Chapter III: Part 3

When the men receive their coupons, they use them for purchasing articles from the Exchange. The clerk making a coupon sale should identify the man making the purchase and make sure he is using his own coupons. He should also satisfy himself that there is no fraud, forgery, etc., connected with the coupons. These two operations are ordinarily instantaneous, requiring no waste of time whatever. The clerk then gives the purchaser the desired articles, tears off a corresponding value in coupons and drops them in his private drawer or compartment, meanwhile ringing up the sale on the cash register and giving the purchaser the receipt printed by the register.

After the day’s work is over, each clerk handles his coupon sales in the same manner as previously described for charge sales, and they are checked by the Steward as before. The latter enters on his Form 4, (Fig. 5) the amount of coupon sales made by each clerk, also, the total amount of coupons issued during the day. All these coupon transactions for any one day are then entered on a single line of Form 26 (Fig. 17) which is the same as that used for Form 7. As will be noted from an inspection of the cut, the coupons issued are entered in column A and the total receipts from all departments are entered in column B. These receipts are distributed among the department as shown, the value carried in column B equalling the sum of the amounts carried in the columns to the right.

Each Form 26 refers solely to one month’s transactions, there are no “brought forward” items. At the end of the month or whenever the books are closed, all of the columns on this form are footed up and the totals checked across. The total of column A should agree with the strip record which the coupon clerk has been keeping as previously described. The detailed process of checking this account will be described later, but it is evident that if the Steward has made out his daily reports (Form 4) correctly, and correctly copied the coupon records to Form 26, there can be no error in the latter statement. After successfully withstanding the checking process, the total of column A is posted as a lump sum to the debit side of “Bills Receivable, Credit Accounts” in the Ledger, writing the entry thus:—“Aug. 31 Credit Coupons $54.00”. It will be remembered that we must also credit this amount to the Outstanding Coupon account. We now transfer the total of the Store column to the Store Account in our Ledger, entering on the right hand or credit side, “Aug. 31 Coupon sales $8.15”. We proceed in like manner with our other departments. The total of column B must, of course, be charged (debited) against the Outstanding Coupon account in the Ledger.

A summary of all these operations is shown graphically in Fig. 18. The solid lines show how a record is carried through the books until it arrives at the Ledger. The dotted lines show the various checking operations that are possible. Attention is especially invited to checking Forms 25 and 26 against each other.

In leaving the subject, it is deemed proper to state that the Exchange Officer should keep a single entry record of all unused coupons on hand. When they are first received from the printer, he should carefully check them in person and see that they are safely stored. His record of them should show the numbers and colors of the coupons and exactly how many of the various colors he has on hand at any time.

Coupons should be issued at a fixed time daily, and the Exchange Officer should see to it that the men are never disappointed, but are always able to secure their coupons at the specified time.

STOCK RECORDS.

In General.

One of the most important points connected with the running of any store, is that referring to the manner in which the records of the stock are kept. In most Exchanges, the stock records are not good; usually, because a clumsy or inefficient system of records is in force. An endeavor will be made in the description to be given hereafter to set forth a system whereby misuse of stock will be prevented and an accurate estimate of the profits made by each department will be possible. The objection may be made to this system that in a large exchange it would require the services of one clerk to keep the stock records alone, but when we realize that an inefficient stock record can and usually does result in losses that are sometimes much greater in value than this clerk’s wages, we see the futility of such an argument. It is useless to try to avoid the conclusion that we _must_ keep accurate track of our merchandise. In an exchange at, say, a 5-company post, it is economy to pay one man $100.00 per month or even more, to take exclusive charge of the stock records.

In the first place, it is essential to make clear in the minds of the Exchange authorities the difference between a stock room and a store room. The former is for storing merchandise that is bought in large quantities and will not be needed in the various departments for some time. The merchandise in the stock room is charged to it on the Stock Records until it is needed in one of the departments when it is sent to and its value charged against that department and credited to the stock room. A store room in the sense now considered is a place in which we may store the merchandise belonging to and already charged against any department. This “place” may be but a corner or a shelf in the stock room or any other room. As a general rule, it is best to charge merchandise direct to the proper department, as it saves time and work. Then, if the department concerned finds that it is inconvenient to keep this merchandise on its counters or shelves, it can transfer some of it to the proper store room until needed. Both the stock room and the store rooms should be under the jurisdiction of the stock clerk, the former exclusively so. Efficient locks should be provided for these rooms and he or his agent should be the only persons authorized to handle the stock therein.

The stock record is simply a stock ledger in which we keep accurate account of the numbers of articles acquired and dispensed. If practicable, it should show at all times the exact number of each article that we have on hand. Such a record is sometimes called a “Perpetual Inventory”. It would not be practicable in the usual case for us to keep such a record in post exchange business for the reason that it would be extravagant for us to record each cash or coupon sale made during the day. For example, during certain days of the month, such as pay day and the first day upon which coupons are issued, it is manifestly impracticable for us to make out a sales slip for each cash or coupon purchase because there are so many five and ten cent purchases that the cost in time and labor involved in such a method would outweigh the advantages gained. If the average sale amounted to a dollar or so, it might pay us to use sales slips similar to those used in recording our charge sales. Therefore, most Exchanges do not require cash or coupon sales to be recorded except on the cash register. Hence, there is no itemized record of the merchandise that is sold during the day for cash or for coupons, which in turn makes it impossible to keep a perpetual inventory. The result is that an inventory must be taken at least once a month.

If we now take such an inventory and calculate the selling price of all the goods found, the result will represent the receipts each department should turn in if they sold out all of their stock. If we keep adding to this amount the selling price of all merchandise that we receive for and issue to the departments for sale, and deduct the selling price of all articles which each department turns in to the stock room, we shall have, at the end of the month, figures which represent the receipts which should be turned in if each department were to “sell out”. By subtracting from these amounts the actual receipts turned in during the month, we find the selling price of the articles which _should_ be on hand at the end of the month. By taking an inventory at the end of the month and figuring out the selling value of the articles actually found, we can check the operations of our various departments. If there is any great discrepancy, it would show that our clerks are, in effect, taking articles from our shelves and the Exchange is not getting the benefit of its sales. It is not to be expected that these amounts will agree to the cent.

Now if there is but one clerk in any department, it is easy to fasten the responsibility for any shortage, but where there are several, special steps must be taken in order to do this. Suppose we have four clerks in the store department; if they sell from the various shelves indiscriminately, or if one or more of them are sometimes away on duty, it would be manifestly unjust to hold any particular clerk or even all of them responsible for any shortages which might occur. The only solution lies in sub-dividing the store into sections, putting one clerk in sole charge of each and allow no clerk to touch the stock in another man’s section. In case a clerk in unavoidably absent, an inventory of his section can be made in a few minutes, and, if the results at the end of the month show it to be desirable, checked against the sales he had made. In this way, both the clerk and the Exchange are protected. A “roving” clerk or the Steward can take the place of the absentee in case of necessity. Heavy sellers like tobacco and the like can be placed in the sections of two or more clerks, thus taking care of pay day rushes. Unless some such scheme is adopted it will be absolutely impossible to fix the responsibility for any loss the Exchange may incur.

Those departments which are, in effect, “manufacturing” departments, such as the lunch room, meat market, etc., also require special treatment, especially in the matter of figuring the selling price of merchandise issued to them.

It goes without saying that the honesty of the stock clerk must be above suspicion. In case a civilian is employed, it is good policy—in fact, it should be considered imperative that he be required to execute a bond for the faithful performance of his duties.

With the above general explanation of the broad principles of this particular system, we are now prepared to discuss it more in detail. It seems generally conceded that the stock records can be kept most easily, cheaply and efficiently by means of the card index system. The present regulations, previously cited, specify an “inventory _book_”, and inspectors are prone to interpret the regulations literally. It makes little difference in our case which method is used, except that the card system is more efficient, as before stated. The handling of the inventory book requires no explanation, so, in order to provide for the time (which should be in the near future) when the up-to-date card system of inventory is specifically allowed in regulations, the following description is given. It is hoped that it will prove a conclusive answer to those who ask, “But suppose you lose a card.”

Inventories of Stock.

Let us start by taking an inventory of the stock we have on hand in the stock room. We take a pack containing a known number of cards, preferably numbered in sequence, like those shown in Fig. 19, and enter on the top line the name of each article as we come to it; in the right upper corner, the unit in which we sell it, whether pounds, bottles or what not; and at the right of the uppermost data line, the number of such units that we actually find on hand. We do this for each article in succession, using a different card for each. If we have various grades of the same kind of article (cigars, for instance) selling at different prices, a separate card will, of course, be made out for each different grade. (Never sell the same article at two different prices. For example, do not sell cigars for “10 cents each, 3 for a quarter”. Sell them at either price and put in a different brand of equal quality at the other price. It is proper to give reduction on a sale of a box of cigars at a time, but sell them _from the stock room_ in such a case, and not from the store. Another way, permitting sale from the department’s shelves, is by means of a discount slip, which will be touched upon later. The first method, however, probably suits our purposes best, especially when combined with the second.) The cards mentioned above should be left with the articles to which they refer until the inventory for that department is complete. We then look over the shelves to see that there is a card with every article, thereby proving that our inventory is complete, a point of superiority over the book form of inventory. We then gather up and count the cards to make sure that none are missing. The cards are then filed alphabetically behind a tabbed index card referring to that department, or that particular section, if the department is sub-divided. This same procedure is followed in taking inventory of merchandise in the store, lunch room, etc., except that a different colored card is used for each department. All sections of the same department use cards of the same color. As each department will have more or less merchandise in its store room, it will probably be best to take the store room inventories first, then take the articles in the sales rooms. Enter partial totals in pencil and the total in ink or indelible pencil on the first line under the heading, “On Hand”, the date being entered at the left. The number on hand, multiplied by the unit cost and selling prices, respectively, will give the total cost and the total selling price of all the articles on that card. For this purpose, the unit cost and selling prices are entered at the upper left hand corner of each card. The total cost prices are used in our inventories shown on our monthly statement, and the total selling prices are used in our stock records only. In large exchanges, these cards are not used again until the next inventory is taken, so it is seen that they will last for several months.

Merchandise Purchased.

When merchandise arrives, it is cared for as described under “Purchase Records” and when the total cost and selling values of the goods on any invoice have been figured and transportation charges, etc., distributed, the selling values are entered on Form 17, shown in Fig. 20. Two copies of this form are used every day, one for cost prices and one for selling prices. Each invoice requires but one line on each of these forms, so one form is ordinarily ample for a day’s stock transactions. In the left hand column is entered the number of the invoice and in the Dr. column pertaining to each department is entered the selling price of all articles which are covered by that particular invoice. The sum of all the values entered in the Dr. columns on any one line should therefore equal the selling price of all articles covered by the invoice whose number appears at the left.

This same procedure is followed with all invoices received, and therefore covers all merchandise transactions. It will be noted that there are no “Requisitions”, properly so-called, in cases like this where the incoming goods are sent direct to a department. The department head receipts for such goods by simply placing his name or initials in the right hand column of the retained copy of our original order. (See Purchase Records.) This simplified way of handling such a transaction saves an enormous amount of unnecessary work, and is just as sound as the Requisition System.

Transfers Between Departments.

This proposition has previously been mentioned, but we purpose now to show in detail how such a transaction is effected. Let us suppose that the lunch room needs a ham, and it is desired to purchase same from the market department. Assume further that the selling price of this ham is $3.25. It is evident that we must first credit the market with this amount. This is done by means of a “turn-in-card”, Form 12, shown in Fig. 21. The card is filled out as shown, (the name of the article is not essential), is signed by the stock clerk and is given to the head of the market department as a credit for the ham, which is then issued to the lunch room man on a regular requisition. The requisition cards and the turn-in-cards are precisely alike, except that the latter are printed in red ink. With the exception of the signature, therefore, Fig. 21 is also a reproduction of the requisition upon which the ham is issued to the lunch room. These cards are of standard size, 3 × 5 inches, and are of various colors, depending upon the color scheme adopted as described under “Charge Sales”. Hence, we may assume that the market’s turn-in card was printed in red on a buff card and the lunch room’s requisition was printed in black on a salmon colored card. The cards can be bought cheaply with “horizontal ruling”, thus cutting down some of the bill for specially printing the cards. It costs less to have the turn-in cards printed in red than it would to have a special form of card printed, and they are better, besides.

In issuing the ham to the lunch room, the stock clerk should note on the requisition, “Cr. Market”. He then enters the transaction on Form 17 as shown in Fig. 20. In all such transfers, the sum of the credits on any line should, of course, equal the sum of the debits. It is not essential to number these requisitions and turn-in slips because the date stamped at the top is sufficient to enable us to identify any particular transaction. The market man would hand in his credit slip to the Steward with his daily report of sales. The stock clerk would hand in the requisition (receipted by the lunch room man) with his Form 17 for that day.

There is still another transaction for which we must provide and that is the operation of returning to our creditors goods which we have received from them. This may arise through some defect in the merchandise or through some other cause. Such a transaction is handled in exactly the same manner as before. See entry opposite No. 7343 in Fig. 20 where we have credited the store with $7.60. The goods were received on this invoice and deduction made on same for this amount. If this invoice pertains to an account already closed, we can make out an invoice of our own, give it any desired number and give the store credit as before.

Goods which are returned to us by our customers are credited to their accounts through the sales records as before described and do not affect the working of the stock records. Wastage, breakage, etc., is credited to departments by means of this same “turn-in” card; so, also, is discount given on goods sold in quantity, as a box of cigars, for example.

Since the whole operation of accounting for our goods on the basis of selling price is purely for the purpose of protecting our stock, and not for the purpose of calculating our monthly profit and loss sheets, it is seen that it is necessary to make out another copy of Form 17 daily, in order to record the same transfers, issues, etc., on a _cost_ price basis. This will be discussed more fully later, but let it be stated here that this work is necessitated by the rule which requires us to base our statement of assets, insofar as merchandise is concerned, upon the cost price of same. This, for the reason that it is not sound practice to anticipate profits. Therefore, our inventories, _when carried as assets_, must be based on cost prices, and in order to secure a true statement of profits earned, we must record the cost price of all merchandise that has been purchased during the month and distribute this cost properly among the departments.

At the end of each day’s work, the stock clerk signs his Form 17 for that day and fastens to it all invoices, retained copies of orders (accomplished as previously described) and requisitions that are entered on said Form 17. These papers are really vouchers to this report and should remain with it until they have been checked against it. The whole bunch of papers is handed in to the Steward and Form 17 is checked as soon as possible. After this is completed, the invoices and the retained copies of our original orders which pertain to them are handled as described under Purchase Records; their function as a part of the system of stock records having ceased.

Consolidating Stock Transactions.

The stock record is composed of two parts—one relating to _cost_ prices and the other to _selling_ prices. In all other respects, these two parts are identical and are handled in the same way. Each “selling” Form 17 is entered on a single line of the “selling” stock record, and each “cost” Form 17 is abstracted to a single line of the “cost” stock record. One page of the stock record (Form 27) is shown in Fig. 22. Only the left hand page is shown; the other departments are supposed to be on a right hand page, confronting the one shown in the cut. In cases of departments where credit transfers do not exist, the CR column can be omitted, with a resulting saving in space.

Checking Stock and Sales.

At the end of the month, or whenever our books are closed, we total each column on the adding machine and enter these totals on the next blank line, as shown, and then, when our inventory is taken, the value thereof at selling price is computed and entered just below these totals in the appropriate columns, and subtracted from them. The remainders, it is evident, should equal the total sales for the period considered. In order to compare these amounts, we now enter the total sales for each department in its proper column and find the difference between these figures and those immediately over them, and enter the discrepancies at the foot of the columns. These operations are shown in the figure. Theoretically, the amounts in the CR columns should just balance the discrepancies in the DR columns, but in actual practice, this state of affairs will rarely occur. The resulting net discrepancies, if small, are due, primarily, to wastage, failure to sell exact weights, etc. If these discrepancies are large, the cause thereof should be promptly investigated.

It is easily seen that this scheme permits us to make a check on any department at any time by simply taking an inventory of that department. All other data that we need for such a check are already available, and, as it would not take long to take an inventory of a single department, these checks should afford us a most efficient means of keeping track of our departments. It should be unnecessary to state that these check inventories should be taken without warning, and, preferably, by the Exchange officer himself.

If this system of handling stock is faithfully carried out, one of the greatest chances for “leakage” in the Post Exchange will be absolutely prohibited. It requires work, but no more so than any other efficient stock record, and the results are superior to those obtained from any other system known to the writer. If any exchange employee objects to the system on the ground that it entails too much work, it might be safely assumed that his real objection lies in the system’s efficiency.

PURCHASE RECORDS.

In most Exchanges, the custom obtains of keeping in the ledger a separate account for each creditor, i. e., each person or firm from whom goods are purchased. This entails an enormous amount of work, and as this work can be done by none but an efficient employee, it also entails a considerable unnecessary expense. In the system to be described, this work is reduced to a minimum, and while each of our creditors has his ledger account, this account is kept in such form as to require no duplication of our records, and, at the same time, to tell us at any time exactly how we stand with each of our creditors.

Purchase Orders.

Let us start with the process of ordering our merchandise. This is done on Form 15, shown in Fig. 23. By means of carbon paper, a duplicate of our order is entered on Form 28, shown in Fig. 24. The original goes to our creditor as an order; these orders are numbered consecutively throughout the year, or even over a longer space of time, should it be found desirable. Form 28 goes to the Receiving Clerk and is held by him on a Shannon file until the goods arrive. He then checks the goods against this form and issues them as described under “Stock Records”. A variation of this method, known as the “blind tally”, is worked by making out a triplicate copy on Form 28, this copy to have the “quantity” column blank, which is easily effected by slipping a piece of paper above it to receive the carbon record which would otherwise be printed in that column. The receiving clerk then has no idea of the quantities ordered and fills in the “quantity” column himself. A comparison of this with the duplicate (kept locked up in the office) quickly shows us whether we received all of our goods. This system has broken up some very obscure practices. In either system, it should be noted that we need not await the arrival of the invoice, unless it is desired to do so, before issuing goods to departments. The columns at the right of Form 28 are for convenience in calculating selling prices, etc.

Natural size of sheet about 8 × 10 inches]

As previously noted, the receiving clerk (or stock clerk, whoever handles this work) hands in at the close of business each day, two copies of Form 17, one covering the selling price of all stock which has arrived or been transferred during the day, and the other covering the cost price of same. Attached to these forms are all requisitions and receiving records (Form 28) covered by these Forms 17. The Steward sees that each receiving record is correctly calculated and properly entered on _both_ copies of Form 17. (He, also, at this time, sees that the requisitions are properly entered on both forms.) The receiving records are then filed in a Shannon drawer to await the arrival of invoices or for comparison with them if they have already arrived. For convenience, they are filed behind alphabetical guides according to the names of our creditors. When the invoices arrive, they are filed in the same manner and in the same drawer. They would, therefore, naturally tend to find each other.

Before the receiving record is sent from the office to the receiving clerk in the first place, the order is entered in our Purchase Record, which, as its name indicates, is a chronological record of all our purchases of merchandise of whatever sort. Hire of services, of course, is not entered in this record.

There are various forms in use for Purchase Records, invoice Records, etc., and a study of several of them leads us to advocate the use of Form 29, shown in Fig. 25 as being the best suited to the work in hand. This is specially ruled and printed and like most of the other forms described is as well suited to the needs of a small exchange as a large one. They will cost about $12.00 per thousand and a good substantial binder for them will cost from $2.75 to $11.00, depending upon the quality of the binding. One and a quarter inch back is large enough for our purpose; the sheets are 10¼ × 10½ inches, the former being the binding side.

When our order is first made out, we enter in the proper column of the purchase record, the name of the firm on whom the order is drawn. This is the only entry made at this time, and the retained copy of the order (the receiving record) is then sent to the receiving clerk. When the invoices arrive, they are stamped as shown in Fig. 26, the 1st and 2d lines of this stamp are filled in, their date is entered in the left hand columns of the purchase record and the invoices are then filed as before described. In this way, the office keeps track of how fast the stock is arriving, because the number of firm names entered on the purchase record will show us the number of outstanding orders, and the number of dated entries will show us the number of invoices that have arrived which have not yet been checked up by the Steward (usually because the goods have not arrived). When the goods arrive, whether they follow or precede their invoices, and the receiving clerk has checked them into stock and returned Form 28 to the office, the purchase price is entered in the Purchase-Credit column shown. This purchase price disregards our cash discount, which is cared for in the cash book. However, if there is any allowance due us for returning all or a part of the goods on any invoice, the amount of such rebate is entered in the Debit-Purchase column. This is the only use to which this column is put.

Let us suppose that we are now ready to pay a bunch of invoices. Proceed as follows:—

1. Take the invoice file, and, starting with the letter “A”, go through the file, taking the accomplished invoices as you come to them. All those relating to any one firm should be found together, as before mentioned, thus saving much time at this stage.

2. Having your invoices, make out a voucher (Form 14, Fig. 27) for each firm or creditor concerned, entering thereon all invoices relating to that firm. If the buying is done properly, there should be plenty of room on the voucher for these invoices. (In case of a firm from whom we make almost daily purchases, we hold the invoices and make one payment at the end of the month.)

3. As you go along, have a dating stamp handy and stamp the date on each invoice as you make out the corresponding voucher. If the invoice is discounted, stamp the date in the “Discounted” space; if there is no discount, stamp the date opposite the word PAID (see Fig. 26). At the same time, enter the voucher number (which may, and probably will differ from the invoice number) in blue pencil on the proper space of this same stamped impression.

4. When all the invoices are finished, take the vouchers, and, starting with the top one, find where each invoice is entered in the purchase record and stamp the date in the PAID column opposite each entry. These places are easily found by reading the invoice numbers entered on the vouchers.

5. While you are stamping these dates, _compare, as you go along, the amount of the invoices as entered on the vouchers, with the amounts entered in the purchase record_.

6. Now take the vouchers and enter them in the Cash Book on the right or credit side. In the “net cash” and “creditors” columns should be entered the exact amounts actually paid, in the Discount column should be entered the amount of discount allowed. Discount is always shown in the cash book and on the vouchers in red ink, to avoid confusion with credits, which should be shown in black.

7. After the cash book has been posted, the proper checks are made out, ready for the signature of the Exchange Officer. They and the vouchers are then mailed to the various creditors.

8. The paid invoices are then placed in a Shannon file drawer by themselves where they can be consulted easily. They form a complete file of sub-vouchers to the cash account for the month. They should never be mailed to our creditors for the purpose of having them receipted; it takes too much energy and time to get them back. In case our creditor fails to return our voucher, we can still prove payment, beyond a _reasonable_ doubt, by producing the canceled check (which he must release sooner or later) and the original invoice exactly corresponding to it in value. One authority goes so far as to say,—“If a check bears no evidence as to its purpose but can readily be identified with a particular bill or invoice, it still is a better voucher than a receipted bill, ... a mere receipt for so much money, which can readily be forged, is poor evidence of a legitimate payment, but a paid check, properly endorsed and otherwise identified as representing a definite liability, is pretty fair proof that the money has reached the creditors.” (P. 49, Vol. 6, Enc. Commerce and Accounting.)

As a matter of fact, we sometimes experience considerable difficulty in getting even the vouchers back from our creditors. Lieut. Schudt, at the Fort Levett Exchange, hit upon a scheme which tends to lessen this difficulty. This is, simply to have the vouchers printed on a card of suitable weight; the reverse of each card being printed in the form of a self-addressed penalty post card. Our creditor, after dating and receipting the voucher, simply drops it into the mail box without the additional trouble of mailing it in an envelope.

The Voucher Check System.

A much more efficient system than that just described, one which we hope will some day be prescribed by regulations, is the “voucher check” system. This system is rapidly forcing its way to the front through the merits of its sheer efficiency, and is now in force in the business administration of many large concerns, the Pennsylvania Railroad, for example. The system is founded on the indisputable proof of payment that is afforded by an endorsed and paid check. As one eminent authority on auditing, has said,—“If a check bears on its face or back any indication of its purpose, it is the best receipt for money paid that can be secured”.

The voucher check system does away with separate “vouchers”, as we in the Army are accustomed to think of them; the checks themselves are our vouchers. The checks are somewhat different from the usual type, as they bear on their face a statement of the invoices they pay. In fact, they contain substantially the same matter as is shown on our regular voucher. Form 30, Fig. 28, shows a voucher check that would be entirely suited to our use. It may be unnecessary to explain, the dates, numbers and amounts of the invoices are entered at the right in the proper spaces, the amounts are totaled, rebates, allowances, etc., are deducted, the discount applied to the remainder and the check proper (left hand part) made out accordingly. Form 30a, shown in the same figure, is the carbon copy, the original being made out in indelible pencil. The right hand or coupon part of this duplicate is torn off, pinned to and mailed with the original check. It gives our creditor a memo of the payment, rendering it unnecessary for him to hold the check until he can make a special note of the payment, thus helping him out and at the same time expediting the process of cashing in our check. The left hand part of Form 30a remains in the check book and performs the same function as the regulation check stub. It will be noted that we thus save the labor usually expended in filling out our stubs and in addition, we are not liable to accidentally forget to fill out the stubs altogether, as sometimes happens with the regular style of check book.

The form and size of these voucher checks lend themselves very readily to manufacture in the same “make-up” as certain kinds of sales books, but the ordinary style of duplicating book is probably just as good as the more elaborate kinds. The checks should be printed three to the page and care should be taken that the duplicate forms are “in register” with the originals, otherwise, the carbon copy data will not appear opposite the proper notations.

When these voucher checks are returned to us by our banker, we file them in a check filing drawer, equipped with sets of monthly tabbed guides, according to the voucher numbers, thus forming the voucher record for our cash disbursements.

It is hard to find a weak spot in the check voucher system, but some inspectors seem to object to it, so, until it is specifically authorized by the War Department, the inexperienced Exchange Officer would do well to stick to the system previously described.

To revert to our purchase record sheets: there is no necessity for noting thereon the amount paid on each invoice or the discount on same, as is sometimes done. This information will be shown in the cash book, and data should not be repeated unnecessarily. The remaining two columns (Balances) are used only when closing the books. Whenever this is done, the balance on each order is brought out to the proper column, the amount we owe being entered in the credit side of this column, and the amount due us being entered on the debit side. The total of the credit side of the Purchase column is then posted as a lump sum to the credit side of the “Bills Payable Merchandise” account on the general ledger, and the total of the debit side is posted to the debit side of the same account. Ordinarily, there will be no such debit entries. It will be seen that the net balance of the Purchase Record and of the above account should equal the difference between the total purchases and the sum of the totals shown in the “Creditors” and the “Discounts” columns in the cash book.

CASH DISBURSEMENTS.

The right or credit side of the cash book is, in general, of the same form as the debit side. See Fig. 11. As all distribution of merchandise to the various departments is made through the stock records, there is no necessity of trying to duplicate this information on the pages of the cash book. We, therefore, lump all merchandise payments under the heading “Creditors” and reserve a column for such payments only. In a similar manner, all payments for services rendered in the various departments could be entered under a heading, “Labor”, and the proper distribution or pro-rata share of each department could be shown on the receipted pay roll, as explained hereafter.

Other columns that will be needed are:—Maintenance, Fixtures, Interest and Discount, Appropriations, and Expense. All disbursements which can not be placed in one of the other columns should be entered under Interest and Discount. Under Appropriations, enter all disbursements voted by the Exchange Council for Athletics, Dividends, Sick in Hospital, etc. Under Fixtures should go all expenditures for permanent equipment (new) of the Exchange, and under Maintenance, all money spent for repairs, replacing of old equipment by new, and the like. In the Expense Column we carry such items as wastage, breakage, telephone and telegraph bills, fuel, light, insurance, printing and stationery, and such expendable supplies as twine, paper, etc., as are used in carrying on the business. When the Exchange Officer or authorized agent makes a purchasing trip on purely Exchange business, his authorized expenses should be entered in this column. Exchange Councils differ in their interpretations of what such expenses should be, and the Exchange Officer should have it recorded in the proceedings of the Council that such allowances of expenses are authorized.

To sum up:—the columns of the credit side of the cash book, reading from left to right are as follows:—Date; Description of item entered, giving name of creditor and a clue to the articles on the invoices; Voucher No.; Check No.; Net Cash; Discount; Creditors (or Merchandise); Labor; Appropriations; Fixtures; Interest and Discount; Expense; Sundries, and perhaps, one or two spare columns.

At the end of the month or when the books are closed, the totals of the various columns are posted to the debit side of the General Ledger as follows:—

Creditors posted to Bills Payable, Mdse.

Interest and Discount to Interest and Discount.

Discount to Interest and Discount.

Fixtures to Fixtures (Exchange or Laundry, as the case may be).

The items entered in the Expense column must be distributed, such items as cannot properly be posted to the account of any of the departments must be posted to the “General Expense” account in the General Ledger. The same rule applies to Labor and to Sundries. The items in the Appropriations column must also be distributed among the proper ledger accounts, such as Athletics, Dividends, Sick in Hospital, etc., as the case may be.

THE LEDGER.

General.

The ledger is the book which shows us the status of every part of our business. It is the most important book that we keep, and, consequently, it should be kept with great care. Every transaction, no matter how small, sooner or later finds its way to the ledger, although it will not be given the dignity of a line to itself. The ledger is, of course, kept on the double entry system.

Make-up.

There are several stock forms for ledger sheets, that shown as Form 30, in Fig. 30, being one of the best, as the center balance column saves much space. Perhaps the most convenient size is 11¼ × 11⅞ inches, which gives about the right amount of room in all columns. These sheets, printed and ruled as shown, cost $12.00 per thousand, retail. Leather tabbed indices cost $1.65 per set and a high grade ledger binder costs $12.00, although a cheaper type, known as a “transfer” can be obtained for a price as low as $2.75, but it would not give the service and satisfaction of the regular type of ledger. In our system, a ledger with a 1¼ inch back should prove of ample size.

Live accounts only should be kept in the ledger; as soon as an account has been closed out, the pages containing same should be taken out and placed in a ledger transfer binder. The same procedure should be followed with the filled pages of live accounts just as soon as there becomes little chance of their being consulted frequently.

Ledger Accounts.

As has been previously described, our method of handling our charge accounts has rendered it unnecessary for us to keep a private ledger account with each of our charge customers. To do so would be merely to repeat information which we already possess. Also, our Purchase Record has obviated the necessity of a separate ledger account with each of our creditors, for the same reason.

Having no _private_ ledger accounts, it follows that this book then becomes a “General Ledger”, holding only general accounts, such as Bills Payable, etc.

Some of our general accounts should be sub-divided in order to give us a better idea of what the business is doing. Take the Expense account, for example. It is usually desirable to classify our expenses as nearly as possible under the following headings:—

Wages,
Fuel and Lights,
Insurance,
Freight and Express on out-going goods,
Printing and Stationery,
Telephone and Telegraph,
Office, including expendable supplies used and not distributed
to departments.

Another example is Bills Payable, which is divided into Charge Accounts, Credit Coupons, Enlisted Men’s Laundry, etc., as circumstances dictate.

A complete list of the accounts in our ledger should run about as follows:—

1. Post Exchange (Synonyms:—Present Worth, Surplus, Net Worth, etc.).
2. Bills Receivable, Notes. (Entrance fees of incoming organizations.)
3. Bills Receivable, Charge Accounts.
4. Bills Receivable, Credit Coupons.
5. Bills Receivable, Enlisted Men’s Laundry.
6. Check Account. (Outstanding Coupons.)
7. Bills Payable, Mdse. (Or Creditors.)
8. Exchange Building. (If not a Government building.)
9. Laundry Building. (If owned by the Exchange.)
10. Exchange Fixtures.
11. Laundry Fixtures. (Including all machinery, tools, etc.)
12. Laundry. (A departmental account.)
13. Store. (Same. There should be an account for each department.)
14. Interest and Discount.
15. Insurance.
16. Fuel and Lights.
17. Freight and Express.
18. Printing and Stationery.
19. Telephone and Telegraph.
20. General Expense.
21. Depreciation. (If taken frequently.)
22. Lost Accounts.
23. Athletics.
24. Dividends.
25. Sick in Hospital.
26. Regimental Fund.
27. Wages.
28. Profit and Loss. (Or Loss and Gain.)
29. Maintenance.

Posting the Ledger.

It has been noticed that our Ledger is used but once a month or whenever our books are closed. At this time, each account in the ledger is brought down to date by entering the results obtained by summarizing the accounts contained in the subsidiary books. This operation is called “posting” and will be discussed with reference to each of the foregoing accounts. It will be assumed, in each case, that the balance from the previous month has been brought down correctly.

It will be of great assistance to remember that any account in the General Ledger represents _one_ of the following:—

1. An asset; (Resource).
2. A liability.
3. A Loss.
4. A Profit or Gain.

_a._ Every account showing a debit balance is either an asset or a loss; a “Personal” account showing a debit balance is an asset, an “expense” account showing a debit balance is a loss.

_b._ Every account showing a credit balance is either a liability or a profit; a “personal” account showing a credit balance is a liability (something we owe), any sales account showing a credit balance is a profit.

1. _Post Exchange Account._ Another name for this account is “Net Worth”, or, if the Exchange is out of debt, “Surplus”. It is important that the status of this account be shown on every monthly statement exhibited to the Exchange Council. It is debited at the beginning of the month with the net worth of the Exchange on that date. Credit it with such decreases and debit it with such increases as will be shown on the “Surplus and Adjustment Schedule” on Form 32 and discussed in connection therewith.

2. _Bills Receivable, Notes._ Debit this account for the amount owed by any organization to the Exchange for Entrance fees, etc., and credit it via the cash book with the amount of payments received from such organizations.

3. _Bills Receivable, Charge Accounts._ Debit this account, as before described, with the total amount of charge sales made during the month, which amount is obtained from the Charge Accounts book. Credit this account with the total of the “Customers” column on the debit side of the cash book and also with the total of the “Credit” column in the Charge Accounts book.

4. _Bills Receivable, Credit Coupons._ This account has been exhaustively discussed under “Coupons”.

5. _Bills Receivable, Enlisted Men’s Laundry._ Debit this account at the end of the month with the gross amount of laundry bills contracted by enlisted men during the month. Credit it with the total of the cash book (debit) column in which are entered the payments by enlisted men for laundry work done. Also credit this account with whatever credits have been allowed for overcharges, damages, etc., these amounts also being charged (debited) against the Laundry account.

6. _Check Account._ See note under paragraph 4 above.

7. _Bills Payable, Merchandise._ Debit this account with balance due creditors on 1st of the month and with Cr. Purchase column of Purchase Record. Credit it with amount of creditors column in cash book, and with total of Dr. Purchase column of Purchase Record.

8. _Exchange Building._ If built and owned by the Government, this item is not an asset of the Exchange. If the building belongs to the Exchange, we debit this account with all amounts spent upon it for additions of any kind, but not for repairs, renewals, painting, etc. Credit this account with all depreciation voted by the Post Exchange Council, and debit this amount against the Depreciation Account.

9. _Laundry Building._ Same as preceding.

10. _Exchange Fixtures._ Debit this account through the cash book with the amount of all new fixtures purchased; credit it with the amount of depreciation voted by the Exchange Council, as before explained, also, with the book value of all fixtures scrapped or otherwise disposed of. When an article is merely replaced by a newly purchased one, it is proper to make no change in the value of our fixtures, but charge the whole purchase price against maintenance. The same applies to cost of repairs.

11. _Laundry Fixtures._ Same as preceding.

12. _Laundry._ This is a live account against which are charged (debited):—

(_a_) The total of the Debit Laundry column in the Cost Price
Stock Record, (Form 13), also, the value of inventory at 1st of
month.

(_b_) The total cost of labor incurred by that department.

(_c_) Any CASH REIMBURSEMENTS that may have been paid to
customers.

(_d_) Such items of Freight, Expense, Maintenance, Board,
etc., as may have been paid during the month on account of the
Laundry.

(_e_) Any credits that may be allowed for damages, etc. (From
Charge Accts.)

This account is credited with:—

(_a_) The total of the Laundry columns in the Charge Accounts
Book.

(_b_) The total of the Laundry columns pertaining to the
current month on our paytable collection sheets (Form 25).

(_c_) The total shown in the Credit Laundry column of Form 13

(_d_) The total of all sales not accounted for under (a) and
(b) above.

(_e_) Inventory at last of month.

The balance, showing gross loss or gain, is transferred to the Profit and Loss Account.

13. _Store._ This and all other departmental accounts should be handled in the manner described in the preceding paragraph except they should receive credit for all coupon and cash sales made during the month.

14. _Interest and Discount._ Credit this account with the total of the Discount column on the credit side of the cash book; this anomaly being only apparent, not real. Credit, also, the total of the Interest and Discount column on the debit side of the cash book and debit the total of the Interest and Discount column found on the credit side of the cash book.

15. _Insurance._ Debit this account, through the cash book, with all premiums paid out, at the time they are paid. Credit this account monthly with the monthly share of such premium or premiums, and debit them against Post Exchange. The effect of this method is to show the unexpired policies as assets, as they should be. There can be no doubt that an unexpired policy is an asset, nor is there any question about the propriety of showing the value of this asset by deducting the appropriate amount monthly. The practice of some exchanges of writing such assets off the books immediately upon payment of premiums is not sound.

16. _Fuel and Lights._ Debit this account through the cash book with all amounts paid out for these items, provided they cannot be properly apportioned to the various departments.

17. _Freight and Express._ Same as preceding, except that all such charges on incoming merchandise should be charged to the goods in question, just as if they cost us that much more. “Out” freight, etc., is a legitimate charge against this account.

18. _Printing and Stationery._ Same remarks as under 16.

19. _Telephone and Telegraph._ Same as under 16.

20. _General Expense._ Debit this account with all items of expense that cannot properly be placed under one of the other expense accounts.

21. _Depreciation._ Debit this account with the total amount of depreciation voted by the Council, and as this entails a corresponding credit elsewhere in the ledger, the respective accounts affected must be credited to a corresponding amount. When the books are closed, the balance of this account is transferred to Profit and Loss by crediting Depreciation and debiting the latter account. This Depreciation account can be eliminated entirely, if desired, by crediting Exchange Fixtures or what not with the amount of depreciation decreed by the Council and debiting this amount straight against Post Exchange. This is the usual method.