figure 5 we show a form of Pay Roll Book, the particulars of which are obtained from the Time Recorder. If the Pay Roll Book is com- ric. .3 PAY DOLL. E>OOK Nl<=>rr\e. M T W Th r Tb-tel ~TTrT\e Parte J A , .[Balance ArnourV| Advanced | ^j. Ffe»i< 1 , 2 '-'■ •■ ■ \ .1 ■ ■ 5 pared with the workmen's cosl cards a very good check is obtained on the total time reported. n Some establishments still have their employes* sign the pay roll, but where the hands are very numerous this is found laborious and inconven- ient, besides exposing to the view of the person signing- the amounts paid to others. Cioe) wxieveuc Ti-ie AMERICAN MANUFACTURING CO. CA3Mlga . or..... 7... ::::. m \r\ payTTNerst-oT wa^« duaas follow*: Monday , _ _ . Kou»» Wedne-aday^ TKuP&day „ • Satonday . j. _ » "Tc>fel .... ........ Kour>* - £>up* QECEiveD ofTKe Arr\er°icar\M^afe^p^Co1rSeove ^n\ourtf-'.nlLll ofal! cl&irr\a> "fry^ doycT _. 1DOO (^i^ncJto^c).... Fig. 6 shows a very good form of combined wages card and voucher, which can be used with advantage. * * * FACTORY TIME-KEEPING. Where an employe is engaged an employes' record card (Form I.) is made out and filed away in an alphabetical index, he being instructed to ..— *£r'L-r r c A - w «y.- <-?„o- -h one. notify the time clerk should he change his address. When any change occurs in his relation to the company it is noted on this card. In the case of a former employe applying for a re-engagement, the information thus recorded will often be found of great value. In an emergency it is also frequently valuable to have easy access to the addresses of employes. t/-*g *mc<3 aro time aoat nccoflo jMfir L J-..,-, .. ., Ov^tr-n^. ~T,rr\e r , ■r Irx .'....1 Irl '*.* Tofel RiWK ■.,. ,-.f ^ .-_,. 120 l.oo ,-, ,,, A'U ■a% a e si i 1201 ISO • • 3 I :, lis- a & u 3 730 ,203 ICO ei i • &U ©•/» A % SB io'/i 2e7a roof ,, ■ -. , - -.• •■:' . ""* The time of all employes is recorded by themselves on entering and leaving the factory. For this purpose two register time clocks are provided, in one for employes who are paid wages, and one for all others. On removing the record sheets (Form II.) from the clocks in the morning, that for the salaried employes is simply placed on file for information of those to whom such employes are responsible. On the record sheet from the other clock, the full amount of time as shown by the record is extended into the column headed total time. The amount of such time as has been spent on piece-work being ascertained from the factory clerk (as described later) is entered in the piece-work column, TMe „ a CO ltd m akf Mo ntft. E '■:- Si t / °' N. M— 5h« Day ','.;:: 33c- IW.K. D..TJ.,k» J 'W, b v Stap, " ■ • ' " ' ■ ' 'Z ,:.., "" •° * " »+ip S<^ !3 so — ia i_ « -,.. £ JS LaJ ..- J3C and the difference between the two extended into the column for day work. The time in this column is entered into the wages book (Form III.) each day, it having first been checked with the factory clerk's day-work tickets and daily time sheet in order to ascertain that all time credited to the work- man has been charged out against some factory order. The total and piece- work time being added, the difference should, of course, correspond with the total of the outside or day-work column. If a workman is allowed to go out on his own business during working hours he is given a pass (Form IV.) by his foreman, indicating the time he stopped work. The door being Ocp To A Tir7\c*Keepe „ CO crcdfcr\£ *tr^e "to bo _,r> punchrd f f SV*1— " r.. ...., l-~t R -o. •-.<* Aftconoorv ^W Oc-te-o-J Ow.f Q«.t u ..n-d . , . , . . . .]-. •1- .... B Id . . . . ,. , ,, , ,.,. :■ .■: -'"■ SO L2 ,1 .-KJ ,- IS ac •ii ':. ■K- so arranged that he has to pass the time-keeper's desk to leave the building. he gives hi to the time-keeper and upon his return reports himself as he passes in. The time he lias been out is noted on his pass, and is deducted from the time passed to his credit through the wages book for that day. If he goes out on the linn's business he is given an outward time card indicat- ing the time he leaves the shop, and having the number of the order upon which his work outside is required. This he leaves with the time-keeper. ( In his return he receives this card, which he returns to his foreman in the usual course. The time-Jceeper thus has either a pass or an outwork time 16 card in his possession for each workman during absence from the shop. It will be seen that every alternate page of the wages book is a flyleaf; this enables one writing of workmen's names to suffice for two half months. The keystone of factory accounting is a rigid adherence to the rule that no work shall be put in hand, expenditure incurred or goods or material delivered without written authority emanating from the office, and that all papers and records referring to or recording such work, expenditure, or delivery, must bear the number of the order authoizing the same. On receipt of card from factory clerk and material from stores, the fore- man of the department puts the order in hand at once. He issues a time Ch 7„ Mj*uu.ra^^ „^,„ NJ „ c5*+*. Of».o»l*. mo,„;^ AttE-noo^. 5«*p-"- Bc4 ,r.n..»i>.d &=< ...-. r,,,, »K=d S T -= . •„ |f ;. , v .,. , ^^ J ^ ,., . A n 36 ■ar, .j , ,,. , -. .. , , s v *. -. -..-. • 1'. ,1 ■ , .. <- (O Ch« = K ' D„pt. ' Ord.» Mo. r,^^iO.™m»*a« 13 ""„* ZZZ*'o*t>Z*T~:* J^o^" D-+i 3 V r, r J 3 £?hLm ■s*f"> "J* Afr^^ooor^ ^ ^ -r,i,«. 2 .4 ,. .... z ,., V A-. SO /■s| 1 ■5 -'■ -10 S ■\ V ,. " , J - ■I : .. . ■>>-. -• ac ■V ;^. M . " L5 '*"- "' "■ '■'' J ' ''- 1 . v., ., ,. ,i p ~ .. --■- fit - ,. V -■■: w •• ■>. *a\e • SO CK me™ '" '- ..,,,.- T«« oaoo Mor-r,,r.o<. A f+c^ooo-. Fi.W)\R*li 'e>c o«^ rw»K*J B«5j9 .co.r^.^r.ctr.^ txrBroo n 'T^ M . "The Tbllo—o^baabeer, placed fe yow Oedit" Ouaritoy Of^.-tTon (=>-.. <=.« \/al„<^ / 11 D^- - -ir-J — TGsssz- W.in P'eo. Ondeio N<3 l©o.o_. Nlarne _ .IdCM^f^JBis. MaroK />< F^TZICC ^panch J^^lo. >3_ecffoo KIo ^Z e> 1 v50 «=■ '/a 1 2- 3 A- -5 e -7 & © i ^lo.__J_ Mon.'tri ^/V^^y^cA- . ie>orr?e _ JV-_/)/toi?£Pjl^ Tr?e fu£uroe£> punched show you t??e Qer> of t? b ee.& you l-7r^K __^2\ Pnice Dpaoch Mo. /Z S^cti'ori r-sJo. <3XT 4o <* '/^ 1 2, 3 >4 £> e ~7 & © 1 v505* '/a 1 ^-> 3 ^4 .5 e -7 e> s> 1 20 advances of cash, and purchase merchandise at the camp store. It is necessary, therefore, to have a special pay roll book, or, as it is called, a ''Hands Ledger," an illustration of which will be found under the heading of Pay Roli. Each workman is furnished with duplicate tickets — one for each department in which he works. On this ticket the foreman punches Mo / Name (^JL C^JTi^^rt. MP..if kfct///&j72& At, _ ^_ ^_ Morjtt^ . _M<^r^h ^J.<£--/£>-OC> o^v. ^r RAT& RER D.AV 1 3/4 '/» '/a 'A 0) 5 10 0) "0 J© * # # * No../. Name, __ xiA -C/J^j^^n The pur?cK iq Tr7i£> jioKet"' >f>how,s you tfce <3m,- o lj rit" of iuTie you h^ve rn^cle "today wfffxj . L.__. Morfffe__7Va^._/^'^ &Q.Q- C3^k ^i"* «.A-r-E. F=&F? nD>o,-v' 1 3/4- '/a '/a «/* 0) 5 <0 "0 # * # _^__ «: the time occupied on the job, so that the laborer is always in a position to check up the settlement of his account by the time-keeper. We append samples of these duplicate tickets. The originals of these tickets go to the time-keeper, from which he makes up his records. PAY ROLL SYSTEM FOR A MINING CORPORATION. The company employs about i ,200 to 1 ,500 natives and 60 to 70 Amer- icans, the latter being foremen, mechanics, clerks and heads of departments. The pay roll accounts for the natives are kept by the Tienda de Raya (mean- ing a store where merchandise is advanced against time tickets;. The Tienda de Raya conducts also what is called a Prestimo office (cashier's or pay office), where labor time-keepers and Prestimo cashier are employed. 21 It also conducts several branch stores which, however, are cash stores. All merchandise invoices and freights for the Tienda are charged to it direct when paid, as also all cash advanced it for use in the Prestimo office. At the end of the quarter the Tienda de Raya is charged with administration ex- penses and accrued profits. The Tienda schedules its pay rolls in what might be termed a distribution journal, showing amount of each class of labor chargeable for the month to each mine, each department or each account. This book when written up at close of month is turned in to the general office, when Tienda de Raya receives credit for total amount of pay rolls, also for the personal accounts of American employes. At the close of the month a pay roll is made up in the general office for all American and salaried employes. There being no banking facilities whatever here, these employes leave the balance of their earnings with the company, each one has an account and is furnished with a pass book. Employes having balances are permitted to draw cash at will during the month, and all are allowed store accounts. These cash items (including checks and drafts) are debited in detail during the month, and at the close of the month the various acounts are charged with their respective store accounts and credited with salaries. PART IX. The Voucher System. The Voucher System* A SYMPOSIUM FROM "THE BOOK-KEEPER. THE Voucher System (so called) consists of a record of accounts pay- able, arranged ith columns for the distribution of purchases to their proper departments ; a record of the payment of such accounts ; and a form of voucher which accompanies the payment. The Voucher Record (or record of accounts payable) is not used in all respects in the same way as a purchase record, for the reason that where- as a purchase record is usually devoted to a record of goods purchased, the voucher record covers not only goods purchased but expenditures of what- ever nature. In the cash book a column is provided on the credit side for "Vouchers Payable," and the payments entered in the cash book are posted to the voucher record, the check number also being given. It is one of the es- sentials of this system that all payments, no matter how small, be paid by check. An account called "Unpaid Vouchers' account" is opened in the general ledger, to which the total of vouchers issued, as per the voucher record, is posted at the close of each month. The total of the "Vouchers Payable" account in the cash book is posted at the close of each month to the debit of this account, the balance showing the amount of vouchers outstanding and unpaid. For every entry in the voucher record, or series of entries for one con- cern, a numbered voucher is made out, and these vouchers are kept in a file until taken out for payment. After payment the voucher can be filed away in alphabetical or numerical order, whichever method may be found most convenient to the business. The bills referred to on the voucher should be attached to same prior to filing. When vouchers are filed numerically, the following is an excellent plan for keeping tracks of same and affording a ready reference. File the vouch- ers in packages each month ; use an ordinary index, but have it ruled with columns for each month of sufficient width to accommodate the voucher numbers ; then index all the vouchers filed away each month, thus : J. O. Johnson & Company would be indexed Voucher No. 163 in April; 462 in June ; 520 in July, etc The voucher itself should be arranged so that it bears on its face the following endorsements : O. K. of shipping department that goods have been duly received. O. K. of purchase agent that prices and terms are correct. O. K. of book-keeper that extensions are correct. O. K. of Auditor. And finally O. K. of President or Secretary for payment. While this involves a certain amount of extra work, the system fur- nishes a complete check upon the accounts payable of a business, and if carried out properly, practically renders it impossible for anything to be paid out for goods which have not been received or paid twice or paid without authority. A great many Corporations now combine voucher and check in the same form by adding the following paragraph : When this voucher is signed by the Treasurer, and countersigned by the President of the , and receipted by the Payee, it becomes a draft payable at the First National Bank of (Sig. of President.) (Sig. of Treasurer.) When the voucher register is properly arranged with distribution col- umns, the distribution on the back of the voucher is unnecessary. Vouchers and Their Uses* THE greatest importance attaches itself to any system of book-keeping error or dishonesty, and minimize the opportunities for mistakes, which will, in itself, add to the security of business, prevent loss by Any receipt for moneys paid which it filed for future reference is a voucher ; but tb^ adaptation of the term by business houses of the present time to a special character of receipt, which shall at the same time of acknowledge- ment of the payment specify the particular purpose for which the money was paid, either with or without the original bills, and which shall be numerically arranged for ready reference, has changed the real meaning of the term, so that it now implies a receipt embodying the above features. That the voucher system is a benefit to the business man is clearly shown by the fact that it has been adopted by the United States government, by all railroads and express corporations and by thousands of other large corpor- ations and private companies. The chief use of the voucher is to facilitate the auditing of accounts, and by rendering this task easy and accurate to prevent the falsification of books, either by the dishonesty of the employer or the employe. Its secondary importance is to preserve a file of receipts that may be reverted to at any time after the transaction, to prove payment ; and to have them uniform in size, plain, but fully explicit, and so filed that they may be easily found at a mo- ment's notice. The United States government goes to the extreme in its complicated system of vouchering, but the government is noted for its red tape in all of its departments, consequently a radical departure in its system of payments is not to be looked for. The government has (in its department) a system of duplicate and triplicate vouchers upon which is enrolled each separate item of the purchase, and all circumstances connected therewith. When ready these vouchers are sent to the firm or individual in whose favor they are made and must be O. K'd, receipted and returned, before any payment is made thereon. Thus the government holds their receipt before payment. A check is sent for these receipted vouchers in due course of time, and a receipt is also required for the check. The original bill, or bills, or supplies represented by the voucher, after being properly attested correct, are attached to the duplicate voucher, and thus permanently filed. It is manifestly impossible in a limited article upon this subject to take up the many variations in the form and matter used upon vouchers, as they differ, according to the character of the business and the various exigencies of approving and auditing, but in some of its many varied forms the voucher is now in use by most corporations and its mission is rapidly becoming uni- versal, as its advantages make it a business necessity, and outweigh all con- siderations of extra labor and expense. In a matter of such universal importance to business interests, it is directly in order (as the system is here to stay) to ask what is the most desirable form of voucher to use, in order that it may answer all purposes for which it is designed. That these purposes may be made clear I will define and explain them : First — A voucher is a receipt for a payment of money. Second — It is a document designed to show definitely for what purpose such payment is made. Third It is made uniform in size and shape so that it may be filed in a manner to make it easily obtainable at a moment's notice. p our th It is consecutively numbered, in order that it may be used to advantage in auditing, and the number of the voucher should invariably pre- cede the entry of payment in the cash book. Fifth— It should be properly approved for payment by the officers of the corporation or member of the firm designated for this purpose, and in this particular too much care cannot be exercised. Sixth— It must accord in amount with the invoice, or collection of in- voices, or account, which it represents, or if used for purposes of wage or salary, with the items thereon stipulated. Being thus a definite and absolute receipt, covering a definite and abso- lute account, it is obvious that a voucher should have neither interlineation or erasures and either of these would invalidate it. If a mistake is made it is just as necessary to void the number and make a new voucher as it would be to void a bank check incorrectly filled out, and write a new one. No busi- ness man would think for a moment of making erasures or interlineations upon his bank check. The voided vouchers should be filed numerically with the others. A voucher should never cover a greater or lesser amount than the amount paid, and should not be used for payments upon account except as a simple receipt. I do not approve of the use of vouchers for this purpose at all. It is better if payments upon account are made to take a simple receipt, and finally, when the last payment is made and the account closed to make a voucher reciting therein the component parts of the account and the various credits as shown from time to time. Thus the voucher becomes in itself a full and final receipt for the account. The best use of the voucher system which any firm can make is to use it simply to cover payment for accounts due, and bills discounted for cash, which are charged direct to merchandise or accounts payable. In this case a voucher may recite the various invoices represented there- in, but under no circumstances do we consider it necessary to duplicate upon the voucher the various items of the original bills. This seems like much useless work, carries no authenticity with it and affords additional oppor- tunity for error. Some firms check up their monthly accounts payable upon statements sent by their creditors, and, as is shown in Form A, to follow, attach the statement of the person or firm in whose favor the voucher is made to the voucher. Others prefer to destroy or file the statement and to write in the dates and amounts of the various invoices covered by the voucher. Either method is equally correct, but T lean toward the attaching of the checked and O. KM statement, as i1 carries the additional evidence of correct- of the voucher furnished by the creditor, and does not require the re- checking of the voucher at some future dale to establish its accuracy. Some firms destroy the creditor's statement, but attach a statement of their own, fully and carefully filled out. But the good effect of this duplication is some- what problematical. It cannot by any means carry in itself the weight or authenticity which the original statement does. Besides this it may require re-checking by the receiving firm. Nine tenths of the firms or corporations using the voucher system at present discount their bills, but there is no good reason why every firm should not add this simple and effective check, guarding payments, assuring proper receipt, and guiding any examination of the books which may become either necessary or desirable. In lines of business of considerable magnitude, such as railroad com- panies, express companies and great corporations, where the branches are numerous, and radiate to all points of the compass ; where the purchases are made at many different points, and by many different people, while the payments are made from one central point, it may become necessary to have vouchers in duplicate or triplicate, but in any ordinary business this is entirely unnecessary. Whenever a duplicate voucher system is used the original invoices may be attached to the duplicate voucher and if so done should, at all times, remain a part thereof. The main abuse of the voucher system of the present day is the large amount of useless and unnecessary labor employed, corporations in many cases requiring that every item from the original invoice be entered upon the voucher, deplicating and triplicating, where no necessity exists. Some railroad companies go to the extreme of requiring a separate voucher for each separate invoice, hence firms from whom they purchase ioo bills per month will be required to enter ioo payments to balance them. Such a course is simply idiotic. It does not seem to me either justifiable or advantageous to make the voucher itself do service as a check, as many railroads do. There can be but one absolute advantage in so doing, and that is the positive certainty of its return to the sender for filing, but as the public is becoming better educated from day to day, in this system, there is hardly less surety of the return of the voucher which is sent accompanied by a check, and that by return mail, than of the one which does check service. Some of the railroads make the voucher do check service and yet avoid some of the disadvantages of the voucher-check, by using a rubber stamp, which makes the voucher when properly signed a sight draft upon the maker. I herewith give such notice which is used by the Texas and Pacific Railway Company. In the body of the voucher, after the preliminary description, the reading matter is as follows : ... .in full from furnished during the month of , 1900, as per bills dated as follows attached to the original voucher. The draft notice is as follows : This voucher when properly dated and receipted becomes a sight draft on L. S. Smith, Asst. Treasurer the Texas & Pacific Railway Co., and will be paid on presentation through the National Bank of Commerce in St. Louis, Mo. The advantage of making the voucher a draft in place of a check is, that no entry need be made in the cash book, until such draft is presented and paid, and it should always be borne in mind by those using this system that the date of payment is the time of the return of the voucher and not the day upon which it is dated and forwarded. A careful comparison of the various systems shows that most of them have more minutiae than is necessary. I herewith append a form used by the Heusinger Hardware Co., of San Antonio, Texas (and with some slight t~l£/VS/NGEO HOW. Co, 3n Antonio. ~7ex. -416. 5o. Military Plaz.a>.. -Do. 5ar\ Antonio "Te> I ler>e.wi"ff\, w<= "SKe plca&urae. n handing you oup checf\ |Nlo or~v"tKe. r7r=.sf Nlarffona! £>.smft, ^?<^r\ Antonio, in. -settlemenT o^ below c)es.<=nibratfrve.ni" 534 Z tlcn^>!noen> /~7ar>c/yvdin>e Co. y3dsn Anfbn/o ~7<~xc for» Accoorvf of variations by numerous other houses) which appears to me to be the sine qua non of all forms. It is simple, contains absolutely all that is necessary for its full purpose, and not one unnecessary item. This voucher does away with a form for sending checks. If this feature is deemed undesirable, as it may be by some firms, the first part of the voucher could be easily changed to eliminate that feature. It will be noticed that I have entered in the form "statement attached," but I have already explained how this may be changed to the various items paid if such change appears desirable. Form A is the face of the voucher, and form B shows the back of the voucher with the matter necessary for filing purposes. This voucher is of the proper size to be folded once, to about the size of an ordinary check, and form B is just the width of one fold. It is entirely necessary, I think, to state the necessity for method and precision in any kind of a voucher system which may be adopted. At the time of payment the number of the voucher should precede the entry, which is carried to its proper column in the cash book, or separated as distributed s by the voucher; although it is unwise to separate cash credits too much by columnar work. Some book-keepers go to extremes in this direction. Every voucher should be checked as to its C. B. entry wnen returned and numerically filed. Your checkings will then show if any voucher should be delayed. Many corporations also have printed upon their vouchers the following, which is a good idea : Alterations or erasures must not be made in this voucher. If not accepted as made, it must be returned for correction. Before leaving this subject I wish to show and explain what appears to me the simplest and yet the most perfect voucher system which has come to my notice. I am enabled to reproduce it through the courtesy of the Hydraulic Press Brick Company, a corporation of $3,000,000 capital, with ramifications in almost every state in the Union. I reproduce it herewith considerably reduced in size. Q&3? A . //*. f->ft? 11W '• C?S^_ 41432 *m v^S^-l jt * 9i ~ : jutf. "-* — ■—-*-">-* Study it. Criticize it. Check with voucher attached. One piece of paper. Both bear the same number. Every check given must have ts accompanying voucher. The whole idea is business-like, simple, compft te and illustrative of the highest order of accounting. In adapting the voucher system to your business study closely eve ry element therein. Select with judgment the form which is best suited to your needs, but avoid if possible (and it is possible) the shoal of redundancy; remember that hours of work saved is money in your pocket — or in your employers, and that the best book-keeping is that which tells every detail, with the least minutiae. Oft times the very simplicity of a statement makes it easy to comprehend and difficult to subvert. Thus you would find that the voucher system entailing the most labor is most likely to carry error in- stead of truth, and to conceal duplicity instead of communicating it. C. A. SWEETLAND. Voucher System in a Brick Making Business. IN MY previous article regarding the various voucher systems, I mentioned incidentally a system now in use by the Hydraulic Press Brick Co., which I consider simpler and better than any other I had yet discovered. I have since been requested to give a fuller exposition of this system so that everyone can understand its complete workings and be prepared to utilize it if thought proper. To this end I have interviewed Mr. Geo. E. Baker, treasurer of the Hydraulic Press Brick Co., of this city, and from him have received the information here set forth. o 9 In a previous letter regarding voucher systems, I mentioned the un- vvieldiness of the voucher attached to a check as being against its usefulness, but to show me that I was in error upon this point Mr. Baker brought forth his check book, which is exactly the size of any other check book, running five checks to the page. At first he was at a loss to overcome this difficulty, but it was finally done by folding the voucher duplicate over and padding the check book a little to make up for the thickness of the extra leaves. When the checks are written these extra folded leaves are laid over to the right out of the way, and the checks are written before the voucher. I will give the modus operandi from the beginning. We will suppose that the monthly bills are to be checked up and paid. After being properly attested "correct" by the receiving clerks, they pass into the book-keeper's hands, and he checks them against the itemized state- ment and attaches them to the statement from the front. Turning the statement over he stamps it with a rubber stamp, for the distribution of the charges, thus: DISTRIBUTION. Mdse Factory Expense Total Of course this distribution may be divided and subdivided to suit the business. . Below this is stamped : This account paid by Check No mtp ... If there should be only one bill to be paid by check the matter above goes upon the back of that bill. The greatest advantages of handling invoices in this manner is that they at no time leave the general office of the company. In many cases, especially where the departments of business are separated, often times in different cities, the attestation of an invoice is of relatively as much importance as the invoice itself. The proper place, there, for this invoice is at the general office where there is no opportunity for it to be lost or destroyed. After these accounts have been audited correct by the book-keeper they go to the cashier for payment, and taking the markings upon the back of each invoice or statement as his guide, he makes checks for each item. 10 The checks and statements audited can then go to a third party if necessary, who fills in the vouchers attached to the checks, from the statements and bills in hand. The checks may then be verified if desired by the signer from the papers above mentioned. Of course, it is obvious that all of the above may be done by one per- son, but we are assuming now the u«se of this system in a business of some volume. After the checks are ready, they are sent to the creditor, without a letter or remittance blank, which is unnecessary, thus a large amount of work is saved. Upon receipt the voucher is detached by the recipient and returned in an envelope sent for that purpose with the remittance. The check itself goes is wandering way, many times going through a number of banks before it is returned to the sender. It is, however, eventually returned ; then as the receipts have been arranged numerically, and as they still form a part of the check which has been cashed, they are united back to back, and left to lie in their numerical order until wanted. After the checks have been made out for the bills or statements the lat- ter are filed away, not by month or date, but by the name of the creditor by means of the Shannon, or some other equally convenient file. The advan- tage of this is, that in the future, if any account or invoice should be called for, even if it was several years old, all of the bills would be found in the same filing section. If it is advisable for the purchases from any source for any year to be figured, all of the bills representing those purchases, are found together, and it is consequently a very short task to make the showing required. In case a firm makes a claim that a certain bill or account is unpaid, it is the work of a moment, even for the office boy, to bring from the file in question the required bill. Upon its back will then be found the date of payment and the number of the check and voucher. As these returned checks and vouchers are filed as before stated in jux- taposition, a reference to the check in question brings forth with it a receipt for the account in question, and it is forever settled. The advantage of this simple plan for auditing work will be seen even without the necessity of any explanation. . It is so simple that none of its workings can be hidden, providing all ;;r.yments be made by check. You may say that all payments cannot be made by check in the line of a general business, but in answer I will show you that they can. Wages may vouched for by the person who pays them. Salaries by the cashier. Petty cash may be easily handled in this manner. A stipulated account may be checked out, vouchered by the cashier, and charged if you please to petty cash. We will say that $200 is thus charged to start this ball. Now during the month the cashier pays such things as may come like postage, express, janitor service and odds and ends for which a personal receipt of the receiver is considered unnecessary. His expenses from this fund may be during the month, $136.72. He makes a check for that amount and signs the accompanying voucher ; while his statement of the items of account after being O. K'd by his superior is filed like any other invoice. You will see that the drawing of this check restores the petty cash account to its equilib- rium, leaving both voucher and receipt where they properly belong. 11 In the matter of the return of the receipt accompanying the check the Hydraulic Press Brick Company assure me that in the last five years that they have used the system, there have been few occasions to ask for the re- turn of the receipt and that not one is missing. In order to handle this system in a perfect manner, every cent that is received in a business should be deposited and every cent that is used in the conduct of that business in any of its departments should be checked out. In order that you may form a more comprehensive idea of this system than perhaps this explanation may give you we will herewith reproduce the check,' with accompanying voucher, used by the company above mentioned. i /&U •J."if&> « yu, I .0X ^wy^^X-,^^/^ a Cash book entries should be made from these checks or stubs, and be preceded by the number of the check. If columnar cash book is used for distribution no further posting is necessary or expedient until the close of the month. C. A. Sweetland. The Voucher System in a Manufacturing Business. I HAVE been running a set of books under the voucher system for several years, and thought possibly an outline of my method of recording might be of interest. As Mr. Sweetland in his articles does not touch on any manner of re- cording, I will, as well as I can, explain our method. We use what Mr. Sweetland terms the third class voucher, viz. : that of attaching the invoice to voucher in the place of transcribing the items of invoice to voucher, ex- cept in cases where there is no invoice, in which case record of items is entered on voucher. We pay all vouchers by check, although the cash ac- count may be used also if desired, I attach a copy of our voucher, also a leaf from our record book which we term "Supply Register," it will be seen that the columns of the supply register conform to the distribution of the back of the voucher. The voucher and leaf of the supply register are self- explanatory when compared with the examples below. The voucher is always recorded before mailing, and generally before issuing a check for payment of same, although the number and date of check should be entered in supply register before mailing, then we have a full and complete record of the whole transaction, and in case the voucher is lost we may make a duplicate. The supply register has a grand total column to 12 which we carry the total amount of voucher, each department having a total column, the footings of all of which should equal the grand total column ; each department may have as many item columns as the nature of the busi- ness requires. There may also be as many departments as desired. At the end of each month we foot up the columns and carry the amounts of the total columns of each department to Journal, thus, for example : "March 31, 1900. Production department $426 52 Maintenance of plant 134 63 Real estate and improvements 551 65 To accounts payable $1,112 80" Supposing all of the above were paid by checks on Indiana National Bank, we refer to stubs of check book, taking all checks that were drawn to pay vouchers during the month of March (these being designated by mark- ing each stub of check that was drawn to pay a voucher thus "Voucher"), we find that the total amounts to $1,112.80, and enter in Journal thus, ex- ample : "March 31, 1900. Accounts payable $1,112 80 To Indiana National Bank $1,112 80" Vouchers paid in March; 1900. This balances Accounts Payable and gives bank proper credit. If desired, the footings of all the columns may be carried forward from one month to another, and at the end of the year we have totals paid for all the different supplies for the year. Any particular transaction may be re- ferred to by looking it up in the supply register and finding the number of the voucher, the vouchers may be filed in cases or in bundles, one month's ACCOUNTS^PAVABLE JOHN JONES & CO. To ..^rnU^mnll 4VOo D>R McK. A ^X 0<£> .-s-p. 1 A ^L PS .5% I A J5.S 1 es.**, 1 1 1 2. fto ^_ ==== ===* = * ^^^t^*""^ ^_^^*****^ ^^ = ^= :S *^~ J ^ Deceived (place) Nt^.w N^reK (ckfc- ) McK OA I90_Q_ of JOHN JONES&CO. ELIeyen n<-.^dF>g-.d Tvv?-lvt-. "y & °/fino Do! fan= beiPvc^ "fKc on\qxjr\t ir\ Voll oV above account ^ And wiQ^TS.^/o/i/) e/o/Tea cvCc, 13 ACCOUNTS PAYABLE • John Jones e* Co., DETTROITT MICH. Vouckep rsJo. ..^52.. ...... Amouni- . $111^^. "The- wiiKirv 4 M 1 Abn/ X \A/»sSte Rrtc-kirvrt «*>£-. 7 1 OQ lnc-iWc.ntal&. /^ i 1 3 5? 44 " maintenance: or plant •2 1 , - > 14 • T><*A ."ikni-mrt Cffe.. 5,5 • - / £>£/4L ESTATE AND IMDQOVEMENT5 FS, ,;U n rf* i i r> OO 140 oo O 1 ~o 2IO 6.-5 OCNCO>ii_ work in a bundle. If I were to choose from the three classes of vouchers mentioned by Mr. Sweetland I would surely choose the third class in prefer- ence to any of the others for the following reasons, viz. : ist, the saving of time in making vouchers ; 2nd, the original invoice must be accepted as cor- rect, in transcribing we are, to a certain extent, liable to make errors ; 3rd, <5UODLItI3 rop> MONT/-7 or Date- Isle. KlorrNO Totaj Arnourst* OroodooTiors Oepfefotrne-rst" Tirnbc O.I • l_abor- B* lr>c "denial* Arrvourrt' «^»m! .^mnlla-Co. , -■\--, f)4 71 ■-. 1 i 3 nz 42S as 1 us so \sa • Aii ■•- L ■ -'-•■ '* JO ..•J aa — jj^l 32 «i£jB bsl MAD* -r ! /OOO Ma,riter\orice of Dlon,+- Rool CilSte. and Impnovemerif . When *nd how pa'd' LJop. .„* DcpoiNa Depo.oof lecd Ao»jr,+ Land e>'!d Dec P, G>v rrvd.se pep. aTtt. bifl 20i oo ~7 do 1 ^^ M do 503 4 672 fiO 1 1 Received the &t-irr\ of -S>ix hond^cd and »£>ey m ^cjil p. ^pprooved . Tn>eas ■rnent of above •&tarfe.>rv=.!~t7n<° rfc\ 1 nr\P^w -^opfr-, ( t-^l^a-sxS ei=fe...si©r> d ^etij VOiX/vfP COH-riNEN-TAL. f-tAPDW/\f=> e CO. No Ift7ft ixi.amo C" > .h,'<^ J ^<~> Wirac Co. Address CKic-aqo . III. Dated Q^=cJ r^c-. ^i C^sK Dooh f&i.o -^e>T Z7/C5 7~£>/fi dV 770 A/ Ck,r ft co W, ra< - C^o * €5-72 ?o , 15 The vouchers are numbered consecutively, which numbers are entered in the cash book in a special column between the dates and the ledger folios. The vouchers when returned, signed by the creditor, are filed in numer- ical order, and an index made of the names and principal items of purchase, thereby enabling one to immediately refer to all the vouchers issued to any one person or firm, and, also, to ascertain readily the cost of any article pur- chased at any particular date, or the name of the firm handling such an article. It is very convenient for the auditor, in this system, if the numbers on the checks and vouchers correspond, in order to afford a ready reference be- tween check and voucher. Where business is done with but one bank, this is easily done. I attach a convenient form for vouchers. L. S. Duryea. The Voucher System in a Wholesale Business. I wish to outline the system I have in use and which I believe to be the bejt system in existence. The accompanying forms show both sides of the voucher (which should be the same size as checks used, and not too wide to go in a medium size envelope without folding) properly filled out.. SIOtT AITC EETVK1 .M9. ^ec^J/rcm9).7l^/Jermem W^/imSC. '//le.men/ o/ ascsxnU ai /iw t>i<>n/ on tMrr }/e<33*jreep> -1 hereby certify "t^at - ^ for>c^o\n^ Account hw*s been utboraized. has beer? examined by rr\ A&y o< r L a-£> 52.— _- — To Payee ". After* sidr?'n^ 1brae4o>n<*) Voucher detatcb "tfys obec.K 3ame oa office boy can take the Ledger, and, without asking questions, get all vouch- ers, and, at the same time, all checks used in making payments, thus pre- senting in perfect form, all the facts so useful in adjusting disputed accounts. Should you desire it. I will submit another form that I have prepared. I hope that the form enclosed herein may be interesting to members of my profession. E. M. Smith. IS An Accountants' Voucher Record- ■m-THEN the voucher system first came into use, the voucher record was \X/ a book of reasonable size and with a comparatively small number of columns. As the advantages of the system came to be more generally understood and appreciated, the record gradually expanded, until now it has, in some instance, grown beyond manageable proportions. Ad- vantageous divisions and subdivisions of an account are sometimes omitted in order to prevent the record from becoming unwieldy. The short form of voucher record here shown is intended to be used in connection either with a voucher ledger or with voucher accounts opened in the regular ledger. A'SnORT 1/OUCtiEP &ECOQD 3 e. HZ £ 1 r f.-s 62 f % •^ 4- P e - J! Si X'fl fl E a a 24 26 123 124 125 126 12.7 X.LumbfpCo. Cashier V. PT3, Co.; Cashier 5 ~Z.AS.sy Co. Total Lumber 3 Pr^rftrnrf P.RTcKt. Advfe. Off.ce Office Off.cc Selling 5ellir79 S>elli'n7S 206.25 ZS.OO 123,73 20«" 345 78 3.37231 1743.16 1 ( I09.59 15178 20, 34576 3.37231 Mav23 danTS 23 24 26 ch.45 * 12 ' 17 • IS • 19 In a certain business, for example, the accounts are classified under three general heads, office, manufacturing and selling. These principal ac- counts are subdivided into materials, labor, supplies, and so on. The ledger headings follow the sub-divisions. Thus the ledger will be headed, "manu- facturing account, materials," "manufacturing account, labor," "office ac- count, supplies," and so on. The column in the short voucher form headed "distribution of voucher" shows the amount to be posted, and the column headed "subordinate account" shows the ledger account to which the post- ing is to be made. This short form of voucher record admits of an indefi- nite division and subdivision of the accounts without enlarging the size of the record. The disadvantage attending its use lies in the fact that the sev- eral amounts have to be posted separately instead of in totals. On the other hand, the ledger accounts will show the way each item is running and will also admit of explanatory notes being made in the remark column of the ledger. John H. Bisjapx 1S9-2 Adcioj>_ _MicJ-w _ Nov. 2d (on "ttVe follower^ duly authorized oooouiNf; whyoN '•• henefav opproved per». delScled bills or\ file. i7e po DISTRIBUTION ACCOUNT AMOUNT J.Srrjtt^. Received.. ^wftrx. L3_1890_fro-TN NATIONAL STEEL and WIRE COMPANY. tf\e sunr\ of, _Qno -KondrvesL .and. eeyecvtj'-aii — — — 7 -5r-> ir\ full • payrr\ervl" of tt^e. o.bove accour\h -Tbff-Qsor^JN^Pfe^c, Sp.^ .. NOTE., if arr\our\T i» r\ot" acrtldfoctopy, petCrr\ voucJ\cj» n1t\out~ 6tteryiTior\ fore oorroLJiorv. No.li££_ "The Clcorftf, N Pif.pc.r. C' Ledcjcp;_Q_ ArfpUry M.c.k^ Anxourf I7ft^ TKis VoucKoio wKsr\ properly n>e- ceip'ted will be. aecepled && a dr^ft" or\ tKo NATIONAL STEEL and WIDE COMPANY, -tK^ou^K 1Ke, HOST NA- TIONAL BANK of Clevalarxd O. NXtT?>rNAl ^fe^.l cS'W.pe, Co... Voucher Record for Publishing Business. TT-ic EiooH-ftce p*tr* Publi\3hina> Co .CIS) V£>l/CA7^Q CiECOC- r OA Horn,-, QHfo^x» r.-.. TsttU. i.,r. r"'X' '. "T " UVv,^ _ '. V.'.'.T "r^ Bool\» DW . 1 C £S* l^^-v. i ! 21 Principles of Distribution in the Voucher System of Accounts. THERE is scarcely any line of book-keeping in which one does not at all times run across the very interesting question as to what account this or that item shall be made a charge, and the answer to the ques- tion, taken through a series of fiscal periods, as shown by the entries them- selves, is quite a clear exposition of the principles upon which the company accounting is carried on. In some respects it is unfortunate that such a marked variation of cir- cumstances, etc., prevails in even the accounts of companies of the same class ; and so it is almost impossible to prescribe any precise methods of ruling, any accounting formula by which the items of an extensive bill with many charges shall be assigned to debits which will prove at all uniform in subsequent periods ; debits of such a nature, that is to say, that any subse- quent items in various classes of bills, can be reasonably inferred, even in the majority of cases, to be a charge against the same account as those at first occurring. It is in fact this very circumstance which makes the em- ployment of a carefully prepared, well itemized voucher folder of so much value, both to those interested in the business and to the auditor as well, giv- ing, as it will, if properly used, a clear and explicit statement of the special distribution of the enclosed bill or aggregate of bills ; and if a folder is pre- pared in such a manner that there will be nearly half an inch between the lines of the folder, space will thus be left for the auditor to note in red ink, perhaps, his own method of distribution of the different disbursements which, to his practiced eye, seem to have been originally incorrectly awarded to this, that, or the other account on the books passing in review. In few companies, unless we include building and loan associations, is there the slightest attempt to regulate the methods of distributing the ex- pense accounts, by charter or by-laws ; although in municipal accounts we come very close to the by-law regulations as to the distributive principles to be employed through the ordinance book, which is strictly an exemplification of continually changing and enlarging corporation by-laws ; and prescribing as it does, the uses to which the allotments of the general fund shall be out, it distributes, many times in advance of the receipts, the revenue of the cor- pc ration along the line of accounting principles which are governed by the exigencies of the cases brought before the councils, and the face of the youch- ers^themselves will have to corroborate in each case, the special distribution of the funds which is illustrated in the payments for sewer, paving, lighting and other purposes. But in ordinary undertakings there cannot possibly be any regulation of the disbursements of the income either in advance or at other times, owing to the unforeseen character of the company disbursements connected with the operating expense account, and which in the case of the municipality is usually quite closely approximated in advance through the comptroller's estimates at the beginning of the fiscal period. Perhaps the most valuable difference between these two lines of companies, the factory and the city 22 accounts, lies in the simple statement that the latter is not in any real sense a corporation "for profit" while the other is such in every sense of the term. It is a well known fact that labor charges, for example, incurred in the building account, do not always render it more valuable as a company asset, and for that reason should be excluded from an appearance thereunder. Whenever lumber is purchased and men are set to work to adapt it to its place in the factory structures, for some new purpose, then we have what constitutes a charge against the building account; but when the labor is employed without the auxiliary of new building material, then it forms a charge, not against one of the visible assets of the company, but against a lepair and renewal account, which is not of the nature of an addition or improvement to the structure, but only a maintenance thereof. Manufacturing companies usually make a marked difference between the building and improvement accounts, relegating to the latter heading such items as the construction of new walks, fences, partitions, railings for offices, etc., stairways, removal of some old construction and substituting new there- for. And they proceed upon the principle that whatever representative ac- count the varied items may appear under at first, a sharp distinction must be maintained up to the close of the fiscal year ; and then, when the different classes of maintenance, improvement and renewal costs have been properly distributed, their relative place in the entire system of accounts, and their relation to the main, the building account, can be very readily ascertained, and amalgamated with it, closing into it one by one, the various sectional departments, with their footings, subject to such changes as the manage- ment may wish, and thus preserving distinct, not only through one fiscal year, but up to close of the undertaking, the history of the sectional ized charges in a clear and comprehensive manner. In the correlative ledger heading in railway accounts (the construction account) we find even interest and discount items made a charge against it; where they are paid out on loans negotiated for that special purpose; and homeiimes even certain portions of the law charges are placed against ir also. In the factory accounts, it is necessary to keep very carefully in rrind the difference between footings of any representative account like the build- ing account, which is the substitute for the railway term "construction," and footings of accounts which stand for added cost merely and not for added value; for cost does not always mean value as has been shown fre- quently in recent years, when sudden insolvency assailed an undertaking. In oil accounts, the sum of the charges against any particular well or group of wells is very rarely indeed made the basis of a sale. It is the pro- duction alone which is the governing factor ; and the sum of the amounts standing against the lease construction, against the undertaking as a whole, is conveniently placed in the background, its results reserved only for the interested consideration of the retiring partners. Now the arrangement of the voucher system and record in oil accounts has two distinct aims ; first, to obtain therefrom the exact cost of any one well at any time, and second, the varied classes of costs common to all the wells, but so arranged that the cost for the original purchase of the property, drilling, tanks, labor, law, traveling, etc., can be also ascertained by them- selves separately. 23 This distinctive result can be reached easily enough by one method, keeping a separate sheet for each well of a lease, whatever their number may be, and then in order to reach the total cost for a given lease, or group of leases, simply carry forward the footing of each distributive column on the various pages, into an aggregation sheet to represent the cost (not value) of the total undertaking. When we come, however, to apply this idea to fac- tory accounts, it will be needful to bear in mind the fact that there is a great difference between the current operating expenses and the cost or expense of any single machine, or adventure which may form a part of the entire factory system of accounts. There are in factory accounts two distinct methods of charging labor ; one to the job account, and one to the current operation account, so far as its items fall outside of the charges which can be shown to be debits against any particular jobs on hand. Any attempts to reach the cost of a single machine or of a group of articles made, must be carried out through the aux- iliary of special statistical sheets as a rule in which can be incorporated from the ordinary record books of the company, the isolated charges taken seratim, which will give the desired information. It is only where the number of machines is limited that their cost up to date can be shown and carried into the regular factory accounts from day to day, as for instance, where the equipment consisted of six machines of a certain kind, of different sizes for turning out different sizes of the same class of products, and the rest of the equipment consisted of the ordinary belting, shafting, pulleys, engines, boilers, etc. — the distribution of costs was made through a specially prepared voucher, dividing the charges into two distinct classes — one of the six machines, the other for the rest of the equipment in a single lump; that is, the printing form on the folder ran as follows : Voucher number, amount, net (third line being reserved for indi- cating the net amount paid in distinction from the gross amount entered upon the line above, since there were always several deductions from the face of the original bill on account of freights, two per cent off, rebates, breakages, claims of various kinds, etc.), paid (this line giving the date of payment), by (this line giving check number, or the word "note" if paid by that means, or else the name of one of the firm who might have settled the bill himself), charge (following this word came the distribution of six lines for the machines, and eight lines for the items belonging to current operation costs, such as labor and wages, freights, interest and discount, rebates, oil, fuel, wire and nails, etc.). And finally ent. (that is entered), meaning the folio of cash book, journal, etc., on which the figures were found which were placed on the folder. In all cases where the carriage costs and the supply bills are so numer- ous as they are likely to be in factory accounts, oil accounts, etc., the use of an itemizing slip ruled up by the printer for the purpose, is advisable, and on which can be placed the items picked out from the great array of figures on the consecutive pages of the periodical bills, freight and supply, the items one by one being marked in red ink or pencil with the initial of the account to which they should be charged, first ; and then the items taken one by one and recopied on distribution slip pasted to the original bills as a proof sheet or slip. The divison of the costs and its skillful distribution is carried out in 24 the most remarkable manner in railway accounting, where the cost of a single car, or engine, or other item of equipment is carefully preserved, in connec- tion with the operating expenses, through the aid of the loose leaf system of accounting, as shown by the use of train sheets, cost sheets, freight income sheets, and so on, the tissue and other forms of record sheets being so numbered, dated and filed, in different colors and sizes that the well nigh countless items of expense can be easily aggregated into comprehensive summaries, balance sheets and statistical tables at short notice. The chief clerk of a large railway company will readily appreciate the wonderful skill with which the footings of any and all of these apparently isolated, but really closely connected accounting departments of the road, can be quickly carried down and forward into summary sheets, and the totals prepared, simply from the proper sectionalizing of the enormous number of items representing the operation expense as a whole. A question came up not long since in a Pennsylvania factory as to the representation of the insurance account which well illustrates the advantages of distributing expenses carefully. A certain class of machines maintained as a new venture, was charged with labor, material costs, repairs, a pro rata of all taxes, insurance carriage, salary and similar costs, and the insurance as fast as it ran out, was not closed into profit and loss but retained in the venture account, as a part of the actual maintenance costs, while the general insurance account was carried on the general ledger. But since part of the charges against this account were kept under the new venture account, they could not be written off in the general books on the cancellation or expiration of the policies without creating confusion in the accounts ; so that the attempt to represent the running out of the insurance premiums was actually aban- doned, and at the end of each three months a new insurance inventory taken, and if it was large enouge to equal the amount of the items charged in the general ledger, that amount was retained; if too large, enough was written off to profit and loss on the general account to make up the difference and reduce the general insurance account to its proper standing. This method is simply given as it was found to exist without comment. In auditing, one of the first tasks is to ascertain, as well as possible, the general principles on which the distributive processes have been carried out, and if any apparent discrepancies occur, to see on what principles the discrep- ancies themselves arose ; if any sudden changes are found in the distribution scheme, to see if there is any cause for the same, made necessary either by the previous inaccuracy of the accounting system, or some marked change in the management of the business itself, for both of these features are possible factors for such changes. And the great underlying principle of all distribution schemes is that not only the constitutent items of cost can be easily reached through an inspection of the columnar divisions of the record books, but also thnt their columnar division itself shall be such as to enable comprehensive results to be quickly and intelligently obtained within a reasonable time. Upon these two principles hang all the law and the prophets of any system of distribu- tion. P. h. Grover. 25 Advantages and Disadvantages of the Voucher System. THE voucher system can be divided into three classes, each of which has its adherents. First, I will consider the system embodying the voucher and check in the same document, which is used by many of the larger corporations, especially the railroad companies. The principal advantage of this system is the fact that upon the return of the voucher check the sender has in one document a record of the goods purchased, the time of purchase, the time of payment, and a receipt for the same. The uniform- ity of size renders filing easy, and the consecutive numbering (copies of which appear at the proper entry in the cash book) facilitates the checking by auditors. The disadvantages of this system to the sender are : First, the addi- tional labor required to transcribe the bills upon the voucher, the additional opportunity for error from this work; and if the bills are not thus tran- scribed, the voucher itself is of no more benefit than an ordinary check. This item of labor must amount to a considerable sum, where the transactions are many. Second, there is no ready record as is the case with check stubs, and the record of the account with the bank must be also separately kept. In some large offices where the cash book is in constant demand the posting of cash debits, paid by check, are made direct from the stubs themselves. Third, where there is a mistake made in the voucher, it causes, fre- quently much confusion, as the cash entry has already been made, and while the voucher must of necessity be returned, being incorrect, and being itself a receipt in full for the account, the issuance of a new voucher for the proper amount would vitiate the cash entry, and also the credit to the bank ; and the return of this one, with the issuing of an additional voucher, should this one be short in payment for the difference, carries with it no evidence of authenticity; as it must be issued to correct an error. The main disad- vantage to the recipient of such a voucher check is that it is usually sent without an inclosure slip, and no corroborative record of its receipt can be kept, a very desirable thing in all records of cash receipts. Second, where the cashier' and treasurer (receiving) are separated, the original document must remain in the cashier's hands until it is checked correct, and entered. If this was the only check received it would not take long, but it is frequently only one of hundreds. Of course, this disadvantage could be easily obviated by the sender using a simple remittance slip, merely stating the name of the sender and the amount of the voucher. Some of the larger corporations arc now doing this. The second class of vouchers used are similar to the voucher-check in all particulars, except that they are accompanied by a check, for the amount and arc not considered a check or draft in themselves. The principal disadvantage of this system to the sender is the large amount of time required to transcribe entire the item of bills purchased upon the voucher. This in large linns or corporations requires the services of many extra clerks, and is never placed upon the book-keeper. It is really 26 unnecessary labor, as the items with the proper checking of receipt, correct- ness as to practice and quality, as well as extensions and footings, should all be found upon the original invoice, and wherever this voucher system is used ; the entire labor of the different creditors' bill clerks, must be duplicated upon the vouchers. Then these vouchers must be carefully compared with the originals, to avoid error. The objections mentioned in third paragraph of the voucher-check sys- tem are also applicable to this system. Of course not to the extent of dis- turbing the equilibrium of the bank account, but as far as its other effects reach. There is no question of the advantage of having all receipts of a similar size and appearance, and consecutively numbered ; as by this means the labor of tabulating or checking is reduced to a minimum ; but still, wherever there exists a necessity for additional entries, either upon vouchers or in records, there also exists additional opportunities for error. The third class of vouchers I will mention is that where the voucher itself does not itemize the account, but is issued for a stipulated amount to pay for bills thereunto attached. The various bills for which the voucher vouches are attached to it, and thereafter form a part of it. _ This system minimizes the labor, and brings an additional feature of accuracy to bear upon it, viz., the actual invoices of the creditor which com- mends it above either of the others, where it becomes necessary to use this system to facilitate checking, and to avoid payments of monies for which there has been no value received. Both of the other classes of vouchers may be juggled, and it would require the corroborative evidence of the original bills, to be absolutely certain of their exactitude and accuracy. Even this system has been beaten. One case to my knowledge involv- ing several thousand dollars, was discovered by an expert, by close investi- gation. Everything seemed perfectly regular, but after much investigation, it was found that the cashier had used invoices several years old, erasing and bringing the dates up to the present. The voucher was then made with bill attached, in due form, charged out and the cash pocketed by the dishonest employe. Of course, had all payments been made by check this method could not have been so successfully used. Even in this case it was finally discovered. The great disadvantage of this system is that it becomes cumbersome to file voucher and bills together, especially whenever there is a great number of bills paid in one voucher. It also costs additional postage to the sender and the receiver. Of course, when there is but one bill or perhaps two, it does not appear so disadvantageous, but whenever the purchases of the month mount into the hundreds of dollars, and perhaps as many invoices it becomes a matter of serious discomfort. Next, and by no means least in importance, is the fact that the invoices for goods 'purchased should by all means be kept separate from the receipts for payment to facilitate ready reference which is so often required in any business house to ascertain prices paid at a given time, or quantity or quality of goods purchased. Where all of these bills have been carried into the permanent receipt files, and their identity lost, except as a receipt for pay- ment of account, it becomes, if not an impossibility, a very irksome task to seek for invoice should it be required. 27 Some of the railroad companies and perhaps other corporations com- bine the first and third styles of vouchers. The Wabash railroad, for instance, issues a voucher (in duplicate) for each bill. One of these is sent to the creditor, with this endorsement: "This voucher when properly receipted, becomes a sight draft upon John Doe, Treasurer. Payable through Clearing House." Just imagine, two of these vouchers for each bill ; the original with bill attached is filed in its proper place in the office of the company. The one with bill attached being called the original, how does the duplicate voucher (so called) differ from a check? In a great corporation like the Wabash railroad what an immense volume of seemingly useless work is made for some one. Of course, it may be argued that all of this "red tape" gives employment to just so many more clerks and book- keepers, and while this is true it does not follow that, because it has this very salutary effect, it is an example of the best book-keeping. When we are studying a system to gain an idea of its advantages and defects and how its application may be made to improve its science of book- keeping, it will not do to lose sight of the fact, at all times, that the best book-keeping in the world is that which gives all of the desired results with the least amount of labor and the fewest number of entries. Book-keeping may be theoretically correct and still four times as many entries made as are actually needed. A better book-keeper taking charge of such a set of books, will have them just as accurate in every particular, and will not spend one-half of the time of his predecessor or use one-half of the space. In carefully comparing the various systems, it seems that an even better one than any I have mentioned could be evolved. It would be a simple receipt in itself, but would be consecutively numbered, and treated exactly at the papers used in the voucher systems now used are; being of a uniform and proper size to fit your receipt files; the number being placed opposite the entry on the credit side of your cash book; then, when this voucher is returned, all of them could be numerically filed for instant reference. If thought of advantage the file number of the voucher could be placed upon each invoice covered by said voucher with blue pencil. The form might be very simple and still carry with it all of the advantages of the more volum- inous plans, with but very little labor added to the plan which now uses no voucher. Why should not such a voucher answer all of the requirements of the voucher system, and still be simple, cheap, requiring but little extra time and labor and necessitating no extra expense? I think it would prove in every way as efficacious as its more cumbersome brother. C .A. 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Detroit. The Book-Kccper Publishing Co., Ltd., 61-69 West Fort Street. v* v< DETROIT. MICHIGAN. The information in regard to Proof Systems and Sectionalization, Manufacturing Cost Systems, Inventories and Stock Accounts, and Card Systems, is alone worth the full price of the book. INDEX. ACCOUNTING SYSTEMS FOR DIFFER- ENT BUSINESSES. Accountants 24 Agents' Accounts 68 Agricultural Implement Business 80 Assignees' Business 122 Architects' Business 101 Attorneys' Business 124 Auctioneers' Business 151 Banks 175-234 Bakery Business 162 Cemetery Accounting 304 Church Accounting 312-313 City Accounting 314 Clearing House 321-324 Clothing Business 325-326 Club Accounting 327 Coal Business 328 College Accounting 335-336 Colliery Accounting 336 'Consignment Business 346-347 Contractors' Accounts 354 Corporation Accounting 359-374 Cotton Mill Accounting 3S2-3V3 Creamery Business 384-390 Custom House Accounting 397 Cost System for Boot & Shoe Business 53S-541 Cost Record for Agricultural Imple- ment Business 542-544 Cost System for Metal Manufacturing Company 514-546 Cost System for Machine and Tool Works Company 546-554 Cost System for Bicycle Manufactur- ing Business 570-574 Doctors' Business 879 Department Store 426-448 Drug Business 473-476 Educational Association 4S0-4S1 Executorship Accounts 525-529 Fish Business (Wholesale) 596-604 Flour Milling Business 605-606 Foundry and Machine Shop 620-621 Fruit Growers Business 622-624 Gas Business 625-632 Grain Business 637-642 Grain Elevator Business 642-648 Grocery Business 648-664 Hardware Business 666-680 Hospitals 678-680 Hotel Business 680-691 Ice Business 693-699 Installment Business 707-712 Institutions 712-720 Insurance Agency 720-722 Iron and Steel Business 741-742 Jobbing Business 742-744 Laundry Business 747 Libraries 752-753 Life Insurance 753-761 Livery Business 762-764 Lumber Business 766, 980-985 Mall Order 7S0-788 Manufacturing Business (General) 529-581 Mining Business 808-827 Municipal Accounting 314, 830-833 Newspaper Business 834-836 Oil Business 839-843 Paper Manufacturers 80I-86O Personal Accounting 876-878 Physicians' Business 879 Picture Publishing Business 881 Plantation Business 883 Plumbers' Business » 887 Printing Business 896-898 Publishers' Business 355-919 Real Estate 925-945 Receivers' Accounts 947 Retail Business 9uO-95S Savings Banks 966-979 Schools 9S6-9&7 Saw Mill Business 980-985 Shipping Business 990-991 Societies 995 Steam Railroad 1000-1018 Storage and Hardware Business ^-1 Telephone Companies Theaters 1027 Voucher System 263, 264, 1051-1058 Water Works 1059-1065 Workroom 1066-1070 SPECIAL ACCOUNTING METHODS. Accounts Payable 36 Accounts Receivable Discounted 122 Accounts Receivable 35 Adjustment Account 163 Auditing System Condensed 133 Balance Sheet 162 Bank Account 174-175 Bills Receivable 249-251 Boston Bank Ledger 163 Cash Sales 131,303 Cash 293, 294, 295-300 Cash and Bank Account 25, 297-298 Changing Single to Double Entry 992 C. O. D. Records 302-303 Collections 331-335 Consignment Accounts 346-347 Daily Balance Sheets (Savings Banks).. 977 Delivery Wagons 162-163 Duties of Permanent Auditor of Cor- poration 141 Expense Account, Distribution of 523-525 Filing Correspondence Havlll Bank Ledger ... Installment Collections Insurance Solicitors' Record Inven torv 101, Inventory, Boot and Shoe Trade Invoices Received Invoices, Keeping Track of Mail Order Paying Help Pay Roll 866 Pay Roll for Hardware Manufactur- ing Company Pay Roil for Tannery Petty Cash Piece Work Postage Account Posting Private Ledger Purchase Record Rent Accrued Due 918 Retail Accounting Without Ledger Ac- counts 950, etc. Reverse Posting 959-963 Sales Book (Lumber) 767 Sales (Lumber) 770 Salesmen's Record 1037, 1038 Time Records 443, 444, 557. 558, 564, 565, 566, 667, 668, 778, 779, 883 Workroom 433-434 FORMS AND TABLES. Acceptance 7 Accounts of Receipts and Disbursements (Building and Loan Association) 281 Account Sales (Grain Business) 639 Accountants' Day Book 24 Accountants' Diary -1 Acknowledgment Before Notary 37 Acknowledgment of Order 674 Adiustment Account 10, 42, 43. 44, 45. 313, 447, 653, 988 Advertising Contract Record 64 Advertising Cost and Profit Statistics. . .54, 55 Advertising Monthly Analysis 55 Advertising Monthly Summary 54 Advertising Records 54, 55, 56 Advertising Record and Journal Com- bined 65 Agents' Sales Record 68 Amendment to Articles R 5 American Balance Sheet 168 American Experience Table '59 Amortisation of Lease R 8 Annual Statement 441 Anticipating Bills 95, 97 Appraisers' Monthly Report 39 s ? Articles of Association 107,175 Articles of Co-partnership 115 Assessment Notice U7 Assessment Record 118 Auditor's Abstract Summary 134 Auditor's Certificate 140 Auditor's Daily Report 439 Auditor's Journal 315 Auditor's Report 127 Audit Note Book «8 Auxiliary Cash Book 652 Average of Storage Charges 154 Balance Ledger 161, 279, 442, 750, 970. 98$ Balance Ledger (Bank) 1X8,199.200, 988 Balance Sheet 168. 109 170. 173. 214. 22S, 244, 268, 370, :!72, 374. 145. 486. 495. 653, 663, 685, 687. 6s9, (.90. 70J. 756, 810, S77 Balance Sheet (Building and Loan As- sociation) 281, 283 Balance Sheet (Grain Elevator) 647 Balance Sheet (Life Insurance Co.) 756 Balance Sheet (Municipal) 831 Balance Sheet (Railroad) 1009 Bank Balance Sheet 214, 228 Bank Cash Book 188 Bank Clearing House Due Bill 217 Bank Collection Register 193, 226 Bank Collection Tickler 209 Bank Credit Report 225 Bank Customers Signatures (2) 227 Bank Discount Register 190 Bank Eoreign Collection Book 209 Bank Foreign Credit Book 209 Bank Insurance on Collateral 226 Bank Journal 188 Bank Liability Ledger 192 Bank Note Tickler 192 Bank Offerings Book 191 Bank Paving Teller's Settlement Book.. 218 Bank Receiving Teller's Settlement Book 219 Bank Receiving Teller's Statement 219 Bank Reconcilements 231. 232, 233, 234 Bank Statement 214,228, 978 Bank Stock Certificate 224 Bank Stock Ledger 1*7 Bank Stock Transfer 203 Bankruptcy Statement 243 Barge Register 244 Bill Book 545. 600. 887 Bills Receivable Account 250 Bills Receivable Ledger 250. 2>1 Bills Receivable Record (Insurance) 750 Bills Receivable Register and Ledger — 250 Bonded Stock Ledger 253 Boston I'. :1 lai;ce L-dger 188, 200, 985 Branch Office Balanci Sheet 267. 268 Brewery Ledger ; 269 Brewery Bales Book 269 Business College Cash Book o01 Capital Account 244, 483 Car Records 828 Carload Record (Mining) (2) 812 Carting Cash Book 291 Carting 289 Carting Order Form 290 Cash Account 293, 296 Cash Adjustmeni 800 Cash Balance 296 Cash Books 257. 'Jul. 296. 2W, ■::<:>. 145, 446, 447. 474, 602, 651, 721, 722 Cash Hook (Auxiliary) 652 Cash Book (Pink) 188 273 278 620 646 584 972 Cash Book (Building and Loan Associa- tion; Cash Book. Secretaries (Building and Loan Association) 278 Cash Book. Treasurers (Building and Loan Association Cash Book (Foundry) look (I train Elevator) Cash Book (lnsurana I Cash Book (Savings Bank) Cash Book (Water Commission) 1063 Cash and Charge Tickets Summary 437 Cash Journal 303,312,661. 954 rournal (Life Insurance) (2) Inserts Cash on Delivery Ticket 436 Cash on Delivery Book < ; 01 Cash on Delivery Record 436 Cash Ticket 434 Cash Ticket Summary 437 Certificate of Siock 305 Charge and C. O. D. Tickets Summary... 437 Check Figure System 310 Check Register 308, 3o9, 660 Church Cash Journal 312 Church Subscription Book and Ledger.. 312 City Pill Record 314 Contracts Currents Average Method loO City Journal 316 City Ledger Balance Account 6o3 City Order Form 316 Clearing House Credit Ticket 322 Clearing House Debit Ticket 323 Clearing House Delivery Clerk Statement 322 Clearing House Due Bill 217 Clearing House Paid Stamp 321 Clearing Plouse Proof Sheet 322 Clearing House Receipt 323 Clearing House Slip 323 Coal Record 32* Collateral Insurance Record 226 Collection Installment Report 7)0 Collection Records 226, 95$ Collection Register 193, 332 Collection Register (Bank) 1»J Collection Tickler (Bank) 2-.y Columnar Cash Book. .296. 297, 298, 301, 651, 9-2 Columnar Journal 74. Columnar Records 1054, 1U58 (21 Colmunar Sales Books 9t>8 Combined Balance Sheet 2' s Colllerv Cost Sheet 826 Combined Cash Book and Check Register 6b0 Combined Collection Register and Diary. 332 Combined Credit Ticket & Cash Voucher 437 Combined Voucher and Check.... 1052-1057. 105s Commercial Reports 337 Commercial Statements s 2* Commission Account '■" Comparative Balance Sheet 9*2 Comparative Financial Statement 341, 900, 1Mb Comparative Percentages — * Comparative Sales Record 9->5 Comparative Statement 681,682 900, lt'4- Computing New Balances 9>9 Consignment. Journal t>H Consignments Received 431 Continental Balance Sheet 1<> Contract Register 101 Cost Book *54 Cost Card 533 Cost Journal 434 Cost Ledger 642 Cost Records ..540,541, 653 Cost Register 858 Cost Sheet & 43 Cost Sheet (Gas) 631 Cost Summary 533. 552 u ior I vhciiture Bond 419 ( 'oupon Kegisli r s; 3 Creamery Pin an( ial Statement 3js5 Creamerv Sales Ledger 388 Ri ports 225. 333 Credil Summary 438 Cr< dii Tii ket 84, 392 n House Appraiser's Report 398 Custom House invoice Record (2> 4iK3 i House Transfer Hook 401 I "87 Customers' Order Index Cards 561 I 834, Customers' Signature Record (Bank).. (2) 227 Daily Cash Balance 407 Daily Time Sheet 56o Day Work Time Card ^ 66< Debenture Coupons 419 Debenture Coupon Bond *n* Debenture Register **0 Debenture Statement • ;>-" Dedication Paper (Real Estate) 93a Deficiency Account •• : -- 4 " Delinquents' Register (Water Commis- sion) MM Delivery Rook ?9' Delivery Receipt °p J Delivery Ticket jjb Department Abstract (Monthly) 4J9 Department Account 447, 47b Departmental Accounts (Motel) 091 Department Financial Statement 441 Department Profit and Loss Account — 427 Department Shipping Order 67* Depar;ment Stock Account 4Z7 Department Stock Ledger 440 Department Summary 432 Department. Transfer Analysis 440 Depreciation Account ^57 Depreciation Fund Account 4S6 Depreciation Tables 450 Discount Register (Bank) 190 Distribution of Expenditure (Water Com- mission) 1065 Dividend Book 122 Double Account Balance Sheet 169 Double Averages (7) 155, 160 Dues Ledger 99o Electric Light Accounts Classification — 4.>3 Electricity Generated and Sold (State- ment, oi) 487 Employes' Purchase. Book 442 Employes Record Card 557 English Registered Company Balance Sheet 169 Equipment Account (Mining) 817 Estimated inventory 738, 740 Expense Bill Record 813 Expense Distribution 524 Express Receipts Records m. 590 Factory Diagram 531 Factory General Journal 531 Factory Order 5o0 Factory Symbols 5>0 Family Ledger 697 Famiiv Record (Ice) 697 Financial Statement 313,341, 445 Financial Summary 997 Fire Insurance Agency Register o9l Fire Insurance Average Clause 69o Fire Insurance. Cash Journal b92 Fire Insurance Customers' Ledger 592 Fire Insurance Record 589 Foreign Advertising Register 835 Foreign Credit. Book (Bank) 209 Foreign Collection Book (Bank) 209 Foreman's Instruction Card 502 Foreman's Order 549 Forwarded Abstract (Railroad) 1007 Foundry Order 543 Foundry Order Stub o48 Gas Company Cost Sheet 6.1 Gas Ledger (2) 626 Gas Register •• 626 Gas Repair Record:-; 627-630 General Sales Expense 858 Grain Deposit Register 60a Grain Individual Account 640 Grain Ledger 60a Grain Summary 60b Guarantee Company Warrant 930 Guests' Record 6S2 Hands' Pay Roll and Ledger 883 Hospital Records 67h, 0(9 Hotel Guests' Record 682, 684 Ice Delivery Book 697 Ice House Manifest 69d Tee Order < 697 ice Platform Report 69b Ice Record and Ledger 697 Impression Book '. Hi' mi inni Income Account 496, 534, 1004 Income and Expenditure Account 244, 701 Income and Expenditure Account (Insur- a nee) ' Income and Expenditure Account (Real Estate) "* "^ Individuaf Cashier's Record 437 Inspectors' Track Book (Grain Elevator) 646 Installment Collector's Report..........;. 710 Installment Ledger 708.709 711 Institution Supplies Record (2) 713 Institution Supplies Summary ^741 Interest Account (Building and Loan As-« sociation) 281 Interest on Daily Balances '31 Insurance Account 7o7 Insurance Solicitor's Record 760 Insurance Statements « s 4 Inventory 005 606,738,739, 801 Inventory Account 271, 737 Inventory Sheets 73b Invoice abstract Book 601 Invoice Analysis 431 Invoice Ledger <41 Invoice Record 400 Invoice Stamp '40 Iron Cos: Sheet '42 Iron Stock Account 743 Joint Stock Company (Insurance Cash Book) 584 Joint Stock Insurance Statement 584 Journals 256, 314, 409, 531, 649, 654, 745. 954 Journal (Bank) 1»8 Journal (Factory) o31 Journal (Lumber) '78 Journal (Real Estate) 926 Judgment Note 746, 903 942 816 88 ul5 312 316 ,-,12 Land Accounts Land ana Property Accounts (Mining)... Lease Account Ledger Ledger (Balance) ... 164, 199, 200, 279, 442, 750. 970, Ledger (Brewery) 269 Ledger (Church) Ledger (City) Ledger (Cost) Ledger (Department Store) 440 Ledger (Family) 697 Ledger (Flour Mill) 605 Ledger (Gas) (2) 626 Ledger (Hotel) 682 Ledger (Insurance) 392 Ledger (Members) 312 Ledger (Petty Sales) 2o7 Ledger (Real Estate) 94o Ledger (Sales) 257,388,650.658, 962 Ledger (Stock) 187, 367 Ledger (Tenants) \irYA' 9 3 Ledger Proofs 258, 441, 442 Letter Purchase Order ...... 670 Liability Ledger (Bank) 192 Life insurance Table '59 Livery Board Book 763 Livery Long Hire Book J63 Livery Short Hire Book '62 Loan Capital (Statement of) 482 Machinery Tags 804 Mail Order or Cash Record •• 436 Mall Order Records 787, '84 Mail and Stores Sales Record 438 Main Office Balance Sheet 2b8 Manilla Mill Account 859 Manilla Mill Report 859 Manufacturing Account 10b7 Manufacturing Analysis Book 438 Manufacturing Book (Clothing) 326 Manufacturing Expense Account 856 Manufacturing Purchase Summary 439 Manufacturing Ticket 433 Manuscript Record ••• 805 Material Card 852. (3) 8a3. (2) 854 Maturity Record *0o. 921, 924 Members' Ledger and Record 312 Merchandise Account '37 Merchandise Coupon 872 Mercantile Balance Ledger <50, 9S8 Meter Records 629, (2) 630 Metered Water Register 1061 Metric Measures 807 Mining (Carload Record) (2) 812 Mining Output (Record of) 811 Mining Sales Record vv'I'U S Z Monthly Comparative Statement (Hotel) Mo n't hi y Departmcn t Abstract , 429 Monthly Statement 827, 828 Mortgage Record .- »■" Mortality Table 759 Municipal Balance Sheet 831 Mutual Insurance Cash Book 584 Mutua) Insurance Company Statement... 684 Net Revenue Account 485 Newspaper Carriers' Record 835 Newspaper City Subscription Record. Newspaper Daily Register Note Tickler (Bank.) Offering: Book (Bank) l'Jl Office Order Book 549 Office Transcript 550 Opening Entries 359, 373 Opening Entries (Mining) 815,816, 821 Operating Expense Statement 489 Option Ledger 638 Order Blank 64\ 656, 845-848 Order Book 852 Order (lard 548 Order Register 656 Out W'orK Time Card 564 Part Stores issued Card 563 Patientb Record 678,679 879 Pa t tern Record 790, 792, 793 Pay Roll Book 534. 772, 866, 867, 868, 869, (2), 87u, 871, 873 Pay Roll ana Ledger Combined 8S3 Bay Roil Summary 870 Paying Tellers' Settlement Book 218 Peddlers' Delivery Book 599 Peddlers' Sales Book 598 Personal Account Book 875 Petty Saies Ledger 257 Physicians' Combined Record and Ledger 879 Piece Work Record 852, 882 566 564 696 721 564 69 856 877 685 903 442 917 9s2 442 654 Piece Work Tickets Piece Work Time Card Platform Report (Ice) Premuim Register Premium Time Card Pro Forma Journal Entries Productive Labor Account Profit and Loss Account 282. 428, 445, 489, 663, 690, Profit and Loss Account (Building and Loan Association) 282 Profit and Loss Account (Ship Business). 990 Front and Loss Statement f.53, Promissory Notes 9u2, Proof Book 258, Protest (Certificate of) Purchase Book . 2o6, 672, Purchase Book (Employes) Purchase Journal 428, Purchase Journal and Ledger Combined. 922 Purchase Ledger 741 Purchase Record 314, 310, 474, 620, 672, 921(3), 924 (3),925, (3), 1054 Quotation Book 802 Quotations Received Book 803 Quotation Record 957 Rated Water Bill 1064 Rated Water Register 1062 Real Estate Diagram 938 Real Estate Ledger 945 Receipt Book (Building and Loan Asso- ciation) 280 Received Sales Record 6U2 Receiving Teller's Settlement Book 219 Receiving Teller's Statement 219 Receipts and Disbursements Accounts 281, 282. 752 Receipts and Payments Accounts 701, 946 Reconcilement Statements (5)231-234 Record of Advanced Invoices 4U0 Record of Expense Bills (Mining) 813 Record of Quantity 271 Ri i ord of Mining Output 811 Register of Hospital Patients 678, 679 Register ot Share Application and Allot- ments 84 Registration Book 6S4, 930 : and Shipping Book (Grain Elevator) 645 tance Blank 432 Ri ii hi Accouni St>7 in Moms Record 627, 62.8 i and Sales Book 621 Repair 'l icket .".7:; Report of Finished Product...;...;;;; 855 Report of Receipts and Shipments 856 i \< ■" ml 486 Ri cord I 1 Irewery) 270 ii Accouni 484 Recapitulation 960 Po ting Slip Salary Book 44:: Uistract Book 597 • «< Blotter 8*9 Sales Book 256, 446. 598, 621, 966 Sales Book (Brewery) 269 Sales Clerks' Summary 435 Sales Journal 649 Sales Journal (Lumber) 776 Sales Ledger 257. 388. 650, 658, 962 Sales and Purchase Book (Grain Busi- ness) 638 Sales and Purchase Record 638 Saks Record 656 Sales Record (Bakery) 162 Sales Record (Brewery) 270 Sales Record (Mining) 812 Sales Record and Ledger Combined 162 Sales Record by Provinces 250 Sales Tickets 618, 77/ Sales Ticket (Lumber) 77* Salesmen's Commission. Account 1034 Salesmen's Records . ■ 1038 Scraj) Book 987 Secretary's Cash Book (Building and Loan Associations) 278 Settlement Book 638 Settlement SUi) 651 Share Capital (Statement of) 482 Shipping Advice 628 Shop Order 534-541 Shop Order Record 551. 552 Single Average 155, 159 Smelter Account (Mining) 816 Sorting Record 851, 852 Special Orders Index Cards 561 Special Working Order 669 State Insurance Certificate 758 Statement of Assets and Liabilities 243,334, 372 Statement of Assets and Liabilities (In- surance) '. — 756 Statement of Eiectricity Generated and Sold 487 Statement of Loan Capital 482 Statement of Share Capital 482 Standing Order Card 569 Standing Working Card . 669 Statistical Record 772 Stewards' Records (Hotel) 683 Slock Application and Allotment Regis- ter 84 Stock Book 571. Stock Book (Clothing) Stock Book (Grain Elevator) Stock Book Summarized Stock Certificate Book Stock Ledger 187.367.440, Stock Ledger Proof Balance Stock Order i>oo. Stock Order Index Cards Stock Records 203,532 (2), Stock Register Slock Subscription 366. Stockholders' Receipt Book Stores Charge Slip Stores Credit Slip Store Fixtures Label Stores Monthly Balance Sheet Stores Order Index Cards Stores Purchase order 794,795.796. Stores Required Card Stores Requisition Stores Returned Card Stores Stock Book Store-keepers' Instruction Card Subscription lost 366. Summary Cost Book Summary of Expense Sundry Customers' Accounts Sundry Purchase Ticket Suspense Ledger 1024, (2) Sj mbols ( Factory) Tabular Ledger 164, 269, 312, 692, 6.97. 708, 711. 750, 943. 945. Tabular Ledger < Hotel) Tabular Pay Roll Tabular i Title Record Tena nts Tenants' Register and Ledger Combined. Three Column Ledger ( Bank) Time Card 534, 542, 667, 77S, 779, 852, 853 (3), RSI (2), 855 (5), 871, 897, Tlmi i i". k Record sheet Time Record Tune Record Book Time Record (Lumber) Time Sheet 852 325 643 1021 224 713 4 41 566 ^,\ 1013 364 ,VM 280 546 561 797 563 797 563 545 562 823 1070 1000 1022 432 1025 580 269 930 943 945 199 1029 1029 ,.67 779 443 Time Wages Book 667 Trade Inquiry Form 1032 Trading Account 476, 1033, 1034, 1067 Transfer Book 4ol Transfer Card 435, 567 Transfer j-ntry 672 Transfer Entry Book 673 Travelers' Order t>70 Traveling Salesmen's Accounts.. 70, 71, 73, 74 Traveling Salesmen's Report 333 Treasurer's Cash Book 2/3 Treasurer's Receipt Book 280 Trial Balance ...448, 476, 653, 876, 1004, luorf-lu46 Trip Account '0 Trust Company Statement 1049 Turnover 476, 1049 Vouchers 655, 671, 1053-1056, 1057, 1058 Voucher Cash Book (.Water Commission) lu63 Voucher Record (2) I0o4-1058 Voucher Register 336 Insert AUDITING. Abstract 6 Account Book Analysis J Accountant's Certificate 22 Adjustment Account 41 Anticipated Profits 354 Arbitrary Entries 128 Arbitrary Posting ... 88 Audit, Definition of 125 Auditor's Assistants 140 Auditor's Attitude lf» Auditor's Certificate 140 Auditor's Duties 136 Auditor's Qualifications l« Auditor's Responsibilities 131 Auditing System Condensed 133 Auxiliary Cash Book 12b Balance Sheet 174 Banking 235 Bank Deposits l-jjj Bank Vouchers *« Book-keeper's Attitude to Auditor 139 Books to be Audited "6 Cash and Bank Account 127 Cash Blotter fol Cash Sales 131 Checking Additions •••• 3Ji Check Marks 127, 308 Checking of Postings 126 Condensed Auditing System 133 Contingent Assets and Liabilities 3j1 Corporation Auditing 135 Customers' Accounts 128 Contracts Unfinished 353 Definition of Audit •■• 125 D2preciation 21, 132 Discount .' I 28 Expenses 21 Fraudulent Errors 128 Individual Check Mark 308 Insurance Unearned 327 Interest Accrued 327 Ledger Analysis 88 Location of Errors 129 Market Values 132 Note Book 837 Orders Uncompleted 353 Partnership 23 Pay Roll 129 Percentages ■••••• £> Percentages on Cost of Production 21 Petty Cash 131 Preparation for Audit 893 Proprietor's Attitude to Auditor 139 Purchase Accounts 128 Recapitulation Sheet 88 Real Estate 21 Repairs tii Reserve for Bad Debts .•••• Rules for Conducting Investigations Savings Bank Pass Books Scope of Audit i,"LVU:; i9« Statistical Reports and Exhibits 12b Testing Purchases 20 Testing Sales f Transfer of Business Undertakings 22 Transfer of Footings «» Turnover Unearned Profits 133 19 Valuation of Assets 131 Verifying Inventory 20 Verification of Profits 22, 132 Verification of Assets and Liabilities — 174 Verification of Bank Balance 234 Vessel Account Credits 991 Vouchers 128. 129 Vouching Receipts 23 Vouching Sales 966 Wages Accrued 327 INSERTS. Card Ledgers 748-9, 750-1 Cash Journal (Accident Insurance) Abbreviation 5 Abode \ About 6 Abscond ° Absent 6 Acceptance 912 Accommodation Papers 9 Accord and Satisfaction 9 Account Book 34 Accrued 37 Accruing Interest 37 Acknowledge 37 Acknowledgment 37 Acquaintanace **> Acquiescence 6 ° Acquittance 38 Act of God 38 Actual 3» Actual Damage ™ Actual Delivery % Agent I* Agreed '" Agreement '£ Aggregate Corporation 3o8 Allonge " Allowance \ Alteration °* Amount Covered »< Amount of Loss °' Annually j Apportionment l Bailment "g Bank Account "5 Bankable 234 Bank Notes or Bank Bills 241 Banks 527 Bargain $™ Barter ^TT Bearer g* Bid %g Bidder J™ Btlau "*° BUI 245 BUI of Credit 246 Bill of Exchange 246 Bill of Lading 248 Bill and Note Broker 2,3 Bill Payable f 24y Bill Receivable 24a Bill of Sale 251 Blank Indorsement 703 Bond 251 Breach of Trust 268 Bribe 272 Bribery 272 Broker 2i3 Brokerage 273 Capital 287 Capital Stock 289 Carrier 2~y Certain Contracts 352 Certified Check 3U6 Certificate of Protest 917 Check 307 Chose 313 Chose in Action 313 Chose in Possession 313 Civil Corporations 358 Clerk 325 Codicil 329 Common Carriers 338 Compromise 342 Concurrent Consideration 343 Conclusive Presumptions 893 Conditional Indorsement 703 Confirmation 342 Confusion of Books 342 Confusion of Rights 343 Considera tion 343 Consignee * 346 Continuing Consideration 343 Contract 351 Contracts of Record 351 Contracts by Specialty 351 Conveyance 354 Copy 354 Copyright 355 Corporation 357 Cost 382 Coupons 383 Covenant 383 Credit 391 Creditor ia2 Currency 393 Current Money 393 Customs 393 Custom House 396 Custom House Brokers 406 Custom of Merchants 406 Daily 406 Date 410 Day 411 Days of G race 412 Dead Letters 412 Debt 421 Deed 421 Deficit 424 Defraud 424 Demand 425 Deposit 448 Discount in Contracts 466 Dishonor 467 Disputable Presumptions 894 Dividend 4,0 Documents 471 Draft 472 Drawback 473 Drawee 473 Drayage 473 Due 477 Due Bill 477 Duplicate 477 Earnest 478 Earnings 4,8 ■■rations 358 Eleemosynary Corporations 358 Embezzlement 518 Employed 518 Employe 518 Endorse 519 Engagement 519 Bngn iss > 519 Enhanced 519 Entire Contracts 352 Entry , 519 Erasure 519 Estoppel 522 Evidence 522 Exchange 523 Exchange Broker 273 Executed Contract 352 Executed Consideration 343 Executory Contract 352 Executory Consideration 343 Express Contract 352 Face 529 Factor 629 False Pretenses 581 Falsification 582 Fictitious Payee 682 Figures 582 Finances 582 Floating Capital 604 Floating Debts 604 Foreign 006 Foreign Bill of Exchange 247, 60C Foreign Creditor 607 Foreign Trade 619 Forgery 620 Fraud 621 Freight 621 Future Acquired Property 624 Future 624 Gaming 624 General Authority 153 Gifts 633 Gold 633 Good Consideration 343 Good Faith 634 Goods 634 Goods Wares and Merchandise 034 Gratuitous Contract 352 Guarantee 664 Guaranty 665 Half Year 666 Handwriting 666 Hazardous Contract 353 Holder 676 Holiday 677 Illegal Contract 353 Illegal Consideration 344 Impossible Consideration 344 Implied Contract 352 Income 70C Indorse 703 Indorsee 703 Indorse in Due Course 703 Indorsement in Full 704 Indorsement 703 Inland Bill of Exchange 247 Insolvency 707 Insolvent 707 Insurance Broker 275 Interest 722 Interlineation 73c Joint 74* Joint and Several 744 Judgment 746 Judgment Note 747 Jurat 747 Law Merchant 747 Lawful 747 Lawful Money 748 Lay Corporations 358 Legal Estate 750 Legal Tenner 751 Letter of Credit 751 Limited Authority 153 Liquidated Account 762 Merchandise 806 Merchandise Broker 273 Merchantable 807 Middleman 807 Mixed Presumptions 894 Money 829 Month 829 Moral Consideration 344 Municipal Corporations 359 Negotiate 888 Naked Authority 153 Negotiable Instruments 833 Negotiation Notes of Dishonor 837 Notes of Protest 913 On Demand 843 Open Account »* Order 844 Overdraw °j?" Overdue °j?" Owing b0i Paper Money *f] Par §£" Parole Contracts wf Par of Exchange fbu Pas-* Book «o* Past Consideration •«* Pawnbroker f'f Payment ?*» Place of Business 8W Pledge »=f Possession °9i Presentment »m Presumption |J» Presumptions of Fact 89-J Presumptions of Law °94 Prima Facie ?9o Private Corporations *« Public Corporations j*™ Principal °9a Printed Forms 89b Proceeds °99 Promissory Note jW-J Protest yu<1 Qualified Indorsement 7 °i Real Estate Broker 273 Receipt 94j Redraft 947 Re-exchange •"' Restrictive Indorsement ' U4 Ship Broker 273 Shop Books 989 Simple Contracts *?(j Sole Corporations *» Solvent 99s Special Authority i™ Special Indorsement Clothing Business Accounting fo Club Accounting 3-7 Coal Business Accounting jS28 Collateral 331, 692 Collections 208-211, 331, 059, 958 Collection Book '71 Collection and Exchange 331 Collections of Notes and Drafts ^20 Collection Record (Bank) 22b Collection Register 331 Collection Register (Bank) 192 Collection Symbols ^ College Accounting 33o Colliery Accounting 409 Colliery Weigh Book 825 Color 33o Columnar Books 336 Columnar Journal ;••,■, ■• •" Columnar System H, 30, 42 Combined Voucher and Check 10o2 Commercial Reports 337 Commission 3°7 Commission Account 337 Commission and Brokerage ?3i Common Stock j*41 Comparative Statements o41 Comparative Statistics 312 Compound Average lbtS-159 Compound Interest '33 Conditional Indorsement 342 Consideration 343 .0, 223, 168 351 35] 393 160 351 770 Consignments 34 Consignment Accounts « Consignor 348 Consolidations £3° Consols (English) •• 351 Construction Account 3ol, 491, 9S3 Construction and Equipment Account — 4i Continental Balance Sheet Contingent Assets Contingent Fund Contingent Liability 3ol, Con to Currento Method Contra Contract Book Contracts Unfinished 353 Contractors' Accounts 354 Controlling Account B, 35 351, 4Uo, 410, 431 Copartnership S5 ^ Copartnership, Articles of U| Copyrights &>o Corn Measure 3-..o Corporations •• j* 5 *) Corporation Accounting S Corporation Aggregate ;; ob Corporation Capital -°4 Corporations, Charitable oob Corporations, Domestic — 3o6 Corporations, Double Liability Corporations, Foreign Corporation Law Corporations, Limited Liability Corporations, Private Corporations, Public Corporations, Sole Corporation Stock Account Books — Correspondents' Accounts (Banking) Correspondence Register Cost Accounting Cost Classification (Boots and Shoes).... 539 Cost Ledger 382 Cost Marks 382 Cotton Measurement 382 Cotton Mill Accounting 382 Counting House 383 Coupons 3S3, 418 Coupon Bonds $83 Country Checks 331 Creamery Business Accounting 3S4-390 Cr .. 390 Credit 390 Credit Book 392 Credit Journal 84. 650. 745 356 357 356 356 356 374 195 376 3s2 H, .197, 212, Credit Ledger Credit Reports Credit Sales Credit Vouchers Creditor Cross Addition Cross Entries Cross Entry Journal Crossed Check Cubic, Measures , Cumulative Preference Stock Cumulative Stock Currency, Foreign (See Foreign Cur- rency)— Current Account 11 Customers' Accounts Customers* Ledger 81, 265, 393, Customers' Lists Customers' Records 394 Customers' Signatures 226 Custom House Accounting 397 Daily Balance , Daily Balance Book 228 Daily Balance Ledger Daily Balance Report Daily Balance Sheet Daily Bank Statement Daily Sales Abstracts Dailv Statement Daily Statement Book (Bank) 189, Day Book Days of Grace t Dead Account ' Dead Rent Death of Partner Debentures 414, Debentures, Accounts and Records of — Debenture (Redeemable) 414, Debenture Register Debenture Sold at a Discount Debenture Stock and Bonds Debits Debit Ledger Debt Debtor Deferred Annuities Dfeerred Bonds and Stock " Deficiency Account Deficit Delinquent Stock Delivery Clerks' Statement Delivery Receipts Delivery of Stock and Bonds Demand, Exchange Demand Note Demurrage Department Departmental Accounting Department Store Accounting 426, Department Summaries Deposit Scratcher (Bank) iition....ll, 81. 171, 449. 704, S64, 981, Depreciation Colleries Depreciation Freehold Building Depreciation Freehold Land siation Investment Depreciation Landlord's Fixtures Depreciation Machinery 152, 453, Depreciation Mines Depreciation Plant Depreciation Patents Depreciation Ships Depreciation Repairs Detection of Errors Dingley Tariff Directors Discount Discount 6?° 849, Discount (Banking) Discount Column Discount and Freight 9., 464, Discount Register Discounting Bills Discounted Notes Discount Register (Bank) Distribution Account Distribution of Costs Dividends 12, 392, 467. 712, Dividend Book Dividend Book (Bank) Dividend on Preferred Stock Dividend Tickler Documentary Exchange Domestic Corporations Donation Account .... 475 . . . . 84 392, 892 .... 677 392 130 392 392 ::9J 665 393 393 421 39.; 395 407 407 977 214 407 408 214 411 411 412 413 413 874 414 LI 418 420 414 421 421 421 42] 93 1.2 413 284 421 322 425 424 CI 3 426 426 426 6S0 443 430 199 991 459 4.31 451 452 453 454 452 452 452 453 453 461 47 464 464 1031 196 464 465 36 1 7 190 4.1 L45 892 755 193 467 755 607 350 471 Dormant Partner ••;••■; }2n Double Account Balance Sheet Ib3 Double Average ■•■ Ji™ Double Entry &< 5' 1 Double In, lex • «* Double Liability Corporation M Double Posting j» Double Slide 461 Doubtful Accounts *" Drafts (Banking)..... Jjg Drafts Register (Hank) 1°9 Drug Business AccounUng 4(3, 4, I >!•>■ Measure 477 Due Bill 477 Due Bills (Banking) J^a Duplicate 4 '' Duplicate Billing System 99 Duplicate Parts °± Duplicate Order System »4a Earnings (See Profits)— iv (of Labor in Devising Forms, e t c ) 4(8 Educational 'Association Accounting 481 Electric Light Company Accounting. . ..481-518 Employes' Ledger 519, 6G6 Endorsed Bonds 519 Endorsement 844, 950 English Money (See Coins)— English Register Company Balance Sheet 169 Entry Clerk • 519 Equal Payments of Principal and Inter- : • •• 733 Equation of Payments (See Averaging of Accounts)— Equipment 39 Equipment Account 500 Erasures 520 Error Accoumt 54) Errors (See Detection of Errors)— Estimate Book • •• 769 Estimated Profits 520, 860 Examination (Bank) xv^v Izl Exchange 522. 607-619, 8C0 Exchange See Collection and Exchange)— Exchange (Demand) 613 Exchange (Documentary) 607 Exchange (Sterling) £08 Excise 523 Executors' Accounting 52o tits 471 Expendi'ture Accounts 959 Expense 523, 844 Expense Account 145 Exp. nses Distinguished from Assets. .UN, 119 Expert Accountant 52a Express Traffic (Railroad) 1017 Pace Value 860 Factory Assets •■ 53a Factory Cost Accounting 529-581 Factory Premium Plan 565 Factory (Nomenclature) 575-581 Family Ledger 696 Fictitious Assets d °£ Fictitious Dividends 5S2 File 582 Financial Books 255 Financial Statements 255, oU 583 Fire Insurance Accounting 5S3-593 Fire Insurance Adjustments 593 Fire Insurance Average Clause and Op- eration 59a Fire Insurance Loss «>93 Fire Insurance Record ■ ■ 755 Fish Business Accounting (Wholesale). 59a-604 Fix. .1 Assets H'j...«;m} Fixed Capital 287. 604 Fixed Charges :; '"'. , : 1 ' Fixed Liabilities xy-^y ■■„•/„• S2I Fixtures 604. 624, 747, 798 Flat Opening Books •■•• fj Floating Assets U9, W Floating Debt b«5 Flour Mill Accounting 60a Fluctuation of Assets 606 Folio 606 Footing bub Foreign Collection Booh (Bank) 210 Corporations 858 Foreign Credil Booh (B ink) - Foreign Exchange -619 n Money (See Coins)— Foreign Bcratoher r 13 Forfeited Stock '•-°, Forward Agent (Railroad) 1006 Foundry 80 Foundry and Machine Shop Accounting. 62« Freehold Building (Depreciation) 451 Freehold Band (Depreciation) 451 Freight 621 Freight Book Tl\ Freight and Discount 465, 621 Freight Received Abstract 1008 Freight Record 990 Freight Traffic (Railroad) 1006 Fruit Growers' Association Accounting.622-o24 lire and Fixtures 624 Funded Debt 624 Futures 624 Gain 624 Gas Company Accounting . . - -626-632 General Ledger 41, 213, Mi Gold (Price of) 618 Good-will 634 Government Bonds *>* Days of • 637 Grain Business Accounting -642 Grain Elevator Accounting 642-648 Grocery Business Accounting 648-664 Gross Amount 87 Gross Profits 664 Gross Profit Book 3S9 Guaranteed Bond 665 Guaranteed Accounts -$™ Guaranteed Stock • • 6bo Guests' Ledger (See Hotel Accounting)— Hands' Ledger ■•■• 666 Hardware Business Accounting 666, t>7t Hay Measurement b ' b Hire Purchases (See Installment Account- "Home Study" U Horizontal Addition 677 Horses, Depreciation of •• 677 Hosrital Accounting VT b SX Hotel Business Accounting 080-092 How to Advertise « Hypothecated Securities 692 Ice Company Accounting C93 "?$ Impairment ™ Impaired Account •■ !_ Ja Impersonal Accounts .-11. 'OU Implement Manufacturing Accounting (See Agricultural and Hardware)— _ Impression Book '""■ 'i' "Impresf Petty ('ash System 878 improvement 5?" Income - : • • ™* Income and Expenditure Account (00 Incorporation (See Corporation)— Incorporation, Articles of ™ Incorporated Accountants • la Incorporated Accountants' Journal 15 Index a61, (01, 765 Index to Advertisers )* Index Ledgers •■ • ■ i '- Individual Account Individual Bank Ledger 20/ individual Ledger •••■ '^ Individual Ledger (Bank) 189, 19a Individual Proprietorship «« Indorsed Bonds !.".' Ink *?J Installment 'S' Installment Book ■..•■ ■•■• L Installment Business Accounting 07, 712 Installment Dividend ■■•■ <" Installment Interest •"• ji- Installment Lease • ■ • ■:>- Installment Note »■ L - installment Scrip ., -••• ' - Institute Of Accounts at N--\v fork 19 institute Of Chartered Accountants 14 Institute Rules and Regulations .. 15 Institution Accounting 70S Insurance ■;• ■ '£" insurance A.ocoun1 on, rcu Vccountmg -0 insurance Expiration Record n -a Insurance Record (Bank) 226 Insurance [Jnearned :« •'■»<. -r.- intere 1 LI. rc3-735 Interest Accrued gg [ntere 1 on CapJtaJ .. »« int.-r.- 1 m Dallj Balances _■ 7a st : '<" s ■■■■ ra*- 7 * . interest and Discount Account i> interest on installment. U, 712 Interest on Profits Not Drawn Out 171 Interest Rules .31-, 33 Intrinsic Value of biuoa 735 Inventory 1o, lul, 12o, 121, 327, 410, 735, 740. 800. 843, 1018-1020 Inventory Approximate 738 Inventory Book 739 Inventory Perpetual 738 Investment 740 Investment Account 48, 740 Investment (Depreciation) 452 Investment Fund 740 Invoice 245, 740, 788 Invoice Book 741, 825, 850 Invoice Copy Book 741 invoice Journal 430 Invoice Ledger 741 Invoice Record 399 Iron Business Accounting 741-743 Itemizing 742 Itemized Statement 742 Jobbing Business Accounting 742 Joint Stock Company 744 Journal 256, 411, 472. 744, 919 Journal (Bank) 213 Journal Cash Book 213 Journal (Cross Entry) 430 Key Figure (See Check Figure)— Labor Account 747 Landlords' Fixtures (Depreciation).... 453, 747 Laundry Business Accounting 747 Lawyers (Accounting Methods for) — See Attorneys' Accounts. Ledger 81, 389, 673, 674, 748 Ledger (Abstract) 6 Ledger (Alternating) 149 Ledger (Bank) 240, 241 Ledger (Boston Bank) 202 Lerger (Check) 308 Ledger (Cost) 382 Ledger (Customers') 265, 393, 421 Ledger (Daily Balance) 407 Ledger (Employes') 519 Ledger (Family) 696 Ledger (General) 633 Ledger (Hotel) 1027 Ledger (Perpeitual) 875 Ledger (Petty) 879, 1022 Ledger (Plant) 883 Ledger (Private) 898 Ledger (Purchase) 919 Ledger (Sales) 388 Ledger (Self Indexing) 1022 Ledgerettes 951 Legacy 750 Legal Book-keeping (See Attorneys' Ac- counts) — Legal Costs 750 Legal Interest 723, 751 Liabilities 604, 752, 850 Liability Ledger (Bank) 192, 208 Libraries, Accounting for 752 Life Annuity 90 Life Insurance Accounting 753-761 Life Insurance Americal Mortality Table. 759 Life Insurance Investments 761 Limited Corporations (See Corporations) — Limited Liability Corporation 357 Limited Partnership (See Partnership)— Linear Measure 762 Liquid Measure 762 List Prices 764 Live Stock Account 762 Livery Business Accounting 762-764 Loan Account 764 Loan and Savings Bank Accounting 764 Loan Record 2S0 Loan Record (Savings Bank) 975 Location of Errors 461, 764 Logismography 764 Long Measure 764 Loose Leaf Ledger 1042 Loose Leaf Ledger Index 702 Loose Leaf System 29, 42, 764-766 Loss and Gain (See Profit and Loss)— Lumber Business Accounting 766-779 Machinery Account 780 Machinery (Depreciation) 452, 453, 454 Mail Orders 847 Mail Order Business 53-56, 780-788 Mail Transportation (Railroad 1017 Maintenance Account 500-508, 788 Maintenance of Way 493 Manifest 788 Manufacturers' Accounting 529-5S1, 789-804 Manufacturing Costs 80, 804 Manufacturing Ticket 434 Manuscript Record 804 Marking Goods 382 Market Value 735, 806 Margin 806 Mariners' Measure 806 Material Account 80 Maturity Record 806 Memorial 28 Mercantile Balance Ledger 1026 Merchandise 806 Merchandise Account 737, 806 Meter Ledger 625 Meter Ledger (See Gas Company Ac- counting)— Metric System 807 Mill Lumber Book 772 Mill Stock Book 389 Minimum Rent 306, 413, 808 Mines (Depreciation) 452 Mining Company Accounting 808-826 Mining Classification 318 Minute Book 187, 827, 995 Mixing Qualities or Values 82 Monetary Table (See Coins) — C Monthly Abstract Sales 825 Monthly Statement 827 (See Trial Balance and Balance Sheet) — Mortgage 829 Mortgage Bond 829 Mortgage Debenture 414 Mortgage Record 755 Mortgage Register 975 Mortality Cards 755 Mortality Table 91, 755 Multiplication 103. 829 Municipal Accounting 414, 420, 456, 8.°0-833 Municipal Bond 833 National Association of Accountants and Bookkeepers 19 National Association of Credit Men 391 Negative Account 11, 833 Net 836 Net Capital 936, 898 Net Profit 75, 836 New York Daily Balance Ledger 241 New York State Society of Certified Pub- t lie Accountants 17 Newspaper Accounting 834 Nomenclature (Accounting) 836 Nomenclature (Factory) 575-581 Nominal Account 11, 836 Nominal Capital 283 Nominal Ledger 11, 836 Nominal Partner 836 Non-Assessable Stock 836 Non-Commercial Accounts Non-Cumulative Preferred Stock 837 Note 1, 8, 837 Note Book (Audit) 837 Note Tickler 206 Note Tickler (Bank) 192 Notes Discounted 351, 837 Notes Payable 837 Notes Receivable 837 Novation 839 Numerical Index 662 Numerical Reference 662, 839, 1028 r Obsolescence .'. 839 Offering Book (Bank) 191, 205 Ofhcers of Corporation and Duties of See Corporation)— Ohio Plan (Building and Loan Associa- tion) 277 Oil Company Accounting 839, 843 On Sale 843 Open Account 844 Open Endorsement 844 Opening Books 844 Opening Entries 359, 363, 366, 369, 370, 371, 373, 844 Operating Accounts 493 Operating Capital S44, 1065 Operating Expense 499, S44 Option 844 Order 844 Order Blanks 425, 844 Order Blank System 702, 844,<-966 Order Book 545, 769. 849. 852 Ordar Register M» Orders Unfinished 413 Original Entry 849 Out Advertising- Record 849 Outstanding Discounts 849 Outside Broker 283 Outstanding Liabilities 850 Overchargo 850 Overdraft 201, 850. Over and Short Account 850 Packages in Bond 253 Packing House Classification 319 Paid Up Capital 851 Paging 851 Paper Manufacturers' Accounting 851-860 Par 860 Par of Exchange 860 Partially Manufactured Goods 860 Partner 38 Partnership 860 Partnership Accounting- 860-864 Partnership Adjustment 40 Partnership. Articles of 115 Partial Audit 860 Partnership Capital 284 Partnership to Corporation 368-370 Partnership Deed 862 Passenger Traffic (Railroad) 1011 Passenger Tickets (Railroad) 1011 Patents 355, 864 Patents (Depreciation) 452 Patients' Record 881 Patterns 81. 7^9, 864 Pay Roll 532, 866, 874, 985 Pav Roll Distribution (Mining) 825 Pay Roll (Mining) 809, 810 Pay Roll Book 772 Paying Teller 215-218 Paying Tellers' Settlement Book (Bank) 218 Percentage 874 Percentage on Turnover 874 Permanent Assets 874 Perpetual Ledger 875 Permanent Assets 1029 Permanent Plan (Building and Loan As- sociation) 276 Perpetual Debenture Stock 874 Perpetual Inventory ..81, 73S, 773, 800, 1018, 1046 Perpetual Lodger 764 Personal Account 11 875, 898 Personal Accounting- 875 Personal Estate 878 Petty Cash 1 7o 878 Petty Ledger 879, 1022 Petty Sales Ledger 257 Physicians' Accounts 879-881 Piece Work 232, 566, 567, 574, 881 Picture Publishing Business 881 Plant 12, 883 Plant Account 780 Plant (Depreciation) 452 Plant Ledger 883 Plantation Business Accounting- 883 Plumbers' Accounts 887-891 Policy Register 755 Policy Tickler 755 Pool 891 Position of Assets and Liabilities on Bal- ance Sheet 170 Postage Account 891 Posting 66, 80^., 892 Posting Checks 66 (See Check System)— Practical Working of Adjustment Ac- counts 46 Preferred Creditors 892 Preferred Dividends 892 Preferred Stock 892 Preliminary Expenses 892 Premiums 893 Preparations for Audit 893 Prescription Book 880 Present Value 171 i Worth 893 Prevention of Errors 463 Price of Gold 618 Pricing- 895 Prime Cosl 895 rig I Justness Accounting 896-898 Private Account 898 Private Corporations 356 Private Journal 898 Private Ledger 6, 10.633, 898 Profit „ 624,664. 899 Profit Estimated 901 Profit and Loss 99, 899, 959, 1047 Profits Undisturbed 901, 1050 Promissory Note 246, 426, 712, 902 Promotion 348, 351 Promotion Expenses 11,120,172,892, 903 Proof ; 904 Proof Book 257, 904 Proof Figures 310, 311, 904 Proof of Posting 658 Proprietors' Account 904 Pro-Rating Advertising Expenditures... 64 Pro-Rating Expenses 427, 546-554 Proving Accuracy 255 Proving Work on the Books 461, 462 Proving Ledger Separately 748, 749 Public Corporations 356 Public Library Accounting 918 Publishers' Accounts 355 Publishers' Accounting 919 Purchase Account 12, 35, 919 Purchase Book 256, 387, 741, 982 Purchase Hire System (See Hire Pur- chases)— Purchase Journal 430, 919 Purchase Ledger 741, 919 Purchase Ledger and Stock Record Com- bined 327 Purchase and Operating Expense Book.. 888 Purchase Record 35, 742, 919-925, 1051 Purchase Record (Coal) 329 Railroad Accounting 925 Railroad Corporations' Subscription Agreements 76 Rapid Addition 39 Raw Material 80, 925 Raw Material Account 530 Real Account 12. 925 Real Estate Accounting 925-945 Refbate 945 Recapitulation 66 Receipts 945, 959 Receipts and Disbursements Account 281 Receipts and Payments Account 700, 946 Receivers' Accounts 947 Receiving Teller 219 Receiving Tellers' Settlement Book (Bank) 219 Receiving Tellers' Statement (Bank) 219 Reconcilement Book (Bank) 215 Reconciliation Account (Cash in. Bank).. 300 Reconciliation of Bank Account 947 Reconciliation of Bank Statements 230 Reconciling the New York Account 230-234 Record Book 947 Record of Customers 334 Reduction of Capital Stock 2S7, 947 Redeemable Dead Rent 306 Redeemable Debentures 414, 421 Redemption Fund 947 Rediscounts (Banking) 195 Register 948 (See Check Register, Order Register, Collection Register.) Registered Bond 948 Registration Book (Grain Elevator) 644 Registration Book (Hotel) 683 Relinquishment of Capital 1066 Remittance Sheets 948 Renewals 288 Renewal Note 948 Rent Account 948 Rent Accrued Due 948 Repairs SI, Repairs, Renewals and Displacements.. .- 39, 81 949, Representative Accounts 12. :!5, Reserve 171, Reserve Fund 947, 949, Reserve for Bad Debts Resources 950 Restrictive Endorsement 950 Retail Business Book-keeping 473,950-953 Retail Yard, Accounting for 329 Returns 958 Revenue 958 Revenue Account 959 Revenue Accounts 959 Revenue Kxpendit ures 596 Revenue Items 959 Revenue Receipts 595 Reverse Posting 463, 658. 959-963 Revolving Fund 689 246 171 Royalty 306,842, 9M Royalty Account ■»* Royalty expense »?* Royalty Income 3 ™ Ruling • »> Ruling oi Accounts iLi Safeguard System •• ^ .245, 475 265 701 995 29 453 509 Account" 12 > 34 - 965 Sales Book ,256, 430 597, 700, 767, 965 Sales Book (for Auctioneers) 152 Sales Book (Coal) *** la^^agerV::::::::::::::::::::::::^;^ 966 Sales Sheet (Department) Sales Ticket Salesmen's Accounts (See Agents.) Salesmen's Samples ••• <* Sample Account .. <*• '* Savings Bank Accounting ?> il?- Saw Mill Accounting a o«« School Accounting »B7 Scrap Book »°7 Scrip Dividend •••• 4bS Secret Reserves *■**> aa ' Secretaries' Ledger g Secretaries' Repo; . (Society) *ws Sectionalization u S ! Ct !?. na !: Z '? S 42^4 S 320 S ,l0S;«i;446;«7\-748; 987 Sectionalizing Accounts 463 Security •••• ™* Self Indexing Ledger 70£ Shares, Allotment of °* Ship Accounting •»« Ship Record • ™) Shipping Book (Gran Elevator) b- Ships (Depreciation) Shop Expense Sight Drax-s •••• -; Silent Partner 471, 991 Silicate Extensions on Ledgers 241 Simple Average £° Simple Interest ™* Single Average 155 Single to Double Entry 9o3 Single Entrv 29, 991 Sinking Fund... 414, 416, 417, 624, 947, 949, 992-995 Six Per Cent Interest Rule 731 Sleeping Partner 995 Sliding Scale Debenture 417, 418 Slip System 463,658, 959 Society of Accountants and Auditors — 15 Societies, Accounting for 995-998 Sold Ledgers 44 Sole-^Corporations 3ob Sole Proprietorship to Corporation 370 Speculative Assets 119 Standard Classification of Electric Rail- way Accounts 488 Statement 659, 998 Statement of Affairs 172, 998 Statements of Assets and Liabilities 172 Statistical Records 255, 999 Statistical Reports 147 Steam Railroad Accounting 1000-1018 Sterling Exchange 608 Steward's Book (Hotel) 683, 686 Stocks 620, 665, S37, 874, 892 893, 1018 Stock (Inventory) 556, 1018 Stock, allotment of 83 Stock Certificates 224 Stock Certificates Book (Bank) 187, 224 Stock (Delinquent) 424 Stock Dividend 468, 1018 Stock Donated 471, 1018 Stock Exchange Rules 274, 275 Stock Ledger 225, 360. 773 Stock Ledger (Bank) 187, 1018 Stock Record 180,532,1018 Stock Record and Purchase Record Com- bined 327 Stock Register 3*4 Stock Register and Transfer Book (Bank) 187 Stock Subscribed 98, 1018 Stock Ticket •■•• 434 Stock-in-Trade "35, 1018 Stockholder 'iHiw m Stores 5o6, 712 793 Stores Account ijjjj Store Keeper's Journal (Hospital) 717 Storekeepers' Report (Hospital) 717 Stores Received Book 827 Stores Record V® Storage • ,™J Storage and Warehouse Accounting 1021 Street Railroad Accounting 1021 Street Railway Accounts Classification . 497 Students' Record 33o, 986 Students' Lectures 18 Subscription Account 3M Subscription Agreements •••• «f Subscription List 36b, 1021 Subsidary Books ••• 1021 Sundry Accounts 34, loss Sundry Expense ••• ba Summary ...ccount "• **»i Surplus ■ 164. 283, 391, 664. 893, 1024 Suspense 161 - 1[) *\ Suspense Account •■••■ *'* Suspense Ledger 1024, 1025 Synthetic Account System 951 Tabular Ledger 749, 1021, 1024, 1027 Tellers (Bank) ■• 1-* Telephone Company accounting 1027 Terminable Annuities »« Terminating Plan (Buying and Loan Assoc* -tion) j™ Theater Accounting ••• 10£J Tickler 81, 1029 Time Card 102 i» Time Draft •••• ' Time Record 5> ". <** Tools ™g° Tools and Supplies *"£» Trade Discount ij™i Trade Inciuirv Form 1031 trading Account 8.3, 1031, 1035, 1047 Transfer of Accounts 1035 Transfer to New Company 372 Transportation Accounts u^u, 50b, 507, 508 Transpositions • ■ 461 Transfer of Stock ..20 2-204 Traveling Salesmen's Account ^l0Jq-UU8 Treasury Stock 10 38 Treasury Stock Account • • • • 254 Trial Balanace 1039-X047 Triplicate Order System •••• 846 True --scount ...466, 1047 Trustee's Account (See Assignee and Re- ceiver)— , Trust Company Accounting ••••:■;,•/ }°H Turnover *«*. 1{J6i > A i*» Twelve Per Cent Interest Move 732 Cncompleted Orders •• 520 Undisturbed Profits aol. 1024 Undivided Profits Account low Unexpired Insurance £'* Unfilled Orders »*> Unfinished Contracts WO Unpaid Vouchers Account ............... 1051 Universities, Accounting for (See College Accounting)— Venture Account (See Adventure)— Vessel Account ••• Voucher ' 5^ • Voucher Record ....35, 492, 493, 681, 9S6. 990, Voucher Register ViT-irci Voucher System 29, 1051, Voyage Account Wages Account • • • • Wages Accrued " ± > Wages, Table of Watered Stock •■•• Waterworks Accounting 1059- Wav Bill (Railroads) 1006 Way and Structures Account Wear and Tear • Weeklv Gross Profit Book Winding Up Partnership ■••■ Working Balanace Sheet . . ... . .... .. • • .173. Working Capital 254, 285, 2bu, 4U. Workroom Accounting lObb 990 1051 1051 987 1058 1058 327 1059 1059 1065 1007 500 454 413 1066 1066 THE AMERICAN BUSINESS AND ACCOUNTING ENCYCLOPEDIA. CASH ORDER. Ninth Edition. .190. To The Book-Keeper Publishing Co., Ltd., Detroit, Mich. Gentlemen: — Please find enclosed the sum of Eight Dollars, for which credit me with one year's subscription to The Book-Keeper (from date of expiration) and send me one copy of The American Business and Account- ing Encyclopaedia. Signature _ Address INSTALLMENT ORDER FORM. Ninth Edition. 190 To The Book-Keeper Publishing Co., Ltd. DETROIT, MICH. Gentlemen : — Please find enclosed the sum of One Dollar, for which credit me with one year's subscription to The Book-Keeper (from date of expiration) and send me one copy of The American Business and Account- ing Encyclopaedia. 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