CHAPTER XIII.

THE SALES RECORDS.

§ 102. General.

The original records of sales usually consist of salesmen's orders, orders received through the mails, cash-sale slips, house-sale slips, etc. If the goods ordered are to be shipped, it is customary to make out a shipping memorandum for each order, or a bill in triplicate, the third copy being used as a shipping memorandum. The shipping clerk prepares his shipments from these records and returns them with freight receipts, bills of lading, etc., attached. If any of the goods ordered are out of stock, he should attach lists of the shortages to the proper shipping memoranda.

§ 103. Billing.

It is advisable to have all bills made out on a typewriter or billing machine. They should be compared with the orders, and the extensions should be verified, before being sent out. When a perpetual book inventory (i. e. stock ledger) is maintained, it becomes possible to ascertain the cost of all goods billed. In such cases it is well to provide an additional column on the form for duplicate bills, extending beyond the originals, and the costs should be entered in this column by the clerk who has charge of the stock ledger. It is not practical to cost each bill in this manner where the number of daily sales is large, as it causes too much posting to the stock ledger accounts.

If a book inventory is maintained it becomes necessary to arrive at the quantity of each kind of commodity sold during a

month, provided each bill is not costed. This can be accomplished by providing the stock ledger clerk with a book having, say, twenty columns to the page. If there are four hundred commodities dealt in, the book should be divided into twenty equal parts or sections. The top margin of all sheets, except the first and last of each section, should be removed. The names of twenty different commodities should be written at the head of the twenty columns on inner side of the first and last sheets of each section, and such headings will be exposed and be used as a guide for all intervening pages. The quantity of each commodity sold should be entered in the proper column direct from the duplicate bill. The totals of the columns at the close of a month should represent the total quantities of the different commodities sold. It then becomes an easy matter to compute the cost of sales, and to make the proper records in the stock ledger.

The usual printed bill head should be omitted from all but the original bills, and in its place should be provided spaces for "Folio," "Stock-ledger clerk's check mark," etc., on second copy; and spaces for shipping instructions, etc., on the third copy. Bills should be numbered consecutively, each original and its duplicates bearing the same number. The original copy goes to the purchaser. The third copy serves as a shipping memorandum. The second copy serves the purpose of a sales book, and customers' accounts should be charged from them daily. They should then be delivered to the clerk who has charge of the stock ledger, and after he has finished using them they should be filed numerically on a post binder.

§ 104. Summary of Sales.

It is necessary to arrive at the total sales of each month and for this purpose a Summary of Sales Book" is provided

(Cut No. 13).

All duplicate bills should be recorded in this book, in numerical order. The rulings illustrated by Cut No. 13 pro

vide for all sales being credited to one sales account. When it is desired to subdivide the sales, an account may be kept in the general ledger for the sales of each department,-in which event a column should be provided in the summary of sales for the sales of each department, and another for the cost of these sales. In other words, there might be two, three or four sales columns with corresponding cost-of-sales columns in place of one of each as shown in the cut, but the same principles govern.

In some businesses it is desirable to divide the sales geographically. This may be accomplished by using a looseleaf summary of sales book, with tabs arranged on the righthand margin of pages on which are printed the names of the different states, or selling territories. The sales in each state or territory are entered on the proper page and the totals of each page are carried to a recapitulation sheet where the grand totals are shown at the close of each month.

At the close of each month the footing of the "Cash Sales" and "Charge Sales" columns should be posted to the debit of "Cash Sales" and "Accounts Receivable" accounts, respectively, and credited to "Sales" account. The footing of the "Cost of Sales" column should be debited to "Sales" account and credited to "Purchases account or "Finished Products" account as the case may be-depending on whether the company is a manufacturing or trading concern. If duplicate bills are not costed, the "Cost of Sales" column should be omitted.

§ 105. Customers' Ledger.

A loose-leaf ledger, or ledgers, may usually be used to advantage for this purpose as it permits the weeding out of dead accounts, and pages that are filled. It also enables an account to occupy the same position in the ledger indefinitely, regardless of the fluctuations in the number of active accounts.

A trial balance should be compiled from this ledger at the close of each month, and should agree with the balance of the "Accounts Receivable " account in the general ledger.

CHAPTER XIV.

MANUFACTURING COST RECORDS.

§ 106. Importance of Accurate Costs.

The importance of ascertaining accurate production costs cannot be overestimated. A cost system accurately conducted enables the management (1) to make accurate and consistent. estimates of gross profits; (2) to intelligently meet competition; (3) to know which lines pay best; (4) to ascertain the efficiency of the production department and judge the work of the foremen, etc.; (5) to note fluctuations in the cost of turning out duplicate orders, and to trace the causes of such fluctuations; and (6) to ascertain the gross profit on monthly sales. If manufacturing is done on special order, and not for stock, the gross profits on each special job may be shown.

Many companies make a practice of figuring costs arbitrarily. The few cost records they keep are independent of the general bookkeeping system and are mere memorandum consisting of guesses. They never know how closely they guess because they never know the true costs of production. Such methods are entirely obsolete, inefficient, and have no place in modern factory administration. If every treasurer of a manufacturing company understood the principles of cost accounting, there would be less failures recorded, and more consistent pricing of products.

§ 107. Requirements of a Cost System.

A cost system for a manufacturing establishment should enable the management to ascertain at the close of each month.