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Title: Cyclopedia of Commerce, Accountancy, Business
Administration, v. 05 (of 10)

Author: American School of Correspondence

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Most recently updated: October 23, 2024

Language: English

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*** START OF THE PROJECT GUTENBERG EBOOK CYCLOPEDIA
OF COMMERCE, ACCOUNTANCY, BUSINESS ADMINISTRATION, V.
05 (OF 10) ***

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."

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 By James B. Griffith[1] Page [2]11
Storage 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' By James B. Griffith Page 163
Accounts

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

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

2. For page numbers, see foot of pages.

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.

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.

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 1,974.00
Rec.

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.

Opening Entry in Journal

Adjusting Journal Entries

Sales Book and Invoice Register

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

Columnar Cash Journal

Columnar Cash Journal

Sales Ledger

Sales Ledger

Sales and Purchase Ledgers

Purchase and General Ledgers

General Ledger

General Ledger

General Ledger

Statement of Sales and Purchase Ledger

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.

Combined Order and Sales Record

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

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

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.

Trial Balance Book

Check Register Combined with Cash Expenditure Book

Cash Received Book

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.

Order and Sales Records

Order and Sales Records

Order and Sales Records

Order and Sales Records

Departmental Abstract of Sales

Cash Received Book

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

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.

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.

Shipment Ledger for Commission Business

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

Shipment Book

Columnar Purchase Book and Journal

Cash Journal for Commission Business

Shipper's Purchase and Shipment Ledger

Shipper's General Ledger

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

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

Commission Merchant's Receiving Book, Journal
and Sales Book

Commission Merchant's Cash Journal

Commission Merchant's Consignment and Sales
Ledgers

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 Dec. 10 100 1 10c 10 00
cs. cs. mo.
eggs

Jan. 6 300 2 20c 60 00
cs. mo.

Feb. 14 200 3 30c 60 00
cs. mo.
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 9,000 cs.
da.
Nov. 30 200 " 800 " 10 8,000 "
da.
Dec. 10 100 cs. 700 " 27 17,900 "
da.

Jan. 6 300 " 400 " 39 15,600 "
da.
Feb. 14 200 " 200 " 10 2,000 "
da.
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.

Storage Record

Statement of Storage Charges

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.

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.

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.

Single Entry Journal

Single Entry Journal

Single Entry Journal

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.

Single Entry Cash Book

Single Entry Ledger

Single Entry Ledger

Single Entry Ledger

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

Proof of Single Entry Ledger

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.

Single Entry Partnership Ledger

Single Entry Partnership Ledger

Single Entry Partnership Ledger

Single Entry Partnership Ledger

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.

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.

Ledger After Changing to Double Entry

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.

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

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.

WORKING BALANCE SHEET

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.

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.

Fig. 18 b. Stock Ledger Card

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.

UNDERWOOD TYPEWRITERS USED IN MELBOURNE UNIVERSITY
COMMERCIAL EXAMINATIONS

Ledger with Accounts Classified

Ledger with Accounts Classified

Ledger with Accounts Classified

Ledger with Accounts Classified

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.

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.

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.

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.

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.

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.

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.

Fig. 22 a. Boston Bank Ledger

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.

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.

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.

THE PRUDENTIAL BUILDING
One of Buffalo's Best Office Buildings

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.

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.

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.

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.

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.

Fig. 25 c. Sales Recapitulation Sheet

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.

Fig. 27. Combined Pay-Roll and Check Register

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:

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

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

Executor's Journal

Executor's Account of Cash Receipts and Disbursements

Classified Ledger Accounts of an Executor

Classified Ledger Accounts of an Executor

Classified Ledger Accounts of an Executor

Schedule Filed by an Executor

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)

Executor's Accounts With Trust Provisions

Executor's Accounts With Trust Provisions

Executor's Accounts With Trust Provisions

Executor's Accounts With Trust Provisions

Executor's Accounts With Trust Provisions

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

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

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.

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.

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.

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.

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.

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

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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).

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.

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.

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.

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.

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:

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.

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:

LAMSON FOUR-INCH PNEUMATIC TUBE ORDER
CARRYING SYSTEM FOR A LARGE WHOLESALE
ESTABLISHMENT OR A FACTORY
Lamson Consolidated Store Service Co.

Fig. 11. Sales Journal Arranged for Distribution to Two
Ledgers

According to territory, as follows:

According to salesmen, as follows:

To separate the sale of regular goods from goods which are being sold on consignment, as
follows:

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.

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.

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.

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.

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:

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.

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.

A YACHT STORAGE BASIN AT THE SHIPBUILDING PLANT OF THE GAS
ENGINE & POWER CO. AND CHARLES L. SEABURY & CO., CONSOLIDATED.

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.

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.

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.

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]

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.

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.

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.

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
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
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
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
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
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
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 1 30 55 47 35 56 34 40 34
38 50 45 70 35 78 25 56 79
492 2 56 87 9 76 87 54 19 86 90
53 74 55 23 09 89 75 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.

Fig. 25. Monthly Statements of Retail Dry Goods Houses
Remington Typewriter Co.

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.

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.

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.

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 159
workers
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