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The credits to the individual accounts receivable should be posted from the register.

The Invoice Binder: This binder contains copies of all invoices sent to buyers. As already explained the entries in the sales register are made from this binder.

When the contract of sale is returned, approved by the buyer, it is usual to make up what is termed a "House Contract" which is made in duplicate from the original contract and contains all necessary information and instructions regarding the order, shipping, etc.

The original copy of the house contract is kept by the sales department, the duplicate copy to be placed in the unshipped binder to be used in making up the necessary invoice copies.

These invoice copies are made in sets of five on the billing machine. Each of these copies should be a different color to avoid confusion.

These invoice copies show the name of buyer, his address, the date of sale, the broker making the sale, the terms of the sale, the shipping instructions, the number of cases, brands, or labels, the grades, the varieties, sizes, dozens, prices, amounts and total for extensions. They are printed at the top "Invoice No." and "Binder No." The number of the invoice is entered as it is made out and the binder number is entered when filed in the permanent binder. When the brokerage is to be credited to the broker and not deducted from the invoice, the amount is figured and entered on the two office copies.

The original copy is kept in a separate file for billing purposes and when the invoice is made up is filed in the permanent binder. The duplicate copy is kept in a binder for the use of the sales department, the stock clerk, the label clerk and any other person interested. Two copies are sent to the plant warehouse where the warehouse foreman enters all shipping data such as date shipped, car number, changes in can marks when it is necessary to make such changes, etc. He returns one copy to the office and keeps the other for his own reference. The box-making order is made up by the warehouse foreman from these copies. The fifth copy is sent to the label clerk at the plant and is kept on file by him for use in getting the necessary labels ready to label the order.

It is best when making up these invoice copies to have the price and extensions appear only on the original and duplicate as this will prevent the factory employees knowing the prices at which the goods are sold. This is accomplished by the use of short carbon paper on the last three copies.

Before the billing is made the invoice copy should be sent to the traffic department, if one is maintained, for instructions as to routing, etc. These instructions should also appear on all copies sent to plant. It is then given to another clerk who checks all extensions and then to the biller who makes out the invoice. The invoice is then checked and mailed, or attached to the draft and deposited for collection.

The invoices used are of two sizes one 721⁄2 by 81⁄2 inches, the other 111⁄2 by 81⁄2 inches. Heading space at top 11⁄2 inches in which is printed the name of company, the buyer, his address, and at the right the date.

billed and the number of the invoice, by whom sold, date shipped, terms and car number.

The billing description will be in order, cases, brands (labels), grades, varieties, sizes, dozens, price, amount and total for extensions.

The order of discounts varies with different firms but the equitable order of deduction is as follows: From gross amount of charge deduct one-half of 1 per cent swell allowance, then label allowance, then brokerage (when brokerage is to be deducted from invoice) then 2 per cent cash discount, then adding any charges such as marine insurance,

etc.

The order of deduction, at times, causes considerable argument with brokers who make the claim that goods are sold at the price quoted by the canner and therefore the brokerage should be paid on this amount and not on the net amount paid by the buyer. Also that cash discount should be allowed on the gross amount of the invoice and not on the net. Goods sold by brokers and for which the brokers make payment are billed by them to buyers who must be allowed the cash discount on the gross amount and unless the canner makes the same allowance the broker is out the difference. It would seem that this is one of the problems to be straightened out by the canners associations and a uniform practice established.

The label allowance on canned goods is as follows: Fancy and choice, No. 1 tall, $1.50; No. 21⁄2 and No. 10, $2.00. Other grades, No. 1 tall $1.25; No. 21⁄2 and No. 10, $1.50.

To figure charge for marine insurance, take the gross amount of invoice, plus 10 per cent and plus freight charges to destination figured at the prevailing rate per 100 pounds.

In accounting for marine insurance the entry can be made in the sales register to "Sundry Credit" column under account No. 58, suspense. A good plan is to subdivide this account into 58A, and 58B using the latter for marine insurance. Accounts receivable is then debited and suspense is credited for the amount. When the customer pays accounts receivable receives the credit and cash the debit. When the bill for the amount is received from the insurance company suspense receives the debit and accounts payable the credit. Then when payment is made the accounts payable receives the debit and cash the credit.

The Consignment Record: Some canners do a large consignment business and all of them will at times have goods on consignment to be sold by brokers for their account. It is a good plan for the sales department, or the accounting department, to keep a record of all consignments independent of the records in the general books.

This is best done by use of a card index system in which the cards are filed alphabetically by name of party to whom consignment is made. The cards will be 4 by 7 inches in size, ruled across with lines 14-inch apart. Five of these lines for information on the consignment as follows: Name, address, consignment No., Order No., cases, dozens, and instructions. The remainder of the card is divided down the center by heavy lines; the left half for debits and the right half for credits. The columns of the debit side will be date, item, folio and debits. The col

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umns on the credit side will be date, item, folio and credit. This information and record will supplement that in the ledger.

A Customer's Record should also be kept by the sales department. This will also be kept in a card index file. Card to be 4 by 7 inches, ruled across with lines 4-inch apart. Printed down the left end will be "Customer's Name;" "Address;" "Broker;" "Brands (Labels) Used;" "Terms;" "Discounts;" "Label Allowance;" "Credit Report;" and "Shipments to be Routed."

The cost department will keep the depreciation record book which can be a standard 8 or 9 column per page book in which will be listed each item of fixed assets against which periodical depreciation is charged. Starting with improvements to land list each improvement under a number, then list each building unit under a number; each unit of machinery and equipment under a number and each unit of furniture and equipment under a number.

The arrangement and numbers should be by department in the case of all machinery, equipment, furniture and equipment. The columns will be as follows: "No." "Name of Unit;" "Department;" “Date of Purchase;" "Purchased From;" "Rate of Depreciation;" "Original Cost;" "Charged off" and year.

A recap of the amount of depreciation charged off each year will be the basis of the charge to the depreciation accounts in the general ledger.

This will make an interesting and valuable record and though it will require a little time to write it up at the beginning, after it has been properly arranged it will require very little work to keep it up to date. Where more than one plant is operated, the book will be indexed by plant numbers and separate records kept of each plant.

Claim Records: A record of loss and damage claims filed against carriers will be kept by the traffic department. No special book is needed for this purpose as it can be kept in any record book. Give each claim a number and record the name of carrier, the amount of claim, the nature of claim, the classification of commodity, the date claim is filed and any information at hand affecting the claim, also make record of all papers attached to claim when presented.

When the carrier acknowledges the receipt of claim enter the carrier's claim number in the record as it will be necessary to refer to this number in all correspondence with the carrier. The subject of claims is treated fully in Part 4, Traffic Rules and Regulations.

Assignment No. 6
Cost Finding

A general treatise on cost accounting is of little value to the accountant of a fruit and vegetable canning establishment for the peculiar problems arising during the process of growing, receiving, preparing, canning and processing the raw product, its separation into various grades, and packing into various sizes of containers requires methods of accounting

common to no other line of business and though many excellent general suggestions are made by authors of various works on cost accounting very few of these suggestions can be incorporated into a system of costs intended to cover the operations of fruit and vegetable canning.

Any work on costs to be valuable to the accountant should not be general in its scope but should deal thoroughly with the operations of an individual line of business. A system designed for a machine shop will be of little value to a candy manufacturer, and a system which would be perfect for the manufacturer of shoes would be worthless to the builder of concrete ships, and a system designed to cover the operations of every line of business will be of little value to anyone.

It may be true that the fundamental principles of costs are the same in every line of business, but the practical application of these principles to the operations of various manufacturing plants varies to such a great extent that the cost accountant must be thoroughly familiar with his particular business to be of any value to his employer.

In the fruit and vegetable cannery he should thoroughly understand the growing, shipping and handling of fruits and vegetables, and the different grades into which it is packed; he should be familiar with the manufacture of sirups and the various per cent sirups used in the grades of fruit packed; he should understand the operations of the various departments of the plant and should be familiar with the operations of the various machines used in the factory; he must be familiar with the various sizes of cans used and be able to convert one size into another for the purpose of reducing the pack to a uniform size; he must be able to figure the value differentials used to determine the difference in the value of the raw product of one grade and that of another grade and also the capacity differentials of cans that he may determine the quantity of raw fruit required for one size can and the quantity required for another size; he must understand the lye peeling process for apricots and peaches; the segregation of the factory labor into direct and indirect labor; the manufacture of boxes and the apportionment of such accounts as factory financial expense; factory overhead expense, depreciation and obsolescence, general overhead expense, brokerage and commission, selling expense and warehousing expense. He must be a statistician and compile daily statistics of the pack showing the quantity of green produce of each variety consumed for the day; the number of dozens, or cases, of finished goods of each variety packed for the day; the number of cans secured from each 100 pounds of each variety consumed, and the number of cases of finished product per ton of each variety. He must separate the daily pack into grades of each variety, reducing the different sizes and determine the percentage of each grade packed. He must know how to make these statistics valuable for comparative purposes. and for use in maintaining factory control. He must know how to compile his labor and sugar schedules and how to use them in the control of labor and sugar losses. He must understand the loss in tomato juice in the manufacture of pulp, catsup and other tomato products caused by concentration, and in fact he must be familiar with every detail of factory and office operation.

This knowledge cannot be acquired from any work on general cost accounting. It can only be gained by years of practical experience aided by a specialized work such as this is intended to be.

The position of cost accountant is not a sinecure. It requires hard work and close application to detail but no other department of the business can be made as profitable and as valuable to the management as the cost department under proper and merited encouragement.

The accounts with which the cost department must deal are included in the financial accounting system and incorporated in the profit and loss statement as the direct costs, manufacturing costs, administration costs, warehousing and selling costs, the total of which will be the cost to make and sell. This total cost to make and sell cannot be determined until the closing of the books for the fiscal year, at which time the cost department should be given a copy of the profit and loss statement from which the final costs will be distributed to the various varieties, grades and sizes packed.

Before taking up the distribution of the final costs it will be necessary to follow in detail the work of the cost department from the opening of the packing season to its close, to familiarize the accountant with the routine and methods of the department.

By the opening day of the season, the cost department should have everything in readiness to begin the compilation of statistics which will be necessary in making up the costs at the close of the year.

The accountant will personally see that all departments are supplied with the necessary forms on which to make the daily reports of operations.

Very few books will be required by the cost department. In those organizations large enough to maintain a fully equipped department of costs, the invoice transmittals and distributions will be made up in this department which will also keep the freight invoice register both of these records having already been described. The cost accountant will require two loose leaf books, rings one inch and sheets 6 by 91⁄2 inches. One of these will be used as a year book and will contain all statistics and operating data for the year, and the other will be used for a permanent work book into which will be accumulated all formulas, data and instructions for general use. The best ruling for the sheets is that known as quadrille. The book containing the yearly records and statistics will be filed away at the close of the year and a new book purchased each succeeding year while the work book will be added to each year and be kept locked in the accountant's desk as it will become a very valuable book of record.

When packing operations commence, the cost department will receive the following reports from the various departments of the factory: Labor report from the timekeeping department, green fruit report from the receiving clerk, sugar and salt report from the sirup maker, pack report, leak and swell report and cans smashed report from the tally clerk, box making and warehouse report from the warehouseman, lye report from the man in charge of the lye machines and power plant report from the engineer and all other reports affecting the plant operations.

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