introduction of many labor-saving methods and devices. One of these now

used in all large stores and in many small ones, is the _sales ticket_. The sales ticket is to all intents and purposes a small invoice blank. Sales tickets are put up in pads or in book form, and are numbered in duplicate. The number is prefixed by a letter--as _H 10_--which is intended to indicate either the department or the sales person. When a sale is made, the ticket or bill is made in duplicate by means of carbon paper; one copy is given to the customer, and the other retained. If it is a cash sale, the copy retained goes to the cashier with the money; if a sale on account, to the bookkeeper to be charged. These sales tickets are also used for taking orders for future delivery, both copies being retained until the order is filled. When delivery is made, one copy goes to the customer as a bill. Aside from the time saved, the sales ticket is a great convenience, as its use gives the customer a bill for every purchase. DEPARTMENTAL RECORDS =24.= When the goods sold are divided into departments, it is here customary to record carefully the purchases and sales for each department. These records are provided for by the use of purchase and sales books having as many columns as there are departments. Let us suppose that the business under consideration is a single proprietorship, and that the goods sold are clothing, shoes, and furnishings. Each class of goods is kept in a separate department, sales and purchases being recorded by departments. =25.= Purchase and sales books of a special design are used, each having three special columns. It will be noted that neither purchases nor sales are recorded in detail, but that both purchase invoices and sales tickets are recorded by number, and only the totals extended in the proper column. The charges and credits are posted to personal accounts from the purchase and sales books. All purchase invoices are filed in numerical order. The sales tickets are kept in bundles, each day's tickets by themselves. The tickets of each department and each sales person are also kept by themselves. If it becomes necessary at any time to know the items of an invoice or sales ticket, it is an easy matter to refer to the files under the proper date and number for the desired information. The combined totals of the three department columns must equal the footing of the total column. All footings are carried forward until the end of the month, when the totals are posted directly to purchase and sales accounts, completing the double entry. In the ledger, purchase and sales accounts are kept with each department; but when the books are closed, the results from all departments are combined in the trading account. Instead of recording cash sales in a special column in the cash book, all receipts of this kind are entered in the regular _cash received_ column. These sales are not posted from the cash book, but are entered in the sales book daily. Thus they are carried forward in the footings, and at the end of the month the totals of the sales book represent all sales, both on account and for cash. =26.= The cash book in this set presents some new features. Instead of using both pages of the book, one page is used for both debit and credit. The bank account is also kept in the cash book, debit and credit columns being provided for this purpose. Deposits are entered in the bank debit column and in the cash credit column. Checks are entered in the bank credit column and posted to individual accounts. The other books used are the journal and ledger. The journal is used only for adjusting entries which cannot be made through the other books. SAMPLE TRANSACTIONS =27.= The business is opened by C. D. Walker, who invests $3,500.00 cash, which he deposits in the bank. The following transactions are recorded: --Jan. 12-- Bought from Hart, Schaffner & Marx, Chicago 50 suits $13.50 $675.00 15 " 16.50 247.50 -------- $912.50 Net; 2% 10. Invoice #1. --Jan. 12-- Bought from Hamilton Brown Shoe Co., St. Louis 30 pr. shoes 2.25 67.50 30 " " 4.25 127.50 10 " " 1.50 15.00 -------- 210.00 Net 60; 2% 10. Invoice #2. --Jan. 14-- Bought from Farwell & Co., Chicago 1 doz. shirts 13.50 13.50 2 " " 9.00 18.00 4 " " 6.25 25.00 2 " sox 1.50 3.00 1 " " 2.00 2.00 10 " underwear 6.50 65.00 5 " hdkfs. 1.10 5.50 -------- 132.00 Net 60; 2% 10. Invoice #3. --Jan. 14-- Bought from Barr Dry Goods Co., St. Louis 12 doz. collars .75 9.00 12 " " 1.10 13.20 -------- 22.20 Net 30. Invoice #3. --Jan. 15-- Sold to S. W. Martin, 842 3d Av., on account Sales ticket A4. 25.00 S.T. B6 4.50 S.T. C18 6.00 -------- 35.50 --Jan. 15-- Sold for cash Clothing 148.70 Furnishings 26.50 Shoes 54.00 -------- 229.20 --Jan. 15-- Paid Hart, Schaffner & Marx account Check #1 894.25 Discount 18.25 -------- 912.50 --Jan. 16-- Sold to A. R. Crane, 1162 Baker St., on account S.T. B7 3.00 --Jan. 17-- Sold to D. H. Whipple, 476 Lake St., on account S.T. A12 27.50 Paid cash on account 10.00 --Jan. 17-- Received from S. W. Martin 1 shirt, for exchange 1.50 Sold him on account 1 shirt 2.00 S.T. B9 --Jan. 17-- Sold for cash Department A 200.00 " B 64.00 " C 87.50 -------- 351.50 --Jan. 19-- Sold to C. D. Lewis, 64 Ferry Av., on account S.T. B11 6.50 S.T. C23 3.50 -------- 10.00 --Jan. 19-- Paid Hamilton Brown Shoe Co., on account Check #2 205.80 Discount 4.20 -------- 210.00 --Jan. 19-- Paid clerk hire, cash 12.00 --Jan. 19-- Paid store rent to D. C. Watson Check #3 50.00 --Jan. 19-- Sold for cash Department B 37.50 " C 35.00 -------- 72.50 --Jan. 19-- Deposited in bank 550.00 --Jan. 20-- Sold to B. E Johnson, 92 King St., on account S.T. A15 20.00 --Jan. 20-- Sold for cash Department A 75.00 " B 21.25 -------- 96.25 --Jan. 20-- Deposited in bank 100.00 --Jan. 20-- Paid freight bills Department A 8.75 " B 3.42 " C 4.20 -------- Check #4 to C. D. Jenks, Agt. 16.37 The inventory on Jan. 20 is: Clothing $487.00 Furnishings 30.50 Shoes 64.50 BALANCE SHEET, JAN. 20 _Assets_ Cash Bank $2,983.58 Office 97.45 -------- $3,081.03 Accounts Receivable Martin 36.00 Crane 3.00 Whipple 17.50 Lewis 10.00 Johnson 20.00 -------- 86.50 Merchandise (Inventory) 582.00 -------- $3,749.53 _Liabilities_ Accounts Payable Farwell 132.00 Barr 22.20 154.20 154.20 -------- -------- -------- Present Worth $3,595.33 [Illustration: Adjustment Journal and Department Purchase Book] [Illustration: Departmental Sales Book] [Illustration: Cash Book Including Bank Account] [Illustration: Center Ruled Ledger] [Illustration: Center Ruled Ledger] [Illustration: Center Ruled Ledger] [Illustration: Center Ruled Ledger] [Illustration: Center Ruled Ledger] [Illustration: Trial Balance] EXERCISE =28.= Take a trial balance of the ledger accounts as they appear after the books are closed Jan. 20. At the close of business, Feb. 28, we find that the following transactions have been recorded: Purchased clothing from Hart, Schaffner & Marx, $1,500.00; from Brokau Bros., $720.00. Purchased furnishings from Barr Dry Goods Co., $60.00, from Rosenthal & Co., $437.50. Purchased shoes from Brown Shoe Co., $460.00. Sold on account, clothing, $600.00; furnishings, $224.40; shoes, $112.00. Sold for cash, clothing, $789.50; furnishings, $302.90; shoes, $447.25. Received cash on account, $672.20. Received returned goods: clothing, $15.00; shoes, $7.00. Deposited cash in bank, $2,230.00. Paid cash for expenses, $10.00. Gave checks as follows: Hart, Schaffner & Marx, $1,176.00; Brokau Bros., $705.60; Brown Shoe Co., $294.00; Farwell & Co., $132.00; Barr Dry Goods Co., $22.20; Rosenthal & Co., $428.75; rent, $50.00; expenses, $100.00. Cash discounts earned on accounts paid as follows: Hart, Schaffner & Marx, $24.00; Brokau Bros., $14.40; Brown Shoe Co., $6.00; Rosenthal & Co., $8.75. Take a new trial balance as the ledger accounts appear after posting these transactions. The inventory, Feb. 28, is: Clothing $1,790.50 Furnishings 176.40 Shoes 136.25 -------- $2,103.15 Close the books, make statement of trading and profit and loss account. Make a balance sheet. What were the gross profits for this period? What were the net profits? What is the proprietor's present worth? PARTNERSHIP =29.= Legal authorities define a partnership as a combination by two or more persons, of capital, labor, or skill, for the transaction of business for their common profit. Partnerships may be formed for the purpose of conducting any legitimate business or undertaking, and are created by contract, expressed or implied, between the parties. Partnership agreements need not be in writing, but may be made by oral assent of the parties. Even though they are legal if made orally, partnership agreements should always be made in writing. =30. Partnership Agreements.= These should state the date on which the agreement is entered into, the name of the contracting parties, the name by which the partnership is to be known, and the address of the place of business. Following should be a statement of the nature of the business, the amount and form of investment of each partner, the duration of the partnership, the basis of division of profits, provisions for the dissolution of the partnership, definition of the duties of active partners, and a provision for the division of the assets in the event of dissolution or at the termination of the partnership. =31. Kinds of Partners.= Partners are of different kinds, depending on the nature of the partnership agreement and the extent of their liability, expressed or implied, as between themselves or in respect to third persons. The usual classification of partners is as follows: _ostensible_, _secret_, _nominal_, _silent_, and _dormant_. Ostensible partners are those whose names are disclosed to the public as actual partners. Secret partners are those whose names are not disclosed to the public, though participating in the profits. Nominal partners are those who allow their names to be used as partners, though they may have no actual interest in the business. The fact of their being known as partners makes them liable to third parties. Silent partners are those who, while sharing in the profits, take no active part in the management of the business. Their names may or may not be known. Silent partners may also be secret partners, Dormant partners are those, who are both silent and secret partners. They are usually included in a general term like _Company_, _Sons_, or _Brothers_. =32. Participation in Profits.= The most simple partnership from an accounting standpoint is one in which the investments of the several partners are equal, and profits are to be divided equally. This condition does not exist in all partnerships. The members of the partnership may invest unequal amounts and share in the profits on the basis of their investment. The investment may be equal, but one partner may receive an extra share of the profits in return for work performed in lieu of a salary. The investment may be unequal, but the one with the smaller investment may share equally in the profits in return for work performed. It is not unusual for a silent partner to furnish all of the capital and share equally in the profits with an ostensible partner who assumes full responsibility for the management of the business. =33. Interest on Investment.= When the investment of the partners is unequal, it is customary to allow interest on the capital invested and to charge interest on all withdrawals. The interest on capital must be credited, and the interest on withdrawals must be charged, before profits can be distributed. =34. Capital and Personal Accounts.= In a partnership a special account should be opened in the name of each partner to represent his investment (for example, John Smith, Capital). To this account is credited his net investment. When the books are closed, the account is credited with his share of the profits, and debited with his withdrawals. A personal account should be opened in the name of each partner, to which is debited all withdrawals, either of money or goods. Even when the capital invested is equal, some partnership agreements provide that interest shall be charged on all withdrawals, particularly when the business is of such a nature that goods traded in are likely to be withdrawn by the partners, or when, for any reason, withdrawals are likely to be unequal. The balance of the partner's personal account is closed into his capital account when the books are closed. Before closing this account, it should be credited with interest on capital account and charged with the interest provided on withdrawals. =35. Opening the Books.= When the books of a partnership are opened, the essential features of the partnership agreement should be written at the top of the first page of the journal. Next following the partnership agreement, are the entries showing the nature and amount of the investment of each partner, the amounts being posted to the credit of partners' capital accounts. =36. Closing the Books.= When the books of a partnership are to be closed, the revenue accounts are closed into trading and profit and loss, the same as in any other form of business organization. The net profit is then apportioned according to agreement, the share of each partner being credited to his capital account. The balance of his personal account is then carried to his capital account; the balance of that account will then show his net investment. =Illustration of Closing Entries.= A, B, and C form a partnership, each investing $1,000.00, profits to be shared equally. When the books are closed, the net profits are found to be $909.60. A's personal account shows a debit balance of $46.50; B's personal account shows a credit balance of $100.00; C's personal account shows a credit balance of $52.00. The entries are as follows: Profit and Loss $909.60 To A, Capital _a/c_ $303.20 " B, " " 303.20 " C, " " 303.20 A, Capital _a/c_ 46.50 A, Personal _a/c_ 46.50 B, Personal _a/c_ 100.00 B, Capital _a/c_ 100.00 C, Personal _a/c_ 52.00 C, Capital _a/c_ 52.00 The capital accounts after closing are: A, CAPITAL _a/c_ Dec. 31, Bal. personal _a/c_ $46.50 $1,000.00 Jan. 1 Balance 1,256.70 303.20 (1/3 profits) Dec. 31 -------- -------- $1,303.20 $1,303.20 ========= ========= $1,256.70 net invest. Dec. 31 B, CAPITAL _a/c_ Dec. 31, Balance $1,403.20 $1,000.00 Jan. 1 303.20 (1/3 profits) Dec. 31 100.00 pers. _a/c_ Dec. 31 -------- -------- $1,403.20 $1,403.20 ========= ========= $1,403.20 net invest. Dec. 31 C, CAPITAL _a/c_ Dec. 31, Balance $1,355.20 $1,000.00 Jan. 1 303.20 (1/3 profits) Dec. 31 52.00 pers. _a/c_ Dec. 31 -------- -------- $1,355.20 $1,355.20 ========= ========= $1,355.20 net invest. Dec. 31 SAMPLE TRANSACTION =37.= The first business taken up for consideration under the head of partnerships is a retail shoe business. The stock is kept in three classes: men's, women's, and children's shoes. Purchase and sales books, ruled to segregate transactions of each class, are used. The bank account is kept in the cash book, which is also provided with two columns for discount. All sales, whether for cash or on account, are recorded on sales tickets. James Benton, Horace Douglas, and Henry Kemp form a partnership under the firm name of Benton, Douglas & Kemp, for the purpose of conducting a retail shoe business in Buffalo, N. Y. The date of the agreement, which is to continue for ten years, is March 1, 1908. James Benton invests $1,000.00 in cash and a stock of shoes inventorying $2,000.00 as follows: men's, $800.00; women's, $700.00; children's, $500.00. Horace Douglas and Henry Kemp each invest $3,000.00 in cash. The three partners are to share equally in the profits and each is to receive a salary of $100.00 per month. The books are to be closed and net profits divided at the end of each three months' period counting from January 1, which brings the first distribution on March 31. The following transactions are recorded during the month of March: --March 1-- Deposited in Second National Bank $7,000.00 --March 1-- Bought from National Fixture Co. Store fixtures 2,000.00 Invoice #1 --March 1-- Bought from John C. Morrison, Buffalo Men's shoes 135.00 Invoice #2 --March 1-- Bought from Hoyt & Co., Rochester, N. Y. Women's shoes 127.50 Children's shoes 84.00 ------ 211.50 Net 60; 2% 10. Invoice #3 --March 2-- Sold to R. H. Wallace, 842 Delaware Av. 1 pr. men's shoes 6.00 1 pr. men's slippers 2.50 ------ 8.50 --March 2-- Sold to D. H. Lyon, 416 Niagara St. 1 pr. women's 3.50 1 pr. women's 4.00 1 pr. children's 2.00 ------ 9.50 --March 2-- Sold to Henry Norris, 297 Madison Av. 1 pr. men's 5.00 1 pr. children's 1.25 1 pr. children's 1.50 ------ 7.75 --March 2-- Sold to R. H. Homans, 427 Lafayette Av. 1 pr. women's 5.00 --March 2-- Sold for cash Men's 44.00 Women's 37.50 Children's 22.00 ------ 103.50 --March 3-- Sold to H. J. Watson, 197 Locust St. 2 pr. men's 15.00 1 pr. women's 5.50 ------ 20.50 --March 3-- Sold to H. J. Meyer, 82 Bennett St. 1 pr. children's 1.50 1 pr. children's 2.00 1 pr. women's 3.50 ------ 7.00 --March 3-- Paid Hoyt & Co. bill by check Less cash discount. --March 3-- Deposited in Second National Bank 75.00 --March 3-- Paid freight on shoes in cash 2.60 --March 3-- Sold for cash Men's 30.00 Women's 24.00 Children's 15.00 ------ 69.00 --March 4-- Bought from Lee & Co., Rochester Women's shoes 140.00 Net 30. Invoice #4 --March 4-- Sold to D. Andrews, 84 Peck St. 1 pr. men's 3.50 1 pr. men's 5.00 1 pr. women's 4.00 ------ 12.50 --March 4-- Sold to Jas. Hayes, 519 Washington St. 1 pr. women's 3.50 1 pr. children's 2.00 1 pr. children's 1.25 ------ 6.75 --March 4-- Sold for cash Men's 27.00 Women's 32.00 Children's 12.50 ------ 71.50 --March 5-- Sold to R. D. Nelson, 842 Niagara St. 1 pr. men's 6.00 1 pr. women's 5.00 ------ 11.00 --March 5-- Sold to D. Needham, 47 Ames St. 1 pr. men's 3.50 1 pr. women's 2.50 1 pr. children's 1.50 ------ 7.50 --March 5-- Sold for cash Men's 31.50 Women's 26.00 Children's 11.00 ------ 68.50 --March 6-- Deposited in Second National Bank 200.00 --March 6-- Sold to D. B. Wright, 47 Andrews St. 1 pr. men's 5.00 --March 6-- Sold to H. N. Hoyt, 821 Delaware Av. 1 pr. women's 5.00 1 pr. children's 2.50 ------ 7.50 --March 6-- Sold to Amos Wiggins, 92 Prospect St. 1 pr. men's 5.00 1 pr. women's 3.50 ------ 8.50 --March 6-- Sold for cash Men's 52.00 Women's 36.50 Children's 18.25 ------ 106.75 --March 6-- Paid clerk hire, cash 9.00 --March 6-- Gave checks as follows: Horace Douglas 20.00 Henry Kemp 25.00 --March 8-- Sold to D. Altman, 127 Wright St. 1 pr. men's 6.00 Gave him check 44.00 Credited his account for 1 mo.'s rent 50.00 --March 8-- Sold to R. H. Homans, 427 Lafayette Av. 1 pr. men's 6.00 --March 8-- R. H. Wallace paid his account in full. --March 8-- Paid account of John C. Morrison by check --March 8-- Sold for cash Men's 25.00 Women's 18.00 Children's 10.50 ------ 53.50 --March 9-- Sold to Walter Jenks, 87 South Av. 1 pr. men's 6.00 1 pr. women's 4.00 1 pr. children's 2.00 ------ 12.00 --March 9-- Sold to D. W. Mantel, 419 Delaware Av. 1 pr. women's 5.00 1 pr. children's 2.50 ------ 7.50 --March 9-- Sold to D. C. White, 1160 Main St. 1 pr. men's 5.00 1 pr. men's 3.50 ------ 8.50 --March 9-- Sold to A. R. Crows, 40 Shaw St. 1 pr. women's 3.50 --March 9-- Sold for cash Men's 54.00 Women's 41.50 Children's 20.50 ------ 116.00 --March 9-- Deposited in Second National Bank 275.00 --March 10-- Sold to Henry Brown, 87 Douglas St. 1 pr. men's 6.00 1 pr. women's 4.00 ------ 10.00 --March 10-- Sold to D. L. Benedict, 80 Adams St. 1 pr. women's 3.50 1 pr. children's 2.00 1 pr. children's 1.50 ------ 7.00 --March 10-- Sold for cash Men's 48.50 Women's 39.00 Children's 16.50 ------ 104.00 --March 11-- Sold to D. H. Lyon, 416 Niagara St. 1 pr. men's 6.00 --March 11-- Received from Henry Norris, cash 7.75 --March 11-- Sold to D. B. Wright, 47 Andrews St. 1 pr. women's 3.50 1 pr. children's 2.00 ------ 5.50 --March 11-- Sold to H. J. Meyer, 82 Bennett St. 1 pr. men's 3.50 --March 11-- Sold for cash Men's 42.00 Women's 39.50 Children's 11.00 ------ 92.50 --March 12-- Deposited in Second National Bank 195.00 --March 12-- Sold to D. L. Benedict, 80 Adams St. 1 pr. men's 5.00 --March 12-- Sold to H. A. Fisher, 42 Lyons St. 1 pr. women's 4.00 1 pr. children's 1.50 ------ 5.50 --March 12-- Sold to Andrew Winters, 476 Delaware Av. 1 pr. men's 6.00 1 pr. children's 2.50 ------ 8.50 --March 12-- Sold for cash Men's 51.50 Women's 43.00 Children's 17.75 ------ 112.25 --March 13-- Bought from Rochester Shoe Co., Rochester Men's shoes 265.00 Women's " 220.00 Children's " 98.50 ------ 583.50 Net 30; 2% 10. --March 13-- Sold to D. Altman, 127 Wright St. 1 pr. women's 4.00 1 pr. children's 2.50 1 pr. children's 2.00 ------ 8.50 --March 13-- Sold to D. Alton, 46 Eastern Av. 1 pr. men's 5.00 1 pr. women's 3.50 ------ 8.50 --March 13-- Sold for cash Men's 67.00 Women's 52.00 Children's 29.00 ------ 148.00 --March 13-- Paid clerk hire 9.00 Henry Kemp wishes to retire from the business. His partners, Benton and Douglas, agree to pay him cash for his interest. To close the books, each partner is credited with one-half a month's salary, and the amount is charged to expense. The inventory shows the stock to be: INVENTORY Men's shoes $759.75 Women's 835.75 Children's 519.00 -------- $2,114.50 [Illustration: Journal Showing Opening Entries for a Partnership] [Illustration: Cash Book with Center Column for Particulars] [Illustration: Departmental Sales Book] [Illustration: Departmental Sales and Purchase Books] [Illustration: Classified Ledger Accounts] [Illustration: Classified Ledger Accounts] [Illustration: Classified Ledger Accounts] [Illustration: Classified Ledger Accounts] [Illustration: Classified Ledger Accounts] [Illustration: Classified Ledger Accounts] [Illustration: Classified Ledger Accounts] [Illustration: Classified Ledger Accounts] [Illustration: Classified Ledger Accounts] EXERCISE =38.= 1. Submit a trading and a profit and loss account as shown by the books at the close of business March 13.