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[Illustration:

  A VIEW IN UNION STOCK YARDS, CHICAGO, ILL.
  The Greatest Live Stock Market in the World
]




                               Cyclopedia
                                  _of_
             Commerce, Accountancy, Business Administration


                     _A General Reference Work on_
      ACCOUNTING, AUDITING, BOOKKEEPING, COMMERCIAL LAW, BUSINESS
        MANAGEMENT, ADMINISTRATIVE AND INDUSTRIAL ORGANIZATION,
           BANKING, ADVERTISING, SELLING, OFFICE AND FACTORY
               RECORDS, COST KEEPING, SYSTEMATIZING, ETC.

                        _Prepared by a Corps of_
     AUDITORS, ACCOUNTANTS, ATTORNEYS, AND SPECIALISTS IN BUSINESS
                         METHODS AND MANAGEMENT

            _Illustrated with Over Two Thousand Engravings_

                              TEN VOLUMES

                                CHICAGO
                       AMERICAN TECHNICAL SOCIETY
                                  1910




                            COPYRIGHT, 1909
                                   BY
                   AMERICAN SCHOOL OF CORRESPONDENCE

                            COPYRIGHT, 1909
                                   BY
                       AMERICAN TECHNICAL SOCIETY

                  Entered at Stationers' Hall, London
                          All Rights Reserved




                       Authors and Collaborators


 JAMES BRAY GRIFFITH, _Managing Editor_
                          Head, Dept. of
                            Commerce, Accountancy, and Business
                            Administration, American School of
                            Correspondence.

 ROBERT H. MONTGOMERY
                          Of the Firm of
                            Lybrand, Ross Bros. & Montgomery, Certified
                            Public Accountants.

                          Editor of the
                            American Edition of Dicksee's _Auditing_.

                          Formerly Lecturer on
                            Auditing at the Evening School of Accounts
                            and Finance of the University of
                            Pennsylvania, and the School of Commerce,
                            Accounts, and Finance of the New York
                            University.

 ARTHUR LOWES DICKINSON, F. C. A., C. P. A.
                          Of the Firms of
                            Jones, Caesar, Dickinson, Wilmot & Company,
                            Certified Public Accountants, and Price,
                            Waterhouse & Company, Chartered Accountants.

                          Of the Firm of
                            Lybrand, Ross Bros. & Montgomery, Certified
                            Public Accountants.

 F. H. MACPHERSON, C. A., C. P. A.
                          Of the Firm of F. H.
                            Macpherson & Co., Certified Public
                            Accountants.

 CHAS. A. SWEETLAND
                          Consulting Public
                            Accountant.

                          Author of "Loose-Leaf
                            Bookkeeping," and "Anti-Confusion Business
                            Methods."

 E. C. LANDIS
                          Of the System
                            Department, Burroughs Adding Machine
                            Company.

                          _Editor-in-Chief_,
                            Textbook Department, American School of
                            Correspondence.

 CECIL B. SMEETON, F. I. A.
                          Public Accountant and
                            Auditor.

                          President,
                            Incorporated Accountants' Society of
                            Illinois.

                          Fellow, Institute of
                            Accounts, New York.

 JOHN A. CHAMBERLAIN, A. B., LL. B.
                          Of the Cleveland Bar.

                          Lecturer on
                            Suretyship, Western Reserve Law School.

                          Author of "Principles
                            of Business Law."

 HUGH WRIGHT
                          Auditor, Westlake
                            Construction Company.

 GLENN M. HOBBS, Ph. D.
                          Secretary, American
                            School of Correspondence.

 JESSIE M. SHEPHERD, A. B.
                          Associate Editor,
                            Textbook Department, American School of
                            Correspondence.

 GEORGE C. RUSSELL
                          Systematizer.

                          Formerly Manager,
                            System Department, Elliott-Fisher Company.

 OSCAR E. PERRIGO, M. E.
                          Specialist in
                            Industrial Organization.

                          Author of
                            "Machine-Shop Economics and Systems," etc.

 DARWIN S. HATCH, B. S.
                          Assistant Editor,
                            Textbook Department, American School of
                            Correspondence.

 CHAS. E. HATHAWAY
                          Cost Expert.

                          Chief Accountant,
                            Fore River Shipbuilding Co.

 CHAS. WILBUR LEIGH, B. S.
                          Associate Professor
                            of Mathematics, Armour Institute of
                            Technology.

 L. W. LEWIS
                          Advertising Manager,
                            The McCaskey Register Co.

 MARTIN W. RUSSELL
                          Registrar and
                            Treasurer, American School of
                            Correspondence.

 HALBERT P. GILLETTE, C. E.
                          Managing Editor,
                            _Engineering-Contracting_.

                          Author of "Handbook
                            of Cost Data for Contractors and Engineers."

 R. T. MILLER, JR., A. M., LL. B.
                          President, American
                            School of Correspondence.

 WILLIAM SCHUTTE
                          Manager of
                            Advertising, National Cash Register Co.

 E. ST. ELMO LEWIS
                          Advertising Manager,
                            Burroughs Adding Machine Company.

                          Author of "The Credit
                            Man and His Work" and "Financial
                            Advertising."

 RICHARD T. DANA
                          Consulting Engineer.

                          Chief Engineer,
                            Construction Service Co.

 P. H. BOGARDUS
                          Publicity Manager,
                            American School of Correspondence.

 WILLIAM G. NICHOLS
                          General Manufacturing
                            Agent for the China Mfg. Co., The Webster
                            Mfg. Co., and the Pembroke Mills.

                          Author of "Cost
                            Finding" and "Cotton Mills."

 C. H. HUNTER
                          Advertising Manager,
                            Elliott-Fisher Co.

 FRANK C. MORSE
                          Filing Expert.

                          Secretary,
                            Browne-Morse Co.

 H. E. K'BERG
                          Expert on Loose-Leaf
                            Systems.

                          Formerly Manager,
                            Business Systems Department, Burroughs
                            Adding Machine Co.

 EDWARD B. WAITE
                          Head, Instruction
                            Department, American School of
                            Correspondence.




                         Authorities Consulted


The editors have freely consulted the standard technical and business
literature of America and Europe in the preparation of these volumes.
They desire to express their indebtedness, particularly, to the
following eminent authorities, whose well-known treatises should be in
the library of everyone interested in modern business methods.

Grateful acknowledgment is made also of the valuable service rendered by
the many manufacturers and specialists in office and factory methods,
whose coöperation has made it possible to include in these volumes
suitable illustrations of the latest equipment for office use; as well
as those financial, mercantile, and manufacturing concerns who have
supplied illustrations of offices, factories, shops, and buildings,
typical of the commercial and industrial life of America.

 JOSEPH HARDCASTLE, C. P. A.
                          Formerly Professor of
                            Principles and Practice of Accounts, School
                            of Commerce, Accounts, and Finance, New York
                            University.

                          Author of "Accounts
                            of Executors and Testamentary Trustees."

 HORACE LUCIAN ARNOLD
                          Specialist in Factory
                            Organization and Accounting.

                          Author of "The
                            Complete Cost Keeper," and "Factory Manager
                            and Accountant."

 JOHN F. J. MULHALL, P. A.
                          Specialist in
                            Corporation Accounts.

                          Author of "Quasi
                            Public Corporation Accounting and
                            Management."

 SHERWIN CODY
                          Advertising and Sales
                            Specialist.

                          Author of "How to Do
                            Business by Letter," and "Art of Writing and
                            Speaking the English Language."

 FREDERICK TIPSON, C. P. A.
                          Author of "Theory of
                            Accounts."

 CHARLES BUXTON GOING
                          Managing Editor of
                            _The Engineering Magazine_.

                          Associate in
                            Mechanical Engineering, Columbia University.

                          Corresponding Member,
                            Canadian Mining Institute.

 F. E. WEBNER
                          Public Accountant.

                          Specialist in Factory
                            Accounting.

                          Contributor to The
                            Engineering Press.

 AMOS K. FISKE
                          Associate Editor of
                            the _New York Journal of Commerce_.

                          Author of "The Modern
                            Bank."

 JOSEPH FRENCH JOHNSON
                          Dean of the New York
                            University School of Commerce, Accounts, and
                            Finance.

                          Editor, _The Journal
                            of Accountancy_.

                          Author of "Money,
                            Exchange, and Banking."

 M. U. OVERLAND
                          Of the New York Bar.

                          Author of "Classified
                            Corporation Laws of All the States."

 THOMAS CONYNGTON
                          Of the New York Bar.

                          Author of "Corporate
                            Management," "Corporate Organization," "The
                            Modern Corporation," and "Partnership
                            Relations."

 THEOPHILUS PARSONS, LL. D.
                          Author of "The Laws
                            of Business."

 E. ST. ELMO LEWIS
                          Advertising Manager,
                            Burroughs Adding Machine Company.

                          Formerly Manager of
                            Publicity, National Cash Register Co.

                          Author of "The Credit
                            Man and His Work," and "Financial
                            Advertising."

 T. E. YOUNG, B. A., F. R. A. S.
                          Ex-President of the
                            Institute of Actuaries.

                          Member of the Actuary
                            Society of America.

                          Author of
                            "Insurance."

 LAWRENCE R. DICKSEE, F. C. A.
                          Professor of
                            Accounting at the University of Birmingham.

                          Author of "Advanced
                            Accounting," "Auditing," "Bookkeeping for
                            Company Secretary," etc.

 FRANCIS W. PIXLEY
                          Author of "Auditors,
                            Their Duties and Responsibilities," and
                            "Accountancy."

 CHARLES U. CARPENTER
                          General Manager, The
                            Herring-Hall-Marvin Safe Co.

                          Formerly General
                            Manager, National Cash Register Co.

                          Author of "Profit
                            Making Management."

 C. E. KNOEPPEL
                          Specialist in Cost
                            Analysis and Factory Betterment.

                          Author of "Systematic
                            Foundry Operation and Foundry Costing,"
                            "Maximum Production through Organization and
                            Supervision," and other papers.

 HARRINGTON EMERSON, M. A.
                          Consulting Engineer.

                          Director of
                            Organization and Betterment Work on the
                            Santa Fe System.

                          Originator of the
                            Emerson Efficiency System.

                          Author of "Efficiency
                            as a Basis for Operation and Wages."

 ELMER H. BEACH
                          Specialist in
                            Accounting Methods.

                          Editor, _Beach's
                            Magazine of Business_.

                          Founder of The
                            Bookkeeper.

                          Editor of _The
                            American Business and Accounting
                            Encyclopedia_.

 J. J. RAHILL, C. P. A.
                          Member, California
                            Society of Public Accountants.

                          Author of
                            "Corporation Accounting and Corporation
                            Law."

 FRANK BROOKER, C. P. A.
                          Ex-New York State
                            Examiner of Certified Public Accountants.

                          Ex-President,
                            American Association of Public Accountants.

                          Author of "American
                            Accountants' Manual."

 CLINTON E. WOODS, M. E.
                          Specialist in
                            Industrial Organization.

                          Formerly Comptroller,
                            Sears, Roebuck & Co.

                          Author of "Organizing
                            a Factory," and "Woods' Reports."

 CHARLES E. SPRAGUE, C. P. A.
                          President of the
                            Union Dime Savings Bank, New York.

                          Author of "The
                            Accountancy of Investment," "Extended Bond
                            Tables," and "Problems and Studies in the
                            Accountancy of Investment."

 CHARLES WALDO HASKINS, C. P. A., L. H. M.
                          Author of "Business
                            Education and Accountancy."

 JOHN J. CRAWFORD
                          Author of "Bank
                            Directors, Their Powers, Duties, and
                            Liabilities."

 DR. F. A. CLEVELAND
                          Of the Wharton School
                            of Finance, University of Pennsylvania.

                          Author of "Funds and
                            Their Uses."

[Illustration:

  GENERAL SALES OFFICES, SWIFT & CO., CHICAGO, ILL.
]




                                Foreword


With the unprecedented increase in our commercial activities has come a
demand for better business methods. Methods which were adequate for the
business of a less active commercial era, have given way to systems and
labor-saving ideas in keeping with the financial and industrial progress
of the world.

¶ Out of this progress has risen a new literature—the literature of
business. But with the rapid advancement in the science of business, its
literature can scarcely be said to have kept pace, at least, not to the
same extent as in other sciences and professions. Much excellent
material dealing with special phases of business activity has been
prepared, but this is so scattered that the student desiring to acquire
a comprehensive business library has found himself confronted by serious
difficulties. He has been obliged, to a great extent, to make his
selections blindly, resulting in many duplications of material without
securing needed information on important phases of the subject.

¶ In the belief that a demand exists for a library which shall embrace
the best practice in all branches of business—from buying to selling,
from simple bookkeeping to the administration of the financial affairs
of a great corporation—these volumes have been prepared. Prepared
primarily for use as instruction books for the American School of
Correspondence, the material from which the Cyclopedia has been compiled
embraces the latest ideas with explanations of the most approved methods
of modern business.

¶ Editors and writers have been selected because of their familiarity
with, and experience in handling various subjects pertaining to
Commerce, Accountancy, and Business Administration. Writers with
practical business experience have received preference over those with
theoretical training; practicability has been considered of greater
importance than literary excellence.

¶ In addition to covering the entire general field of business, this
Cyclopedia contains much specialized information not heretofore
published in any form. This specialization is particularly apparent in
those sections which treat of accounting and methods of management for
Department Stores, Contractors, Publishers and Printers, Insurance, and
Real Estate. The value of this information will be recognized by every
student of business.

¶ The principal value which is claimed for this Cyclopedia is as a
reference work, but, comprising as it does the material used by the
School in its correspondence courses, it is offered with the confident
expectation that it will prove of great value to the trained man who
desires to become conversant with phases of business practice with which
he is unfamiliar, and to those holding advanced clerical and managerial
positions.

¶ In conclusion, grateful acknowledgment is made to authors and
collaborators, to whose hearty coöperation the excellence of this work
is due.




                           Table of Contents

                                VOLUME V


 WHOLESALE, COMMISSION, AND STORAGE _By James B. Griffith_[1] Page [2]11
 ACCOUNTS

 Wholesale Business—Controlling Accounts—Sample Transactions—
 Order and Sales Record—Abstract of Sales—Sales Expense—Trial
 Balance Book—Commission and Brokerage Business—Merchandise
 Broker—Manufacturer's Agent—Shipments—Agents' or Factors'
 Account—Principal's Account—Commission Account—Produce
 Shipper's Books—Commission Merchants' Books—Consignment
 Ledger Account—Storage Accounts—Special Records

 SINGLE ENTRY BOOKKEEPING              _By James B. Griffith_    Page 91

 Distinctive Features—Books Used—Debit and Credit—Posting—
 Proprietor's Account—Proving Work—Model Set—Determining
 Profit—Closing Books—Changing to Double Entry—Trial Balances
 and Comparative Statements—Comparative Statements—Proof
 without Trial Balance—Book Inventories—Demonstration of
 Proof—Reverse or Slip Posting—Special Accounting Forms—Cash
 Books—Cash Journals—Tabular Sales Books—Pay-Roll Records

 TRUSTEES' AND EXECUTORS' ACCOUNTS     _By James B. Griffith_   Page 163

 Executors' Accounting—Inventory—Intermediate Account—Final
 Account—Schedules—Form of Account—Sample Accounts—Accounts
 with Trust Provisions—Exercise—Realization and Liquidation
 Account—Statement of Affairs—Resources and Liabilities—
 Balance Sheet—Affairs of a Bankrupt—Appraiser—Statement of
 Affairs—Deficiency of Account

 STOCK BROKERS' ACCOUNTS              _By Chas. A. Sweetland_   Page 195

 Grain Purchases—Bulls and Bears—Broker's Commission—
 Securities—Transfers—Clearing House—Ring Settlement—
 Commodities Handled—Cornering Market—Value of Wire—
 Settlement of Contracts by Offset—Adjustment of Balances or
 Settlement—Commission Allowed Brokers—Books and Forms Used—
 Glossary of Board of Trade Terms

 BILLING AND ORDER RECORDING             _By Geo. C. Russell_   Page 235

 European Methods—Machines for Manifolding—Development of
 Billing Machines—Loose-Leaf Sales Sheets and Invoices—
 Duplicate Invoices—Condensed Billing—Traffic Department
 Records—Analysis of Quantities and Amounts—Unit Billing—Back
 Orders—Split Orders—Loose-Leaf Sheets—Binders—Designing
 Stationery—Styles of Type—Carbon Papers—Blinds—How to Handle
 Orders on Billing Machine—Invoices in Blanket Form—
 Tabulators—Computing Machines in Billing—The Colored Sheet
 System—Compound Forms—Retail Dry Goods Billing—Devices of
 the Future

 REVIEW QUESTIONS                                               Page 303

 INDEX                                                          Page 319

Footnote 1:

  For professional standing of authors, see list of Authors and
  Collaborators at front of volume.

Footnote 2:

  For page numbers, see foot of pages.

[Illustration:

  OFFICE, FARWELL, OZMUN, KIRK & CO. (WHOLESALE HARDWARE), ST. PAUL,
    MINN.
]




              WHOLESALE, COMMISSION, AND STORAGE ACCOUNTS


                           WHOLESALE BUSINESS

In this section complete methods of bookkeeping as practiced in
wholesale houses are demonstrated. Numerous modern methods that are
readily adaptable to other lines of business are illustrated and
explained in detail.


                          DIVIDING THE LEDGER

=1.= There are many advantages in dividing the ledger into sections. The
subdivisions most commonly used are purchase ledger, sales ledger, and
general ledger. Such divisions greatly facilitate posting and reduce the
chances of error. While it is advisable in most cases to use a separate
book for each division, the three ledgers may be combined in one book by
setting aside a section for each. This practice is not recommended
except where the number of accounts is small, when general and purchase
ledgers or purchase and sales ledgers may be combined. The division of
the ledger into three sections does not necessitate radical changes,
either in form or method of handling, in the other books.

=2. Purchase Ledger.= The purchase ledger contains only accounts with
those from whom we are making purchases. The balances of the accounts in
this ledger will be on the credit side and represent a liability. The
total balance of the purchase ledger is the amount we owe on open
accounts. If, for example, our purchases on account during a stated
period amount to $964.50, and the amount paid on account by us is
$320.30, we still owe $644.20. If the work is correct the combined
balances of all open accounts in the purchase ledger will exactly equal
this amount.

=3. Sales Ledger.= The sales ledger contains only accounts with
customers to whom goods are sold on account. The balances of the
accounts in the sales ledger will be on the debit side and represent an
asset. The total balance of the sales ledger is the amount that our
customers owe us on open accounts. Suppose that a business is started
with no open accounts receivable—during a stated period the sales on
account amount to $1,427.75, and the total payments received on account
are $965.50—the amount still outstanding is $462.25, and this amount
should exactly equal the combined balances of all the open accounts in
the sales ledger.

The sales ledger is sometimes subdivided into two or more parts. The
divisions may be City and Country or they may be according to the
letters of the alphabet—as A-K, L-Z, etc.

=4. Accounts in Both Ledgers.= Occasionally one from whom we are
purchasing goods will also be a customer. For reasons which will appear
later, accounts should, in these cases, be opened in both the purchase
ledger and the sales ledger. When settlement of such an account is made,
the necessary adjusting entries are made through the journal.

=5. General Ledger.= The general ledger contains the investment accounts
of the proprietor or partners, and all real, representative, and nominal
accounts. Accounts with the purchase and sales ledgers are also kept in
this ledger. These are _controlling accounts_ which represent at all
times the total balances of the purchase and sales ledgers.

When statements of the other ledgers have been made and proved correct,
a trial balance of the general ledger is made.


                          CONTROLLING ACCOUNTS

=6.= A controlling account is one which exhibits a summary of all of the
accounts in a ledger, or of all accounts of the same class.

The sales account, with which the student has been made acquainted,
exhibits net sales, while a _sales controlling account_ exhibits a
summary of all accounts in the sales ledger. The _debits_ to the sales
controlling account represent the total debits to customers' accounts as
shown by the sales book or the journal. The _credits_ to the sales
controlling account represent the total credits to customers as shown by
the cash book and the journal. This account is variously styled Sales
Ledger Account, Accounts Receivable Account, or Sales Controlling
Account.

A _purchase controlling account_ exhibits a summary of all accounts in
the purchase ledger. It is called a Purchase Ledger Account, Accounts
Payable Account, or Purchase Controlling Account.

These controlling accounts are kept in the general ledger and show at
all times the totals of accounts receivable and accounts payable,
without the necessity of listing the individual balances. At the end of
the month statements of the balances of the accounts in purchase and
sales ledgers are made, and the totals of these balances must agree with
the balances of the controlling accounts.

The operation of these controlling accounts demonstrates one of the most
apparent advantages of the division of the ledger. If an error is made
in posting to an account in the sales ledger it is discovered as soon as
the statement of the sales ledger is made, and can be located without
referring to purchase or general ledger accounts. Without the ledger
division and the use of controlling accounts, there would be nothing to
assist in locating an error in the trial balance in any particular
section of the ledger.


                              ORDER BLANKS

=7.= In a wholesale business it is customary to have all orders entered
on specially ruled order blanks of a uniform size. These orders are
filed in a binder designed for the purpose, which takes the place of the
old style order book.

These order blanks are furnished to salesmen who send in their orders on
them. When an order is received direct from the customer it, also, is
transcribed on one of these blanks so that all order records will be
uniform. One very appreciable advantage in the use of this loose sheet
system of order blanks is that all unfilled orders are kept in a binder
by themselves.

=8. Filling Orders.= Each day the orders to be filled should be placed
in a temporary binder or holder and sent to the warehouse. The packer
will check quantities shipped and return the order, together with the
shipping receipt from the railroad or express company, to the
bookkeeping department.

The amounts are extended, and the invoice is made out from this order
blank. The sale is next recorded in the sales book. Instead of entering
each item in the sales book the totals for each department are entered
in the proper column. Each sale is numbered in the sales book as
illustrated and the same number is placed on the order. These orders are
then filed in the binder for filled orders in exact numerical order,
which brings them also in the order of the dates of shipment.

[Illustration:

  Order Blank
]


                               SALES BOOK

=9.= The sales book used in this set exhibits some features not
heretofore shown. At the right are three columns for the distribution of
sales. At the left, in addition to columns for number, date, and folio,
are two columns headed cash and sales ledger. All cash sales are entered
in the cash column, and all sales on account are entered in the sales
ledger column. At the end of the week or month the total of the sales
ledger column is posted to the debit of the _sales ledger account_ in
the general ledger, while the totals of the sales columns at the right
are posted to the credit of the _sales account_ in the general ledger.


                            INVOICE REGISTER

=10.= A form of purchase book, which also combines an invoice register,
is shown in this set. Unlike the forms of purchase book with which the
student has been made familiar, this invoice register gives full
particulars as to terms, discount, when due, and when and how paid.

The combined footings of the two department columns must of course agree
with the footing of the amount column. At the end of the month the total
of the amount column is posted to the credit of _purchase ledger
account_ in the general ledger, and the totals of the department columns
are posted to the debit of the _purchase account_ in the general ledger.

The details of payment are kept in the invoice register as a memorandum
only. This provides a convenient record of unpaid invoices, showing when
each is due.


                               CASH BOOK

=11.= In this set we introduce a columnar cash book which also serves as
a journal for cash transaction and is known as a cash journal. The
principal advantage of a columnar book lies in the opportunity to
introduce columns with special headings for accounts to which entries
are frequent. Not only does this permit of carrying footings to the end
of the month with one posting to the ledger account, but it provides a
convenient classification of receipts and expenditures with a complete
segregation of items of a given class.

In the form illustrated, columns are provided on the debit side for
cash, purchase ledger (subdivided for discount and amount), bank
deposits, and sundries; on the credit side, cash, sales ledger
(subdivided for discount and amount), cash sales, bank withdrawals, and
sundries. At first glance it might appear that this form is a departure
from the regular form of cash book, but it should be remembered that the
cash columns are the only ones having anything to do with the cash
account. A cash receipt is entered in the cash debit column, but the
amount is credited to its source through the proper credit column; thus
a payment received on account is debited to cash and credited through
the sales ledger column. A deposit is credited to cash and debited to
bank deposits; the payment of a purchase ledger account by check is
credited to bank withdrawals, and debited to purchase ledger account.

The discount columns are memorandum columns only, the net cash being
entered in the amount columns under purchase and sales ledger. These
columns are included that the total payment may be posted to personal
accounts in purchase or sales ledger. The totals of these columns are to
be posted to discount and interest columns at the end of the month.

The total amount to be posted to the debit of the purchase ledger
account and to the credit of sales ledger account is made up of the
totals of the discount and amount columns.

The sundries columns are provided for all entries for which there are no
special columns and are used principally for transactions affecting
general ledger accounts. These columns are sometimes used for ordinary
journal entries not involving an exchange of cash, but their use for
this purpose is strongly advised against. The cash book should be used
exclusively for recording cash transactions. When columnar purchase,
sales, and cash books are used, the journal is only needed for adjusting
and closing entries, and for this purpose it is best to provide an
ordinary two-column journal.


                     SUBDIVISION OF EXPENSE ACCOUNT

=12.= In every business there are several classes of expense and it is
very useful to know the exact amount of each class. When all expenses
are charged under one head, it is impossible to determine without
considerable checking, whether or not any particular class of expense is
more than it should be. It is customary, therefore, to subdivide expense
and to open accounts in the ledger for different classes of expense.
Some subdivisions in common use are rent (paid), insurance, taxes,
interest and discount, in freight, out freight, salaries, labor, fuel,
office supplies, telegraph and telephone, postage, general expense, etc.
The exact subdivisions used must of necessity be governed by the nature
of the business. For instance, the item of telegraph and telephone
charges may be of importance in one business, while in another, the
number of such charges would be so small that a separate account is not
warranted.


                           PETTY CASH VOUCHER

=13.= A form of envelope voucher for petty cash is illustrated. A strong
manilla envelope in what is known as size #10 takes the place of the
petty cash book. It is ruled for a record of payments, and a receipt for
each payment is placed in the envelope. At the bottom is a space for a
distribution of the amounts to the proper accounts. When the petty cash
fund is depleted—or at stated intervals—a check is drawn for the amount
expended and it is charged through the cash book, leaving petty cash
intact. The amount of the petty cash fund is considered as cash on hand,
and the voucher envelope accounts for any part of the fund not actually
in the cash drawer. Petty cash should be used sparingly, as it is
intended only for small expense items when it is inconvenient to give a
check. When the books are closed, the petty cash expenditures may be
charged through the cash book as cash payments, instead of drawing a
check.

[Illustration:

  Petty Cash Voucher
]


                      TREATMENT OF PROTESTED PAPER

=14.= When a note, draft, or check is protested, the bank will charge us
with the protest fee in addition to the face of the paper. The total
amount must then be charged to the one from whom the paper was received.
Suppose the check of Jones & Laughlin for $100.00 goes to protest and is
returned to us with a protest fee of $2.50—the entry will be:

            Jones & Laughlin                 $102.50
              Bank                                   $102.50
            Check No. 16 given to First Nat.
            Bank to cover J. & L. check for
            $100.00, protest fee $2.50.


                          SAMPLE TRANSACTIONS

=15.= D. A. Hall is engaged in the business of a wholesale dealer in
men's and boys' clothing. On Feb. 1st. his balance sheet is as follows:

                     Balance Sheet, Feb. 1st, 1909.
                                 Assets
 Cash
   In Bank                                $1,765.20
   In Office                                 125.00
                                           --------
   Total Cash                                       $1,890.20

 Accounts and Bills Receivable
   Bills Receivable                          850.00
     Henry James, Due
       Feb. 5                      350.00
     David Traver & Co., Due
       Feb. 15                     500.00
   Accounts Receivable                     1,124.00
     Frank Weitz                   234.00
     John Gorham                   150.00
     George Golden                 300.00
     Clayton & Co.                 275.00
     Henry Ames                    165.00
                                 --------  --------
   Total Accounts and Bills Rec.                     1,974.00

 Inventory
   Men's clothing                         $2,240.00
   Boys'    "                              1,200.00
                                           --------
       Total Inventory                              $3,440.00
                                                     --------
       Total Assets                                           $7,304.20

                              Liabilities
 Accounts and Bills Payable
   Bills Payable                             650.00
     Henry Weir & Co., Due
       Feb. 7                      450.00
     A. Stein & Co., Due
       March 1                     200.00
                                 --------
   Accounts Payable                          675.00
                                           --------
     D. Meyer & Bro.               150.00
     Altman & Sons                 350.00
     Garson & Co.                  175.00
                                 --------
       Total Accounts and Bills
           Payable                                   1,325.00
         Total Liabilities                                     1,325.00
                                                               --------
       Present Worth                                           5,979.20

The following transactions are entered on the books:

                              —Feb. 1st—
         Sold to D. A. Marcus & Son
           10 overcoats                  7.50    75.00
           10 men's suits                6.75    67.50  142.50
                                              --------
                                 —1st—
         Sold to H. A. Branch
           15 boys' suits                3.50    52.50

                                 —1st—
         Rec'd from Geo. Golden
           Cash on account                      150.00

                                 —2nd—
         Deposited in 1st Nat. Bank             150.00

                                 —2nd—
         Sold to John Gorham
           10 men's suits                7.00    70.00
           10 men's suits                6.50    65.00 $135.00
                                              --------
                                 —2nd—
         Sold to Larson & Anderson
           5 boys' suits                 2.75    13.75
           10 men's suits                6.50    65.00   78.75
                                              --------
                                 —2nd—
         Sold for cash
           Men's clothing                        37.50

                                 —3rd—
         Sold to Tallman & Co.
           15 men's overcoats            7.25   108.75

                                 —3rd—
         Paid 1 month's rent, Ck.
           No. 1                                 75.00

                                 —3rd—
         Received from John Gorham
           Cash on account                      150.00

                                 —4th—
         Bought from Carson & Scott
           36 men's corduroy coats       3.00   108.00
           12 men's corduroy coats       3.50    42.00  150.00
           Terms 2/10, 1/30, n/60             --------

                                 —4th—
           Deposited in 1st Nat. Bank           187.50

                                 —4th—
         Sold to Harris & Rogers
           12 men's corduroy coats       3.75    45.00
           5 overcoats                   8.00    40.00   85.00

                                 —4th—
         Received from Frank Weitz
           Note at 30 days, 6%                  234.00

                                 —5th—
         Sent to D. Meyer & Bro. Ck.
           No. 2                               $150.00

                                 —5th—
         Received from Henry James
           Cash to apply on note                200.00
           Cash for interest                      1.75 $201.75
           New note 30 days, 6%               --------  150.00

                                 —5th—
         Bought from Adler & Co.
           50 men's suits                6.25   312.50
           Terms 3/10, 1/30, n/60

                                 —5th—
         Paid salesman's salary Ck.
           No. 3                                 25.00

                                 —5th—
         Drew for personal use Ck.
           No. 4                                 50.00

                                 —7th—
         Sold to Henry Ames
           20 men's suits                7.50   150.00
           10 boy's suits                2.75    27.50  177.50
                                              --------
                                 —7th—
         Sold to Ackley & Son
           10 boy's overcoats            3.00    30.00
           10 boy's suits                2.75    27.50   57.50
                                              --------
                                 —7th—
         Received from Clayton & Co.
           Check to apply on acct.              200.00

                                 —7th—
         Deposited in 1st Nat. Bank             401.75

                                 —7th—
         Paid our note to H. Weir & Co.
           Check No. 5                          450.00

                                 —8th—
         Sold to H. J. Andrews
            10 men's overcoats           8.00    80.00
            12 men's corduroy coats      4.50    54.00 $134.00
                                              --------
                                 —8th—
         Paid express on shipment from
            Carson & Scott, Ck. No. 6              .90

                                 —8th—
         Received from Henry Ames
           Cash on account                      165.00

                                 —8th—
         Sold for cash
           1 job lot boy's clothing              87.50

                                 —9th—
         Deposited in 1st Nat. Bank             252.50

                                 —9th—
         Received from bank, check of
           Clayton & Co., protested
             for non-payment.
           Amount of check                      200.00
           Protest fees                           2.50

                                —10th—
         Sold to Harris & Landis
           10 men's overcoats            7.75    77.50

                                —10th—
         Sold to Frank Weitz
           12 men's corduroy coats       3.75    45.00

                                —10th—
         Paid Carson & Scott
           Check No. 7                          147.00
           Discount 2%                            3.00

                                —10th—
           Paid electric light bill
           Check No. 8                            3.75

                                —10th—
         Received from Clayton & Co.
           Cash to redeem protested
             check                             $202.50

                                —10th—
         Inventory at close of business,
             Feb. 10
           Men's clothing                     1,898.75
           Boy's clothing                     1,247.75

Journal entries are to be made to get the accounts, as shown on Feb.
1st, recorded on the books. The transactions are properly entered in
journal, cash book, sales book, and invoice register, and posted to
ledger. The accounts in the general ledger are closed into trading, and
profit and loss—the net profit is credited to proprietor's account—a
trial balance is taken after the ledger is closed, and a balance sheet
is made. Statements are prepared from sales and purchase ledgers, which
agree with the balances of their controlling accounts. All accounts in
the general ledger are properly ruled and balances carried forward.

[Illustration:

  Opening Entry in Journal
]

[Illustration:

  Adjusting Journal Entries
]

[Illustration:

  Sales Book and Invoice Register
]

[Illustration:

  SCENE IN SOUTH WATER STREET, WHERE THE COMMISSION HOUSES OF CHICAGO'S
    GREAT PRODUCE MARKETS ARE LOCATED
]

[Illustration:

  Columnar Cash Journal
]

[Illustration:

  Columnar Cash Journal
]

[Illustration:

  Sales Ledger
]

[Illustration:

  Sales Ledger
]

[Illustration:

  Sales and Purchase Ledgers
]

[Illustration:

  Purchase and General Ledgers
]

[Illustration:

  General Ledger
]

[Illustration:

  General Ledger
]

[Illustration:

  General Ledger
]

[Illustration:

  Statement of Sales and Purchase Ledger
]

[Illustration:

  Balance Sheet and Trial Balance of General Ledger
]


                               EXERCISES

=16.= The following transactions are recorded on the books of Parker and
Hoadley, Omaha, Neb., wholesale dealers in tea and coffee. In recording
these transactions use is made of the books and forms illustrated in
this section.

                           January 2nd, 1909

  A partnership is formed on this date between K. J. Parker and D. C.
  Hoadley for the purpose of conducting a wholesale tea and coffee
  business, in the name of Parker & Hoadley, the principal place of
  business to be Omaha, Neb. Parker invests $3,000.00 cash. Hoadley
  invests $2,000.00 cash. It is agreed that profits are to be shared
  on the basis of capital invested, capital to draw interest at 6%,
  and interest at 6% to be paid on withdrawals. The books are to be
  closed monthly and the profits divided between the partners. Hoadley
  is to assume the entire responsibility for the conduct and
  management of the business, for which he is to receive a salary of
  $150.00 per month, payable in installments of $75.00 on the 15th and
  31st of each month.

      Deposited in Western National Bank $5,000.00.

      Withdrew from bank, Ck. No. 1 petty cash $25.00.

      Bought from Leggitt & Co., New York, 30 chests Japan tea, 1,455#
  at .37½, 20 chests Oolong tea, 972# at .40; terms net 30, 2/10, f.
  o. b. N. Y.

      Bought from Laughlin & Co., Chicago, 20 sacks Rio coffee, 1,020#
  at .22½, 20 sacks Java coffee, 985# at .25; 20 sacks Mocha coffee,
  970# at .25; terms net 30, 2/10, f. o. b. Omaha.

      Paid rent of store 1 month to James Roberts, Ck. No. 2, $60.00.

                                 —3rd—

      Sold to Ames & Johnson, 92 12th St., on account, 3 chests Japan
  tea, 149# at .48; sack Rio coffee, 50# at .28; 1 sack Java coffee,
  52# at .32.

      Sold to Landis & Snow, So. Omaha, on account, 2 chests Oolong
  tea, 101# at .52; 1 sack Mocha coffee, 47# at .32; 2 sacks Rio
  coffee, 98# at .28.

      Sold to J. C. Peters & Son, 267 Roberts St., 3 chests Oolong
  tea, 146# at .52, 5 sacks Rio coffee, 252# at .48.

    Bought for cash from Harris & Co., 1 office desk and chair $45.00,
  gave Ck. No. 3 in payment.

                                 —4th—

      Paid freight on coffee from New York by Ck. No. 4, 12.93.

      Sold to Wright & Noble, 146 7th St., 2 sacks Java coffee, 99# at
  .32; 2 sacks Mocha coffee, 101# at .32.

      Sold to Horgis & Co., 84 Jackson St., 5 chests Japan tea, 248#
  at .48.

      Sold to Winters & James, 92 Hastings St., 4 chests Japan tea,
  201# at .48; 3 chests Oolong tea, 138# at .52; 2 sacks Java coffee,
  97# at .32.

      Sold for cash 1 sack Rio coffee, 47# at .28; 1 chest Japan tea,
  45# at .48.

                                 —5th—

      Sold to Cobb & Willet, 892 Park Av., 2 chests Japan tea, 92# at
  .48; 1 chest Oolong tea, 47# at .52; 1 sack Rio coffee, 44# at .28;
  1 sack Java coffee, 45# at .32; 1 sack Mocha coffee, 43# at .32.

      Sold to Young & Criger, 62 Watson St., 5 sacks Mocha coffee,
  205# at .32; 3 chests Oolong tea, 127# at .52.

      Bought from Japan Importing Co., San Francisco, 60 chests Japan
  tea, 2,700# at .36, f. o. b. Omaha, net cash; gave our note at 10
  days without interest in payment.

      Paid account of Leggitt & Co., less 2% discount, Ck. No. 5.

                                 —6th—

      Ames & Johnson paid their account, less 2% cash discount.

      Deposited cash received to date.

      Sold to Wade & Francis, 92 Bluff St., 10 chests Japan tea, 448#
  at .48.

      Paid for telegram—petty cash—.40.

      Received check from Landis & Snow in full settlement of their
  account.

      Sold to J. C. Peters & Son, 5 sacks Java coffee, 231# at .32.

      Sold for cash 3 sacks Rio coffee, 127# at .28; 2 sacks Mocha
  coffee, 89# at .32; 3 sacks Japan tea, 131# at .48.

                                 —8th—

      Deposited cash on hand, also check of Landis & Snow.

      Sold to Ames & Johnson, 2 sacks Mocha coffee, 91# at .32; 2
  chests Oolong tea, 87# at .52.

      Sold to Wright & Noble, 3 chests Japan tea, 129# at .48; 1 chest
  Oolong tea, 42# at .52.

      Paid for fuel by check No. 6 to Rogers Coal Co., 12.00.

      Paid clerk's salary, check No. 7, 10.00.

      Paid for labor, check No. 8, 16.50.

                                 —9th—

      Sold to Watkins & Fish, 64 Prairie Av., 5 chests Oolong tea,
  207# at .52.

      Bought from Western Grocer Co., Chicago, 50 chests Oolong tea,
  418# at .39; 20 sacks Rio coffee, 876# at .22¼; 10 sacks Java
  coffee, 434# at .25; 15 sacks Mocha coffee, 653# at .25; terms 30
  days net, 2/10, f. o. b. Omaha.

      Received from Wright & Noble cash in payment of our bill of Jan.
  4th, less 2% cash discount.

                                 —10th—

      Received from bank, check of Landis & Snow protested for
  non-payment, protest fees added 1.90.

      Sent Laughlin & Co. our check No. 9 in payment of account

                                 —11th—

      Sold to Raymond H. Moss, 182 Spring St., 5 chests Japan tea,
  217# at .48; 5 sacks Rio coffee, 214# at .28.

      Sold to Watkins & Fish, 10 sacks Mocha coffee, 424# at .32.

      Cobb & Willet paid their account in full, deducting 2% for cash.

                                 —12th—

      Deposited cash on hand.

      Sold to Cobb & Willet, 5 chests Japan tea, 213# at .48.

      Sold for cash, 2 sacks Rio coffee, 88# at .28.

                                 —13th—

      Paid our note to Japan Importing Co., check No. 10.

      Paid sundry office expenses from petty cash 3.60.

      Sold to Wade & Francis 3 sacks Rio coffee, 123# at .28; 2 sacks
  Mocha coffee, 86# at .32.

      Paid clerk's salary, ck. No. 11, 10.00.

      Paid for labor, ck. No. 12, 16.50.

                                 —15th—

      Paid ½ month's salary to D. C. Hoadley, ck. No. 13, 75.00.

      1st. Balance cash, first charging petty cash expenditures as a
  cash payment.

      2nd. Post purchase book, sales book, journal, and cash book.

      3rd. Take a trial balance.

      4th. Credit interest to partner's accounts.

      5th. Take an inventory of stock on hand. The records show
  quantities purchased and quantities sold. When the same goods have
  been purchased at different prices, use the last price paid in
  figuring inventory.

      6th. Close accounts into trading and profit and loss accounts.

      7th. Distribute net profits to partners' capital accounts.


                    COMBINED ORDER AND SALES RECORD

=17.= Instead of keeping separate order and sales books, both records
may be combined on one blank. This is accomplished by the use of order
blanks provided with columns for the distribution of sales to the
different departments. Before the order is filled these blanks are
handled in the same manner as those without distribution columns. When
filled, the amounts are extended in the proper columns and the invoice
made. The orders are then filed in a binder, each day's orders being
kept together, and postings made direct to customers' accounts. The
footings are carried forward to the end of the month and totals posted
to sales accounts. The original orders thus become a loose leaf sales
book.


                           ABSTRACT OF SALES

=18.= When the order blank is used as a sales record, making a sales
book with a record of a single sale to a sheet, it is somewhat
inconvenient to determine from the footings the total sales for the day.
This information is of considerable value, as a knowledge of what is
being done from day to day is of importance to the principals of a
business. Such a record is provided for by an abstract of sales on a
separate sheet. This abstract should show total sales for each day, both
cash and on account, divided by departments.

The blank may be made the same size as the order blanks, and filed in
the sales binder at the beginning of the month. Sales are recorded daily
and footings carried forward to the end of the month, when the totals
may be posted direct to the credit of the sales account in the general
ledger. The totals of sales on account will be posted to the debit of
the sales controlling account in the general ledger.


                              OUT FREIGHT

=19.= The proper treatment of freight paid on outgoing shipments is an
important question in accounting. When goods are sold at delivered
prices, the freight paid is one of the items of expense in selling the
goods, and when the books are closed the account will be closed into
profit and loss. However, in a wholesale business, freight is sometimes
paid as an accommodation to the customer when the goods have been sold
at f. o. b. prices. Although the amount should be added to the invoice
it should not be credited to the sales account as this would be taking
credit for a fictitious trading profit. Such an item should be made a
special charge against the customer by means of a journal entry.

                          Customer Dr.
                              Out Freight Cr.

[Illustration:

  Combined Order and Sales Record
]

[Illustration:

  THE GENERAL OFFICES OF THE SAMUEL C. TATUM CO., CINCINNATI, OHIO
]

[Illustration:

  Abstract of Sales by Departments
]


                             SALES EXPENSE

=20.= In a wholesale or manufacturing business it is very desirable that
the exact cost of selling goods be known. Broadly, this cost is covered
under the general head of sales expense, but this is usually divided
into several classes of expenditures. The segregation of the various
items of sales expense is desirable for the purpose of determining the
percentage of each. The items which properly belong in sales expense
depend somewhat on the nature of the business. For example, traveling
expenses are usually a direct sales expense, but in some businesses they
may be chargeable to the cost of purchases. The items entering into
sales expense of the average business are: advertising, salaries of
salesmen, traveling expenses of salesmen, commissions paid on sales,
cost of packing and shipping, out freight.

=21. Advertising.= This account should be charged with all expenditures
for publicity such as newspaper, magazine, street car, and bill board
advertising, cost of printing catalogs, booklets, and circulars. Where
there is any reason for so doing, the cost of the different classes of
advertising can, of course, be kept in separate accounts. The aim and
object of advertising being to increase the sale of goods, it is
properly considered an item of sales expense.

=22. Salaries of Salesmen.= This account is charged with all salaries
paid to salesmen whether traveling or working in the house. Commissions
and bonuses are sometimes included in this account, but it is usually
considered best to keep them in separate accounts.

=23. Traveling Expenses of Salesmen.= This account is charged with all
legitimate traveling expenses of salesmen, the specific items included
depending largely on the nature of the business. For example, in some
businesses a liberal allowance is made for the entertainment of
customers, while in others this item is never allowed. In any business
the traveling expense account requires careful scrutiny. Salesmen should
be required to furnish an itemized statement or voucher of expenses at
stated intervals. For convenience, this should be made on a form
specially provided for the purpose. One of the most convenient and
popular expense vouchers is in the form of a book of a convenient pocket
size, with a page for each day of the week and a summary of the week's
expenses on the last page.

=24. Packing and Shipping.= This account is charged with the entire cost
of packing goods for shipment. It includes such items as wages of
shipping clerk and his assistants, crates, lumber, boxes, and all other
packing materials.


                           TRIAL BALANCE BOOK

[Illustration:

  Traveler's Expense Book
]

=25.= To save rewriting the names of the accounts each month, a trial
balance book can be used to good advantage. These books are made to
accommodate six trial balances on a double page, and are sometimes made
with alternate short leaves so that twelve trial balances may be made
with one writing of the names. When the trial balance book is used, care
must be exercised in providing space for the addition of new accounts in
each section. Where separate sales and purchase ledgers are used, it is
best to provide a trial balance book for each ledger.


                           THE CHECK REGISTER

=26.= Large check books are cumbersome to handle and necessitating the
expenditure of much needless labor. Their use is rapidly giving way in
modern offices to the check register. The check register has several
distinct advantages. It exhibits, in compact form, a record of all
checks issued and can also be arranged to show deposits and balance in
the bank. Distribution columns can be provided with headings for the
different expenditure accounts, which makes of the check register a cash
expenditure book. The form should be varied to suit the business in
which it is to be used. A typical form is illustrated on page 37.

=27. Checks in Pads.= When the check register is used it is the usual
custom to have checks put up in pads. After the check is written, it is
registered and numbered to correspond to the register number. With the
use of padded checks, it is not necessary for the clerk who writes the
check to know anything about the bank balance.

[Illustration:

  Trial Balance Book
]

[Illustration:

  Check Register Combined with Cash Expenditure Book
]

[Illustration:

  Cash Received Book
]

[Illustration:

  Checks in Pads
]


                           CASH RECEIVED BOOK

=28.= A cash book specially ruled for a record of cash received is used
to supplement the check register or cash expenditure book. Columns are
provided for the different classes of receipts, with one credit column.
It is assumed that all cash received is deposited, payments being made
exclusively by check. This does not refer to petty cash expenditures
which should be kept in a petty cash book or on envelope vouchers.


                          SAMPLE TRANSACTIONS

=29.= The following transactions illustrate the use of the special
blanks and books described.

D. A. Hall employs H. D. Snyder as traveling salesman for the purpose of
increasing his business, agreeing to pay him a salary of $150.00 per
month and expenses. He commences work on Feb. 11th. The amounts in the
ledgers stand as shown in the last model set illustrated and these
transactions are recorded:

                              —Feb. 11th.—
          Paid Altman & Sons
            To balance account
            Ck. No. 9                                  $350.00

                                 —11th—
          Paid Garson & Co.
            To balance account
            Ck. No. 10                                  175.00


                                 —11th—
          Sold to Daniels & Dean, Boone, Ia.
            10 men's suits                       $7.50  $75.00
            10 men's suits                        6.75   67.50
            20 boys' suits                        2.00   40.00
                                                        ------
                                                        182.50
            Terms 2/10 N/30

                                 —11th—
          Sold to A. C. Petersen, Nevada, Ia.
            10 men's overcoats                    8.50   85.00
            10 men's suits                        7.00   70.00
                                                        ------
                                                        155.00
            Terms 2/10 N/30

                                 —11th—
          Received from D. A. Marcus & Son
            Cash                                        139.65
            Discount 2%                                   2.85

                                 —11th—
          Sold for cash
            20 boys' suits                        1.75   35.00
            20 men's pants                        2.00   40.00

                                 —12th—
          Received from John Gorham
            Cash  132.30
            Discount 2%  2.70

                                 —12th—
          Sold to Henry Cook, Iowa Falls, Ia.
            5 men's suits                         8.00   40.00
            5 men's suits                         5.75   28.75
            5 boys' suits                         2.00   10.00
            5 boys' suits                         1.75    8.75
                                                        ------
                                                         87.50
            Terms 2/10, N/30

                                 —12th—
          Sold to James Adams, Dennison, Ia.
            15 men's suits                        7.00  105.00
            Terms 2/10, N/30

                                 —12th—
          Received from Geo. Golden
            Cash                                       $150.00

                                 —13th—
          Sold to D. A. Marcus & Sons
            10 men's pants                        2.00   20.00
            10 boys' suits                        1.75   17.50
                                                        ------
                                                         37.50
            Terms 2/10, N/30

                                 —13th—
          Paid freight on shipment to
            Henry Cook
            Ck. No. 11                            3.65
          Charge to Cook

                                 —13th—
          Deposited cash                                824.45

                                 —13th—
          Sold to S. H. Allen, Mason City, Ia.
            30 men's pants                        1.75   52.50
            Terms 2/10, N/20

                                 —14th—
          Paid Adler & Co.
            Ck. No. 12                                  303.12
            Discount                                      9.38

                                 —15th—
          Sold to Marx & Sons, Charles City, Ia.
            10 boys' suits                        2.00   20.00
            10 men's suits                        7.00   70.00
                                                        ------
            Terms 2/10, N/30                             90.00

                                 —15th—
          Received from H. A. Branch
            Cash                                         52.50

                                 —15th—
          Received from Larson & Anderson
            Cash                                         78.75

                                 —16th—
          Paid H. D. Snyder
            1 week's salary                             $37.50
            Ck. No. 13

                                 —16th—
          Paid H. D. Snyder
            Traveling expenses                           17.65
            Ck. No. 14

                                 —16th—
          Deposited cash on hand                        131.25

                                 —16th—
          Paid D. E. Jenkins
            For cartage on shipments                      2.50
            Ck. No. 15


                                EXERCISE

1. Prepare a trial balance of the ledger as it would appear after
posting these transactions.

2. Assuming that gross trading profits average the same per cent of
selling prices as in former transactions of this business house, find
approximate inventory at close of business Feb. 16th.

3. Prepare trading and profit and loss account, based on this inventory.

[Illustration:

  Order and Sales Records
]

[Illustration:

  Order and Sales Records
]

[Illustration:

  Order and Sales Records
]

[Illustration:

  Order and Sales Records
]

[Illustration:

  Departmental Abstract of Sales
]

[Illustration:

  Cash Received Book
]

[Illustration:

  ONE OF THE ELECTRICAL MANUFACTURING PLANTS OF THE FAIRBANKS-MORSE
    COMPANY
]

[Illustration:

  Check Register and Cash Expenditure Book
]


                   COMMISSION AND BROKERAGE BUSINESS

=30.= Commission or brokerage is the business of buying and selling
goods for another. The commission merchant or broker acts in the
capacity of agent, charging a stated per cent or commission for his
services.

Certain commodities are sold on the market at the best prices
obtainable, the prices depending upon the condition of the market—the
supply and demand. Since it would be both inconvenient and unprofitable
for each seller to accompany his own wares to market, he avails himself
of the services of the commission merchant. The class of goods most
largely dealt in by commission merchants is farm produce, shipped to the
cities by both producers and country dealers.

The practice of shipping produce to the broker to be sold on commission
is gradually falling into disuse. As the business is now conducted, the
commission merchant buys the produce outright and takes his own chances
of making a profit, and thus his business becomes also that of a
wholesaler.


                           MERCHANDISE BROKER

=31.= Certain classes of merchandise are marketed through the medium of
brokers styling themselves merchandise brokers. Their business is
usually transacted on a larger scale than that of the ordinary
commission merchant. The merchandise broker sells in large quantities—as
salt by the car load.

The distinction between the commission merchant and the broker lies in
the fact that the commission merchant has the goods to be sold actually
in his possession, while the broker acts as agent for the purchase and
sale of goods which he does not actually handle.


                          MANUFACTURER'S AGENT

=32.= One distinct class of brokers is the sales agent or manufacturer's
agent. He is a broker who sells goods for the manufacturer, usually by
sample. As a rule the manufacturer sets the prices and determines the
terms of credit. The goods are sold in the name of the manufacturer who
carries the accounts on his books, paying the agent a commission for his
services. In some cases, however, the manufacturer's agent maintains his
own warehouse, issues a warehouse receipt for the goods which are
shipped to him, and even advances money to the manufacturer. He then
becomes virtually a commission merchant. He holds the goods as security
for the money advanced, and, when sold, collects the money and remits
the balance of the net proceeds the same as the ordinary commission
merchant.


                               SHIPMENTS

=33.= When a principal sends goods to a commission merchant or broker to
be sold on commission, it is called a shipment. As soon as the goods are
sent, an account is opened with the shipment, and the shipment is
designated by the name of the consignee, a number, or the name of the
place—as _Shipment to Richard Roe_. If more than one shipment is made to
a commission merchant an account should be opened for each one in order
that the gain or loss can be determined for individual shipments. The
separate accounts should be designated by number—as Richard Roe,
shipment No. 2.

The shipment, when made, is entered in the same way as a sale, and the
items are charged at cost price. The account is also charged with any
expense incurred on account of the shipment. When the Account Sales is
received, the account is credited with the net proceeds. It now shows
either a profit or a loss which is transferred by a journal entry to an
account called _Profit and Loss on Shipments_. This account is, in turn,
closed into profit and loss when the books are closed.

If at the time of closing the books there are any outstanding shipments
on which Account Sales have not been received, the debit balances
represent assets the same as inventory of merchandise on hand.

=34. Agents' or Factors' Account.= If the Account Sales, when received,
is accompanied by a remittance to cover net proceeds, cash is debited
and the shipment account credited for the amount. When a remittance is
not received with the Account Sales, the shipment account is credited
with net proceeds and the amount is charged to a new account opened in
the name of the consignee as _Agent_ or _Bailee_ or _Factor_—as _Richard
Roe, Agent_, or _Richard Roe, Bailee_, which is treated as a personal
account. This does not mean that Richard Roe is a debtor in the ordinary
sense of the term, but that he holds funds in trust; and in case of his
failure, the shipper could recover full value instead of being obliged
to accept his pro rata share of the assets.


                             A CONSIGNMENT

=35.= When a broker receives a shipment of goods to be sold on
commission, it is known as a consignment. He opens a memorandum account
by entering a list of the goods, but without extending any amounts. He
has not purchased the goods, but simply holds them for sale as agent of
the shipper. If there are any charges against the consignment, as
freight, cartage, or storage charges, an account is opened in the name
of the consignor. The title would be _John Doe's Consignment_, and if
more than one consignment is received from John Doe a separate account
is opened for each. This account is debited for all charges, and as
sales are made they are credited to the account. When all of the goods
have been sold, the broker renders the consignor a statement, known as
an Account Sales, showing sales, expenses, and net proceeds.

If, when the books are closed, there are on hand any consignments, or
parts of consignments, unsold, the consignment accounts are left open
and represent either assets or liabilities. If expenses have been
debited and no sales credited, the account will show a debit balance
representing an asset. If sales have been credited in excess of the
expense charges, the credit balance will represent a liability. When an
Account Sales has been rendered, the account will balance, the net
proceeds having been either remitted or credited to the consignor.

=36. Principal's Account.= If the broker remits the net proceeds at the
time of rendering the Account Sales, he debits the consignment and
credits cash, or bills payable as the case may be. But if he renders an
Account Sales without remitting, he opens an account with the consignor,
as _John Doe, Principal_, or _John Doe, Bailor_, and credits the account
with the net proceeds, debiting the consignment account. The title of
the account shows that he is not an ordinary debtor to John Doe, but
that the amount of the credit represents funds belonging to John Doe and
held in trust by the broker. In case of his failure the account of John
Doe, Principal, would have to be paid before the claims of ordinary
creditors.

=37. Commission Account.= All sums received by the broker for services
rendered in connection with the sale of goods for a shipper are credited
to a commission account. When the books are closed this account is
closed into profit and loss.


                        PRODUCE SHIPPER'S BOOKS

=38.= The most common branch of the commission business is that of
shipping and selling produce. The books used vary somewhat from those
used by a manufacturer's agent selling to jobbers, but the principles
are the same.

[Illustration:

  Two Column Shipment Book
]

Sometimes the same man conducts both the business of shipper and broker,
buying certain goods which he in turn ships to other brokers to be sold
for his account. In the produce commission business, however, the
shipper is usually a buyer, located in the country, who buys produce
from the farmer and ships to a commission merchant in the city.

The books required by the shipper are _purchase book_, _shipment book_,
_shipment ledger_, _cash book_, _journal_, and _general ledger_.

=39. Purchase Book.= This book is of the same form as used in other
businesses, with as many columns as may be desired to separate purchases
of different classes of produce.

=40. Shipment Book.= This is the book of original entry for shipments in
which each shipment is recorded in detail, showing each item, with
prices (usually at cost) extended. The book can be ruled with columns
for segregating shipments of different classes of produce. The total of
each shipment is posted to the debit of the individual shipment account
in the shipment ledger. The footings of the columns are carried forward
to the end of the month when they are posted to the credit of shipment
accounts in the general ledger. These general ledger shipment accounts
are opened for each class of produce for which a separate record is
desired, and correspond to the sale account of a mercantile business.

At the end of the month the total of all shipments is posted to the
debit of a controlling account in the general ledger known as _shipment
ledger account_.

If more than one class of produce is shipped to an agent at the same
time it is best to make invoices for each, treating them as independent
shipments. Each package should bear a number or other mark by which it
can be identified as belonging to a particular shipment.

=41. Shipment Ledger.= An ordinary ledger can be used or a special form
prepared. Since the debit side of the account will require much the
greater amount of space, special forms are quite desirable. A convenient
form is illustrated on page 55.

=42. Cash Book.= Tabular cash books with special arrangement of the
column headings are used. The special features are the column on the
credit side headed _shipment expense_, and the debit column headed
_shipment ledger_. The shipment expense column is for the expenses paid
on each shipment. Expenses are posted direct to the debit of the
individual shipment accounts, and at the end of the month the total
expense is posted to the debit of the shipment ledger controlling
account. The shipment ledger column is for net proceeds remitted with
account sales. The amounts are posted to the credit of shipment
accounts, and the total is posted at the end of the month to the credit
of shipment ledger controlling account.

The sundries column is for receipts other than remittances with account
sales—as payments by agents who have not remitted with account sales.

[Illustration:

  Shipment Ledger for Commission Business
]

[Illustration:

  Cash Journal for Commission Business
]

=43. Shipment Ledger Account.= This is the controlling account of the
shipment ledger. It is charged with total shipments through the shipment
book; with advance expenses through cash book or journal; credited with
net proceeds through cash book or journal. It must also be charged with
profits on shipments, or it will not represent the total balance of
shipment ledger.

When net proceeds are credited, the individual shipment account should
be charged, through the journal, with the net profit, which is credited
to _Profit and Loss on Shipments_. A special credit column is provided
in the journal for profits, or if a record of profits on each class of
produce is desired, two or more columns are provided. Monthly totals are
posted to the credit of profit and loss on shipment account, or to more
than one such account—as _profit on poultry_, _profit on butter and
eggs, etc._ The total of all profit columns, which represents debits to
shipment accounts, is charged to shipment ledger account.

It is to be supposed that losses will be few, and when one is incurred
the entries should be made through the journal. The amount will be
charged to profit and loss on shipment account and credited to both the
individual shipment account and shipment ledger account.

=44. Journal.= As already explained, the journal should be provided with
extra columns for profits on each class of shipment.

When an agent transmits an account sales without a cash remittance, the
transaction must be journalized to close the shipment account. When
proceeds are to be charged to his account, the entry is:

                                           Dr.     Cr.     Cr.
       Richard Roe, Agt.                 $160.00
         To Shipment Ledger
           Richard Roe Shipment No. 1            $160.00
       Richard Roe, Shipment No. 1         18.00
         To Profit and Loss on Shipments                  $18.00

If a note to cover net proceeds is received, the entry is the same
except that Bills Receivable is debited instead of Richard Roe, Agt.

When a loss is incurred the entry is:

                                           Dr.
       Profit and Loss on Shipments       $18.00
         To Shipment Ledger Account
           Richard Roe Shipment No. 1                     $18.00

and postings will be made direct to all accounts affected.


                       TREATMENT OF ACTUAL SALES

=45.= The shipper may sell a portion of his produce outright, and if a
large share of his business is transacted in this manner, sales can be
treated exactly the same as though he was not engaged in a commission
business, with separate sales book and sales ledger.

Most shippers, however, will not find it necessary to segregate sales to
this extent. Sales can be charged to shipment accounts in the shipment
ledger, but will of course be charged at a profit, and credited to
shipment account in general ledger. Payments on these accounts will be
entered in the cash book as net proceeds.


                       SHIPPER'S TRADING ACCOUNT

=46.= The trading account of the shipper is made up somewhat differently
than for a mercantile business where all sales are supposed to be
entered at a profit.

If all his produce is sold through commission merchants, and the
inventory of produce in stock exactly equals the difference between
purchases and shipments, the account, _profit and loss on shipments_
represents the trading profit. But this state of affairs seldom if ever
exists. Either there will have been outright sales or a discrepancy will
appear in the inventory. The latter is usually the case in a produce
business, for some value will be lost owing to the perishable nature of
the goods handled.

The trading account is charged with all purchases and inventory, if any,
at beginning of the period, and credited with all shipments and
inventory at end of period.

The trading account now exhibits the true trading profits with a
complete segregation of profits from actual sales and commission sales.
The inventory does not include outstanding shipments, these being
treated as a separate item in the balance sheet.

                              TRADING a/c

    ════════════════════╦═══════╤══╦════════════════════╤═══════╤══
    To Purchases        ║$10,000│00║By shipments        │ $9,000│00
                        ║       │  ║                    │       │
    Profit on Sales     ║    465│00║ " Inventory        │  1,465│00
    ────────────────────╫───────┼──╫────────────────────┼───────┼──
                        ║$10,465│00║                    │       │
    ════════════════════╬═══════╪══╬════════════════════╪═══════╪══
                        ║       │  ║  By Profit on Sales│   $465│00


                          SAMPLE TRANSACTIONS

=47.= The following transactions, taken from the books of John Doe,
shipper of poultry and butter and eggs, illustrate the books and
accounts used.

                            —Nov. 1, 1908—

         Commenced business with a
         cash investment of                          $1,000.00

                                 —1st—

         Bought for cash
           200# chickens                      @ .11½     23.00
           100# ducks                         @ .13      13.00

                                 —1st—

         Bought from
           Henry Meyers
           400# turkeys                       @ .16      64.00

                                 —2nd—

         Shipped to
           Richard Roe, to be sold on my a/c
           220# chickens                      @ .11½     25.30
           98# ducks                          @ .13      12.74

                                 —2nd—

         Ctg. and Exp. on above
           paid in cash                                   2.25

                                 —3rd—

         Bought for cash
           100 cs. eggs, 3,000 doz.           @ .16     480.00

                                 —3rd—

         Shipped to
           Richard Roe to be sold on my _a/c_
           95 cs. eggs, 2,850 doz.            @ .16     456.00

                                 —3rd—

         Sold to Johnson & Sons on _a/c_
           5 cases eggs, 150 doz.             @ .20      30.00

                                 —4th—

         Shipped to Richard Roe to be sold
           on my a/c 200# turkeys             @ .16     $32.00

                                 —4th—

         Paid freight on eggs to Roe                      2.98

                                 —4th—

         Paid freight on turkeys to Roe                   1.80

                                 —5th—

         Received from Richard Roe
           Account Sales for Shipment No. 1
           Net proceeds remitted in cash                 47.73

                                 —6th—

         Received from Richard Roe
           Account sales for shipment No. 2
           Net proceeds retained by him                 518.12

                                 —6th—

         Paid for labor
           cash                                           9.00

[Illustration:

  Shipment Book
]

[Illustration:

  Columnar Purchase Book and Journal
]

[Illustration:

  Cash Journal for Commission Business
]

[Illustration:

  Shipper's Purchase and Shipment Ledger
]

[Illustration:

  Shipper's General Ledger
]

[Illustration:

  THE ADMINISTRATION BUILDING OF THE MINNEAPOLIS STEEL & MACHINERY CO.,
    MINNEAPOLIS, MINN.
]

[Illustration:

  Shipper's General Ledger
]


                                EXERCISE

=48.= On a certain date a trial balance of the ledger of Henry Donnely,
shipper of produce, stood as follows:

                                 DEBITS

   Purchases of apples                                         $1,264.00
   Purchases of potatoes                                        1,500.00
   Shipment Ledger Account                                        736.00
   Cash                                                           450.00

                                 CREDITS

   Shipment Account—apples                                      1,200.00
   Shipment Account—potatoes                                    1,200.00
   Profit on Shipments—apples                                     250.00
   Profit on Shipments—potatoes                                   350.00
   Accounts Payable                                               950.00

 During a subsequent period, his transactions were as follows:

   Cash purchases of apples                                     1,000.00
   Cash purchases of potatoes                                   1,000.00
   Shipments of apples                                            900.00
   Shipments of potatoes                                        1,100.00
   Profits on apples                                              100.00
   Profits on potatoes                                            200.00
   Account Sales for which cash was received                    1,800.00
   Account sales charged to Agts.                                 600.00
   Shipment Ledger Account decreased                              100.00
   Sundry expenses paid in cash                                    50.00

 Inventory at end of period
   Apples                                               210.00
   Potatoes                                             190.00    400.00

Prepare trading and profit and loss accounts showing net profits or
losses on both apples and potatoes for the entire period represented by
the accounts.


                      COMMISSION MERCHANTS' BOOKS

=49.= The books required by a produce commission merchant are _receiving
book_, _cash book_, _consignment ledger_, _sales book_, _sales ledger_,
_journal_, and _general ledger_. If he buys produce to be sold on his
own account, he also requires a _purchase book_ and _purchase ledger_.

=50. The Receiving Book.= This is usually a rough blotter with ordinary
day book ruling, though some merchants use special forms.

When a consignment is received it is given a lot number and entered in
this book in the name of the shipper, but without extending the amounts.
If any expenses have been incurred, an account is opened immediately in
the consignment ledger in the name of the shipper.

=51. The Cash Book=. On the credit side of the cash book, under the
general heading _consignment ledger_, are three columns, headed _net
proceeds_, _expense_, and _commission_. The commission column is a
memorandum column only, the total being posted, at the end of the month,
to the credit of commission account in the general ledger.

Net proceeds, expense, and commission on each consignment are posted as
separate items to the debit of that particular consignment account. At
the end of the month, the total of these three columns is posted to the
debit of consignment ledger account in the general ledger.

=52. Sales Book.= The sales book is provided with special columns for
sales and consignment sales. The sales column represents sales of the
merchants' own goods, the totals being posted at the end of the month to
the credit of sales account in the general ledger and to the debit of
the sales ledger account.

The consignment sales are listed by lot number and posted to the credit
of the consignment accounts. As the lot numbers run consecutively in the
receiving book, this furnishes an index to the consignment accounts. The
totals of the consignment sales columns are posted to the credit of
consignment ledger account, and the consignment ledger column is posted
to the debit of sales ledger account.

=53. Consignment Ledger.= This ledger contains accounts with every
consignment received. The accounts are _charged_ with expenses, net
proceeds, and commissions from the cash book, and _credited_ with sales
from the sales book. If a remittance is not sent with the Account Sales,
the necessary entry is made in the journal, charging both consignment
account and consignment ledger account and crediting the shipper as
principal—or bills payable account when a note is sent.

=54. Consignment Ledger Account.= This is a controlling account which
receives its debits and credits from the same sources as do the
consignment accounts. Except in the case of journal entries, totals only
are posted at the end of the month.


                     PURCHASE AND SALE OF OWN GOODS

=55.= When the commission merchant is also a wholesaler, the purchases
and sales are treated on the books exactly as they would be if he was
not a commission merchant. The books and accounts required are the same
as those of any other wholesale merchant.


                           SAMPLE TRANSACTION

=56.= The following transactions include the shipments used in the last
model set, but treated from the standpoint of the commission merchant.

                             —Nov. 3, 1908—
             Received from John Doe to be
               sold for his account:
               220# chickens
               98# ducks
               Lot No. 1

                                 —4th—
             Received from John Doe to be
               sold for his account
               95 cs. eggs, 2,850 doz.
               Lot No. 2.

                                 —4th—
             Sold for cash
               100# chickens (Lot 1) @ .16           $16.00

                                 —4th—
             Sold to Sweet & Co. on a/c
               110# chickens (Lot 1) @ .16            17.60

                                 —4th—
             Sold for cash
               100# ducks (Lot 1) @ .17¼              17.25

                                 —4th—
             Paid expense on lot #1                   $1.60

                                 —4th—
             Rendered Account Sales, with
               remittance for Lot #1, commission 3%

                                 —5th—
             Sold for cash
               20 cs. eggs., 600 doz., @ .18 (Lot 2) 108.00

                                 —5th—
             Sold to Gaston & Co., 156 Hammond St.
               20 cs. eggs., 600 doz., @ .20 (Lot 2) 120.00

                                 —5th—
             Sold to Francis & Gates, 948 37th St.
               30 cs. eggs, 900 doz., @ .19 (Lot 2)  171.00

                                 —5th—
             Sold to H. B. Niles, 364 Fuller Ave.
               25 cases eggs, 750 doz. @ .19 (Lot 2) 142.50

                                 —5th—
             Paid expense on Lot #2                    7.13

                                 —5th—
             Rendered account sales for
               Lot #2, commission 3%, crediting
               amount to shippers' account.

                                 —5th—
             Received from John Doe to be
               sold for his account
               200# Turkeys
               Lot #3

                                 —5th—
             Paid expense on Lot #3                    1.25

[Illustration:

  Commission Merchant's Receiving Book, Journal and Sales Book
]

[Illustration:

  Commission Merchant's Cash Journal
]

[Illustration:

  Commission Merchant's Consignment and Sales Ledgers
]

[Illustration:

  Commission Merchant's General Ledger
]


                                EXERCISE

=57.= During a certain period a commission merchant transacted the
following business:

     Purchased goods on his own account                  $3,000.00
     Sold goods on commission                             5,000.00
     Sold his own goods                                   2,500.00
     Commissions earned                                     150.00
     Received cash for goods sold                         6,250.00
     Paid expenses on consignments                           37.50
     Rendered account sales with which cash was
       remitted to cover net proceeds                     2,712.50
     Rendered account sales on which net proceeds
       were credited to the account of principals         2,000.00
     Paid cash on account of goods purchased              2,200.00
     Paid cash for sundry expenses                           75.00
     Inventory of goods owned at the close of the period    800.00

Prepare trading and profit and loss accounts and balance sheet.


                                STORAGE

=58.= Storage, as here used, is the business of furnishing storage for
merchandise on its way to market until such time as it is sold and
delivered to the purchaser. The source of supply and customs of the
trade in certain classes of merchandise render the question of storage
an important one. This is particularly true of the grain trade. Large
buyers of grain, located in important distributing centers which have
become the principal grain markets owing to their manufacturing or
transportation facilities, locate their buyers in the grain producing
sections to buy grain from the producers. At these points are located
small grain handling plants or elevators, where the grain is received
from the farmers and shipped to the distributing centers.

Here, extensive storage facilities must be provided, that these
shipments, aggregating enormous quantities of grain, may be held until
the condition of the market is favorable for selling. If it were not for
this custom of storage it would be necessary to market all of the
grain—except the small quantities stored by the farmers—soon after
harvest, which would result in lowering prices to all concerned, from
the farmer up.

These conditions have resulted in the organization of warehousing
companies to provide storage for the owners. When grain, or other
classes of merchandise, is received for storage a warehouse receipt is
issued, and the merchandise will not be delivered without the
presentation of the receipt. Warehouse receipts are negotiable and since
they are evidence of the ownership of certain merchandise stored in a
warehouse, bankers will loan money to the owner and accept the warehouse
receipt as security.

Manufacturers and jobbers of certain products also find it necessary to
store large quantities of their wares at distributing centers that they
may promptly supply the trade. Another reason for this practice is a
financial one. When a manufacturer exchanges his wares for a warehouse
receipt, he can immediately borrow on its security, thus securing
capital to carry on his business until the regular selling season for
his particular product.

The merchandise broker and manufacturers' agent sometimes have their own
warehouses and combine the business of buying and selling with that of
storage and, if they possess sufficient capital, advance money to the
manufacturer.

Perishable products handled by the produce commission merchant are also
stored in cold storage warehouses, both to preserve them and to hold for
more favorable market conditions.


                            STORAGE ACCOUNTS

=59.= Storage charges are usually based on a 30 day period, though
sometimes for shorter periods, and any period less than a full month is
charged for at the 30 day rate.

The storage is frequently charged for the exact time that goods are in
the warehouse, that is, the amount is figured for each amount withdrawn.
The following example demonstrates this, storage being charged on each
quantity withdrawn at the rate of 10c per case per month.

        ════════════════════╤═══════════════╤═════╤════╦═══════
              Received      │   Delivered   │Time │Rate║Amount
        ────┬──┬────────────┼────┬──┬───────┼─────┼────╫────┬──
        Nov.│15│600 cs. eggs│Dec.│10│100 cs.│1 mo.│10c ║  10│00
            │  │            │    │  │       │     │    ║    │
            │  │            │Jan.│ 6│300 cs.│2 mo.│20c ║  60│00
            │  │            │    │  │       │     │    ║    │
            │  │            │Feb.│14│200 cs.│3 mo.│30c ║  60│00
        ────┼──┼────────────┼────┼──┼───────┼─────┼────╫────┼──
            │  │            │    │  │ Total │     │    ║ 130│00

This is known as simple storage.

Another method is to charge storage for the average time at a given rate
per month of 30 days. This method is most commonly used when receipts
and deliveries are frequent, and is called average storage. The
following example demonstrates the method.

        ═══════╤════════╤══════════╤═══════╤══════╤═════════════
         DATE  │RECEIPTS│DELIVERIES│Balance│ Time │  QUANTITY
               │        │          │       │      │ STORED FOR
               │        │          │       │      │   ONE DAY
        ────┬──┼────────┼──────────┼───────┼──────┼─────────────
        Nov.│15│600 cs. │          │600 cs.│15 da.│    9,000 cs.
        Nov.│30│200 "   │          │800 "  │10 da.│    8,000  "
        Dec.│10│        │100 cs.   │700 "  │27 da.│   17,900  "
        Jan.│ 6│        │300 "     │400 "  │39 da.│   15,600  "
        Feb.│14│        │200 "     │200 "  │10 da.│    2,000  "
        Feb.│24│        │200 "     │000 "  │      │
        ────┼──┼────────┼──────────┼───────┼──────┼─────────────
            │  │800     │800       │       │      │30)52,500
                                 Average for 1 mo.│    1,750
               1,750 cs. @ 10¢  $175.00 (Amt. of charges)


                        SPECIAL RECORDS REQUIRED

=60.= One of the most important records required is a storage record
showing receipts and deliveries. A special form is necessary and should
be adapted to the requirements of the particular class of storage
business in which it is to be used.

The form illustrated is typical in that it provides for a record of
storage of any class of goods handled in packages. The storage charges
are always shown so that a statement of the account can be made at any
time. At the end of each month the storage charges extended during the
month are debited, through the journal, to the personal accounts of the
owners. The total of all such storage charges is credited to a _storage
account_ in the general ledger.

When there are frequent receipts and deliveries, the owner should be
given a detailed statement showing all changes in quantities and storage
charges. Such a statement should be a transcript of the storage record.
The form illustrated answers the requirements of simple storage.

[Illustration:

  Storage Record
]

[Illustration:

  Statement of Storage Charges
]

[Illustration:

  BIRD'S-EYE VIEW OF THE PLANT OF SWIFT & COMPANY, CHICAGO, ILL.
]




                        SINGLE ENTRY BOOKKEEPING
                       COMPARATIVE STATEMENTS[3]


                        SINGLE ENTRY BOOKKEEPING

=1.= To this point all of the discussions in this work have related to
the double entry system of bookkeeping, and all demonstrations have been
carried out according to that system. The reason for this is that double
entry is the best and the only satisfactory method of bookkeeping; it is
the only method that fulfils the important function of bookkeeping by
furnishing a true record of the results of all business transactions.

Footnote 3:

  _Copyright, 1909, by American School of Correspondence._

It might appear that instruction in keeping books by the single entry
method has no place in a modern treatise on bookkeeping; and if our
purpose were to teach single entry as a method to be used, this would be
true.

_Single entry bookkeeping is not recommended as a method to be used in
any business._

The only reason for introducing single entry is to show the student how
to change a set of books from the antiquated single entry to a modern
double entry system. Though inadequate, single entry is still used to
some extent. It is more commonly found in small retail establishments,
but occasionally encountered in the offices of corporations and
manufacturing enterprises. The bookkeeper who is called upon to fill a
position where this method is used must know how to keep books by single
entry, that he may more clearly demonstrate the advantages of the double
entry method.

When the advantages of double entry are demonstrated, few employers will
object to a change from single entry. In most offices where single entry
is still used, the reasons which have prevented a change may be summed
up as ignorance of the double entry method, or a fear that double entry
will increase the work without a corresponding benefit. This latter idea
is a misconception inherited from the days of the old time bookkeeper,
who considered it necessary to laboriously journalize every transaction.
While it may have possessed some merit at that time, it is no longer
true. Modern ideas, improved forms of account books, labor saving
devices, and short cuts without number have reduced the labor of
bookkeeping to a minimum, and if any attempt at a proof of accuracy is
made, double entry actually requires less labor than single entry.

=2. Distinctive Features of Single Entry.= The distinctive feature of
single entry is that only personal accounts are kept. When goods are
sold or purchased, records are made of the transactions as they affect
the persons to whom sold or from whom purchased. The records do not show
the increase or decrease of any specific form of assets, like
merchandise, for no property accounts are kept. An account is usually
kept with cash, but this approaches double entry, for when a person pays
money to the business, cash is debited and the person credited; and when
money is paid out, cash is credited and the person debited.

Sometimes, in a set of books otherwise kept by single entry, such
accounts as merchandise, expense, and real estate are found, but when
such accounts are introduced the books begin to take on double entry
features.

=3. Books Used=. The principal books of a single entry set usually
consist of day book or journal, cash book, and ledger. Both the day book
and cash book are books of original entry, from which transactions are
posted direct to the ledger. Auxiliary books used are order book, bill
book, and check book.

The day book or journal is the familiar two-column form, the left-hand
column being used for debits and right-hand column for credits.

The _cash book_ has two columns on each page, and these columns are used
to separate the items affecting personal accounts, which are to be
posted, and all other items, none of which are posted. See illustration.

The _ledger_ is the same form as used in the double entry method.

The _order book_ is usually the regular two-column journal form. In
retail businesses it is used as a principal book, transactions being
posted from it to the ledger. Sometimes the first column is used for
prices, the extensions being made only when the order is filled.

The _bill book_ is quite essential in a single entry set for the reason
that no Bills Receivable and Bills Payable accounts are kept in the
ledger.

=4. Rules for Debit and Credit.= The rules for debit and credit are the
same in single entry as in double entry, except that no debits and
credits are recorded which do not effect persons or cash—when a cash
account is kept. Briefly, these rules applying to single entry are:

 _Debit the person_
                   When he receives anything of value;

                   When you pay him cash.

 _Credit the person_
                   When you receive anything of value;

                   When he pays you cash.

 _Debit cash_
                   When you receive it.

 _Credit cash_
                   When you part with it.

=5. Posting.= There is no difference between posting to a single entry
ledger and one kept by the double entry method. However, the only
accounts posted are personal accounts, and the ledger shows merely how
much money the business owes to persons and how much money persons owe
the business. A single entry ledger does not show the amount of our
notes outstanding, or the amount of other persons' notes held by us.
This information can be found only in the bill book. The ledger does not
show the value of merchandise purchased or sold, expenses of the
business, nor the amount of our investments in land, buildings, or other
forms of property.

=6. Proprietor's Account.= A proprietor's investment or capital account
is kept in single entry just as it is in double entry. This may or may
not include withdrawals. They may be recorded in a personal or private
account, in which case the proprietor's account will exhibit the net
investment in the business.

=7. Proving the Work.= Since but one side of each journal entry is
posted, the two sides of the ledger will not agree as in double entry.
Hence a trial balance is, strictly speaking, impossible. The only
absolutely sure method of checking the accuracy of a single account in
the ledger is to carefully check all postings; this is also true of
double entry. But it is possible to prove that the correct totals have
been posted in single entry, as it is in double entry. Since the ledger
is never in balance as in double entry, the proof is not found by
comparing the two sides of the ledger, but by comparing the difference
between the two sides of the ledger, with the difference between debits
and credits in the columns of books of original entry from which
postings have been made. If the difference between debits and credits in
the ledger agrees with the difference between debits and credits in the
books of original entry, the work may be assumed to be correct.

To prove the work, first find the balances of all ledger accounts and
enter the amounts in the debit and credit columns on journal paper—as
for a trial balance. Foot and find the difference between the two
columns. Next foot the order book, day book, cash book, or any other
books from which posting is done, and list the totals which should be
posted to debit and credit of ledger accounts. Foot and find the
difference.


                          SAMPLE TRANSACTIONS

=8.= For the first demonstration of single entry bookkeeping, we have
selected a small retail business, using transactions which have been
used to illustrate a double entry set. This set is kept in the most
simple manner possible, the books used being journal, cash book, and
ledger.

The business is opened by Wm. Webster on the 21st day of November, 190-.
He is to conduct a retail grocery business and has rented a store from
Wm. Bristol at a monthly rental of $30.00. His resources consist of
cash, $600.00; a stock of groceries, $946.50; personal accounts due him
as follows: Henry Norton $25.00, L. B. Jenkins $22.70. His liabilities
consist of two accounts, as follows: Brewster & Co., $115.20; Warsaw
Milling Co., $64.00. The opening entry recording the above, is made in
the journal as in double entry, but only personal items are posted. Cash
is transferred to the cash book.

[Illustration:

  CUTTING OFF DEPARTMENT IN THE PLANT OF THE UNION TWIST DRILL CO.,
    ATHOL, MASS.
]


                               —Nov. 21—
           Sold to Henry Norton on account
             10# sugar                            5½¢    $.55
             2 cans corn                                  .25
             1 can peas                                   .15
             3# rice                                      .30
                                                        -----
                                                         1.25

                                  —21—
           Sold to John Smallwood on account
             5# butter                                  $1.00
             4# lard                                      .50
             1 doz. eggs                                  .25
                                                        -----
                                                         1.75

                                  —21—
           Cash sales                                   14.10

                                  —22—
           Sold to Harry Webster on account
             7 bars Lenox soap                            .25
             1 pkg. gold dust                             .20
             1 pkg. matches                               .15
             ¼ bbl. flour                                1.35
                                                        -----
                                                         1.95

                                  —22—
           Bought for cash
             10 doz. eggs                         .21    2.10

                                  —23—
           Bought from H. Kling & Co. on account
             244# hams                            .12½  22.50
             201# lard                            .07½  15.08
                                                        -----
                                                        45.58

                                  —23—
           Sold to F. W. Bradley on account
             2 bu. potatoes                              1.60

                                  —23—
           Sold to C. D. Glover on account
             1 bbl. apples                               3.25
             5 gal. vinegar                              1.25
                                                        -----
                                                         4.50

                                  —23—
           Cash sales                                   13.20

                                  —24—
           Sold to A. C. Maybury on account
             1# bkg. powder                              $.50
             1# corn starch                               .10
             1# soda                                      .10
             1 pkg. jello                                 .20
                                                        -----
                                                          .90

                                  —24—
           Sold to John Smallwood on account
             2# cheese                                    .32
             1 bottle vanilla                             .35
             1# coffee                                    .35
             1# tea                                       .60
                                                        -----
                                                         1.62

                                  —24—
           Bought from John Smallwood on account
             100 bu. potato                       .60   60.00

                                  —24—
           Paid John Smallwood
             Cash on account                            25.00

                                  —24—
           Cash sales                                   15.00

                                  —25—
           Paid Brewster & Co.
             Cash on account                           115.20

                                  —25—
           Sold to L. B. Jenkins on account
             ½# pepper                                    .20
             12# ham                              .14    1.68
                                                        -----
                                                         1.88

                                  —25—
           Received from Henry Norton
             Cash                                       26.25

                                  —25—
           Cash sales                                   13.00

                                  —26—
           Credited Wm. Bristol
             for one month's rent                      $30.00

                                  —26—
           Sold to Wm. Bristol on account
             11# ham                              .14    1.54
             1 qt. bottle olives                          .50
             2# coffee                                    .70
             20# sugar                            .05½   1.10
                                                        -----
                                                         3.84

                                  —26—
           Sold to C. D. Glover on account
             ¼ bbl. flour                                1.35
             1# bkg. powder                               .50
             7 cks. borax soap                            .25
                                                        -----
                                                         2.10

                                  —26—
           Paid cash for clerk hire                      8.00

                                  —26—
           Cash sales                                   18.70

                                  —28—
           Sold to H. N. Shaw on account
             1 bu. potatoes                               .80
             1 doz. cans corn                            1.50
                                                        -----
                                                         2.30

                                  —28—
           Sold to Watkins Hotel Co. on account
             10 bu. potatoes                      .75    7.50
             50# lard                             .10    5.00
             20# ham.                             .13½   2.70
                                                        -----
                                                        15.20

                                  —28—
           Cash sales                                    9.45

                                  —29—
           Bought from Lowell & Sons on account
             500# sugar                           .04¾ $23.75
             50 gal. molasses                     .30   15.00
                                                        -----
                                                        38.75

                                  —29—
           Bought from Star Salt Co. on account
             10 bbls. salt                        .80    8.00

                                  —29—
           Sold to R. H. Sherman on account
             1# coffee                                    .25
             1# chocolate                                 .45
             1 qt. olive oil                             1.35
             ¼# ginger                                    .15
             ¼# pepper                                    .15
             1 pkg. mince meat                            .10
             2# lard                                      .25
                                                        -----
                                                         2.70

                                  —29—
           Cash sales                                   14.35

                                  —30—
           Received from F. W. Bradley on account
             Cash                                        1.60

                                  —30—
           Paid Warsaw Milling Co. on account
             Cash                                       64.00

                                  —30—
           Sold to John Smallwood on account
             1 bbl. salt                                 1.10

                                  —30—
           Sold to D. E. Johnson on account
             10# lard                             .10    1.00
             1# bkg. powder                               .50
             1 pk. apples                                 .35
                                                        -----
                                                         1.85

                                  —30—
           Bought for cash
             5 bu. apples                         1.00  $5.00

                                  —30—
           Cash sales                                   17.90

At the close of business, Nov. 30, the ledger is proved, in accordance
with the rules given in Art. 7. All open accounts in the ledger are
listed on ordinary journal ruled paper and the balances extended to the
debit and credit columns. These columns are footed, the total of the
credit columns being $1,564.02, and of the debit column, $56.08.
Subtracting the latter from the former, we find the difference to be
$1,507.94. The total postings—debit and credit—from the journal and the
cash book are then entered and added, the total debit postings being
$296.44, and the total credit postings, $1,804.38. The former deducted
from the latter leaves $1,564.02, which agrees with the _difference_ in
the ledger balances. This proves the correctness of the postings to the
ledger, and takes the place of the trial balance used in the double
entry method.

[Illustration:

  Single Entry Journal
]

[Illustration:

  Single Entry Journal
]

[Illustration:

  Single Entry Journal
]

[Illustration:

  VIEW IN THE GROUNDS OF THE FORE RIVER SHIPBUILDING COMPANY, QUINCY,
    MASS.
  Showing the Facilities for Handling Material in the Plate Yard and a
    Typical Arrangement of the Shops. The Great Electric Crane Shown has
    a Span of 175 Feet, and Travels Over 1,000 Feet of Track. It is Said
    to be One of the Largest of Its Kind in the World.
]

[Illustration:

  Single Entry Cash Book
]

[Illustration:

  Single Entry Ledger
]

[Illustration:

  Single Entry Ledger
]

[Illustration:

  Single Entry Ledger
]

[Illustration:

  AUTOMATIC MACHINE TOOL ROOM, FOR THE MANUFACTURE OF PARTS FOR ROCK
    DRILLS, COAL MINING MACHINES, DIAMOND DRILLS, ETC., IN THE
    CLAREMONT, N. H., FACTORY OF THE SULLIVAN MACHINERY COMPANY
]

[Illustration:

  Proof of Single Entry Ledger
]

[Illustration:

  Single Entry Profit and Loss Statement
]


                         DETERMINING THE PROFIT

=9.= Having no nominal accounts, we cannot close through trading account
into profit and loss, but must use another method to find the profit or
loss for a given period. It will be necessary to first ascertain the
present worth of the business. Therefore the first step will be to take
an inventory, just as we would if closing a double entry ledger. Our
inventory shows merchandise $1,042.77. Next, we will make a statement of
assets and liabilities, following the same form as the balance sheet
when the books are kept by double entry. This will give us the present
worth.

From the present worth, we will deduct the capital investment (or the
present worth at the time of making the last statement) which will show
the profit for the period. If the present worth is less than the capital
investment, the business shows a loss.

It will be noted that while this method shows net profits, it does not
show how those profits were made. Having no accounts with purchases and
sales, we can have no trading account to show gross profits, and without
expense accounts there is no data from which to make up a detailed
profit and loss statement. Herein is one of the shortcomings of the
single entry method of bookkeeping.


                           CLOSING THE BOOKS

=10.= To close a single entry ledger, all that is necessary is to credit
the proprietor's investment account, or any account representing
capital, with the net gain, or debit the account with the net loss. Then
rule the personal accounts and bring down the balances.


                                EXERCISE

On a certain date the assets and liabilities of David Henry are as
follows:

            _Assets_
              Cash                                  $450.00
              Due from sundry debtors                 75.20
              Merchandise per inventory              762.50
            _Liabilities_
              Due sundry creditors                   144.00

The following transactions are recorded:

              Sales to sundry persons on account      44.71
              Bought from sundry persons on account  337.54
              Sold for cash                           94.90
              Received cash on account                62.00
              Paid cash on account                   132.50
              Paid cash for rent                      35.00
              Paid cash for clerk hire                 7.00

  At the close of the period in which these transactions were recorded,
the inventory of merchandise on hand was $987.75.

_First._ Open single entry books, entering these transactions in the
journal and cash book.

_Second._ Post to ledger using the terms _Debtor_ and _Creditor_ to
represent account of customers and those from whom goods were purchased.

_Third._ Prove the ledger.

_Fourth._ Make a statement of assets and liabilities.

_Fifth_. Has there been a gain or a loss, and how does it affect the
account of the proprietor?


                        CHANGING TO DOUBLE ENTRY

=11.= How to change the method of keeping a set of books from single to
double entry is an important question to the bookkeeper, for he may be
called upon any time to do the work. When once understood, the change
involves only very simple entries. The routine may be briefly described
as follows:

_First._ Prepare a statement of assets and liabilities.

_Second._ Enter this statement in the journal and post to the ledger,
debiting all accounts which represent assets and crediting all accounts
which represent liabilities. Credit proprietor's account with the
difference, which is the present worth.

If a new ledger is to be opened, new accounts will be opened for each
form of asset or liability represented in the entry.

If the old ledger is to be used new accounts are to be opened with
assets and liabilities not already represented by accounts in the
ledger, and the net gain only will be credited to the proprietor's
account. Check personal accounts, but do not post.

_Third._ Take a trial balance to see if the ledger is in balance, as it
should be after posting these entries.


                                EXERCISE

Following the rules given, change the books of David Henry to double
entry using the old ledger.

Show necessary journal entry and indicate what new accounts must be
opened.


               CHANGING PARTNERSHIP BOOKS TO DOUBLE ENTRY

=12.= We will suppose that the ledger illustrated in the following model
set (pages 23-27) represents the business of Benton, Douglas, and Kemp,
and that the books have been kept by single entry.

They wish to adopt the double entry method and call you in to make the
necessary changes in their books.

Your first step is to make a statement of the ledger accounts, including
all except the capital accounts of the partners. This statement gives
you the following information:

             Personal Accounts, _Debit Balances_   $189.25
             Personal Accounts, _Credit Balances_ 2,828.50
             Cash in Bank                         7,313.73

You also balance the cash book and compare the balance with the cash in
drawer, and find that the amount shown, $21.60, is correct.

In the meantime an inventory is being taken. When completed, the results
shown are:

                    Merchandise            $2,114.50
                    Furniture and Fixtures  2,000.00

The next step is to make a statement of assets and liabilities for the
purpose of finding the present worth of the business.

                  STATEMENT OF ASSETS AND LIABILITIES

       _Assets_
         Cash in Bank (Ledger)              $7,313.73
         Cash in Office (Cash Book)             21.60
         Personal Accounts (Ledger)            189.25
         Merchandise (Inventory)             2,114.50
         Furniture and Fixtures (Inventory)  2,000.00
                                            ---------
                   Total Assets                       $11,639.08

       _Liabilities_
         Personal Accounts (Ledger)                     2,828.50
                                                      ----------
         Present Worth                                  8,810.58

The capital accounts of the partners show the original investment to
have been $9,000.00, which is more than the present worth. Deducting the
latter from the former will give the net loss.

                        Investment    $9,000.00
                        Present Worth  8,810.58
                                      ---------
                          Net Loss       189.42

The partnership agreement provides that profits and losses are to be
shared equally, but contains no reference to the payment of interest on
withdrawals, or allowance of interest on personal credits.

The statement of assets and liabilities is entered in the journal and
accounts opened in the ledger with _merchandise inventory_ and
_furniture and fixtures_—the only items not already represented by
ledger accounts. To complete the change and balance the ledger the
following single entry is made in the journal and posted to partners'
personal accounts.

                       James Benton   Dr. $63.14
                       Horace Douglas Dr.  63.14
                       Henry Kemp     Dr.  63.14

A trial balance will now show the ledger to be in balance.

You have followed the routine necessary to change the books of a
partnership from single to double entry under the conditions given. A
general rule to be followed is to ascertain the present worth, make the
partnership adjustment as in double entry, and post as in changing books
of a single proprietorship.


                                EXERCISE

The books of Lancaster, Jenkins, and Stubb have been kept by single
entry, but they desire to change to double entry.

The partnership agreement provides that each partner shall share in the
profits in proportion to his net investment. Separate accounts are kept
with each partner to cover his investment and withdrawals.

The following is a statement of the ledger accounts as they appeared
December 31st. The balances of partners' investment accounts are the
same as when the last adjustment was made, no additional investments
having been made during the present period.

                          STATEMENT OF LEDGER

          Lancaster,     Investment  Credit Balance $2,000.00
          Jenkins             "        "       "     1,500.00
          Stubb               "        "       "     1,500.00
          Personal        Accounts     "       "       900.00
                "             "      Debit     "     2,200.00
          Lancaster,     Withdrawals   "       "       325.00
          Jenkins             "        "       "       250.00
          Stubb               "        "       "       175.00
          Bank                "        "       "     2,150.00
          Cash in office                                50.00

An inventory is taken and shows the value of merchandise in stock to be
$1,850.00, fixtures $300.00.

_First._ Transfer debit balances of partners' withdrawal accounts to
investment accounts.

_Second._ Show entries to make the partnership adjustment and to change
books to double entry.

_Third._ Indicate by check (√) what accounts are to be posted, the old
ledger being used.

[Illustration:

  Single Entry Partnership Ledger
]

[Illustration:

  Single Entry Partnership Ledger
]

[Illustration:

  Single Entry Partnership Ledger
]

[Illustration:

  Single Entry Partnership Ledger
]

[Illustration:

  Single Entry Partnership Ledger
]


               CHANGING CORPORATION BOOKS TO DOUBLE ENTRY

=13.= Corporation books are seldom kept by single entry, but such cases
are not impossible to find. In Chicago, there is a manufacturing
corporation which has been in business for more than twenty years and is
doing a business of a quarter million dollars a year, whose books have
been kept by single entry. Not until January 1909 was an accountant
called in to change their books to a modern double entry system.

In the case cited a capital stock account was kept, and dividends were
paid in cash. The routine followed by the accountant was to first take
an inventory of machinery, material, supplies, goods in process, and
manufactured goods. Then the land and buildings were appraised at their
present value. Accounts had been kept with real estate and machinery,
but repairs to buildings had been charged to real estate, thus showing a
fictitious increase in value, and no depreciation had been charged
against machinery. There was also a merchandise account which had been
charged with all purchases and credited with all sales, so that it
furnished no information of value.

For these reasons only personal accounts, capital stock, bank account,
and cash were taken from the books in making up a statement of assets
and liabilities. In making this statement capital stock was included as
a liability and the excess of assets over liabilities represented
surplus.

The statement was entered in the journal and accounts representing each
item were opened in a new ledger. The balance was credited to surplus
account and the books were in balance. Subsequently, the different
expense accounts were opened as the transactions requiring their use
arose.

Had the directors insisted, the accountant would have been obliged to
enter real estate and machinery at the values shown in the old accounts,
but an inventory of merchandise would have been necessary in any event.

A safe rule in changing the books of a corporation to double entry is to
make a statement of assets and liabilities, including capital stock in
liabilities. Then open the necessary accounts and credit the difference
in the statement to surplus account.

[Illustration:

  Journal Entries to Change to Double Entry
]

In the case referred to the following facts were shown by the books:

                     Cash in Office        $156.72
                     Cash in Bank         7,264.20
                     Accounts Receivable 11,978.50
                     Accounts Payable     9,647.60
                     Capital Stock       75,000.00

The inventories and appraisals resulted in the following valuations:

              Real Estate (Land and Buildings) $38,000.00
              Machinery                         27,750.00
              Material                          11,227.60
              Supplies                             648.50
              Goods in Process                   3,984.70
              Manufactured Goods                 5,290.00

A cost system was desired by the management, consequently in opening new
books it was necessary to provide for the needed accounts. The complete
entries used to change these books from single to double entry are shown
in the model journal illustrated, page 29.

[Illustration:

  Ledger After Changing to Double Entry
]

[Illustration:

  Ledger After Changing to Double Entry
]


                                EXERCISE

The books of the Star Coal Company, a corporation with a paid-up capital
of $10,000.00, have been kept by single entry. The following facts are
gathered from the books:

              Cash in Bank                      $3,500.00
              Personal Accounts Debit Balances   6,500.00
              Cash in Office                       200.00
              Personal Accounts Credit Balances  2,500.00

       An inventory results as follows:

                    Coal                   3,750.00
                    Horses and Wagons        800.00
                    Furniture and Fixtures   300.00

Make necessary journal entries to change to double entry. Provide a
reserve of 5% for uncollectible accounts, 10% for depreciation of horses
and wagons, 10% for depreciation of furniture and fixtures. Declare a
dividend of 10% and transfer balance of profits to surplus, making all
journal entries to record these transactions.

[Illustration:

  TWO HEMISPHERICAL BOTTOMS FOR 100,000-GALLON ELEVATED TANKS RIVETED
    TOGETHER, SHOWING CLASS OF WORKMANSHIP NECESSARY ON WORK OF THIS
    CHARACTER
  Chicago Bridge & Iron Works, Chicago, Ill.
]


               TRIAL BALANCES AND COMPARATIVE STATEMENTS

=14.= The construction of comparative statements is one of the most
important duties of the bookkeeper. The ability to properly classify the
accounts that make up trading and profit and loss statements, and
balance sheets is a valuable asset to the bookkeeper who aims to advance
to the highest position.

Statements of this kind, unless properly classified, are unintelligible
to the average business man. A mere statement of the balances of the
ledger accounts arranged without respect to their relationship, one to
the other, may show that the ledger is in balance, but does not present
information of special value to the manager of a business. What he
wants—and expects—is a statement from which he can readily extract
desired information; it must emphasize the salient points.

The classification of accounts has already been touched upon, but no
harm will be done by placing still greater emphasis on the importance of
this feature. For with the right classification of accounts in the
ledger, the trial balance itself will supply some very interesting
information, instead of being a mere list of balances. The following
rules should be observed in the arrangement of accounts in the ledger.

All asset accounts should be assembled in the first section and grouped
according to their classification; i. e., active, fixed, and passive or
fictitious.

The liabilities should be divided into secured or funded, unsecured or
floating, and capital; the latter includes any reserve accounts that may
be maintained.

The expense accounts should follow and should be subdivided as to
selling, general, and administrative.

The trading accounts should be grouped and divided into purchases,
in-freight, and sales.

If a manufacturing business, the manufacturing accounts should be
divided as to purchases, labor, and expenses.

The advantages of card and loose leaf ledgers are apparent in connection
with the proper arrangement of accounts. They readily lend themselves to
any desired classification, and new accounts as needed can be inserted
at any point.

For the purpose of showing some of the possibilities in the
classification of accounts, we give a few examples of model trial
balances.

                             TRIAL BALANCE

                                _Assets_
               Cash                     $264.20
               Bank                    4,728.50
               Accounts Receivable     6,270.00
               Inventory (Jan. 1)      7,860.00
               Real Estate            10,000.00
               Furniture and Fixtures  5,000.00

                             _Liabilities_
               Mortgage Payable                 $3,000.00
               Bills Payable                     5,000.00
               Accounts Payable                  6,120.00
               Capital Stock                    20,000.00

                           _Profit and Loss_
               Advertising               475.00
               Salesmen's Salaries       300.00
               Traveling Expenses        189.70
               General Expense            74.00
               Interest and Discount      22.60
               Building Maintenance       37.00
               Taxes and Insurance        42.00
               Salaries                  525.00

                               _Trading_

               Purchases               5,500.00
               In-Freight and Cartage     96.20
               Sales                             7,219.00
                                      --------- ---------
                                      41,361.60 41,361.60

If the accounts in this trial balance were listed without regard to the
groups in which they belong, it would merely show that the ledger
balances. In its present form, it gives at a glance much valuable
information. Total expenses and expenses of each class are readily
ascertained, sales are shown, and expenses can be compared with sales.
With the exception that it does not show the changes in the account of
the inventory, this trial balance exhibits the condition of the
business.

Supposing that an inventory is taken, the following statements are
quickly prepared.

                             BALANCE SHEET
                               _Assets_
             Cash                       $264.20
             Bank                      4,728.50
             Accounts Receivable       6,270.00
             Inventory (Feb. 1)        7,995.00
             Real Estate              10,000.00
             Furniture and Fixtures    5,000.00

                             _Liabilities_
             Mortgage Payable                    $3,000.00
             Bills Payable                        5,000.00
             Accounts Payable                     6,120.00
             Capital Stock                       20,000.00
             Surplus                                137.70
                                      --------- ----------
                                      34,257.70  34,257.70

                           TRADING STATEMENT
             Inventory (Jan. 1)        7,860.00
             Purchases                 5,500.00
             In-Freight                   96.20
                                     ----------
                                      13,456.20
             Less Inventory (Feb. 1)   7,995.00
                                     ----------
                                       5,461.20
             Sales                                7,219.00
             Gross Profit              1,757.80
                                      ---------  ---------
                                       7,219.00   7,219.00
                                      --------- ----------

                       PROFIT AND LOSS STATEMENT
             Gross Profit                        $1,757.80
             Advertising                $475.00
             Salesmen's Salaries         300.00
             Traveling Expenses          189.70
             General Expense              74.00
             Interest and Discount                   22.60
             Building Maintenance         37.00
             Taxes and Insurance          42.00
             Salaries                    525.00
             Net Profits                 137.70
                                      ---------  ---------
                                       1,780.40   1,780.40
                                      ---------  ---------

The facts that sales were $7,219.00, or that the expense for salesmen's
salaries was $300.00 mean nothing in themselves. It is only when
compared that they exhibit vital facts. If we find that last month's
sales were $8,400.00 and salesmen's salaries the same as this month, we
know at once that our present selling cost is proportionately higher
than during the preceding period.

The following trial balance should be compared with the preceding and
the difference in their values, in respect to the information given,
carefully noted. The accounts in this trial balance are arranged in the
order in which they were found in the ledger.

                             TRIAL BALANCE
                                        Dr.       Cr.
              Capital Stock                    $30,000.00
              Sales                             45,411.40
              Accounts Receivable    $7,190.00
              Accounts Payable                   2,720.00
              General Expense           727.00
              Salesmen's Salaries     3,000.00
              Salaries, General       3,600.00
              Interest and Discount                126.70
              Returns and Allowances    942.20
              Inventory               9,687.00
              Purchases              26,250.00
              In-Freight               $396.40
              Bank                    6,470.00
              Traveling Expense       1,759.00
              Taxes and Insurance       236.50
              Real Estate            25,000.00
              Fixtures                3,000.00
              Surplus                           10,000.00
                                     ---------  ---------
                                     88,258.10  88,258.10
                                     ---------  ---------

[Illustration:

  Fig. 15-a. Working Balance Sheet
]


                         WORKING BALANCE SHEET

=15.= A form much used by accountants combines the trial balance with
the balance sheet, trading and profit and loss statements. The
compilation of the information required for this form is greatly
facilitated by a proper classification of accounts in the ledger. The
form is known as a working balance sheet.

A working balance sheet is shown in Fig. 15 a. The figures used are
taken from the last trial balance shown, and furnish a graphic
illustration of the difference between proper and improper
classification of accounts. It will be noticed that the first two
columns constitute the trial balance. Following this are columns which
classify the accounts under the headings of _Trading, Profit and Loss_,
and _Balance Sheet_. The balance of each account is extended to its
proper group.

At the bottom of the form, trading and net profits are extended as a
memorandum only. Since no inventory has been taken these figures are not
exact, but represent approximate results on the supposition that the
inventory would be practically the same as when the last inventory was
taken. Of course, if there was a noticeable change in the quantity of
merchandise in stock, an estimate would be made and taken into
consideration in making this statement of probable profits.


                                EXERCISE

From the following trial balance, prepare a working balance sheet
showing actual gross and net profits.

                             TRIAL BALANCE
           Bank                         $8,460.00
           Capital Stock                          $25,000.00
           Sales                                   11,201.00
           Purchases                    10,000.00
           Returns and Allowances          400.00
           Interest and Discount earned               260.00
           General Expense                 425.00
           Salaries                        360.00
           Rent                            300.00
           Taxes and Insurance              37.60
           Selling Expense                 421.00
           Inventory (Jan. 1st)          8,864.00
           Fixtures                      2,500.00
           Accounts Receivable           5,680.00
           Accounts Payable                         1,274.00
           Cash in Office                  287.40
                                        ---------  ---------
                                        37,735.00  37,735.00
           Inventory (Feb 1)                        9,650.00


                         COMPARATIVE STATEMENTS

=16.= The trial balances shown in the preceding pages illustrate some of
the advantages of properly classified accounts. The information gained
can be made of still greater value by the construction of comparative
statements; for, as has been stated, the chief value of many of the
figures shown lies in the opportunity for comparisons. Statements which
permit of comparison of items of a like nature from month to month
furnish a valuable survey of the progress of the business.

The following is a trial balance taken from the books of a manufacturing
business, and will be used as a basis for the construction of
comparative statements.

                             TRIAL BALANCE

                                               Dr.       Cr.
           Cash in Office                  $162.50
           Bank                           8,500.00
           Accounts Receivable            7,500.00
           Bills Receivable               4,500.00
           Inventory, Materials (Jan. 1)  9,500.00
           Inventory, Manufactured Goods
           (Jan. 1)                       6,000.00
           Real Estate                   20,000.00
           Machinery and Tools           17,500.00
           Furniture and Fixtures         3,500.00
           Bills Payable                           $7,000.00
           Accounts Payable                         5,000.00
           Capital Stock                           50,000.00
           Surplus                                 10,000.00
           Undivided Profits                          900.00
           Advertising                    1,200.00
           Salesmen's Salaries            1,000.00
           Salesmen's Expenses              720.00
           General Expense                  430.00
           Interest and Discount                       97.50
           Salaries Administrative          900.00
           Factory Expense                  850.00
           Factory Labor                  1,750.00
           Repairs to Machinery             150.00
           Depreciation                     175.00
           Taxes and Insurance               25.00
           Material Purchases             4,600.00
           In-Freight and Cartage           126.00
           Sales                                   16,491.00
           Returns and Allowances           400.00
                                         --------- ---------
                                         89,488.50 89,488.50
                                         --------- ---------

In Fig. 16 _a._ is shown a working balance sheet in which the accounts
as found in the trial balance are segregated in the four groups,
_Manufacturing, Trading, Profit and Loss_, and _Balance Sheet_. First,
the trial balance is entered in the two columns at the left. Next, the
manufacturing account is made up by extending the inventory of material
at end of preceding period, the manufacturing expense accounts, material
purchases and freight on same. This gives the total charges to
manufacturing account, but not the month's expenditures, for the present
inventory of material must be considered. An inventory shows the value
of material in stock to be $4,550.00. Deducting this leaves $12,626.00,
the total operating cost for the month. To find the cost of goods
completed during the month an inventory is taken of work in process, the
amount is deducted from the total operating cost and the result,
$9,126.00, represents cost of goods manufactured.

The trading account is now made up, this $9,126.00 taking the place of
purchases, and the gross profit is carried to profit and loss account.

The manufacturing, trading, and profit and loss accounts are now ready
for analysis, which is made on a percentage basis. In the analysis of
the manufacturing account, the total operating cost is used as a basis
and the different items of manufacturing cost are figured on this basis.
We find that the expense items are 23.3% and the material 76.7% of the
total which furnishes a tangible basis for a comparison of the same
items in other months. Having the percentage of each item, we can note
the fluctuations from month to month, and know where to retrench if any
item appears to be increasing too rapidly.

The basis of the analysis of the trading and profit and loss accounts is
the turnover. Figuring on this basis, we find the total expenses,
exclusive of manufacturing costs, to be 41% of the turnover, and the net
profit, 20%. The gross profit is 60% of the turnover. Ordinarily the
total expense and net profit would equal the gross profit, but in this
case there is a capital profit of $97.50 from interest earned.

Sometimes these comparative percentages are figured on the gross sales,
but the turnover is considered the proper basis, for it is less subject
to marked fluctuations. The sales in one month may show abnormal
profits, while in the next these profits may return to normal. If based
on sales, the cost percentages would fluctuate accordingly, when in
reality they may have remained stationary.


                     PROOF WITHOUT A TRIAL BALANCE

=17.= A comparison of the accounts in the last trial balance with the
working balance sheet shows them to be arranged in the order in which
they would appear in the balance sheet and profit and loss statements.

[Illustration:

  WORKING BALANCE SHEET
]

[Illustration:

  Fig. 16a. Working Balance Sheet for a Manufacturing Business
]

It should be remembered that manufacturing and trading accounts are
subdivisions of the profit and loss account, and that the profit and
loss account is a statement of income and disbursements including
differences in inventories.

If it is desired to show the actual condition of the business at the end
of each month, the inventory must be added. There may be objections to
actually closing the books each month, but the complete statement can be
made by adding the current inventories as shown in the working balance
sheet illustrated. The amounts of these inventories and the gross and
net current profits are, in such cases, memoranda only. The inventories
may be arbitrary estimates, and while the results shown may not be exact
they will be found of value for purposes of comparison; and care in
estimating inventories will greatly increase their value.

Reference to our working balance sheet shows that the profit and loss
statements—with current inventories added—agrees with the balance sheet
in one respect. The current profit exactly agrees with the difference
between assets and liabilities as shown by the balance sheet.

To prove the ledger without the usual trial balance these rules should
be followed:

_First:_ Make up trading and profit and loss statements, taking balances
direct from the ledger accounts, deducting current inventories.

_Second:_ Make up balance sheet using current inventories in listing
assets.

If the current profit and loss agrees with the difference between assets
and liabilities the ledger may be assumed to be in balance. This is, in
effect, a sectional trial balance, since the accounts in the trial
balance are all represented in the two statements. The reliability of
this proof is not affected by the fact that the inventories are
arbitrary—and perhaps inaccurate—since the same amounts are used in both
the balance sheet and profit and loss statement.


                            BOOK INVENTORIES

=18.= To make the foregoing plan still more effective, perpetual
inventories should be carried in the ledger. A perpetual or book
inventory is an account showing the value of merchandise received, sold,
and on hand. If an accurate account is kept of merchandise received and
sold, the perpetual inventory will show the amount that should be in
stock. To prove the accuracy of the account, it is necessary to take an
actual inventory of the merchandise in stock, just as it is necessary to
count the cash before we can know that the amount on hand agrees with
the cash account.

A detailed perpetual inventory should be kept on cards or in a loose
leaf book. A card or sheet is used for each article or class of material
carried in stock. The sheets or cards should be arranged alphabetically
according to the names of the articles. To make the system effective one
person should have charge of these records and no goods should be taken
from stock without an order or other proper record.

At the end of the month the receipts will be shown by the purchase
accounts. The deliveries will be tabulated from the cards, and the
necessary adjustments made on the ledger account. Adjustments should be
made by journal entry debiting inventory accounts and crediting trading
account for increase in inventory, and _vice versâ_ for decrease in
inventory.

Fig. 18 _a._ is a typical form of stock ledger sheet for a loose leaf
book. The form should in all cases be made to suit the requirements of
the business in which it is to be used.

Fig. 18 _b._ is a card form of stock ledger which gives more detailed
information about the article in stock. On the top line is recorded the
name of the article, size or kind, where kept, and date of verification
of the record. The second line gives the unit and maximum and minimum
limits. The unit represents the unit in which the article is bought—as
pounds, tons, dozen, feet, yards, etc. It is customary to establish a
minimum limit, below which the stock is not allowed to go before
re-ordering, and a maximum limit of a quantity sufficient for the needs
of the business. The record of receipts and disbursements includes a
detailed record of cost, including freight and cartage, and columns for
costs per unit. This makes it possible to calculate the value of the
stock in hand without referring elsewhere for prices.

In some lines of business it is possible to ascertain the quantities
sold, at the end of each month, from the sales records. This applies
where an article is sold in but one grade or size, and necessitates
keeping sales records which show sales of each article. An example is
the coal business. For such a business a card like the one shown in Fig.
18 _c._ can be used to good advantage. This provides for a monthly
record of purchases and sales.

[Illustration:

  Fig. 18 _a._ Loose Leaf Stock Ledger
]

In this illustration the manner of indexing is shown. The cards are
first arranged alphabetically under the names of the articles. If there
is more than one size, the cards bearing the records of a certain
article are filed in the order of their sizes. Indexed in this manner
any card that may be desired is quickly found.

[Illustration:

  Fig. 18 _b._ Stock Ledger Card
]

[Illustration:

  Fig. 18 _c._ Stock Ledger Card and Indexes
]


             DEMONSTRATION OF PROOF WITHOUT A TRIAL BALANCE

=19.= Taking the accounts in the following trial balance, a model ledger
is illustrated which demonstrates the manner of proving the ledger
without the aid of the conventional trial balance. It is assumed, of
course, that a book inventory or stock ledger is kept, and in this
demonstration the figures showing the change in inventory are used. Only
the ledger is illustrated, it being expected that the student will
understand the necessary journal adjusting entries.

                             TRIAL BALANCE

           Cash in Office                 $575.00
           Bank                          8,750.00
           Accounts Receivable           8,871.00
           Bills Receivable              5,000.00
           Inventory (Jan. 1)           12,500.00
           Furniture and Fixtures        2,250.00
           Bills Payable                           $4,000.00
           Accounts Payable                         3,325.00
           Capital Stock                          $25,000.00
           Purchases                    $6,750.00
           Sales                                   15,000.00
           Advertising                     960.00
           Salesmen's Salaries             450.00
           Traveling Expense               190.00
           Office Expense                   46.50
           Office Salaries                 225.00
           General Expense                  34.20
           Rent                            175.00
           Taxes and Insurance              21.30
           Discounts Allowed                47.90
           Interest Paid                    33.10
           Interest and Discount Earned                54.00
           Administrative Salaries         500.00

On Feb. 1st the inventory shows a decrease of $3,500.00. A reserve of 3%
on accounts receivable is to be created to provide for uncollectible
accounts. To make these adjustments the following journal entries will
be required:

                Trading _a/c_         3,500.00
                  To Inventory                 3,500.00
                Decrease in Inventory

A study of this entry will show that the result is the same if we make
up the trading account by using purchases and adding or subtracting the
decrease or increase in inventory, or if the preceding inventory is
added and present inventory is deducted. The result in either case is
the turnover and the above entry makes the necessary adjustment in the
inventory account without closing the account through the trading
account.

The entry for the reserve for uncollectible accounts is

               Profit and Loss             266.13
                 To Reserves                      266.13
               Reserve of 3% to provide
               for uncollectible accounts.

At the end of the next month this account will be adjusted by charging
or crediting the amount necessary to maintain the total at the desired
percentage of accounts receivable.

[Illustration:

  UNDERWOOD TYPEWRITERS USED IN MELBOURNE UNIVERSITY COMMERCIAL
    EXAMINATIONS
]

[Illustration:

  Ledger with Accounts Classified
]

[Illustration:

  Ledger with Accounts Classified
]

[Illustration:

  Ledger with Accounts Classified
]

[Illustration:

  Ledger with Accounts Classified
]

[Illustration:

  Ledger with Accounts Classified
]


                        REVERSE OR SLIP POSTING

=20.= To feel absolutely sure that his work is correct is the ambition
of every bookkeeper. The fear that an error will throw his books out of
balance is always present, and is only dispelled when the ledger is
proved at the end of the month.

Accountants, bookkeepers, and mathematicians have long searched for an
infallible rule or method of checking which would detect an error as
soon as it is made. No system could possibly prevent the making of an
error, but if detected, an error is quickly corrected. Numerous formulas
and checking systems, designed to detect errors in posting, have been
put on the market from time to time. Each has been advertised as the
only infallible system. All have been eagerly purchased, tried more or
less faithfully, and, as a rule, speedily discarded.

Modern methods of bookkeeping have done more to aid in the detection of
errors in posting than all of the checking systems combined. The
sectionalization of accounts not only facilitates the detection of
errors, but greatly minimizes the chances of their being made. As an
illustration take a sales ledger which is subdivided into two or more
parts, with special columns in cash book and sales book, and controlling
accounts for each section. If the individual balances taken from the
sales ledger do not agree with the controlling accounts, it is seen at a
glance in which section the error has been made. Instead of a search
through all postings to sales ledger accounts, it is only necessary to
check postings to that particular section.

[Illustration:

  Ledger Proof Without a Trial Balance
]

Errors in posting to nominal accounts are minimized by special columns
in cash book, sales book, and purchase record, with one posting at the
end of the month, in place of a posting for each item entered.

But still, errors are and always will be made in posting, and for the
bookkeeper who has a large number of accounts to post and wishes to keep
a constant check on his work, the reverse posting or slip posting system
will give satisfactory results with little labor.

[Illustration:

  Fig. 19. Monthly Posting Proof Sheet
]

This system is very simple, and easily operated. It consists of the use
of a slip of paper with debit and credit columns in which accounts
posted to the ledger are entered. A separate slip is used for each book
from which postings are made, and the items are posted to the slip from
the ledger. The slip should be placed on the desk on the opposite side
of the ledger from the book of entry.

If posting is from the sales book, the ledger should be placed to the
right of the sales book and the slip to the right of the ledger. After
the item is entered in the ledger it is posted to the slip. When the
work is completed the slip is footed and compared with the footing of
the sales book. If the footings agree, it is quite evident that the
correct amounts have been posted to the ledger, for it is scarcely
possible that an incorrect amount has been posted to the ledger and the
correct amount entered on the slip.

A further daily proof may be had by inserting a blank slip of paper in
the ledger wherever an item is posted. At the end of the day these
ledger accounts are referred to, the amounts are drawn off, and total
postings compared with the totals of the checking slips from the
different books.

When postings are not checked daily a form should be prepared to which
daily totals will be carried. Columns are provided for each book from
which posted, and these are footed at the end of the month and compared
with the footings of the books. If the ledger does not balance a
comparison of this proof slip with the column footings of the books will
show in which book the error has been made. The form of the monthly
proof slip is illustrated in Fig. 19.


                        SPECIAL ACCOUNTING FORMS

=21.= Bookkeeping, if it is to fulfil its mission, must furnish a
complete record of the transactions of a business. The record must show,
as well, the results of each transaction or class of transactions, with
respect to their bearing on the business as a whole, or on specific
sections or departments of that business. From a mere record of personal
debits and credits, bookkeeping has grown into a detailed history of a
business.

The principles of bookkeeping are the same regardless of the nature,
size, or condition of a business. But different businesses require
different kinds of information; vital facts in one business may be
valueless in another. The success or failure of each depends upon
certain elements which must be recorded in its history. It is the work
of the bookkeeper to record these facts—to write the history of the
business in language that will be understood by anyone who may read it.

Laying out the business history is the work of the accountant. He makes
an analysis of those elements which bear on the success of the business,
and determines what facts, when properly recorded, will furnish the
clearest and most understandable history. And when he has determined
what facts should be recorded he must plan how they are to be
recorded—in what form they will present the most concise history of
business transactions. His work should result in a system of bookkeeping
that will present the most vitally important information, with a minimum
expenditure of labor.

The increasing demand for more intelligible records—for facts—has
stimulated the ingenuity of accountants in devising forms that will not
only accommodate the records desired but will permit of their being made
with the least labor. Special forms exactly suited to the records which
they are to contain, are now made for every purpose. Labor-saving
devices and methods have minimized the drudgery of bookkeeping.

The bookkeeper who would rise above mediocrity requires something
besides the ability to record business transactions in the proper
columns of books prepared for him. He must know how to devise forms and
books, how to adapt correct principles to the building of a system of
bookkeeping for any line of business. If certain facts assume
importance, he must know how those facts can best be obtained and
recorded.

To assist in familiarizing the student with the more modern methods,
this section is devoted to illustrations and descriptions of special
forms of books for various purposes. The student should devote careful
study to these forms, for while they have been in the main devised to
meet special conditions, the principles can be adapted to any line of
business where similar conditions exist.


                            SPECIAL LEDGERS

=22. Loose Leaf Ledgers.= A loose leaf ledger is one in which the leaves
are removable. Instead of the sheets being bound in solid book form,
each leaf is a separate sheet ruled for one ledger account. The sheets
are filed or bound in what is known as the binder, being securely held
in place by a mechanical device. The binder can be locked so that only
the person holding the key can insert or remove the sheets.

The loose leaf ledger is indexed either numerically or alphabetically.
When the numerical method is used the sheets are numbered and placed in
the binder in numerical order which gives the same arrangement as a
bound book. A separate index is required with the numerical method. The
alphabetical method of indexing necessitates the use of sheets on the
edges of which are tabs or projections printed with the letters of the
alphabet. These index sheets are placed in the binder in alphabetical
order and the ledger sheets are placed between them. The alphabetical
method is preferred by many as it makes the ledger self-indexing.
Another method of indexing is a combination of the alphabetical and
numerical. The alphabetical index sheet is used, and under it are filed
all accounts of persons whose names begin with that letter. These sheets
are numbered Account No. 1, No. 2, etc., and the names are written on
the index sheet, followed by the account number. This practically
divides the ledger into separate numerical ledgers for each letter of
the alphabet.

[Illustration:

  Fig. 20. Loose Leaf Ledger
]

Binders for loose leaf ledgers are made to hold from a few sheets up to
one thousand or more. By proper arrangement of the indexes, more than
one ledger can be accommodated in one binder. As an illustration, the
general, purchase, and sales ledgers, each with its separate index, may
all be in the same binder.

One of the chief advantages of the loose leaf ledger is that all "dead"
matter can be removed. When a sheet becomes filled, it can be removed to
another binder called a transfer binder, and a new sheet put in its
place. Or if the account be permanently closed, it is transferred,
leaving only live accounts in the ledger. When new accounts are to be
opened, it is only necessary to insert additional sheets. There is no
transferring of all accounts from one ledger to another as with bound
books, for the loose leaf ledger is never filled. If the number of
sheets increases beyond the capacity of the binder, the ledger can be
divided by transferring a part of the sheets to a new binder.

The ruling of loose leaf ledger sheets is the same as in bound books,
the forms usually being made to fit the business. A sheet with a
conventional form of ruling is illustrated.

=23. Card Ledgers.= For certain classes of accounts, the card ledger is
very desirable. It is well adapted for a sales ledger in a business
having a large number of customers, and especially so if the nature of
the business is such that the purchases of a customer are infrequent. In
many businesses handling a single line of goods known as seasonable,
sales are made in the spring and fall so that a customer purchases
practically an entire year's supply in two orders.

[Illustration:

  Fig. 21 _a._ Ledger Card for Dentists
]

The card ledger is largely used in banks for keeping accounts with
depositors in the savings department. A card 5 inches x 8 inches in size
gives room for forty items on each side, and for the average savings
account will last more than two years.

Some advantages claimed for the card ledger are:

_First:_ Dead records are eliminated, as filled cards and closed
accounts are transferred to a separate file, leaving only open accounts
in the current file.

_Second:_ It can be expanded to any size, which makes it ideal for
business with a large number of customers. The opening of a new account,
or re-opening of a closed account, is accomplished by merely dropping a
card in the right place.

_Third:_ The labor of making trial balances is greatly reduced, as there
are no closed accounts to refer to in the current file.

_Fourth:_ Statements can be mailed much earlier as the cards can be
distributed among several clerks who can be working on them at the same
time.

_Fifth:_ The ledger can be subdivided as desired by the use of proper
index cards. When one drawer or tray is filled, a part of the cards can
be taken out and placed in another tray without disturbing their
arrangement.

There are two general plans of indexing the card ledger—alphabetical and
numerical. The alphabetical method consists of a set of guide or index
cards between which the cards are filed. This index may consist of one
index for each letter of the alphabet, a smaller number with two or more
letters on one index, or a much larger number subdividing the alphabet
into as many parts as may be necessary. In planning an index for a card
ledger, a safe rule to follow is to provide one index card for every ten
ledger cards.

[Illustration:

  Fig. 21 _b._ Ledger Card for Publishers
]

A subdivision of the alphabetical index is the geographical or
territorial. This divides the ledger by states and towns. Guide cards,
printed with the names of the states, provide the main division; other
guides, printed with names of towns, subdivide the state sections; and
where necessary, alphabetical guides subdivide the names in the towns.
If desired, the ledger may be divided into territorial sections, as East
and West; or each section may include the territory covered by one
salesman.

A numerical index divides the cards by tens and hundreds. Guide cards
numbered by hundreds—100, 200, etc.—provide the main divisions. Between
these are placed guides numbered 10, 20, 30, etc. to subdivide these
sections by tens, and the ledger cards are filed in numerical order
between these guides. To facilitate locating any number desired, the
cards themselves are made with small projections numbered from 0 to 9 to
represent the units. Each card bears one tab, and all tabs bearing the
same unit are in the same relative position on the card; that is—0 is
always at the extreme left, while 9 is ten positions to the right. When
the cards are placed in numerical sequence, between the guides numbered
by 10's, any number can be found instantly. To find number 2,987, we
refer first to the main guide number 29, then to the guide numbered 8—in
the section between 29 and 30—and then to the number 7 tab next
following. As there are never more than one thousand cards in a tray,
any number can be found more quickly than in a bound book. If a card is
misplaced in filing, the unit tab will greatly assist in locating the
missing card. Suppose card No. 964 is missing; a search through the row
of No. 4 tabs will locate it, no matter where filed. With this system of
filing, a separate index by name is required, and this also is made on
cards. For a very large ledger the numerical system is more frequently
adopted than the alphabetical.

[Illustration:

  Fig. 21 _c._ Balance Form of Ledger Card
]

It is claimed that the numerical tab scheme affords one safeguard not
found in an alphabetical system. A missing card is at once detected by
the break in the row of tabs, but to make the safeguard of value it is
necessary to leave the cards in the file even after accounts are closed.

There is no good reason why an alphabetical card ledger should not be as
safe as the numerical. If it is desired to guard against the removal of
one card and the substitution of another, the blank cards should be
placed in the custody of one man, who will issue them to the bookkeeper
as needed, first placing his initials on the card. In any event, the
card ledger should be provided with a locking device which will prevent
the removal of a card, except by the one who has the key.

These suggestions may be of assistance to the bookkeeper who is called
upon to use a card ledger.

Never leave ledger cards lying on the desk. When you leave your work,
put them back in the file, where they belong.

Before leaving the office, lock the ledger so that no one can remove a
card in your absence.

If your superior asks you to see a certain ledger account, do not give
him that one card. He may lose it. Give him the entire tray, with the
cards securely locked. Should he insist on having that one card, ask him
to give you a receipt for it.

Some special forms of ledger cards are illustrated. Fig. 21 _a._ is a
form used by a dental supply house. The special feature of the form is a
separate column for each different class of goods purchased by the
customer. Fig. 21 _b._ is used by a publisher for advertising accounts.
Fig. 21 _c._ is a conventional balance ledger form adapted for use in
almost any line of business.

=24. Tabular Ledger.= This is a ledger in which the names are written
down the side of the page, with debits, credits, and balances extending
across the page. Columns are arranged to group entries during uniform
periods, as a month, week, or day. A special feature of this style of
ledger is that it can be more quickly balanced and proved than any other
style. To prove this ledger add the balances at the end of the preceding
period to the debit postings of the current period. This will equal the
total of the credit postings added to the new balances, if the balances
have been correctly extended. The postings to all of the accounts on a
page—30 to 40—can be footed at one operation, saving much time.

Fig. 22 _a._ is a form of a tabular ledger used by banks, known as the
_Boston bank ledger_. It is specially arranged to exhibit daily
balances, as it is necessary that the depositor's ledger be balanced
daily. This form can be used in a mercantile business, but as balances
are not required daily, the form shown in Fig. 22 _b._ is better adapted
to the purpose. These tabular forms of ledgers are not commonly used
except in banks.

=25. Balance Ledgers.= Three forms of balance ledgers are illustrated,
each one of which is specially adapted to some particular class of
business.

[Illustration:

  Fig. 22 _a._ Boston Bank Ledger
]

[Illustration:

  Fig. 22 _b._ Commercial Tabular Ledger
]

The special feature of Fig. 23 _a._ is two credit columns—one for cash
and one for merchandise returns. This form is favored in certain lines
of business where merchandise returns are frequent. A special column
serves to separate returns of merchandise sent out on approval, which in
some businesses is an important item.

[Illustration:

  Fig. 23 _a._ Ledger with Special Credit Columns
]

Fig. 23 _b._ is provided with two balance columns, for debit and credit
balances. This form saves time in taking trial balances, as it is seen
at a glance whether the balance is a debit or a credit.

[Illustration:

  Fig. 23 _b._ Balance Ledger
]

The feature of Fig. 23 _c._ is several credit columns to one debit
column. This form is largely used where sales are made subject to
periodical payments. It is well adapted for installment accounts, rent
accounts, insurance accounts, and similar classes. The number of credit
columns can be extended indefinitely to meet existing conditions.

[Illustration:

  THE PRUDENTIAL BUILDING
  One of Buffalo's Best Office Buildings
]

[Illustration:

  Fig. 23 _c._ Balance Ledger for Installment Accounts
]


                               CASH BOOKS

=26.= Since the almost universal adoption of special forms of sales
books, purchase books, and check registers, the journal proper is only
used for adjusting entries. The cash journal, which is a combination of
cash book and journal, has taken the place of the two books. Some forms
of this book have been illustrated earlier in this text, and a typical
form is shown in Fig. 24 _a._ A study of this form will be found
instructive as it suggests the many possibilities of segregating
distinct classes of receipts and expenditures. Note the segregation of
charges to manufacturing, selling, and administrative branches of the
business. Under each branch the different kinds of expense might be
shown with all their subdivisions by providing additional columns.

In fact, as we have already stated, there is no end to the possibilities
of segregating different classes of transactions by means of the
columnar principle in designing books of entry. But it may not be out of
place to sound a note of warning against increasing the size of the
pages of a book beyond a reasonable limit. While the saving of time is
the important factor that influences the introduction of columnar books,
there has grown up a tendency to go to such extremes that the unwieldy
book defeats this very purpose.

[Illustration:

  Fig. 24. Cash Journal—Left-Hand Page
]

While the "sundries" columns in the form shown render possible the
making of any kind of adjusting entries in this cash journal, we
recommend that it be reserved for cash transactions and that all
adjusting entries be made in an ordinary journal. This will segregate
cash transactions, just as sales and purchases are segregated, and
render much easier an audit of the books. The journal of the ordinary
type also affords abundant space for explanations which should be
exceptionally complete for adjusting entries. Entries of this kind are
frequently used to cover up fraud and they are sure to receive the
careful attention of the auditor.

[Illustration:

  Fig. 24. Cash Journal—Right-Hand Page
]


                          TABULAR SALES BOOKS

=27.= In no department of a business are tabulated records of greater
value than in the sales department, for only by studying the records of
sales of different classes of goods or of different departments can a
manager determine which departments of his business are most profitable.
A tabular sales book makes it possible to record sales in detail with
very little additional labor, resulting in greater economy of time in
collecting valuable data.

[Illustration:

  Fig. 25 _a._ Tabular Sales Book
]

In certain lines of business a record of quantities of different kinds
of merchandise sold is of almost equal value to records of values.
Examples are—wholesale coal business, in which records are kept of
quantities and values of different grades and sizes or the product of
different mines; lumber, in which sales are divided as to lumber, lath,
shingles, sash, and doors; wholesale paper, in which some of the
divisions are book, flats, bonds, cover, etc. A sales book designed for
a business of this class is shown in Fig. 25 _a._ This is arranged for a
record of sales in a coal business, segregating sales of the product of
each of three mines.

There are businesses in which returns and allowances are so frequent as
to constitute an important item in the record of transactions. Such
cases demand special columns in either journal or sales book. Another
condition occasionally met with is where purchases are frequently made
from customers, resulting in accounts in both ledgers. This requires
journal entries to adjust the accounts, but instead of making these in
the regular journal, special columns can be provided for the purpose in
the sales book. Fig. 25 _b._ illustrates a sales journal with columns
for returns and allowances, and columns for purchase adjustments. The
total of these adjustment columns are posted to the sales ledger
controlling account.

[Illustration:

  Fig. 25 _b._ Sales Journal with Adjustment Column
]

_Sales recapitulations_ are of very great importance in department
stores and similar businesses where it is desired to ascertain the total
sales of each sales person as well as the result by departments. In Fig.
25 _c._ is shown a sales recapitulation sheet arranged for daily records
of sales of each clerk and of each department. All sales tickets are
lettered or numbered to indicate the clerk, and at the end of the day
these tickets are tabulated by numbers. One of these recapitulation
sheets is used for a month's record, and it can of course be designed to
accommodate as many departments and clerks as there are in the
establishment. Recapitulation sheets arranged on this plan are found
very convenient in many lines other than department stores.

[Illustration:

  Fig. 25 _c._ Sales Recapitulation Sheet
]

[Illustration:

  Fig. 26. Departmental Pay-Roll Record for Piece Work and Day Workers
]


                            PAY-ROLL RECORDS

=28.= The designing of pay-roll records to meet the special conditions
in the great variety of manufacturing industries, offers a wide field
for the ingenuity of the bookkeeper or accountant. Where all employes
are paid a stated wage and their employment in one department is
continuous, the problem is a simple one, resolving itself into a mere
record of the number of hours worked each day, the rate, and the amount
due. But this condition seldom exists.

In most industries more complex problems are encountered. The same
employe may be called upon to work in more than one department during a
pay-roll period, or he may do several different kinds of work in the
same department. In either case the form for the record must be so
constructed as to furnish complete information relative to the cost of
the different classes of work. Elaborate systems for gathering records
of time on each detail of the work are employed in most modern
factories, and the pay-roll record or time book is arranged for a
consolidation of these detailed records.

Fig. 26 illustrates a form used in one factory for a distribution of
time records where men are employed on different kinds of work in
different departments, and on both day wage and piece work plans. In
this form provision is made for the record in each department, and each
day's record is divided between time and piece work. Several lines are
set aside for each employe, so that the record will be complete for each
kind of work. At the extreme right, department totals are extended.
These are quickly calculated for the reason that while an employe may do
different kinds of work and in different departments the same operation
is not performed in more than one department. To provide for records of
more kinds of work this principle can be carried still farther by
allowing more space for each employe, and in some cases a full sheet is
assigned for each. In one factory the pay-roll book is loose leaf, one
sheet being used for each employe. Each side of the sheet holds the
record for two weeks, and by using both sides, it gives a complete
record for four pay-roll periods.

=29. Combined Pay-Roll and Check Register.= Many industries pay their
employes by means of checks instead of in currency. Special pay checks
are used which merchants willingly cash as an accommodation to their
customers. Whenever the check system of payments is adopted it is best
to carry a special bank account for the purpose. When the amount of the
pay-roll is determined, a check should be drawn on the regular bank
account and deposited in a special fund against which the pay checks
will be drawn.

Fig. 27 shows a form, designed for the use of a concern paying by check,
which combines a check register with the pay-roll record. Since all
checks drawn against this special fund are pay checks, this register
gives a complete record of the special bank account.

[Illustration:

  Fig. 27. Combined Pay-Roll and Check Register
]

[Illustration:

  A TYPICAL GRAIN ELEVATOR IN CHICAGO HARBOR, WITH A MODERN FREIGHTER
    READY FOR LOADING
]




                    TRUSTEES AND EXECUTORS' ACCOUNTS


=1.= From the accounting standpoint, business can be divided into two
general classes: (a) Business conducted by the owner or a person
appointed by him for the benefit of the owner; (b) Business that is the
property of persons incapable of transacting business, necessitating the
appointment, by the owners or other authority, of persons to transact
business in place of the owner. It is with business of the latter class
that we now have to deal.

In this class the owner or proprietor is supplanted by the
_administrator_ of the business. The generic term _trustee_ applies to
the administrator, who also takes more specific titles, depending upon
the nature of the trust—as _executor_, _administrator_, _assignee_,
_guardian, receiver_, etc. He is subject to the powers granted by the
source of his appointment, and to the restrictions and requirements
imposed by law.

A trustee—by whatever specific name designated—acting in his capacity as
substitute for the owner, is the owner of the trust property as against
the public. He is accountable to no one but the beneficiaries for whom
he is acting as custodian. As owner of the estate, he can sue or be sued
and perform many functions pertaining to the ordinary property owner.
The beneficiary, by reason of his equity in the estate, can compel the
trustee to carry out the provisions of his trust.


                         EXECUTOR'S ACCOUNTING

=2.= While an executor may keep his accounts in a manner chosen by
himself, his _accounting_ must conform to the legal requirements of the
state in which the accounting is made. The form in which the accounting
is to be made is not subject to rigid rules, but must conform to certain
regulations. While requirements differ according to the jurisdiction,
the regulations in general are as follows:

The preliminary accounting consists in filing an inventory of the
personal estate of the deceased, showing both the nominal or face value
of the assets and the amount they are expected to realize as stated by
the appraisers. An executor usually files two accounts—an _intermediate
account_, filed at some date prior to the final account, and a _final
account_, showing the property in his hands subject to distribution by
judicial decree. The intermediate account may be filed either
voluntarily or by order of the court. The account must be accompanied by
the following schedules:

                              =SCHEDULE A=

       1. Statement of property contained in the inventory, which has
been sold, with the manner of sale and amounts realized. 2. Statements
of debts due the estate as scheduled in the inventory, which have been
collected. 3. Statement of all interest and dividends received by the
executor.

                              =SCHEDULE B=

       1. Statement of debts due the estate that have not been collected
or are uncollectible, with reasons. 2. Statement of personal property
named in inventory that has not been sold, with reasons, and the
appraised value of such property. 3. Statement of all property belonging
to the estate that is lost through no fault of the executor, with the
cause of loss and appraised valuation. 4. Statement that no other
property than set forth in the inventory or schedules has come into the
possession or the knowledge of the executor. 5. Statement that the
increase or decrease in value of all assets of the deceased is allowed
for or charged in Schedules A and B.

                              =SCHEDULE C=

       1. Statement of all amounts expended by the executor for funeral
and other necessary expenses, together with the receipts for, and
objects of, such expenditures.

       2. Statement of the date when the executor caused a notice for
claimant to present claims against the estate to be published, together
with order, notice, and proof of publication herewith filed, to which
the executor refers as a part of his account.

                              =SCHEDULE D=

       1. Statement of all claims of creditors allowed by executor or
disputed by him, for which a judgment or decree has been rendered, with
the names of the claimants, nature of claim, amount and date of
judgment.

       2. Statement of all money paid to creditors of the deceased, with
names and time of payment.

                              =SCHEDULE E=

       1. Statement of all money paid to legatees, widow, or next of
kin, of the deceased.

                              =SCHEDULE F=

       1. Statement of names of all persons entitled—as widow, legatee,
and next of kin, of the deceased—to a share of his estate, with place of
residence, degree of relationship, and statement as to which are minors,
whether they have a general guardian, and if so, the name and place of
residence to the best of the executor's knowledge, information, and
belief.

                              =SCHEDULE G=

       1. Statement of all other facts affecting the administration of
said estate, executor's rights, and those of others interested.

       These schedules provide all the material from which to make the
account proper. In his account, the executor charges himself as follows:

          With amount of inventory                  $_________
          With amount of increase as per schedule A  _________
          With amount of income as per schedule A    _________
                                          _________
                        Total debits                 _________

He credits himself:

 With amount of losses on sales as per schedule B               $_________
 With debts not collected as per schedule B                      _________
 With articles mentioned in inventory lost, schedule B           _________
 With funeral expenses and other expenses, schedule C            _________
 With money paid creditors, schedule D                           _________
 With money paid to legatees, widow, or next of kin, schedule E  _________
     Total credits                                              $_________
     Balance                                                     _________
   Add articles unsold                                           _________
   Add debts not collected                                       _________
                                                                 _________
     Total to be distributed                                     _________


                            FORM OF ACCOUNTS

=3.= The devising of forms of trust and executory accounts offers a wide
scope for the application of accounting knowledge. Many intricate
problems arise in the interpretation of details of the trust and in the
apportionment of sums received, between capital and revenue. Broadly,
these accounts are prepared in one of two forms: (a) An account of
charge and discharge; (b) in the form of regular ledger accounts. As has
been intimated, legal requirements are complied with by the first form,
but the second form is preferable. When ledger accounts are kept on the
double entry plan, the fullest information can be obtained about the
condition of the trust at any time, and from these accounts, the account
of charge and discharge or any form required by the court can be made
for each period.

In preparing the accounts the exact relationship of the trustee to the
estate (as the property in trust is called) must be kept in mind. As the
owner of the property, he is a creditor of the estate (the business)
just as the proprietor of the business is the creditor of that business.
On the other hand, as custodian, he is a debtor, being in possession of
the property of others.

In the ledger, property accounts are opened with the different classes
of properties represented in the estate, which accounts are debited for
the appraised value of the properties. These are known as _custodian
accounts_.

A contra account representing the estate—sometimes called the capital—is
opened under some such caption as _Personal Estate Account_. This
account is credited with the combined values of all properties
represented by the custodian accounts.

When the assets are entered and posted, the ledger accounts will appear
as follows:

[Illustration]

These asset accounts represent the value of the individual properties,
while the personal estate account represents the combined values of all
personal property of the estate (No. 1, No. 2, and No. 3). The personal
estate is known as the _corpus_, distinguishing it from the real estate.

If the trustee, as the custodian, is called upon merely to distribute
the estate to the beneficiaries, his accounting is a very simple
problem. In many cases, however, he is called upon to take care of the
income arising from the corpus or the real estate.

When he receives such income in the shape of cash, he debits himself as
custodian through a cash account, and credits an income account under an
appropriate title—as _interest account_, _rent account_, _dividend
account_, etc. The account may represent the income from a specific
property, or all income of a stated class. For example, rent account may
represent the rents received from all properties, or there may be a
separate rent account for each.

Distinguished from the income accounts, the trustee sometimes has
accounts representing the sale of real estate, which must then be
treated as personal property. When real estate is sold, cash is credited
and an account, usually called _Sale of Real Estate_, is credited.

=4. Classification of Accounts.= A classification of the accounts of the
executor naturally divides into: (a) _Personal estate account_; (b)
_asset accounts_; and (c) _distributive accounts_. The personal estate
account, as we have seen, is a controlling account which represents the
total of all assets. It is also referred to as the capital account. It
is, as well, a controlling account of the distributive accounts, and in
the end exhibits a schedule of transactions in the order in which they
occur.

The asset accounts, representing the different classes of properties or
assets of the estate, correspond to the asset accounts of an ordinary
business.

The distributive accounts may be likened to the revenue accounts of a
business enterprise. These accounts are debited with all amounts
distributed—as expense of administering the estate—and credited with all
income or revenue other than that representing the conversion of the
original estate into cash.

=5. Executors' Commissions.= While the commission allowed administrators
and executors varies in different states, the amount specified by law in
New York applies as a general rule. The commission allowed is 5% on the
first thousand dollars received and disbursed, 2½% on the next ten
thousand dollars, and 1% on all amounts above eleven thousand dollars.

If the value of the personal property is $100,000.00, or more, in excess
of all debts, each executor is entitled to receive the commissions
provided in case of a single executor; except that if there are more
than three executors, the amount which the three would receive must be
divided in proportion to the services rendered.

In cases where the will provides a specific remuneration, the executor
is not entitled to a commission. He can, however, decline a legacy and
in lieu thereof take the usual commission.

Commissions are not allowed on specific legacies, that is, where
specific property, as household effects, automobiles, etc., are named.
An annuity is a series of legacies and the commission is not allowed on
its payment. However, when a beneficiary is given the use of a fund, the
beneficiary is charged with the commission.

In all cases where administrators or trustees are responsible for the
investment of the funds of an estate, they are entitled to receive
commission on the income. The commission in all of these cases is at the
regular rate, that is, 5% on the first thousand dollars received and
paid out, etc.


                                EXAMPLES

1. Two trustees collect in one year an income of $36,000.00 for a
beneficiary, the expense being $3,000.00. If each trustee receives an
equal share, what commission will be paid to each, and what sum shall be
paid to the beneficiary? Ans. Each trustee, $275.00; beneficiary,
$3,275.00.

2. Executor X collects of the corpus of an estate $30,000.00, executor Y
collects $40,000.00. Together they pay out $55,000.00. Commissions are
to be divided in proportion to the amount collected by each. What
commission will each receive and what is the net amount to be paid to
the residuary legatee? Ans. Commissions: X, $381.43; Y, $508.57.
Residuary legatee, $14,110.00.

3. Four trustees collect and pay out of an estate $350,000.00, the total
debts of the estate being $135,000.00. What commission will each trustee
receive? Ans. $2,767.50.


                            SAMPLE ACCOUNTS

=6.= Following are the transactions and accounts of David Brown,
executor of the estate of Henry Snow, deceased. For keeping the
accounts, the journal, cash book, and ledger are the books used.

                             June 1, 1908
       Henry Snow died this day, naming David Brown _executor_.

                                  —3—
    Estate inventoried and appraised as follows:
    Cash in bank                                  $390.50
    Mortgages                                    5,000.00
    R. R. stocks $5,000.00 appraised @ 112                $5,600.00
    Household furniture                                    1,000.00
    Debtors to the estate
    Henry Alton                                   $160.00
    J. L. Lawrence                                  52.00
    D. Pringle                                      75.00
    F. D. Smith                                     84.50    371.50
                                                  -------
    Interest accrued on mortgages $5,000.00
    —5 mo. @ 5%                                              104.16
    Accrued dividends on stock estimated
    at 3% semi-annual, payable July
    1st—5 mo. accrued                                        137.50
                                                          ---------
                                                          12,603.66

                                 —30—
    Approved the following claims:
    Dr. Knight bill                                          200.00
    Funeral expenses—Undertaker                              250.00
    Henry Cole account                                        62.00
    H. Dawson account                                         17.00
    Probate expenses                                         100.00

                                 —30—
    Additional assets discovered
    Geo. Smith owes the estate                                50.00

                                July 1
    Collected 6 mo. interest on mortgage
    at 5%                                                    250.00

                                  —1—
    Collected the following accounts:
    Henry Alton                                              160.00
    D. Pringle                                                75.00

                                  —1—
    Paid the following:
    Dr. Knight                                               200.00
    Funeral expenses                                         250.00
    Henry Cole                                                62.00
    H. Dawson                                                 17.00
    Probate expenses                                         100.00

                                  —5—
    Received dividend on R. R. stock
    3½% semi-annual on $5,000.00                            $175.00

                                  —5—
    Sold R. R. stock $5,000.00 @ 132                       6,600.00

                                Sept. 1
    Collected the following account:
    J. L. Lawrence                                            52.00

                                 —20—
    Sold H. H. furniture                                     790.00
    Depreciation on H. H. furniture                          210.00

                                Nov. 1
    Collected the following accounts:
    F. D. Smith                                               84.50
    Geo. Smith                                                50.00

                                Dec. 1
    Collected 6 mo. interest on mortgage
    $5,000.00 @ 5%                                           125.00

                                  —1—
    Sold mortgage                                          5,000.00

[Illustration:

  A GENERAL VIEW OF THE PLANT OF THE FOX TYPEWRITER COMPANY, GRAND
    RAPIDS, MICH.
]

[Illustration:

  Executor's Journal
]

[Illustration:

  Executor's Account of Cash Receipts and Disbursements
]

[Illustration:

  Classified Ledger Accounts of an Executor
]

[Illustration:

  Classified Ledger Accounts of an Executor
]

[Illustration:

  Classified Ledger Accounts of an Executor
]

[Illustration:

  Schedule Filed by an Executor
]

[Illustration:

  Schedule Filed by an Executor
]


                                EXERCISE

=7.= George Williams died on March 5th, bequeathing his entire property,
after payment of all debts and funeral expenses, to the following
beneficiaries: George Williams, Jr., one-fifth; John Williams,
one-fifth; Fred Williams, one-fifth; Mary Williams, three-tenths; and
George Robinson, one-tenth.

The inventory filed by his executors was as follows:

                       Stocks and bonds $4,000.00
                       Mortgages         6,000.00
                       Wearing apparel     100.00
                       Cash in bank         40.00

There are two executors, and their transactions are as follows:

                             CASH RECEIPTS
          Stocks and bonds sold                       3,341.00
          Mortgages realized                          4,656.00
          Wearing apparel sold                           50.00
          Dividends collected on stocks and bonds     1,800.00
          Interest collected on mortgages             2,400.00
          Interest received on deposits in bank         100.00
          Real estate sold                            1,000.00
          Rents collected                               720.00
          Cash in bank at decease, withdrawn             40.00
                                                     ---------
                                                     14,107.00

                           CASH DISBURSEMENTS
          Funeral expenses                               30.00
          Expenses of probate                           200.00
          General legal expenses                        400.00
          Repairs to building                           220.00
          Stationery, postage, etc.                      10.00
          Accountant's fee                               80.00
          Debts of deceased                             500.00
          Taxes                                         800.00
          Insurance                                      10.00
          George Williams, Jr., on account of legacy  2,200.00
          John Williams, on account of legacy         2,500.00
          Fred Williams, on account of legacy         2,220.00
          Mary Williams, on account of legacy         3,100.00
          George Robinson, on account of legacy         960.00
                                                     ---------
                                                     13,230.00
                                                     =========

The inventory at the date on which they wish to account is as follows:

                       Stocks and bonds $1,000.00
                       Mortgages         1,280.00
                       Cash in bank        877.00

Make up summary statement of the Executor's Accounts showing the balance
due each legatee.


                     ACCOUNTS WITH TRUST PROVISIONS

=8.= In the accounts shown in the preceding illustrations the entire
estate is distributed by judicial decree. When all of the property has
been distributed, the custodian accounts will have been closed into the
personal estate account, which in turn is closed by the distribution of
the estate. In many cases the will of the deceased provides that certain
beneficiaries shall have a life interest in certain of the assets. Quite
frequently the widow is given the income on certain investments which
will revert to the estate at her death. This is illustrated in the
following example of trust accounts:

Edward Brown died on June 15, 1907, leaving a will which elected that
after payment of all just and lawful debts the following legacies should
be made:

To his widow, that part of the real estate consisting of his residence,
the household effects therein, and the income from $50,000.00 to be
invested.

To his son and daughter, $20,000.00 each, and an equal share of the
above $50,000.00 at his widow's death.

The inventory made up for the preliminary accounting was as follows:

          Cash in house                               $200.00
          Cash in bank                               1,500.00
          Household effects valued at                2,500.00
          Stocks                                    40,000.00
          Book accounts                             20,000.00
          Merchandise, fixtures, and stock in trade 25,000.00

The real estate consists of

           The residence of the deceased, valued at 15,000.00
           5 houses valued at                       15,000.00
             (to be sold according to will)

[Illustration:

  Executor's Accounts With Trust Provisions
]

[Illustration:

  Executor's Accounts With Trust Provisions
]

[Illustration:

  Executor's Accounts With Trust Provisions
]

[Illustration:

  Executor's Accounts With Trust Provisions
]

[Illustration:

  Executor's Accounts With Trust Provisions
]

[Illustration:

  Accounting of an Executor, in the Form of an Account of Charge and
    Discharge
]

[Illustration:

  A FACTORY CHEMICAL LABORATORY AT THE PLANT OF THE S. OBERMAYER CO.,
    CINCINNATI, OHIO
]

[Illustration:

  Accounting of an Executor, in the Form of an Account of Charge and
    Discharge
]


                  REALIZATION AND LIQUIDATION ACCOUNTS

=9.= A _realization and liquidation account_ is an account showing the
result of the liquidation of a business or an estate.

It is debited with the total assets as shown by the _balance sheet_ or
_statement of affairs_, and is credited with all liabilities to outside
creditors. The account is subsequently credited with the amounts
realized on assets, and debited with liabilities liquidated together
with the expenses of realization and cost of liquidation.

Realization and liquidation accounts are frequently prepared in the form
of an _account of charge and discharge_ as shown in the preceding pages
for executor's accounts.


                          STATEMENT OF AFFAIRS

=10.= A statement of affairs is frequently confused with a balance
sheet. This is because, like a balance sheet, a statement of affairs
exhibits the resources and liabilities of a business. The difference
lies in the fact that a statement of affairs is made up partly from
information gained from the books and partly from information secured
from other sources.

A statement of affairs is used chiefly in the preparation of a statement
of the condition of an insolvent concern, or one whose affairs have
been, for any reason, placed in charge of an Administrator. In a going
business, all facts that have a bearing on its financial standing should
be recorded on the books, when the statement will be made in the form of
a balance sheet.

Statements of affairs of a going business are sometimes made when it is
desired to make a showing for a special purpose, or at a date other than
a regular closing date. When the books have been improperly kept, a
statement of affairs, or statement of assets and liabilities, is
necessary to get all of the facts properly recorded.

=11. Statement of Affairs of a Bankrupt.= A statement of affairs of a
bankrupt is prepared on a somewhat different basis than a similar
statement for a going concern. Such a statement is prepared for the
benefit of creditors, and should be based on the probability of the
creditors receiving their claims in whole or in part.

[Illustration:

  A Statement of Affairs of a Bankrupt
]

On the left-hand side of the statement, the liabilities should be
listed, showing whether they are actual, contingent, or provisional;
which are preferable or ordinary, or secured partly or wholly by assets
held by creditors of the concern as security for their claims. On the
right, the assets of the concern should be shown. These should be
classified as to whether they are free for distribution among the
ordinary creditors or subject to special liability or claims and which
must be liquidated before the assets can be released for distribution.

The assets may be listed on the basis of their value in a going concern,
or on the basis of the prices they are estimated to bring at forced
sale. The best practice is to list the assets to show, in one column,
their nominal value, and in another column the amounts they are expected
to realize. The statement is prepared for the express purpose of showing
the probability of creditors—preferable, secured, partly secured, and
ordinary—receiving their claims in full or being obliged to accept a
dividend. In preparing such a statement, therefore, the investigation
should be extended beyond the mere bookkeeping records. While the
statement should be based on the properly balanced books of account, it
must be supplemented by information from other sources.

The statement of liabilities should include, not only all of the
liabilities shown on the books of the debtor, but all other enforcible
claims, including contingent liabilities on account of the debtor's name
being on commercial paper as an endorser.

Preferable claims for taxes, wages, and salaries which must be paid in
full out of the assets of the estate, should be deducted from the assets
in order to show the net value of the estate available for distribution
among ordinary creditors. The details of such claims should be included
among the liabilities, but without extending the amounts to the total
column.

Claims of secured creditors also are entered on the liabilities side of
the statement, but are not carried to the total column. Such claims are
deducted from the assets forming the specific security held, the balance
only being included among the assets available for distribution and
carried to the total assets column.

Partly secured claims are entered among the liabilities, but the amount
to which they are secured is deducted, and the balance, which must take
the same chances of payment as other unsecured claims, is entered in the
liabilities column. The corresponding assets are entered on the assets
side but not extended.

[Illustration:

  A Deficiency Account Which Shows the Causes of Loss
]

These adjustments are necessary to show clearly the net assets that will
be available for the ordinary creditors, and the total amount of claims
to be satisfied out of these assets.

Every statement of affairs should also have appended to it schedules
showing the fullest particulars of the different entries which appear in
the statement. The names and addresses of all creditors should be given
and the nature of the debt, whether a trading debt or for borrowed
money, should be clearly shown. Full particulars of any security held
should also be given.

It is much more difficult to ascertain the value of the assets of a
bankrupt than the amount of the liabilities. While it is comparatively
easy to get at the cost or book value of the assets, if the books have
been properly kept, it is usually necessary to write off a considerable
portion of this value to arrive at the amount likely to be realized on
forced sale. It is usually advisable, therefore, to call in an
appraiser, familiar with the line of business involved, to set the
values of the assets on the basis of a going business and on forced
sale.

By showing the book value of the assets and the values they are expected
to realize, the probable deficiency as a result of the liquidation of
the estate is readily seen. Book debts should be classified as good,
doubtful, and bad. Good debts are extended at face value, doubtful debts
at the amount they are expected to realize, while the bad debts are
entered on the statement without extending any amounts.

Assets should be listed in the order of their availability, those most
readily realized being placed first. At the bottom of the statement, in
the form of a note, the dividend available for ordinary creditors,
exclusive of expense of realization and liquidation, is shown.

A statement of affairs is shown, Page 27, which will make the
explanation clear.

Every statement of affairs should, when possible, be accompanied by a
_deficiency account_. The purpose of the deficiency account is to show,
as far as may be, the cause of insolvency. This account is credited with
the losses and shrinkage in the estate shown by the statement of
affairs, the losses shown by the books, and the withdrawals of the owner
or partners. It is debited with the capital at the last known date of
solvency, all additions of capital, and all profits shown by the books.
The balance is the net amount of the deficiency, and should agree with
the amount shown by the statement of affairs. A deficiency account is
shown in connection with the illustration of a statement of affairs.

[Illustration:

  STOCK EXCHANGE BUILDING, CHICAGO, ILL.
]




                       STOCK BROKERS' ACCOUNTS[4]


=1.= The principal feature of brokerage accounting is that such
companies are not supposed to make investments upon their own account,
but to act as intermediaries or agents for those who desire either to
buy or sell.

Footnote 4:

  _Copyright, 1909, by American School of Correspondence._

As this is the case, such companies' profits depend entirely upon the
commission charged their clients, which is charged whether they buy or
sell for a client. There is also a margin of profit on the interest
account, as large brokerage firms are enabled to secure money from banks
at very favorable rates, sometimes much lower than the regular six per
cent charged to customers.

The legitimate broker actually buys and sells, as instructed by his
client. If a customer instructs the broker to buy one thousand shares of
D. & R. G. preferred at 88½, the customer deposits the margin required
by the broker, usually 10 per cent, and the broker at the first
opportunity thereafter, buys in open market the one thousand shares of
D. & R. G. stock ordered, paying in full for the same. The customer may
have a certain time to take up this stock, say thirty or sixty days, but
as he is still indebted to the company for ninety per cent of the
purchase, he is required to pay six per cent interest upon the deferred
payments until such time as the stock is finally taken up and paid for.


                         LARGE CAPITAL REQUIRED

=2.= It will be seen that in a multitude of transactions of this
character, a very large amount of money is required by the broker, to
carry on his business successfully. As very few of them have the amount
of capital necessary, they resort to bank loans. Banks are very willing
to loan money with listed stocks as collateral security, and frequently
do so at favorable rates for the broker. This rate is determined by the
condition of the money market, but is invariably less than the rate of
interest charged to the client.


                            GRAIN PURCHASES

=3.= Purchases of grain at a stipulated price differ from stock
purchases, inasmuch as the full amount of the purchase does not have to
be paid until the delivery of the goods, although there are frequently
charges, such as storage and insurance, which must be made upon long
time purchases. These charges do not accrue, however, until after
delivery. If a customer buys fifty thousand bushels of wheat in April
for September delivery, the purchase is made by the brokers at the
earliest date possible, in order to avoid any fluctuation of the market.
When the broker makes the purchase he pays over the amount necessary to
secure the same. If the deal is carried through to maturity, the grain
is delivered to the broker who has made the purchase for his client, and
is in turn delivered to the client upon the payment of the balance due,
including all charges upon the same.

It is frequently the case, however, that before the actual delivery
takes place, the client has ordered the broker to sell a sufficient
amount to cover the deal. This may be either at an advance or a decline
from the price purchased, but in either case the broker receives his
commissions for both transactions—buying and selling.


                            BULLS AND BEARS

=4.= Investors who are always figuring upon an advance in prices are
termed _bulls_, and those who are confident of lower prices are termed
_bears_. If a seller sells for future delivery what he does not own, he
is termed _short_ and becomes temporarily a buyer, in order that he may
have a sufficient amount to fill his orders. If a buyer holds stock or
grain for a rise, or contracts for future delivery, he is termed _long_
and becomes temporarily a seller, seeking to bring his holdings down to
the normal demand.


                      EXACT BOOKKEEPING NECESSARY

=5.= It will be seen from the nature of the business that the
bookkeeping department must be very exact, careful in its dealings, and
as prompt as a bank in its action. Every precaution must be taken to
safeguard the broker and protect the customer. The accounts must show,
with each transaction, the brokerage or commission charges and, as in
active times the transactions are very numerous, they must be quickly
and accurately recorded in the books of the company.


                          BROKER'S COMMISSION

=6.= The percentage or commission due to the broker is included in the
amount deposited to protect the deal, which is called a _margin_. If
there should be a decline in price of either stock or grain, sufficient
to cause the broker to feel insecure, he always reserves the right to
call upon the customer for an additional deposit, even though the time
of delivery has not yet arrived. In case the customer fails to make such
additional deposit, the broker can sell the securities, grain, or other
purchase, at once, in order to protect himself; the amount primarily
deposited by the customer is thereby forfeited.

All orders for the purchase and sale of any article are received and
executed with the distinct understanding that _actual delivery_ is
contemplated and that the party giving the order so understands and
agrees.


                               SECURITIES

=7.= It is understood and agreed between the broker and his client, that
all securities carried in his account, or deposited to secure the same,
may be carried in the broker's general loans, and may be bought or sold
at public or private sale without notice, when such sale or purchase is
deemed necessary by the broker for his protection.

It is also understood and agreed that the right is reserved by the
broker to close transactions on all accounts without notice, when
protection is exhausted, or when, in his judgment, it is near enough
exhausted as to endanger the account, and the broker reserves the right
to settle contracts with his client, in accordance with the rules and
customs of the exchange where the order is executed.


                              BUCKET SHOPS

=8.= The class of brokerage concerns termed _bucket shops_ are those
which do not actually carry out the orders of their customers, who
neither buy nor sell anything, but who expect quick deals, frequent
changes and, speaking plainly, merely _gamble_ with their clients,
allowing them to take whichever side they prefer. The large margin which
this fraternity receives is a commission on deals whether they win or
lose.

In order to maintain at least a pretense of legality, there must be an
_actual_ transfer of all stocks and commodities speculated in. The
broker must acquire nominal possession of something which represents
stocks, grain, cotton, or other commodities. To do this he must borrow
money from the bank, or borrow stock or warehouse receipts from those
who have them to lend. In either instance he charges interest to his
speculative customers.

It is estimated that the brokers in New York City who are members of the
various exchanges, have an average amount in call loans outstanding of
about $600,000,000.00, all of which vast sum is used to finance the
orders of the brokers' customers. In dull times the minimum falls as low
as $350,000,000.00, but there have been periods of speculative activity
when $1,100,000,000.00 have been thus employed. The interest rate
charged brokers constantly varies, but those who have had dealings with
them state that their accounts rarely show less than five per cent
interest. The broker charges the customer six per cent, thus averaging
one per cent profit upon all money borrowed.

The New York Stock Exchange was founded for a high and honorable
purpose, the same being true of the New York Produce Exchange, The
Chicago Board of Trade, and other institutions for coöperative trading
and the determination of values, in accordance with the recognized codes
of business, and in conformity with the laws of supply and demand. Such
exchanges serve admirably the producer and the merchant. They have a
valid function to the investor in railroad and corporation securities,
and are indispensable in facilitating the massing and distribution of
capital required by large commercial enterprises.


                           LEGITIMATE DEALERS

=9.= Every legitimate brokerage concern has its representative or
representatives on the board of trade in the city wherein it is located,
and they are members in good standing of the board. When an order is
given by a customer, either through the wicket or by wire, it is
immediately transferred to the floor man and he proceeds to buy or sell
as the instructions are given. In an active market the client must take
the chances of slight fluctuations, which are just as likely to be in
his favor as against him. The floor man reports the sales or purchases
as soon as made, with the price paid and from whom purchased. The
entries are immediately made to the customer's account.


                             CLEARING HOUSE

=10.= The boards of trade in different cities maintain a clearing house
somewhat similar to that used by the banks, to settle the deals of each
member of the board each day. The deals consummated during the day's
session are reported to the clearing house and the amounts due from and
payable to each firm or individual member are computed. If the brokerage
firm has purchased ten thousand dollars more than it has sold, a check
is given to the board for ten thousand dollars, as there must be some
other firm or firms who have sold more than they have purchased to whom
this ten thousand dollars is due, and to whom it is paid. Deliveries of
stock are made at the time the balance is paid.


                            RING SETTLEMENT

=11.= At the close of the day, settlements for grain purchases are made
between brokers at an agreed _settlement price_. If brokers have bought
and sold to each other in varying amounts, only the difference in the
price is adjusted with each other. What are called _ring settlements_
save considerable time, money, and labor. The _ring settlement_ is a
settlement between three or more parties without the necessity of
margining and may be illustrated in this manner:

_A_ has bought 50,000 bushels of wheat of _B_, and has sold 50,000
bushels to _C_. By inquiry, it is found that _C_ has sold 50,000 bushels
to _B_. It is ascertained that the transactions between _A_, _B_, and
_C_ offset each other, and instead of each party being obliged to put up
margins upon each transaction, a settlement may be effected by paying
the difference in price, as the sale from _C_ to _B_ may be at a
different price from the sale made by _B_ to _A_, and the sale made by
_A_ to _C_, may have been at a still different price. By the adjustment
between the different parties of the difference in price, the necessity
of margining by _A_, _B_, or _C_ is rendered unnecessary.


                              ILLUSTRATION

  _A_ bought 50,000 bushels of wheat of _B_ at $1.23; A sold 50,000
  bushels of wheat to _C_ at $1.23½. By making up the ring it was
  found that _C_ has sold to _B_ 50,000 bushels at $1.22½. In making
  the settlement it is found that _C_ is indebted to _B_ ½ cent per
  bushel for the amount sold, as _B_ sold at ½ cent advance; _C_ is
  also indebted to _A_ ½ cent per bushel as he purchased of _A_ at a ½
  cent advance on the price _A_ bought from _B_. The settlement of
  this deal would be made by _C_ giving his check for the amount due
  to _B_ and to _A_, and there would be no necessity for any one of
  the three brokers putting up a margin on the deals. The amount of
  grain is offset one by the other, and the difference in price has
  been adjusted by payment of cash.


                          COMMODITIES HANDLED

=12.= The commodities that are handled upon the board and by brokers in
general—food stuffs—are wheat, corn, oats, pork, lard, and short ribs.
The various listed stocks are also bought and sold, a considerable
business is done in bonds, and in some exchanges mining properties are
listed, bought, and sold; although the latter is not common in the
larger and more important exchanges. Cotton is a very important factor
in some exchanges, and tobacco in others.


                          CORNERING THE MARKET

=13.= To _corner the market_ is to offer to buy and be prepared to carry
out your offer, for an amount more than is offered for sale, thus
causing the price to advance. Sometimes this is done by large operators
to their advantage and sometimes, in spite of their large purchases,
which encourage a rising market, the prices fall before their deals are
consummated, and they are left high and dry with a considerable loss
instead of a large profit. The _bull_ who tries to run a corner has a
strong foretaste of what it means to advance sensationally, a staple
article of consumption. Stocks and bonds may be hoisted ever so high;
real estate may be boomed to far beyond its intrinsic or even potential
worth—the public has no objection; the process is, in fact, rather
pleasing to it. A lift in cereals or cotton above the normal lines
encounters many protests and the higher the lift, the more savage the
protest. This of course does not include the farmer or planter, unless
he has disposed of his output; then he willingly enough joins the chorus
of protestation.


                           VALUE OF THE WIRE

=14.= The telegraph is a very important factor to the grain and stock
broker, as a large majority of their business is done by wire. Many of
their clients are distributed through the country and keep close watch
of the fluctuations of the market, sending their orders by wire, at what
they consider an opportune time.

Most brokerage firms have a number of customers outside of the city, and
these customers as well as those in the city who are large buyers, keep
a considerable deposit on hand with the broker at all times. This
deposit is frequently augmented by advantageous sales or decreased by
losses, commissions, and interest charges. Reports of the condition of
customers' accounts are made with frequency and any customer who finds
that he has more money in the hands of the broker than is considered
necessary, can secure part of the same by asking, or if he desires to
close all transactions, the total amount due him is paid over at once.
All amounts thus deposited are credited to customers' accounts and
properly taken care of through the bookkeeping department.


                   SETTLEMENT OF CONTRACTS BY OFFSET

=15.= To quote from the rules of the Chicago Board of Trade:

  In case it shall appear that the delivery of any outstanding trade
  or contract between members of the association may be offset by some
  other corresponding trade or contract, made by the parties with
  other members of the association; and the parties to such trade or
  contract, or their authorized agents, consent to such offset, such
  trade or contract shall be deemed to have been settled; any balance
  between the current value of the property covered by such trade or
  contract, and the several contract prices shall be due and payable
  immediately by the party from whom such balance may be due, to the
  party entitled to receive the same under his contract.

This is the rule applying to ring settlements hereinbefore described. To
quote further:

                       "MARKET VALUE TO BE POSTED

  The current market value of the property contracted for shall be
  conspicuously posted, at a stated hour each day, under the direction
  of the Board of Directors, in the Exchange Hall and in the
  Settlement Room of the Board, which posting shall serve as a basis
  for the adjustment of all contracts settled, as herein provided on
  that day.

                 "ADJUSTMENT OF BALANCES ON SETTLEMENT

  In order to facilitate the operation of this section, each member is
  required to keep a _settlement book_, in which shall be entered the
  names of parties with whom settlements have been made and the dates
  and terms of the trades included in such settlement, and the terms
  of such settlements, and the prices at which the commodities were
  originally sold or purchased, and the amounts due to or from him or
  them on each separate settlement, also the net amount due to or from
  him or them on all settlements.

                      "CLEARING HOUSE AND REPORTS

  The Board of Directors is hereby authorized to provide a suitable
  office, with the necessary employes, to which members shall be
  required, at stated hours each day, to make reports, showing the net
  balance due to or from each member, as shown by such settlement
  book, and also the general balance due to or from him or them upon
  all such settlements; each report to be accompanied with an
  acceptable check for the balances, if any, due from him or them on
  the contracts so settled; whereupon, if said report is found to be
  correct, as compared with other reports rendered him, the person in
  charge of said office shall, at a stated hour each day, pay to each
  of the parties making such report any balances which he may have
  collected, and which shall appear to be due to them by said reports,
  less such charges as shall be prescribed by the Board of Directors
  as compensation for the services of said office.

                "CONFIRMATION OF TRANSACTIONS FOR FUTURE
                             DELIVERY, ETC.

  It shall be the duty of each member or firm making a transaction for
  future delivery of grain or flax-seed in five thousand or one
  thousand bushel lots, lard and pork in two hundred and fifty or
  fifty package lots, and D. S. short ribs and D. S. extra short
  clears in lots of fifty thousand or twenty-five thousand pounds,
  under the Rules of the Association, to confirm such transaction by
  sending to the clearing house a memorandum of the same by 6 o'clock
  P. M. of the day on which it is made; such memorandum shall be in
  writing, and shall state on its face the date of the transaction,
  the quantity and kind of property covered by the same, the month of
  delivery, the price, and the name of the party to whom sold or of
  whom bought, and shall be signed by the party or firm making the
  same. All transactions of the same date made with any member or firm
  may be included in one memorandum, and all such memoranda shall be
  sent to the clearing house by the member or firm making the same, in
  unsealed envelopes addressed to the member or firm with whom such
  transactions were made. It shall be the duty of the clearing house
  manager to assort and have ready for delivery by 8 o'clock A. M. of
  the following day, and to deliver, on application, all envelopes
  containing such memoranda as are left with him in compliance with
  this section.

There is a fine imposed upon any member failing to comply with the above
provisions.

               "FAILURE TO DELIVER OR RECEIVE ON CONTRACT

  In case any property contracted for future delivery is not delivered
  at maturity of contract, the purchaser may, if he shall so elect,
  consider the contract forfeited; or he may purchase the property on
  the market for the account of the seller, by 1:15 o'clock P. M. of
  the next business day, notifying him at once of such purchase; or he
  may require a settlement with the seller at the average market price
  on the day of maturity of contract, and any damages or loss due to
  the purchaser, by reason of such purchase or declared settlement,
  shall be due and payable by the seller immediately.

[Illustration:

  A SECTION IN THE GENERAL OFFICES OF THE SIMMONS HARDWARE COMPANY,
    ST. LOUIS, MO.
]

  In case any property contracted for future delivery is not received
  and paid for when properly tendered, it shall be the duty of the
  seller, in order to establish any claim on the purchaser, to sell it
  on the market at any time during the next twenty-four hours, at his
  discretion, after such default shall have been made, notifying the
  purchaser within one hour of such sale; and any loss resulting to
  the seller shall be paid by the party in default.


          DEPOSITS TO SECURE THE FULFILLMENT OF TIME CONTRACTS

[Illustration:

  Fig. 1. Memorandum of Deposit with Broker to Secure Contracts
]

=16.= The rules of the board of trade provide that on time contracts,
purchasers shall have the right to require of sellers as security, a
deposit of ten per cent, which amount is based on the contract price of
the property purchased; they are also further allowed to demand security
from time to time to the extent of any advance in the market value above
selling price. Sellers shall have the same right on property sold, and,
in addition, any difference that may exist or occur between the
estimated legitimate value of any such property and the price of sale.
It is required that all securities shall be deposited with the treasurer
of the association or with some bank duly authorized by the board of
directors to receive such deposits. The board requires in each instance
a memorandum which shall state the name of the depository, the date on
which the deposit is made, the name of the depositor, and also the name
or names of the party or parties in whose favor the deposit is to be
made, together with the amount of such deposit in detail and also in the
aggregate. The left-hand part of the memorandum is retained by the
depository selected, the right-hand portion thereof being taken by the
depositor after being duly signed by the person authorized to receipt
for the said deposit, and without delay this memorandum must be placed
in the office of the clearing house. A detail of this memorandum is
shown in Fig. 1.

Upon the fulfillment or settlement of any contract or upon the closing
of any contract—deposits upon which have been made—when the full
adjustment of all differences relating to the same shall have been
effected, the deposit shall be paid to the party depositing.


                COMMISSIONS ALLOWED BY BOARD TO BROKERS

=17.= The commissions to be collected by brokers from customers are
fully prescribed by the board of trade in each city and do not
materially differ. While it will not be possible to give all the rates
of brokerage or the charges allowed for buying, selling, or accounting,
the commissions allowed on the Chicago Board of Trade for buying _or_
selling, or for buying _and_ selling, are as follows:

        For the purchase, or for the sale, or for the purchase and
  sale by grade alone of wheat, corn, or oats, to be delivered in
  store, either for immediate or for future delivery, one-eighth of
  one cent per bushel.

        For the purchase, or for the sale, or for the purchase and
  sale, by grade alone, of rye, barley, or flax-seed, to be delivered
  in store, either for immediate or for future delivery, one-quarter
  of one cent per bushel.

        For the purchase, or for the sale, or for the purchase and
  sale of lard, six cents per tierce.

        For the purchase, or for the sale, or for the purchase and
  sale of pork, five cents per barrel.

        For the purchase, or for the sale, or for the purchase and
  sale of D. S. short ribs, or D. S. extra short clears, twenty-five
  cents per thousand pounds.

        The minimum rates allowed upon the above transactions made for
  the account of members of the board are one-half of the foregoing
  minimum rates.


                          BOOKS AND FORMS USED

=18.= There are a number of ordinary forms, such as checks, drafts,
receipts, requisitions, etc., that are common with most lines of
business and used in the brokerage business, which will not be necessary
to reproduce. Most brokers have all such forms printed or lithographed
for their especial use with their name and address prominently displayed
thereon.


                              ORDER BLANK

[Illustration:

  Fig. 2. Telegraphic Buying and Selling Orders
]

=19.= The first form of importance in connection with the accounting
department of a brokerage firm is the _order_ of the customer. This must
invariably be in written form with the signature of the customer and the
order must be expressed in the plainest terms so that there is no
possibility of misconstruction. As these orders are frequently received
by wire, or often dispatched by wire to New York or other branch office
for execution, blanks for the purpose, as shown in Fig. 2, are furnished
to customers, those used for buying orders being printed in black and
those used for selling orders being printed in red. These orders are
made out by the purchaser or his authorized agent and should not only
show the date of the order but also the time of the day it was given,
which is frequently of great importance in an active market. Whatever
margin is required by the broker upon the deal must be deposited by the
client at the time the order is given, as without this protection, the
broker will not proceed to execute the order. It is sometimes the custom
for brokers to accept collateral covering a certain amount of margin, in
which case the broker gives the customer a receipt in due form, holding
the collateral as trustee until settlement of account. All orders are
executed at the earliest possible moment after their receipt. Legitimate
brokers are members of the board of trade often in various cities and
have their representatives on the floor, during the business hours of
the board, to buy or sell as ordered.

[Illustration:

  Fig. 3. Credit Slip Given to Customer by Broker
]


                         DEBIT AND CREDIT SLIP

=20.= As soon as the transaction is accepted by the broker, he gives to
the customer a debit or credit slip showing the nature of the
transaction, or it is sent by mail, as soon as possible after business
hours; the charge or credit depend upon whether it is a purchase or a
sale. The blanks for this purpose, as shown in Fig. 3, should be printed
on different colored paper; the debit blank is usually on white and the
credit blank on buff or yellow paper. If a client buys, the amount of
his purchase appears as a debit to his account, with the commission
added. He receives credit for whatever amount of margin he deposits, and
the account stands thus until delivery, when the entire balance must be
paid. If a sale is made by the client before the time of delivery, the
amount of the sale is credited to his account, less the commission due
for selling and any other charges. The difference in the account,
whether it is an amount due from the broker to the client or from the
client to the broker, is paid in cash as soon as the deal is closed.

[Illustration:

  Fig. 4. Daily Sales Journal or Record of Stock Sales
]


                           DAILY RECORD SHEET

=21.= As a most perfect record must be kept of every transaction, the
daily record sheets, as shown in Fig. 4, are of the greatest importance.
This book is called the _daily journal_ as frequently as it is
designated the _daily record_.

[Illustration:

  Fig. 5. Daily Sales Journal or Record of Grain Sales
]

This book is most convenient when kept in loose-leaf form, as a small
number of leaves may be kept in the binder for current use, and after
the sheet is filled, it may be filed away for future reference. The size
of the sheet is usually 16 by 14 inches, and it is ruled and printed to
show date, remarks, shares, stock, price, charge stock account,
commission, credit account of, and folio. The _purchase blank_ for this
record is exactly the same with the exception that it is used to credit
stock account instead of charging, and to charge customers' accounts
instead of crediting. There should also be a _grain sales sheet_ and a
_grain purchase sheet_, which differ slightly in the column headings but
not necessarily in the ruling—_number of bushels_ taking the place of
the column headed _shares_, and _kind of grain_ taking the place of
_stock_, as shown in Fig. 5. There should also be a _sundries sales and
purchase sheet_ for recording orders upon other commodities than grain
or stock. Its form is the same as that shown with the exception that
_amount_ takes the place of _shares_, and _commodities_ the place of
stock in each form.

[Illustration:

  Fig. 6. Special Journal Used by a Grain Commission Company
]

As soon as an order is received, it is entered upon the proper record
with all of the particulars, and the postings to customers' accounts are
made daily, but the posting to the general ledger accounts need not be
made more frequently than once a month, unless it is desired to take off
a general ledger balance at more frequent intervals.

[Illustration:

  Fig. 7. Daily Advice of Purchase or Sale Rendered to Customers
]


                     GRAIN COMMISSION JOURNAL SHEET

=22.= In this connection it is advantageous for the student to study the
journal form used by an exclusive grain commission company, Fig. 6. This
form is used for recording the sales as they are made in a manner
similar to that described in the daily record sheet. The form is
loose-leaf and may be 11 by 14 inches in size, or if preferred could be
made 16 by 14 inches, giving the advantage of a longer page. The
necessity for a long or short page is determined altogether by the
amount of business done by the house in one day, as it is the intention
with this record to use one full page or more for each day's
transactions. This journal bears the day and the date at the top of the
page, and is ruled and printed to show columns for folio, names, number
of sale, net proceeds, insurance, sack rent, freight and charges,
commission, and total. The entries in this journal are made from the
sales sheet, and the total amount is posted to the ledger for customers
from this medium.

[Illustration:

  Fig. 8. Record of Stocks in Hands of the Broker
]


                       ADVICE OF PURCHASE OF SALE

=23.= A very important document used by commission merchants and brokers
is the _advice_ or _notification to customer_ of their action in filling
his orders. This advice is rendered daily to each customer and should be
checked by him carefully, so that there may be no errors in the deals
and no differences in opinion between the client and his broker. The
advice would begin with the date and read something like this: "Mr. Geo.
Bronson, Milwaukee, Wis.: We have this day bought for your account and
risk, 100 shares American Car and Foundry (preferred) at 111⅛; 200
shares Canadian Pacific at 177; 100 shares Pullman at 187." On the lower
part of the form, as shown in Fig. 7, are printed the rules of the house
in regard to the order and it should be signed by some one in authority.
If the customer accepts the same, it is an evidence that the transaction
is according to orders.


                              STOCK RECORD

=24.= Owing to the fact that a very large amount of stock of various
companies is being bought and sold continually by a brokerage firm, no
book kept in the accounting department is of greater importance than the
_stock record_. Not only is the broker's business with customers but it
is also very largely with other brokerage concerns as he is buying and
selling continually. Every share of stock which is bought or sold must
be recorded in the stock record. This record shows: Record number, date,
number of certificate, number of shares, from whom received, in name of,
record number, number of shares, to whom delivered, and date of
delivery, as in Fig. 8. It is not necessary in this book, to keep a
record of either the price paid or the price at which sold, as this
register is intended merely to show the disposition of the certificates
of stock and whether they are still in the house, or if disposed of, to
whom they have been delivered. It is needless to point to the necessity
for the greatest care in keeping this record, as any errors might make
it very difficult to trace the paper and result in loss, or at least
considerable trouble for the house.


                               CASH BOOK

=25.= The general cash book for a brokerage firm in loose leaf should be
sheet size 14 by 14 inches. In a bound book, it would not be necessary
to have it more than 12 inches wide. In this particular business, it is
not desirable to carry the general cash debit on one sheet and the
general cash credit on another, although it might be advantageous in
certain cases to run the grain in the general cash book and to keep a
subsidiary cash book for the stocks, which might be run upon similarly
ruled sheets, the total of the day's transactions being brought into the
general cash at night. By doing this the posting clerk could be using
one of the cash books while the cashier was working on the other.

[Illustration:

  Fig. 9. Broker's General Cash Book
]

At the heading of the general cash sheet appears the sheet number and
either the date (providing one sheet or more is used for each day), or
the month with an extra day column, next to the margin. The columns are
ruled and printed to show stocks, grain, and general ledger on the debit
side and the same on the credit side, with the posting columns and
sufficient room for the names of customers in center, as in Fig. 9. In
this cash book should be entered all payments for margin on purchases of
either grain or stock, all deposits by customers, which should be
carried into the column indicated by their account—if they deal in grain
their account is in the grain ledger and if in stocks their account is
in the stocks ledger. All items of receipts or expenditures, not from or
to customers, should be entered in the general ledger column, except as
shown in the subsidiary cash sheet called _office cash disbursements_.
Cash book sheets should always be paged consecutively when made, and
each sheet accounted for, if loose-leaf cash books are used.

The best binder to use for a loose-leaf cash book is a flat opening
spring back holder, in which may be placed enough leaves to last for the
month, to be used for the current work, and when the new month is
started the sheets for the previous month are placed in a reserve
binder—which should be of the sectional post variety—for reference. If
the back of the binder is labeled as the front and the leaves are
reversed when placed in the transfer binder, they will run consecutively
as to pages and dates.

At the end of the month the totals of the grain ledger and stocks ledger
are brought into the general ledger column and posted to the controlling
account for that ledger.


                       OFFICE CASH DISBURSEMENTS

=26.= As there are a number of disbursements for office help,
advertising, telegraph, etc., that should be kept separate from the
general cash, it is very desirable to establish an _office cash fund_.
This fund is started by charging to office cash in the general ledger a
definite amount, say $500.00, which amount is drawn from the bank or set
aside for special checking for the payment of all miscellaneous bills or
drawings of principals on account of salary, also the drawings of
salaried employes. This account may be as large as is required for the
purpose, and when the office cash becomes depleted, more is drawn which
can be added to the account. At the end of the month, a statement is
made of the totals of the different columns which should be a duplicate
of the office disbursement sheet. These totals are entered in the
general cash posted therefrom, a check given for office cash
disbursements for the amount of the interest, say $500.00, and credit
given the account for the difference in the amount spent as shown by the
statement.

[Illustration:

  Fig. 10. Detailed Record of Office Cash Disbursements
]

The office cash disbursement sheet, shown in Fig. 10, should be 14 by 16
inches in size, with _sheet number_ and _month of_, in the heading. The
box headings are as follows: Day, item, posting, general ledger,
salaries, office help, advertising, private wire, tickers, telephone and
telegraph, special commissions, rent, and sundries. The office cash
balance should be kept independent of the general cash balance and,
preferably, by another clerk.

Entries should be made as money is disbursed, with the proper vouchers
for the same, to be turned in with the report.

[Illustration:

  Fig. 11. Record of Margin Balances to Protect the Customer's Account
]

The totals of the different accounts, having been entered in the general
cash, are posted to the debit of their respective accounts in the
general ledger.

In localities where cotton is largely dealt in, or where tobacco is
largely dealt in, it may be necessary to add columns for the tobacco
ledger or the cotton ledger in the general cash, but in localities where
the transactions are not frequent, the accounts for such transactions
and also the deals in provisions are carried in the grain ledger.

Any cash book sheet which should happen to be spoiled should be marked
_void_ in red ink, and filed in its regular order with the other cash
sheets, but _in no case should it be destroyed_.


                              MARGIN BOOK

=27.= It is as necessary in the brokerage business to know the condition
of customers' accounts as it is in a bank, and perhaps a little more so,
as fluctuations in the market may _wipe out_ his margin without his
knowledge, and while it is not absolutely obligatory on the part of the
broker to notify his customer, still it is very much to his interest to
do so.

The margin clerk has the balance of each customer every morning. All
orders to buy or sell received during the day pass through his hands and
he makes the necessary memorandum against the customer's account. He
keeps posted on the fluctuations of the market and immediately notifies
the principals of any account which needs protection. After the trading
for the day is finished, which on the board is 1:15 o'clock P.M. on any
day except Saturday, and Saturday at 12:00 M., the margin clerk extends
the balances of the various customers' accounts, these balances are
checked by the bookkeeper from his accounts to prove their correctness,
and a new list of the balances is made for the use of the margin clerk
the following day.

This book is kept in most houses as a form of blotter, but the best form
is a short sheet with numbered lines for the names of customers and a
long sheet with similarly numbered lines divided into inch columns, with
the balance column at the beginning and at the end, to be inserted under
the short sheet, to care for the transactions of the day. By this means
the names of customers will not have to be duplicated daily.

The sheets should be kept in a holder so that the names run
alphabetically and the initial letter of the names on one short sheet
should be penciled upon the long sheet each day. The bookkeeper can, if
desired, have a duplicate set of the short sheets, shown in Fig. 11, to
use for making up the balances for the succeeding day.

Where there are a sufficient number of accounts to warrant, they should
be divided by tabbed index sheets with a leather tab projecting, in
alphabetical arrangement, so that any account may be turned to
instantly; for instance, if the account of L. S. Tucker & Co. is wanted,
turning up the tab _T_ will bring to light all of the customers whose
names begin with _T_. This index may be further subdivided if it is
deemed advisable.

The sheets for each day's work should be dated at the beginning of the
day and may be kept, if desired, for reference, although after they have
been proven by the books, they are of no practical value.

[Illustration:

  Fig. 12. Ledger Account of Each Stock Handled
]


                              THE LEDGERS

=28. Stock Ledger.= Some brokerage firms, besides keeping the stock
record, keep a stock ledger, opening an account with each line of stock
bought or sold and posting therein daily from the orders. This ledger
account, with each class of stock, indicates at all times just how much
of each line is held by the house and is very necessary in order to show
what may be sold if occasion demands. As a large amount of stock held by
brokerage firms is usually deposited with their bank as collateral for
loans, and, as it is frequently the case that portions of this stock
must be delivered to customers or sold upon their order, it is necessary
to frequently change the collateral deposited with the bank,
substituting other stock for that taken from the bank.

[Illustration:

  BASEMENT SHIPPING PLATFORM, FARWELL, OZMUN, KIRK & CO. (WHOLESALE
    HARDWARE), ST. PAUL, MINN.
]

[Illustration:

  Fig. 13. This Shows a Variety of Rulings for the Customers' Ledger
]

The stock ledger form in loose leaf is 13¾ by 14 inches, and the name of
the stock should be inserted in the heading. It is ruled and printed to
show: Date bought, preferred, common, extra column, price, account, date
sold, preferred, common, extra column, and price, as shown in Fig. 12.
Each sheet should have a number, and these numbers should follow
consecutively. There are two ways of indexing these accounts. The one
strictly in accordance with the theory of loose leaf is the insertion of
the sheets in their proper alphabetical sequence. When the accounts are
carried in this manner, leather tabbed index sheets appear at intervals
throughout the ledger or ledgers. The division of the alphabet depends
entirely upon how many accounts it is necessary to run and ledgers may
be alphabetically subdivided into from twenty-five to two hundred
divisions. The better the subdivision, the easier it becomes to turn to
an account.

Since the majority of listed stocks are designated by initials or
abbreviations in order to handle them with greater ease, some firms
prefer to run the stock ledger on the numerical plan. By this plan each
account is numbered and the accounts follow consecutively. Tabbed index
sheets occur at intervals of from ten to twenty numbers, showing the
location of any numbered account. With this arrangement it is necessary
to keep a separate index of the various listed stocks, with their
respective numbers, and to find an account the number of the stock must
first be ascertained. By constant handling and entering, the bookkeeper
becomes very familiar with the numbers and it is but little trouble for
him to locate an account. The greater difficulty would be for someone
who is unfamiliar with the books to find an account when wanted. Owing
to this fact, the alphabetical arrangement is preferred.

=29. Customers' Ledger.= Brokers who deal in grain and other food
products, cotton, and stocks, usually require ledger sheets slightly
differing, to keep a record of customers' accounts. The different
rulings are not frequently used for the same customer, as those who deal
in grain are not often stock manipulators. As interest is charged to the
customer for deferred payments upon stock deals, this item must be taken
care of in the ledger. Upon grain transactions, the balance on the
purchase price is not paid until the delivery of the goods, consequently
there are no interest charges upon these accounts until after maturity.

Fig. 13 shows rulings of six ledgers used by prominent brokerage houses
in Chicago and St. Louis, and a study of the different forms as to the
columnar arrangement will show how varied are ideas in regard to ledger
rulings. All of these forms are useful, and the choice is merely a
matter of individual preference. One thing which should be borne in mind
in regard to ledger rulings is that the information shown in the ledger
account should be exactly the same as that which it is necessary to
convey to the customer in his monthly or weekly statement. The reason
for this is that it should never be necessary to refer to any book
except the ledger in preparing customers' statements, and it will be
noticed in the statement of Logan & Bryan, shown later, that it is not
only a reproduction of the ledger account as to matter contained
therein, but also follows it exactly in form and ruling.

This book is used the same as any other loose-leaf ledger with the
exception that there is much more detail entered in these ledger
accounts than is usual in a mercantile business.

Not more than one account should be entered on one leaf, for the reason
that it is impossible to maintain a perfect alphabetical arrangement
unless each account is absolutely independent.

After the names have been entered, the ledger sheets should be arranged
alphabetically under each leather tabbed indexed subdivision. This
arrangement should be carried, if necessary, to the fifth or sixth
letter and when names are the same, like _Smith_, they are indexed
alphabetically by initials. The brokerage business is one where there
should be no loss of time in referring to accounts, hence the more
perfect the indexing the more easily the account is located. Ledgers can
be balanced daily by the aid of an adding machine without writing off
the amounts of the balances.

The binders to use for this ledger are a current binder for active
accounts and a transfer binder for closed accounts.

Postings should be made from the daily record sheet to the ledger as
soon as possible after the consummation of the deal, and the postings
from the cash book must also necessarily be kept up to date. At any
moment the statement of the customer may be required, and it would be
quite inconvenient for the broker if, on account of delayed posting, the
statement were incomplete or incorrect. The number of customers' ledgers
that should be kept depends entirely upon the number of customers. One
loose-leaf ledger binder will accommodate at least five hundred
accounts, and if the number exceeds this, two current binders should be
used. By keeping the ledgers well gleaned and transferring closed
accounts to a transfer ledger, the active accounts only remain in the
current binder, which facilitates posting, statement making, and
reference.

[Illustration:

  Fig. 14. Conventional Balance Form for General Ledger
]

Some firms use the vertical filing drawer for transferred accounts
instead of placing them in another binder, as it is much easier to
secure these accounts for replacement in the current binder in case the
account is reopened.

=30. General Ledger.= A general ledger should be kept for the personal
accounts of members of the firm, controlling accounts of subsidiary
ledgers, controlling account of bills receivable and bills payable, and
all impersonal accounts. This book may be in loose leaf if desired,
although many firms prefer to use a bound ledger for this purpose. The
best form is the regular four-column ledger, debit, credit, debit
balance, and credit balance, as in Fig. 14.

The periodical statement of the condition of the firm is taken from the
general ledger, and all subsidiary books controlled through its accounts
must balance with the amounts shown therein.

[Illustration:

  Fig. 15. Broker's Statement to a Customer, Which is a Duplicate of his
    Ledger Account
]

Most large brokerage houses have branches in different cities and it is
necessary to keep accounts in the general ledger with each of these
branches showing the expense of the branch and the receipts therefrom,
taken from the regular statements furnished at whatever period required.
It is very necessary that the profits or losses from these branches be
readily computed as it might be deemed expedient, if it were known that
the branch was not doing well, to discontinue it. Frequent statements,
complete in their nature as to receipts and expenditures, should be
demanded.

The principal expense accounts of a brokerage firm are salaries, rent,
private telegraph wires, telephone booths, tickers, advertising, special
commissions, and sundry expenses. As before stated, the receipts are
from commissions and interest. Commissions accruing to brokers from the
sale of stock are twenty-five cents per share—twelve and one-half cents
for sales, and the same amount for purchases.


                          CUSTOMERS' STATEMENT

=31.= In a brokerage and commission business, customers are very likely
to demand a statement at any time, and even should they not do so, it is
deemed expedient to make statements to customers often enough to keep
them fully posted regarding the condition of their accounts. The best
form of statement to use for this purpose is shown in Fig. 15, and is an
exact reproduction of the ledger account. As these statements are made
very frequently it is unnecessary to provide blanks with more than nine
or ten lines.


                          BILLS PAYABLE RECORD

=32.= Taking into consideration the large amount of money borrowed in
this business, and the constant fluctuation of the amount due to banks,
it will be seen that a careful, complete, and simple _bills payable
record_ is a prime necessity. This usual record shows date of loan, call
or time, from whom borrowed, to whose account, rate of interest,
securities—amount, when paid; securities—when released. A more simple
form of this record is shown in Fig. 16.

[Illustration:

  Fig. 16. A Detailed Record of Loans Payable During Each Month
]

Loans made should be reported immediately to the cashier in writing, and
the data concerning them should be entered at once in the cash book and
the bills payable record. In some cases, banks arrange with the
brokerage firm for what is called a _blanket loan_ varying in
amount—from $100,000.00 upward—according to the requirements of the
firm. In increasing a loan of this character it is always necessary to
keep upon deposit with the bank, collateral amply sufficient to cover
the highest amount required, and any part of this collateral may be
withdrawn by the substitution of other collateral satisfactory to the
bank. In such a case there should be a blanket loan account kept in the
general ledger showing, specifically, the collateral in the hands of the
bank, and by the system of debit and credit, the record of that
withdrawn and that substituted should be kept.

In case there is sufficient fluctuation in values to warrant, a bank can
demand additional security at any time or the withdrawal of that held by
them and the substitution of something more acceptable, or they may,
upon call loans, demand a part or full payment at any time, in which
case it is necessary for the broker to make arrangements to take up the
loan at once.


                                JOURNAL

=33.= All orders received are copied from the order blank into the
journal, as the order blank used is not of a character to allow its
being numbered and filed consecutively, nor can it be readily adapted to
the division of the buying and selling accounts.

The journal sheet should have debit and credit columns for each ledger
used for customers, and a general ledger column as shown in Fig. 17.
Entries from the orders are carried into the proper ledger column. If a
man buys stock, he is debited in the stock ledger column; if he buys
grain he is debited in the grain ledger column; and if he sells either,
he is credited in the proper column.

In making a statement to the customer of purchase and sale, the profit
or loss together with the commission charged is shown.

[Illustration:

  ILLUSTRATION
]


                             CHECK REGISTER

=34.= Most brokers have accounts with several banks; it is therefore
necessary that a _check register_ be kept with each bank, showing the
date, number, to whom issued, amount of each check drawn, the deposits,
and the daily balance, as in Fig. 18.

[Illustration:

  Fig. 17. General Journal in Which All Orders are Entered
]

By using this register the account with each bank may be kept
separately, and the necessity for filling out stubs in a check book
entirely avoided. Many houses have given up the use of check books
altogether, having their checks padded in numerical sequence and as the
numbers follow consecutively on the check register, each numbered check
must be accounted for. In case a check is spoiled, the line should be
_voided_ in red ink, and the spoiled check filed with returned checks.

In case the _office cash_ carries an account for itself from which
checks are made, a separate check register should be kept for this
account, as its balance does not enter into the general cash balance of
the firm.

[Illustration:

  Fig. 18. Check Register Showing Condition of Bank Account
]

In no just sense can a broker be held to be the owner of shares of stock
which he purchases and carries for a customer, and it is a breach of
trust to use this collateral to his own advantage. The certificate of
shares of stock is not considered, according to the decision of the
Supreme Court of the United States, property itself; it is but the
evidence of the property in the shares.

To sum up, the accounting work in connection with the brokerage business
is in taking care of the orders received from customers, being sure that
they are correctly interpreted and promptly filled, noting the loans
necessary to complete the contract, keeping a careful record of
commissions and interest due the house, being watchful in regard to the
margins of customers, and arranging all accounts with customers so that
they may be kept up to date and instantly available.


                    GLOSSARY OF BOARD OF TRADE TERMS

  =BEAR:= One who believes the conditions are ripe for a decline in
      prices, or one who desires such an event. One may believe that
      the price of a certain security is about to decline and
      therefore is said to be a _bear_ on that particular security,
      whereas he may not be so on others. The natural attitude of a
      _bear_ is that of a seller but he may be so for the sake of
      buying at a lower price later.

  =BEARING THE MARKET:= An artificial lowering or forcing down of
      prices.

  =BID PRICE:= The price offered or bid for any security or commodity.

  =BORROWING STOCK:= A broker borrows stock when he has made a
      contract to deliver and the stock which he has sold, for any one
      of various reasons cannot be delivered at the time agreed.

  =BREAK IN THE MARKET:= A sudden and considerable decline in price.

  =BROKEN LOT:= Same as _odd lot_ in reference to stocks and less than
      ten thousand dollars par value in bonds.

  =BUCKET SHOPS:= Offices run by irresponsible brokers not members of
      any stock exchange and who do a marginal business upon one
      dollar per share and upwards. As a matter of fact the stock
      itself is neither purchased nor sold for the customer by these
      operators. If the order is actually executed upon a _bonâ fide_
      exchange then the _bucket shop_ puts in a contrary order for a
      like amount. For example: This kind of a dealer would sell an
      amount equivalent to a customer's purchase or purchase an amount
      equivalent to a customer's sale, thus, in no event carrying
      stocks.

  =BULL:= One who believes that conditions are ripe for an advance in
      prices or one who desires such an advance and talks _bullish_ in
      consequence. One writer defines a bull as a man who has
      something to sell, consequently he is anxiously waiting for
      prices to go up that he may sell at a good price.

  =BUY AT MARKET:= An order to buy at the lowest prices at which the
      security can be obtained without any price limit being set by
      the one giving the order.

  =BUYER'S OPTION:= A contract under the terms of which the buyer of a
      security need not receive delivery until the end of a specified
      time, but he has the right to demand delivery at any time within
      the period covered by the contract by giving the seller one
      day's notice. The understanding is briefly expressed as "buyer
      4," "buyer 10," the figures indicating the number of days
      provided for in the agreement.

  =BUYING ORDER:= An order given to a broker to buy a certain security
      with or without limit as to price as the case may be. An order
      to buy is good for the date for which it was given only, unless
      otherwise specified. Sometimes an order is given "until
      countermanded" or "until cancelled" by which the broker
      understands that there is no definite limit as to time; but
      brokers usually remind their customers regarding orders to be
      sure that they still desire them to be kept in force.

  =CABLES:= Telegrams from foreign countries on the conditions of the
      market. Large brokers receive cables each morning from London,
      Paris, and other points giving closing prices of grain and
      provision in that market.

  =CALL:= A privilege which one party buys of another to _call_
      (receive) from him a certain amount of stocks, grain, etc., at a
      certain price and date.

  =CARRYING CHARGES:= The interest charged by brokers for the amount
      of money advanced by them to customers in marginal transactions;
      also used by a Chicago firm to indicate storage rates, interest,
      and insurance on grain or provisions.

  =CASH GRAIN:= Grain for delivery at once. _Spot grain_ has the same
      meaning.

  =COMMISSIONS:= The charge made by any broker for buying or selling
      securities for someone else.

  =CURB:= Securities which are not traded in upon the large stock
      exchanges or new securities which have not yet been listed upon
      such exchanges are handled in what is known as the _curb
      market_. The reason for the existence of "curb market" in the
      open rather than in some building is that if the latter plan
      were pursued there would, in truth, exist another exchange, and
      it would not be permissible for a member of the regular exchange
      of the same city to be represented thereon as he frequently now
      is upon the _curb_.

  =CURBSTONE BROKER:= One who usually, not being a member of the stock
      exchange, goes from office to office or transacts his business
      on the curb.

  =DELIVERY:= The actual turning over to the buyer of the thing
      bought. If delivery is offered after hours, the buyer may refuse
      it until the following business day, but the seller has no right
      to demand interest for extended time.

  =DIVIDEND:= A portion of the profit of a corporation authorized by
      the board of directors to be paid to the stockholders.

  =DUMP:= An amount of stock that is forced upon the market for the
      purpose of getting rid of it. It does not mean so much the
      disposing of an undesirable investment but in offering any
      investment in large amounts.

  =EVEN:= A broker is even on stock when he has contracted to receive
      and deliver equal amounts of the same stock with another broker.
      A settlement of the difference in prices is the only thing
      called for.

  =FLURRY:= A small panic. An excitement caused by a rapidly falling
      market and advancing money rates.

  =FUTURES:= Buying or selling grain for future delivery. Literally
      speaking when you buy grain in February which is known as _May
      grain_ you contract for delivery in May at prices then existing.

  =IN SIGHT:= The amount of grain, coffee, cotton, tobacco, or any
      commodity available for immediate use.

  =LIMIT:= A price which a broker must not exceed in executing an
      order for his customers. It may also be a restriction of the
      amount to be purchased or sold.

  =LISTED SECURITIES:= Securities before they can be listed upon any
      board of trade or stock exchange must have complied with certain
      rules of the exchange. This does not imply that listed stock has
      any greater intrinsic merit than unlisted stock but it merely
      shows that certain facts and figures in relation to the security
      have been given more or less publicity.

  =LONG:= One who holds stock or grain for a rise in price, or, one
      who has a contract under which he can demand such stock or grain
      on or before a certain day. The opposite of _short_.

  =MARGIN:= An amount of money deposited with the broker to insure him
      against loss; a part of the purchase or selling price.

  =O:= The "Ticker" abbreviation for _offered_ when accompanied by
      figures; for instance, "G. N. O. 76" would mean that Great
      Northern Common Stock was offered at $76.00 per share.

  =OPEN MARKET:= A market where any or all may buy or sell.

  =OPEN ORDER:= An order which is good until cancelled.

  =OPTION:= An agreement of purchase or sale, good only for a certain
      time.

  =PIT:= The portion of the board of trade where floor trades are
      made. This term is particularly applied to Chicago. Other stock
      exchanges set aside certain places signified by posts set in the
      floor for trading and in these exchanges the trading points are
      called _posts_ instead of pits.

  =POOL:= A combination of buyers who work together and invest their
      joint capital as one. (The different boards of trade have
      enacted strict rules against pooling.)

  =PUT:= A privilege which one party buys of another to _put_
      (deliver) to him a certain amount of stock, grain, etc., at a
      certain price and date.

  =PUT AND CALL:= A _put_ and a _call_ may be combined in one
      instrument, the holder of which may either buy or sell as he
      chooses at a fixed price and date.

  =REMARGIN:= To give more margin.

  =RING:= A combination of brokers to offset and settle trades with
      each other; also an exclusive combination of persons for a
      selfish purpose as, to control the market. (Rings have the same
      standing in the board of trade as pooling, if of the same
      character.)

  =SELL AT MARKET:= An order to one's broker giving authority to sell
      stock or grain at market price.

  SELL AT OPENING: An order to sell immediately after the opening of
      the stock exchange at the best price obtainable.

  =SELLING ORDER:= An order given to a broker to sell a certain
      security with or without limit as to price, as the case may be.
      A selling order is good for the day for which it is given only
      unless otherwise specified.

  =SETTLEMENT:= The payment of differences in trades between brokers.

  =SHORT:= One who has sold for future delivery what he does not own,
      but hopes to buy at a lower rate.

  =SKYROCKETING:= Pushing the prices of securities up to unnatural
      levels or forcing the price up with startling rapidity.

  =SLUMP:= A sudden and a considerable fall in prices.

  =SPREAD:= A "put and call" at differing prices.

  =STOP LOSS ORDER:= This is a method of limiting losses by giving a
      stop order to the broker to sell if stock declines below a
      certain point. These are sometimes called _stock orders_.

  =STRADDLE:= A "put and a call."

  =SWEETEN:= To give more collateral or margin.

  =TICKER:= A small printing machine operated by telegraph by which
      the outside world obtains the reliable information as to the
      prices of securities and commodities dealt in upon the principal
      exchanges of the world. It is a never failing source of
      information to the broker. The results are printed on a strip of
      paper like a ribbon which automatically unwinds and after
      passing under the printing device runs into a basket. The ribbon
      is called the _tape_. All fluctuations in prices are thus wired
      to the principal exchanges immediately.

  =WASH SALE:= An illegitimate or fictitious transaction.

[Illustration:

  THE WHOLESALE HOUSE OF MARSHALL FIELD & CO., CHICAGO, ILL.
]




                     BILLING AND ORDER RECORDING[5]


=Introduction.= The survival of the fittest applies most forcefully to
business men and their methods. The success of the men depends upon
their methods; the efficiency of the methods, upon the men. Large
corporations of to-day would be impossible without method. They plan
their work, and method tells them daily whether they are working their
plan successfully or unsuccessfully.

Footnote 5:

  _Copyright, 1909, by American School of Correspondence._

It is commonly supposed by the smaller business men that method is a
result of business growth. Sometimes it is. If a business grows fast,
better methods become a necessity. Without method any business must
remain small—with few exceptions, just as small as the capacity of the
man at the helm. "To the extent which system is intelligently used, it
multiplies one's powers of achievement in all directions."

The importance of the order billing and shipping departments, the amount
of waste effort therein, and the relation of each to all other branches
of the business, make them a most interesting and profitable study for
the progressive business student, whether he be a beginner, an
executive, or an owner. To attain quick results and to eliminate useless
head, hand, and leg work, learn the capacity, capability, and usefulness
of office machinery and the short-cut methods made possible thereby.

During the last eight years there has been a tremendous amount of
improvement made both in this country and abroad in handling office
work, changing from hand to machine methods. Most of these improvements
have been literally forced upon the business men of the country by
specialty companies having labor-saving devices for sale. Wide-awake
merchants have in some cases left the installation of such devices to
office people who feared the loss of their positions through the use of
them.

One of the pioneers in the development of the class of work above
mentioned is Hiram J. Halle, who overcame all obstacles, and gave the
impetus to modern billing methods which has been such a help to our
economic results in office practice. The typewriter companies have
followed his lead and equipped cylinder machines with the necessary
attachments for accomplishing almost any desired result, except writing
in a bound book. In order to overcome this obstacle, the McMillan and
the Empire and some other loose-leaf books have been invented. These
books are loose-leaf only while they are being written upon; after
completion they are permanently bound by a simple device, and become as
secure as a sewed book.

In any book of this character, the student must consider the text as a
series of problems, with explanations of how each has been solved. If
the student does not learn to exercise his own powers of originality as
a result of a study of this volume, he will fail to secure the result
intended. Rarely, if ever, will two problems be met in two commercial
establishments which will be alike. The judgment of the person
installing the system will determine the best method to be used under
certain conditions.

Before starting in on the regular work, it will not be out of place to
give a comparison of the methods of business in various foreign
countries.

The rush in the business life of the United States is accounted for by
our fast growth and national desire to accumulate wealth. Commercial
concerns have grown both fast and slowly to undreamed proportions.
Strenuous efforts have been made to secure business, and then a
corresponding effort has been made to effect the small economies which
in a large business aggregate large sums. As a nation, we are rushing at
headlong speed, seeking all the means which will give us results. In
transportation we advance from steam to electricity; in social life we
turn from horses and carriages to automobiles; in commercial life we use
every known device to short-cut the work and effect economies—adding
machines, typewriters, cash registers, envelope openers, envelope
sealers, multigraphs, etc.

A distinct surprise awaits the person visiting Europe on a mission of
introducing "short-cut" methods. While we are in business to make all
the money we can, most of the Europeans are in business to make a
living, or reasonable earnings.

Imagine the surprise of the writer when told by the managing director of
one of the largest department stores in London that they did not care to
save the services of thirty-five clerks (which was possible by modern
methods) as they were making a certain amount of money each year, and
did not care to make any more; besides, they did not wish to put these
people out of positions. It is not an easy matter to secure positions in
England. Employes are very diligent and pay strict attention to
business. A manager of one of the large banks in London said that once a
clerk is hired he is discharged for gross misconduct only—not even for
incompetency. There are young men clerks (pronounced _clarks_) in the
Bank of England who are doing the same work for the bank as done by
their grandfathers. There are old men in the Bank of England to-day who
still use quill pens and the sand box instead of a blotter. There are,
however, adding machines being used there by the younger generation, and
they are of more use to them than to us in a way, as their currency is
so much more difficult to add.

Each year, more improved methods are being introduced into England.
Typewriters have been used for a number of years, and of late years
adding machines have made headway. It is more difficult there to
introduce new methods, but, once installed, it is difficult to dislodge
them for other ones.

Some of the wholesale houses have very old methods. In one house in
London, an order was copied twenty-nine times from the time it was
received until it was finally charged. The concern was over two hundred
years old and had never made any effort to improve its methods. It had
four boys whose duty it was to hunt orders lost about the warerooms. A
system of manifolding was installed, which eliminated so much waste of
time in copying and recopying orders that it was difficult to convince
the firm that something had not been overlooked. After four weeks they
were delighted.

An American going abroad is much impressed by the deliberation of
Europeans and is inclined to criticise them for it. After a time, they
can point out enough Americans who have worn out at forty years of age,
and are in Europe seeking health, to convince them that perhaps the
Europeans are not wholly wrong.

In Germany, the railroads are controlled by the government. When one
attempts to introduce short-cut methods, he is confronted by the fact
that work is needed to keep busy old soldiers for whom the government
has to care. In asking an agent of an American firm dealing in
labor-saving devices why he did not use any of the devices, the answer
was given that in Germany the young men work three years for nothing; he
did not feel the necessity of doing away with any of them. At the end of
three years' work in an office, a young man receives a diploma for
efficiency, if he has attained it. The government exercises a strict
supervision over all commercial concerns, and inspects their books at
periodic intervals. Commercial failures are therefore more rare there
than at home. Fraudulent schemes are dealt with severely.

There are many large firms in Germany, both jobbers and manufacturers,
that are striving to be progressive. The Siemens-Halske Electric Co. are
just as progressive in their order and billing methods as any American
firm in the same line. To show the attention to details given by the
Germans—a managing director of one of the large department stores in
Berlin, when asked how long he had lived in the United States, said he
had never been there. Upon being complimented upon his American accent,
he replied that when talking to an American he always used the American
accent, slang, intonation, etc., and when talking to an Englishman he
changed his accent, etc., to correspond. He had all the American devices
in his accounting department which one would find in any department
store in the United States, and sent out monthly typewritten bills the
same as John Wanamaker, Altman, and others of New York, and the same as
all large department stores do in all American cities.

In France, the commercial houses are very conservative and are subject
to the same government supervision as practiced in Germany. In one of
the railroad companies, the Chemin de fer du Nord, they use the manibill
system of billing (whereby each shipment is billed separately and
manifolded on a form of seven sheets) which is the shortest form of
billing known, but which has never been adopted by American railroads on
account of the bulk of papers increasing too rapidly. The present
American method is to put several shipments on a way bill for shipments
to any given town, and when the goods arrive at the given town, the
receiving stations make out separate freight bills for each shipment,
copying the information from the blanket way bill made out at the
forwarding station. Some of the American railroads are now adopting the
special roll machine for car accountants' work, as shown in Fig. 1.

[Illustration:

  Fig. 1. Underwood Special Roll Machine for Car Accountants' Work
]

The French people do not, as a rule, form large companies like the
Americans and Germans and English. There are a large number of small
manufacturers and jobbers in France. The large department stores, like
the Louvre, in Paris, are run on a strictly cash basis.


                        MACHINES FOR MANIFOLDING

Neither the billing machines (book-writing machines) nor typewriters
were originally intended for heavy manifolding work. The flat-bed
billing machines were originally invented to write in books used for
court records, sales books, etc. The book was to remain stationary and
the machine was to travel over the books. The flat-bed machines are the
only machines made for writing in bound books—the latter are being
gradually replaced by loose-leaf books. A flat-bed machine for bound
books is shown in Fig. 2.

[Illustration:

  Fig. 2. Flat-Bed Typewriter for Bound Books. _Elliott-Fisher Co._
]

The typewriter was originally intended to write on one sheet of paper
only. If extra copies were needed, a copying ribbon was used, and a wet
copy taken in a letter-press book. In the evolution from bound books
(official record and commercial) to loose sheets, the book typewriter
was equipped with devices for holding loose sheets of paper—used alone
or in connection with books. In the evolution from letter-press copies
to carbon copies, the typewriter was equipped with hard-rubber and brass
platens for taking from one to twenty-five copies, and in some cases
even more, with extremely thin paper and carbon paper.

The flat-bed billing machines are equipped with heavier type-bar springs
than the cylinder machines. The operator in depressing the keys
overcomes the additional resistance to the touch, due to the heavier
type-bar springs, and strikes a heavy blow on the paper, making a good
manifold copy in all cases. The operator on a cylinder billing machine
strikes a heavier blow than usual to secure the heavy manifolding
results. The heavier the blow, the clearer the result on a billing
machine. The Underwood billing machine is shown in Fig. 3.

[Illustration:

  Fig. 3. Underwood Billing Machine
]

All typewriters equipped with special attachments for holding the sales
sheets, invoices, and orders are called _cylinder billing machines_. The
paper upon which the machine writes is held by, and passes over and
around, a round rubber roll, the cylinder.

This is in contrast to the flat-bed billing machines (or book
typewriters) on which the paper lies flat on a rubber plate while the
machine moves over the paper.

=Development of Billing Machines.= This text has been prepared by taking
the simplest forms of billing and order work, and leading up gradually
to the more complicated forms. This is actually what took place in the
improvement of office and factory work.

A bill and a copy were first made—an extra sheet was made for some
additional purpose. The advantages of doing two or three things at once
led to further investigation. This resulted in still additional sheets
being used for other purposes. Every time an additional sheet was added,
the labor of typewriting that sheet separately was eliminated.

Gradually it developed that it would be useful to copy a part only of
the typewritten information on some of the under sheets. Means were
found for accomplishing this. For instance, on an order form, it was
desirable to have the prices show on the office copy, but not on the
copy which was intended for the warehouse or factory.

In some cases it was desirable to write all the information on the top
copies and split up the information thereon on the sheets underneath.
The final development of all the above ideas is embodied in the compound
form, in which all sheets for the office, customer, warehouse, factory,
shipping room, and loading platform are typewritten at one operation,
and the invoice and duplicate finished as a separate operation.

Wholesale and manufacturing lines are used mostly in this text to
illustrate the evolution and improvement of billing and order work. Some
of the conditions which have to be considered in installing office
systems are as follows:

  Whether the orders are received from customers or salesmen or both,
      and which are in the majority.

  Whether the goods are carried in stock or manufactured or bought
      outside, or all of these.

  Whether the orders can be filled completely, or nearly so.

  Whether or not the factory may know the prices.

  Whether the goods are shipped by freight, mail, express, or all of
      these.

  Whether copies of the bills have to be made for any other purpose.

  Whether a copy of the sales sheet has to be sent to the home office,
      or made for any department.

  If additional copies of either are necessary, what colors to use for
      readily distinguishing them.

  How many ledger clerks, and how to sort their work to the best
      advantage so that each clerk handles his work only.

  How to file office and factory copies for quick reference.

  How to plan all the above so that improper filing of sheets does not
      destroy the chain of record.

The reasons for these considerations will be better appreciated after
further progress is made.

If the business student learns the capabilities of office machinery, the
advantage of manifolding, the use of colored papers, and the important
feature of correctly grouping statistics (which is almost an art in
itself), he will have accomplished much. He should learn also to develop
his own power of originality and suggestion.

The natural order in which order billing and shipping ought to be
presented is the way in which the transactions occur. Methods of billing
(making out invoices) in many businesses govern the manner in which the
orders are made up, and therefore will be considered first.

In order to more clearly bring out the advantages of new methods, it is
deemed advisable to consider old-style methods and contrast them with
the newer ideas. By showing the weak points in the older methods and why
the new are better, the gradual evolution and improvements can be
traced.

=Old-Style Method of Billing and Making Wet Copy in Tissue Book.= There
are enough firms who still follow this plan of billing to resent the
term "old-style." The best that can be said for this plan is that it is
shorter than writing the bill-and-sales book, or sales journal,
separately. The wet copy takes the place of rewriting the bill. One
objection to this method of copying bills is that if all the bills are
copied some of them are either blurred or are too light when the copy
has dried on the tissue leaf. This is a difficulty which can be
corrected by careful attention.

The worst feature is that one never knows whether all the bills have
been copied, and there is no way of knowing this unless the copies in
the tissue book are checked back with the orders from which the bills
were made. Many firms spend thousands of dollars in advertising,
traveling expense, labor, etc., ship out and bill large invoices of
goods, "double check" the invoices, and leave the copying of the
invoices in tissue books to a young office boy. They never think to
check back the invoices with the orders to be absolutely certain that
the goods have been _charged_ as well as invoiced (billed out).

[Illustration:

  Fig. 4. Old-Style Cloth Bath. _Underwood Typewriter Co._
]

If one should ask them how they know that all invoices are charged (or
copied into the tissue books) the invariable answer would be, "Oh! we
never lose any bills before they are copied." Ask them how they know
none are lost and, after thinking a while, they will admit that they
really do not know _for sure_. They begin to check back the tissue book
after some customer brings in a bill for payment which has never been
copied into the tissue book, and hence has not been posted to the
customer's account.

[Illustration:

  Fig. 5. Old-Style Copy Press. _Underwood Typewriter Co._
]

Fig. 4 shows the old-style cloth bath, Fig. 5 the old-style copy press,
and Fig. 6 the old-style sales book (tissue paper leaves).


                  LOOSE-LEAF SALES SHEETS AND INVOICES

This style of billing was the first variation from the plan of using
copying ink, or pencil, on invoices and then transferring the ink to
tissue paper books, by wetting the leaves with water and then absorbing
the surplus water with paper blotters. Or this was done by placing damp
cloths on the under side of the leaf and covering it with a leaf,
placing the invoice downward on the tissue leaf, closing the book, and
placing it in a copying press. The ink from the invoice was sufficiently
transferred to the tissue paper to make an impression thereon.

[Illustration:

  Fig. 6. Old-Style Sales Book. _Underwood Typewriter Co._
]

If the person who did the copying did not use due care, the paper would
be too wet and the ink would run and blur the copy and the invoice. If
two invoices were accidently picked up by the person copying, the top
invoice would not be copied on the tissue sheet. This is a most serious
objection, for the reason that the copy in the tissue was used as record
of the invoice for the purpose of posting into the ledger.

Another difficulty was the usual one experienced through the use of
bound books in office work. Only one person can use a book at one time.
If Fayette Henry, the accountant, was using the tissue-copy book, and
Dave Pike, the order clerk, wanted to use it to see if all invoices had
been copied by the office boy, he had to wait on Fayette Henry. The
loose-leaf sales sheet shown in Fig. 7, with the pages serially numbered
and placed in proper binders after each sheet has been filed, overcomes
all of the difficulties mentioned—with many additional benefits.

[Illustration:

  Fig. 7. Loose-Leaf Sales Sheet and Invoices. No Ruling on Sales Sheet.
    _Remington Typewriter Co._
]

The loose-leaf sales sheet and invoice were first used with the flat-bed
billing machine, the sales sheet being held in position by being placed
over studs (round metal posts), which fitted into the punched holes in
the edge of the paper. These punched holes were used ultimately for
fitting over the metal binder posts in the loose-leaf binders. The
invoices were wider than the regular-size invoice and were perforated
about 1 inch or 1½ inches from the left side, as shown in Fig. 8. To the
left of the perforated edge were two small holes about 2¾ inches apart,
which fitted over two small studs on a sliding bill-holder device. This
plan provided a means of holding the large sheet and invoice in proper
relation to each other. A piece of carbon paper the same size as the
sales sheet was placed between the invoice and the sales sheet. This
ruling of the sales sheet is shown in Fig. 9.

[Illustration:

  Fig. 8. Invoice for Use on Billing Machine
]

When an invoice was written on the billing machine, it was manifolded on
the sales sheet beneath. When the invoice was finished it was ready to
mail—no delay in copying invoices, no blurred invoices through careless
copying. No fading of the manifolded copy where black carbon paper was
used. Inks are not made of indestructible carbons as black carbon paper
is made. A condensed billing or invoicing loose-leaf sales book for this
purpose is shown in Fig. 10.

The following are some of the many good features of the condensed
system, as it is in use to-day, briefly stated:

[Illustration:

  Fig. 9. Loose-Leaf Sales Sheet
]

  Bill and entry in sales book are obtained at one operation.

  Entries upon sales book agree absolutely with bill rendered.

  The bill clerk becomes bill and entry clerk combined.

  There is no danger of a bill being rendered without the proper
      charge being made.

  Entries under this system occupy but one-fourth the space required
      for those written with the pen.

  There is no waste space upon sales sheet.

  Both sides of the sales sheet may be utilized.

  The saving in vault space alone is worthy of special consideration.

[Illustration:

  Fig. 10. Condensed Billing or Invoicing Loose-Leaf Sales Book.
  _Underwood Typewriter Co._
]

In recent years, the typewriter companies have placed devices on their
typewriters which permit of the sales sheet being held independently of
the invoices. This permits one to hold the large sales sheet in the
machine until enough invoices have been manifolded thereon to cover the
page, at which time the sales sheet is reversed. The invoices can be
placed in the machine and removed therefrom after being written, without
interfering with the sales sheet. No extra width of invoice is required,
which permits of old stationery being used in the form of invoices. The
flat-bed machines can use old stationery, but not quite so well.
However, when billing by machinery, it is false economy to use
stationery designed for pen work. The reasons for this will be touched
upon later.

The use of two ledgers necessitates the use of two columns at the right
side of the page. All names from _A_ to _L_ are placed in the first
column; all names from _M_ to _Z_ are placed in the second. For
instance, an invoice reading as shown in the sales journal, Fig. 11,
illustrates the idea of writing the totals in the two columns at the
right side of sheet according to the initials of the last name of the
firm or the individual, as the respective ledgers are arranged in that
manner. If at the end of the month the first column shows a total of
$3,000.00 the bookkeeper knows that he has posted that amount into
Ledger _A-L_, etc.

The above plan enables the bookkeeper to add separately the totals which
are posted to the respective ledgers. The desire to separate the charges
to a country ledger and a city ledger can be accomplished by using two
columns in the same way.

The desire to place all credit memoranda in the sales book can be
accomplished by using two columns in the sales book as noted above. The
first column is used for the charges, and the second one for entering
the credits. One difficulty arises in connection with this plan. Credits
are liable to be entered in the debit column. To obviate this, the
invoices are made just wide enough to reach over the first column, the
credit memoranda are made wider to reach over the last column. When an
amount is written in the last column of the invoice, it manifolds in the
proper column of the sales sheet. The same is true of an amount written
in the last column of a credit memo.

This subdivision of columns is carried a step further to permit of the
analyzation of sales in several ways.

According to classes of goods, as follows:

[Illustration]

[Illustration:

  LAMSON FOUR-INCH PNEUMATIC TUBE ORDER CARRYING SYSTEM FOR A LARGE
    WHOLESALE ESTABLISHMENT OR A FACTORY
  Lamson Consolidated Store Service Co.
]

[Illustration:

  Fig. 11. Sales Journal Arranged for Distribution to Two Ledgers
]

According to territory, as follows:

[Illustration]

According to salesmen, as follows:

[Illustration]

To separate the sale of regular goods from goods which are being sold on
consignment, as follows:

[Illustration]

Generally the invoice is wide enough to reach over the total column
only, as shown in Fig. 12. Therefore, a total amount written in the
total column of the invoice will manifold onto the sales sheet, and in
the column marked _Total_.

A wide-carriage billing machine, if used, can be adjusted with tabulator
stops to jump to any column desired. The total amount is then written
therein a second time. The amount of the total column should always
equal the total of all the columns placed to the right of the total
column. This plan eliminates the old way of waiting until the end of the
month, and then laboriously going over the sales book with one total
column only, and picking out the various items according to the
classification wanted.

[Illustration:

  Fig. 12. Loose-Leaf Sales Sheet and Invoices with Columns for
    Distribution of Labor and Stock
]

The work should be planned in a manner which permits of each day's work
being finished each day—leaving nothing to accumulate until the end of
the month, necessitating the retracing of steps to secure certain
statistical information.

In certain lines of business it is desirable to make two sales sheets,
one of which is retained in a binder for an office record and the other
is used for various purposes. It can be used as record of sales from a
branch to a home office, each page being numbered in duplicate, and of a
distinctive color. This is the plan used all over the world by the
Standard Oil Company. As the sales sheets arrive at the home office,
they are placed in their respective binders and are gradually made into
a built-up book. The loss of a sheet would be instantly detected by the
missing page number.

A large French perfumery firm in New York pursues this plan, and sends
to Paris the duplicate sales sheet on thin paper. It gives the home
office a fine record of every invoice sent out to any customer by the
branch office or warehouse. As several invoices can be manifolded on
each page, and on both sides of the sheet, it is the most economical
method of billing as far as stationery is involved. The name _condensed
billing_ indicates this fact.

In other instances, the duplicate sales sheet is wide enough only to
allow quantity and description of goods to be manifolded thereon, prices
and extensions not showing. This narrow sheet can be used for posting to
the stock records without disclosing to that department the prices at
which the particular goods have been sold. This form of the sales sheet
is shown in Fig 13.

=Duplicate Invoices.= There are many reasons, in various lines, why
duplicate invoices are desirable and even necessary. Some customers
request invoices rendered in duplicate with one copy complete, the other
minus the prices and extensions. To accomplish this, it is either
necessary to place a piece of paper between the carbon and duplicate
invoice in such a manner that the prices and extensions will not copy,
or to use a short invoice cut off at the left of the price column, or to
use a short piece of carbon paper between the original and second, or
duplicate, invoice.

It is desirable to make extra copies of invoices or duplicates for the
use of various departments of a business, for instance, analysis of
sales by salesmen. Where a company employs a large number of salesmen,
it is very convenient to file in binders a duplicate copy of all
invoices sold by each salesman, using a binder for each salesman. This
is preferable to having separate columns in the sales book (sales sheets
in binders). The latter method permits each salesman to see what every
other salesman is doing.

[Illustration:

  Fig. 13. Sales Sheet for Condensed Billing
]

=Department Records.= A separate binder allows each man to consult his
record without inconvenience to any other one. In large companies having
a traffic department, it is necessary to provide a duplicate copy of
each invoice for the record, showing complete details of every charge.

A distinction should be made between those firms who make their invoices
before the goods are shipped, and those who make the invoices after the
goods have been shipped. In the cloak business, for instance, the goods
are generally billed before the goods are shipped, the invoice being
placed in an envelope and packed with the goods.

Ofttimes the goods are manufactured in proper quantities, properly
checked from the order to the packers' table, and then packed
improperly—some customer receiving too many garments, another, too few.
Yet the order will be properly checked. To obviate this difficulty, a
scheme was devised whereby the packer received a duplicate typewritten
copy of the bill (or invoice) showing everything but the quantities.
This makes it necessary for the packer to count all the garments and
mark down in pencil on this copy of the bill the quantity of each style
and kind to be shipped. Before the goods are shipped, the packer's copy
of the invoice, with his quantities marked in lead pencil, is compared
with the quantities charged on the sales sheet. This scheme forces the
packer to count all garments instead of double checking someone else's
figures in an absent-minded, or even neglectful, way.

This is accomplished by placing a narrow strip of paper over the
quantity column of the duplicate invoice, but under the carbon paper.
The quantity figures manifold onto the strip of paper instead of onto
the duplicate invoice. This plan is termed _using a blind_. The narrow
strip of paper between the invoice and duplicate is the _blind_
described a little further on.

The next step in short cutting work is the printing of a label in
connection with the invoice and sales sheet. In the book business, where
it is generally possible to fill orders from stock, and where the
invoice can be made before the goods are shipped, it is possible to
place a small piece of paper (the label) between a folded invoice in
such a manner that when the name is written on the invoice it manifolds
onto the label as well as onto the duplicate invoice and sales sheet.

=Analysis of Quantities and Amounts.= In certain lines of business which
sell three or four varieties of goods, it is desirable to analyze the
weights or quantities in the proper columns, which in turn manifold onto
the sales sheets, as shown in Fig. 14.

[Illustration:

  Fig. 14. Sales Sheet for Analyzing Quantities and Amounts of Goods
]

This saves a great deal of time as compared with making out the same
invoice in the following way:

                      3000 # Brass Rods @20 $60.00
                      2500 # Brass Bars @21 $52.50
                      1000 # Zinc Bars  @15 $15.00

By following the first plan, all of the weights for the respective
classes of goods will be manifolded into the proper columns, and it is
therefore an easy matter to total each column, and at the end of the
month the classification of sales will be totaled according to weights
as well as according to dollars and cents. The invoice is ruled to match
the sales sheet.

=Information on Sales Sheet Not on Invoice.= In certain lines of
business, such as wire-screen manufacture, it is desirable at times to
substitute the next size of wire in order to fill orders promptly. In
such cases, it is necessary to have the invoice show the size of wire
ordered, but to have the sales sheet show the size really sent. It would
seem impossible therefore to write _No. 8 wire_ on the invoice and have
_No. 9 wire_ manifold on the sales sheet.

The idea used to accomplish the desired result is to place the invoice
in such a position with relation to the sales sheet that a margin is
left on the left-hand side of the sales sheet, which would permit the
operator typewriting directly on the sales sheet, and placing thereon
the actual size of the wire shipped. The size ordered would be written
on the invoice in the regular manner, and of course would manifold onto
the sales sheet.

There are other cases where it is desirable to use this idea. For
instance, wholesale dry goods firms when purchasing dry goods from
eastern manufacturers request the latter when billing to use lot numbers
furnished by the purchaser. It is also necessary for the manufacturers
to bill the goods according to their own lot numbers. Hence it becomes
necessary to have both the customer's lot number and their own on the
sales sheet. This is accomplished by writing their own lot numbers
directly upon the sales sheets at the left of the invoice and then
making the invoice out in the regular way. This idea carries out the
customer's wishes, and always gives a comparison of lot numbers to the
manufacturers on their sales sheets. Flat-bed machines require wider
invoice, Fig. 15.

=Goods Purchased Outside.= It is possible to make a short cut in some
lines of business where the goods sold are not kept in stock but are
purchased from other firms in the same city. When placing the invoice in
the billing machine over the sales sheet, requisition blanks in
duplicate or triplicate can also be placed in the machine with the
invoice, and the items which have to be ordered outside written first on
the invoice. When all of these items have been entered on the invoice,
the requisition blanks may be removed, and the invoice and sales sheet
left in the billing machine, putting the remaining items which are to be
shipped and charged on the invoice (sales sheet). This occurs where
orders can be shipped complete.

This plan can also be used when writing up the order, where the billing
is done after the goods are shipped. It is to be remembered that there
is a great distinction to be made in handling the billing work of firms
who are able to fill their own orders complete, as contrasted with those
firms who have to wait until goods are shipped in order to determine
which items to bill. Some firms who always carry a complete stock are
able to make up an invoice and order blank, a label for the express
package, and a charge on sales sheet, simultaneously, because they know
that they can ship every item called for, and consequently do not have
to wait to see what items are shipped before billing them.

[Illustration:

  Fig. 15. Form to Provide on Sales Sheet Information not on Invoice
]

=Unit Billing.= The unit idea in billing has grown considerably in the
last few years, notwithstanding that the size of the bills have to be
uniform, and as large an invoice has to be used for one item as for a
large bill. Many firms prefer the unit idea to the condensed sales sheet
idea.

This is due chiefly to the elasticity of the scheme. The duplicate,
triplicate, or quadruplicate of the invoice can be sorted in any
desirable way. It is especially convenient for bookkeepers to sort
duplicates of the invoices alphabetically, and save a great deal of time
in posting to loose-leaf ledgers arranged alphabetically, in the same
manner. (In mentioning loose-leaf ledgers, card-ledgers are always
included, as the same principles are applied to one as to the other, as
far as accounting methods are concerned.) It is easier to handle unit
billing forms on the typewriters with billing attachments, which is an
added reason that many firms prefer to use them. Some of these forms are
shown in Fig. 16.

Another idea to be recommended is the color scheme, whereby each copy of
the invoice is manifolded onto a different-colored piece of paper. In
sorting the various copies for different departments, different colors
will greatly facilitate the recognition of various sheets, and the uses
or departments for which each is intended.


                    ORDER WORK OF WHOLESALE GROCERS

There are hardly two firms who handle their order work alike. The first
consideration in treating order methods is to distinguish the classes of
business in which the orders are made up ready for execution by the
salesman, from those which are received from customers and transcribed
on typewriters. The first class will be discussed separately from the
second.

Wholesale grocers, druggists, and similar lines receive the great
majority of their orders from the salesmen in the field. After the
orders are opened, the first step is to stamp on each order a number
with an automatic numbering machine. After this is done they are copied
into an order register as follows:

[Illustration:

  Fig. 16. Samples of Unit Billing. _Remington Typewriter Co._
]

               1012 John Smith & Co.,   Plainfield, N. J.
               1013 A. B. Jones & Bro., Providence, R. I.
               1014 U. J. Benedict,     Elmira, N. Y.
               1015 Grace Barnes & Co., Alliance, Ohio.

After the orders are filled and charged, they are checked on the order
register. About once a week all of the unchecked numbers on the order
register are compared with the unfilled orders. If an order should
become lost, the fact would not remain unknown longer than one week's
time.

It should always be remembered that in case an order is not completely
filled and is "back ordered," the back order should always show the
original order number in order to prevent confusion. A little practical
experience will quickly show how wrong it is to use a new number for a
back order.

=Back Orders.= In the problem of systematizing any kind of business, the
question of back orders and the proper method of handling them is one of
the most troublesome. Some firms do not wish an order blank returned to
the warerooms after it has once been there, because they do not wish the
wareroom or factory to know the prices which are placed on order blanks
in the office after they have been received there for pricing,
extending, and billing. Many firms therefore make an entirely new order
to be returned to the factory or wareroom with the letter A used in
connection with the order number, as follows: _1013A_. This of course
delays the filling of the order until the back order is typewritten. If
it is necessary to make a second back order, the same would read
_1013B_. Other firms use the color scheme. This is a very good idea, as
it indicates clearly to the order fillers old orders which should
receive attention first.

Many important improvements in the order and billing methods have been
inaugurated in recent years in the business of wholesale grocers.
Formerly it was the custom, after the order had been numbered and
recorded in the order register, to pass the orders out into the
warehouse with the general understanding that they were to be filled as
quickly as possible. The order fillers would generally start at the top
floor and pick all of the items which were to be shipped, place them on
a truck and take them to the next lower floor, and follow this plan
until the order was entirely filled. In stores above a certain size this
resulted in considerable delay.

The first improvement was to send the orders to the shipping department,
where they were split up by clerks known as _Slippers_, who wrote on
slips the items which were to be taken out of stock, each slip
representing the goods to be gotten out on a certain order from a
certain floor. This idea allowed the order fillers on all floors to work
simultaneously, and resulted in considerable saving of time.

Another favorable result obtained through this system is that the
shipping clerk retains an original copy of the order (the copy sent in
by the salesman) and is enabled therefore to follow up all departments
and hurry up any department which may be delinquent in the filling of a
certain order. In planning work, it is always advisable to have one
department act as a follow-up on some other department. In the grocery
business, it is much more satisfactory for the shipping clerk to have a
complete record of all the orders to be shipped that day, than to hand
the original orders into the warehouse to be sent down to the shipping
department after the order has been entirely filled, and then have the
shipping clerk rushed _at the last minute_ to plan his loads and do all
of the clerical work, such as making up bills of lading, etc.

The next improvement was necessitated by a desire on the part of those
wholesale groceries which are located in cities having an efficient
interurban electric car service to fill orders at different hours of the
day. One western firm transcribed all of its orders on cylinder billing
machines, giving the shipping clerk a full copy of the order, and each
department a copy of the items which are to be filled from that
department only. On the shipping clerk's copy, the notation _11 A.M._,
is marked, also on all of the department order slips. This indicates
that the order is to be shipped on the 11 o'clock car. Other stationery
is printed with the _1 P.M._, _2 P.M._, _3 P.M._, _4 P.M._, _5 P.M._ to
indicate the hours at which the orders are to be shipped. Many small
retail merchants delay ordering until the last minute, and the wholesale
house which can give the promptest service gets the business. The above
plan advises the shipping department the time that the goods are to be
delivered, and makes it responsible for results. All delays are noted,
and a daily report made of the causes, which are promptly investigated
and removed.

=Split Orders.= Some wholesale drug houses have their stock arranged on
different floors, of which their salesmen are fully advised. If the
salesman takes an order for goods which are held in stock on four
different floors, he sends in the order on four sheets of paper with the
items for each floor written on the respective sheets which indicate the
respective floors. Different-colored sheets of paper are used for the
various floors. This scheme puts more clerical work on the salesmen, but
it enables the office to quickly hand each department its part of the
order without the delay of transcribing the department slips on the
typewriter at the office. In all order schemes where an order is split
up and written on several sheets of paper in order that each department
may fill the order without delay, the term _split orders_ is used. In
all split-order schemes, the number of sheets in which the order has
been divided is written on each sheet. For instance, if there are
departmental order sheets for three different floors, the figure 3 is
marked on each slip. In this way the biller, by counting the number of
sheets attached to the complete order, will know that all of the
split-order sheets have been returned to the office. Fig. 17 illustrates
this system of orders. The three blank sheets at the top are
departmental order sheets, and each contains _only a part_ of the whole
order. This is accomplished by removing one departmental sheet at a time
from the billing machine, but allowing the three top sheets to remain in
the machine until the entire order is written.

Some firms are willing to make four copies of an order, each copy
containing _all_ of the items of an order. Other firms do not wish the
employes to know what a customer is buying outside of the goods relating
to the department in which the employe is working. Further, sometimes
two departments in the same factory are equipped to make the same class
of goods, and if each department received a complete copy of the order
there might be some confusion and duplication in the filling of the
order.

Some firms, instead of making split orders, make a summary of the goods
to be delivered from each floor, giving each floor several of these
summaries in the course of a day. The goods are delivered to the
shipping department in large quantities, and are separated by the
shipping clerk according to the quantities wanted for each order.
Concerns which are using this idea claim that it takes less time for the
shipper to separate goods than it does for the order department to make
split orders for each individual.

[Illustration:

  Fig. 17. Forms for Split-Order Schemes
]

In planning the clerical work in order billing and shipping methods, the
volume of business being handled must be taken into consideration. A
plan which is necessary with a large business would be considered as red
tape in a smaller one. The larger a business grows, the more it is
possible to "specialize" the work.

In a very small business, one man could fill all the orders and make out
all of the bills. In a little larger business it would be necessary to
devote one person's entire time to filling orders, another's to making
out the bills. In a business twice as large as the one just mentioned,
it would be necessary for one person to devote his entire time to
filling the orders from one floor only. In an exceptionally large
business, it might be necessary for one person to devote his entire time
to filling orders for some particular class of goods on one floor. These
examples are given to illustrate the meaning of the word _specializing_.

=Simple Order Form.= The majority of firms transcribe their customers'
orders onto their own order forms from letters or requisitions. The
simplest form of order is one containing an original for use of the
warehouse or factory, a duplicate to be mailed to the customer as an
acknowledgment of the order, and a third copy which is held in the
office as a record of unfilled orders. The requisition form illustrated
in Fig. 18 conveys the idea.

The practice of sending an exact copy of the order to the customer
eliminates the necessity of acknowledging the order by letter, and gives
the customer an opportunity of checking over the order as entered. It is
customary to print on acknowledgment of order forms the sentence: _This
is an exact copy of the order as entered—if any errors are noted kindly
advise us at once._ One firm in Buffalo saved $300.00 the first week
they installed this scheme, through the detection of an error by the
customer.

[Illustration:

  A YACHT STORAGE BASIN AT THE SHIPBUILDING PLANT OF THE GAS ENGINE &
    POWER CO. AND CHARLES L. SEABURY & CO., CONSOLIDATED.
]

[Illustration:

  Fig. 18. Simple Requisition Forms for Order Handling. _Remington
    Typewriter Co._
]

It is imperative that before a remedy or short-cut methods can be
prescribed, it is necessary to thoroughly diagnose all of the conditions
incident to the business. It should also be remembered that clerks and
even department heads will see all of the imaginary difficulties of a
new idea and overlook all of the benefits to be derived therefrom. It
should be further remembered that if a new method shortens nine-tenths
of any particular class of work and slightly increases one-tenth, the
party involved will many times fail to see the net advantages accruing
through the introduction of the new idea. If objections are raised to a
suggested short-cut method it is always well to ascertain whether the
objections apply to a majority of the work or a portion of it only. Most
people in clerical positions rather resent new ideas, and seem to take a
pleasure in trying to find some reason why a new idea will not succeed.
This is one phase of human nature which requires the utmost tact and
diplomacy to handle successfully. In advancing or suggesting new
methods, it should be assumed as far as possible, that the idea has been
suggested by the person to whom one is talking, for the reason that most
people are willing to "father" their own ideas.

=Simple Order Form with Copy for Shipping Department.= The second short
cut which was instituted in connection with order forms was the addition
of a sheet on which was manifolded a copy of the order for the shipping
department.

The idea is to give the shipper information in advance, in order that he
may prepare his bills of lading and plan his work for his teams, order
cars in advance from the railroad, call up express companies, and such
other work as might be necessary to the proper shipment and delivery of
the goods manufactured and sold, and to file the copy as his permanent
record, in some cases.

Some firms desire to prevent the shipper from knowing the prices at
which their goods are sold. This is accomplished by using for the
shipping department a short sheet of paper which reaches from the left
edge of the order-blank to the price column only. Another method is to
use a narrow sheet of carbon paper with a full-size sheet of paper. This
plan is not as satisfactory as the former one, as the carbon paper
sometimes slips to the right and allows the prices to manifold.

=Acknowledgment of Order to Salesman.= In some lines of business, it is
desirable to add an additional sheet which is termed _acknowledgment of
order to salesman_. This plan enables the salesman to know that the
order has been received and properly entered for execution (in
manufacturing lines it is necessary to transcribe orders on order forms
which contain too many copies for a salesman to manifold by pencil), and
gives him the opportunity of checking the order as entered. It should be
remembered that in some lines of business there is such an enormous
amount of detailed information in connection with an order that neither
the customer nor a salesman would check over an exact copy of the order
as entered. This should always be taken into consideration when
considering the addition of this sheet.


                               STATIONERY

The various styles of loose-leaf sheets and binders should be fully
understood in order to appreciate their importance in order and billing
work.

=Loose-Leaf Sheets.= The first loose-leaf sheets were punched with
closed holes, as shown in the illustration of Kilby Mfg. Company forms
in Fig. 18. The trouble with the closed-hole punching is that, when
placed over the metal posts of the binder, it is impossible to remove a
sheet in the center of the binder without removing all of the sheets
immediately above the one desired.

To obviate this difficulty, the slotted hole was devised. This is
illustrated in the forms of the Commercial Sash & Door Company, in Fig.
19. The slot from the edge of the paper to the punched hole permits the
paper to be placed over the posts of the binder between any two sheets.
Holes are punched in both the closed and slotted styles in various
sizes, ranging generally from a ¼ to 5/16 of an inch in diameter. In
late years, manufacturers have introduced punched holes of different
shapes from that of a circle.

For permanent records where the sheets are filed serially according to
page number, order number, etc., the closed-hole loose-leaf sheet is
perfectly satisfactory. For records which are to be removed from any
given part of the binder and reinserted in another part, the
slotted-hole loose-leaf sheet is the most satisfactory style to use.

=Binders.= Binders are generally made of two covers and a set of posts,
which ordinarily are attached to one of the covers. The other cover is
movable in order to accommodate the increased thickness of the binder as
loose-leaf sheets are added. Great strides have been made in the
manufacture of improved binders. There are so many styles of posts and
other ingenious arrangements, where the two covers are held together and
closed or opened by the use of a key, that only reference to catalogs of
manufacturers will supply detailed information.

[Illustration:

  Fig. 19. Two Styles of Punching for Loose-Leaf Sheets. _Remington
    Typewriter Co._
]

In buying binders and loose-leaf sheets, it is well to buy both of the
same firm. Heretofore, trouble has been experienced where the punched
holes of the loose-leaf sheets were probably 1/64 inch further apart or
closer together than the metal posts in the binder in which they were to
be used. The manufacturer of the binders will always claim that the
sheets were punched incorrectly by the printer, and _vice versâ_.

It is pretty generally understood now that all punched holes should be
placed with the center of the hole ½ in. from the edge of the paper.
This allows enough margin to permit of the paper being held firmly over
the posts. In all cases where the holes are punched too near the edge of
the paper, the narrow margin between the edge of the paper and the hole
becomes torn very quickly.

=Stationery Printed for Typewritten Work.= Very few people recognize the
great value of properly designed stationery for typewritten work. The
law of usage and custom is so strong that invariably invoices and order
forms are printed the same as if they were to be hand-written. The
headings are printed with the first letter of each word lined up
vertically. This plan causes great waste of time on the part of an
operator.

All billing and order work should be done on machines equipped either
with a column stop or a decimal tabulator. A column stop is a device on
a writing machine which automatically stops the carriage at any one of
several predetermined points. A decimal tabulator is a device on a
writing machine which automatically stops the carriage at the units,
tens, hundreds, etc. place in any predetermined column.

It should also be understood that all typewriters and billing machines
are equipped with marginal stops. These stops are adjustable, and can be
arranged on either side of the machine in such a manner that the
carriage will always stop at any given point at either edge of the
paper.

It is vitally important that either a column stop or a decimal tabulator
should be used in connection with marginal stops on writing machines,
and these three points should be taken into consideration when designing
stationery for use with a machine. The following illustrations show
poorly designed and correct invoice headings.

                         J. B. WILLIAMS & BRO.
                             NASSAU, N. Y.

                  NAME             SALESMAN
                  SHIPPING ADDRESS ORDER NUMBER
                  P. O. ADDRESS    REQUISITION NUMBER
                  VIA

This blank form has purposely been shown in order to contrast it with an
invoice printed in the same way with the headings properly filled in.

                         J. B. WILLIAMS & BRO.
                             NASSAU, N. Y.

    NAME, _Geo. Brown & Co._              SALESMAN, _Jenkins_
    SHIPPING ADDRESS, _Flat Rock, W. Va._ ORDER NUMBER _2246_
    P. O. ADDRESS, _Wenonah, W. Va._      REQUISITION NUMBER _A341_
    VIA _N. & W. R. R. Co._               OUR ORDER NUMBER _9422_

Contrast this heading with that of an invoice which has the last letters
of each line lined up vertically. This makes it possible for the
operator of the billing machine to draw the carriage to the extreme
right, as the first letter to be written in every line of the heading
starts at the same point.

                  NAME _Geo. Brown & Co._        SALESMAN _Jenkins_
     SHIPPING ADDRESS _Flat Rock, W. Va._       ORDER NUMBER _2246_
          P. O. ADDRESS _Wenonah, W. Va._ REQUISITION NUMBER _A341_
                  VIA _N. & W. R. R. Co._   OUR ORDER NUMBER _9422_

The latter form does not have as good appearance before being
typewritten as afterwards. However the change is made for the sake of
utility and speed. In the first form it is necessary for the operator to
position the carriage at a different starting point for each line,
whereas in the last illustration it can be readily seen that all the
operator has to do is to draw the carriage to the right to the marginal
stop, and write without any loss of time.

At one time a speed contest between pen billers and machine billers was
held on one of the large railroads of this country, and permission was
given the machine people to change the position of the headings of the
freight bills. The salesman in charge of the test studied to eliminate
certain wasted movements of the typewriter carriage. He succeeded in
arranging the printed matter on the bill in a manner which permitted of
three starting points in the heading and body of the bill. By pressing
his tabulator stop after writing a name or figure, the machine would
immediately jump to the next printing point on the line. This
arrangement greatly facilitated the work, and enabled him to prove the
superiority of machine over pen work. If he had endeavored to use the
old stationery with its irregular headings, he would have made a failure
of the test.

=Designing Stationery.= In designing invoices, order forms, and
statistical forms, it should be always borne in mind that the ordinary
typewriter or billing machine spaces ten letters to the inch, sometimes
twelve spaces to the inch with elite type, and sometimes eight spaces to
the inch with large Roman type. Therefore, all vertical lines separating
various columns of the form should be ruled in multiples of tenths,
twelfths, or eighths of inches, according to the spacing (escapement) of
the machine to be used. The different styles of type are shown in Fig.
20.

In estimating the distance between lines, it should be borne in mind
that all typewriters and billing machines are arranged for spacing one
line, two lines, and three lines. By adjusting the spacing device, the
paper can be advanced the width of one, two, or three lines. All
headings on the invoice should be arranged so that the next writing
point below, on the invoice or order, will be one, two, or three spaces,
and the beginning of the body of the bill should be arranged for in the
same manner. This prevents any waste of time, and eliminates the
necessity of throwing off the ratchet spacing device of the machine and
turning the carriage by hand.

The first printing point on an order or billing form should be placed in
such a manner that the marginal stop of the typewriter carriage, instead
of a tabulator stop, will be available for use. The second writing point
on the form should be the first column stop (the column finder on the
billing machine is the device which automatically stops the carriage at
certain given points). The third writing point on the line should be the
second column stop, or decimal tabulator stop, according to the one
which is on the machine.

In Fig. 21 is shown an illustration showing the top sheets of an order
form designed to facilitate the work of the billing machine. In addition
to having all of the printed headings aligned vertically on the last
letter of each word, each line is either one space or two spaces of the
billing machine platen (rubber roll). This eliminates any waste of time
in spacing the order form through the machine.

[Illustration:

  Fig. 20. Styles of Typewriter and Billing Machine Type
]

The last sheet of the form of the McCaskey Register Co. is cardboard,
with the numbers _1_ to _31_ printed along the top. A movable metal
"spud," or tip, is used to show the due dates of each invoice, and to
enable the collection clerks to quickly find the desired copies of
charges for the purpose of sending out statements from three to five
days ahead of due dates.

=Styles of Type.= The size and style of type is a very important factor
in all classes of work where legible manifolding results are wanted.
There are several classes of type used in connection with billing
machines. Different companies use different names in describing them.
The four sizes of type used are as follows:

                         ELITE
                         PICA
                         MEDIUM ROMAN
                         LARGE (or full) ROMAN

_Elite._ This style has come into general use in connection with
correspondence. It gives a dignified style to a letter. It is the
hardest type to keep clean—the most destructive to the rubber roll and
typewriter ribbon of any type made. It also manifolds very poorly where
a number of copies are used, as the type is so small that the sixth or
seventh copy, and many times the third and fourth, are so blurred that
it is impossible to tell an _e_ from an _a_ or an _o_.

This style of type is sometimes used for making up tabulated statements
where it is desired to crowd a large number of figures to the inch.

_Pica._ This is the most generally used type of any. It manifolds quite
well up to six and seven copies. It is possible to write only ten
figures of this size to the inch.

_Medium Roman._ This is the next larger size type than the pica and, on
account of it being larger, it gives better manifolding results. It also
writes ten letters to an inch.

_Large Roman._ This is the size type which is used by railroad and
steamship companies for typewriting their way-bills. It is possible to
write only eight letters to an inch.

[Illustration:

  Fig. 21. Forms Showing Properly Designed Stationery
]

_Gothic Type._ The term _Gothic_ indicates the style, and not the size
of the type. If the small points at the top and bottom of the Roman type
were removed (these points are called _serifs_) the effect would be that
of Gothic type. A very pleasing combination on a billing machine is two
different sizes of Gothic type, the larger size to be used for capital
letters, the smaller size for the small (or lower case) letters. Recent
practice has demonstrated the value of using capital Gothic letters of
one size, as it increases the legibility of an order or an invoice.

In manifolding, numerals should always be of the "open" kind, that is,
1 2 3 4 5 6 7 8 9 0, and not _1 2 3 4 5 6 7 8 9 0_, as the former are
much the more legible.

=Carbon Paper.= There is no article which is so generally misused in the
commercial world and which is so little understood as carbon paper. In
order that the correct usage may be clearly understood a brief
description of its manufacture is given.

The chief ingredients of carbon paper are oil, wax, paper, and color.
Oils and waxes are used to give wearing surface, elasticity, and body to
the color mixture. Tissue paper—generally of imported quality—with a
fine, strong fiber is used. The quality must be first class in order to
insure absence of holes and other imperfections in the sheets. Generally
the sheets are cut 20 x 30 inches. A ream is regarded as containing 500
sheets. Three weights of paper are used, 4lb., 7lb., 10lb.,
respectively, meaning that 500 sheets of the above size of paper will
weigh the number of pounds named, according to the thickness of the
paper.

_Color._ The only really indelible color is black; that is because
carbon is the basis of the color. The colors which are used are powders
which have been ground as fine as possible. They are mixed in proper
proportions with oils and waxes. Formerly the mixture was applied by
hand, but great strides have been made in machinery for automatically
applying the color evenly to the paper. It is important that the color
or pigment be applied evenly to the paper and that it penetrates the
fiber. Unless the paper retains the pigment, the carbon paper will not
wear properly. The longer the color adheres to the paper, the longer it
can be used.

_Finish._ The finish of carbon paper is the factor which is so little
understood by the public. Carbon papers are finished with soft, medium,
and hard finishes. The first will hardly rub off on the hand under
pressure, the next will rub some, and the soft finish will smudge if
pressed against the hand. Each finish is intended for a definite use,
which will be explained later. The manifolding power of carbon paper
depends absolutely on the typewriter itself, the hardness of the rubber
roll, the touch of the operator, and the weight of paper, and lastly,
the finish of coating on the paper. Two operators on the same typewriter
can secure totally different results because one will have light, and
the other heavy, touch. The regular rubber rolls which are furnished
with typewriters are medium hard—in six months or a year they gradually
grow harder, eventually becoming as hard as slate. If a typewriter is to
be used for regular work as well as heavy manifolding, it should have
two different rolls, one for each kind of work. There is no reason for
using a medium hard rubber roll on the machine, getting poor results,
and then blaming the carbon paper. Use a hard rubber roll on the machine
and there will be no difficulty. Some makes of machines have
interchangeable rolls (known as _platens_) which are very useful. It is
the work of a minute only, to remove one and place the other on the
machine.

_Four-Pound Paper._ This class of carbon paper has a heavy, sensitive
coating, and is intended for heavy manifolding—for making from five to
twenty copies. Soft-finish carbon papers are always used where heavy
manifolding is to be done. The finish of the paper which is being
written upon is also a factor. Papers with a hard finish—that is, a
shiny surface—do not allow the color of the carbon paper to take hold,
and yet a paper with the soft finish will allow the color to spread, and
make a poor copy. This class of paper is also used for making a few
copies on very light-stroke machines like the Hammond.

_Seven-Pound Paper._ This weight of paper is adapted for making from one
to five copies. Being heavier than the four-pound, it will wear longer.
If coated heavily it will give more impressions than if lightly coated,
but the impressions will not be as clear and clean.

_Ten-Pound Paper._ This weight of paper is intended for use where one or
two copies are wanted. Its weight enables it to stand the hard usage to
which it is put. On one or two copies, the additional weight or
thickness of the carbon paper does not affect the imprint. This class of
paper is used with billing machines of all kinds.

_Full Carbon Papers._ This is a paper which is coated on both sides for
making a multiplicity of copies on tissue. The pieces of carbon paper
are placed between _every other piece_ of tissue paper and manifold on
the top of one sheet and the bottom of the next. This carbon paper is
used to reduce the bulk of paper in the typewriter—one-half as much
carbon paper being required. It is sometimes called _double_ carbon
paper, and is mostly used by railroads in making up way bills on yellow
(dandelion grade) tissue paper.

_Copy Carbon Papers._ This paper is for use where it is necessary or
desirable to make a carbon copy from which to make a letter-press copy.
Hektograph carbons are for making carbon copies to be used in a
hektograph.

_Pencil Carbons._ This class of carbon paper is made in the heavy grades
of paper from seven-pound to twenty-pound and is made full carbon in the
seven-pound weight.

_Pen Carbon._ This class of carbon paper is made in the seven-pound and
ten-pound weights.

_Troubles and Remedies._ Carbon papers made in summer have different
treatment in the matter of color mixture than those made in winter.
Users should always remember that carbon paper which has lain unused all
year has gradually dried out and depreciated in efficiency. The fresher
a carbon paper the better—therefore it is not economy to buy too large a
supply if it is liable to stand for more than six months. Never store
carbon paper near heat, nor in the direct rays of the sun.

The one great difficulty experienced with carbon paper is the streaked
effect called "treeing." This is caused by the carbon paper being
inserted unevenly between the sheets of paper used with it. Once
wrinkled, it remains so, and gives the streaked result as long as it
lasts. To guard against this trouble, the operator should watch that the
carbon paper is not wrinkled when inserting it between the sheets of
paper, and should press the release lever on the typewriter to release
the paper-feed rolls on the machine, after the paper is inserted in it,
so that the unequal tension of the paper and carbon paper may adjust
itself.

_Durability of Color._ Black paper made of carbon pigment is indelible
and most durable. Blue or purple papers are next in the order of
durability of color, and are made of aniline dyes. Green next, and red
next. The fact is that red and green carbon papers should not be used
for permanent records, as they will fade quickly.

_Wearing Quality of Paper._ Many times a typewriter will have a rubber
roll (platen) which has become pitted and worn from age and the use of
periods, commas, hyphens, and ditto marks. This is very destructive to
carbon paper. New rubber rolls should be placed on the machine. It is
not economy to use the cheap variety which can be purchased for 75 cents
and which is nothing more than rubber hose drawn over a wooden core. The
latter is not cylindrical and will give trouble. The type will print
unevenly and cause bad alignment, for which the machine will be blamed.

=Blinds.= _Blind_ is the name given to a sheet of paper used in
connection with manifold work for preventing all of the information on
the top sheets from being manifolded on certain of the sheets
underneath.

For instance, in describing the scheme for providing the packing
department with a description of the goods to be shipped, but with the
quantity column blank, it will be remembered how a strip of paper of
proper size wide enough to cover the quantity column was placed over the
left side of the invoice from top to bottom. Therefore all quantities,
instead of manifolding onto the packer's sheet, manifolded onto the
strip of paper known as the _blind_.

A blind may be of any given shape, and cut away at the top, side, or
bottom; or, in some cases, irregular-shaped cuts are made in the middle
of the sheet or near the edges. The cuts are made in order to allow
certain information to be manifolded on the next sheet under the blind.
The balance of the information on the top sheet is manifolded onto the
blind, which is thrown away. It is reasoned that it is cheaper to use a
sheet of paper for this purpose than it is to stop and make a separate
sheet with part of the information only, typewritten thereon.


           HOW TO HANDLE ORDERS AND BILLS ON BILLING MACHINES

=Loose-Leaf Sheets with Invoices in Blanket Form.= In some lines of
business it is possible to use invoices of equal size. Some firms
therefore have the invoices and sales sheets of equal size. The top
sheet is perforated horizontally at equal distances, which permits the
invoices to be torn apart so that one blanket of form invoices may be
separated into three or four separate invoices. This plan can be used
where the work is done on an ordinary letter-writing machine. In
preparing the papers for billing, a sheet of carbon equal in size to the
sales sheet is used. A heavy-weight carbon (10lb.) with hard finish is
the best kind of carbon to use for this work. If an extra sales sheet is
needed for any purpose, a duplicate sheet of paper, preferably of
another color, can be used with another sheet of carbon interleaved
between the two sales sheets. This method is wasteful of space as far as
the sales sheet is concerned. If each invoice were loose and placed in
the machine in such a manner that the first written line on the invoice
would be two or three spaces only below the last item of the previous
invoice manifolded on the sales sheet, generally _one more_ invoice of
average size could be manifolded onto the sales sheet.

=Loose-Leaf Sales Sheet with Separate Invoices.= This combination is
made possible by the billing machine, the flat-bed and the cylinder
style. Cylinder billing machines are equipped with special carriages
having special feed rolls which hold the sales sheet until it is fed
entirely through the machine. Cylinder machines also have an independent
feed roll which can be released by a special lever. This permits an
invoice to be inserted in the machine, and then clamped into position by
the intermediate feed roll and fed through the machine with the sales
sheet until the invoice is completed. The intermediate feed roll is then
released, and the invoice removed without disturbing the sales sheet.
The next invoice is then placed in position, and the same operation is
repeated. This allows one invoice to be manifolded very nearly under the
previous invoice. Some firms having invoices of one or two items only,
which permits of from seven to nine invoices being manifolded on each
page, have the invoices made up in blanket form; that is, seven or eight
invoices to a strip. After each invoice is manifolded they advance the
next invoice into position and then tear the invoices apart as
previously described.

=Carbon Paper Cut for this Class of Work.= Some operators doing
condensed billing work prefer to use carbon paper the same size as the
invoice, and to remove the carbon paper each time an invoice is
completed. This necessitates a great deal of handling of carbon paper.
It is preferable to use a large sheet of carbon paper the same size as
the sales sheet, feeding it through the billing machine with the sales
sheets. This eliminates the necessity of picking up a piece of carbon
paper each time an invoice is placed in the machine. With the former
method, if one had four invoices to one page of a sales sheet, it
required one to pick up the same piece of carbon paper four times, or
once with each invoice. The latter plan necessitates handling the carbon
paper once only, when the sales sheet is placed in the machine. The
operator positions the second or third invoice on a sales sheet, in
order to avoid writing over the previous invoice, by spacing the
carriage three times after an invoice is completed.

=Using the Sheets Serially.= All sales sheets should be serially
numbered, in order that when placed in a binder the loss of any sheet
may be detected by a missing number. Some firms prefer to use one side
of a sales sheet only. In this case, a sales binder holding 375 sheets
would have 375 pages. Where the sheets are numbered on both sides, the
sales binder would have 750 pages. If the appearance of a page is marred
by an invoice being spoiled, that sheet is not thrown away, and the fact
that it is not is an incentive for the operator to do good work.

=Handling Credit Memoranda.= Some firms prefer to handle their credit
memoranda on different-colored paper (generally pink) for both invoices
and the large sheets which correspond to sales sheets. All of the rules
which govern the making of invoices and loose-leaf sales sheets apply to
the execution of credit memoranda.

=General Remarks Regarding Billing Machines.= The flat-bed billing
machine enlarged somewhat upon the idea of using special characters for
certain abbreviations peculiar to various lines of trade. For instance,
in the shoe business, the following abbreviations are some of those
used:

                         WOM   means Women's
                         CHI     "   Child's
                         BOYS'   "   Boys'
                         BAL     "   Balmorals
                         BLU     "   Bluchers
                         PR      "   Pair
                         PRS     "   Pairs
                         DOZ     "   Dozens

The cylinder machines have adopted the same plan. In the cylinder
machines there are two distinct classes—those having two type to a
type-bar, such as the Remington and the Underwood, and those having one
type to a type-bar, with double the number of bars, such as the
Smith-Premier. Both classes of machines can use special characters, but
the machines having one type only to a bar have a preference in that
they have more room in which to place special characters.

There is considerable saving in the use of special characters, as
evidenced by the following example:

_OCT 14 09._

  This necessitates nine strokes where each letter is written
  separately. Had this been written by three special characters, it
  would have necessitated five strokes only. The special characters
  would be used as follows: _OCT._-space-_14_-space-_09_.

To the uninitiated, it would seem that a special character of three
letters, such as the abbreviation OCT., would occupy three spaces on the
machine, and consequently would overlap on the word at the right. This
is obviated by placing the type on the type-bar in such a manner that
the letter T of the abbreviation is in the printing point of the paper.
The following illustration will show how the type are placed or aligned
in order to secure the desired results:

                            _OCT_ _14_ _09_
                              │    │    │

As the month always precedes the next word, the abbreviation _OCT_ is
aligned so that the two first letters are to the left of the printing
point. In case a machine were equipped with numbers for all the days of
the month, the character _14_ would be aligned to print either side of
the printing point. As the abbreviation _09_ would always follow and
never precede, it would be aligned with the _0_ in the printing point,
with the _9_ printing to the right of it. It is very important to have
special characters properly aligned so that the abbreviations which
always _precede_ are aligned to print on the last letter, and the
abbreviations which _follow_ are aligned to print on the first letter.

It is impossible to print abbreviations in solid matter such as a
letter. They are only to be used in connection with dates of invoices or
orders, in connection with names of firms. For instance, the
abbreviation _Messrs._, at the beginning of a firm name where such a
term is desired, or the abbreviation _Co._ at the end of a firm name or
the abbreviations _Pr._, _Doz._, _Gro._, and similar abbreviations, come
in the body of a bill and, preferably, in the first column after the
quantity.

It should be remembered that when the rubber platen of a billing machine
becomes worn and cut with holes incident to the use of periods, commas,
hyphens, etc., the special character type will sometimes print heavy at
the top and light at the bottom of the letter, or _vice versâ_. This is
remedied to some extent by placing a new rubber roll on a cylinder
billing machine, or a new rubber covering on a flat-bed billing machine.

Special characters are used to a better advantage on the under-stroke
(or blind machine) than on the visible machine. In the latter, the
type-bars are all grouped in less than a half circle, which necessarily
crowds the type-bars a little closer together, and therefore does not
permit of special characters of a large size.

=Tabulators on Billing Machines.= It is absolutely essential that every
billing machine be furnished with either a single-stop (known as a
_column-stop_) tabulator or a decimal tabulator, preferably the latter.
A single-stop tabulator is used as follows:

On the billing machine frame rests a bar on which metal stops or pegs
are placed at predetermined intervals. By pressing the column stop, the
carriage holding the paper is released, and jumps automatically to the
first stop. After the information is written, the stop is again pressed,
and the machine jumps automatically to the next printing point. The
following example shows the use of the column stop:

                   John Jones  Marion, Ind.      XXV
                   A. B. Smith Washington, D. C. XXX
                   G. Barnes   Seattle, Wash.    XXX

The following example shows the use of the decimal tabulator:

                                   10.50
                                     .50
                                  150.25
                                15560.65

With the decimal tabulator, the operator would press the tens key, which
automatically places the carriage in a position to begin writing the
amount _10.50_. If the column stop were used for this purpose, it would
have stopped the machine at the period point, and necessitated the
operator pushing the carriage two points to the right in order to begin
printing two points to the left of the decimal points. Some operators
place the column stop so that the machine always stops at the tens
point, and if an amount of 1.00 or less is to be written, they use the
space key. This is quicker than to always stop at the decimal point and
then position the carriage properly by hand. However, where any
tabulated work involving figures which vary greatly is to be done, it is
decided economy to use a decimal tabulator. Most operators do not see
the advantage of using tabulators, and in many instances will continue
to waste time spacing the machine with the space bar. If they would
avail themselves of the tabulator device they would jump from one part
of the line to the next desired point instantaneously. It should be
remembered that billing work is a constant repetition of certain manual
movements. If one movement in ten can be eliminated, it is equivalent to
saving one hour in ten. To show the great advantage of, and it might be
said, necessity for, time saving and short cuts in large establishments,
a device used by Butler Bros., a large mail-order house with warehouses
in several of the large cities, is an excellent illustration. This
particular scheme is used in Jersey City, N. J. It consists of two rows
of billing machine operators (sixty-five in number) placed in parallel
positions with an endless belt running between them, and two checking
clerks at the end of the row. As fast as the operators transcribe the
orders onto the order forms, the original and typewritten order (with
departmental copies) are placed on the belt and carried automatically to
the checker's desk.

The rubber belt passes over a pulley at the edge of the checker's desk,
which allows the orders to fall from the belt to the desk. The belt
returns to the end of the line, where it revolves around another pulley.
The power is furnished by a small electric motor.

=Arrangement of Billing Machines in Large Business Houses.= In large
businesses in the wholesale dry goods, wholesale notions, and kindred
lines, special arrangement enables a few billing machines to accomplish
a large amount of billing. In these classes of business, it is the
custom to call the lot number, class of goods, and the number of yards
to the bill-clerk, who in turn enters it on the bill and duplicate. The
system used will be described elsewhere. Here it is desired to touch
upon the movable-platform idea only. The operator is seated on an
elevated platform on which is placed the billing machine and the chair.
This platform has rollers, and can be moved in the aisle between two
rows of counters on which the goods to be shipped are placed. As soon as
the callers call off the lot numbers, description, and quantities of one
shipment, the billing machine operator moves the platform to the next
lot of goods, which enables him to hear the caller clearly wherever the
caller may be. If the bill clerk were permanently located in one portion
of the room, he would be liable to make errors through misunderstanding
the caller. A scheme which is largely used in those classes of business
which demand the "call off system" or, as they term it, "billing from
call" is to call off the word _sixty-five_ as if it were _sixity-five_,
and the word _fifty-five_ as if it were _fifity-five_. This prevents
confusion between these amounts which sound so much alike. Some firms
_for sixty-five_ use the term _sticky-five_.

=Use of Computing Machines in Connection with Billing.= Many firms use
computing machines such as the comptometer for proving the extensions on
invoices. With a machine of this character, it is possible to figure all
of the extensions. The machine at the same time automatically adds the
totals, and, if there are discounts to be taken off the bill, this
operation can be performed without clearing the machine. For instance,
in the following example:

                12 yards lace           50  $6.00
                15 yards ruching        10   1.50
                24 doz. hdchfs.      12.00 288.00
                                           ------
                                           $295.5
                                 25%              221.63

By _clearing_ the machine, is meant pulling the handle which returns all
of the wheels to _0_ for the beginning of a new computation. Without
desiring to enter into the mechanical merits of adding machines, either
listing or non-listing machines, it is important to touch upon the
various arguments used in favor of billing machines with adding
attachments and without them.

The flat-bed machines were the first to use the combined machines. The
plan in use was to place two recording registers on the billing machine
and prove the total of each bill separately with one register, and
accumulate the totals of all the bills for the day on the other
register. Certain firms used extra recording registers for recording the
totals of extra columns on the sales sheets in which they analyzed the
sales according to classes of goods or some other classification. Some
firms did not add the bills when making the extensions of the prices and
quantities, but left the additions for the adding machine. The only
draw-back to this plan was that if the operator copied a wrong total
from the register dial it caused trouble. This fault, if fault it may be
called, as it is not the fault of the machine, but of the operator, has
been corrected by placing a subtracting device on the late models of
combined billing and adding machines, whereby the subtracting device is
thrown into action when the total of the bill is being written. If the
correct amount of the bill is written on the invoice, the dial figures
all turn to ciphers, which indicates that the amount has been correctly
transcribed by the operator. Other improvements will likely follow in
the many machines which are being placed upon the market. See Fig. 29 on
Page 67.

Some firms prefer to do all the billing as one operation, and use a
separate or computing machine, as the case may be, for proving the
additions at the end of the day. The reason is that by having two
separate machines they can be used by different people during the day
for different work.

If computing machines are needed for adding, multiplying, and taking off
discounts, the non-listing machines are recommended, as they are
key-driven. If adding machines are needed when printed lists are wanted
of all additions, then listing machines are recommended. The general
public has recognized that each class of machine has its separate use.
Some firms check the totals of listing machines with non-listing
machines, in order to save time and paper. Non-listing machines are used
for taking a record of rolls and yards of cloth during inventory time,
and later are used to multiply the extensions. Some dry goods firms hire
expert operators at a dollar an hour to do this class of work, as it can
be done in one-fifth the time that it would otherwise take. For
instance, an example in multiplication, such as _432_ × _235_, would
take approximately ten seconds to write down, multiply, and set down the
figures. With a multiplying machine mentioned above, it can be done in
two seconds.

With listing adding machines, equally valuable results can be obtained.
In certain classes of work, such as collection letters in banks where
there are rows of figures representing the various checks, and
typewritten information, such as description of endorsements, it is much
faster to place the sheets in the adding machine and list the amounts
thereon and automatically print the total with the adding machine. This
avoids the trouble due to operators printing wrong totals on the billing
machine. The typewritten information is then put in on the typewriter or
billing machine. There is this to be said, however, if an operator
prints a wrong amount on a listing adding machine, the answer will be
incorrect, but the machine will print a correct total of the figures
printed by the machine. A listing machine can be equipped with a wide
carriage and used for printing lists of figures just the same as a
typewriter. Time should never be wasted printing a statement covering
rows of tabulated figures on any typewriter, and then taking the
statement to an adding machine and adding the columns to prove them, if
it can possibly be arranged to make up the entire statement on the
listing machine. Listing machines are now prepared to manifold at least
two extra copies, and are equipped with column tabulators.

For adding a number of columns, with or without a grand total column at
either the right or left side of the book or sheet, and where the items
are written one at a time in _different columns_, the combined
typewriter and adding machine is recommended. One such is shown in Fig.
22.


                             COLORED SHEETS

The "colored sheet system" indicated below makes it unnecessary to refer
to the written matter for distribution. A glance indicates the
department or service for which every slip is intended. The distribution
may be as follows:

         The office record (register) may be filed numerically;
         The order book copies alphabetically;
         The requisitions by departments;
         The shipping instructions, chronologically;
         The salesman's records, territorially;
         The cost sheets, according to classification.

One copy may also be filed geographically for comparison of results.
This furnishes a complete record and makes reference easy.[6]

Footnote 6:

  As a general rule, the "order acknowledgment" has been handled
  separately, although it is possible to include it in the one writing.

This summary illustrates the use of the color scheme, and gives a brief
hint of the plan usually followed in filing order sheets for various
departments. It should be remembered that the best billing and order
plan in the world can be made the most abject failure, if proper
attention is not given to the proper filing of sheets.

[Illustration:

  Fig. 22. Combined Typewriter and Adding Machine. _Elliott-Fisher Co._
]

For example, if clerks in looking for a certain order could always give
the order number, but not the name of the customer, it would be wrong to
file the orders alphabetically; in such cases, file the orders
numerically. Always file papers according to the information which the
clerk or executive will have at hand when looking up the same.
Sometimes, papers will be just as easily found when filed numerically as
alphabetically.

=Reference Information.= One very important feature to remember in
designing forms is to place all reference information on the right-hand
side of the sheet. In leafing loose sheets held in binders, it will be
easy to find the desired sheet if this plan is followed; but, if the
reference numbers are placed on the left side of the sheet, it will be
necessary to open the binder relatively wide to see each number.

In the illustration, Fig. 23, it will be noted that the order number is
properly placed, and that the printed headings are aligned horizontally
at the back, which permits all typewritten matter to be started evenly.
The value of this point was touched upon in a previous chapter, as to
saving of time in the execution of the work. In this particular form,
however, there is typewritten matter to the left of the headings, such
as _account of_, _ship to_, etc. The marginal stop on the billing
machine should be set for the first typewritten matter, and tabulator
stops used for all matter to the right on each line.


                             COMPOUND FORMS

One of the most effective means of short-cutting work, where the nature
of the business will permit, is through the use of compound forms. These
forms derived their name from the combination of order and billing work
on one set of sheets and accomplish in one operation, sometimes in two,
all the clerical work incident to the receipt, registering,
acknowledgment, billing, charging, and shipping of an order.

It can be readily seen that if a firm can fill its orders completely, or
almost so, that there is no use to wait until the order is filled before
billing it. It is a great deal easier to place another sheet along with
the order forms and use it for an invoice. It is generally placed as the
top sheet of the set, and therefore it is the original.

=Goods Shipped for Entire Order.= If the nature of the business is such
that the firm can always fill its orders completely, it is perfectly
safe to enter prices, make the extensions, and complete the invoice,
with the possible exception of the date when the goods are finally
shipped, if they cannot be sent out the same day. In such cases, a
printed heading is provided on the invoice, opposite which the shipping
date is typewritten. This then becomes the date of invoice.

[Illustration:

  Fig. 23. The Colored-Sheet System. A Different-colored Sheet is Used
    for Each Department
  _Underwood Typewriter Co._
]

=Goods Almost Completely Shipped.= If it is possible that one, two, or
three items cannot be shipped at all, or in part only, it is the custom
to hold the invoice (and copy, or copies, when there are any) in the
office, arranged alphabetically according to customers, pending receipt
of information from the shipping department as to quantities, weights,
etc., of goods shipped. This invoice is an exact typewritten duplicate
of the balance of the order forms, and has the heading for quantities to
be shipped and, usually, prices for each article. Neither the extensions
of the items nor the footing of the bill have been made. Generally, a
copy of the order showing the quantities, weights, or measures marked
thereon is handed to the office. The copy of the invoice is then placed
in the machine, and the prices, extensions, and footings made to
correspond with the items which have been shipped. The question arises
in regard to the items which have not been shipped. Some firms print on
the bottom of each invoice the sentence: _All items which are not priced
nor extended have been "back-ordered" and will be shipped later._ Other
firms typewrite an _X_ in the price column, or number the items which
have not been shipped. They then make a written explanation on the
bottom of the invoice regarding the date at which the balance of the
goods will be shipped. In some lines of business this plan tells the
customer not only what he ordered, but what has been shipped and when
the balance will be shipped. The memo on the bottom of the invoice also
saves the writing of letters to customers.

In other lines of business, this plan would be absolutely unfit—for the
reason that certain firms do not wish to call the customer's attention
to the items which have been omitted.

Compound forms generally have two columns at the left—one for the goods
ordered, the other for the goods shipped. If this were not provided, it
would be necessary to erase quantities in all instances where a
different quantity were shipped from the quantity ordered.

Fig. 24 is a good illustration of forms for a line of business which
always has the goods in stock. The various brands of goods are printed
in the body of the invoice. All that is necessary is to write the
quantities, prices, extensions, and footings. Four copies are
manifolded—invoice, warehouse order, house record, and collection
record.


                        RETAIL DRY GOODS BILLING

The retail dry goods houses and department stores use a form of billing
which is different from any other, in that the bills are rendered to the
customer once a month only. There are other lines of business which
render their bills monthly, and which use the same style of billing.

A folded form is used, the top sheet when completed at the end of the
month is mailed to the customer. The second or duplicate is retained for
the record of purchases.

When a customer makes a purchase, the saleslady makes the charge in her
sales book. One copy goes with the goods to the wrapping desk, the other
goes to the cashier's desk. The wrapper cannot handle a package without
a duplicate sales slip. The packer removes from his duplicate slip a
stub bearing the same number as the slip. This is to prevent goods being
removed from the house without proper authority. The cashier retains the
slip if cash has been paid, but passes the slip on to the auditing
department, if the slip is marked by the saleslady _charge_.

[Illustration:

  Fig. 24. Compound Forms, Showing Invoice and Office Records
  _Remington Typewriter Co._
]

In large stores like John Wanamaker's, the customers are given by the
credit man a brass check with their number marked thereon. This shows
each clerk with whom they deal that they are entitled to credit, without
having them identified each time they make a purchase. In smaller
cities, the clerks become familiar with all the charge customers, and
any plan of this character is not needed.

The sales slips are all numbered from _1_ to _50_, and the auditing
department checks back each day all the slips of the different
sales-people to see if all the slips have been accounted for. Some
stores have a chart on the cashier's desk _with the clerk's number at
the top of each column_, and the check numbers listed serially in each
column, as shown in Table I.

                                Table I
                 CHART FOR CHECKING RETAIL SALES SLIPS

              ══╤══╤══╤══╤══╤══╤══╤══╤══╤══╤══╤══╤══╤══╤══
               1│ 2│ 3│ 4│ 5│ 6│ 7│ 8│ 9│10│11│12│13│14│15
              ──┼──┼──┼──┼──┼──┼──┼──┼──┼──┼──┼──┼──┼──┼──
               1│ 1│ 1│ 1│ 1│ 1│ 1│ 1│ 1│ 1│ 1│ 1│ 1│ 1│ 1
               2│ 2│ 2│ 2│ 2│ 2│ 2│ 2│ 2│ 2│ 2│ 2│ 2│ 2│ 2
               3│ 3│ 3│ 3│ 3│ 3│ 3│ 3│ 3│ 3│ 3│ 3│ 3│ 3│ 3
               4│ 4│ 4│ 4│ 4│ 4│ 4│ 4│ 4│ 4│ 4│ 4│ 4│ 4│ 4
               5│ 5│ 5│ 5│ 5│ 5│ 5│ 5│ 5│ 5│ 5│ 5│ 5│ 5│ 5
               6│ 6│ 6│ 6│ 6│ 6│ 6│ 6│ 6│ 6│ 6│ 6│ 6│ 6│ 6
               7│ 7│ 7│ 7│ 7│ 7│ 7│ 7│ 7│ 7│ 7│ 7│ 7│ 7│ 7
               8│ 8│ 8│ 8│ 8│ 8│ 8│ 8│ 8│ 8│ 8│ 8│ 8│ 8│ 8
               9│ 9│ 9│ 9│ 9│ 9│ 9│ 9│ 9│ 9│ 9│ 9│ 9│ 9│ 9
              10│10│10│10│10│10│10│10│10│10│10│10│10│10│10
              ──┴──┴──┴──┴──┴──┴──┴──┴──┴──┴──┴──┴──┴──┴──

As fast as the checks are received at the cashier's desk they are
checked. If one of the clerks should sell goods to a friend, and send
one slip to the packer, but destroy the cashier's copy, the fraud would
be detected, as the next slip which would be sent in would show by the
number that the previous one was missing. The matter could be
investigated immediately. The auditing departments of different stores
handle the detail of the work in various ways—which, however, are about
the same. Some stores, after they prove that there are no slips missing
by checking the slips by the serial numbers, add them up on adding
machines. As some stores do not care for a list of the slips, they use a
non-listing machine, such as the comptometer. Other stores add the sales
of each clerk separately, and add the totals of all the clerks to secure
the total sales. The total sales of each clerk are then entered on a
statistical sheet which shows a comparison of the total daily sales of
each clerk for the month, as shown in Table II.

The slips are then sorted according to departments, then added again,
and similar information written on statistical sheets with the
department numbers at the top, instead of the clerk numbers. The grand
totals must agree to prove the work.

The slips are then sorted according to customers. If Mrs. J. B. Jackson
has bought goods in three different departments, the auditing department
will pin the three slips together and mark the total of the slips to be
charged to her account on the back of the under slip. If there are
twelve bill clerks and twelve billing machines, all the slips will then
be assorted into twelve lots, each lot representing the number of
accounts taken care of by each bill clerk.

                                TABLE II
                  COMPARISON OF DAILY SALES OF CLERKS

    ══════╤═════════╤═════╤═════╤═════╤═════╤═════╤═════╤═════╤═════
          │Clerk No.│  1  │  2  │  3  │  4  │  5  │  6  │  7  │  8
    ──────┼─────────┼─────┼─────┼─────┼─────┼─────┼─────┼─────┼─────
    Total │  Days   │     │     │     │     │     │     │     │
    335 38│    1    │30 50│55 45│47 70│35 35│56 78│34 25│40 56│34 79
    492 53│    2    │56 74│87 55│9 76 │87 23│54 09│19 89│86 75│90 52
     etc. │  etc.   │etc. │etc. │etc. │etc. │etc. │etc. │etc. │etc.
    ──────┼─────────┼─────┼─────┼─────┼─────┼─────┼─────┼─────┼─────
          │         │     │     │     │     │     │     │     │
    ──────┴─────────┴─────┴─────┴─────┴─────┴─────┴─────┴─────┴─────

Each bill clerk receives the slips in alphabetical order. The monthly
folded bills are arranged in the same order. These are held in binders—a
special kind, such as the Tengwall, being used—from which the bills can
be easily and quickly removed. Some firms prefer to file daily in
vertical files the current monthly bills, upon which the charges are
being made.

Some machines, such as the Smith Premier and the Elliott-Fisher, have a
carbon roll on their machines for manifolding these duplicate folded
bills without handling the carbon paper. These attachments were
especially designed for this particular work.

After the operator has entered the charges of the three slips for Mrs.
J. B. Jackson, or any other customer having more than one slip for the
previous day's purchases, she compares the total she has placed on the
bill with the total marked on the back of the slips by the auditing
department.

Fig. 25 shows samples of folded monthly retail bills. The black showing
under the top sheet, which is turned over, is the carbon paper used with
the bills when made on machines not equipped with the carbon-roll
attachment. Some firms place the carbon paper between the sheets at the
beginning of the month, and leave it there; others place the carbon
paper between the sheets for every charge which is made to the bill.

After all the charges have been made, the operator adds up on the adding
machine the totals of all the last charges on the various bills to which
charges have been made that day. This total must agree with the amount
which the auditing department handed over to each bill clerk to be
entered upon these bills. The Smith Premier and Elliott-Fisher have
tally-strip devices which automatically record the total of each charge
made to all the various bills each day. This paper strip, when added up,
must agree with the total of the auditing department figures.

At the end of the month, about the 26th, most firms begin to total the
columns of the bill. The final total of each bill added to the total of
every other bill must give a grand total equal to all the charges for
the month. This proves that each bill has been correctly added. The
balance due from the previous bills is then brought forward, and any
payments made during the month deducted, and the bill footed. All
credits for returned goods are entered during the month the same as the
charges, excepting that they are placed in a separate column provided
for that purpose, and deducted at the end of the month from the charges.

Some firms post the total charges and credits for the month to the
ledger in two lump sums. Other firms prefer to post the total of each
day's charges to the ledger daily, instead of letting the posting go
until the end of the month. This is a matter to be decided from a
bookkeeping standpoint. If the bookkeepers have the current month's
charges in the ledger, it saves referring to the bills at the bill
clerk's desk for information or the current month's charges.

[Illustration:

  Fig. 25. Monthly Statements of Retail Dry Goods Houses
  _Remington Typewriter Co._
]

[Illustration:

  Fig. 26. Smith Premier Device for Inserting Dry Goods Billing Forms
    Evenly
]

After the bills have been sent out, the duplicates are filed away. The
best known way to file them is alphabetically; each customer's bill for
the various months together. This is in contrast to the plan of filing
each month's bills away separately. If it is wished to refer to any one
person's charges for a given number of months it is necessary, under the
latter plan, to refer to several binders.

[Illustration:

  Fig. 27. Remington Billing Machines
]

One of the devices which did more to permit cylinder machines to do
billing successfully is shown in Fig. 26. Formerly, when two or more
sheets of paper were inserted in a cylinder machine, the small feed roll
which rests against the large rubber platen, fed the under papers at a
different speed than those sheets which rested against the large roll.
The result was that the papers were fed unevenly into the machine. When
removed, it was impossible to replace them in the same relation in which
they were before.

The device illustrated furnishes a resting place for evenly placing all
the sheets in the machine by pressing a release lever which draws the
feed rolls away from the large roll until the papers or sheets are
properly placed in the machine. Started evenly, they will invariably
feed evenly.

[Illustration:

  Fig. 28. Smith Premier Dry Goods Billing Machine
]

This is of particular advantage in retail dry goods billing, where a
sheet is placed in and out of a machine as many as thirty times a month.
If the top of the bill is each time started from the same starting
point, namely, the top of the statement, it will feed correctly to the
next writing point on the statement without any adjustment. The
Remington, Fig. 27, and Underwood machines are equipped with devices for
the same purpose. The Smith Premier, Fig. 28, and the Elliott-Fisher
machines are equipped with rolls of carbon which automatically manifold
folded monthly bill forms.


                         DEVICES OF THE FUTURE

One of the successful devices which is being perfected at this time is a
combination of an adding machine and a cylinder billing machine which
can be operated as a combined machine or separately as two machines, and
may be actually removed, one from another. The idea is to have a platen
or roll which can act as shuttle between the typewriter and the adding
machine. By pressing a button, the roll travels from the typewriter to
the adding machine. This scheme has the same advantage as has the farmer
who can operate his horses singly or in pairs.

The adding machine people have been experimenting and gradually
increasing the printing capacity of their machines. They are now able to
print the different months of the year and some other abbreviations for
monthly statement work. Further developments can be expected along this
line. Adding machines which list are a very important factor in office
work and their capacity is so large for certain classes of work that
space does not permit of detailed treatment here.

[Illustration:

  Fig. 29. Adding and Subtracting Machine Combined with Cylinder Billing
    Machine
  _Remington Typewriter Co._
]

While marvelous improvements have been made in the last decade, the next
one promises equally well, especially in the adding-machine line.




                           REVIEW QUESTIONS.

                       PRACTICAL TEST QUESTIONS.


In the foregoing sections of this Cyclopedia numerous illustrative
examples are worked out in detail in order to show the application of
the various methods and principles. Accompanying these are examples for
practice which will aid the reader in fixing the principles in mind.

In the following pages are given a large number of test questions and
problems which afford a valuable means of testing the reader's knowledge
of the subjects treated. They will be found excellent practice for those
preparing for Civil Service Examinations. In some cases numerical
answers are given as a further aid in this work.


                            REVIEW QUESTIONS
                           ON THE SUBJECT OF
                         COMMISSION AND STORAGE

 1. What advantages are derived from a division of the ledger? Name the
three most common subdivisions of the ledger.

 2. What accounts are kept in the purchase ledger; in the sales ledger;
in the general ledger? Under what circumstances should accounts with an
individual be kept in both purchase and sales ledgers?

 3. What is a controlling account? What do the balances of sales and
purchase controlling accounts represent? From what sources are the
debits and credits to these accounts derived?

 4. When loose-leaf order blanks are used, what is the customary routine
followed in filling and charging orders?

 5. For what purposes are special distribution columns in a sales book
used?

 6. To what accounts in the general ledger are total purchases, as shown
by the invoice register, posted? In what way are these two accounts
distinguished?

 7. Describe briefly the cash journal, and explain how it is used? What,
if any, objection can be raised to making entries which do not involve
an exchange of cash, or its equivalent, in the cash journal?

 8. Why is the expense account divided? Name some of the accounts
representing different classes of expense.

 9. What is meant by petty cash, and how should the account with petty
cash be handled?

10. The check of Martin Mason for $164.20 went to protest, and was
returned by our bank with a protest fee of $2.50. What entry is
necessary to record this on our books?

11. Prepare trading and profit and loss accounts representing the
transactions listed in Art. 16, Pages 28 to 31, inclusive.

12. How can an order record be used as a sales record? Why is an
abstract of sales used in connection with such sales records? Explain
how this abstract is made up.

13. If goods are sold at f. o. b. prices, but the freight is prepaid as
an accommodation to the customer, how should it be treated on the books?
Why?

14. Name three or more subdivisions of sales expense, and explain what
items are properly included in each.

15. Why are check registers taking the place of the old style check
book? When a check register is used, how are the checks kept?

16. What is a cash received book, and for what purpose is it used?

17. Complete the exercise given at the end of Art. 29, Page 42.

18. What is your understanding of the meaning of the terms _commission_
and _brokerage_? What is the distinction between a commission merchant
and a merchandise broker?

19. What is a manufacturer's agent, and how does his business differ
from that of a commission merchant or broker?

20. By what term is a consignment of goods to a broker known on the
books of the shipper? In what name is an account opened to represent the
consignment?

21. How is the above account made up? When is the account closed, and to
what account is the balance transferred?

22. What is an _account sales_? When an account sales is received
without a remittance, what account should be opened, and what does it
represent?

23. When a broker receives a shipment of goods to be sold on commission,
by what name is it known on his books? In what name is an account
opened?

24. If a broker renders an account sales without a remittance, to what
account should he credit the net proceeds? Why?

25. If a broker has on hand any unsold consignments when his books are
closed, do the accounts represent assets or liabilities? How would you
determine the broker's liabilities on account of consignments?

26. Name the books used by a produce shipper, and explain how each is
used.

27. What is a _shipment ledger account_, and how is it made up? What is
a _profit and loss on shipments account_?

28. In what way does the journal used by a shipper differ from the one
used by the average merchant?

29. How is the trading account of a shipper made up?

30. Prepare trading and profit and loss accounts called for in Art. 48.

31. Name and describe the uses of the books used by a commission
merchant.

32. Prepare trading and profit and loss accounts, and balance sheet
called for in Art. 57.

33. What is a storage business, and for what purpose is it conducted?

34. What is a warehouse receipt, and what does it represent?

35. Explain what is meant by _simple storage_, and _average storage_.


                            REVIEW QUESTIONS
                           ON THE SUBJECT OF
                  SINGLE ENTRY—COMPARATIVE STATEMENTS

 1. What is the distinctive feature of single entry bookkeeping? In what
respect does single entry fail to fulfil the functions of bookkeeping?

 2. What books are usually used in single entry? How does the single
entry cash book differ from that used in double entry?

 3. In posting, what features distinguish single entry from double
entry?

 4. How can the accuracy of single entry books be proved?

 5. To determine the profits of a business whose books are kept by
single entry, what steps are necessary? What are the steps in closing
single entry books?

 6. On a certain date the assets and liabilities of Henry Lamson are as
follows:

                                ASSETS

                   Cash                      $452.00
                   Due from sundry debtors     77.20
                   Merchandise per inventory  764.50

                              LIABILITIES

                   Due sundry creditors       142.00

 The following transactions are recorded:

              Sales to sundry persons on account    $46.71
              Bought from sundry persons on account 339.54
              Sales for cash                         96.90
              Received cash on account               64.00
              Paid cash on account                  133.50
              Paid cash for rent                     37.50
              Paid cash for clerk hire                8.00

 Record these transactions in single entry books; prepare proof of
ledger and statements of assets and liabilities, the merchandise
inventory at end of period being $983.75. Do the books show a profit or
a loss, and how does it affect the account of the proprietor?

 7. Explain, briefly, the necessary routine followed in changing single
entry books to double entry.

 8. H. P. Hayes established a small factory upon a borrowed capital of
$10,000. The undertaking was a success, and at the close of the first
year his financial condition was disclosed by the following particulars:

                    Bills payable          $4,000.00
                    Accounts payable        6,574.50
                    Cash                    1,752.50
                    Accounts receivable    12,694.18
                    Inventory               4,765.90
                    Salaries                3,500.00
                    Sundry expenses           435.50
                    Manufacturing expenses 11,759.50

 Mr. Hayes kept his own books during his first year in business, but did
not keep them by double entry. His sales for the year amounted to
$35,643.25, and his total purchases amounted to $16,076.07. At this
point Mr. Hayes admitted as a partner, A. B. Andrews, who contributed
$10,000.00 to the partnership upon the agreement that the partners
should share equally in the business. A bookkeeper was engaged to keep
the books by the double entry system. From the particulars given, make a
trial balance and the necessary journal entries to complete the change
to the double entry method. Ascertain the interest of Mr. Hayes in the
business, and credit his account with the same.

 9. Foster, Harvey, and Morton—a copartnership—wish to change their
method of bookkeeping from single to double entry. The partnership
agreement provides that each partner shall share in the profits in
proportion to his investment. Separate investment and withdrawal
accounts have been kept with each partner. In the following statement of
ledger accounts, partners' investment accounts show the same balances as
at the last adjustment, no additional investments having been made:

              Foster, Investment  Credit Balance $1,600.00
              Harvey, Investment  Credit Balance  1,200.00
              Morton, Investment  Credit Balance  1,200.00
              Personal Accounts   Credit Balance    900.00
              Personal Accounts    Debit Balance  1,900.00
              Foster, Withdrawals  Debit Balance    315.00
              Harvey, Withdrawals  Debit Balance    240.00
              Morton, Withdrawals  Debit Balance    155.00
              Bank                 Debit Balance  2,050.00
              Cash in Office                         45.00

An inventory shows merchandise $1,775.00, fixtures $300.00.

Show all entries necessary to make the partnership adjustment and change
the books to double entry, indicating by check √ the accounts to be
posted.

10. The books of the Star Coal Company, a corporation with a paid-up
capital of $10,000.00, have been kept by single entry. The following
facts are gathered from the books:

              Cash in Bank                      $3,500.00
              Personal Accounts  Debit Balances  6,500.00
              Cash in Office                       200.00
              Personal Accounts Credit Balances  2,500.00

An inventory results as follows:

                    Coal                   3,750.00
                    Horses and Wagons        800.00
                    Furniture and Fixtures   300.00

Make necessary journal entries to change to double entry. Provide a
reserve of 5% for uncollectible accounts, 10% for depreciation of horses
and wagons, 10% for depreciation of furniture and fixtures. Declare a
dividend of 10% and transfer balance of profits to surplus, making all
journal entries to record these transactions.

11. Prepare a model trial balance of an imaginary business, or one with
which you are familiar, giving special attention to the proper grouping
of the accounts. Explain the benefits of your grouping of the accounts.

12. What is a _working balance sheet_? From the trial balance, which you
have prepared, make up a working balance sheet, supplying such
additional figures as may be necessary.

13. What are the fundamental advantages of comparative statements? On
what basis should percentages be figured in on analysis of the
manufacturing account? of the trading account?

14. To prove the accuracy of the ledger without a trial balance, what
steps are necessary? What test is applied to determine whether the
ledger balances?

15. What is meant by a _book inventory_? How can the receipts be
determined? the disbursements or quantities sold?

16. What is the _reverse_ or _slip posting system_? How is it operated?

17. Describe, briefly, the _loose-leaf ledger_. Describe the principal
methods of indexing. Name some of the advantages of the loose-leaf
ledger.

18. For what classes of accounts is the card ledger specially desirable?
What are the principal methods of indexing the card ledger?

19. What is a _tabular ledger_? Describe the Boston Bank Ledger. Is a
tabular ledger well adapted for commercial accounts?

20. What is meant by a _balance ledger_? What are its advantages?

21. Prepare a form of cash journal segregating administrative, selling,
and manufacturing expense for an imaginary business, or one with which
you are familiar.

22. Prepare a form of sales journal for a business having five
departments.


                            REVIEW QUESTIONS
                           ON THE SUBJECT OF
                       TRUSTEES' ACCOUNTS; STOCK
                           BROKERS' ACCOUNTS

 1. From an accounting standpoint, into what two classes can business be
divided? What is the position of the trustee of an estate, as against
the public?

 2. Describe the essential features of the _accounting_ of an executor.

 3. In what two forms may an executor's accounts be kept? By what term
are his accounts with properties known?

 4. What are the proper classifications of an executor's accounts?

 5. Two trustees collect in one year an income of $50,000.00 for a
beneficiary, at an expense of $3,100.00. If each trustee receives an
equal share, what commission should each receive, and what amount will
be paid to the beneficiary, under the New York law? Prepare a complete
solution of this problem.

 6. Prepare a solution of the following: Four trustees collect and pay
out of an estate the sum of $416,000.00, the total debts of the estate
being $201,000.00. What commission will each trustee receive?

 7. Prepare a statement of the executor's accounts—from the particulars
given on Pages 17 and 18—showing the balance due each legatee.

 8. What is a _realization and liquidation account_? How is it made up?

 9. What is a _statement of affairs_? In what respect does it differ
from a balance sheet?

10. How does a statement of affairs of a bankrupt differ from that of a
going concern?

11. What is the purpose of a _deficiency account_?

12. Wm. Andrews, finding himself on July 1st unable to meet his
obligations, asks you to make up his statement of affairs for submission
to his creditors, and a deficiency account for his own information. You
find from his books and other sources the following facts regarding his
business:

   Unsecured creditors                                     $9,000.00
   Fully secured creditors                                  2,300.00
     Holding securities of the value of $3,000.00
   Partly secured creditors                                35,000.00
     Holding securities of the value of $20,000.00
   Preferred claims                                           800.00
   Bills payable                                           20,000.00
   Accounts receivable, home office (good)                  1,000.00
      "         " (doubtful) $200.00, estimated to
       realize                                                 75.00
      "         " (bad) $300.00
   Stock, Home Office, cost $1,500.00, estimated to
       realize                                              1,200.00
   Stock and accounts receivable, less sundry liabilities,
       at branches                                         36,000.00
         Of which it is estimated there will be a loss
         on realization of stock $6,000.00, of accounts
         receivable $9,000.00.
   Buildings and equipment at branches, cost $40,000.00,
       estimated to realize                                20,000.00
   Office furniture $300.00, estimated to realize             200.00
   Cash in office                                               4.00
   Cash in bank                                                80.00
   Bonds held by fully secured creditors                    3,000.00
   Stocks held by partly secured creditors                 20,000.00

Six years ago Andrews' capital was $42,000.00. The profits for the first
three years appear to have been $3,000.00, $4,000.00, and $5,284.00, and
the losses for the three subsequent years $1,500.00, $2,500.00, and
$3,000.00, after allowing $2,000.00 a year for interest on capital. His
withdrawals have been at the rate of $4,000.00 a year. From these
particulars, prepare a statement of affairs and a deficiency account.

13. What differences exist between a transaction for the purchase or
sale of stock, and the purchase or sale of grain?

14. Explain a _ring settlement_.

15. What is necessary to post to the customer's ledger account, and from
what sources do you post?

16. Show form of _margin book_ and explain how it is kept.

17. In what cases should interest be charged? What is it charged for?

18. What should be entered in the general cash book?

19. Explain fully the handling of _office cash_.

20. If _A_ bought 5,000 bushels of wheat at $1.20, and sold 12,000
bushels at $1.21, how much cash would he be obliged to deposit to secure
the fulfillment of his orders?

21. What is the cash which he deposits called?

22. Write an order form for the sale of 25,000 bushels of corn @ 76¼c
made upon the orders of Mr. D.

23. Show what acknowledgment must be made to Mr. D.

24. What is the _daily record sheet_? For what purpose is it used?
Explain the entries in this book.

25. Explain how stock purchases should be handled, what records should
be kept, and what information in regard to them is necessary.

26. What is the difference between a _bull_ and a _bear_?

27. Explain the meaning of a buying order and state how it should be
treated in the accounting department.

28. On July 5th James Robinson sold 25,000 bushels of September wheat at
1.04½; on July 10th he purchased 10,000 bushels wheat at 1.02¼, and on
July 11th he purchased 15,000 bushels of wheat at 1.02. Make a statement
of this account for Mr. Robinson.

29. What is the difference between _listed_ and _unlisted_ stock?

30. What is a _debit_ or _credit slip_ and for what purpose is it used?

31. Show the ruling of the stock ledger and explain the necessity of
each column. Rule a sample page.

32. For what purpose is the journal used in connection with the
brokerage business?

33. Explain the meaning of _buyer's option_.

34. Explain the meaning of _carrying charges_.

35. Explain the meaning of _a put_ and _a call_.


                            REVIEW QUESTIONS
                           ON THE SUBJECT OF
                      BILLING AND ORDER RECORDING

 1. Explain the difference in principle between the _cylinder_ billing
machine and the _flat-bed_ billing machine.

 2. Explain the meaning of _manifolding_.

 3. Explain in your own language why the plan of copying invoices in
tissue books with a letter press is inferior to the billing-machine
method of typewriting the invoice and sales sheet simultaneously.

 4. If an office boy mailed a pen-written invoice without copying same
in the tissue book, what method would enable the firm to detect such
oversight?

 5. What is the difference between the style of invoice used on flat-bed
machines and on cylinder machines?

 6. When a concern uses two ledgers on account of having too many
customers to be conveniently held in one ledger, what change is
advisable in ruling the columns of the sales sheet?

 7. What plan is used in classifying sales according to territory,
salesmen, etc.; and what means is used to prove the footings of each
page?

 8. How much of the left side of the sales sheet do you understand is
covered by the invoice when they are both in the machine for the purpose
of making the bill and charge?

 9. How do you classify with the machine the amounts of the bills in the
columns to the right of the total column?

10. Name all of the reasons you can, whether included in the textbook or
not, for making duplicate invoices.

11. Explain why some firms are enabled to make their invoices (and, of
course, sales sheets) before the goods are shipped, and give reasons why
other firms are forced to wait until after the order has been shipped,
or at least partially shipped, before making invoices.

12. Explain what plan you would use to inform the packer of the
description of the goods to be shipped, but prevent him from knowing the
quantities, in order to further prevent him from double-checking the
figures showing quantities and at the same time neglecting to count the
articles.

13. Where the firm sells three or four classes of goods and wishes to
keep a continuous record of the tonnage sold, that is, weight of the
various classes of goods, how would you rule the invoice and sales sheet
in order to shorten the billing?

14. If you were forced to substitute one size of an article in place of
another size ordered (without injury to the customer), how would you
design your forms in order to enable you to typewrite the size shipped
and size ordered on the sales sheet, and size ordered, only, on the
invoice?

15. If you wish to typewrite a requisition for goods ordered at the time
the invoice and sales sheet are written, how would you arrange it?

16. What is the difference between the terms _unit billing_ and
_condensed billing_? Under what conditions would you recommend unit
billing and when condensed billing?

17. What is the best plan of facilitating the filling of orders where
there are a large number of floors or departments and where each day's
orders are supposed to be filled upon the day the orders are received?

18. Why should a plan which is highly satisfactory in a small concern
prove to be an absolute failure in a large one?

19. What is meant by _split orders_?

20. Describe the different forms of punched holes of loose-leaf sheets
and why the closed-hole punching is not adapted for use with records
which are to be removed and replaced in binders from time to time.

21. Describe the different forms of binders with which you are familiar.

22. In printing invoices what is the best plan of designing the headings
in order to facilitate the execution of the invoice on billing machines?
Would you pay any attention to the space between the lines of the
heading and to the distance between the last line to be typewritten on
the heading and the first line to be typewritten on the invoice?

23. Explain the mistakes made in using carbon paper, and under what
conditions you would use the various weights of carbon paper.

24. Explain what is meant by a _blind_.

25. Explain what is meant by _credit memoranda_, and tell how to use
them in connection with a sales book instead of having to use a separate
credit sheet.

26. Explain the use of special characters on the billing machine, and
what is meant by aligning them in order to prevent one abbreviation
being printed over the top of another.

27. Explain the difference between a single-stop tabulator and a
decimal-stop tabulator.

28. What is the advantage of having a billing operator on a platform on
wheels in a wholesale dry goods house?

29. Under what conditions would you recommend the use of the separate
billing machine and separate computing machine for the same work?

30. Explain the benefits to be derived from the use of the color scheme.

31. What is meant by _compound forms_, and under what conditions can
they be used?

32. In what general way does retail dry goods billing differ from
condensed billing and what is the difference in the general style of
stationery used?

33. What is the best plan of filing the duplicate monthly retail dry
goods bill?

34. What is the plan used in retail dry goods billing to prevent goods
from being shipped out of the store without a charge being made?

35. What is the advantage of a subtracting device on the billing machine
with adding attachment?




                                 INDEX

  _The page numbers of this volume will be found at the bottom of the
       pages; the numbers at the top refer only to the section._


                                    A

 Abstract of sales                                                     1

 Accounting forms, special                                       146-161

   cash books                                                        155

   ledgers                                                           147

     balance                                                         152

     card                                                            148

     loose-leaf                                                      147

     tabular                                                         152

   pay-roll records                                                  160

   tabular sales book                                                157

 Accounts with trust provisions                                      180

 Adding machine and cylinder billing machine combined                301

 Adding machine and typewriter combined                              289


                                    B

 Back orders                                                         262

 Balance ledgers                                                     152

   with two balance columns                                          154

   with two credit columns                                           154

   for installment accounts                                          155

 Bearing the market                                                  229

 Bid price                                                           229

 Billing machine

   development of                                                    242

   how to handle orders and bills on                                 280

   Smith Premier                                                     300

 Billing and order recording                                     235-301

   acknowledgment of order to salesman                               268

   analysis of quantities and amounts                                257

   back orders                                                       262

   billing machine                                                   241

   carbon paper                                                      277

   colored sheets                                                    288

   compound forms                                                    290

   computing machines in connection with                             286

   duplicate invoices                                                253

   goods purchased outside                                           258

   information on sales sheet not on invoice                         257

   loose-leaf sales sheets and invoices                              244

   manifolding, machines for                                         239

   order form                                                        266

   reference information                                             289

   retail dry goods billing                                          292

   split orders                                                      264

   stationery                                                        269

   traffic department records                                        256

   unit billing                                                      260

 Blinds                                                              280

 Board of trade terms, glossary of                               229-232

 Book inventories                                                    134

 Borrowing stock                                                     229

 Boston bank ledger                                                  152

 Break in the market                                                 229

 Broken lot                                                          229

 Brokerage concern, legitimate                                       198

 Broker's commission                                                 197

 Bucket shops                                                       197,
                                                                     229

 Bulls and bears                                                     196

 Buy at market                                                       229

 Buyer's option                                                      229

 Buying order                                                        230


                                    C

 Cables                                                              230

 "Call"                                                              230

 Card ledgers                                                        148

 Carbon paper                                                        277

   color                                                             277

   copy                                                              279

   finish                                                            277

   four-pound                                                        278

   full                                                              279

   pen                                                               279

   pencil                                                            279

   seven-pound                                                       278

   ten-pound                                                         278

   troubles and remedies                                             279

   wearing quality                                                   280

 Carrying charges                                                    230

 Cash book                                                       15, 155

 Cash grain                                                          230

 Cash received book                                                   49

 Check register                                                  45, 227


 Clearing house                                                      199

 Colored sheet system for billing and order recording                288

 Commission accounts                                               60-83

   actual sales, treatment of                                         68

   cash book                                                          77

   consignment                                                        62

   consignment ledger                                                 77

   exercise                                                           76

   manufacturer's agent                                               60

   merchandise broker                                                 60

   produce shipper's books                                            63

   receiving book                                                     77

   sales book                                                         77

   sample transactions                                            69, 78

   shipments                                                          61

   shipper's trading account                                          68

 Commission, executor's                                              168

 Commissions                                                         230

 Commodities handled by brokers                                      200

 Comparative statements                                              129

   book inventories                                                  134

   proof without trial balance                                       131

   reverse or slip posting                                           143

   trial balance                                                     129

 Computing machines, use of, in connection with billing              286

 Consignment                                                          62

   commission account                                                 63

   principal's account                                                62

 Controlling accounts                                                 12

 "Cornering the market"                                              200

 "Curb"                                                              230

 Curbstone broker                                                    230

 Customers' ledger                                                   220

 Customer's statement                                                224

 Cylinder billing machines                                           241


                                    D

 Debit and credit rules                                               93

 Debit and credit slip                                               206

 "Delivery"                                                          230

 Designing stationery                                                273

 "Dividend"                                                          230

 "Dump"                                                              230


                                    E

 "Even"                                                              230

 Executor's accounts                                                 163

   classification                                                    168

   commissions                                                       168

   form of                                                           166

   sample accounts                                                   169

   schedules                                                         164


 Expense account, subdivision of                                      16


                                    F

 Flat-bed billing machines                                           241

 "Flurry"                                                            230

 Forms

   abstract of sales, departmental                                43, 57

   accounting of an executor                                         186

   balance form for general ledger                                   222

   balance form of ledger card                                       151

   balance ledger for installment accounts                           155

   balance ledger with two balance columns                           154

   balance sheet and trial balance of general ledger                  37

   billing of invoicing loose-leaf sales book                        249

   Boston bank ledger                                                153

   broker's general cash book                                        213

   broker's statement to a customer                                  223

   cash journal                                                      156

     columnar                                                         27

     for commission business                                      66, 72

   cash received book                                                 48

   check register                                                    228

   check register and cash expenditure book                       47, 58

   colored sheet system for billing and order recording              291

   commercial tabular ledger                                         153

   commission merchant's

     cash journal                                                     81

     consignment and sales ledger                                     82

     general ledger                                                   83

     journal                                                          80

     receiving book                                                   80

     sales book                                                       80

   compound forms showing invoice and office records                 293

   credit slip given to customer by broker                           206

   customers' ledger, variety of rulings for                         219

   daily advice of purchase or sale rendered to customers            210

   daily sales journal or record of grain sales                      208

   daily sales journal or record of stock sales                      207

   deficiency account which shows causes of loss                     191

   departmental pay-roll record for piece work and day workers       159

   executor's account of cash receipts and disbursements             173

   executor's accounts with trust provisions                     181-185

   executor's journal                                                172

   general ledger                                                 33-35,
                                                                     227

   information on sales sheet not on invoice                         259

   invoice for use on billing machine                                247

   journal entries, adjusting                                         25

   journal entries to change to double entry                         119

   ledger with accounts classified                               139-143

   ledger after changing to double entry                             120

   ledger with two credit columns                                    154

   ledger account of each stock handled                              218

   ledger account of an executor, classified                         174

   ledger card for dentists                                          149

   ledger card for publishers                                        150

   ledger proof without a trial balance                              144

   loose-leaf ledger                                                 148

   loose-leaf sales sheet                                            248

   loose-leaf sales sheet and invoices                               246

   loose-leaf sales sheet and invoices with columns for              254
 distribution of labor and stock

   loose-leaf stock ledger                                           136

   memorandum of deposit with broker to secure contracts             203

   monthly posting proof sheet                                       145

   monthly statements, retail dry goods houses                       297

   office cash disbursements, detailed record of                     215

   opening entry in journal                                           24

   order blank                                                        14

   order and sales record                                          53-56

   order and sales record combined                                    42

   pay-roll and check register combined                              161

   petty cash voucher                                                 17

   proof of single entry ledger                                      107

   purchase book and journal, columnar                                71

   purchase and general ledgers                                       32

   record of loans payable during each month                         225

   record of margin balances to protect customer's account           216

   record of stocks in hands of broker                               211

   requisition forms for order handling                              267

   sales book and invoice register                                    26

   sales ledger                                                       29

   sales and purchase ledgers                                         31

   sales journal with adjustment column                              158

   sales journal arranged for distribution to two ledgers            251

   sales recapitulation sheet                                        158

   sales sheet for analyzing quantities and amounts of goods         257

   sales sheet for condensed billing                                 255

   schedule filed by an executor                                     177

   shipment book                                                  63, 70

   shipment ledger for commission business                            65

   shipper's cash journal                                             59

   shipper's general ledger                                           74

   shipper's purchase and shipment ledger                             73

   single entry cash book                                            103

   single entry journal                                          100-102

   single entry ledger                                           104-106

   single entry partnership ledger                               113-117

   single entry profit and loss statement                            108

   special journal used by grain commission company                  209

   split-order schemes, forms for                                    265

   statement of affairs of a bankrupt                                189

   statement of sales and purchase ledger                             36

   stationery properly designed                                      276

   stock ledger card                                                 136

   stock ledger card and indexes                                     137

   storage charges statement                                          88

   storage record                                                     87

   tabular ledger                                                    153

   tabular sales book                                                157

   telegraphic buying and selling orders                             205

   trial balance book                                                 46

   typewriter type, styles of                                        274

   unit billing, samples of                                          261

   working balance sheet                                             127

 "Futures"                                                           231


                                    G

 General ledger                                                  12, 222

 Gothic type                                                         275

 Grain commission journal sheet                                      209

 Grain purchases                                                     195


                                    I

 "In sight"                                                          231

 Invoice register                                                     15


                                    L

 Legitimate brokerage concern                                        198

 "Limit"                                                             231

 Listed securities                                                   231

 "Long"                                                              231

 Loose-leaf ledgers                                                  147

 Loose-leaf sales sheets and invoices                                244



                                    M

 Manifolding, machines for                                           239

 "Margin"                                                            231

 Merchandise broker                                                   60


                                    O

 "Open market"                                                       231

 "Open order"                                                        231

 "Option"                                                            231

 Order blanks                                                         13

 Order and sales record combined                                      41

 Order work of wholesale grocers                                     260

 Out freight                                                          42


                                    P

 Pay-roll records                                                    160

 Petty cash voucher                                                   17

 Pit                                                                 232

 Pool                                                                231

 Posting                                                              93

 Produce shipper's books                                              63

   cash book                                                          64

   journal                                                            67

   purchase book                                                      63

   shipment book                                                      64

   shipment ledger                                                    64

 Protested paper, treatment of                                        18

 Purchase controlling account                                         13

 Purchase ledger                                                      11

 "Put"                                                               231

 "Put and call"                                                      231


                                    R

 Realization and liquidation accounts                                188

 Reference information                                               289

 "Remargin"                                                          231

 Remington standard typewriter                                       299

 Retail dry goods billing                                            292

 Reverse or slip posting                                             143

 "Ring"                                                              231

 "Ring settlement"                                                   199


                                    S

 Sales book                                                           14

 Sales expense                                                        44

   advertising                                                        44

   packing and shipping                                               44

   salaries of salesmen                                               44

   traveling expenses of salesmen                                     44

 Sales ledger                                                         12

 Sales recapitulations                                               158

 Securities                                                          197

 "Sell at market"                                                    231

 "Sell at opening"                                                   231

 "Selling order"                                                     231

 "Settlement"                                                        231

 Shipments                                                            61

 Shipper's trading account                                            68

 "Short"                                                             232

 Single entry bookkeeping                                         91-122

   books used                                                         92

     bill book                                                        92

     cash book                                                        92

     ledger                                                           92

     order book                                                       92

   changing corporation books to double entry                        118

   changing to double entry                                          110

   changing partnership books to double entry                        110

   closing the books                                                 109

   debit and credit rules                                             93

   determining profit                                                108

   distinctive features of                                            92

   posting                                                            93

   proprietor's account                                               93

   proving the work                                                   93

   sample transactions                                                94

   statement of assets and liabilities                               111

   statement of ledger                                               112

 "Sky rocketing"                                                     232

 "Slump"                                                             232

 Smith Premier carbon roll billing machine                           300

 Special accounting forms                                        146-161

 Split orders                                                        264

 "Spread"                                                            232

 Statement of affairs                                                188

   of a bankrupt                                                     188

 Stationery                                                          269

   binders                                                           269

   designing                                                         273

   loose-leaf sheets                                                 269

   printed for typewritten work                                      271


 Stock brokers' accounts                                         195-232

   bookkeeping for                                                   196

   books and forms used                                              204

     advice of purchase of sale                                      211

     bills payable record                                            224

     cash book                                                       212

     check register                                                  227

     customer's statement                                            224

     daily record sheet                                              208

     debit and credit slip                                           206

     grain commission journal sheet                                  209

     journal                                                         226

     ledgers                                                         218

     margin book                                                     217

     office cash disbursement sheet                                  214

     order blank                                                     205

     stock record                                                    212

   broker's commission                                               197

   bucket shops                                                      197

   bulls and bears                                                   196

   capital required                                                  195

   clearing house                                                    199

   commissions allowed by board to brokers                           204

   commodities handled                                               200

   cornering the market                                              200

   deposits to secure fulfillment of time contracts                  203

   glossary of board of trade terms                              229-232

   grain purchases                                                   195

   legitimate dealers                                                198

   office cash disbursements                                         214

   ring settlement                                                   199

   securities                                                        197

   settlement of contracts by offset                                 201

   value of the wire                                                 200

 Stock ledger                                                        218

 "Stop loss order"                                                   232

 Storage                                                              84

 Storage accounts                                                     85

   special records required                                           86

 "Straddle"                                                          232

 "Sweeten"                                                           232


                                    T

 Tables

   chart for checking retail sales slips                             294

   daily sales of checks, comparison of                              295

 Tabular ledger                                                      152

 Tabular sales book                                                  157

 Tabulators on billing machines                                      284


 "Ticker"                                                            232

 Traffic department records                                          256

 Trial balance book                                                   45

 Trial balances and comparative statements                       123-128

   balance sheet                                                     125

   profit and loss statement                                         126

   trading statement                                                 125

   trial balance                                                     124

   working balance sheet                                             128

 Trustees' and executors' accounts                               163-192

 Type, styles of                                                     275

   elite                                                             275

   Gothic                                                            275

   large Roman                                                       275

   medium Roman                                                      275

   pica                                                              275

 Typewriter and adding machine combined                              289


                                    U

 Underwood billing machine                                           241

 Underwood special roll machine                                      239

 Unit billing                                                        260


                                    W

 Wash sale                                                           232

 Wholesale accounts                                                11-59

   cash book                                                          15

   cash received book                                                 49

   check register                                                     45

   controlling accounts                                               12

   exercises                                                       38-40

   expense account                                                    16

   expense book, traveler's                                           45

   general ledger                                                     12

   invoice register                                                   15

   order blanks                                                       13

   order and sales record combined                                    41

   out freight                                                        42

   petty cash voucher                                                 17

   protested paper                                                    18

   purchase ledger                                                    11

   sales book                                                         14

   sales expense                                                      44

   sales ledger                                                       12

   sample transactions                                            18-23,
                                                                      49

   trial balance book                                                 45




                          TRANSCRIBER'S NOTES


 1. Many pages had section page numbers as well as book page numbers.
    Footnote 2 on page 10 refers to the book page numbers. Ignored the
    section page numbers.
 2. Changed 22.50 to 30.50 on page 95 since both 244×.125=30.50 and
    30.50+15.08=45.58.
 3. Opening but no close quotes for next few pages beginning on p. 201.
 4. Silently corrected simple spelling, grammar, and typographical
    errors.
 5. Retained anachronistic and non-standard spellings as printed.
 6. Enclosed italics font in _underscores_.
 7. Enclosed bold font in =equals=.