Chapter IV: Part 4

22. _Lost Accounts._ Debit this account with all bad debts which we have decided we cannot collect. This, of course, necessitates a corresponding credit entry in some other account, such as Bills Receivable Credit Coupons or Charge Accounts, etc., as the case may be. When the books are closed, this account is balanced and transferred to Profit and Loss, as explained in 21. If any of these accounts are afterwards collected, we must credit this account, via the cash book, with the proper amounts.

23. _Athletics._ Credit this account with all amounts voted by the Exchange Council for the support of athletics and charge or debit the same amount against Post Exchange (Account No. 1, above). At the end of each month, pick out of the Appropriations column on the credit side of the cash book, all amounts which were spent for athletics during the month and debit them to this account. The credit balance of this account is a liability against the Exchange.

24. _Dividends._ Credit this account with the amount of dividends declared by the Council and debit the same amount against Post Exchange account. Debit this account with all dividends paid to organizations. If the dividends have not been paid out by the end of the month, they will show up in this account as a credit balance, a liability against the Exchange; if they have been paid, there will be no balance left to this account.

25. _Sick in Hospital._ Same as preceding.

26. _Regimental Fund._ Same as 24.

27. _Wages._ It will be remembered that each department was debited with its share of all labor charges incurred during the month. These “accrued wages” are credited to this account in the Ledger. Debit this account with the total of the Labor column on the credit side of the cash book. Any credit balance remaining (as when part of the pay due an employee is held back) is a liability against the Exchange.

28. _Profit and Loss._ This account is ordinarily posted only upon closing the books. To this account, we post the balances of all those Ledger accounts which show a profit or a loss to the Exchange. These include all departmental accounts and also accounts numbered 14 to 29, inclusive, except Nos. 15, 21, 23, 24, 25, 26 and No. 28, which is now under discussion. Remember that each of these accounts which shows a debit balance is a loss and each that shows a credit balance is a profit or gain. After all of these accounts have been balanced and brought into Profit and Loss, the latter is balanced and the balance transferred to Post Exchange. Before this last named operation is performed, however, a trial balance should be taken, because, for reasons before explained, the books will never balance to the cent, and the entry of a small item, usually “income not otherwise accounted for,” is necessary in this account before the books will balance.

29. _Maintenance._ This is really in the nature of an expense account and we should debit it with the amounts shown on the credit side of the cash book as paid out on this account. Credit this account for such items as can be and are debited against any of the departments (see 12 d); credit this account for the balance remaining at the end of the month and charge same against Profit and Loss.

Balancing the Ledger.

It has been stated above, that all “Expense” accounts are balanced monthly and posted to Profit and Loss, and that after a trial balance has proved the Ledger to be in balance, the balance of the Profit and Loss account is transferred to the “Post Exchange” account. The remaining accounts, Nos. 1-11, inclusive, etc., represent assets and liabilities and are not transferred at all, although they are balanced every month.

We now come to the book-keepers’ bug-a-boo, the “Trial Balance”. This is a simple thing (to describe), consisting merely going through our ledger, taking the total of all the totals on the credit side of all our ledger accounts and seeing if this equals the total of all the totals on the debit side. If these totals do not agree, the book-keeper must run down the error and correct it. There are no rules for this procedure that would be of practical benefit. This trial balance does not necessarily mean that the ledger is correct, it simply proves that for every debit item entered a corresponding credit entry has been made; it does not prove that these entries have been made in the proper accounts.

A sample trial balance sheet, worked out by Mr. Parker, cashier of the Fort Slocum Exchange, is shown herewith.

After the ledger is balanced, we proceed to get out our monthly statement. If it is a case of an inspector, we can get all the data he needs by simply taking our statements since his last visit and combining the results shown by same.

Balance
ACCOUNTS Trial Balance of Loss & Gain
Balances
Dr. Cr. Dr. Cr. Dr. Cr.
Post Exchange
Cash 555.60 372.00 183.50
Bills Rec. Charge Accts 11.62 1.62 10.00
” ” E. M. Laundry 16.00 16.00
” ” Credit Coupons 100.00 100.00
Bills Pay Merchandise 4.00 4.00
” ” Check Account 90.00 100.00 10.00
Stock Room .50 .50
Athletics 20.00 20.00
Fixtures 21.00 21.00
Store 11.50 280.55 269.05 269.05
Lunch 67.72 211.27 204.55 204.55
Pool 50.00 9.00 41.00 41.00
Barber 67.00 17.00 50.00 50.00
Tailor 46.65 59.00 12.35 12.35
Shoeshop 35.75 35.00 .50 .05
Soda Fountain 37.00 3.00 34.00 34.00
Skating 14.50 4.60 9.00 9.90
Moving Pictures 10.00 31.00 21.00 21.00
Laundry 29.00 22.00 7.00 7.00
Interest and Discount 17.60 17.60 17.60
Office 11.00 11.00 11.00
Loss and gain 336.50
TOTALS 1151.44 1151.44 521.00 521.00 507.00 507.00

Assets
ACCOUNTS and Cash Statement
Liabilities
Dr. Cr. Dr. Cr.
Post Exchange 336.50
Cash 183.50
Bills Rec. Charge Accts 10.00
” ” E. M. Laundry 16.00
” ” Credit Coupons 100.00
Bills Pay Merchandise 4.00
” ” Check Account 10.00
Stock Room
Athletics 20.00 20.00
Fixtures 21.00 21.00
Store 250.00 11.00
Lunch 170.00 6.00
Pool 8.00 50.00
Barber 14.00 67.00
Tailor 46.00 43.00
Shoeshop 29.00 35.00
Soda Fountain 3.00 37.00
Skating 4.60 14.00
Moving Pictures 31.00 10.00
Laundry 29.00
Interest and Discount 17.00
Office 11.00
Loss and gain
TOTALS 350.50 350.50 555.60 372.10
183.50
Balance 555.60 555.60

MONTHLY STATEMENTS.

General.

The primary object of the monthly statement is to give the Exchange Council and the Commanding Officer a clear and concise understanding of the operations and financial standing of the Exchange. The statement, therefore, should be so simple in construction that it can be understood at a glance by anybody, regardless of their knowledge of book-keeping. Most statements submitted to Exchange Councils either show nothing or lead to a waste of time, due to the necessity for asking for explanations of obscure items. The statement should also contain such information as will be required by the Inspector. The form of statement here shown fulfils all of the above requirements and is a form approved by certified public accountants. It is divided into three parts, which will be discussed in their relative order.

General Balance Sheet.

This, Form 32, is shown in Fig. 31 and is almost self explanatory. Attention is invited to the scheme of segregating different classes of assets and of liabilities. A stock form of this nature would do for all Exchanges, regardless of their size, as there are sufficient blank lines to suit all requirements, but perhaps better satisfaction would be obtained if the form here shown be merely taken as a model and only those items be used as apply to the particular case in hand. Pains have been taken, in this form, to insert a sufficient number of entries to show clearly how any ordinary item should be handled.

Of course, the item, “Exchange building”, should be omitted if the building belongs to the Government and not to the Exchange. The item, “Cash Reserve”, covers the amount required by regulations to be set aside before dividends can be declared. Under the liabilities, there will ordinarily be no entries under “Funded Debt”; this entry merely shows how such items should be handled in case any should exist. “Commissions due” is the amount we owe for goods already sold on consignment; the same item under the assets refers to the amount due us for goods sold on consignment or commission. A declared dividend is a liability until it is paid. Outstanding coupons are also a liability. Under the deferred liabilities come any amounts that are payable at some future date, but are meanwhile bona fide debts owed by the Exchange. The term “Total Surplus” refers to the surplus at the end of the month in question, and, while not really a liability, it is put in this place in order to properly balance the account.

Surplus and Adjustments.

Under this head, we show the changes in the net worth of the Exchange which have occurred during the month, this being, to all intents and purposes, a repetition of the Post Exchange Account in our general Ledger.

Under “Re-valuation”, take up any increase in the value of buildings or fixtures that may have occurred other than through the cash book (upon appraisal, for instance). Under “Adjustment”, take up any increase of amount owed us on any account, that is, if any account has been corrected during the month and the amount due us on this account has been increased, the amount of such increase should be taken up under the head in question. The net profits for the month are obtained from the Statement of Income and Profit and Loss, to be described later. All of the above items serve to increase our surplus or net worth, and hence, must be added to the net worth shown at the beginning of the month.

Under the deductions would come all amounts written off for depreciation; dividends actually paid; appropriations paid or put to the credit of any particular fund, such as the Athletic Fund; and all decreases in accounts owed us, caused by the adjustment of same.

After the above notations are made, the surplus at the end of the month is entered in the proper space in the general balance sheet. This surplus is the net worth of the Post Exchange, and should, of course, be equal to the balance of the Post Exchange account in the Ledger.

Statement of Income and Profit and Loss.

This, Form 16, gives us a very clear and concise statement of the operations of all of our departments during the month. It is printed on the back of Form 32. It is filled in as follows:—

_a_ Enter on the first line, the total sales for cash as shown by the footings of the respective debit columns in the cash book.

_b_ On the second line, enter the total coupon sales of the various departments shown by the footings of the respective columns of Form 26 (Fig. 17).

_c_ On the third line, enter the total charge sales made by each department as shown by the footings of the respective columns of Form 7 (Fig. 6).

_d_ Add the above, both horizontally and vertically and see if the grand totals check.

_e_ Enter on the fourth line all credits given during the month.

_f_ Subtract _e_ from _d_; the remainder shows the net sales made by each department during the month and should be entered in the proper spaces.

_g_ Under “Inventory ... 1st”, is entered the cost price of all merchandise on hand in the various departments at the beginning of the month, which amounts are obtained from the Inventory Book or Inventory cards as before described.

_h_ Under “Purchases” are entered the cost values of all merchandise sent to the various departments, that is, the difference between the footings of the Dr. and Cr. columns referring to each department on Form 13 (Cost Price). No cash discount is considered.

_i_ Under “Labor”, charge each department with its proper share of the wages paid by the Exchange. If any employee divides his time between two or more departments, his wages should be distributed between said departments proportionately. Book-keeper’s wages should be charged to Office. To counterbalance this charge, some Exchanges credit all cash discounts to Office instead of taking them up under Other Income. This is entirely proper, as is also the procedure of crediting the Office with mail order profits, etc. In the usual case, there being no accrued wages, the figures for labor are taken from the Labor column in the cash book.

_j_ Under “Maintenance”, transfer from the cash book all amounts paid out for

(1) Articles bought to replace other similar articles worn out.
(2) Paints, cleaning material or repairs and spare parts, etc.
(3) Labor charges in connection with the foregoing.
(4) In general, any expenditure for up-keep.

_k_ Under “Board”, should be entered all amounts paid out for board of employees.

_l_ Under “Expense”, enter the value of all expendable supplies issued to the various departments, such as paper bags, etc., or, as illustrated in the case of a Laundry, the cost of all soaps, starch, soda, etc.

_m_ Add items (_g_) to (_l_), inclusive, and enter the totals on the proper line. Also, add the items horizontally and check the grand totals obtained by these two operations.

_n_ Enter under “Deduct Inventory”, the cost price of all articles found on hand in the various departments at the end of the month.

_o_ Subtract (_n_) from (_m_) and enter the respective remainders in the spaces for “Cost of Goods Sold”. Check these remainders vertically and horizontally.

_p_ Subtract the Cost of Goods Sold from Net Sales and enter the remainders in the spaces for “Gross Profit”. Check results as before.

The lower part of this form is made out as follows:—

_a_ Under “Cash Discounts” (unless credited to Office as before explained), enter the total of the Discounts column in the cash book.

_b_ Cash in excess of daily checks is self explanatory.

_c_ Under “Goods Sold on Consignment”, should be entered all such sales actually made during the month.

_d_ Miscellaneous credits is self explanatory, being for such items as junk, receptacles sold, etc., as are not credited through the stock records.

_e_ Entrance fees cover all payments by organizations joining the Exchange.

_f_ Interest on Bank balances is self explanatory.

_g_ Lost Accounts collected refers to amounts that have previously been dropped from the books as lost, but have afterwards been collected.

_h_ Under “Income not otherwise accounted for”, is entered the amount that will make the books balance. As it is impracticable to give precise weights on bulk merchandise and as mistakes will sometimes occur, the books will never balance exactly and all discrepancies are thrown into this item. As an example, suppose we unintentionally give short weights on our sales of, say, crackers. At the end of the month, we will have more money on hand than our sales would call for, and such excess is taken up under this heading. If, as sometimes happens, there is a deficit (for example, caused by melting and wastage of ice) it should be taken up under the “General Expense” side of this form. It should be noted that this item cannot be filled in until the General Balance Sheet is made out.

_i_ “Freight and Express Out” refers to transportation charges on goods returned to our creditors or sold to our customers.

_j_ Under the item, “Insurance”, should be entered the total premiums paid out during the month, but not the pro-rata share that is charged off monthly.

_k_ Under “Paid on Consignment”, should be entered the net amounts paid to our creditors for the goods sold by us.

_l_ To the Total Gross Profit, add the total Other Income, from this amount, subtract the Total General Expense and the remainder is the net profit for the month; it should be carried to the Surplus and Adjustment part of the general balance sheet.

PAY ROLLS.

A thoroughly satisfactory form for pay rolls is shown by Form 2 in Fig. 33. The Recapitulation at the bottom of the form is for the purpose of distributing the cost of labor among the various departments when we make out our statement of income and profit and loss. If employees are not paid up to date, that is, if a part of their pay due is withheld, this form allows such information to be recorded. In some cases, it has been found practicable to pay off three times a month, especially in the case of civilian employees. In any case, all hands should be paid promptly at the last of the month, thus getting all of these wages out of the way and avoiding the necessity of any reversing entries or other expedients to show the real operations of the Exchange. If any wages due the employees are not paid by the end of the month, these amounts become “accrued wages” and must be carried as such.

FIGURING SELLING PRICES.

This is done by some employee designated by the Exchange Officer; sometimes it is done by the Exchange Officer himself. It is sometimes prescribed by the Council that when organizations (shareholders in the Exchange) order articles not in stock, the selling price shall be actual cost to the Exchange of such articles. This cost would, of course, include any transportation charges, etc., that were incurred, but the Exchange would get the benefit of all cash discounts. It is also prescribed in some instances that persons not stockholders in the Exchange who order merchandise that is not in stock shall be charged a commission of 5%. Both of these rules are sound, because, in the first case, any profits made by the Exchange would simply revert in dividends to the organizations from which the profits were made, assuming that all organizations transacted the same amount of this kind of business. If they did not, it would still be unjust to penalize one company for patronizing the Exchange by taking from it money for distribution in dividends to other companies, regardless of the amount of patronage the latter gave the Exchange. The second rule is sound because the transaction is a quick sale, and the money of the Exchange is tied up in stock for the minimum length of time. The selling price in the above cases is, therefore, very easily determined.

In figuring out the selling price for the ordinary run of goods, the process, while different, is never very difficult. We must base our calculations on the smallest value used in coupon sales, except in the case of staples sold only to charge customers. Ordinarily, the smallest purchase that can be made with coupon books is five cents. We should, therefore, in every possible case, make our selling price a number divisible by 5. Cheap articles may be sold “2 for 5”, etc. It is a bad policy to sell articles for 4 or 9 cents and have the clerk hand back change when a coupon sale is made.

Articles that can be quickly and easily sold can be handled at a small margin of profit, but articles that may prove to be “stickers” or those representing a considerable investment should be made to pay a larger profit.

In this connection, the general policy of the Exchange may be made to take one of two trends. The first policy is to sell all articles at the minimum price consistent with making the Exchange self-supporting. In this case, the amounts paid to the organizations in dividends will be proportionately small, and consequently, the various companies will receive little money to spend on their messes, athletics, etc. This plan would be of considerable benefit to such customers of the Exchange as are not stockholders.

The other policy is to charge about the same prices as obtain in the stores of nearby towns. In some cases of isolated posts, the prices could be put even higher. This plan would result in larger dividends paid to the companies but might entail the loss of customers, especially in these days of mail-order and catalogue houses. This latter policy is upheld by many able authorities, especially since the passage of the “anti-canteen” law. According to one of the most able officers the writer has ever known, this policy was stated about as follows:—“We should charge as high a price as the traffic will stand. I do not want my men to spend their money in town, for obvious reasons. I want them to spend it where they themselves will get the benefit of the profits made on their purchases. Therefore, give them good value for their money—as good as they can get anywhere—but do _not_ try for low prices and _do_ make the Exchange so attractive that they will naturally gather there and patronize it.”

In view of the above facts, and knowing the general policy of the Exchange it is not difficult in the ordinary case, to fix a selling price for our goods. We simply add the cost of transportation to the cost price of the goods, add the desired profit and this gives us our approximate selling price. In some Exchanges, other items of overhead charges, such as clerk hire, depreciation, etc., are taken into consideration in fixing the selling price. There should be ample space in the right hand columns of Form 28, the receiving record, in which to figure the selling prices.

One of the results to be tried for in every Exchange is QUICK SALES. It is a serious mistake to keep money tied up in stock any longer than is absolutely necessary. A vivid illustration of this point is obtained by taking the case of, say, an Italian banana vendor on the street. Let us assume that he buys a bunch of bananas in the morning for $1.00. We may rest assured that he will have sold out by evening; it is a certainty; he is too good a merchant to do otherwise. Even supposing that he had a bad day, and was compelled to close out part of his stock in the evening at cut prices, he will have realized anywhere from $1.50 to $2.00 on his sales, thus giving him from 25% to 50% gross profit. At this rate, he will turn over his capital at least 25 times during one month, thus transacting a total amount of business 25 times greater than his actual net resources, and securing a profit equivalent to that of the greater amount. This is the ideal toward which the Exchange should strive.

In this connection, do not state your profits as a percentage of the COST price of your goods, but of the SELLING price. In other words, if an article costs the Exchange $10.00, do not add one dollar to this for the selling price and then imagine your profits will be 10% of your sales. If you desire 10% profit, then the cost must constitute 90% and you must sell the article for $11.11 in order to make 10% on the sale. Take a pencil and figure it yourself. A very good talk on this subject (and many others of interest) is given in “A Better Day’s Profits”, published by the Burroughs Adding Machine Company.

Another most excellent book containing many hints which would prove of value to any Exchange Officer is one entitled, “Where Have My Profits Gone?”, published by the American Sales Book Company of Elmira, New York.

LAUNDRIES.

Many Exchanges run laundries and while no attempt will be made here to show how a laundry should be handled, it is thought proper to explain how the books should be kept. The handling of actual laundry work can be learned only by experience and it is an exceedingly difficult task to prevent a flood of complaints unless careful supervision and checking is in force.

As far as the Post Exchange Books are concerned, the Laundry need furnish but three items:—

(1) The amount owed by each customer for laundry work done
during the month.

(2) The total value of expendable articles on hand at the end
of each month. (Inventory.)

(3) The data for paying the wages of employees.

Any other records that may be kept are for the information of the Laundry management, and are not essential to the proper running of the Exchange. The above three headings will be discussed in turn.

Bills Receivable for Laundry Work.

The methods used in the case of enlisted men differ from those used in the case of Officers and others of like classification; the former is rate work and the latter is piece work. The former will be explained first.

The system about to be explained hinges about the Laundry List, Form 20, shown in Fig. 34. These are 5 × 8 inches in size, made up in pads of 100, fifty originals printed in black ink on white paper and fifty duplicates printed in red on white paper. Thus, each book or pad will last one man about one year. Each original and duplicate are on the same piece of paper, folded at the bottom and the lower (duplicate) forms are bound by their top edges, a piece of carbon paper being bound into each pad so as to fall between the two copies. A glance at a “Paragon” style of duplicating sales book will show clearly how this simple arrangement works. The backs of all sheets should be fairly well covered with advertising or other matter in order to prevent persons from ekeing out their supply of stationery by using these forms. If desired, the instruction shown on the face of the blank in the illustration could be placed on the back instead. In quantities of 1,000 or so, these books should cost in the neighborhood of 7 cents apiece.

With this arrangement, each man makes out two copies of his laundry list with as little trouble as he formerly made out his single copy. The amount of clerical labor which this simple expedient obviates is simply enormous. It makes the system practically automatic and saves labor costs in the Laundry. The man puts both copies of his list in his bag of laundry, and the laundry wagon calls at the company at the proper time and collects same. The bag of wash is given to the “Marker”, who checks off on the duplicate slip, all wash found in the bag. If everything is right, the marker places the duplicate slip in a sorting tray, and lays the original aside to be filed. If the list contains a mistake, the whole bundle is immediately placed aside and is not touched until the owner has been sent for, his mistake explained to him, and he has personally corrected both copies of the list. This not only prevents controversies, but, also, makes the men careful in making out their lists in order to avoid the necessity of visiting the laundry to correct their lists.

In case any article is damaged when received at the laundry, it is examined to see if it is properly marked, and then placed aside for the inspection of the Officer in charge. This point will be touched upon later.

The duplicate lists remain in the sorting tray behind numbered guides until the time comes to sort out the finished wash of the organization to which the slips belong. When “marking in”, the marker either uses the space “MARKING O. K.” provided for the purpose, or, as is usually the case, we depend upon the personal check mark she places opposite each item on the list. This marking is done on the duplicate list only.

When the finished wash is sorted, preparatory to delivery, the sorter makes another check mark (different from the first one) opposite each item that is put in the batch. No batch is allowed to go out with a shortage if it can possibly be avoided; if any article is held for re-washing, it is rushed through “special” and the whole bundle belonging to that particular man is held back to wait for it. This prevents the laundry from acquiring garments belonging to customers. If this is not done, a receipt for the shortage should be delivered to the customer with his wash, and a duplicate kept as a sort of tickler, to insure the missing articles being put in the next batch of washing received from and done up for that customer.

The original slips are inserted in alphabetical order in loose-leaf binders, one binder for each organization. These binders should have a 2 inch back in order to hold one month’s slips conveniently. They form our retained record and are invaluable in case of disputes. The duplicates are given to the men when they come for their wash. While it is a great convenience to the men to be permitted to get the wash of their friends, at times, it has been found that this privilege is abused. In such a case, each man may be compelled to come for his own wash, which will be found to have a salutary effect. Ordinarily, it is sufficient to tear off the top of the duplicate slips at the time of delivery, thus showing that the wash has been called for and delivered.

At the beginning of each month, each organization makes out a list of the men in the company, a carbon copy of Form 25 is the easiest to furnish. On the first day upon which any organization sends wash to the laundry, some designated N.C.O. of that organization marks in the first blank column opposite each man’s name, information as to whether or not he sent laundry on that date. Such entries would be “YES” (by using a rubber stamp) if the man sent laundry; “S”, if he did not, through being sick in hospital; “A”, meaning temporarily absent; “D”, meaning discharged, etc. When the batches of wash belonging to this organization are received at the laundry and each bundle or batch has been checked as before described, the entries on the consolidated list are checked against the original laundry slips as the latter are being placed in the binders. This is to insure the correctness of the consolidated list. After this is done, the consolidated list is returned to the organization, and the above operations are repeated upon every succeeding wash-day during the month.

At the end of the month, all extras, such as charges for pressing uniforms, excessive number of pieces in wash, etc., are charged up on the original lists, the totals for the month found by mental addition and said total entered on the last original list for the month pertaining to each man, also, if desired, but only for cogent reasons, on the consolidated list. These totals are then sent to the Post Exchange for incorporation in the pay table collection sheet. If the binders are taken to the Exchange, the totals can be read from them without the necessity of entering these totals on the consolidated list at all. At this time, all of the original lists are lifted from their binders, temporarily bound with twine, and sent to the Exchange for file until the bills are paid, when they may be destroyed.

Piece Work.

In this case, a different list is used. See Form 21, shown in Fig. 35. These lists are made up into duplicating pads just the same as the soldiers’ laundry lists, and are handled in exactly the same manner, except that no consolidated list is kept. They measure 5 × 8 inches, like the others. At the end of the month, the amount of laundry bills on each retained original list is carried forward and the total entered on the last slip. These totals are then transferred to the Charge Accounts Book previously described. (Tearing a half inch off the upper right hand corner of all but the last slip for the month for each customer makes the binder self-indexing.)

The above shows how all amounts due the laundry are transferred to the Exchange books, but there are one or two points in this connection that deserve at least a passing notice. The first of these is the

Damage Report.

This, Form 24, shown in Fig. 36, should be made up in the form of a duplicating pad, 3 × 5 inches being a standard size. One copy of this form, preferably, the original, is retained in the book or filed in a card index drawer; the duplicate is returned to the proper customer with his wash in which the damaged articles were found. As before noted, when damaged clothing is found in any wash during the “marking in” process, the damaged articles are placed aside. They are then entered on this form, inspected by the officer in charge, or person designated by him, and then sent through the wash.

Claim Settlements.

When a claim for damages, loss, etc., is settled in favor of the claimant a report should be made on Form 22 (See Fig. 37), to the Post Exchange. This form should be made up in triplicating pads, one copy for the Exchange book-keeper; another, plainly stamped “duplicate”, for the claimant, and a third to be retained by the Laundry, either in the book or in a card index drawer, preferably the latter.

Inventories.

These are taken in the same general way as in other branches of the Exchange except that the cost price alone is considered. When finished, the totals shown by the various cards are added on the machine and the result given to the Exchange book-keeper in order to permit him to make out the profit and loss sheet. The cards are filed in a card index drawer until they are used up, when they may be transferred to a dead file.

Pay Rolls.

These are handled in exactly the same manner as the Exchange pay roll. They may be made out separately by the Laundry authorities or incorporated in the regular Exchange roll. In any case, they should be made out from the time book kept by the Laundry superintendent. The accuracy of this book should be checked frequently in the usual ways.

Miscellaneous Laundry Records.

In addition to the above, the laundry should keep accurate track of the amounts spent in repairs or renewals of each machine or component part of the laundry. In the inventory book should be entered a proper rate of depreciation against each machine, etc., and this depreciation should be written off periodically by the Exchange Council, say once per year. Then, if any organization wishes to sell out or to buy in, it will be a simple matter to arrive at a proper valuation of the laundry and its fixtures.

There should be on hand blueprints of the laundry building, showing dimensions and details of construction. There should also be on hand a complete diagram of all the steam and water pipes, connections, valves, etc.

For cost-keeping, which would be desirable if it can be done conveniently without adding too much cost, other records would have to be kept. The Baker-Vawter Company has given this point special attention and have devised a system which is used by many members of the Laundryman’s National Association.

AUDITING.

It is not too much to say that the monthly audit of the Exchange books is usually done poorly and inefficiently. This is due to several causes. In the first place, very few officers have ever had experience fitting them for such a task, and still fewer have any liking for the operation. The average audit consists of counting the cash and seeing if the vouchers to the cash account are correct, but a proper audit is something different. The Council should expect, as a result of the audit, a clear statement of the status of the Exchange together with recommendations for improvement and reports of any irregularities, etc. An auditing officer who spends his time finding out whether or not the books contain any mistakes in addition is not performing his proper functions as auditor.

Reduced to its simplest terms the duties of an auditor may be expressed as finding the correct answers to the following:—

(_a_) Were all assets on hand as shown?

(_b_) Were there any assets not shown?

(_c_) Were all the liabilities real ones?

(_d_) Were all liabilities shown?

(_e_) Were all liabilities properly incurred?

(_f_) Were all earnings accounted for?

(_g_) Were any earnings omitted from the statement?

(_h_) Were all disbursements, expenses and losses properly stated and supported?

In the following pages an attempt will be made to lay down a system of procedure which will enable the auditor to secure proper answers to the above questions in the most expeditious manner. For this purpose, the use of Form 33, shown below, is recommended. They should be on sheets conforming in size and punching to those used in the book used for recording the proceedings of the Exchange Council. This remark also applies to Forms 16 and 32, previously described.

Form No. 33.

STATEMENT OF AUDIT OF POST EXCHANGE, FORT HANCOCK, N. J.

For the month ending March 31, 1915.

I certify that the cash balance of the Post Exchange, Fort
Hancock, N. J., on the 31st day of March, 1915, was three
thousand five hundred forty-two dollars and seventy-six cents
($3,542.76) and was held as follows:—

Second National Bank, New York City $3,000.00
In Office Safe 542.76
---------
TOTAL $3,542.76

(Signed) E. A. BROWN,
_1st Lieut., C. A. C., Exchange Officer_.

AUDITOR’S STATEMENT.

_1. Charge Accounts_:—

Take retained sales slips for at least three different days
and select, at random, at least five sales on each. Are these
sales entered on Form 9?... Compare several consecutive sales
on each day’s record with adding machine and cash register
strips.... Are the totals for each of these days entered on the
Steward’s daily report, Form 4?... Are these entries on Form 4
supported by clerks’ reports, Form 5, for same totals?... Are
the total charge sales on Form 4 correctly transferred to the
daily summary shown on Form 7?... Do they check with Form 6?...
Has the Bills Receivable account in the Ledger been debited
with the total shown on Form 7?... Have amounts shown on Form
7 been credited to the various departments in the Ledger?...
Have all credits been entered on Form 6?... Are they charged
against the various departments?... Are they credited to Bills
Receivable?... Are they noted on Form 4?... In separate list,
show what bills have been due the Exchange for more than one
month.

_2. Cash Sales_:—

Take the clerks’ reports for the above selected days: are the
cash sales and coupon sales shown thereon properly entered on
the Steward’s daily report, Form 4?... Do Forms 4 agree with
the cash register records?... Are entries on Form 4 correctly
transferred to the cash book?... Are totals of department
columns in cash book correctly posted to the accounts of the
respective departments in the Ledger?...

_3. Coupon Sales_:—

Do the total coupons sales shown on Form 4 for the selected
days agree with the cash register records for these days?...
Are entries on Form 4 correctly posted to Form 26?... Are total
coupon sales for each department shown on Form 26 credited to
these departments in the Ledger?... Are total coupon sales
debited to Check Account in the Ledger?... Are coupon books on
hand safely stored?... Are they correctly accounted for?...
What value of coupons issued during the month of which there
is no record?... Are total coupons issued during the month
correctly credited to Check Account in the Ledger?... Are they
properly debited against Bills Receivable, Credit Coupons?...
Is there any ground for believing the stated value of coupons
outstanding to be erroneous?... Any complaints from men that
they are erroneously charged for coupons?... Is total cash
received for coupons (shown in cash book) credited in Ledger
to Bills Receivable, Credit Coupons?... Deduct from the total
coupons entered on all Forms 25 the amounts shown in cash book
as received for coupons; is the remainder properly supported
by unpaid Forms 19?... Have these unpaid amounts been properly
entered on Forms 25 for next pay day?... What efforts made to
collect payments on coupons past due?...

_4. Stock Records_:—

Perform or check the following operations on the record of
Stock Transactions, Form 27, at selling price:—To inventories
at first of month add all stock received during the month,
subtract from this the inventory at the end of the month. The
remainder should equal the total sales from the respective
departments during the month. Any marked discrepancies should
be brought to the attention of the Council immediately.
(Initials)... Check several copies of Form 28 against
corresponding invoices and against Purchase Record; do they
agree?... Are these values correctly transferred to Forms 17,
BOTH at cost and at selling prices?... Are these Forms 17
correctly transferred to Form 27?... Are totals on Form 27
properly charged against the various departments in the Ledger
and on the Statement?... Are inventories entered properly
in each department’s account in the Ledger?... Under whose
supervision was stock taken at the last of the month?... Are
results of inventory correctly noted on Statement?... Are all
wastages, accidental breakages, etc., entered on the stock
records and properly supported?... Are windows and doors of
Exchange provided with efficient locks?... Are all civilian
employees under bond?... Are the stock records kept up to
date?...

_5. Purchases_:—

Check Purchase Record against the Cash Book; do entries
correspond?... From “Total Purchases” subtract “Creditors”
column in cash book; does the remainder check with the balance
shown in the Bills Payable, Merchandise (or Creditors) account
in the Ledger; ... with the credit balance shown on the
Purchase Record?... Are all bills discounted?... If not, is
there any excuse for it?... Who makes purchases?

_6. Cash Book_:—

Check all vouchers against cash book disbursements. Were all
expenditures proper ones?... If not, give particulars under
remarks.

(_a_) The following vouchers not rec’d back....

(_b_) Vouchers not supported by canceled checks....

(_c_) Nos. of outstanding checks....

(_d_) Total value of same....

(_e_) Cash found on hand at end of month....

(_f_) Cash in bank at end of month, per bank statement....
Does total of (_d_), (_e_) and (_f_) agree with Statement?...
Look up items (_a_), (_b_) and (_c_) mentioned in preceding
audit, are they now complete?... State items lacking.... Does
Exchange Officer keep the cash book himself?... Does he attend
personally to all cash transactions?... Does any employee have
access to the cash after it is turned over to the Exchange
Officer?... Cash reserve is $....

_7. Ledger_:—

Inspect trial balance; is it correct and does the Ledger
balance?... Is the system being rigidly adhered to?... Report
to the Council any omissions or faults found in the manner of
keeping the books.

_8. Statements and Balance Sheets_:—

Check all items on Statement of Income and Profit and Loss
against the original entries; do they agree?... What earnings
cannot be accounted for?... What earnings are not taken up
on the books?... Check all entries on General Balance Sheet
against the original entries; do they agree?... Are any assets
left off the books?... Were all assets actually on hand as
shown?... Are any liabilities left off the books?... Among the
liabilities shown, are there any which are not real obligations
of the Exchange?...

_9. General_:—

Is copy of Steward’s Report posted for information of
customers?... Any books or papers which should be destroyed?...
Any recommendations?... If so, submit them to Council in
separate report. Remarks....

(Signed) ....
_Captain, C. A. C., Auditor._

CASH REGISTERS.

In Post Exchange business, these machines are ordinarily used in recording all sales, although some Exchanges do not ring up their charge sales, but rely upon the sales slip alone, an unsafe practice. There is, besides, a saving in ringing up all sales. These machines, if properly handled, and used in conjunction with our stock records at selling price should amply protect the Exchange.

In order to secure the maximum benefit from a cash register, however, it should be suited to the work in hand. Many registers handle but two kinds of sales, charge and cash; but we have a third kind, coupon sales, and the registers in use by every department which handles all three kinds should be arranged for such work. This kind of a register has three separate adding mechanisms, the appropriate set being thrown into mesh by means of a movable clutch and indicator at the left of the keyboard. In ringing up each sale, the clerk sets the indicator at “cash”, “coupons” or “charge”, as the case may be, before turning the handle; the total sales of any kind can be read at any time by anyone possessing the key which unlocks the reading window. Thus, the Steward, at the close of business on any day, can ascertain these totals in a few seconds, instead of having to transfer them from the cash register record tape to the adding machine. Thus, considerable time and labor are saved.

We should also be able to tell which clerk made every sale. This is accomplished by having a separate push button for every clerk and requiring the clerks to punch the proper button before ringing up their sale. The record tape of the machine will then show the full particulars of every sale—how much it was, what kind of a sale it was and who made it.

The size of the keyboard is determined by the probable value of the largest sale. In departments where there can be but two different kinds of sales, say charge and cash, a machine without the movable clutch can be used.

A modern development of the cash register is the “Slip Printing” device. By this, we mean the printing of the amount of sale on the sales slip itself, instead of on the “chop ticket”. In our system of recording charge sales, where the customer is given a copy of the sales slip, it is unnecessary for him to have the chop ticket, too, but it is necessary for us to know that his sales slip calls for the same amount that has been rung up on the register. For this purpose, the register can and should be arranged for “Slip Printing”, that is, for printing directly on the sales slip whatever amount is rung up on the register. This arrangement can be made without extra cost in the case of a new machine. The sales slip then handed to the customer then shows him exactly what amount was rung up on the register. The slip shown in Fig. 1 was treated in this way, although the slip was not originally designed for this work. Another slip is shown in Fig. 38. A cash register embodying the above described characteristics is shown in Fig. 39.

It is apparent that if we can be sure that all sales are rung up on the register the Exchange can suffer no loss except by persons taking stock from the shelves, a proposition which is cared for by our stock records. Therefore, it is important to devise means for insuring that every sale is properly rung up. There are various means to this end. One is to provide a series of locked boxes, one for each organization at the post, each provided with a slit in the cover large enough to admit a chop ticket. These boxes to be plainly labelled with the designation of the respective organizations, and all customers to be instructed to drop their chop tickets into these boxes. Whenever dividends are declared, a certain proportion of same to be divided in the same proportion as exists among the total values of the tickets in the various boxes. Unless these tickets are counted by a committee from the various organizations, this scheme would entail considerable clerical work for the Exchange office force. The scheme practically amounts to distributing a part of the dividend according to the amount of business done by the respective organizations—a necessity in the rare case when one or more organizations boycott the Exchange. It is said that the members of the various organizations soon become efficient agents in promoting the practice of customers demanding the chop tickets from the clerks.

Another scheme is for the Exchange Officer to inspect the serial numbers of the sales recorded for a certain time, say one month, and to arbitrarily select some one of these numbers, publish a notice concerning same, and to present to the person who produces the chop ticket bearing that number, a credit at the Exchange of $5.00 or so. The Exchange could easily afford to do this, as the advantages accruing from having every sale rung up will more than counterbalance this small expenditure. Other devices will readily suggest themselves to those who are interested in the subject.

The Steward should, of course, keep accurate track of the readings of the various dials of the registers. Cash register companies issue books for this purpose. The keys to the registers should be jealously guarded, including those to the reading windows. A record should be kept of the readings of those dials which show how many times the lid of the register has been opened.

In leaving this subject, a further discussion of which is necessarily curtailed, it will be well to add that the best way to get satisfaction in this line is to write to the firm whose register you intend buying and ask them to send you their local representative and such descriptive literature as they may have at hand. It will then be an easy matter to secure a machine exactly suited to the needs of the case.

CONCLUSION.

In the foregoing pages, the writer has attempted to outline a system of record-keeping for our Post Exchanges that is at once simple and efficient, complying with the desiderata set forth in the opening pages. No contention is made that the system is perfect and incapable of improvement; but it is the best that the writer has seen in twelve years’ experience with Post Exchanges. It is hoped that it will at least prove worthy of being taken under advisement by most Post Exchanges and many of its points put into practice. Strenuous efforts have been made to explain the system in such simple language that the average employee of an Exchange could install and operate it, without the necessity of the Exchange Officer devoting his personal efforts to it. An effort has also been made to simplify matters for the Exchange Council and for officers detailed to audit the accounts, to show what points are important and what are not, how to secure a clear idea of what the business is actually doing in all its branches, and how to prevent leaks.

THE END.