§ 176. Sales.

Debit With:

(1) Total cost of goods sold. (Entry made at close of each month.) (2) Gross profits taken on goods sold and afterwards returned.

Credit With:

(1) Total cash and charge sales. (Entry made at close of each month.)

Balance:

Represents the gross profits on sales, and should be transferred semi-annually to the "Profit and Loss" account. § 177. Income.

(a) From Rentals.

Debit With:

(1) Cost of maintaining properties rented; e. g., interest on mortgages, taxes, insurance, repairs, janitor service, fuel and light, etc.

Credit With:

(1) Gross income derived from properties rented. Balance:

Represents net income from rentals, and should be transferred semi-annually to the credit of " Profit and Loss."

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(b) From Stocks of Other Companies.

Debit With:

(1) Losses sustained on stocks sold.

Credit With:

(1) Income (dividends) derived from stocks owned. (2)

Profits realized on stocks sold.

Balance:

Represents the net income from stocks of other companies,

and should be transferred semi-annually to the credit of "Profit and Loss."

§ 178. Expenses.

(a) Selling.

Debit With:

(1) All expenses incurred as a result of maintaining the selling department. (2) Direct expenses of carrying stock, such as storage, insurance, expenses incurred by consignees in connection with goods carried by them on consignments, etc. (3) Expenses of the shipping department.

Credit With:

(1) Any items which should result in diminishing charges to this account (contras).

Balance:

Should be transferred semi-annually to the debit of "Profit and Loss."

(b) General and Administrative.

Debit With:

(1) All expenses applicable to the administrative department. (2) All expenses that are general to the business considered as a unit. (The class of expenses ordinarily charged to this account are enumerated in Chap. XIV, § 111.)

Credit With:

(1) Contra items.

Balance:

Should be transferred semi-annually to the debit of "Profit and Loss."

(c) Manufacturing.

Debit With:

(1) All expenses incurred in connection with the produc

tion department. (2) Cost of non-productive labor supervision, factory clerk hire, engine room labor, etc. (3) Estimated monthly depreciation of machinery and equipment, and small tools. (4) Estimated taxes on machinery, small tools, raw materials and factory supplies. (For list of items chargeable to this account, see § 117.)

Credit With:

(1) Contra items.

Balance:

At the close of each month transfer the balance of this account to the debit of "Manufacturing" account. The amount thus transferred should be apportioned amongst the active jobs or processes.

§ 179. Discounts.

Debit With:

(1) Footing of the "Discount" column per cash receipts book. (Entry made at close of each month.) This footing should represent cash discounts allowed to customers.

Credit With:

(1) Footing of the "Discounts" column per cash disbursements book. (Entry made at close of each month.) This footing should represent cash discounts allowed by creditors.

Balance:

Should be transferred semi-annually to "Profit and Loss."

Represents dividends due but not paid. (See § 188.)

§ 181. Subscriptions to Stock.

Debit With:

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(1) Par value of stock subscribed for, at which time credit Subscribed Stock."

Credit With:

(1) All moneys received on account of subscriptions. Balance:

Represents unpaid subscriptions.

§ 182. Subscribed Stock.

Debit With:

(1) Par value of shares when fully paid, at which time credit capital stock account, common or preferred, as the case may be.

Credit With:

(1) Par value of stock subscribed for, at which time charge "Subscriptions to Stock" account.

Balance:

Represents the aggregate par value of stock subscribed for but not fully paid.

§ 183. Cash Sales.

Debit With:

(1) Footing of "Cash Sales" column per summary of sales book, at the close of each month, thus causing the account to balance.

Credit With:

(1) Footing of "Cash Sales" column per cash receipts book. (Entry made at close of each month.) This footing should represent the total cash sales for a month.

CHAPTER XVII.

SPECIAL ENTRIES OF CORPORATE BOOKS.

184. Characteristic Entries.

The only new features introduced into the books of account when a private or partnership business is transferred. to a corporation are those which relate directly to the mechanism of the corporate form. Thus the interests of the parties. forming the corporation are represented by stock and a "Capital Stock" account is necessary. Profits when divided are declared as dividends and a "Dividend" account must be opened. Stock returning to the corporation either by purchase or by donation becomes treasury stock and a "Treasury Stock" account is required. The corporate losses or gains find their ultimate resting place in a Surplus" account. Bonds when issued require a "Bond" account, and accounts must also be kept with the interest on these bonds as it accrues from month to month.

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The various entries in the corporate accounts which follow in the present chapter are merely intended to show the debits and credits resulting from the transactions considered. For the sake of clearness, they are expressed in the form of journal entries regardless of whether these entries belong in the cash book or in the journal. It will therefore be understood that the expression of a cash entry in this form is not intended to indicate its inclusion in the journal.