Iifi% I'v-'-il!'! III; S'ljli':''' SSjte'r , m$ Bookkeeping Systems tor a Retail Lumber 1... J iisiness PUBLISHED BY ^bieiHca|J|iii|mnan Introduction. The articles on retail lumber bookkeeping and various details of ofi&ce system for the retail lumber yard were contributed in a prize contest held the latter part of 1910, and the articles and forms \^eve published in the American Lumberman during 1911. Two articles are appended which were not contributed in this contest, but were prepared by an editorial representative of the AiiERiCAN Lumberman as the result of visits to the two yards whose accounting and office systems are discussed. No particular attempt has been made at rearrangement and classification of subjects treated in these articles, but a subject index has been added at the end of the book to facil- itate convenient reference to any particular subject. It will be noted that a great variety of different methods are represented in these articles, not all of which can be the best. They offer, however, a variety of ideas from which the reader may select those which appear best to fit his own particular circumstance or meet his own approval. Many of the con tributors do not keep a running stock record, but a number of others do, and there are several distinct methods shown for keeping track of this matter successfully. Since the publication of these articles there has been considerable demand for back copies of the paper containing them, and it is believed that a republication of this matter in a more convenient form will meet with much favor upon the part of many of our read- ers. Should any problem come up which does not appear to be successfully .covered here, the Query and Comment Department of the American Lumberman is always open to inquiries upon such subjects. Additional copies of this pamphlet will be furnished at 35 cents each, postpaid. AMEEICAN LUMBERMAN, 431 South Dearborn Street, Chicago, 111, 258690 PRIZE BOOKKEEPING SYSTEMS IN A RETAIL BUSINESS. B00EK£EFINO IN THI! BETAH. YASD. Xo section, no state lias a monopoly of the men in the retail lumber business who are seeking advanced methods in their occupation. That has been demonstrated anew by the results of the bookkeeping contest conducted by the American Lumbekman in which the prize winners are this week announced. Several months ago this publi- cation offered a series of rewards for the best letters on this subject. The response was almost overwhelming, so nearly so that it has required time to determine the best. Letters came from every state, from England, from Can- ada and elsewhere; and this week the Ameeican Lum- BEEMAN begins the presentation of the best thought of the best thinkers on this question. To a Canadian goes the first award, and the others are distributed on a strict system of point-scoring to dealers in Pennsylvania, Indiana, Mississippi, North Dakota, Minnesota, Colorado and Arkansas. It is a matter of special gratification to the American Lumberman that the contest awakened such widespread interest, for where one wrote hundreds wiU read ; and it is a matter of grati- fication as an indication of the universality of the great audience of American retailers of lumber whom it is the privilege of the American Lumberman each week to address. * Wherever lives a retailer, regardless of geographical location, there is perplexity over the question of book- keeping — a desire to learn new and better methods of keeping a record of all classes of accounts. Better meth- ods do not mean more detailed methods, a more intricate system. They mean accuracy, but economy of time and labor. They mean the use of short cuts without the sacri- fice of system, the use of system without the loss of short cuts. Effort has been made to judge these letters not from the viewpoint of the technical bookkeeper alone but from the viewpoint of the manager who employs him, or him- self performs the work. Xo one man is prepared to furnish a complete system that will meet all these re- quirements; but from the experiences and ideas of three- score retailers who here present them the retailer will be able to evolve a bookkeeping method nearer the ideal. He may have a system of his own which is good in all but one particular. The reading of these letters from prac- tical retailers, as they appear from week to week, may supply the missing link. One man's system may be strong in its stock record and weak somewhere else; another man may have a way of supplying customers with statements that is all but ideal, but faulty because laborious; but out of the ideas of many may be evolved a method that will combine the best elements of aU. The Ameeican Lumberman commends these letters to its retail readers and urges their careful examination as they appear from week to week; and it promises other features of a correspondingly helpful character in later Announcement of the Six Prize Winners — Two Extra Prizes Awarded — Hon- orary List — Canada and England Rep- resented — First Prize Awarded and Forms. In December the American Lumberman offered a se- ries of four prizes for articles on retail lumber yard bookkeeping. Fifty-nine contributions were received in this contest, all of which were carefully considered. Scor- ing of comparative completeness and merit was done on the following basis: Points. Purchase order system 10 Sales Invoicing and delivery order system.. 18 System for customers' monthly statements 10 Sales records 15 Cash, bank and Journal records 15 Ledger forms 5 Merchandise classification 6 Expense classification 5 Stock record and inventory system 15 Record for estimates and partial deliveries thereon... 5 Total 100 3 On this grading the prizes have been awarded as follows : Points. First prize, $20 — William Patricks, Fori; Arthur, Ont 78 Second prize, $15 — E. J. Lesher, Pitcaim, Pa 77 Third prize, $10 — Gus. H. Tessman, Terre Haute, Ind 73 Fourth prize, $5 — J. B. Hunt, Collins, Miss 69 Tied ^with A. K. Orube, Deapolis, N. D., extra prize, $5 69 S. Shaw, Dresden, Ont., special prize for a superior stock record system, $5 67 Honorary Mention. I. G. Iverson, Houston, Minn. 66 Earl P. Haubert, Philadelphia, Pa 64 M. P. Anthony, Denver, Colo 63 O. M. Hendrickson, Rochester, Ind 60 C. E. Hopkins, Cotter, Ark ; 60 Archie J. Clarke, Norwich, England 59 It became necessary to award two extra prizes of $5 each, one on account of the tie for fourth prize, and one a special prize for a stock record system which seems a little in advance of anything described by other com- petitors, although this contributor was beaten by a neck in a hot finish on other points in the scoring. In addition to the honor list here printed there are many valuable ideas in the other contributions, all of which will be culled and presented for consideration in due course. A large percentage of the systems sub- mitted were adequate as to accuracy in handling the personal accounts, but there was wide variance in the amount of labor required. The element of time has been considered material because in most cases it is es- sential that the books require as little labor as possible; and it was for this reason that the highest scoring was given to the features which represent the greatest saving of labor, in handling the greater number of items, such as invoicing, monthly statements etc. Theoretically the questions of merchandise classification and expense classification should have been given higher scores, but these were held down because of a desire to base thci CHICAGO, ILL, GOOD SERVICE LUMBER CO. Ship to -19- -Bailding . -Street MA NUFA CTURERS. WHOLESALE AND RETAIL DEALERS LUMBER, LATH, SHINGLES, SASH AND DOORS INVOICE TO AddresM . Wanted ~ form 1, ny^xd, with tissue duplicate and manila tag tripl icate, the latter coveriiig left side of form only and used for yard order. Duplicate punched for post binder. scoring upon high average practice rather than upon an ideal which, however desirable, has not yet come into common use. The one contribution from England is interesting as showing methods widely used by retail lumber firms there, and scores high on results, but rather low on the amount of labor required by the system. This the contributor wiU doubtless recognize as he reads the other articles to be published, together with his own, which we are glad to have. In connection with the contributions to this contest the American Lumberman will at an early date publish the very excellent article on "Cost System for a Ketail Yard," delivered by William A. Jordan at the annual convention of the National BuUders' Supply Associa- tion in Chicago on February 22. Mr. Jordan is comp- troller and auditor of the Charles Warner Company, Wil- mington, Del., dealer in cement and allied building mate- rial, and the paper describes its method of classifying and distributing expenses upon various merchandise clas- sifications. The system is directly adaptable to lumber with no material change, and the paper is the most valuable contribution to bookkeeping in this line that ever has been presented. The first prize article is reprinted herewith and others will follow in both the prize and honor classes, with liberal gleaning of the best ideas from all the articles. forming a series which doubtless will command the in- terested attention of all our retail readers. FIEST PBIZE LETTER. Poet Akthuh, Ont., Dec. 12, 1910. Editors American Lumberman : I take pleasure in enclos- ing a few sample sheets of a system of bookkeeping applicable to a retail lumber yard. These samples, with a few explana- tory words I shall make, will, I believe, be clear to you. You win note this covers a manufacturing proposition also, but as we market our product retail, our main efforts have been clear, comprehensive records for the retailer. We could, in fact, quit manufacturing and still make no change in our books. Moreover, this system Is built up over a period of years, not thrown in all at once. Therefore the facts it shows are practical facts, not so liable to be red tape facts. Taking the journal and cash sheet, it will be seen this is merely an adaptation of the old synoptic Idea and is there- fore clear to everyone in principle. Yon can make subdivi- sion into two, three or four ledgers, Just as you like, and by taking advantage of the idea of proving your ledgers by footings rather than balances you can further subdivide these four ledgers again, making eight sections capable of independent proof. This method shows at once whether an error is in the debit or credit side of any ledger, thus elimi- nating checking the opposite debit or credit. The expenses are "keyed" for different classes, and the STATEMENT M CHICAGO. ILL,. ACCOUNT HUHaCR -191 - GOOD SERVICE LUMBER COMPANY WHOLESALE AND RETAIL LUMBER DATE S. S. Nn, BUILDING LUMBER OUTSIDE LUMBER VARO A LUMBEB YARD B |{ AMOUNT BUILDING MATERIAL TOTAL FEET AMOUNT FEET II AMOUNT EEET AMOUNT y YARD A YARD B Lj " L Lt-i-i ' ^ :^^ l^ ^~-w-^_ y^ ^ ^S. V bi?si h^ ~^ ^1 u Form S, 9%x9yi, net, plus loose leaf margin at left. Original perforated to detach for customer, rond wanila duplicate unperforated, remains in hinder till settled, then transferred. Rail- DAILY SALES »MtKT DATT W__ GOOD SERVICE LUMBER COMPANY cu Miir .™; nn luaed L*IH s»H«6i£s 1 oooM, s««. nc. 1 ""• ' .ct .»»,.. -«-■ mti »««. ntec UHMHT U DOM *UIII .»<. — "■' " - ' - ^. -- JJ. ■l^^ 1- ^ /~-J t~ ' X -M:^ P- ^ iiir LU ^V '"-i. ■J^ i-^ ^ H«, Form 3, white paper, 8^x12 net, with loose leaf margin at left, used one side only. keys carried in a separate book or register. If the business is small this classification can be carried on the face of the Journal sheet, mentioned in the above paragraph, by using a column for each class. All orders are taken in the office and entered on triplicate form No. 1 for shipment and invoicing. This Is self-explana- tory. It absolutely prevents material leaving the yard, as the shipper must have the triplicate form before he can even start loading a load. After extending the ofBce copies of all Invoices for the day they are entered on form 3, and the total of this form for the day charged customers' ledger through the journal. Each office copy is then posted to the customer's respective monthly statement sheet, form 2, the total of which sheet at the end of the month Is entered direct to his account in the customers' ledger. The value of this Is that at the end of the month you have a statement ready to mail out, that during the month you carry the mass of customers' business by single entry, but have all the safeguards of double entry. The records as shown on form 3 (material going out) With its opposite, form 4 (material coming in) recapitulated by months shows first ; value in dollars of different classes of goods handled, also value per unit. For instance, it permits of comparison between hard and soft woods, which it pays to push. Second, at the end of any month it forms a per- petual inventory. An Inventory taken should e^^l the dif- ference between the two forms. Being loose leaf, can be changed at pleasure to suit one's Ideas. The ideas mentioned above are the essential ones in this system. That is, a subdivision of records for comparative purposes, and a comparison of the same record for two, three or more years Is the only comparison that is true and valuable. Your statement at the end of the year will show how many cents gross you made on a dollar's worth of busi- ness In pine lumber, as compared with fir, compared with shingles or doors or lath. If this Information does not cost too much, it Is valuable. It also shows percentages on cost, but these figures are tricky ; you can not rely on them for next year. Your statement will show also where your expense money Is going, to a subdivision as fine as you want to make it. This also is valuable if It does not cost too much. To summarize : This idea Is comprehensive ; it shows the gross profits and what lines made those profits and what lines lost them. The money you spent is accounted for, and it is important to know to a practical point where your ex- pense money goes. It Is comparative. The comparisons, you can get here are limited only by your time and Industry. It Is elastic. You could add a line of twenty yards and make no change in the books opened in your original invest- ment. You could curtail operations and the system would adapt Itself to the curtailed conditions. And, lastly, it Is Injxpenslve to operate, considering results. It Is possible to take a big city yard, hire all the bookwork done by em- ployees, and do it for 25 cents a thousand sold. Considering results, that Is cheap. William Patricks, Accountant, Vlgars-Shear Lumber Company, Limited, Port Arthur, Ontarix). EDITORIAL DISCUSSION. Mr. Patricks' very excellent article, while brief, doubt- less will be completely understood by reference to the cuts reproducing the forms submitted. Form No. 1 con- sists of the customer's invoice, reproducing a tissue copy of it which is not reproduced, and which is punched for a binder, the consecutive invoice number being numbered on this sheet and the amount being carried to the daily sales sheet, form No. 3. It will be noted that the uaily sales sheet contains separate columns for the different classifications of merchandise which are used in this case, both in feet and in amount. A similar form is used for material received as a purchase sheet, as a return sheet and as a stock sheet, being form No. 4. A separate sheet PURCHASE ) fEKIOD ta RETURNS j- SHEET "^"^ ' GOOD SERVICE LUMBER COMPANY NO. NAME LUaSER FIR 1, HARDWOOD LUMBER lATH SHINGLES DOOR. SASH, ETC. FEET AMOUNT FEET AMOUNT PIECES AMOUNT PIECES AMOUNT DOOR WIND. PLASTF PAPER AMOUNT "1 '^V y"* ~~v^ /^ \ u ^ r L-^ ^-^J L^ ^-~y^ ^^-Jui^ NJ ^~V ^-^"^"^ ^ ^ ^ ^ U-' ^ ^^ \^ ,>^ ^\^ 1} *« ^ ,-J UJ LL I/' ^ ^ Form 4, twin form to Form 3, same size, yellow paper; note slight difference in column arrangement. title checked to indicate. Used for all inmerchandise of three Tcinds, separate sheets for each with is used for each of these three purposes. These sheets are carried to a monthly and to a yearly recapitulation sheet, and, being kept by quantity as well as amount, show actual quantities in their respective classes, which quantities should agree with the physical inventory. Eeturning to the customer's invoice, form No. 1, a triplicate of the left side of the invoice is made on manila cardboard as a yard order. In filling the invoice in the first place only the order columns are filled and when the yard order comes back, if any items of the order are not filled or not fully filled, the amount act\ially delivered is extended and priced. The contributor's suggestion as to the subdivisions of the ledger may not be understood by some. He means by this that the ledger may be divided into divisions corresponding with various columns upon the columnar journal. Each division of the journal should prove with its column when fully posted and if any error appears it is confined to that particular section and does not need a rechecking of the entire trial balance. He further suggests taking the balance by totals and, of course, keeping- the two sides of the journal account by totals in the same manner instead of by balances, so that any dis- crepancy will indicate whether it is on the debit or credit side and not necessitate checking both sides. It is, how- ever, much more work to foot forward in this manner and possibly more work than would be required to check both debits and credits for an occasional trial balance error. This is a matter of individual judgment. Form 2 shows a detailed monthly statement to cus- tomers. S. S. No. here means sales statement number and only one line of tho monthly statement is used for each sales statement or invoice. This statement is de- signed for taking care of separate accounts for two or more yards in the same set of statements. For the pur- poses of a single yard the same thing would be accom- plished with the use of but three columns, one for lumber, one for building material and one for a total of these two. The contributor made pencil quotations on the form which have been erased in engraving it and which indicate that these monthly statements are started with the first monthly charge to the customer and that after the total for the month 's business has been brought down the previous month's total is brought to the statement from the ledger and any credits for the current month are then deducted. Although this is not fully explained, it is probable that credits for material returned are carried through the daily material return sheet, and instead of being posted direct to the customer's monthly statement when they occur, are credited to his ledger account, and that the total of such credits is brought from the ledger to the monthly statement at the end of the month, to- gether with the previous month's balance and together with any cash which has been paid on account. At the end of the mon^h as described, the current ' month's charges are posted to the customer's ledger ac- count and the total of these ledger accounts should then balance with the account of customers on the journal. The fo^i showing the journal headings merely shows their arrangement and not the proper width apportion- ment of the columns. It shows a few columns which have to do only with the sawmill business and which, of course, would be eliminated in bookkeeping covering only lumber retailing. The daily sales are brought to the journal from the daily sales register in a single line so that the journal does not fill up rapidly. It would also be ad- visable to keep a separate petty cash account, carrying it to the journal by a single line entry for each day, for the purpose of condensing the journalizing. It is prob- able, although Mr. Patricks does not describe it, that a voucher system is used for payments and that the sub- division of expenses is made from the voucher. It would have been interesting had Mr. Patricks fully described this particular feature and given his entire expense classi- fication by numbers. Taken altogether the system here described gives the most complete results with a minimum of labor. Divid- ing the merchandise into classes, it keeps track of it by classes as well as by amounts, thus affording material for very complete periodical statements, showing amount handled, average cost price, average selling price, ex- penses properly chargeable to each class etc. It also makes it possible to make a monthly closing of accounts if desired, which would be approximately correct, using for this purpose such quantities as are shown by the stock record and verifying or correcting the stock record annually or semiannually by means of an actual inventory. The best bookkeeping method is that which accom- plishes the most complete results in the simplest manner, and the system herein described deserves earCful study because of its close approach to the ideal in these re- spects. Second Prize Article Printed and Re- viewed — Fine Check Voucher System — Contract Sales Show Masterly Han- dling — Excellent Stock Record — Stock Summary Includes Contract Sales Un- delivered. SECOND PRIZE LETTER. riTC.\iitN, Ta., January 7, lUil. Editors Amebicak Lumberman : The accurate keeping ol accounts is a proposition of vital Importance to every upto- date merchant. Accurate accounting Increases In necessity and Importance In propoitlon as the merchant's competition and sources of loss Increase and as his margins of profit de- crease. An accurate accounting system eliminates guess- work and puts the merchant's feet upon the solid rocls of actual fact. He knows the details of his business, knows exactly where he stands, and just what his limitations are. 1. MnisTTH OF -.-19 JOURNAL CASH BOOK AND MONTHLY GENERAL ACCOUNTS / CtSTOMERS CREDITORS GENfflAL LfDGER LUMBER DR. CR. BLDG. MATtfilAL DR. Cfl, CASH BANK PAY HOLl BILLS PAY INTEREST BILLS REC BRANCH YDS. CAMPS 1-9 EXPENSES EXPENSE ff[r.lSTEfl DATE HkUl TRANSACTIONS L. F. DH- CR. OR. etc. DR. OR PCHS HETNS. DISCI SALES PCH5 RETNS, DISCI. SALES OH. CR DR. C8, DR. CR. OR CR. OR. CR. DR. CR DR. CR. DR. CR. GNflL. 38-4S MFG. 17-J7 LGNG lO-tC KEY HO. FOLIO ^ 1^^ \^ J L^^ "*^j ^ 1 ^ "^ L^ L^^ L J ^ U-J k 1 U.^ J vj '^ \^ ^ *> L^ — , Form 5, to go across two pages. Column widths not drawn to scale. 6 Lesher lumber & Supply Co., Inc. No. ^zt r ,.„ "" 1 •"••' '=" 1 = 1 -"■■■ "■ 1 T .,L «.t <„^ -^f \yi.?,,^-iJ. -SIT!. ■^ la-to i-it-'S L,^^ 140(^30 711 ZIQ __ - i5. ^,. i ""*«» r-~— ^^— ^ f?:¥Trx /tV^ -4i»~ — ^ — 1 ■"* [•' s pv-j •>. H 7 1/^ r> - ^^ ^^-^>''*"'«6i#>*»t'^^ — '■^""T •^Jin ) mi /!»■&,. ifa- m jff rfif ^^^.^ ^i; ?;^^ 300 /. ±1' /!» iKf (fl .s -* /. 00 mi '/« X 1 ■ W .ft^ y< tr }i flUx, A,_2o 3i IK» .7 ^j- <^a.iCl5t!/.^3f(,k iWci A^iJ f &a/0M |atlr1a«| Kxp Tot Up *l7g m Exp Sous Butint iDlKt ■noe 1- A Ul^J&^JiBlA^n 1 ! 1 1 J- ( 1 } 1 i» So (fe'j^J.mxg^ /T/fln ,T^ To 1 1 — i 1 1 i !// 31 7-2^ 2..', ,f^ .fVi- 1 '— I 1 ^c- . is, Tjy^J/^A,., ,.roU .^CJ „ r •■ S3 .V^Itc Is 7 _ i i ^7 4'^hJiC^ Ss'^'f !?? ^y 1 1 ^n 1 ! 1 sr ip^,-^^ '^'^'1 1 ! 1 — |— j H /Slit i 1 1 1 51 r€iyjc, ^n^^Ke si it So - 1 : _ —f- L-^ 1 ^- ^ 1 ^ d _^ L_ I' i^ ^^ w — i-^ -J ■^ ' ~~\ ^ . — ^->j '-^ _l L^vj iX J -~J Viy. 5. Voucher Register or Purchase accord, Distributing Merchandise and Expenses paid through bank. Sketch does not show working size. Note that voucher in Fig. 4 is entered here near the bottom. Totals post to journal. 313 pieces, likewise we find that we are oversold on 2x4 — 14 to the extent of twenty-five pieces. We find that our system keeps us right In touch with the actual condition of our business, meets every demand put upon it, and we would not change it unless by so doing we could better it. Having been left at the quarter-pole on a previous occa- sion when competing with our fellow retai'.ers In a similar contest, we know we're traveling In fast company and after seeing the results of this contest, may bo obliged to do some more evoluting. E. J. Lesher, Secretary, Lesher Lumber & Supply Company. EDITORIAL DISCUSSION. The check voucher system here described is most excel- lent and deserves careful attention. It provides a good classification of expenses, with extra columns for use if needed, one of which already has been added for ' ' Car Service" or demurrage, as referred to in the article. Merchandise is classified in three departments, and all that is lacking is an adequate method of distributing ex- penses upon the three classes of merchandise. This, how- ever, no main set of books can do, because the expense accounts are multiplied by the merchandise classifications, and instead of fifteen expense accounts as here shown forty-five would be required. Notes Payable column if located separately from the expense columns would make a bptter arrangement, as this is of course not an .expense but a liability. The footing of the voucher record is entered on the journal in a single entry for the week or month, whatever the period may be. The sales journal. Pig. 1, is of customary form with extra columns to provide the merchandise classification. Where cash sales are an important feature it might be No. / <^ 3 ?: $ ''C/--?^. AdfcOUNTS PAYABli LESHER LUMBER & SUPPLY CO., Dr. TO . J&^^-. Folio ^^- DBTWBDTIOn ■^^-^. -(C^c^ /£./^^^ Fig. ih. Top -of left hand half of back of voucher. Bight half for endorsements, with printed legend, "Endorsed and receipted as payment in full for account as herein noted." well to provide an extra column here for cash and put cash sales here instead of on the daybook as described, carrying the column totals only to the eashbook, thus h-aving all sales together. The third prize article, which will be published next, dcseribes a system in which the consecutive sales ticket duplicates eonslitute the sales- book, doing away entirely with the labor of rewriting. The contract salesbook is a strong feature of this sys- tem. The contributions describe widely different methods of handling contract or estimate sales. Some charge the entire price up at once before delivery. Others charge each load at full price, and attempt to collect full price if the customer docs not cany out his contract in full; while if he does, the last loads are priced at a reduction sufficient to make the total charges agree with the esti- mate. Others price tlie loads at pro rata of the estimate price. This system appears to be the only one in which the entire transaction is held in suspense upon a separate record until completed, and then put upon the regular books in a single entry, including extras. It will be noted that the socalled contract .lournal nas no money eolumnsj nnd keeps track only of quantities. When completed the special statement form, Fig. 3, is used to figure up on. The estimate items and over and under-deliveries on these items are first figured, then the extras, grouped into de- partments. It happenefi that in the example given the original estimate only included lumber. Presumably if hardware and building supplies had been included these would have been grouped together to afford a convenient recapitulation. In the lumber extras the individual items are carried direct to the charge column. The building supply and hardware items are itemized in the first col- umns and totals carried to I he charge. These items theoretically should have been set in the second or dc- ? fo Fig. 7. One corner of weeMy stock sheet holding iZO items, size not stated. Totals post to stock cards. Fig. 8. 10 Corner of periodical stock summary sheet as described in text. stated. Size of sheet not livery column, as these are not parts of the originnl estimate. The stock record system described shows more complete results than any other which has been submitted, in that it takes into account material sold on estimate but not yet delivered. It uses both a stock sheet and stock card, the latter for the ultimate record. The stock sheet is merely a recapitulation which accumulates the week's sales for posting to each stock card in a single item. This looks like extra work, and in other systems the items go to the stock card direct; but a little examination of Fig. 7 will show that items can be placed on this sheet more rapidly than by sorting out a card, entering and replacing for each item, so any criticism on this score appears to have a pretty stout string tied to it. The rcsumary, Fig. 8, however, can not escape such criticism so easily. The on-hand balances already are shown on the stock cards. By providing an extra column they could take the state- ment of "Obligated" or sold for future delivery, indi- cating at once the few cases needing attention and pur- chase; and these few could then be taken off in a very brief statement omitting the majority of items which needed no particular attention at that time. The contributor, having provided special books for voucher distribution and for charge sales, covering the . great majority of transactions, is content to use daybook, cashbook and jourjial of commonplace form for petty cash and the few transactions which require journal entry; making these first on a daybook (possibly in pencil) merely to contribute to neatness of the journal. The latter presumably is 2-column, requiring separate posting for each item, and the ledger accounts are relied upon to accumulate and show the results of business. It is believetl, however, that if he would arrange a synoptic or columnar journal in such manner that it would itself constitute a running balance sheet of the business it would be a valuable addition to the system. The objec- tion to a multi-column journal occurs where it is used for expanded instead of condensed entries, filling up fast and multiplying the work of totaling columns for- ward to a now page. Its advantage, in addition to con- stantly showing accumulated operating results, is that each column proves against its corresponding, portion of the ledger, thus sectionalizing and quickly locating any trial balance errors, obviating the necessity of checking over the entire trial balance — that most despised of all bookkeeping tasks. However, while the contributor received a low score on cash and journal system, his method of handling pur- chases and disbursements, stock records, expense classi- fications and the difficulties introduced by special contract sales, carried him easily into second place, and these fea- tures of his article are heartily commended. Bookless Bookkeeping — Salesbook and Petty Cashbook Replaced by Ticket Systems — Monthly Statements Writ- ten Progressively — A Clever Synoptic Journal Scheme. THIBD PRIZE LETTEE. Tekrb Haute, Inc., Nov. 21, 1910. — Editors American LtiMEERMAX : I wish to enter the enclosed forms in your bookkeeping contest. We use no books with this set, ctocpt the ledger or ledgers ; and the set Is made up of the order and loading ticket as per Fig. 1 ; the triplicate delivery ticket and in- voice as per Fig. 2 ; the statement and ledger as per Fig. 3, the cash ticket, Fig. 4, and ledger. When the order Is received it Is immediately entered upon the loading ticket and is given an order number, and all loading Information is mentioned thereon and at the end of the month these tickets are sorted In rotation for future Fig. 1. loading order. Manila tag, 4 3/4x7 long. " X' marks indicate that these amounts have been invoiced. reference and made into one package and the month noted on the face. From the loading ticket, each load being made upon a separate delivery ticket, we make the delivery and invoice tickets — ticket No. 1 remains in the office, being the original copy, and is used to make the charge ; ticket No. 2 uors tn the customer and No. 3 is signed by the customer aud re- turned to the office, where it Is tiled on a post binder ia number rotation. The charges from No. 1 are posted in rotation and it Is also filed on a post binder and if not enough to fill the binder for one month, we place a divider between the months on the binder and mark them so as to show on the side. These loading tickets and delivery tickets are used in single orders as well as for contracts, as we charge every- thing as soon as it is delivered, whether by contract or otherwise. So far this system gives everyone an Ihvolce for the amount received, and we find, after having used It for some time, that the customers save their invoices and use them for settlement and quite frequently the amounts are paid upon delivery to the driver, which saves the book work, as those paid are so marked upon the No. 1 ticket and no further entry is made of them, except "cash sale." We now open the statement ledger and the statements are also given numbers and filed on the post binder in rotation. To do this successfully we make a temporary Index, using heavy paper or cardboard, dividing the different letters in sections large enough to handle the month's business, as we do not post the amounts of the statement ledger until the end of the month, at which time the amounts are totaled and entered In the ledger as a total under the last date 'n which material was bought for that month. In the event of two ledgers. It will be necessary to make two index sheets (one from A to L and the other M to Z) and have the statements to correspond. The statements are put up fifty to a pad and one pad will be numbered in duplicate throughout and used for the first ledger and the other for the second, as In this manner we do not have to change ledgers in posting but will post all the accounts in pad No. 1 Into ledger A-L and pad No. 2 in ledger M-Z. After the first or second month, one will become familiar with the amount of business done and will only number In advance about the amount of statements required. One ledger need not be treated In this manner, as the statements can be posted as they are entered without changing ledgers. We use an autograph machine for invoices, making the tickets in triplicate and the statements are made in dupli- cate, so that all the work that we have done would be necessary in any kind of books, but we have furnished our customer with an Invoice at the one writing and at the end of the month we have our duplicate statement ready to mail or send out with the collector without any extra work. We use the looseleat ledgers and recommend them above all others and the form enclosed is the one used after sev- 11 eral trials of different stock forms ; our balances are carried out after each transaction so that we have no footing lines to make in order to take off the balances for trial balance, and one is less liable to make error in handling one trans- action than several during the month. Our cash system is very simple. We use an autograph machine that makes the original ticket, duplicate, and the triplicate copy remains in the machine — this triplicate copy rolls on a spool and the entries are spaced about three- fourths of an inch apart, so that they are easily added and the record on the triplicate is that part shown on the bot- tom of the sample. The right hand column are "Sales" and the next to the left Is "Received on Account," and the one on the left "Paid Out." The other columns are for the ticket numbers and the operator's initial. In posting to the Individual accounts we use the duplicate ticket (the original is given to the customer) and post the amount shown and also place the amount on a separate sheet of paper in order to see that the amounts posted will equal the amount shown on the footing of the triplicate sheet. If they do not, we find the reason and in this manner we keep a check on each day's posting. The cash tickets are numbered and filed in rotation and are the only cash book used. In posting to the ledger we use in the "folio'' column by letter and number instead of page number, for example : When posting a charge we place the letter "S" before the statement number, indicating "statement No.," and in posting the cash ticket we place the letter "C" before the number, indicating the cash ticket number and these can be referred to quickly, as they are filed in rotation. The ledger shows the statement number, the statement shows the ticket number, the ticket shows the order num- ber and the order will show the full information. How- ever, It is very seldom that we have to go farther than the ticket (or invoice). In this manner we keep the ac- counts of our contractors all under one head, but the state- ments show the different "jobs'' and are entered in the ledger accordingly. Should we desire to trace any particular Job, we have only to look In the ledger and find the state- ment covering that Job and that statement will show every delivery for each month. We find that the contractors keep their Invoices and in this manner they keep in touch with their different contracts and when the statements are sent at the end of the month they are checked over and settlements are made much more Intelligently than under former methods. When the month's business is closed, the statements are tooted and the amounts listed ; this will show the total sales on account and will be added to the individual ledger balance for the month just passed and from this amount we subtract the total amount as shown under cash ticket "On account" for the month, aud the balance will show the total of the Individual ledger (or ledgers). I find this method a great labor saver, because, after having posted the statements to the ledger and I take off the balances (which are already carried out) and they agree with the amount as shown In the foregoing, then I am certain that my ledger is correct aud trial balance worry is soou over. However, if it will not agree we know where the trouble is before we leave it. The total amount of the statements is credited to the merchandise account and this, together with the total of the cash sales, will equal the total sales for the month. In connection with the above, I use a combination Jour- nal, cash-book and check register. This is a multi-column book, the left side Dr. and the right Cr., and on each side of the binding is the blank space for name of account charged or name of account credited, and each column is headed with the name of the account, namely, debit and credit columns for lumber account, accounts payable, notes payable, notes receivable, cash, bank, interest, customers' ledger, and debit column for expense and freight ; we also leave one or two blank columns for Items that may be In- volved later and the names can be written at the head. 1 STATISTICAL JOURNAL, CASH BOOK AND DEBIT ,.,-■„„ .V o u r™..> J OUlDE D .„' ote'i P RCHASE *CCOUNT FREIGHT txPttiSf iNtEBESI ^ OISCOUNI 1^ *" COUHIS fABLf CUSrONtB'S KDGER [j BANK CASH GEN R«l fOuO, NAME Of ACCOUNT CHARtEO DAIE s C*l NO * OUHT C*R NO AMOUNT FOUO AMOUNT I o !! alio to ',Jfl 00 ns 'lo wsm w 7hM-A / . r^C S/9J/ 3f.Z« [ 1 1 / j ? .9d 5/iy/ / ,2 5-0 / \ 3 " )SM 1 [ , 1 / Son / \ 8 4- 1^ •i-iooo < lle^tBMTXirn, >/i / 1 ,. 1 "Ao ^ 25(3 M ^f{,m:U>l,ly J , 1 i ^:;5s» / "t i \ liH ^0 'SUfy' / - ., i 1 f/i 00 ' /-^^ 1 lO ^ OOHO / \ M •^ 5fb« 7^>:ec,rt:^ 19/c? 1 CREDIT L • 1 GUIDE rR*NSACTIO« exPHIMEO NiiiE OF Acceonr CRtonto FOLIO G tttR«l C*SH BANK CUSTOMERS LEDGER ACCOUNTS PAYRBLE ] INTEREST & SAlIS rBfnn DISCOUNT ACCOUNT t-KlUn [^UlOE CHtCH NO - AWOUNI focio MOUNT DATE PAlO CMtCR NO ^ AHOUNr O V ilS 10 i J 5 oo O y 1 C^M/14/^^^^ :7Zte>^j/^(i-% lu,^ / 7^1 ^ ^i7 }0 t 'PtTa^m, Cc^'^.C 7SO ^ 101 ■W * '( o^a^rrJaV'r'ti'ntc ^nr^ ^ nt 00 3 . '""' "/fer/f,.«,,..,<,//^y^/ '^^'■^fia^ ^ /y f/! 4 ) B ^ntnco &ur- aJ^ ^.-^s- • 7f/ *- T5c ao 5 j ,. CacA oM^m^l^ ^^^„XZC ^^ ___ /}Z ^ f. f ( Ofi 6 / I S»i.&J,BnA lf49fty- ,11, <: i^ tL^Jic^ -i€^ aC^c^k^) ( '00 ^ ^1 90 2Z0O V » Tj^m^^ 7S3 8 \ ,, See (S^^r^r^ <>T^ » Tl f 9 ID //^■~ ^uM jJ^'^^-:-i,~^^ YofXo (/fu U*^ ilM^^ //ffV 1 C 10 lO 11 Jt^ cAic. i% ' Ji/f- ^^¥ , }fi fS 6'S 11 13 '^ \i 13 13 11 % iff^Ut^c/ulfVI^/^T^ * K^t**^ fc**^ *4«-^-M a^ fW<»UII 1 1» l IS ■J i/ / / nil III IS —J— convenient length, fifty lines suggested. Folio 114 would refer to journal page 1, line 14. 13 General Gt. CaUif al ?25,000.00 Merchandise credit balance .-. . Notes payabie . . . . Undivided profits . 13,425.00 5,500.00 4,000.00 $47,925.00 It will be noted that I have entered the totals of the in- terest account into the general account from the preceding month by a red Ink footing, which closes both sides of this account and from the general account it is entered Into the ledger account of that name. We must transfer each ac- count that is closed at the end of the month to the general account first and post from this account, as it is the idea to have the journal in balance with itself and make the other books or accounts "come to it." The same thing, it will be noted, has been done with the merchandise account. However, this procedure is optional with the bookkeeper, as it will make no difference with the result as to whether the balance is transferred to the general account or whether it be subtracted at the end of the month and the balance carried forward in its proper column. In entering purchase account, the freight is deducted (where delivery is allowed) and the net balance is entered to the debtor side, and the accounts payable are credited as per lines 1 and 2. At. the end of the month we add the Freight and Purchase account together and the footings of the two will make the total to be charged to the merchan- dise account. Local shipments are marked "local" where the car and number are named. The expense and interest columns are self-explanatory. Accounts payable must be entered the amount of the invoice or debt that was placed on the credit side so that the exact amount shown will be the proper balance in Accounts I'ayable. If interest be added to the invoice for past time, it will be entered into the column under that head and discount will be treated as shown on line 11. Cash will be handled as per previous explanation, or a cashbook may be opened with three col- umns on each side of the page and each column will repre- sent receipts or expenditures and the total will be charged Fig. 2. Sales ticket, triplicate. Size 7 1/4x9 wide, including post binder margin on first and third tickets. Holes punched for hinder do not show in cut. to cash and the credit side of the journal will be entered the separate amount for which it is intended. In the event that a cash book is used in place of the cash tickets, the posting "Received on Account" will be posted to the cus- tomers' ledger direct from the cashbook and the total post- ings will be checked from the entry as shown on line 7. We find after the several postings into the journal that the additions of the several columns will balance and the footings will amount to $64,275.50. If it does not balance we must find it before we can carry the amounts forward to the next page and in this manner we keep ourselves In check. In taking oft the trial balance our journal Is the guide, as it will show what the trial balance must be, and we bring the different amounts to the amounts shown In the footings. Referring back to the statements at the end of the month we total the amount of each statement and the total of the footings thus found will be entered as a whole to the customers' ledger on the debtor side as shown on line 14, and the sales column will be credited with the same amount. At the end of the month we add the debit side of cus^tomers' ledger and from it subtract the credit side (from entries made as explained) and the balance shows what the foot- ings of the ledger must be, so that in this manner we know what the trial balance is before we take it, only that we make the accounts "come to" the amounts shown in the register and by this method we know in just what depart- ment our balance is off, if such be the case. In making deposits in the bank, I make a carbon copy of the amounts and on this copy, that I retain, I make memorandum of what the Items are, and the checks will sho^ "by whom made" and "from whom received," so that I can refer back to the date for information. DISCUSSION. The ledger page submitted is not reproduced, as it is a familiar form, in which the narrow explanation column is followed bj' the folio column and three money coli'.rans, the first for debits, second for credits and third for balance. Sometimes ne.\t the balance column a narrow column is allowed in which to indicate whether the bal- ance is debtor or creditor. This is not shown on the form submitted, and is unnecessary as credit balances may be indicated by a star or by underlining. The explanation column is very narrow, as no explanations are used or only brief ones, such as "C" for cash, "Al" for allowances etc. The rulings therefore occupy only lialf the width of the page and are repeated for the second half, into which the account is forwarded when the first half is filled. The methods of handling s.iles tickets and cash tickets is unique and deserves careful attention. A triplicate plain roll in the cash machine summarizes the tickets issued in a single line for each transaction, convenient for adding. The contributor implies that the sales tickets are totaled forward in a similar manner which he does not fully describe, but which might well be accomplished in the same manner as with cash, by a fourth or summary roll separating cash from charge sales. The contributor refers to his collection of current month's statements, with their duplicatei interleaved, alphabetically arranged, as a "statement journal." This has been edited to read "statement ledger," as it is usually so known and is really a ledger of current accounts, carrying the charges until they are trans- ferred to the regular account at the end of the month. Mr. Tessman probably will recognize that an imjirove- ment could be made here by the use of a special "cus- tomers' ledger" in which the left-hand page would be the regular standing ledger account of the customer, and the right-liand page would be his current monthly statement with its duplicate beneath it, ready to re- ceive the daily postings. This, of course, would be loose leaf, new statement blanks inserted monthly, and old statement duplicates held in it till settled and 14 then transferred, and would have a permanent alpha- betical index, like any loose leaf ledger. The method of handling deliveries on contract sales is suggested but not fully described, and is not so com- plete as that described by Mr. Lesher in the last article. In the present instance deliveries are invoiced as they occur, while Mr. Lesher accumulated the in- formation on the page in the special loose leaf contract journal, until deliveries were completed, and then made one statement and charge entry covering the entire job. Whichever way is adopted is a matter of preference. The columnar journal plan here presented is fairly well worked* out, and while as the contributor says it is not readily comprehended at first glance he is at considerable pains thoroughly to explain its uses. It is chieflj' an intermediate book between the original entry records and the ledger, taking cash and sales transactions in condensed form and cari'ying these entries as a checking balance against the postings from original tickets, while as to other transactions it is a book of original entry. He indicates the great ad- vantage of such a journal in sectionalizing the ledger. Each column controls its own ledger account or set of accounts and shows or should show the same bal- ance. Any difference is to be hunted for only in that section of the accounts instead of looking through the whole trial balance. The reviewer prefers the journal form in which each account has its own pair of col timns, Dt. and Cr., located together, instead of being separated to the right and left sides of the facing pages. This is a stock form, and the columns of Mr. Tessman's form may be provided for, or any number of columns greater or lesser. Mr. Tessman recommends for a stock record the line-ledger form in which each item is carried forward on its own line through successive short pages, so that one writing of the stock items will carry for a long time. This is a good arrangement but not so flexible as the card system, a separate card for each item, which Mr. Lesher has already described, and the most complete development of which will soon be published in one of the many valuable contributions yet to aj'- pear. The work of charging and billing, and the handling of petty cash, constitutes by far the largest volume of the transactions in almost any lumber yard, and Mr. Tessman appears to accomplish it very successfully with the least amount of labor of any plan submitted, and it is the strong feature of his contribution. Just how it would add anything whatever to his records to go to work and write up all these transactions in a sales journal, post to accounts by items and then make the monthly statement from the ledger account at the end of the month (instead of posting direct from sales ticket to statement as he describes) is not apparent; and if the work accomplishes no useful result,' why is it being done every day in hundreds of lumber yards throughout the country? ^. / - MowTHtv ytATngwr •w.; The Reese-5nider Lumber G). 539 NORTH SEVENTH STREET Tig. S. lop of monthly statement, size 7 1/Sx8 112. Ex- planation left blank except in special instances, such as footings and credits. CASH IKAINSACTION WITH The Heese-Snider Lumber Co* DEALBRS^ Uumber and Building Material 4 -t ^ a t\ ^39 N. Seventh Street /O /» Terre Haute. InH 'yZ•«, Tell Da. Paid 0>1 M«nb«r 0|>«ral«>r On Aceonnt CukS>l« n^C:L U 7S 1 .^—^ t'ig. 4. Cash ticlet, 3x4 long. Issued from machine, ivith summary roll taking only the bottom entries in three-fourths inch spacing for totaling in three separate classifications, 15 Good Brief Classification of Accounts — Tissue Ticket Duplicated Pasted Into Salesbook — Invoices Made and Mailed After Orders Are Filled — Books Closed Monthly — Card Index Stock -Record. FOURTH PEIZE LETTER. Collins, Miss., Jan. 12, 1911. — Editors American Lum- berman ; Bookkeeping can be briefly defined as the art of recording business transactions in the terms of money and showing the results obtained therefrom. If the results shown are to be accurate it is absolutely necessary to record all the transactions. In conducting a retail yard all the transactions must be gotten into the record before the results shown can be relied on as accurate. The expenditures in connection with conducting such a business, outside of the purchase of the stock in trade, can be classed under two heads — permanent [Investment] and operating expense. Under the former should be included real estate, buildings, machinery, oflice equipment, horses and wagons, in tact all permanent property. All other expenditure ■is to be classed under operating expense. All property should be represented by corresponding accounts on the ledger. Noth- ing should be charged to these accounts except property or equipment purchased or permanent improvements made. All repairs and upkeep are a proper charge to operating expense. l'"or purposes of analysis it is better to keep various expense accounts, the number depending entirely on the size of the business or the choice or reference of the individual. Under the following general heads can be grouped all the expense : Repairs and maintenance, depreciation, labor, offlce expense and salaries, general expense, insurance, taxes, rent, interest and discount. Of course, many of these can be fur- ther subdivided if desired. An account should be kept for the stock in trade, perhaps several, depending on the number of side lines carried. One of these should be headed lumber and one or more for coal, cement, paint or whatever else is sold. The simplest cash book to keep is a columnar combination cash book and Journal. One as shown in Fig. 1 will serve for the purpose of illustration. Items for which columns are not provided must be en- tered in the sundries columns and posted direct to their respective accounts. Footings of the several columns are carried forward until the end of the month and the totals posted. Of course, all the separate items in the sundries columns must be posted. This book is also used for the recording and distribution of all invoices rendered the concern as well as for the regular journal entries. Where the size of the business warrants, of course, a regular pur- chase invoice book could be kept. This cashbook Is self- balancing and all entries are posted- to the same side of the ledger account, which makes for simplicity. A petty eashbook should be kept in which should be entered all receipts from cash sales and all petty expendi- tures from day to day. These are totaled at the end of the . month and transferred to the large eashbook as shown above. Provide a triplicate ticket machine. Make out a ticket for all material leaving the yard ; this includes all local cash values as well as material going out by team. The original and second copies go with the driver, the original to be signed by the customer and returned to the office, the second copy to be retained by the customer. At the end of the day the roll of third copies are removed from the machine, clipped apart, and pasted in order in the sales book, priced and extended. Of course, this last can be done either before or after the tickets are put in the book. In- voices are made out direct from these tickets. The signed ticket which comes back is filed under the customer's name. The salesbook should be ruled with two or more money columns to the right. First should be headed Lumber, second Cash Sales, and the third or others Coal, Lime, Cement or other merchandise. Total amount of the charge lumber sales of each ticket should be entered in the lumber column, all cash sales in the second and the charge sales of other merchandise in the third. The totals of the charge columns are posted at the end of the month to the credit side of the proper account in the ledger while the Individual accounts are debited. The cash sales column is not posted, as this total is taken care of through the petty cash. If cash sales Is for coal or lumber it should be so Indicated when the entry is made in the petty cash as shown above. At the end of the month the total of these two should equal the total of the cash sales column in the sales book. Of course the petty cash sales totals should be posted to the lumber and coal accounts respectively. All house bills or contracts are handled as follows : For each contract open ,a special ledger account with the pur- chaser and give it a number or name. All tickets for de- liveries to this job are extended in the sales Irook at about the price figured in the estimate and are posted to this special account in the ledger. When It comes toward the finish of the Job it must bo seen that the final delivery is sufliciently priced to equal the amount of the contract ex- actly. All money received from the customer applying on this contract should be credited to him on this account. Then when the account is settled in full the sheet is bal- anced and transferred to the closed accounts. The looseleaf ledger will be found to be far the most convenient, once a man has become accustomed to it. For all contracts, too, a folder should be opened in the letter file and all papers pertaining to it filed there. When the Job is finished the folder Is transferred. Under this system there is little trouble in keeping exact tabs on the status of each of the various contracts. The dealer who is not satisfied with taking an inventory only once a year and who desires to be accurately posted at all times on the amount of stock on hand can do so readily by keeping a card file Inventory. A card should be given to one or more items and all receipts and sales recorded thereon. These should be ruled off at the end of each month and the balance brought forward. It takes time and pains to keep up such a record but the many benefits derived from having this information on tap at all times will amply repay the additional effort or expense. Where such records are kept accurately It permits of the books being closed each month and there Is not the uncer- tainty attendant upon going a whole year without knowing accurately how the business stands. Fig. 2 will serve as an Illustration of how the continuous inventory may be kept. At the end of the month it must be seen before closing the cash book that all Invoices rendered the concern are entered and that all salaries are properly credited. The proprietor or proprietors should also credit their accounts with a reasonable salary. Further It might not be a bad idea for the proprietor to credit his account with Interest at 5 percent on the amount of his Investment in the business. This must be left to Individual preference, how- ever. Any accounts known to be dead should be charged off. After the books have been written up It will be an easy matter to determine the total expeuses for the month. Find the total sales of all kinds and divide the total expense by this amount and It can be easily found what percentage of the sales it is costing to conduct the UUsIness. Right here, however, it is easy to drop Into error as follows : Suppos- ing it has cost 20 percent to run the business, stock has been bought at $30 and It Is necessary to find the price at which it must be sold to realize 10 percent profit. It Is often figured as follows ; Cost $30, plus 20 percent expense $6, plus 10 percent profit $3, equals $39, the price at which It Is to be sold. Figure back a minute and see how near this Is to the truth : $39, less 20 percent expense $7.80, leaves $31.20, or a profit of $1.20, which is about 3 percent on CASH BOOK AND JOURNAL CASH BOOK AND JOURNAL C«S» OFFICt EXP. GEK. EXP. L«B0I1 CO»l lUKBEl dc^ 'Vi o.t.'?i?oi fffO 30? Hi "/7 5 30 Zj 'V? iffi TT 10 )f£) UH I5i 110 laa ^?s IS 30 35- Z25 ?0 *f1 to i'^ (D SOLO 35- 2?r P T? 10 X^ 10 Die' Bal. 11? 6?5 2Z0 9li m US i ^0 -^ ' -1 "^ ^= L ==■"' Fig. t — Stoc^ card, 5x8, for drawer file. Monthly footing shown at bottom. separately distributed to the several merchandise accounts. There is no reason why the salesbook should not pro- vide columnar distribution to merchandise for cash sales as well as charge sales, except that possibly they are fewer. This would involve, if merchandise is divided into three classes, say, lumber, coal and building material, six columns, a cash and a charge column for each kind. Another arrangement would provide two columns for cash and charge debits, and one credit column for each of the merchandise classes, or five in all, but would involve double entry of each item amount, once in the charge or cash column as a debit, and again in the proper merchandise column as a credit. Where four or five or more merchandise classifications are desired this is the better plan. The columnar ji)urnal form is similar in principle to that described in the third prize article, but does not carry as many columns, leaving more accounts to be taken care of by ledger postings from sundries columns. The classification of specific expenses is fairly complete and adequate. In their analysis the best arrangement is one that applied them progressively to the material handled. The lumber costs a given average price f. o. b. at yard. To receive and unload it and carry it in stock until sold costs certain direct expense and a certain proportion of overhead expense, producing the average cost at the yard gate as it goes out. On the portion delivered there is additional teaming cost, and another proportion of overhead expense, producing cost delivered to the customer. To this is added the cost of sales and 17 collections, including advertising etc., with another pro- portion of overhead expense (which totally absorbs it), and the result is the final delivered cost with all expense distributed upon it; and if it is desired to make 10 percent upon the sales price it must be so fixed that the final cost is 90 percent of the selling price, as the con- tributor has illustrated. The handling of petty cash account separate from the main cash account is largely in line with the third prize article, except that it was kept there by machine cash tickets, which took the place of a cashbook. The method of keeping stock account by card system, a separate card for each item (several lengths on one card) has been recommended by previously published contributions. It is believed that the form here sub- mitted would be improved by providing three contiguous columns for each item, one for receipts, one for sales and one for running balance. The balance would be extended only as the information is required, but it is often desir- able to ascertain this as to any certain item at other times than at the periodical balancing indicated in Fig. 2. One column for date and one for car number at the left would answer for all the columns across the card, and both material received and material sent out on any date would go in their respective columns on the one line. The most complete stock system contributed remains to be published. In the estimate plan described, deliveries are invoiced as made at approximately pro rata prices, keeping the books in substantial line with the transactions, and on the clos- ing deliveries on the estimate the charge is so adjusted as to close out the estimate at the agreed aggregate price. Some such plan is generally followed, though one con- tributor not yet given his turn at publication adopts the theory that the customer has not earned the estimate reduction until he has filled his contract by taking all the material, and current deliveries are priced at full price, and the allowance adjustment credit is made only at the close. This appears to be good practice, and the contract as a matter of justice should provide that if the customer does not fulfil his agreement to purchase the entire bill that portion actually delivered shall be settled for at the usual price. The reviewer believes that the contract itself should bill all the material at regular price, and then state a specific sum which is to be allowed by way of reduction, to which the customer shall become entitled when he has completed his con- tract. Often item prices are not extended on such esti- mates as given the customer; but even in these cases the total given should be the current price total, with the special reduction to be allowed separately stated. Mr. Hunt submits a sample of ledger page, which can be described in smaller space than would be required to illustrate it. There is a balance column down the center separating the two halves of the page. The left or debit side is the conventional form; so also is the right or credit side, except that the money column is moved from the right over to the left of the date and explanation, so that it comes next the balance column. In other words, there are three money columns in the center, debits, balance and credits. The form carries a sample of handling merchandise account, in which Mr. Hunt sub- tracts the inventory from debits instead of adding it to the credits, in balancing forward; the purpose of which may need a word of explanation. Merchandise account as usually carried represents really two accounts. Buying and Selling, and often two accounts are used. If but one account is used the debit side represents inventory balance and purchases, at cost, and the credit side rep- resents total sales, at selling price. But in buying there are often credits, as for allowances on claims; and in selling often there are debits, for merchandise returned and for allowances on complaints. In order to keep the two functions of the two sides of the account separate, buying credits should be subtracted from the debit side, and in closing, the inventory should also be subtracted from it; and merchandise debits should be subtracted from the credit or selling side as a deduction from total sales; otherwise the account would represent a greater amount of merchandise bought and sold than has actually been the case. In the third prize article, last published, it was announced 'that the billing and charging system there described was of a high order of merit. Briefly com- paring with the present one, the former first wrote the order on a yard-order card and, when filled, invoiced in triplicate, using one numerical set as the sales record, with no bound salesbook. This one makes the original a triplicate memo, pastes the triplicate in a salesbook, prices, extends and makes a pen invoice. Thus far labor is about even, with two writings, though it takes some extra time also to paste up the tissues; from there the plans' vary. Mr. Tessman posts to the monthly state- ment and at the end of the month posts the current total of statement to ledger account and carries the ledger balance to the statement, completing it for mailing. Mr. Hunt follows the old routine, posting to ledger and making the statement at the end of the month. There is always the question in a bookkeeping system as to how far the records may profitably be simplified as a labor-saving expedient; and this question is largely in how far the details of the transaction may be left to the original entry and in how far they need to be car- ried forward with the posting of the net results. To get at the original information Mr. Tessman has to go back through statement and invoice and order numbers to the original yard order. Mr. Hunt has only to go from the ledger account to the sales book page in which the orig- inal entry tissue is pasted. His plan takes less time in reference, when reference is needed. It takes more time to make the record, including the ledger and monthly statement. The question therefore is: "How often is it really necessary to look up the original entry?" The answer to that question determines in how far it is desir- able to save reference time in a certain proportion of transactions where reference is necessary, by expending extra recording time on every transaction. Practical Methods that SimpHfy Diversi- fied Accounts — Feature that Aids Col- lection — Up-to-the-Minute Systems Il- lustrated — Conveniences in Book Form — Handy References That Are Imme- diately Available. FOURTH PRIZE ARTICLE NUMBER TWO. In describing the methods of accounting used by the writer it is assumed that a new set of books is to be opened by a new company in the retail lumber field. Someone must be employed to keep the books of the concern who under- stands the common methods of bookkeeping. He must select his own books. The writer offers his assistance In selection of them. The simplest yet most accurate and best set of books to open up are a ledger, combined cashbook and journal (here- after referred to as Journal), daybook and billbook, a credit memorandum book, an estimate book, stock-on-hand book IS and order book. These books are to be supplemented by a sale ticket book on the person of everyone connected with the selling of material handled in yard. The ledger should be a looselcaf book. A statement of the actual assets and liabilities of each member of the Arm is made and is entered under stock account of each. Then open a merchandise, machinery, coal, miscellaneous, build- ings and fixtures, bills receivable, bills payable, expense, freight and express, salaries, .insurance, interest, collections and exchange, advertising, lost accounts and notes, loss and gain and taxes accounts. These accounts are open and entered in journal with rulings shown, a separate entry for each member of firm for amount invested in miscellaneous column to right of ORDER BLANK please ship via The following items, to-wit : When.. J>lcaae do not fail to pat onr order No. on your bill, and oblige, Yonia troly^ '.. Town State Kcmarkt : Fig. 1. Fnrcliaxe Order, '>.35xfiS> inclii.t liigh. name and to cash received, bills received, or miscellaneous column to left. It is now plain that a double-entry system is to be used in all transactions. Entries are made for buildings and fixtures, real estate etc. and posted to ledger. Now that the resources are known, yard is ready to be stocked up. The writer will take a car of material and follow transac- tions from order to collection from buyer of part of car. The order is made out in order book and carbon copy left in book. Invoice of car is received which, tor example, is a car of 2x4s. Bill is either discounted or note given. Enter on journal in cash paldout column and lumber column, or bills payable and lumber columns. Invoice is then filed in a file and binder of letter size. Other invoices are filed as they come in and arranged alphabetically according to firm names. At the end of the month take volume from file and place a heavy piece of paper on top and bottom, fasten No_ -181. P. o mu\ DESCBIPTIOII FEET 1 PUCE tinuiiT RECEIVED ABOVE MATERIAL SMned Fig. 2. Sales Ticket, 4.S5x6 inches high. whole and label top in the following manner : Invoices, month, year and Journal pages. When these bills are posted to ledger, and we wish to And a certain bill, we refer to the credit side of the firm's account and And the Journal page ; then look for file of bills which has on It this number and as they are alphabetically arranged, it may be easily found. The car arrives with way bill calling for freight, demurrage, transfer etc. Make entry In Journal and post to ledger. Lumber is piled in shed and inventory made of same to check Invoice. If not correct, handle through loss and gain account, or if difference Is too great make protest to shipper and debit his account the amount. Entry is then made on stockbook of number of various lengths. Sample sheet Is shown. John Doe buys a bill of lumber from estimate given him from estimate book. He gives his signature on same show- ing how, when, where bill is to be paid, his address, loca- tion and kind of building. These points are Important, as they very materially help collection of bill. Mr. Doc Is charged on daybook credit sales column with amount of estimate. He takes copy of estimate and loads his wagon. The yard man makes out a sale ticket for material taken and gives copy to Mr. Doe. The amount taken Is then charged on estimate page and any balance can be delivered at a moment's notice by looking at amounts delivered and amounts charged. If an additional cash sale to estimate Is made, sale is handled In like manner only in cash sales column of daybook. Whenever Mr. Doe takes material on estimate, same Is charged him In lumber column In daybook. Sale tickets are made for ' every transaction in the course of the day's business. At the end of each day or longer period of business sale tickets are numbered, entered in daybook as above described, posted to ledger and ledger post- ing entered In daybook ledger column. Ticket number la posted in ledger. The daybook is always balanced and manager or owner of the yard using this form of book can tell at a glance his day's, Week's, month's credit sales, cash sales and total sales, in lumber, machinery, coal or whatever he may deal In. The writer's yard handles lumber, machinery, harness and in the miscellaneous column wood and coal. A stock sheet for other than lumber classified can be kept on same daybook sheet for each day. Here the general stock in lumber can be seen at a glance and a correct inventory can be had at any time. Same Is shown In machinery, harness and wood and coal. The manager of a yard with a daybook like this one will never be without an article that is in constant demand be- cause he Is shown at a glance In the office how near the low mark he Is approaching and can write his orders ac- cordingly. Shortage on material cuts the profits and loses trade. In a busy yard low stock is often overlooked. A few minutes' time In this daybook will keep up profits and sales. There is no limit to the additional columns or space that can be added to supply the demand of any retail yard's business with side linos connected. Any dispute regarding delivery can be found direct from daybook sale ticket column or name column if ledger is in use. Trial balances must be checked from same ; comparison of sales made for any tiiSe period ; a yearly or monthly statement of condition of stock and in connection with Journal of the condition of business done. With these two books nearly all questions a manager can ask regarding his business can be answered quickly and correctly, doing away with the time lost it would take him to go through a ledger. Journal, cashbook and what not of regular ruling. The agreement entered into with John Doe is now due. He pays part cash and gives note for balance. A credit ESTIMATE Date No. 190 Alt KigMi Kttftyta For Mr.-.. P. 0. Address Location , ■ L«« State Terms In Pmlf The Mtomng prices are tor Immediate aeeeptanee only. Clerical errors subfect to correction OM« TEAMSfER * _ SELLING PRICE COST PRICE DEUVmiKS •KlUNa rmct • COST RMICt • SPECIAL REMARKS Sipiatare, Fig. 3. Estimate, 10x16 inches high. 19 memo is made out for note and receipt given lilm for cash - payment. Slip is numbered and entered in Journal under personal accounts credit column and cash received and bills receivable debtor columns. His note becomes due in the biUbook, used as a memorandum tor notes and time drafts showing when become due ; any payments made, security given, renewals, location of indorser, and remarks regarding his credit, payment Is made. A credit ticket Is made out, numbered, dated and entered in bills receivable column for face of note, interest in Interest column and entry balanced in cash received column. Other transactions are handled In respective columns. Insurance, for instance, would be en- tered In cash paid out and cash expended, yard column. Freight same. Stationery is entered in cash paid out and cash expended expense columns. Salaries account Is handled In like manner. These entries are then posted to ledger to corresponding accounts. In the lower rulings to the left one glance will show balance of cash on hand In office and bank balance. Middle rulings show total outstanding accounts, always In balance. To the right bills receivable account Is balanced, with the DAY BOOK SHEET NO^ Yard- Date- -191 -Agent WINDOW! SCREENS fOOFING wo-tqus. COAL HARD NO. TONS CO»l SUET NO. TON! BUGGIE! WAGON! BOBS COLLARS SADDLES SINGLE HARNESS NO. SETS wMb CHUNKS NO. CORO! TOTAL FOR DAY FORWARDED TOTAL FOR MONTH T(l DATR Fig. i. Salesbook, line form. Single yard form is the same with stock record omitted. 20 last entry on a credit slip. The advantages of this journal are Innumerable. For example, the firm's resources and liabilities always ai;e on hand at the close of a day's business. Expense of carrying on same ; amount of collections ; Interest on accounts ; total outstanding accounts ; in fact, everything to help the manager in pushing the button for more speed or less pressure in any department. Time is saved in being able to know all details of his management and he has posi- tive evidence at all times of the condition of his management. The stockbook may be either a bound volume or looseleaf book ruled with spacing shown. It is an invaluable asset to the yard management. The date of shipment received and car number with initials is entered in the column headed Date. Number of pieces of material received in column cor- responding to their length or size. When sale tickets are all numbered and posted amount of sales may be entered from them to stock sheet. This may be done dally or weekly according to amount of sales. Sales and receipts are then totaled and balance on hand obtained and forwarded to next sheet in receipts column. On the last sheet of each week, month or on the daily sheet a graphic illustration of the total sales may be made with red ink by stock clerk or book- keeper. With the figures to the extreme left of sheet and red line a profile of sales Is shown. The best sellers of any line of material is very readily seen. To keep stock In the best condition possible the manager of yard must beware of the two extremes of this profile. He can arrange his orders from same, by ordering a greater percent, or less as the case may be, of any one length or kind of material. The above described books may be very profitably used by a branch or a line of yards. The bills payable columns are NOTE RECORD- . ^Station famm Fig. 6. Note Record, loose leaf 5x8 inches wide, includ- ing binding margin. Account- changed to general office col- umns. Only one column Is used to the lower left in cash balance on hand ruling. All general accounts are placed to the general office columns. Buying freight, real estate, In- surance, taxes etc. are all handled by the general oflice. The agent has only the selling part of the business to care for. In this case journal and day- book are made with a white sheet and a yellow sheet for a carbon duplicate to be taken along perforated line and mailed to general office. A looseleaf ledger of same rulings Is kept by line yard with a cash account, bills receivable ac- count and general office ac- count and all personal accounts. Sale ticket, receipt book, estimate book are made with two carbon sheets ; one for cus- tomer and the other for general office. The original Is kept in book of line yard. Stock sheet may be made In duplicate and sent to general office, but the general stock report on right of daybook sheet should be suflJclent Information for general office, as the yard agent orders from his detailed stock sheet. The general office is given a complete inventory of stock on hand dally from daybook sheet. The yard agent has a more complete itemized Inventory of his yard at any time. , In short, the books and system herein described may well be entitle* "Up-to-the-Minute Business Methods" tor retail lumber dealers. Almost any question, let the writer em- phasize, can be answered by a yard manager using this system in three words : "Walt a minute." He looks at whatever column the question pertains to and shows positive proof as to his final answer. A. K. Grubb. Deapolls, N. D. EDITORIAL DISCUSSIOK. A number of the contributions received submitted accounting systems as specialized for lineyard use, the branch yard handling only the selling and local ex- pense accounts and the general accounts being kept at the home office. It seemed desirable that this special department of lumber yard bookkeeping should have recignition, and Mr. Grube's contribution is accepted as one of the simplest and most complete in this class, and adaptable either to line yard or single yard use. "What the contributor calls a "daybook" in his text is reproduced in Fig. 5, and is, as there titled, really a salesbook because it records nothing but selling trans- actions. A second form was submitted for single-yard use, in which the money columns were the same as 21 FIRM NAME Wood, Coal and Lumber SAMPLE CREDIT MEMO. Dale . Name riril_ D<^ic Lin. Feci Bd. Feci Price Fig. 7. Credit, memo., pink stock, 4x7 inches wide. here shown, but lumber, machinery, lumber and miscel- laneous are represented by money columns only, and the quantity, columns for lumber and moldings are omitted. The stock sheet columns to the right are also ) 12 UgM 8 LtgM / D«rt SilO 9il2 lojia 7i9 8ilO 10U2 lOsn 12iU I0\2ai0s2ai0i2' k 11/. ^■4 TT " w "l / >\lr ^ •/ t i f [ T.,..l Rrr,-,... ll xU Lo \^ \ •ialti w t. 1^ f 11 a H lj J •■>-i ,A \ "_! J \ "} y^ ^'4 "v, I ttT J J \ ■ — — . "^^ s 1 ^ / ( ai6 2*i6* 2«i9»ilM 2«>6*iH» •l*A-'vV/^ :is«j».iv ' 0.1.1 AIIMII.-^ V^ f I \ n r J ^ y ^— ' -■! |^_ _ J \y -*J t^ ■^ ^-sj-- ^*r— Fig. 8. Corner of stock record sheet, 17 inches square. Note diagram, line near bottom. omitted and the ruling occupies half the sheet and is repeated on the other half. For lineyard use these original entry books are printed on righthand page, one side of sheet only, and are made in duplicate, white sheet perforated to detach and send in and rail- road manila duplicate remaining in the book as the yard record. Inasmuch as duplicates of the numbered sales tickets (Fig. 2) are mailed to the home office it is not clear what good purpose is served by writing the names of customers on the sales sheet. Why not use ticket num- bers only and save the extra writing The condensed stock report is excellent as a means of keeping the home ofSce informed as to condition of stock and reminding the local manager of articles need- ing attention. It is evident, of course, that some sepa- rate figuring is required in order to condense the day's results into this form, but it is quite desirable that this be done. The combined cashbook and journal of columnar form is well devised and the summary forms at the bottom arc a customary featiire of line forms, but the arrange- ment here is simpler and better than in some of the complicated forms used. A peculiarity of the money- column arrangement is that whereas in columnar jour- nals if the money columns are separated into two divi- Enter 0. G. Batts, O. G. Casing— Lineal. Enter Mouldings, all kinds— Lineal Plain Casing enter as Finished. No. 1 Fencing enter as Finish. J^ X 3 Batts— Surface Measure. Enter all Coal in Pounds. Dimension in Pes. '* 10 ft. when no space is given as halves of 20 ft. " 8 " " " " " of 16 ft. " " " " " " of 12 ft., etc. Ending J 90. 'ttf. Fig. 9. Instructions printed on one corner of Stock Sheet. sions the left is a\\ debits and the right all credits, this form is so classified that transactions involving the receipt of money will go into the right-hand columns, while cash payments are taken care of in the left-hand columns. Separate columns are provided for petty expense and yard expense. An interest column is pro- vided at the right for interest received, in connection with notes receivable, but none for interest paid out, so presumably it is charged into the expense column. Usually a columnar journal is so arranged as to take care of all classes of transactions and shows sales also, posted in a single daily entry from the sales book totals, which are then dropped and new totals accumulated for the next day's sales. Here the sales book is a separate direct posting record, and while the totals are carried forward from day to day they are carried to the foot instead of head, and the day's total is exhibited before being merged with the total forward. Some line forms submitted extend cost price as well as selling price on each sale and figure the daily sales profits on the daily report. This requires twice as much labor in extension. In this system the profit results are exhibited by inventory in monthly closing, and a perpet- ual stock record is kept. A printed stock sheet is sub- mitted, about seventeen inches square, printed on both sides and with a capacity for 267 separate items, mostly printed in but with some blank columns left for addi- tions. On account of its size only a comer of the cOiQot naa be reproduced, showing the arrangement. The Fig. 5. Journal, with special recapitulations. lower portion is used to record amounts from sale tickets, which are then totaled and deducted from on hand and received. In the lower space a diagram line is drawn to represent amount of sales, based on the marginal quanti- ties, and its fluctuations show relative activity of the stock items. In drawing this line the columns in which there have been no sales are ignored and it is drawn straight toward the proper indicating point in the next succeeding column in which sales are recorded. Only the angles of the line therefore are to be read as having significance. The note record (Fig. 6) is a special looseleaf form of excellent arrangement. The sale^ ticket needs no com- ment except to call attention to the fact that it has column for pieces as well as feet, which is desirable. Sales tickets are often used for credits and acknowl- edgments of cash on account, and entered through spe- cial column in sales journal. Here a special credit ticket is provided in duplicate, and there is also a cash receipt form. The systematic use of a printed numbered pur- chase-order form is desirable. The lumber salesman and his duplicate-order book usually look after this, but it is better to handle purchasing on own order numbers, even though in certain cases it may be convenient to issue order onlyas a dummy, inserting amount and con- firming attached copy of sEilesman's order and referring to it for details. The estimate form submitted is a good standard form which other contributors also have sent in. It is repro- duced here for once and for all and will be referred back to as necessary. The customer's copy of course is per- forated to tear off the cost price column. It would appear from the contributor's description that the cus- tomer is charged with the total amount of the estimate to start with, and that lumber (or whatever merchandise concerned) is credited with deliveries only as made, aud that therefore the daybook will be out of balance with the amount remaining undelivered, until the transaction is closed. It might be better to segregate this suspense difl'erence by having an additional pair of columns for estimates. Credit this column with the total ?um when customer is charged, and charge it with deliveries when merchandise is credited with them, and let it carry the dift'erence until closed out, not only with this one customer but with the entire lot of estimates partially filled, so it will show the value of balance undelivered at all times and yet leave the boolf as a whole in balance. The system here described appears to supply all the specialization required for branch line yard accounting, and yet to answer equally well the requirements of a simple system for a small single yard which summarizes and presents the results of the day's business in a man- ner which does not require trained accounting experience either to write up or to understand. A Minnesota Retailer's Contribution — Sales and Credit Tickets Filed in Ver- tical Folders for Each Customer — Daily Statement Form of Journal — Good Auxiliary Forms. SYSTEM FOR AN AVERAGE YARD. Responding to your request tor letters on methods of book- keeping I am sending you a description of a system that I have used for the last six years and have found simple, labor saving and adequate for the average retail yard. The necessary equipment for this system Is as follows : Duplicate sales ticket books (Fig. 1). Duplicate credit ticket books (Fig. 2). Six covers tor the above. One vertical file with Index cards, 500 plain folders No. ^•^* Houston. Mbn d. ,191 Mr. WE CREDIT YOUR ACCOUNf ByCuh By Uercbandite ■ ■ ■ By Discount ..... T0TAL'-7,«Hc. ACCOUNT with thanks and soliciting your future patronage, we are, Yours truly, PETERSON & IVERSON, Per ....;... Vxg. 2 — Credit memorandum form, same size as sales ticket, and duplicate is filed in customer's folder in the same manner. 23 and one colored folder for each Index card : this file to be of convenient size for holding sales tickets. Special ruled and printed loose leaf dally record sheets (Figs. 3 and 4). One springback binder for record sheets. One transfer binder for record sheets. Loose leaf ledger with two sets alphabetical Indexes, and one set of index tabs for subdivisions of merchan- dise accounts. One transfer binder for ledger. One 31-day desls tickler. One duplicate remittance book (Fig. 5).- One trial balance book for accounts receivable. Duplicate order books (Fig. 6). I have found in using the ordinary lumber sales book that fully one-fourth of the time required for the book worli was taken up copying the original entries from memorandum books into the salesbook. This time is saved by using dup- licate sales tickets, bound in book form, fifty originals and fifty duplicates. These books are slipped into covers made for the purpose and can be conveniently carried in the pocket. Original entries of sales are made in these books and no copying is necessary. Some make an objection to tickets on account of the danger in losing or misplacing them, but if books are made with only originals perforated this trouble is avoided. The duplicates then remain in book form, after originals are taken out,' and are filed away, be- coming a permanent record which can be referred to should original become lost or misplaced. After being entered on dally record sheet, mentioned above, the original sales tickets are filed In a vertical file, each cus- tomer having a plain individual folder. Tickets for petty accounts are filed together In colored folders, of which there are one for each index card. By this method sales to any one party are found together in one folder. These tickets can be easily taken out and checked with the ledger account or estimate, and on Itemized account can be made in short order. The duplicate credit tickets for cash on accounts and on notes receivable, merchandise returned and discount are bound In book form the same as sales tickets, but are of different color. When cash is paid on account original is slipped out and given to the customer as receipt ; in case of merchandise returned or discount original Is filed In folder with sales tickets. By using this method for all credits on account one Is sure that all credits are booked and trouble from that source is avoided. The daily record sheet Is a combination of recapitulation sheet for sales tickets on one side and journal and cash ac- count on the other. Sales tickets are numbered and entered on recapitulation sheet, the Items being separated and entered, quantity and amount, under the sulxllvisions of merchandise, such as lumber, sblngles, lath, millwork, moldings, doors and win- dows, paper etc., total amount of each ticket being entered In "total amount" column. After tickets for day are all entered columns are all footed and the sum of "amount footings" should chock with sum of "total amount" column. This will prove addition on all sales tickets for day. Quantity and amount totals are transferred from recapitulation sheet to sales account on Journal sheet. Cash sales tickets are checkmarked when entered on recapitulation sheet and total entered in cash account as cash sales. Sales tickets for credit sales are next entered under credit sales on journal sheet, name of customer, amount of ticket and number being entered. Cash sales and credit sales are totaled to check with sales account total. From credit tickets cash on account is entered direct to cash account, name and amount of payment being entered. Merchandise returned and discount are journalized under journal entries, merchandise being separated as on recapitu- lation sheet. Credit sales for day are added to accounts received for- ward and cash on account, merchandise returned and dis- count on accounts received subtracted from this sum, giving accounts received outstanding. Expense bills are entered direct to cash account. Remit- tances are entered from duplicate remittance book. Invoices are journalized under journal entries, merchandise being sepa- rated tor the dl£ferent accounts. After booking, invoices are filed ahead in a 31-day desk tickler. Ledger Is divided Into three sections : merchandise, ac- counts and notes receivable and general accounts and ac- counts payable. No cash account Is carried in ledger, there being no necessity for It. From record sheet merchandise Is posted to the different accounts In merchandise section of ledger, both quantity and amount being posted. At the end of month columns are totaled in red ink and carried forward. In this way the merchandise accounts also become a stock sheet, which is kept without any special effort. This stock sheet may not be as extensive as some others, but Is adequate to locate shortages. If any, and to determine size of stock in case of Qre or other accident, and we believe that the above described method will serve the purpose tor the average individual yard, where the stock Is under the eye of the manager. If in addition to the above the yard stock is filed and stored systematically and a duplicate order book is used for all orders, no dealer need go very far wrong In ordering or selling material. In accounts received section of ledger the first page after each Index sheet Is used for petty accounts. This makes it more convenient to take off a trial balance of accounts re- ceived, which Is taken at the end of every month. A trial balance book ruled for twelve months is used. Trial balance is checked with accounts received outstanding on record sheet. Statements sent out are noted on trial balance. I. G. IVERSON, Successor to Peterson & Iverson. EDITOEIAIi DISCUSSION. The system described has some resemblance to that submitted by A. K." Grube and already published, Mr. Grube using separate salesbook or sheet rnd cashbook- journal sheet, while herein both are combined on one large loose leaf page, the back used for sales recapitula- tion and distribution to merchandise accounts. The mer- chandise classification is very complete and carries quan- tities as well as values, which also go to the ledger and are noted in the explanation column. The form of daily statement is much like that often used in lineyard work, though the contributor evidently uses it for a single yard only. By a summarization of tickets on which the transactions are first recorded, the UoJ.lpb Hou«on,Miim 'j':^ \9\C> M (3^..>9-t,v«..r^ pd^ Bo^oF pEXERSON & IVERSON^ Vig. 1 — Sales ticket, 3.5x7 iiichcs, showing also folder in whitii each customer's tickets are kept for current month. Name on jacket flap shows poorly. 24 day's work is condensed into a brief record of the re- sults. Journal entries are double entry with a single money column, the amounts being posted separately to both debit and credit accounts, as indicated by the ex- planations. Such a form has its merits, and among its demerits is that all the ledger accounts except casli are carried in the ledger and require posting, which the columnar journal form does away with to a considerable extent. Besides the sales ticket a credit ticket form is used, of commendable design. As shown by the cuts, tickets are distributed to customer's folder in a vertical file. These are used from ^hich to make the statement, but get on the customer 's ledger account by being posted individually from the daily statement. By having two extra "total amount" columns on the recapituation sheet, one marked "charge" and the other "cash," the separation could be made direct without reflguring, the total of the two columns balancing the total of the merchandise distribution columns. An order form already has been published, and this contributor's form is also offered for comparison. His remittance blank is the fir.st to be published and is of excellent arrangement, but might well be a voucher check to be cashed by the pay^ee and comt back again as a receipt, doing away with tile necessity of acknowledg- ment. Where the bookkeeping task is sufficient to keep one man busy it is desirable that the books bo so arranged, as far as possible, that the record of transactions be completed as they occur, in such form that ledger post- ing may follow. In the form herewith submitted there appears to be little that can be entered, except the jour- nal entries and the balances forward from previous day, until the day's business is concluded. Tlie making of the daily statement is a matter therefore for attention probably the first thing the following morning. In the ordinary lumber yard, however, this is an advantage rather than otherwise, as the time required for the books is comparatively short, and no attention need be given them during the busy hours except to see that the ticket record of each transaction is properly made, leaving the summarizing to be done at one time as a single task. As the contributor says, his quantity columns carry information as to stock on hand by departments which answer many of the purposes of a stock record by items; but the latter serves various purposes which the shorter method does not, especially in anticipating and prevent- ing shortages of items in frequent dem.and. To keep the record as herein shown, however, ia m.uch better than keeping none at all, takes little time and would afford a basis for interesting tabular statements by months for the fiscal year as to quantities handled by the different departments, average cost and sale price per quantity unit etc. Mr. iTerson has adopted a very complete elassiflcation of merchandise sales, but carries all his expenses in a single account, which seems to be somewhat inconsistent. An expense distribution sheet arranged like his sale dis- tribution, and based on the cash tickets through which expenses are mostly taken care of, would seem a de- sirable addition to the system as described. As a matter of fact, however, he undoubtedly has a much better mental analysis of the nature of his expenses than his books show on their face — though this should be a mat- ter of bookkeeping rather than of mental process. The use of loose leaf books, the adoption of substantial loose covers for the duplicate ticket books, the generally excellent ai-rangement of the printed forms used, and the complete supply of kinds of forms are all indicative ^ i ^- 111 y ■ >» K I., V- — T- L> O V V M ^ K -** r fc. ' ^ (w ^ ^, V, r> r> N V N V V N ^ V \ 5^ 6^ V <1 ^ V k 1 :S W !V, -"s:r i. o s. y «s jc^iv i I N »» ^ > I ."$<^4?^^^3^ I l» >-.(J3 « st: 5-^ IV K V ^t' v» ■^^ "^ »• O *^ ^-i ^ ^ ^ i3 "T^r^^"^5^ N TCo- "SS- '^ in 'r» n uf o (A ITT «;-^ ■^«^^«^T5TT^T=^^T^ OS <4>l E^ .M! ~ 11 rnLI , Sri vmKT«H»0(l. Order No. Date . y. IVKH^OM. M """" 1 Ship to PETERSON & IVERSON. HOUSTON. MINN. How Ship-i. M, & SI. P. R|. When. Lumber Dealers. Terna: ret m tan Am'tt rm. nn mua Fig. 6 — Order form 6x10 inches high, linen stock, dupli- cating on blank tissue. A Complete and Well Designed Set of Duplicate Forms for Lineyard Account- ing — Novel Trial Balance Sheet — Spe- cial Cash and Bank System — Points in Credit Carrying. . This article describes a newly developed lineyard sys- tem in which novelty of design and excellent printing of forms are prominent: A SPECIALIZED LINEYARD SYSTEM. We have had our troubles, but are now over them, so far as our books are concerned, and are only too glad to offer what suggestions we can to those who are strug- gling with the proposition. While we are a lineyard company and keep a duplicate set of books at the general ofBce, we believe that we have evolved a system that is complete and satisfactory in all its details and one that can be applied to any re- tail yard, at least we find it so, and besides it is so simple that anyone with ordinary business intelligence, whether he be bookkeeper or not, can understand it. It requires but a small clerical force and our yard managers do not spend more than one hour each day on their books. In one of our yards doing a busine.ss of better than $200,000 a year, we have but one bookkeeper, who also makes the itemized bills and acts as cashier, and he finds ample time to do ail this in nine hours, and no night work. One of our lady bookkeepers in the general office keeps duplicate sets for three yards that do a collective busi- •s 1 1 1 Ho. C Din¥ir to Omit to. 6500 0. 1 1 II - i BMitr, C«»..-.- -•- -I»l.._ St r ■ , ^ •>• S -— = a :^« X I 1 Fig. 1. Delivery ticket, 4x6.5 inches wide, duplicate. ness of about $20,000 a month, and takes only about three hours each day, which includes the time spent on check- ing extensions etc., and all trial balances are out by the second day of each month. We use the following forms: Duplicate Order Tickets (Fig. 1). Triplicate Sales Tickets (Fig. 2). • Duplicate Bill Book. Cash Book and Journal, with columns to cover 4. — Recapitulation of merchandise sales by fifteen departments, occupying back of loose leaf sheet shown in Fig. S, and running across the wide way of page, 16.5 inches. Distribution is both by quantities and by money amounts, and both are posted to merchandise accounts in ledger. 26 THE HALLACK LU«BER AMD SUPPLY CO. N. B 2951 Hold to t Qi—i. «ATein*L fHt TMt ^ 1 • ' ' 1 Fig. 2. Sales ticket or invoice, triplicate, i.75x7.5 inches wide, copies punched for hinder. departments (Figs. 3 and 4). Ledger. The duplicate order book Is kept for all orders taken In office, and teams are loaded from them. From this it is entered after loading into the triplicate sales book, and the load is checked oft from this, original and trip- licate to go with the delivery; the original being signed, returned and filed, triplicate being left for the customers. The duplicate Is never removed from the book, and these books are filed under dates and numbers. Cash sales tickets are itemized in same book so marked, the orig- inal put In cash drawer to check cash sales, triplicate given to customer for receipt. Extensions and prices are made on the duplicate slips. Bookkeeper then lists all sales, both cash and credit, numerically, separating under different columns where departments are desired. (We keep this numerical list on the reverse side of the cash book journal, but It may be kept In a regular sales book If so desired.) He then bills all charges Into the duplicate bill book, checking off each charge, both numerically and as to amount, from his list, and noting ticket number oppo- site each entry for future reference. About the twenty- fifth day of each month, he devotes his spare time to bringing down his footings on the bills, so that on the last day he only has to bring down the total and carry forward balances from ledger to get out his statements. On the morning of the first day of each month he posts the totals from his bill book into the ledger. He then proves the totals from his daily sales list by the totals of his bill book. He then posts his sales to his sales account on the ledger, also the footings of his cashbook journal and Is then prepared to take his balance. By the double dally check little trouble ever Is experienced in arriving at a balance. In the cashbook -journal Is kept all cash transactions and is divided under various heads, such as general mer- chandise, coal. Interest, labor, expense etc. to meet lo- cal requirements and is balanced each day. Our experience with many systems In previous years has proved to us that the foregoing is highly satlsfac- r>ATi No. »„c..«„.. Co*L Credit* /^UA / t/^Cf ' y.i-^ .S-c ^ kL }^ \S~o / _ y^ ^l/c ^ J — J ' V..- ' ^ J—J •^ Fig. 4. Distribution form on back of Fig. S. Figure shows one-half which is repeated in other half of page. tory as to both simplicity and ability to arrive at the condition of business. We will be pleased to furnish you subscriber's blanks and detailed Information, if It will In any way be of assistance. M. P. Anthony, Hallock Lumber & Supply Co. EDITOBIAIi DISCUSSION. While, as the contributor says, this system could be used for a single yard, it is essentially a specially de- veloped lineyard system, its strong feature being the complete set of tickets and daily statements arranged for duplication to general office. The cash account is really kept on the daily cash statement (Fig. 5), and there are no cash columns on the "Cashbook and Jour- nal." The balance on-the daily cash statement is veri- fied by the cash balance statement (Fig. 10), showing o o CASH RECEIPTS AND DISBURSEMENTS V.rH. 19 NO. BALANCE V— >- — ^'A.,'-'''^'""- ' ' L 1 V""" ^^ OEPOSrTEO Fig, 5. Daily cash statement, blue, 4.5x7 inches high, duplicate; binder holes at top. amounts on hand of each denomination and a list of the checks; the detailed bank account is shown on Fig. 6 daily, and these with duplicate sales tickets and delivery tickets carry to the general office a complete history of the day's transactions, from which the accountant there can write up the accounts for that branch yard. At the branch yard office the only main books kept are the "Cashbook- Journal," (Fig. 3) and a small ledger (the exact form being shown in Mr. Shaw's article, printed April 29). Fig. 3 evidently is not duplicated to the home office, but the monthly trial balance is, on an extremely clever special form (Fig. 8). As already pointed out, Fig. 3 form has no cash columns. All the contra entries appear here, however, and so indicate cash by omission. That is, the book is al- ways out of balance by the amount of cash on hand, and it and the balance of the daily cash statement together will furnish a complete balance. Just what "Sundry" means in the columns is not clear, unless "Sundry Merchandise, ' ' as ledger items go into ' ' General ' ' col- umns. The reverse form (Fig. 4) affords a distribution sheet of the same plan as that already shown by Mr. Iverson, but he distributed sales to a considerable num- '(yP^^'Tb^- Fig. S. Cashbook form, 11x16.5 inches wide, with S-inch loose-leaf margin. 27 ber of merchandise departments, instead of only lum- ber and coal, and in each carried quantities as well as amounts. The contributor notes on the form that this distribution is done direct on an adding machine, where one is used, on a sheet taking as many figure columns as may be needed. The three daily forms referred to fit the same binder and are printed on stock of distinguishing colors. De- livery tickets are provided, with columns to indicate amounts delivered and amounts "Back Ordered" (re- served for future delivery, usually because out of stock). Both the delivery and the sales ticket (Fig. 2) are ma- chine numbered consecutively on original and copies. What the contributor refers to as the duplicate bill book is evidently the book of current monthly statements (no form sent), which are kept posted so that they are practically complete and ready for mailing at the end of the month. The distribution sheet (Fig. 4) carries merchandise total sales until the end of the month, when they are posted to the merchandise accounts in the ledger. Referring to Fig. 8, the first month's trial balance is made on the narrow sheet with printed headings and line numbers for accounts, punched for loose-leaf binder and printed one side only for carbon duplication to gen- eral oflBce. The sheet for the next month goes directly underneath and is wider to the extent that the money columns project. Without rewriting the accounts, there- fore, the new amounts can be extended opposite, and any new accounts added. The next month's sheets are still o BANK o Y»rH. 1<1 NO. BALANCE DEPOSITED Fig. 6. Daily bank statement, duplicate; same size as Fig. 5, yellow. wider, and so on for six months, when the list is started over again on the first form of sheets. The loose-leaf binder is, of course, made to take the widest sheet. It is really the usual short page trial balance form cleverly redesigned to allow monthly duplication to the general office without any additional writing being required. The daily cash statement takes cash sales as one item from the sales tickets, and cash received on account as one item from the column of the distribution sheet. Petty cash items are put directly on the statement. As stated before, it is really the original cash record, ami entry of contra amounts in the journal may be made at leisure. Fig. 7 is a semiannual form for listing accounts due. These are, of course, shown on the monthly trial balances, but the idea here is to keep track of these particular accounts and trace them, month by month until closed out. After six months a new list is made, those carried Porm 6— 2-Oy— 2m LIST OF NOTES AND ACCOUNTS YARD 190 Fiff. 7. List of notes and accounts, 8.5x11 inches high; runs six months before rewriting. Fig. 8. Trial balance sheets, loose-leaf, 16.5 inches high, first sheet 6 inches wide, sixth 14 inches wide; six suc- cessive overlaps, running six months without rewriting. 28 from the old list being marked in red ink. Collections on these lists are figured into percentages for the pur- pose of comparing the records of the various yards, and comparing also with previous years. In reproducing this system for single yard use it might be desirable to let Figs. 5 and 6 be represented by per- manent books of usual form, since there would be no need of carbon duplication; or in place of Fig. 5 use individual cash tickets for petty items, and let other cash go direct to cash columns added to Fig. 3 form. The forms are so clear and simple as not to require fur- ther explanation or comment other than the reader may make for himself. The contributor explains, however, that in addition to these duplicate forms the bank state- ment and vouchers also are forwarded to home ofSce with the trial balance, forming a complete audit on the branch office operation. o o CASH ON HAND. V.rd. lAn GOLD, 2(k \ 1l» ia CUnRENCVMto 20l loa 6t • 1t«2l SILVIR, 1.W .SO Jt .10 .OS TOT, MONEY nEIIIttUCKCa _ ■«— -V- r — ^•^" ^^" 1 1 1 ' ~~ 1 r-^^ • "X^ ON HAND Fiff. 10. Daily cash balance, same size as Fig. 5, dupli- cate, pink. REMITTANCE THE HALLACK LUMBER AND SUPPLY CO. WHOLESALE AND RETAJI. Dimnr. Colorado WO RCCCIPT WECE«>ARY Yours mfy, THB HAUACK LUMBER AND SUPPLY CO. Fig. 9. 'Remittance form, 7x8.S5 inches wide. An Indiana Lumberman's Painstaking Article — Columnar Journal or Daily Exhibit the Backbone of the System — Card Ledger Used — An Autograph Register an Elssential Feature. BOOKKEEPING- IN THE EETAIL LUMBER YARD. The question of bookkeeping In the retail lumber business, like a few other Important Issues, Is looked upon by many as a matter o( secondary tmportance, therefore receiving little or no attention. Yet when viewed In the light of modern business methods It must be conceded that this Is one of the questions of vast concern entering Into the successful opera- tion of a retail lumber yard. The modern business manager Is not satisfied with knowing the fact of a loss or a profit at the close of the business year ; he desires to know why, how and where such loss or gain was sustained so that he will be better enabled thereby to fortify his business for the fu- ture. In order that he may acquire that knowledge a certain amount of detail will be necessary. I am aware that the matter of detail In this line of business has been the subject of articles appearing In some of the leading lumber Journals of the country and has been adversely criticised In many In- stances, yet I still agree with Mr. Saley in his Indorsement of detail. Without It certain embarrassing and otherwise avoidable errors are bound to crop out here and there which, with the adoption of a simple safeguard system, could readily be prevented. Of all the reports which the manager requires placed be- fore him In order that he may obtain constantly, quickly and 29 accurately a bird's-eye view of the business situation, the most Important are those relating to finances. Cash on hand and collections are Important factors which Indicate when bills may be paid and cash discounts saved. It is customary, therefore, In all well regulated business operations, to draw up a monthly statement of accounts re- ceivable immediately following the first of each month. In order to do this correctly it is necessary to have some es- tablished method of keeping a complete record of accounts. The double entry system of bookkeeping Is the best adapted and most satisfactory for this purpose. I shall take this matter up under the following heads : (1) Daybook (2) Cashbook (3) Journal (4) Ledger. Since the Daybook Is the basis of all other records it is evident that on the making of this record will hang the ac- curacy of all the other records entering Into the complete set of books. The most valuable sort of Daybook that can be deylsed Is one which may be obtained and built up from carbon copies HENDRICKSON BRO'S & DEALERS IN LUMBER, LATH. SHINGLES HARD AND SOFT COAL. MR. Uir^ dj (n/ CO. ^ ^/O P,J^ ^t NO. Rochester. Ind (^-OAa-C | iqi 1 ^o«. — 1 OIMKN8ION rIKT f>fllCC % CT8. rnoA ( x/fcXfvvvx-vU fll^cL II ^0 \o 3 Xiv^ TM" OraJL 7^ i? ?5- /«" r-/xi'-/i#//2A^ W \a'^ / oo V^^tsJL ■if 7r t-1 Cat-k. m dYo '"/O oo V ^1-0 00 3t) 00 fi^c^cJL. 1 r-r Fig. 1. Sales ticket form, showing how it m also used for a monthly statement. Siee 5x6 inches. of all bills or invoices and receipts glyen to customers dur- ing the course of the day's business. It should be a recog- nized fact that such a bill or invoice should be made for each sale and a receipt given for each payment on account or for lumber returned. It not only will protect the cus- tomer but will be a safeguard to the dealer. As a mechanical device for the handling of such tickets an autograph reg- ister is very economical but not absolutely essential In the installation of such a system. The local printer can print, number and bind Into pads these tickets at a nominal price, using, for Instance, white paper for the original and buft for the duplicate. The same tickets are used for receipts by scratching out the "Sold to," and inserting "Received of," preceding the customer's name. The entry for credit will occupy the body of the ticket and receipt by the usual sig- nature of the firm's name below. The carbon copies of these tickets are retained on the file peg in the office and at the close of the day's business are arranged in numerical order and properly entered : the sales tickets Into the sales record and the reclpts into the Journal. The tickets are now ready to be placed on the file for that purpose. At the close of the month they may be removed from this monthly file and placed Into the transfer file and there retained for future reference. Hence you have built up a daybook that no customer can gainsay. The monthly statements are also made up on these tickets. If they are to be mailed the carbon copies are retained in the ofllce with proper notation as to date of mailing, etc., or it the accounts are handled by a collector, instead, he has car- bon copies of all receipts for the day's work, with proper no- tation of partial payments, promises, removals, and any other information which he may deem useful to the man- ager In the operation of accounts with that customer In the future. The carbon copies returned by the collector or re- tained from statements mailed are placed into the tickler, which the manager refers to daily, enabling him to make good these promises, etc., as they shall fall due. The Cashbook and Journal I shall take up together since I have combined them into one record, which, for convenience, I will name the dally exhibit, and will hereafter refer to it as such. An ordinary double entry 10-column Journal is used for this record. The idea of using a 10-column book for this record Is for the purpose of sectlonallzing the accounts, the value of which will be more readily appreciated when we speak of the ledger. A comprehensive view of these ten columns will be as follows : (a) Accounts receivable (b) Accounts payable (c) Private accounts. (d) Cash account (e) Bank account. The accounts receivable are accounts with your customers and here occupy the first two columns of the dally exhibit, as debit and credit Items respectively. In order to amplify the information of the manager I have added another book tc this section which I will name the sales record. Besides saving space in the dally exhibit It saves time In posting to the ledger. ITie sales record contains a number of columns depending upon the several divisions the manager desires to make in the merchandise account. The value of these col- umns will be taken up later under the head of private ac- counts. The dally sales are entered into the sales record from the sales tickets as has been previously referred to, while the credits are entered directly into, the accounts receivable sec- tion of the daily exhibit. The items in this section of the dally exhibit are posted dally to the ledger, which will be referred to later. l"he accounts payable are the purchase accounts and occupy the second pair of columns of the dally exhibit. For the same purpose as referred to above I have added another book to this section of the dally exhibit which I will name the pur- chase record, similar in form to the sales record. All the purchases are entered from Invoices rendered to you and posted from there Into the proper section of the ledger. The debit purchase accounts are entered directly into the ac- counts payable section of the dally exhibit and from there posted to the proper section of the ledger. Private accounts are such as capital stock, bills receivable and payable, buildings, real estate, equipment, cash, banks, merchandise, office and miscellaneous supplies, expense etc. The third pair of columns of the dally exhibit are used for this account. All the Items In this section except the mer- chandise accounts are entered dally in these columns and posted to the proper section of the ledger. The merchandise accounts are posted monthly from the footings of the several columns of the sales record and the purchase record. These two books as referred to above may have any number of columns governed by the divisions desired In the merchan- dise account. On the left hand side of each of these books is the usual space for the date, customer's name and ticket or Invoice number as the case may be. The divisions may be similar to the following : Total sales, coal, lumber, shingles, lath, doors and windows, hardware, roofing, brick, posts, molding, etc. Much time is saved since these are footed and posted only at the close of the month instead of posting the items dally, as would be necessary had they been entered directly into the dally exhibit. • At the same time that the footings of the merchandise accounts are entered in the private accounts column of the dally exhibit the total column of the sales record may be entered to the debit column of the accounts receivable and the total column of the purchase record to the credit column of the accounts payable of the dally exhibit. This is ob- viously for the purpose of balancing the ledger entries. The cash accounts are those representing receipts or dis- bursements of cash for any purpose. They occupy the fourth pair of columns of the dally exhibit. The items of this ac- count are not posted to the ledger. The columns in this sec- tion are footed at the close of the month and the balance en- - 30 tered into the private accounts section and from there posted to the ledger. The bank accounts occupy the last pair of columns of the daily exhibit and are treated similarly to the cash accounts section. After these sections have all been posted to the ledger you are ready to take off the trial balance. The ledger Is the most Important record In the complete set, and after several years' experience with solid-bound, loose-leaf and later with the card ledger, I have found that the great simplicity, economy, and work-saving features of the card ledger appeal not only to the bookkeeper but com- mend themselves favorably to every member of the office force. It is certainly here to stay and can readily be in- stalled in any retail lumber business without disturbing the present system of accounting but rather will simplify It. So much depends upon the ability to secure the flrst-of-the- month statement of accounts receivable quickly and accu- rately that a card ledger would be well worth the installation if for no other reason than that checking, posting, the taking of trial balances and making up of statements are so greatly simplified. Prompt statements mean more prompt collections. The card ledger falls into three sections : (1) Accounts receivable (2) Accounts payable. (3) Private accounts. The accounts receivable portion of the card ledger Is di- vided into two classes — open and closed accounts. The bookkeeper's work is simplified at the start because he handles nothing but live records. Two sets of indexes or guides are used, one for open and one for closed accounts. When an entry is posted to an open account, which closes it, the card instead of being retwned to the open account sec- tion of the drawer Is placed In the closed accounts file ; so that in making the trial bal.mce and monthly statements every record in the open accounts enters into It. The accounts payable section of the card ledger has a set of Indexes or guides of different color so as to readily dls- • tingulsh it from other sections. The private accounts sec- tion of the card ledger has a set of indexes or guides of still a different color. It is now obvious that the trial balance will be taken off in three sections representing the three divisions of the card ledger, each complete within itself. An error can readily be located as to section, thus saving much time in checking. On account of limited room In the safe we found it neces- sary to use a 4x6 card for our card ledger. The cost Is much less than the larger size and It is sufficiently lajge tor any ordinary purpose. I would not now adopt the 6x8 card even If the safe space did permit. The system of bookkeeping outlined herein may from an external viewpoint seem Intricate, but when looked at from the Inside it is very simple and easily applied to the retail lumber .business. O. M. Hendbickson, Hendrickson Bros. & Co. Rochester, Ind. EBITOBIAL DISCUSSION. The contributor is correct in describing this as a simple and easily worked system. Certainly it can not be considered complicated as compared with some of the more highly developed ones that have been de- scribed. There are, however, one or two points in the working of it that are a little obscure in the descrip- tion, but which are evident from a closer study, of the article. Since a merchandise classification is described and there is no provision of columns for it in the "daily exhibit," it is eviden^t that the salesbook is intended to take care of all sales, both cash and charge. Its merchandise columns at the end of the month show the total credits to merchandise for the month's sales. The charge sales are charged to customers' ledger ac- counts direct from the salesbook, and also must in some way go to accounts receivable column in the daily exhibit, in order that that column may balance the customers' section of the ledger, which it controls. It is presumed this is carried on the salesbook in a charge column and posted at the end of the month at the same time merchandise is credited. It is evident, however, that the cash columns in the daily exhibit should receive the cash from daily cash sales, prob- ably as a total for the day from the salesbook, but the contramerchandise credits do not come into that book until the end of the month, and meanwhile would be left out of balance. It is understood that there is no general merchan- dise account in the ledger, but that this is represented by separate accounts for each class of merchandise carried upon the sales and purchase records. The daily entries of cash sales could be balanced by a credit entry to merchandise in the private accounts column, to be posted to a special merchandise cash sales account in the ledger. Then when the classified merchandise credits were posted from the salesbook at the end of the month, and the contracharge to ac- counts receivable, an additional contracharge would be made to merchandise cash sales, balancing the class merchandise credits iiv the daily exhibit, and when posted balancing out the merchandise cash sales, which is thus a temporary or suspense account. The usual way, however, is to have two additional merchandise columns in the daily exhibit, and use this to take daily credits against cash and accounts receivable columns, for daily postings of the sales footings from the sales- book. This would be a controlling account, equal at all times to the total merchandise columns of the salesbook, which total would be accumulated until the end of the month and posted to the ledger. The journal merchandise column would then be closed over into the private accounts column, which would then- balance with that section of the ledger in which the classified merchandise accounts are contained. This is carrying out the contributor's excellent sectionalizing plan by adding a monthly subsection to private ac- counts for the purpose of showing the total merchan- dise sales daily and aggregate, balancing with the similar figures of the salesbook divided as to merchan- dise departments. The purchase record as here de- scribed has the same merchandise columns as the sales record, and is a logical development. If all accounts to be paid by check are first put into accounts payable, bank credits will all charge to that c;?^ Fig. e. Form for ledger card 4x6 inches. one account and it is possible, therefore, to take the bank column oflf the daily exhibit entirely and make it subsidiary to the cash columns there. The cash balance could include both cash in drawer and in bank. In the bank register deposits would be entered, and checks would be entered and totaled for the week or month and the total of checks entered in the daily exhibit as a charge to accounts payable and credit to cash, ^n extra column on the bank register shows the run- ning balance in bank; but in balancing the daily cash, the cash in drawer would be added to the bank bal- ance at the time the checks were last totaled into the daily exhibit, not taking account of checks issued later. This plan relieves the daily exhibit of these entries, and it, of course, does not fill up so fast. The charges to accounts payable are posted direct to ledger accounts payable, and, in fact, bank is here specialized in exactly the same manner that the con- tributor has specialized his sales and purchase records. 31 In preference to the plan as above described, however, the reviewer would prefer to retain the bank columns in daily exhibit and handle bank separate from cash, but still use the bank register for details and posting, bringing only daily or weekly totals into the daily exhibit bank column and figuring a running balance on the bank register to show amount in bank at all times. This is the first article to be published in which a preference is shown for the card ledger instead of book ledgers; but this form is widely used and has strong advocates. It is a matter of individual prefer- ence. A loose-leaf book will hold greater writing area and more pages in the same cubical space, be- cause paper is thinner than cardboard; but if the use requires removal, and especially for typewritten rec- ords, the card index has the advantage, and there are other points of difference. The columnar journal plan as described by this con- tributor divides the ledger into three sections and takes the original entries, except sales and purchases, for which separate original entry books are provided. Usually it is expanded by the provision of more col- umns, further subdividing the private accounts column of his form and providing additional original records for bank and voucher system and for petty cash, so that the transactions come into the journal in con- densed form. Just how far this may be carried is a matter of individual judgment; it is evident, however, that Mr. Hendrickson's plan is very logically and neatly developed to the extent which has commended itself to him and offers considerable advantages over the old method centering in the bound daybook and 2-column journal. Like many others submitted, it is stronger in distribution of merchandise than in analy- sis and subdivision of expenses. The contributor speaks of using the sales ticket form for the monthly statement also, and Fig. 1 shows a statement made on this form. The ticket is of liberal size, well printed on heavy paper, and with its uniform copperplate gothic type is a fine example of business printing. Nevertheless, in most cases, it is considered a good investment to have a distinct and larger form for the monthly statement, one which will impress upon the customer that it is the statement on which settlement is to be made. Pig. 2 shows the ledger card in stock ruling, no printed heading, which costs money and is unnecessary. The back also is ruled for continuation of the account when front is filled. The balance column is a good feature some- times omitted from narrow ledger ruling. No cut of the columnar journal form is given, the description of the text being suflSciently explanatory. Typewriter Invoicing in Duplicate — Sales Kept by Departments — Expense Dis- tributed Direct on Merchandise Depart- ments Where Possible, Balance Pro- rated at End of the Month. SySTEM OF ACCOUNTS IN AN ARKANSAS YAED. For entry In your bookkeeping contest, I submit the fol- lowing description of my system, which has been gradually boJlt up by a process of evolution. That I may have complete Insight Into all the details of the business I have divided It into six departments, as follows : Department A, Includes lumber of all kinds ; Department B, Includes sash, doors, moldings, columns etc. ; Department C, Includes shingles and roofing and building paper ; Department D, includes hardware, paint and glass ; Department E, includes brick, lime, cement, plaster, sewer pipe etc. ; Department F, Includes all items of delivery. Every sale calls for a bill, and for this purpose I have •dopted a billing and charging system. These bills (Fig. 1) ■re made in duplicate — the original being delivered to the customer at the same time with the goods or as soon there- after as possible, while the duplicate (after being entered on the sales book) is filed in a loose leaf binder In our office unrter the customer's name. Opposite each item of the bill (OB the duplicate) I indicate by the department letter which denertment should have credit for this particular item. For oopvenlence these bills are numbered consecutively, original •i>4 duplicate being numbered the same. From these dupli- cate bills the entries are made In the sales book (Fig. 2). Here the customer's name is entered for his debit and the amount of the sale that comes from each department is carried to Its particular column. As the bill numbers are entered In regular consecutive order, when one has been mislaid its absence at once becomes apparent, and thus a ch^k Is given against losing any charges. When all the bills for the day have been entered I make • dally trial balance, and on this dally trial balance the aeblts must balance the credits. Each customer Is debited the amount of all the items opposite his name in the sales book in a horizontal row, and each, department Is credited the amount of the Items In a vertical row in Its particular column. This dally trial balance reveals any mistake that I may have made during the day, and when I have It correctly balanced, I post In the usual way from It directly to a loose- leaf ledger In which each customer has a page and each de- partment has Its page also. It Is obvious that my ledger COTTER LUMBER COMPANY COTTtK. •tKHANSAk CLAReNCE E HOPKINS. PROPRIETOR lour 3»lt.B SIIINumbm 1684 ZO-UIE.IO iz se9 104 M Cob. wUa 3 window! L0xl2 ■ e Lt . 1 roll dsadonltjg fall, ; e Mck« cooen' -lii Jfnttmtf «^ a««ra4 Ml D«jr Book Fig. 1. Sales invoice about 5x8 inches wide, punched for binder duplicating. must be In balance If I have made no error In posting to It from my dally trial balance. By proving my posting by checking it over my books are kept constantly in balance. The dally balance would be as follows : DAILY TRIAL BALANCE. JANHAHY 1, 1911. Dr. a/c A B C D E F Smith, John Jii Jones, William 11 Cash 15 $38.80 Cr. J15.50 10.50 4.50 .60 7.50 .20 $38.80 This system makes rendering statements an easy matter. The customer has his original Itemized bills and the state- ment I send him is merely a list of the dates, bill numbers and amounts, footed up. I find that It is very seldom nee essary to replace a lost bill or make an itemized statement, as the customer almost invariably keeps his bills to check with the statement. My regular form of statement is shown as Fig. 3. In addition to the sales book I keep a common journal for entering debits and credits that are not sales, and In this ail payments made by my customers and all incoming invoices are recorded. The entries In this book are, of course, in- cluded In the daily trial balance and posted from It to the ledger. When a customer pays his bills they are removed from the live bill file and put away In a transfer binder for record. Thus the live bill file contains only such bills as are unpaid and the amounts of them correspond with the debit entries in the ledger on the customer's page. With the ledger and the live bill file both open before me I can make out the statement of a customer in a remarkably short time. It is obvious that the department account credits on the dally trial balance represent the sales from those departments for that day, so at the end of each month I make from the dally trial balances a complete sales summary (Fig. 4) which shows the sales from each department and the total sales for the month. From these sales summaries it is an easy matter to make a similar one by months for the business year, and thus I can ascertain which departments of the business are on the best footing. Every item of expense is charged, as far as possible, to the department that caused it, and thus each department Is made to stand on its own feet. The over- head expense that can not be traced to any particular de- partment Is divided in proportion to the sales and charged to the department accounts before such accounts are balanced to profit and loss at the end of the fiscal year. 283 Sari./ /f// ,(4^.,.,^ /Ln JiHEL "vjZrvi^V _MA il^ M.2^ 12fh ±£>0 ^£e. z& //• // ro 20 Fig. S. Sales record distributing by departments. Con tributors form does not have last two columns. 32 Cotter, Ark., Mr. John Smith Ja" • 10, 1911 Iii,account with Cotter Lumber Co. Clarence E. Hopkins, Proprietor Dealer in Building Material of All Kinds I3ATF BILL NUMBER Fig. 3. Monthly statement form. There are many devices that save labor In connection with this system. I use for my duplicate bills a newly patented paper that makes a copy without the use of carbon paper. I also use an adding machine that sits beside my typewriter, and on which all the additions of the work are performed. An automatic numbering machine, set to number the bills consecutively in duplicate, keeps track of the num- bers for me without danger of confusion. But these devices are not at all necessary to the working of the system, which is not at ail costly and is adapted to any yard. Columnar sales books with columns for any desired number of depart- ments are kept in stock by stationers and do not command the prices of special ruled books. Clarence E. Hopkins, rrop'r. Cotter Lumber Company, Cotter, Arli. EDITOKIAL DISCUSSION. This contributor has a very good and complete under- standing of the purposes to be attained in bookkeeping, and has worked out an excellent special plan, though not fully complete, for handling sales and billing, but the other parts of his books offer no special features. In particular he is the only contributor thus far noted who has voiced the correct idea in distributing expenses — that as far as possible they should go against the classes of merchandise which have occasioned them. Many con- tributors describe a very complete analysis and subdivi- sion of expenses, which Mr. Hopkins does not, but make no provision for dividing them in just proportion on the merchandise classes handled. The billing form used is very simple, having a heading only and no ruling, which is unnecessary for typewriter billing. The form is punched for binder, and after en- tering on sales book is filed to customer's name, so the binder contains together all the unpaid invoices. The monthly statement form is very simple and neat, and entirely adequate if the customer has kept his invoices to check it by, as he should. If the contributor would ar- range these statements in a suitable file and post direct to them instead of to the ledger account, posting from the statement to the ledger at the end of the month (total only), he would save work and his system would be much in line with some already described. For his salesbook Mr. Hopkins uses a stock 6-column journal, and has a set of six rubber stamps which he uses to stamp in the department headings, giving both letters and descriptions. His merchandise classification is excellent and probably entirely adequate to his needs. In the form as reproduced two columns have been added which Mr. Hopkins does not have, one for total charge and one for total cash, and the footing of the six mer- chandist columns balances the footing of these two total columns, taking the place of the separate balance, and connecting it as a permanent record with the page. This contributor shows a spirit of progressiveness in his use of tvpewriter billing, an adding machine (which is a profitable money-saving addition to any lumber of- fice), numbering machine, fine theory of expense and mer- chandise classifications etc. His handling of all book- keeping except sales in the old routine way is not in line with his up-to-dateness in these other matters; but doubtless he will recognize this in his study of this series of articles, and if another contest should offer within a year or two we predict that he would give some of the other contestants a hard race to get in "on the money. ' ' Simple and Direct Method in Use Among Dealers in England — Expedition and Thoroughness Combined— rStock Rec- ord Laborious but Reliable — Books Employed Easily Kept and Invariably Accurate. 2. 3. 4. 5. 6. T. AN ENGLISH METHOD. Largely used in retail firms. The books necessary are : 1. Rough duplicate invoice book. Ready money daybook. Sales daybook. Cashbook. Bought invoice book. Sales ledger. Bought ledger. 8. Stockbook. With ail transactions each customer receives an Invoice made out from a duplicate book and from the numbered counterfoils these transactions are entered up at the end of each day : Ready money transactions into the ready money book ; credit transactions Into the sales day book, each book having columns ruled for different classes of goods corresponding to like columns in the stock book (summarizing similar goods). The ready money transactions at the end of each day are entered Into the ready money book, which Is totaled up and the summary or grand total for the sale of each kind of goods is transferred to the sales daybook, with the total of the monetary put in a column by Itself headed Ready Money Sales. The credit transactions are likewise at the end of each day transferred to the sales day book with the total of the monetary value put in a column headed Credit Sales Summary for January, 1911. Day A B c D E Total 1 15 50 10 50 4 50 60 7 50 36 60 2 5 00 17 32 4 10 7 50 33 92 3 126 75 144 25 60. 16 00 24 60 46 62 4 40 9 10 15 00 30 00 173 45 245 97 Fig. 4. Monthly sales summary review of sash and door situation. 33 Sales. The sales daybook, which should be totaled up each day or week or period required, then gives grand totals for goods sold, of each kind, with monetary ralue which cast across them agrees with the combined totals of the credit sales and ready qioney sales columns. Cashbook. Cash received should be entered Into the cashbook on the lefthand side, the cash received for ready money sales in one column headed Ready Money Receipts, the cash for credit sales In a column headed Credit Receipts, and If totaled at the same time as the sales daybook, should then give the total for ready money receipts, which should agree with the corresponding columns or total In the sales day- book, while the difference between the credit sales and credit receipts columns will give the amount of book debts owed by customers. On the rlghthand side of the cashbook the amounts paid out should be entered In columns to correspond to those in the invoice book headed respectively Stock Payments, Plant and Buildings Payments, Sundry Payments, where again by deduction may be obtained the amount owing to creditors for a given period. Invoice Book. All Invoices of goods purchased should be entered in this book and numbered with a corresponding number put on the Invoice before it Is filed away. Thus by using consecutive numbers the original can easily be found without trouble. These entries should be totaled out Into columns marked Stock, Plant and Buildings, Sundries. The entries In the stock column are the ones to transfer to the stock book, the plant column needing no transfer, being for what Its name Implies, while sundries should be reserved for small ready money purchases, not for sale or stock. Ledgers. The two ledgers should be alphabetically Indexed and Into the sales ledger Is posted all credit column items from the sales daybook on the rlghthand side and on the left side cash received from the credit receipts columns of the cash- book and from these accounts all statements of accouats due should be sent out. In the bought ledger should be posted all Items from the stock and plant and building columns of the Invoice book on the lefthand side and corresponding payments from the cashbook on the rlghthand side. Stockbook. The stockbook should be started by entering in separate columns from the Invoice book stock column, all goods purchased, with rate for them, to which should be added from time to time further purchases and from which from time to time should be deducted the grand totals for goods sold from the sales daybook, the individual columns thus giving at any time the stock of any particular article. This, If worked out at the purchased rate (as orig- inally entered) and placed under each column In a different colored Ink will easily give the value of any particular stock, and also If the sold price Is entered show the profit, while If all columns are cross-cast will give the total stock value In hand. Thus may easily be obtained : Stock In hand (from the stock book) Owing by customers (from cashbook) Estimated value of plant etc. (from Invoice book) .■ Total Less owing to creditors Present position Also Credit sales (from sales day book) Ready money sales (from sales day book) Credit receipts (from cashbook) Ready money receipts (from cashbook) Owing by customers Stock purchases (from invoice book) Plant and building purchases (from Invoice book).. Sundry purchases (from Invoice book) Stock payments (from cashbook) Plant and building payments (from cashbook) .... Sundry payments (from cashbook) Owing to creditors ARCHIE .T. CLARKE, NORWICH, ENGLAND. EDITORIAL DISCUSSION. They do things thoroughly in England and this article is interesting as showing how they do their lumber yard bookkeeping; and doubtless Mr. Clarke will find the articles describing American methods of equal interest to himself. He has been so thorough and painstaking in his description that really no explanation is needed except as to some terms not familiar here, and a little coniparison of the system with our routine systems. The ' ' Ready Money Day Book ' ' is really a Cash Saies Book ; the ' ' Sales Daybook ' ' takes charge sales entries, and also takes a daily total from the Cash Sales Book, with a separate ftolumn provided for the cash. On this side we would throw the first book away and enter all sales tickets in consecutive numerical order on the one sales book, with separate . columns for cash and for charges ; and later systems do away entirely with the book, or else use it merely to recapitulate by ticket numbers instead of names, posting charges direct from the tickets. "Credit Sales" is understandable, though we usually call them Charge Sales; "Credit Receipts" means (iash Received on Account. The description of ledger post- ings seems to indicate a reversal of the sides of the ac- 34 count, "Cr." to the left. The Cash Book is an old familiar form. The Invoice Book or Purchase Record is an excellent feature of the system as described, though it would seem necessary, instead of having merely a "Stock" column that it should have columns corre- sponding to the merchandise distribution or depart- ments on the saJes records. There is nothing especially new in the Stock Record as described, except its thoroughness in handling cost and selling prices on the quantities handled through the item accounts. It would require a good deal of labor to keep a stock record up on this plan; but doubtless our English brethren do not begrudge this labor, and appreciate as we have not yet learned to the importance of keeping close track of money received, disposed of or on hand, whether it be in the form of actual currency passing through the cash drawer or material passing through the yard. No one can say that the policy which hunts two days for a nickel out in the cash or trial balance, whUe $5 worth of material could be taken from anywhere in the yard without the accounts ever reveal- ing it, is a consistent policy. Bank Accounting Systems Adapted to Lumber — No Original Entry Books, Tickets Used Instead — Trial Balance Tri-Weekly by Adding Machine — Spe- cial Ledger Plan — Sound and Original Financial System. KEEPING BOOKS BY ADDING MACHINE. The article published June 10 is the last of those contributed to the prize contest and selected for reproduction in practical entirety. In the fifty-eight articles it was inevitable that there should be some duplication, and the remaining articles describe sys- tems which as a whole are practically identical with sonie one that already has been published. There are a number of original suggestions cover- ing individual bookkeeping or office system features, which have been gleaned out and will be published. As an interlude, however, this week's article will describe the accounting system used by W. M. Hazen, of Three Rivers, Mich., as exhibited last week in his office. Mr. Hazen was a bank cashier before going into the retail lumber business, and bank accounting meth- ods are prominent in his method of keeping books. Really he does not keep books, but only a book, the ledger being the only book record in his system, original transactions being recorded entirely and solely on slips, as in a bank. This sounds somewhat revolutionary, but Mr. Hazen 'a accounts in general arrangement very closely resemble a form used largely in lineyard practice and of which several variations already have been described. Fig. 1 shows his sales ticket, which is put up in plain pads with a yellow duplicate, which is the copy given to the customer. These are used for charge sales, for cash sales, and also as a credit memo for merchandise returned. Pig. 2 is a cash receipt which is used for practically all purposes except cash sales, where the sales ticket also records the cash received in payment. Cash sales usually are put consecutively upon the one cash ticket, to- taled forward to successive sheet numbers to cover the sales for the day. For all cash payments no duplicate for the payee being required, a plain blank ticket is used. It will be noted that none of the forms bear a serial number. A number system is some protection VBHBER—W. M. Hazen — coal :••«■. PlaitM. S*lt. Brick. Li«>. SmIi u D*«n, Wir* r™«. Po»to. GIbu, RmA^ Three Riven, MIcb., l£l . KeceiTe!> of. -DOLLARS On tccouni in Tull. Thtaks. V. M HAZEN. » Per... Fig. S. Cash receipt, duplicate, SxB inches wide. against lost tickets, Mr. Hazen concedes, but it is the purpose in his oflRce not to lose any tickets. The office copy goes directly on the patent spindle, from which the wind can not lift it, and it is as care- fully guarded as cash in drawer. A lost ticket repre- senting cash would, of course, be missed when the day's cash balance was made up; but if it represents merchandise sold on account and no stock record is kept there is no audit that will discover the loss of that ticket, unless the customer comes in with his copy to pay the bill. In many offices a numerical series on the tickets is needed to check against this possible leak. Mr. Hazen, however, is fortunate in having his office in the constant charge of a very capable assistant. Miss Etta M. Phelps, who came to his office six years ago from high school. A capable person in undivided charge of office mat- ters is able to avoid errors which are apt to come in when office work is divided between several per- sons who give a considerable share of their time to yard duties. • Cash is balanced up every night, the cash tickets for receipts and payments being listed and totaled by adding machine to check up the cash on hand, fivery second day Miss Phelps makes up an adding machine balance sheet, of which a sample is repro- duced herewith. In making up this sample form she used fictitious amounts, not revealing any confidential information of the Hazen business, and added type- written legends for which in daily practice brief pen symbols are employed. Charge sales are first sorted out, arranged alpha- betically, posted to ledger, and listed in the first column under debits, amounting here to $203.80. Credits to customers are then taken up, also ar- ranged alphabetically and posted to ledger. They are then listed, but as they consist of both cash and merchandise returns, the merchandise returns are listed with the eliminating key down, so that they are printed but do .not go into the total. The use of the key also causes the item to be marked with the t sign. When all the credits are listed the subtotal is taken, which is the total of the cash credits. By the use of the subtotal key the total is printed, but instead of ueing cleai-ed from the ma- chine, remains, so that further additions may be made to it. The eliminated items that have been listed are then relisted and the total taken, which is a total of both cash and merchandise credits to customers. By subtracting from this total the subtotal of cash credits the balance would show the credits for mer- chandise returned; but subtraction on an adding ma- chine is more complicated than addition and gives more room for error, and Miss Phelps has preferred again to add these items and ascertain their separate total, $10.41. This is then carried to the first column and deducted from the charge sales, leaving a bal- ance of $193.39. To this is added the cash sales, $67, producing the total sales for the day with re- turns deducted. From this the gross profit on the day's sales, $75.50, is deducted, leaving $184.89 as the cost price of merchandise sold. How Profits Are Obtained. Just here a digression must be made to show how the $75.50 profits have been obtained. The sales ticket form shows a blank stub at the left. Mr. Hazen has gone over the tickets and figured in this space the gross profit on each item sold, and these are totaled forward on the adding machine (on a slip, not showing on the balance sheet), and this total amounts to $75.50. The day's transactions are now' all listed except cash, which is not listed here, presumably because the cash has been balanced in a separate operation. From results here shown, however, it is apparent 35 that the cash record, if added, would have been, in brief: Previous balance $126.70 Cash sales 67.00 Cash on accounts 62.11 Paid out in sundry expense items $ 6.55 Deposited in bank 179.25 Balance on hand 70.01 J255.81 J255.81 From this point the statement proceeds in third column to add the day's transactions to the previous account totals as taken from the preceding statement of August 3. "Books Aug. 3" means previous total of debtor accounts. To this is added the current charges, $203.80, and the day's credits, $72.52, are deducted to show the new balance due from customers. The merchandise account, as here shown, carries cost prices only and its balance is supposed to show the cost value of merchandise stock. From the previous balance the cost value of the day's sales, $184.89, is deducted to show the balance of merchandise on hand. In like manner the expenses, bank account and gross profit account are forwarded. "Books credit" is accounts payable, in which there was no change ou the current transactions. A trial balance of the statement now shows that the debit balances in customers' accounts, merchan- dise stock, expense account, bank and cash balance the total credits in capital account, profit and loss account and accounts payable. The statement is complete except to verify the postings to customers' accounts, from the tickets; and these listed from the ledger show $9,131.28, exactly balancing with the "Books Aug. 5", and indicating that the posting has been correctly done. The sheet has therefore' audited and proved the accounts as completely for the two days as is done by the usual monthly trial balance. Personal Account. There is also a somewhat peculiar relationship be- tween the accounts of the business and the private affairs of the owner in this case. Mr. Hazen 's rela- tions with the bank are a private matter and do not appear on the books. When the business needs money he supplies it, and the accounts do not show whether it comes from his own funds or whether he borrows it. As far as the business is concerned it makes no difference. The business also owns no buildings or site, but is Mr. Hazen 's tenant and pays him a regular monthly rental. He personally owns the site and treats the money which has gone into the buildings as his personal funds. Thus the business balance sheet is divested of assets invested in buildings whose forced sale value might be vastly different from their book value, and the incident problem of annual de- preciation is also eliminated. All the assets of the business are in cash, accounts and merchandise. Its only liabilities are to the owner, for capital investment, undivided profits and credit on personal account for working funds supplied in addition to original investment. All this contributes to a clean an- nual statement, and in the final clos- ing of the books there is another practice that contributes to this. The business has paid rent to Mr. Hazen, and also a regular salary. The rent is based upon the same considerations that would influence a lease from or to outside parties; the salary prob- ably is somewhat low. In addition, in tlie closing, Mr. Hazen takes interest on the amount of his permanent and floating investment; and with tliese deductions, together with the usual conventional costs of doing business, the remainder he calls his net profit. It is what his time and money de- voted to the business have paid him, over and beyond what they might reasonably be considered worth if ho were loaning his money out at the usual interest and selling his service to someone else. The Inventory Check. At the end of the year also an inventory is taken to check up on his system of figuring the stock ac- count. Always more stock has been found on hand than is shown by the balance in the merchandise account, but the results have come quite close, the difference usually running from 67 cents to $1.33 for each $100 of sales made during the year. One year it was as low as 27 cents that being a year of falling values. Error dif- ferences of less than 1% percent accumulating during a year is work- ing pretty close, considering how the work is done. Stock will come in during the year at widely varying prices for the same item. Stock which cost a specific price is located pretty closely as to pile and that cost used in the figuring until that par- ticular stock is used out. Odd profit figures such as 7 cents would be thrown to even, such as 5 cents, the intention being to balance these differences as much as . possible. Mr. Hazen does this figuring him- self because of these complications. Once when he was away from home for a couule of weeks Miss Phelos Auguat 5, 1910 , rcblts Credits Balance Dr * » * ¥ .28 .15# Books Aug 3 9,000.00 Books 9,131.28 10.30 3.44# Bbta " 5 203.60 Udae 26,815.11* .42 6.93 E^enae 3,100.07 1.20 2.00 9,203.60* Bank 1,292.40 1.50 17.13 CrdtB " 5 72.52 Cash. 70.01 1.40 2.30 1.25 4.02# Books Aug 5 9,131.28 40,408.87* 3.75 .04# 2.00- .20# Cr. 12.47 2.00# Mdse Aug 3 27,000.00* Capital 30,000.00* 10.75 3.75 Sales » 5 164.89 P & I 5,214.60 1.05 5.00 . Bobka 5,134.27 .57 .56# Sfdse Aug 5 26,815.11 2.77 5.00 40,406.87 1.73 20.00 1.05 Casb Sjf Aug 3 3,093.52 2,75 62.11* " 5 •6.55 Ledger 2.75 Udae Ret. 1,242.62 7.10 .15 " 5 3,100.07* 1,620.00 1.20 3.44 1,271.96 3.06 4.02 1,256.29 3.35 .04 Bank Aug 3 1,113.15 1,701.39 .94 .20 Dep " 5 179.25 1,052.12 1.15 2.00 1,086.88 2.46 .56 Bank " 5 1,292.40* 4.89 Total J, 131.28* 1.50 72.52* 2.50 B&L Aug 3 5,139.10 2.75 .15 " 5 75.50 3.54 3.44 10.67 4.02 " 5 5,214.60* 4.60 .04 .35' .20 16.29 2.00 Book Cr 5,194.27)!! 4.00 .56 2.75 Mae Pet 2.15 10.41* .15 4.18 ' 3.75 23.64 .29 38.51 208.80* 10.41 Leas Mdaa R< td 193.39 67.00 Caah Salea 260.39* 75.50 Profit . 184.89 . .. Fia. 3. Adding machine statement taken every second day. did it and he refigured on his return and found very few and unimportant differences. If he would establish standard costs approximating the markets, and whenever a purchase was made at a lower figure charge it to merchandise stock at standard cost and throw the balance into an account for "purchasing profits" the standard cost schedule would greatly simplify the figuring of sales profits and enable Miss Phelps to handle it without any dif- ficulty, a point which Mr. Hazen was very quick to recognize when it was suggested to him. If the market advanced materially on a particular item the standard cost could be changed, the amount in stock approximately inventoried and the profit on it from the advance figured as a market profit, the operation being reversed for market declines, and with these adjustments the profit figuring on sales should produce accurate results without requiring the owner's per- sonal attention in the figuring. The tickets for current statement are filed in the order of the statement on a small arch binder with a heavy device for punching the proper holes in the tickets. When removed to make room for the next set they are bound together in a packet and kept for as long as may be necessary. In posting to ledger account it is customary with the ordinary run of customers to carry the sales item to the ledger and from there to the monthly statement, referring here to customers wno habitually lose their sales tickets. With city customers, business men who keep the individual invoices, this is not carried out. It might be possible, perhaps, to induce the careless cus- tomer to reform by printing on the tickets a request that it be preserved, and in other ways; but mean- while the practical way, or course, is so to render the account as to promote its prompt audit and settlement. This is one of the points on which prac- tice varies widely. The Ledger Balance. The reader may be curious to know how the ledger balance of customers ' accounts comes off in only seven items, when obviously in a business of this size there must be more open customers' accounts than that. A description of the special ledger used will make this clear. It is a looseleaf book with a large page, with a balance column ruling. It is divided by index sheets into eight sections, seven carrying customers' accounts and one the internal or private accounts. Taking hold of any index tab and pulling it a tablet slides out from inside the index sheet, being permanently attached but coming out per- haps six inches to reveal an erasable tablet, which is renewable as the paper wears out, and which car- ries in pcBcil the trial balance for that section of the ledger. This trial balance is changed for each account as postings occur to the account, and is there- fore kept up perpetually. In order to condense and simplify this process, a number of pages are used in the front of each sec- tion for small or petty accounts, of which perhaps sixteen or twenty will be placed upon a single page, and the balance total of the page is taken as a whole. Under the first section, for instance the first sheet may carry accounts Aa to An, and there may be eight to a dozen such ledger sheets of petty accounts. It is, of course, obviously impractical with so many accounts to a page to change the final balance for each individual item posted. A blotter book is ■ therefore used with a separate pair of columns for each petty account page, running under A as Aa-An, Ao-Az etc., according to the pages. Each posting to the Aa-An page is therefore noted in the corre- sponding columns of the blotter, either as a debit or a credit, and w jen the posting is completed the total of the blol tsT column, combined with the previous page total, will give the new page total for the tab- let. The tablet itself is totaled when brought up to date, and the eight tablet totals when added to- gether will give the total ledger balance. The seven sections devoted to customers' accounts, considered separately, give the total for that division, which will, of course, balance with the private accounts carried in the eighth division. The ledger total shown on the sheet is obtained by a list of the first seven section totals. In correcting the tablets it is necessary to erase and change only the accounts to which new postings have been made. It probably will be quite clear from the foregoing just how the statement is produced, but there are some other interesting points about it. The book credit or total of accounts payable consists entirely of the owner's private account. There never are any other creditors on the books. All purchase invoices are discounted, and therefore are not entered up except in connection with the settlement. Freight will have been paid some time in advance of that, but is also held on ticket so that the check for freight goes into the accounts along with the check to the mill for balance of invoice less freight. Mr. Hazen does not expect the millman or wholesaler to supply him with any part of his working capital. He has an idea that he can get it more cheaply from the bank, and have his entire outside liability thereby concentrated in one place, where it can be more easily handled in case of sickness or other emer- gency. He believes further that in his present prac- tice he not only saves the discount but is placed at a buying advantage that is worth as much more, because it is well known that a sale to him means quick returns. Additional working capital as needed is borrowed from the local bank on 30-day paper discounted in advance. The purpose is to borrow sufficient money not only for working needs but to maintain a creditable balance. Bather than allow his balance to run at a hundred dollars or so for a month he will borrow an extra thousand and pay interest for the purpose of maintaining his daily balance about $1,000. From his own bank experience he knows that one of the first things the banker considers in passing upon loan credits is the average size of bank balance maintained by the customer, and dealing liberally with the local banker in this regard the banker deals liberally with him. For in- stance, the 1,600-ton capacity of the new coal ele- vator wiU be filled with hard coal at spring prices, producing a nice carrying profit, and the carrying will be done on additional funds supplied by the banker. When it is considered how desirable a good bank connection is, the thought occurs that a pre- vious banking experience is not a bad preparation for a retail lumberman. The Adding Machine. The adding machine which is here so important and labor saving a bookkeeping implement is a Bur- roughs of ordinary type, listing to six figures and uiMBoi— W. M. Hazen— COM. ^'"" "'""• •"«'•• /''V^ rUal*. laM. BrM. Ua« iMb ^ «aM n V>»-^»i»^r— ^riiii ■■■i.a.di^ .«■» •WMMFi.. A«r~ »IT ._„.. .... r^ — ^->]ii-^ ^^ -^_,,->«--~v-' "N U^^ L — k . .^ -^,.. Fig. 1. Sales ticket, duplicate, 4.6x7.5 inches wide. totaling to seven. It should really be of 7-figure listing capacity. In the final balance, for instance, occurs a 7-figure merchandise item of $26,815.11. It was necessary here for Miss Phelps to raise the car- riage, discharge the first item by using the total key, and list separately 9,000, 9,000 and 8,815.11, accumu- lating a total of 26,815.11, all this with the carriage raised so the work did not print. Closing the car- riage she then printed this amount by the use of the subtotal key, retaining the total in the machine. Again raising the carriage she took in the number first listed, and again closing the carriage proceeded with the work in the usual way. The 6-figure ma- chine was thus by indirection made to perform a 7- figure operation in one of the very few instances where it is necessary to handle sums larger than $9,999.99. it will be noted that Mr. Hazen- carries no depart- mentizing of merchandise and no classification of expenses. Giving his personal attention to the busi- ness, he believes he has a thorough grasp of such details without carrying them out in the main ac- counts. From the tickets, however, is taken off a tabular statement showing quantity sales in lumber, 37 hard coal, soft coal and numerous stock items, and figuring aggregate gross profits, expenses and net profits, accumulating these figures for the month and then by months for the year, for comparative puf- poses, amounting therefore to a subdistribution apart from the main accounts, which could be carried to any desired length as a subdivision of any of the main accounts. Mr. Hazen 's bidaily statement, as here described, closely resembles the daily exhibit made in some of the widely used lineyard systems, except in the man- ner of its production by use of adding machine. His theories of business finance suggest no such com- parison; they are highly original, carry the weight of his own banking experience and of their own essftntial and evident soundness, and will well repay careful study by any retailer, regardless of whatever bookkeeping system he may prefer. New Way of Keeping Track of Stock — Perpetual Pile Record Checked Against Office Record— Duplicate Ticket That Gets Triplicate Results. KEEPING STOCK RECCED. I send you herewith specimen sheets which should be self- explanatory, but a few remarks may help to demonstrate more clearly. The piles of lumber etc. would be numbered and a piece of dressed lumber, say, 1x6 — 4 feet nailed to each pile. The order (Fig. 1) would be made out In the office, banded over to the yard salesman, who, after filling each Item, would mark the number of pile and the balance still In each pile (taken from the record on the dressed board). The customer's bill (Fig. 2) would then be made out In the office. When delivery Is made the customer simply signs the receipt, tears off at perforation and returns the receipt to the teamster and retaining the Itemized bill him- self. The pile record In the office (Fig. 3) Is a perfect check on each pile, for If the salesman sends In a wrong balance It would be immediately detected. It also gives proper record In feet of purchases and sales. The postings to the ledger (looseleaf) Is done direct from the counter checkbook both for merchandise and received on account. The counter checkbook record (looseleaf. Fig. 4) Is placed at risht band when posting, being used the same as the reverse posting slip, and each time an amount Is posted the same amount Is placed In Its proper column, the difference be- tween the Credit and On Account columns always will show the amount outstanding. Each day's sales and the total of the received on account are each posted to their respective columns In the cashbook. My ledger Is kept In two sections, termed sales ledger and general ledger, there being separate columns In the cashbook from which to post the diffierent amounts to their respective ledger sections. S. Shaw, Dresden, Ont. In a supplementary letter Mr. Shaw says: In the charge sales column in the book record, should there be any material returned or credited, and with no debit entry, the saftie is deducted from the following sale or sales. My aim and claim in bookkeeping is that postings should be made as direct to the ledger as possible, and to eliminate all unnecessary entries, but consistent with proper check or proof as to correctness (as all are liable to mistakes), and this I think is exemplified in this system. The carrying of entries to the cashbook and thence to the ledger I contend is useless, as in this system of posting everything direct to the ledger from slips you are assured that if the totals of your cash sales and on account are correct, then your post- ings must be correct. My books are kept double entry and books from which postings are made are provided with a separate column for sales and general ledger (even my bill- book from which I post direct to ledger), which provides for any entry that could possibly be made. My billhook Is also provided with an Interest column to provide for interest that may be added to an account or a renewal note, and there is also a column showing the face of the note, the postings of which are both made to their respective accounts each month. In this enclosure there is copy of statement issued to employers each month, the items of jvhlch are readily obtained. The explanations herewith, together with former letter, should, I think, give you full understanding of the system. EDITORIAL DISCUSSION. It wiU be noted that the contributor has hardly de- ORDER No. I ChtcludBy. M. ^o -191.Q- <=f;2-'7^Tl (MdedJold xfAti'.j'.fr'-^T^i!> z /' Jco /■io Bal OddedSold f7' J /U. Sal 'JefdeaSold < /■i' 4 jBai. Idded-Soid 9fM S ^eil Std'k Vici^ril. I.nt.l. fn S.'rJ-I.J in. CASH BOOK m fM Wllf UM. ■' wtn •IKtikt ..„ lU UllS tFDO 6i«tm filS - 1 fiX.L 21 (rx^d.ft.^rv^^.y.. TO zo ^^ijU V ot /N, ,/-^ .^Ol^ y X, / ^^^■^^l -' \ / s, ^^^ /^'^ _^^^ ^"*^w ^ ^ LJ v^ -v k/ \J U\->^ ■M ,^^ ^ ■^ ^ l^ ^.^ Vig. 7. Cashbook form, debit and credit sides separated. S9 to the page, one for each stock item in numerical order. Apparently each item is posted direct from the ticket, which fills the stock record rather rapidly. The second prize system used distribution sheets to take the sales ticket amounts and only the weekly totals went to the stock records cards. It is desirable to have an addi- tional column in which to record car numbers, on pur- chases, or order numbers if numerical purchase orders are used, and an additional column for unit prices paid, as a useful running record of cost. Often the minimum quantity to allow before reordering and the quantity to order are also noted at the top of each item. If the suggested plan of periodical checking with actual stock is adopted, balances which have been so verified are to be on inventory should be noted in red ink as a plus or minus quantity in the sold column (never in receipts) and the corrected balance extended. If it seems desirable these can be put into the regular books (at cost price) in a merchandise short and over account, which when closed to profit and loss would show the total of such discrepancies. The contra debit or credit, of course, goes to the merchandise account and this merely segre- gates the stock discrepancies from the general merchan- dise results. Stock returned should also be entered in the sold column within a circle to indicate a reversed quantity, as a subtraction from quantity sold rather than in bought column as an addition to quantity bought, ■-^^^j-joU o ** ^^K/^>*^^J^./l^^^.' Shop Ticket Hawkeye Lumber and Coal Co. F AVENUE BY THE DAM. CEDAR RAPIDS, IOWA No.108j3 Name Job......... Date 191 Time Cost: L $ M $ Item Pieces 1 Thick Wide 1 Long Feet Wd. Grade WORKING DIRECTIONS 1 2 ^^_, L ^_»— 1 rifl. Ii. simp tickel, 1.5x10.5 inchei long, blank numbered dupHvate. which it is not, as the contributor says. The contributor posts directly to customer's ledger account and makes his monthly statement from it, a gen- eral practice; but an improved time-saving method has Who* No 191... Where Whon Purchase Orders Nos ....for items No \A/ ..«»«.!. Wk^n Prrtm-''-"!- Shop Orders Nos (or items Jc b No Read back- Yes No... Loaded bv Driver 1-all loaded; 2 — only — loaded; 3— no more in stock; 4 — to be ordered; 5 — rush BIN NO. 1 PIECE? THICK WIDE LONG FEET GRADE WOOD CHECK NO., NAME OR DESCRIPTION PRICE AMOUNT 2 ,'i^^V/ . ^ - -' Uci-— ^— — ^ kiii;^ ki-^^- Kl— -V-' ■ taw--*w - ■"" — .^ ^ .-i-i-^-v. .--.... ' V~ ^'~' already been described in previous articles. The indebteil- ness of the lumber trade in general to Mr. Shaw for having contributed a method of keeping stock that is bound to work if given a half-way fair chance is, how- ever, a' sufficient halo for any one lumber accountant. One of the above suggestions involved two additional columns on the sales ticket duplicate to take the stock entries, doing away with the separate yard order form. The corresponding space on the original or customer's copy would be dead space. The original might be that much narrower, but to make sales books that way is much more expensive. Mr. Tessman in his customer's invoice used the left margin, which on the original and triplicate was needed as a binding margin for the post binders, for a well worded printed reminder of the terms of settlement, and this plan could well be followed in arranging the form suggested, or the customer's detach- able receipt described by Mr. Shaw could be well ar- ranged for this space. HAWKEYE LUMBER & COAL CO. F. AVE. BY THE DAM JOHN W.BARRY PRES. Res. 1448 W. H. McCLINTOCK SEC. & TREAS. Res. 2004 Block PHONE 769 Cedar Rapids, Iowa Fig. 1. Telephone sMp or order, 6x8 inches wide, in pads, no duplicate. 40 A Complete Set of Numbered Blanks for Initial Records — A Useful Shop Ticket for Planing Mill Work— How the Stock Record Is Kept — Miscellaneous Kinks. SYSTEMS OF THE HAWKEYE LUMBER AND COAL COMPANY. It might be anticipated that two such methodical gentlemen as those connected with "Hawkeye by the Dam," Cedar Eapids, Iowa, would have a systematic oiBce system; and a couple of days recently spent with John W. Barry and W. H. McClintock developed some interesting information regarding their ways of doing business. Fig. 1 herewith shows the printed form which is put up in pads and used for the first record of orders received by 'phone or taken at the counter. In many yards the first printed blank is the duplicate ticket; but where a machine is used it is obvious that orders taken by 'phone will in most cases be jotted down as a memorandum and transferred to the ticket later. The form here shown serves to record this initial memorandum in a complete way with about half the writing that otherwise would be required. It will be Fig. e. Stock card, standard size 5x8 inches wide. Original JOHN W BARRY Ret. New, Itm Blue; Oid. 54 L-3 Sold and Delivered to. New Phone "$9 Old Ptaeoe iiA L-l Date. W. H.McCLINTOCK Res. Phone Old. 4:3 L'3 Kes. Pbone: New, lOtl Wtiite .19_ On the. At No,_ .Job .N. S,. OnE, W N.S.sldeot. -St. Ave. bet.. .St. Ave. E. W. Sl.Ave E.W. By the Hawkeye Lumber & Coal Co. Load Ticket No.. F Ave. by the Dam: Cedar Rapids, Iowa Loaded by Amount: $ LP. LP.. TERTMS: Casti, unless otherwise agreed. Past doe accoonis will draw eight per cent MT W No. A 2306 . Driver. Extended by. . Stocked by. I'ig. 2. Customer's invoice, quadruplicate machine ticket, 6.5x3 inches long. 41 noted also that it provides for cases where some of the goods must be ordered in, or some must be pro- duced on a shop ticket in the planing mill. Fig. 2 represents the customary duplicate invoice or ticket. In this system four copies are made, providing two complete office files, one of which is filed nu- merically and forms the sales book, the other being sorted and filed alphabetically by customers. This ticket form is very complete and of generous size, so it would be less likely to be lost by the customer. Cash sales where the customer takes away the goods are noted on a blotter instead of ticketed as they occur, and at the end of the day a cash ticket is made on the machine to cover all of them. Cash sales for delivery by wagon are recorded on the ticket machine. At the end of the day's business charge tickets are listed on the adding machine, posted direct from ticket to ledger, a similar total is made for cash sales and the totals only are entered to the journal, a columnar book of form very similar to some already described. . > The ledger used is a very convenient one — two, in fact, being used — a large paged, permanently bound book for private accounts, wholesale or jobbing sales etc., and a looseleaf ledger for customers' accounts. Both have the very convenient index feature whereby the index tab opens to index pages ruled crosswise into sections about %-inch deep, each section having its own thumb notch in the margin. One to four or five names may be written in each section, and the thumb notch will open the book at once to the ledger pages on which all these accounts appear, or it may be where there are several accounts recorded in this index section that some of them will be on the next following page. At any rate, two motions quickly performed will open either ledeer to any desired acooiiTit without any hunting of pages, saving about half the time in posting. The invoice form is twenty-five item lines in length, but has been redrafted so that the next lot ordered will be turned the other way and be wider than they are long, and will have the margin for binding at the left instead of at the top, a somewhat more convenient arrangement. Each day's numerical tickets as filed away have the adding machine summary on the front, agreeing with the journal entry. The numbering serves to check missing tickets; Mr. Barry tore off the sample set from which the figure was made while Mr. Mc- Clintock was out of the oflSce, and along in the after- noon the latter gentleman started inquiries as to what Fig. 7. Stock card like Fig. 6 except that it i» intended for smaller unit quantities. JOHN W. BARRY, PreiMwit W. H. McCUNTOCK, Secjr. and Trau. Cedar Rapid*, Iowa ORDER NO. 955 .190- TO- AT_ PleoK Ship, Via C. 4 N.-W. R. R. or C»r« of C. * N..W. at fint Interchanging PoJnt, To HAWKEYE LUMBER & COAL CO. (inc.) CEDAR RAPIDS, IOWA Whea Term* Regular -ton* of- _CoaI at $- -per Ion F. O. B._ If anjthiag in above »uggeftU an error on our part, pleaae kindly call attention to tame before thipment. Very truly, HAWKEYE LUMBER & COAL CO. By- Fig. S. I'urchase order, 8.5x11 inches loTig, blank numbered duplicate, book bound, original perforated to tear out. 42 had become of that particular ticket, having missed it in his round-up. Fig. 3 shows the order blank which is used for the giving of all orders. It is very similar to forms used by others, but comparatively few retailers have their own forms, relying instead upon the salesmen to record the orders and furnish them a copy. Having your own series of order numbers, however, tends to better sys- tem, and it will be noticed that these are serially numbered. Fig. 4 represents a form which has not hitherto been presented, a shop order upon which all work in the planing mill is done. This form also has its own series of machine numbering. The front gives working instructions, and the back is arranged to serve as a record of material and of machine time and bench time used upon the job, thus accumulating systematic information upon which simijar jobs may be figured in future. Fig. 5 shows in skeleton the back of the same form. In the summary on the face of the ticket at the top machine time and bench time are figured together to produce the "L Cost" (labor cost). The "M Cost" is, of course, for material used. A novel and useful card index stock record is used, two forms of cards being used, as indicated by Figs. () and 7. The first is intended largely for feet quan- tities and for larger amounts of piece count, and the second is used for doors, sash and many miscellaneous items in which the stock quantities run in small num- bers. Where there are many progressive sizes, as in dimension, sash etc., several sizes may bo recorded on the same card in successive columns, thus condensing the record. A very complete set of guides is used, consisting of colored guides with wide tabs for main divisions, a second set of distinctive color for subdi- visions, and the tabs on the individual cards, which occupy progressive positions, are marked with the size etc. which that card shows. This stock record is posted direct from the sales tickets and purchase order invoices. The two columns carry totals only. If the sold column shows 842 and seven units of this kind are sold, instead of setting down the 7 it is added mentally and set down 849, the progressive total. To get the balance on hand at any STOCK USED ON ORDER NO. 1082 Item No. Pieces Thick Wide Lont Feel Wood Grade Bin Pal. No. WORKGri FOR I'ig. 5. Back of shop ticket with 16 lines for recording maioial and 7 Unei each for recording machine and bench time.' time subtract the out total from the in total. Another way to handle this within the space of two columns would be to use the first column for quantities, dis- tinguishing " in " quantities by inclosing them in a circle, and use the second column for a running balance on hand. In a dimension item there might be half a dozen or more sales a day; the separate items could be recorded in the first column, then added mentally and the total deducted from the balance to bring the new balance on hand down opposite the last item, thus avoiding making a separate calculation for each entry. This record is kept up daily, and as certain stocks get low they are checked up with the card and a red ink adjustment made for any difference between book and actual quantities. The cards only take up eight or nine inches in depth in a single drawer which is stored nightly in the vault and in case of fire would furnish an inventory which would facilitate insurance adjust- me.Bt. John W. Barry is the author of a stock estimate book which is widely used, so no explanation of this form is needed here. On the first delivery on an estimate it is the custom here to charge up the entire amount, and succeeding delivery tickets on that job will be made in quantities only and not extended as to price, except, of course, for extras. A 9-column adding machine is one of the office fix- tures that is found exceedingly useful, and in almost any lumber office it would pay a handsome profit on the investment. A letter-printing device is used for sending out imitation typewriter circular letters. A stencil-making machine is used for addressing ship- ments, and, incidentaUy, this machine is put to a novel advertising use. With the first shipment sent out on a job there is sent out a piece of half-inch board lettered in the style shown in Fig. 8. The contractor, of course, nails this up to advertise himself, and "Hawkeye by the Dam" comes in for its share of the ensuing publicity. In taking his monthly trial balance Mr. McClintock uses a plan which is not new but probably will be new to many readers. He first goes through his ledger and on each account to which any entries have been made during the month lists the debit entries on the adding machine, totals them, then the credit entries, tears off the slip and puts it in the ledger for a marker. He of course uses the trial balance book having columns for a year with one writing of the account names, which is the almost universal standard form. He now goes through the ledger and brings into the new trial balance columns the totals for the marked accounts, at the same time taking out the markers and laying them in a pile; then he brings forward from the previous month's trial balance the footings for the other accounts (the ones which have not changed) and takes his balance. If it does not come the first time he takes his marking slips and totals all the debits on the adding machine and compares them with the debit side of the customers' column in the journal. As he carries his journal footings forward by totals instead of by bal- ances the debit footing should of course agree with the total of debit postings during the month to the ledger, and the same should be true of the credit post- ings. If either should not agree, as shown by this totaling of the marker slips, it is necessary only to check postings from the journal to that side of the ledger accounts to see where the error occurred, in- stead of checking over both debit and credit items. In his prize-winning contribution to the retail book- keeping contest Gus H. Tessman (April 1, p. 38) de- scribed a slightly different method of applying the ■ same principle. On the stock record cards reference will be found to "Bin No." Every bin and pile throughout the yard is successively numbered and it is this number to r.iMu:ii]-[:ni\'TRy\(:Tnn MILL WOHK VmM MAWKHYH HY THU WW Pig. 8. Sample tign intoripiion fumithed contractor to dUplay at the fob. 43 which reference is made. The Hawkeye method of storing and caring for its stock is very complete and comprehensive, but this belongs to yard system rather than ofBce system, which is the subject here under consideration. A set of carefully worked out forms such as have here been described not only assist in preserving a set business routine but actually save much labor because they serve to describe a transaction with much less writing than is necessary otherwise. They are actually a double economy, saving labor both in making the record and in its subsequent use, as the particular information needed at any time always appears in its appointed place and it is not necessary to read the entire sheet in order to find it. L. I.. Selbel, Free., Badger Lumber Co», Kansas City, Mo» Dear Sirx- Tour favor of the 6th, relative to the.Anerican "Lm.- herman received. The writer has been reading the American luiribernan almost from the time of its first publication. I consider it the best IJiurbGr Journal in the World today, and do not feel that I could keep house or run a lumber yard successfully without it. It is worth all it costs to any merchant. We certainly want it to come right along every week. The man who does not get anything out of it is the man who never breaks the wrapper, and the man that lets this magazine come into his office and never looks into it cannot be a very enthusiastic lumberman. Yours truly, rx>-f^. 44 COST SYSTEM FOR A RETAIL YARD. TUB general subject of "Costs" is one that has lately been ffiven a great deal of prominence and attention In all lines or business. It may seem that much of the system presented herewith Is Inapplicable to your business, and you may say "red tape." No matter how simple a method or system may be Its description on paper Invariably appears more complex and cumbersome than it proves in actual application ; further- more the installation of new methods such as I shall describe Is an art in itself, requiring not only comprehension of the outlined scheme, but also considerable sIjIU, tact and broad- ness of mln(l Many good and valuable methods have turned out failures owing to incorrect Installation, lack of concen- tration, or failure to introduce such modification as the actual working out in practice demanded. The general principles that I shall deserioe can in a great many cases be introduced and carried out in your business without the addition of any considerable number of clerks, and by this I mean without the addition of more than two and in some cases only one assistant to your present book- keeping force. The ramifications In the buildipg supply business are so numerous I need not try to enumerate them ; but the funda- mental principles of cost finding are the same the world over and what I desire to do is : <1) Outline these fundamental principles underlying all costs. (2) Show by means of a tew simple forms how such principles can be followed out in the building supply business. (3) Give In more or less detail the cost system used by the Charles Warner Company, and show how the facts brought out by the system have been used to Increase our net profits. And when all is done and said, that is the real object of our being in business and one of the main reasons why we as an association are here today. In the first place you must agree with me that the man who devotes his capital and life's energy to any business has the right to expect and demand certain returns from that business to which he Is devoting himself. Let us try to figure out what a satisfactory return should be. From the opinions of many men In the business I think we win be safe in assuming that a normal net profit of from 12 to 15 percent on gross sales should be considered a fair one. This, of course, is in a well established business dealing in staple commodities that are not protected by patents. In view of the relation between capital involved and gross sales, this means that we should expect a return of from 17 to 20 percent on the capital Invested ; since through natural Investment channels capital can earn 5 percent without business risk. Let us compare these figures with the facts as they exist [By WiLLiA-M A. JOKDAN, Wilmington, Del.] in our business today, and I think you will admit that there Is a necessity of some radical action to remedy the condi- tions. But before we can remedy the conditions we must first find out the conditions. Admitting for the sake of an argument that taken as a whole our business has returned the necessary 17 or 20 percent on the capital invested, how many of us know what particular department has contributed to this earning or what one has helped to hold it down ? Not once but a score of times, in my professional work, I have found that the losses of one department were being paid from the profits of another. Taken as a whole, the ::T"oi \ :v.... '/9i .// r.:;r~^i/o I^aata •• r."r "-^ '^/^^'-*-=**^ /?. _;■■ ^o4> 6.0 • 1 1 ! 1 •=7i---- ^ <.» /2 „i ! ■ -1 1 ... 1 ™7' ^-#-0* •u 1 ■u t— /4«« t ■/'» >«« //.. 1 1 ■wte ^^ '•••■I Fig. 3. Inventory Card. account number in all cases ends in "5" and is always 65, 75, 85 etc., while different yards are differentiated by means of letters. The accounts so far described are all operating or expense accounts. Beginning with G-400 we have what we call our capital or asset accounts, such as stock, stores, land, build- ings, railroad tracks, machinery, equipment, horses and wagons, furniture and fixtures etc. I have gone into this matter of our manual of account numbers at such length because it forms one of the funda- mental principles upon which the entire cost finding system is based. It enables the timekeepers or foremen to know exactly where to charge all labor costs ; it enables us to charge all supplies exactly where they belong. By placing these numbers on requisitions for matefiai, the bookkeeping department is able to properly distribute the bills coming in against the department. It not only forms the basis of cost finding methods, but it enables us to compare month by month the expenses in- curred by any particular number or group^ of numbers, and also to find the expense per ton or per unit on any material that we desire. All materials are reduced to a tonnage basis and delivery and other costs figured on this basis. A team record is carefully kept showing the number of hours teams are employed on any particular material and the entire stable expense, as shown by the account numbers, is carefully prorated over the different materials in pro- portion to the horse hours consumed by each one. Bec(uisition for Stock. All requisitions, either for stock chargeable to account G-400, or for supplies to be carried in the storeroom, are made in duplicate on the purchasing department on the form shown in Fig. 1. After being O. K.'d by the superin- tendent, the original comes to the purchasing department which places the order, and the duplicate remains filed in the yard office to be used by the superintendent or chief clerk In following up or urging the purchasing department. Purchase Order. The purchase order as shown in Fig. 2 consists of three parts ; the original which goes to the seller, the duplicate which goes to the man making out the requisition and acts as a receiving slip, and the triplicate, a standard 5x8 buff colored card, which Is used by the purchasing department in following up deliveries. The original contains a number of instructions at the bottom which do not need to go on the duplicate or triplicate, and is therefore made 6x8. tt is also designed to go in an outlook envelope. The duplicate Is perforated at the left so that the figures showing the quantity ordered may he torn off before going to the receiving clerk. This necessitates his counting or weighing the ma- terial very carefully and inserting this quantity on the dupli- cate before returning It to the purchasing department. The triplicate has the numbers of the days across the top and a clip placed at any particular day shows the clerk that this material should be followed up on that date. The original requisition has on it the account number to which this material should be charged and this in turn is transferred to the order. In checking up invoices this enables the clerk to place this account number on the bill, thus Insuring the proper distribution. Perpetual Card Inventory. A perpetual card inventory, reproduced in Fig. 3, is kept of all stock on hand. This also acts as a record of average cost prices and shows the amount of material bought of any particular firm in a given length of time. One very useful feature of this record is that it shows the minimum quantity that should be held in stock at any time and the number of units to order when the stock reaches this minimum. In this respect it is practically auto- matic and there is no danger at any time of being "out" of some good selling material. Another feature of this card that we have found very useful is in having the ' balance available" column filled out, even though the material itself may not actually have been removed from stock, if it is already called for on orders, it Is not available for future use and, therefore, the column "Balaiice available" shows the true condition of the stock with respect to this particular article. In connection with our perpetual inventory, it might be of interest to state that the accumulated error for one year beween our stock record cards and our actual physical in- ventory was slightly over one-t'liird of 1 percenii Storeroom Bequisitions. The general plan of having a requisition for obtaining any material is followed out in our storeroom. This storeroom is under lock and key, and if anyone wants miscellaneous supplies for use about the yard they must have a requisition RCOUISITION NO. 12822 '(^^^ fML Dcacniin-ioN /2yi^^-'^<'^^^ APPROVCD ^—^ ' warn* OCLIVtRKD B^ 'i'o "m Fig. 4. Storeroom Eequisition. (Fig. 4) O. K.'d by the foreman and charged to its proper account number. These requisitions are deducted from the store record cards, priced and filed numerically by their account number. At the end of the month it becomes a simple adding machine job to summarize the amount of the money chargeable to the various account numbers. Time Books and Payrolls. Having taken care of the material, both for stock and for stores to this point, wo now come to the recording of the labor Item, which is a considerable one. Following out the same general idea of the distribution of expense and labor to various account numbers as descriljed in the manual, it becomes necessary to have a payroll system adapted to tills use. We therefore have a loose leaf payroll sheet as shown In Fig. 5. Each foreman has a loose leaf book in which he 47 carries these sheets arranged numerically by the men's num- bers. The interesting thing about these payroll sheets is that a man may work on seven dififerent jobs in as many different departments In a week and yet have his time dis- tributed day by day or hour by hour. This makes the- weekly work of distributing the payroll to the proper de- partments comparatively simple. These original payroll slips are not copied to any other payroll book, but in themselves form the payroll. They are simply summarized by account numbers, and the various labor accounts charged with the total amounts. OtPT. NAMI NO. WCCK tNOINO ACCOUNT NUMBERS | V/f// (,A /^ r^ //«r /7dA/ N? 26867 /A CHARLES WARNER COMPANY WAREHOUSE OKDEB /A,/, ^^ 26867 ^ ^?rs^i^'■^ur^ <^<^ 1 /^ 7^ V. x^l-t.?^,,..^^.^-. ^2-4 DESCRIPTION / ^3- Fig. 6. "Pink Slip" or Warehouse Order. 48 the number of square feet of land, or the number of square feet of space in a building occupied by each one. The next item for consideration is the asset or inventory value of the buildings, machinery or equipment used by this particular department. In case of the taxes the amount was distributed in pro- portion to the square feet of ground occupied, and also on the value of the buildings. Insurance is figured directly on the buildings themselves and in case of two or more departments occupying one building this expense is prorated in proportion to the number of square feet occupied. Depreciation is figured as a percentage on the inventory value of the buildings, machinery or equipment, while in- terest on Investment is taken as a percentage on this same asset value. This leaves only the administrative expense to be pro- rated, and this is distributed the same as the general ex- pense described above, namely in proportion to the amount of sales in each department or as may be determined by experience. Taken as a whole, we find the fixed expense as shown In our sample cost card under account G-2:i7 amounts to $153.90 a month or a total of $1,846.80 a year. The material costs are obtained at the end of the month from the summary of the duplicate pink slips In connection with the average prices as shown by the perpetual stock Inventory card. The addition at this point shows the total cost of the material together with the labor of handling it and Its pro- portion of general expense and its proportion of fixed ex- pense, and becomes the total cost at the yard gate. The quantity or tonnage shown is also obtained from the dupli- cate pink slips and is transferred to the cost card from the daily summary. Dividing the prime cost by the number of tons sold, we obtain the prime cost a ton. In the same way the fixed and material cost per ton is obtained and the cost per ton at the yard gate. In fact, each one of the expense items might be divided by the quantity sold In order to obtain the various costs per unit. Also the percentage that the prime cost bears to the material cost etc., could be found. We now come to one of the most important items in the entire building supply business, namely the tcamage. At least we have found it so. Teamage. The teamage charge against each material or department Is ascertained in the following manner : We have what are known as teamage sheets, on which a careful record Is kept of 'the time teams come in the yard and the time they leave the yard, and also the material that thpy are employed in teaming. From this sheet we are able to total up the number of horse hours employed In all departments and also the number employed in each par- ticular department. The total monthly expense of the stable and drivers is then divided by the total number of horse hours and the cost per horse hour obtained. Teamage ex- pense Is then distributed against the different commodities in proportion to the number of horse hours, and thus we have a very accurate distribution of this expense. ISxtra hauling beyond the city limits is charged for, and when subtracted from our total teamage cost gives us our net teamage. The number of tons teamed is generally less than the number of tons sold for the simple reason that a few cus- tomers do their own teaming. Dividing this net cost of teamage by the tons teamed, we have the teamage cost per ton for an average haul of two miles. The average teamage cost per ton, shown in ITig. 8, CHARLES WARMCR COMWMm iMBa. r. 1. Oiibftll k OB.. C1«J- a» 4900# . Iiab*ll-A O*^ - ^aritijflanifr^pamaiig. d.. 43004 Ita ii :43O0# tand JWt U«a M l>-n>la| 1. Caa«t U iSOOOt Ihn^b [MbOt iSand H tflOO^ 1«m(k 3T 10-Sbli . 1. Oaaatt K K00# Bottca 9.01 8,af 4.«0 S.SO s.os W.OO an.oa -I4W.U Fig. 7. Monthly Bill and Ledger Account. 49 amounted to $0,464 for the year. This seems to bear out the general proposition that the teamage costs were running about $0.50 a ton. In a number of cases this was true, but we found upon analysis that the cost in one of our heaviest tonnages averaged $0.99 a ton owing to peculiar conditions due to the material. Specific cases such as this, will be taken up and discussed later. Selling Expense. Before we can arrive at the total delivered cost a ton we must add to each department the prorata cost of our selling expense. These percentages are determined in the same way that the general expense is determined ; namely, in proportion to the amount of gross sales In each department modified by the judgment of the men most closely in touch with the sales conditions, but in general we may say that the selling expense Is in proportion to the sales. Analysis of Sales. The next step beyond the cost records, shown in Fig. 8, is the analysis of sales reprodnced in Fig. 0. This record is kept on a card and first shows the net tonnage each month and the accumulative tonnage for the year up to date. Next comes the amount of sales, from which is subtracted the material costs. This leaves us the gross earnings, against which is charged the operating expenses or prime costs from the cost card. Fig. 8. This leaves us the gross earnings at the yard gate, from which must next be subtracted the de- livery expense, which includes teamage and carrying. This leaves us the gross earnings delivered. li'rom this amount is taken the selling expenses already determined, and finally, If there is anything left, the fixed charges are subtracted, leaving a net earning or loss for the department for the month. This loss or gain is accumulated month by month In order to show the total at the end of any particular period of time. After the accumulated earnings or loss comes various figures showing the average cost a ton for material, operating, teaming, selling, fixed charges etc. These figures are based on sales, whereas the figures shown In Fig. 8 are based on tons teamed and, therefore, do not exactly agree. MoutMy Loss and Gain Statement. From our analysis of sales card. Fig. 9, there is prepared monthly loss and gain statements bringing together in one place all the vital Inlurmatiou in regai*a to the variou* materials. These are shown In Figs. 10 and 11, and form a summary of all the analysis cards for use by the executives of the company. Certain percentages that will be useful in analyzing the business are determined on this sheet. Among these are the percentage that the handling, teaming, selling and administrative expense bears to the cost of the material in each department, and the percentage of net profits to gross sales in each department. These monthly loss and gain statements should also be accumulated so that at the end of any particular month a comparison could be made with the standing of the business as compared with the cor- responding number of months of the previous year. With the accumulated monthly loss and gain statements the system is complete and it only remains to analyze the facts and figures as presented and draw certain conclusions. Finally, necessary action should be taken to correct these figures should Ihey be found unsatisfactory. And by unsatis- factory I mean should it by any chance be found that they were not returning the 12 to 15 percent net profit on the gross sales. Conclusions. No .cost system is worth the paper it is recorded on if it is not used. Assuming that this statement is correct let us point out the conclusions that can be drawn from the fore- going cost system. Not only can be drawn, but as a matter of fact have been drawn in the last two years' experience of our company. In the first place, these records are compiled in such a way that they check absolutely with the controlling accounts in the general ledger of the company, and this Is a very important point. If cost records do not check with the gen- •) WIUilKnTOH RBTAIL COSTS, i910. A/c ;an re« lUr Ajr Hay Jun Jul Aug 8.P Oet Kc Sec TOTAL Repam — tt-ttcr £31 £34 B3& £36 £37 £38 ei ' 1 1 61 HkterUl Power 1 96 4 73 76 86 62 96 1 95 Supptlei k Suxtdrles Labor 11 BO 188 74 61 68 4 73 86 07 44 15 38 31 49 88 49 84 88 74 41 63 46 99 6 — 61 71 50 49 38 98 47 98 885 43 83 47 43 2 85 26 11 46 B9 89 76 47 88 9 46 42 36 54 .17 41 82 637 48 614 93 PRMR COST Tixei B^^enscs Carrying Bxpenaas SOS a 16i 90 le 66 e 848 S6 . 104 98 153 90 11 16 S 406 83 87 87 183 90 16 eo 1 S83 68 101 98 183 90 9 84 1 039 53 88 8t 153 90 11 97 1 397 98 117 to 88 M 153 90 183 90 19 14 £8 10 8 068 31 i 1 658 03 93 81 183 90 1£ 58 676 06 80 88 183 90 S3 83 936 88 78 — 106 98 183 90 153 90 £4 88 ] 33 84 758 88 -1 37S 68 148 80 183 90 38 85 1 £04 36 1 298 79 1 848 80 241 64 If 049 83 rCTAL COST Ton* •old 3 ess 38 996 S678 tt 884 1 541 89 437 1 304 65 434 1 65« 67 490 £ 368 65 ; 8 126 93 753 664 1 138 36 344 1 198 a 331 1 008 97 |l 669 40 £61 ; 488 1 539 61 ISl 436 86 412 ' 6450 Prl&e cost* p*r ton .S03 3.033 .ISS 3.010 .800 3.ia6 .838 £.771 .161 .J.191 .165; .133 .878 £.963 3.119 3.037 .244 3.369 .298! •" 3.567 3.243 .36 3.37( .£01 3.128 Coat at yarl gita 3. £36 3.1iS 3.586 3.00c 3.07£ 3.183 3.E8S: 3.309 3.813 3.865 3.463 3.731 3.383 Teamage £39 610 86 e98 44 S06 07 •5 — 185 37 •6.50 136 63 •13 43 1 395 7£ ! 416 94 •£0 20 "11 60 146 37 •3 - 144 84 •a 78 100 38 .•4 — £07 37 •15 50 291 32 •16 75 3 076 98 •103 63 net teamaee Tons teanwd Team cost per ton 610 86 983 .621 »8 44 848 .36 801 07 436 .461 lie 87 488 .878 1£3 80 489 .8i8 375 58 754 .498 406 44 66£ .8U 143 37 348 .419 i 138 09 98 36 ! 191 87 1 875 67 1 2 973 38 318 287 i 479 | 407 i 6400 .4271 .374- .40 1 77 1 46 .1 i .. 1 j _ Retail Sailing txf IQ i Tona sold Seiling co»t per ton 8»t 81 3« 996 .061 47 48 884 .056 84 68 4.i7 .148 88 80 434 .188 96 96 490 .198 60 97 755 .067 46 16 654 .071 1 ! 1 1 ; , 69 9£ 48 79 1 89 98 ! 59 77 76 £S 746 88 344 j 331 261 ' 462 418 6460 1 .261j .147 .arai .124 188 .1)6 TOTAL rSLIVKRltC COST PIR TOH 1 3.908 3.537 4.136 3,41£ 3.621 3.688 3.936 3.969 4.18' 4.486, 3.987 4.59^ 3.901 * Uirjit 4uantltlti, Fig. 8. Departmental Cost Sheet. eral books they are unreliable and, therefore, worse than useless from the fact that they are misleading. By proper use of the "Pink Slips," which form the author- ity for removing material from the yards or warehouses, and the customer's charge sheets, a daily check is obtained that shows us that every ton of material taken from the yards is charged to somebody. This is often a weak point in the system of any business and should be guarded against very carefully. The maintenance of a perpetual inventory proves very useful in a great many cases. In case of a flre it is undls- putable evidence to the insurance companies of the value of the stock on hand and it has been so proven many times in the courts. An accurate record of stock withdrawals over a period of six months or a year shows us exactly the amount of stock we ought to carry. This often saves thousands of dollars of investment in over-stocking. The perpetual inven- tory card gives us a correct average price when the price of purchased materials may be fluctuating. And finally the balance available enables us to tell instantly whether or not we have certain material in stock and In what quantity. On the whole, the perpetual inventory Is a most useful and profitable thing to have. Coming to the summary of our cost cards, a monthly analysis shows whether or not we are running ahead or behind of the previous month, while the accumulated costs show how we stand with respect to the same period of time for the year previous. Very often when these figures are called to the attention of the superintendent or foreman and a frank talk had with him on the subject it is incentive enough for him to do better the next month. If the cost continued to run high, we must then consider ways and means of changing our methods of handling or of introducing labor saving machinery where it is possible. This cost record will enable us to figure very accurately whether or not the investment in labor saving machinery will be warranted. Labor costs per unit give us figures to go by and enable us in a number of ways to set piece rates or let out certain work on contracts. We have found this to work particularly well in the unloading of barges of sand or barges of bricks. It is possible to make a scientific time study of such an operation as unloading bricks from barges and many other operations, which at first glance seem illy adapted to putting on piece work. Where piece work rates are set it is of greatest importance that the confidence of the men be ob- tained. This is brought about in some cases by written assurance that a piece work rate once set will not be changed for a year. When such a statement is made, however, the management must be very certain that they have made a scientific time study of the operation and that their labor cost will be well within the average price as shown by the cost cards. In drawing conclusions and showing the "results to be de- rived from a properly designed cost system, I might give an example of a reduction in stable costs that was effected 50 KritlT LOSS 1 uii ■tiTiiBrr. 1910. tUFT. HMT.CT 9AU! CCST Cr KATU. OBC39 nCTII UWCLlRO.TEJUIIIia, ULLUO & iDM. imnsi OPD»T. l« luTL. ccaf MET PKCFIT ) t!21T.<0 tscs.ei |isn.-'<» 1*4*. T« IM.l lMf.03 30 3 ITT5.0» IS'i.dB J99.i9 MO.BS »0.'8 . U1.4T • .J 1 lliT.SI 10M.*T 2i!«.e4 i«03.ie 1M.6 . M? «■ U.l' 4 BM1.B3 *aS7.TS 13M.TT lOM.ll M.B U9.U ».14 6 S65«.9» 3«M.a9 leoi.Pi loie.Ts »*.h tt*.!i 13. M 6 1L8I.9a ♦MS.M 1S«0.03 W?9.0» M.S ii».oe 1.9> T T9T.IS 4eS.S9 J31.S* so«.6a 4J.9 120.99 16.M • tMO.tT 9S9.14 441. IS 240. «0 ss.«s ICO. IT 14. S » MJ.«1 ST'.M S54.M *0*.CJ ■•0.4 49.96 S.S8 1 10 T?9.M 669.ST 339.36 il«.« «.fl "■" _L«1 Esua.M LUBT.M waM.»s T9M.M 2296.01 e.oc tOTtaT IMS 6 MIW ITATIUirT i9l0. MP T Atrr or s*us ;osi cr luTi. (»C9S ntorit RAITOLIM.tlAJIllW. BIUIM 1 Acx. tirtxu OfOT. t« WtL. C0» nt merit t IISIB.W IMT.I4 tiiso.aa •991.96 ■36.1 •ao«.» 11.7. i203.14 WM.OS •06. n 732.00 39.4 • 326.69 U.4S iMj.aa »91.21 1633.07 isei.it 1*7.8 286. tt ta.n »S*).i4' 44S^ 10 1105.14 1081.67 23. 61.9* 1.50 1«39.M 1033. 9« 603. W 461. » 47.5 U1.6A 6.61 «'1S.M €U9.U 33M.0S 1641.29 39. e • 311.24 ».«3 4«fl.iS 193. M 274.99 343.04 lib. 3 31.65 6. 62 10T4.44 T9S.T4 260.70 379.61 36.26 I.Ot 0.10 120'. 06 1647.11 339.91 S43.10 89.5 • UI.IT 6. 36 iC 66?. ir 429.28 227.98 »W,o< .£2J ' w,n « j» •«T4T,*9 U1-».0B J8T0.36 6M».77 47.6 • It.BB ■ ■ Uu. .103 Fig. 10. Monthly Loss 4" Gain Statements. The first shows losses which were overcome by the cost system when the second was taken, several months later. through these records. • We have uniform cost records In operation in seven different stables. It was noticed by the management and drawn to the attention of the superin- tendent that his cost of feed and bedding per horse per month averaged about $5 more than any of the six other stables. The fact that the six were very nearly the same showed that their average price could be taken as standard. Upon Investigation It was found that the stable boss was a grafter, selllug oats outside, Improperly feeding the horses and generally an "undesirable citizen." Upon his being re- moved and the superintendent giving his personal attention to the matter of feeding horses and regulating the amount of feed, tlie cost came down to the same average as the other stables and has so continued tor four months. At this rate we will effect a saving of $5 per horse on fifty horses, which amount to $250 a month or $3,000 a year. This Is only one example of many similar eases. Without a cost system the business might have been conducted for years on this basis and no one been the wiser. One of the most far reaching and beneficial effects from a record of the prime cost per ton of handling material has been the installation of a bonus system for the superin- tendent and foremen. After several months records were complied. It was found that the prime costs a ton of material in different departments were running at a fairly uniform rate, showing that the superintendent and foremen had ap- parently struck their gait. Under the old system this was considered good enough. But under the new order of things we held a meeting of the superintendent and foremen and in fact included In the plan the clerks In the otSce, and made them a proposition which practically put them In busi- ness for themselves. The proposition was this : If these men by Increased effort on their part could reduce these costs the company would give them as a bonus 50 percent of all that they saved. This amount was to be divided among the men prorata in proportion to the Importance of their positions as indicated by their salaries. If any of you gentlemen have any question In your mind as to the amount of reserved energy a gang of foremen have in getting work out of their oien 1 wouia recommend that you try this piuu. The subject of teamagc costs Is a most Important one. Too often the assumption is made that the teamage cost a ton, say for an average haul of two miles, is $0.50 or what- ever figure may be calculated from a year's records. Whilfc this may be perfectly true for certain materials, there are always one or two materials which, owing to peculiar con- ditions, may be far above this. As a matter of fact, our actual cost records showed on one of our important tonnages that the cost a ton for teamage averaged exactly $0.99, whereas the selling price had been fixed on the assumption that the cost was $0.50. The material in question was machine mixed wet mortar. This was manufactured in a separate building of its own with comparatively expensive machinery and hauled to the jobs In steel mortar boxes. The excessive haulage costs arose from the fact that after the box mortar had been used. It was up to us to send a team out and bring back the empty box, thereby practically doubling our teamage cost a ton. Acting on the cost figures as shown by our records, ways and means were devised to replace the wet mortar by a dry mortar put up In bags, which could be teamed at a normal cost. Not only does this dry mortar effect a saving in team- age, but it is In Itself a superior article and Its introduction •iimnTrwi i>r,'Aii tadd. warua or sun, mo /ai> tmi Iter Apr Iter Jun /ul Aug 1 sap Oct «07 Dae TOTAl. Wet 'onnajf iold looe.M eii.ee is».3 «96 55 ewp ee 1595 31 9095 19 1547 i3 9918 58 1796 69 11379 81 8602 49 13990 70 8903 14 16843 94 1825 95 17469 79 1199 30 16969 09 1023 67 19691 76 1779 07 81496 63 1596 56 2.'^053 39 83053 39 Itaterul eoata taw H B400 a ie«o ee 1039 53 1«7 99 8099 il 1959 03 979 09 939 89 768 88 1376 69 1204 36 19045 93 Uru«t •«rnin(* «M 77 031 it 31; 99 5(J7 60 367 71 534 le 405 11 347 99 860 05 871 46 399 39 302 80 5003 56 Opcntlrg txpanMa aoe b 104 n 97 57 101 99 99 98 117 80 99 90 93 91 60 65 79 — 109 99 146 50 1296 79 Sroaa •aniir.^a ml yard (ytal tit M AM- 37 CM le 405 98 879 99 419 99 319 21 294 09 179 80 193 45 803 41 833 70 J706 77 Teaeaae and earrylnf txfWi— «t9 U CM 44 •09 07 i.i* 91 149 90 414 96 445 04 199 99 166 07 185 80 841 81 324 17 3291 44 Qroaa aarninga dallvtrad •IM M I3n P3 19 09 871 81 130 89 8 18 •189 91 95 13 U 13 99 25 58 80 •90 47 416 35 C«Ulng Bxpanaa il M 47 a 94 99 99 90 99 99 90 97 49 19 99 98 46 75 59 98 69 77 79 89 746 98 Oroaa Earning aold 'ise M •3 4e •49 90 819 91 » 33 •49 99 •178 99 5 81 •3T 60 9 33 •7 97 •196 78 •331 49 ri»d charsta 153 90 199 to 193 90 193 90 193 90 153 90 153 90 153 90 153 90 153 90 153 90 193 90 1949 60 Kat ;,i6flt or inaa ■ • " " Cuinulatlra •»1 M •70 4e •Ate M •BOO 90 •9e«99 91 7] •591 17 •lao 67 •991 74 •808 78 •694 49 •389 99 •1811 39 •149 69 •139C 07 •151 S6 •1951 93 •145 57 •1997 80 •191 47 •1658 67 •319 62 •2179 89 •8179 89 Avaraga aalaa Viuflla per ion ■atarlal coata operating exparaa ■ laan expenaa " aalllrg erpanae • flxt ehargea Tolal coata • Vet profit or loaa i.SJ e.>49 .eoe .see .051 .153 J.S79 .MP 3.44 t.et .12 J .0*6 .055 .19 3.5«A •.0«< 3 65 e.94 .90 .47e .149 ..^3 4.113 3.6«6 8.995 .E>8 .31 .189 .994 3.419 •.146 3 90 8.959 .191 .304 .199 .314 3.998 •.898 3.449 8.73« .155 .649 .067 .804 3.711 •.896 3.499 8.941 .133 .691 .076 .235 3.996 •.901 3.565 8.554 j27o .468 .861 .447 3.997 •.43« 3.983 9.935 .244 .506 .147 .465 4.197 •.574 3.98 8.934 .292 .49 .299 .99 4.475 •.656 3.965 8.957 .22 .50 .124 .38 4.081 •.336 3.951 8.926 .361 .767 .194 .373 4.131 •,777 3.573 8.00 .80 .51 .116 .285 3.91 •.637 ' Ulnua quar.tltlaa 7r loaaaa. Fig. 9. Analysis of Sales. 51 Is simply a matter of educating the trade. And in this cam- paign of education we tell our customer very frankly that it is a mattfer of costs with us, and we have found very few of them but what are fair minded enough to see the force of our arguments. Our analysis of sales records enable us to determine very accurately what our selling prices should be. But if for any reason selling prices are governed by cond'tions beyond our control, we know what our losses are in hiindling that par- ticular material. It Is then up to us to br'ng about certain trade agreements with other dealers or if we are unable to do this, to dificourage the sale of that particular commodity. Without a monthly loss and gain statem'^nt, as shown in Fig. 10, we would simply know that in the particular month for which this statement was made the entire department had lost $27.38 or a little over one-tenth of 1 percent on the gross sales. A condition very much different from the 12 to 15 percent that we decided in the first part of this paper was to be reasonably expected from tb 5 business. What department or material had contributed to t his loss we could not tell. But with this statement it was very easy to see the departments 2, 6, 9 and 10 had been the principal con- trlbuters to it Department T had also helped, and depart- ment 4, In which we had next to the highest sales, had contributed but 1% percent of those sa'es to the profit column. Certain departments in which the tonnage and gross sales were very heavy and which we natural! y concluded were profitable departments, gave us a great nhock by showing that they were decidedly unprofitable anc that, apparently, the more business we did the more money we lost. The Improved conditions, as shown in 'he monthly state- ment, reproduced in Fig. 11, did not com-^ about the month following the statement shown in Fig. 10, by any manner o( means nor in six months for that ma iter. It was only after many months of concentrated thovght and effort on the part of the management, of the" sale's force and of the engineers that these improved conditions were brought about. The facts were brought to our attention a^d it was up to the management to make their decisions and take the necessary action. It was readily seen that dept rtment No. 1 was profitable, returning us 13.74 percent on our sales. Sales effort was increased, the operating was put on a piece work basis and this, together with the help o< the general bonus plan to the superintendent and all toreinen, brought about decreased costs of handling and teaming with the result that the net profit was Increased to 30 percent. The sales in department No. 2 were rliscouraged with the result that instead of a loss of 14.43 percent, we had a loss of only 9.1 percent. Department No. 3 was a profltabU- department and in- creased sales effort and decreased operftting expense brought about an increase of over 6 percent in the net profit of the department. In the same way we might go on and analyze all ten of the departments. Referring to the total figures we find that the business as a whole made a net profit of $2,298.07 or 8.06 percent on the sales which had been increased only slightly over the amount of sales in the previous statement. Even though the installation of these methods has cost us a great deal of time and money, nevertheless I will leave it to any fair minded business man if the results are not justifiable, and I can not urge upon you too strongly the necessity of every man in the building supply business today to "go and do liljewise." [The above paper was delivered before the National Builders' Supply Association, and also distributed in pamphlet form. Where the author says "department" tlie term "branch yard" or "line yard" would be u.scd in the lumber business; he does not mean separate mer- chandise departments of a given yard. — Editors.] « How to Meet Mail Order Competition." The articles on this subject, which appeared in the AMERICAN LUMBERMAN in 1912, are now available in booklet form at twenty-five cents a copy, postpaid. The subject is such an important one to the retail dealer that we felt there, were many who would like to have these articles in convenient and permanent form, so that everyone could be supplied, espe- cially as back issues of the AMERICAN LUMBERMAN were not to be had. The letters on "Collections by Retail Lumber Dealers," that were reprinted in the AMERICAN LUMBERMAN in 1910, are still available at fifteen cents a copy.. These letters by AMERICAN LUMBERMAN subscribers give the experiences and suggestions of prominent retailers and offer many exeellent ideas on the handling of accounts. It will well repay any dealer to carefully read them. 52 Free Advertising Service for American Patriotism and Love of Country can scarcely be expected of chil- dren reared by homeless parents with no more serious thought than the present. "Just as the twig is bent, the tree's inclined," and as more recent writers have said, "The home is the backbone of our nation," it behooves all lovers of life, liberty and happi- ness, and particularly those di- recting the footsteps of the youth of our country to set a good example. To do this it is not necessary to build a palace and go into debt for life. Wood construction will just meet your requirements. With it you can plan a home of any size you may ultimately desire and then start with a few rooms apd build on as your demands require. We have helped many people solve their building problems and would like to help you. Come in and let's talk it over. Lumberman Subscribers. Put Your Money Into A New Home this year and make it earn you happiness and contentment. Can't get away from the (act that the home is the mainstay of this great country of ours and never will there be a time when you can buy the kind of lumber we are selling for less money. Better start planning early so as to get the ground broken as soon as the host is out. We're ready any time to talk about your lumber needs. Come in. ( Name and AiMraw > "Tkera't No PUc« Uka Hoaa" Nam* and Addraaa We Can Supply Building Material for any kind of a structure you contemplate building on the shortest notice. Thoroughly seasoned lumber of full thick- ness and guaranteed quality, shingles or prepared roofings for coverings, framing, etc. — all the pick of the best manu- facturers. Come in and look us over — maybe we can save you some money, time and trouble. (Nam* and Addrttt) The ads shown on this page are from the QUARTERLY BULLETINS OF ADVERTISING SUGGESTIONS FOR RETAIL LUMBER DEALERS, furnished free to AMERICAN LUMBERMAN subscribers. Each bulletin shows twenty ads — twelve illustrated witli attractive cuts and eight all type. The illustrated ads are so worded that they can be used with or without illustrations. Electrotypes of illustrations are AMERICAN LUMBERMAN, furnished at 50 cents each postpaid. Complete ads with space left for name and address are 80 cents each. If you advertise in your local paper these advertising suggestions would help you keep your arts fresh and attractive and make them better business getters. We will be glad to send you sample bulletin and tell you all about the service if you are interested. 431 South Dearborn Street, CHICAGO, ILL. 53 BOOKS FOR LUMBERMEN. American Iiumberman Telecode A cypher code adapted to all branches of the lumber trade ; 412 pages ; 61,427 code words ; nearly 4,000 In use. $5, postpaid. Ijiunber Shed Construction Met L. Saley's new book on construction of lumber sheds, offices and other buildings, with plans. $1.50. Bealm of the Retailer The best of Met L. Saley's writings put into perma- nent form. $1.50, postpaid. The Lumberman's Actuary Shows the cost of any number of feet of lumber be- tween 2 and 29,000 feet at any price from $6 to $75 a thousand ; also of lath and shingles from 85c to $6 a thousand. In leather $4. doth $3.50, postpaid. The American Lumberman's Curiosity Shop A reference work containing hundreds of practical ques- tions about the lumber business with full and appro- priate answers, which, in many cases, embody illustra- tions. $2, postpaid. Chapin's Lumber Reckoner Reduces to board measure lumber, scantling, square timber and saw logs. Morocco $3, cloth $2, postpaid. In Forest Land The humor, sentiment and philosophy of the lumber business Interpreted by "The Lumberman Poet." $1.25. The Coalier's Actuary For retail lumber dealers who handle coal. Tables show ehe amount of any quantity of coal from five pounds to 1,100 tons at prices from 25 cents to $15 a ton and apply to either gross or net tons. In cloth $2.50, leather $3, postpaid. Collections by Retail Lumber Dealers A series of letters by subscribers to the American Lumberman, giving their views on the best way to handle the accounts of a retail lumber business. These letters offer many excellent ideas, and it will well repay any retail lumber dealer to read them carefully. Fifteen cents, postpaid. Climax Tally Book For hardwood lumbermen, 110 pages, size closed 4V,. i 8V> inches. Finger straps to hold book open when tallying. One copy 75c, six $4, twelve $7.50. The American Lumberman's Vest Pocket Ready Reckoner Seventy-two pages of tables, showing the contents of any number of pieces of dimension lumber from 1 x 8-10 to 12 X 20-40, Including also table of freights, weights of lumber, shingles, latn, doors, sash, blinds, styles of siding and the different log scales. Twenty-five cents, postpaid, five copies $1. Dustman's Book of Flans and Building Construction Covers the construction of modern homes, bungalows, farm buildings, barns, store fronts, store buildings, garages ; also the various phases of construction. A good book for the retailer to have to show prospective home builders. Price $2, postpaid. Science of Organization and Business Development By R. J. Frank. A treatise on the law and science of the promotion, organization, reorganization and man- agement of business corporations, with special refer- ence to approved plans and procedure for the financing of modern business enterpri.scs. Morocco, $2.75. The Cost of Growing Timber By R. S. Kellogg and E. A. exposition of facts and figures. Craftsman Homes A book of house plans. Every page replete with unique and original ideas. Heavy canvas crash $2. postpaid. Advertising Suggestions for Retail Lumber Dealers The American Lumberman issues quarterly and sup- plies free to subscribers to the American Lumberman a bulletin of sample advertisements. Plates of these advertisements and of illustrations are also furnished subscribers at cost price. Send for sample bulletin. Bungalowcraft A book on bungalow and cottage building in its latest development. Heavy canvas crash $1.50, postpaid. Zicgler. An interesting Twenty-five cents. AMERICAN LUMBERMAN, 431 S. Dearborn St., CHICAGO, ILL. .54 * 1 s-*i* T,IMBER SHED CONSTRUCTION MET L. SA LEY'S LATEST BOOK Covers every phase of shed construction and other build^ ings used in connection with a retail lumber yard, with plans and specifications SOME OF THE FOLLOWING SUBJECTS TAKEN INTO CONSIDERATION GIVE AN EXCELLENT IDEA OF THE COMPLETENESS OF THE BOOK Type of Sheds The Unloading Deck Location Po'e Support The Foundation The Roof Ventilation The Platform The Alley Width of Bin The Hood The Warm Room Capacity of Shed The Store Room Open Dustproof Room Advertising Space To Exclude Animals and Birds Molding Racks Displaying Goods Storing Timbers The Office Sheds for End Storage How to Build a Lime House Origin and Advantage of Sheds When to Build the Enclosed Shed Lumbermen have wanted •uch a book (or years— it ia now ready. If you are not aurc you want a copy, let us send you one postpaid for examination, witti the privilege of returning if you do not wish to retain it. "Lumber Shed Construction" haa 176 pages printed on a high grade sepia paper, durably bound in Russian linen. Sent postpaid anywhere in the United Statea. Canada or Mexico for St. 50 a copy. ss INDEX. Anthony, M. P 26 Bank Statement 28 Cash Forms 15, 27, 29, 35, 39 Credit Memos 21, 23 Clarke, Archie V 33 Cost Sheet 50 Counter Book 38 Delivery Forms (see also Sales Forms) 26 Estimate Systems 7, 8, 19 Grube, A. K 18 HawUeye Lumber and Coal Co 40 Hazen, Wirt M 34 Hendrickson, O. M . 29 Hopkins, Clarence E., 32 Hunt, James B 15 Inventory Card 47 Iverson, I. G 23 Jordan, William 45 Journal Forms 6, 12, 16, 22, 25 Ledger Forms 31, 39, 49 Lesher, E. J 6 Monthly Statements 4, 15, 33, 51 Note Registers ; 21, 28 Patricks, William 4 Purchase Forms 5, 18, 26, 42, 46 Remittance Forms 26, 29 Requisition Forms 45 Sales Forms and Records 4, 5, 7, 14, 20, 24, 27, 29, 32, 37, 38, 41 Shaw, S 37 Shop Orders 40, 43 Stock Sheet Forms. . .- 5, 9, 10, 17, 19, 21, 2l>, 26, 33, 39, 41, 42 Telephone Slip 40 Tessman, Gus H 11 Time Sheet 48 Trial Balance Forms 28, 36 Voucher Forms and Records 8, 9, 10 Warehouse Order 48 Yard Orders (see also Sales Forms) 38 W '^^ ^^ 8 1955 LD2I-10Om-7,.39(402s) _U tv^'-' ^^^^ UNIVERSITY OF CALIFORNIA LIBRARY . J I