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The books comprised in Set II. are supposed to record the accounts of a firm of Manufacturers carrying on all processes for the production of woollen and worsted cloth. The firm trades under the style of Samuel Blackburn & Co., and consists of two partners, viz., Benjamin Summers and William Blackburn, who are entitled respectively to two-thirds and one-third of the profits, after charging 5 per cent. interest pon Capital. The firm's Balance Sheet on Jan. ist, 1884, is given on pages 188-9 (i.e., on folio ii of the Private Ledger). The Dr. and Cr. Balances of the several Ledgers at this date will be found in columns 3 and 4 of the Balance Book, pages 172, 174, and 176; the Summary on page 176 shewing the totals of each Ledger, which agree with the figures of the Balance Sheet. The firm's transactions for the year 1884 are recorded in the several books; a Trial Balance is made at the end of each quarter ; and on Dec. 31st, 1884, Stock is supposed to be taken, and a new Balance Sheet prepared, together with a Trading Account. As in Set I., it is necessary to assume that a new set of books is opened on Jan. ist, 1884, the balances being transferred from the old into the new Ledgers.

The accounts in this set of books are probably carried out in greater detail, and are of a more exhaustive character, than any yet published; the object being to present as near as possible fac similes of books in actual operation, recording a full year's trading, and shewing the whole system from the Balance Sheet at the commencement of the year to that at the close. Without employing a large number of transactions it would be impossible to accomplish this purpose satisfactorily. The terms of payment and the various peculiarities of the trade are illustrated as far as practicable, and every important feature of manufacturing accounts is sought to be comprised in the examples. Where thought desirable, the ruling of the first folio of the book is given in colours in imitation of actual books.

THE PURCHASES DAY BOOK.

See Example, pages 82-93. The method of working this book is identical with that of Set I. (see page 57), except that columns (a) are provided for classifying the entries according to the nature of the invoices.

The headings of these columns, together with the subsequent comments on the Nominal Ledger and Trading Account, sufficiently explain their respective uses.

The additions of the columns may be verified by comparing the total of the column headed “ Total amount of Invoice with the aggregate of the classification columns.

It is in some cases convenient to arrange the invoices at the end of each month under the names of the parties from whom they are received, instead of entering them in precise order of date. By way of illustration, the invoices for the month of February are so arranged in the Purchases Day Book, page 82.

An additional column may be provided for extending the total amount of invoices received from each firm during the month, and such total only need be posted to the Ledger account.

Where the invoices received from a firm are many in number, but small in amount, both time and space may be saved by entering the monthly statement in the Purchases Day Book instead of each individual invoice. The invoices may be fastened in the Book-File without serial numbers, and should be marked so as to identify them with the statement to which they relate (6).

Quarterly and other periodical accounts are treated as invoices.

All invoices, delivery notes, weight notes, and other similar documents must be carefully preserved until the statement, account, or invoice to which they relate has been checked and

verified therewith, and no entry should be made in the Purchases Day Book without such verification.

An invoice should be obtained in every case where it is reasonable to require one. An Auditor will reject invoices made out by bookkeepers in the employ of the firm, and will require the production of bona fide invoices.

THE RETURNS AND CLAIMS (Purchases) DAY

BOOK.

See Example, pages 94-5. This book, like that of Set I. (see page 58), is simply the reverse of the Purchases Day Book, and is provided with columns for classifying the entries.

(a) The ruling of this book may be varied indefinitely, according to the requirements of the business in which it is employed.

(6) The most convenient method of dealing with many details such as those above referred to may be decided by the Book-keeper according to circumstances, so long as the main principles of the book are observed.

THE MILL SALES DAY BOOK.

See Example, page 96. In every large manufacturing concern a variety of articles are sold representing surplusage and waste (e.g. Shoddy, Noils, Flocks, Waste, Seak, &c.), as well as old and disused implements and machinery. Such sales virtually reduce the outlay in the articles from which they arise (c).

Work is in many cases done in various departments on commission, such as Scribbling, Spinning, Dyeing, &c.

The record of both sales and work of the character indicated should be kept entirely distinct from the ordinary sales of manufactured goods, and for this purpose it is convenient to keep a Mill Sales Day Book, all entries in which are posted to the Dr. of personal accounts opened in the Purchases or Mill Ledger (d).

The entries are classified at the end of each quarter, and posted to the Cr. of the Nominal accounts to which they belong.

In extensive manufacturing concerns, especially in those which do not consume their waste products, carelessness in the supervision of the sundry sales at the mill is a frequent cause of dishonesty on the part of those whose duty it is to dispose of the articles.

This duty should be confined to as few hands as possible, and the party who sells the goods should not be allowed to receive payment for them. In fact, all monetary transactions, without exception, should pass through the counting-house. Each person entrusted with the sale or delivery of the articles sold should be provided with a carbon paper duplicate invoice book, numbered consecutively; he should be required to make out and hand an invoice to the buyer, and payment should be made to the cashier. Some person, other than the cashier, (e.g., the Auditor) should ascertain periodically that all sales recorded on the duplicate invoices are duly brought to account in the counting, house. Articles paid for at the time of purchase may be summarised quarterly from the duplicate invoice book, and passed through the Mill Sales Day Book to the Ledger in one total as Sundry Sales. The cash received in the meantime may be entered in the Mill Petty Cash Book, and likewise carried in one total to the Cash Book at the end of the quarter, and thence posted to the Ledger. An illustration of an entry of Sundry Sales (E 50 Ios. 6d.), and of the cash received in respect thereof, is given in the quarter ending Dec. 31st (see Mill Sales Day Book, page 96, and Cash Book, page 126). Both entries are posted to the Sundry Persons Account in the Purchases or Mill Ledger, folio 23, page 136.

(c) When the Mill Sales are few in number they may be conveniently treated in the same manner as Returns, and passed through the Returns and Claims (Purchases) Day Book.

(d) In many instances such sales are made to persons from whom other goods are purchased, and for whom, therefore, a personal account is already opened in the Purchases Ledger. (See Dyson, Mills & Co., page 130 Purchases Ledger, folio 2,) The Sales Ledger is appropriated solely to ordinary accounts with customers to whom only the manufactured article is sold, and, for several reasons, no accounts relating to purely Mill transactions should be opened therein.

THE SALES DAY BOOK.

See Example, pages 98-102.

This book is identical with that of Set I. (see page 58); the details of the invoices are necessarily omitted.

Pattern Day Book.—Where many patterns are supplied to customers it is convenient to keep a separate Pattern Day Book. The particulars of each delivery should be regularly entered therein, but as patterns are usually paid for altogether at the end of the season, the entries should then be classified, and the total only of the deliveries to each customer need be posted to the Ledger (see summary at the end of the March and September entries in the Sales Day Book, pages 99 and 101). The several dates and amounts may be set out in the classification, and also on the statement rendered to the customer, but these details may be omitted from the Ledger. This plan avoids the inconvenience of bringing down balances in the Ledger accounts in respect of patterns not due for payment.

The greatest care should be exercised in preparing invoices for goods sold, as balancing the books does not bring to light errors in the computation of quantities and prices. A rule should be firmly established in every counting-house that the calculations made by the person who prepares the invoice shall be checked and initialed by another person, who, for greater security, may reckon double the quantities and half the prices, or vice-versa.

DAY

THE RETURNS AND ALLOWANCES (Sales)

BOOK.

See Example, pages 103-4.

1

This book is the same in principle as that of Set I. (see page 59), but it is ruled with three classification columns :

(i.) For goods returned ; (ii.) For canvas returned ; (iii.) For shorts, damages, and allowances.

The monthly totals of all the columns are summarised at the date when the Balance Sheet is prepared (see page 104). The particulars afforded by this summary should be compared year by year, according to the proportions which they severally bear to the total sales. Any excess will thus be brought to notice, and should be the subject of strict enquiry. Where the goods returned exceed the average, the cause usually arises either from faulty manufacture or irregular deliveries.

As in the case of the Sales Day Book, details of the entries are necessarily omitted from the example.

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THE CASH BOOK.

See Example, pages 106—127.

The principle of this book is similar to that of Set I. (see page 60), the mode of entering both Cash and Bank transactions being exactly the same.

There are, however, additional columns, the use of which requires explanation. The column on the left-hand side headed “ Allowances " is very useful for entering small claims made by customers on remitting their accounts. A manufacturer needs not to be reminded how seldom he receives a remittance without a deduction of something in addition to the ordinary discount. This column saves a separate entry of such allowances in the Returns and Allowances (Sales) Day Book. The practice of including the allowance with the discount is objectionable, as, for several reasons, the discount should be stated separately. The columns headed “ Totals Posted" are for the purpose of arranging the entries according to the respective Ledgers to which they are posted, in order to localise mistakes when preparing the trial balance (e). By means of these columns the classification required for the Test Journal is performed instantaneously at the end of the quarter.

In the books of a manufacturer it will be observed, in practice as well as in the examples given, that almost every entry on the left-hand side of the Cash Book is posted either (i.) to the Sales Ledger, or (ii.) to the Nominal or the Bills Ledger. In case of an occasional entry that has to be posted to the Purchases Ledger, it should be written in red ink (f) (e.g., April 8th, Mitchell, Jonathan, £11 175. 6d.), and the initial letters P.L. should be placed against the Ledger folio (see page 112). Conversely almost every entry on the right-hand side is posted either (i.) to the Purchases Ledger, or (ii.) to the Nominal or the Bills Ledger. In case of an occasional entry that has to be posted to the Sales Ledger, it should be written in red ink (f) (e.g., Jan. 28th, Bragg, & Co., £15 4s. 7d.), and the initial letters S.L. should be placed against the Ledger folio (see page 107) (8).

In checking the postings the book-keeper should call over and compare with the Ledgers the several amounts extended into one classification column before passing to those extended into another column. He will thus effectually guard against amounts being extended into the wrong column.

(e) Very little extra labour is caused by the use of these columns, as in posting to the Ledger the cash and discount are necessarily added together, and the addition can nowhere be more conveniently made than alongside the entry.

(f) In the example these entries are printed in black type to represent red ink; the latter item is printed in red.

(9) In certain businesses it is convenient to have three Ledger classification columns on each side of the Cash Book-(i.) For the Sales Ledger, (ii.) For the Purchases Ledger, (iii.) For the Nominal and Bills Ledgers.

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