This bill of Voss & Co. is for repairs to the building. Pay it by check. Is this a real or a nominal element? Does it increase the cost of the building or simply help to keep it worth its cost? Mr. Kline has returned to Chas. Strang & Co., 5 Oak Dining Tables as they do not seem to be suitable to our trade. They send us this credit memorandum. Prove cash and submit your cash book and check book to your teacher for approval. September 9. This bill is for repairs to the delivery truck. Pay it. D. G. Paxton, City, orders: 10 Felt Mattresses 6 Kitchen Cabinets 18 Oak Dining Chairs. Terms: 2/10, net 30 days. C. G. Yates, Denver, Colo., orders: 12 Mahogany Parlor Tables 6 Oak Library Tables Terms: on account. Mr. Kline has arranged with C. G. Prang, Receiver in bankruptcy, to purchase some of the bankrupt stock at 90¢ on the dollar. The deduction is made on the invoice. This is not a discount but simply a method of lowering the price. Pay it by check. Enter the net amount in the purchase book and in the cash book. Check both entries. It is not necessary to open an account with the receiver of the bankrupt stock as the transaction is closed and you will have no more dealings with him. September 10. C. P. Baker & Co., City, order: 15 Felt Mattresses 5 Kitchen Cabinets Terms: 3/5, 2/10, net 30 days. He instructs you to ship the goods to D. G. Foss, Utica, N. Y. He also asks you to prepay the freight and charge it to his account. Make out the invoice to K. L. Mears, but on it write, Shipped to D. C. Foss, Utica, N. Y. The bill of lading should be made out to D. G. Foss. Pay this freight bill and charge it to K. L. Mears' account, as it is simply an accommodation to him. The bank reports the sight draft on C. E. Randall collected. Collection charge, 50¢. September 11. M. E. Newton, Wheeling, W. Va., orders: 12 Oak Dining Chairs 8 Oak Library Tables Terms: draft favor National Exchange Bank, with B/L attached. Mr. Newton has not yet given us sufficient information in reference to his credit standing to enable us to sell him on account. He instructs us to send these goods by freight C. O. D. Study a similar transaction that you have had. What kind of a bill of lading is required for all C.O.D. sales by freight? 15 Brass Bedsteads 6 B. E. Maple Dressers 15 Hair Mattresses Terms: on account. This invoice is received from the E. J. Ranney Co. The goods have been shipped direct to C. L. Larson, City, on his order to us. We instructed the E. J. Ranney Co. to pay the freight on this shipment and to charge it to our account. Enter the amount of the merchandise bought in the purchase book in the usual way. Enter the amount of the freight in the journal. What account should be debited just the same as if we had paid the freight on the arrival of the goods? To whom do we owe the amount of the freight? Credit their account. Make out an invoice for the goods bought of the E. J. Ranney Co., and send it to C. L. Larson, City. Terms: account 30 days. Pay this freight bill on goods bought of Chas. Strang & Co., and charge it to their account. September 12. This bill for advertising is a cash bill and should be paid at once. The discount is already deducted. Do not enter the discount in the cash book. G. L. Bennett, Lansing, Mich., orders: 3 Kitchen Cabinets 12 Mahogany Chiffoniers 6 Oak Chamber Sets Terms: note at 30 days with interest at 6%, for $425; balance on account. This note accompanies the order. D. G. Paxton, City, reports 1 Kitchen Cabinet in an unsalable condition. As this cabinet was reported in good condition when it left the hands of our delivery-man, we have refused to allow him full credit for it. We have compromised and allowed him half the value. Make out a credit memorandum for one-half the selling price of 1 Kitchen Cabinet. Pay Chas. Strang & Co. the balance due them on the invoice of the 7th. This invoice is received from the Atlas Parlor Furniture Co. The goods were shipped by our order, direct to J. G. Hull, City. Make the entries as in a previous transaction of the same kind. Make out an invoice to J. G. Hull, City, for these goods. Bill them on account. September 15. This check is received from D. L. Ellery for his note due today. Cancel the note and return to the maker. This bill is for printing circulars to be sent to the trade. Pay by check. Receive this check from C. P. Baker & Co., for the invoice of the 10th, less discount. Third Report. Prove cash, make a report, and hand in your Outgoing Papers. Post from all the books. Do not close any of the books of entry nor post any totals. Open the two new customers' accounts on page 12, the new creditor's account on page 18, and the other new account on page 24. CHAPTER XXIII SHIPMENTS AND CONSIGNMENTS In certain lines of business goods are frequently shipped by one firm to another to be sold on commission. The person that makes a business of selling on commission is usually called a commission merchant or factor. Produce, grain, fruit, poultry, and meats are frequently shipped in this way; pianos, automobiles and sewing machines are quite often shipped in this way, while many other articles are occasionally shipped to be sold on commission. The person who makes the shipment is called the consignor or principal. the person to whom the goods are consigned, the consignee or agent. The legal effect of a shipment is to retain the title and control of the goods while in the hands of the consignee or agent. The agent must use reasonable skill and diligence in handling the goods, and must account to the principal for the goods at certain times. There are several reasons for making shipments of goods to be sold on commission instead of selling the goods. 1. The consignor may not be willing to trust the consignee on account. He may be willing to trust the consignee to properly handle the goods and account for the proceeds. 2. The consignee may not be willing to buy the goods because they are a new brand or because a demand must be created for them. He may be willing to assume the responsibility of properly handling them and selling them on commission. 3. In the case of fruits, grains, produce, poultry, etc., the shipper may not know the market price in the consignee's city. For that reason, he cannot invoice them on account, but makes an invoice of shipment to be sold on commission. Invoice of Shipment. When the consignor makes a shipment to be sold for his account and risk, he makes out an invoice of shipment instead of the ordinary invoice. On this invoice of shipment the goods are usually listed at their cost price or with no prices given. Sometimes, however, the consignor wishes to keep the cost price from the consignee. In that case he may list them at the selling price or at a fictitious price. The first plan, that of listing them at the cost price, is the one most commonly used. INVOICE OF SHIPMENT Invoice of merchandise shipped to HESS FURNITURE CO., CHICAGO, ILL., August 3, 19— PEORIA, ILL. To be sold for the account and risk of BRADFORD PIANO CO., Shipment Account. This account, with the name of the consignee. added, is opened up to record the consignor's dealings with the consignee. It is not a sale, so the entry should not be made in the sales book. Part of the goods have been taken from purchases and shipped to be sold on commission. The Purchases account must be credited for the shipment when it is made at cost. The journal entry should be made as follows: Shipt. Hess Furniture Co. Shipped to be sold on $4685 $4685 The Shipment account should be opened up in the last section of the ledger and not in the section with the personal accounts. The Shipment account should be debited for everything paid out by the consignor for the shipment, such as, freight, drayage, insurance, etc. It is also debited for any cash advanced to the consignee on account of the shipment. The Shipment account should be credited for all returns from the shipment, such as, cash, goods returned, drafts honored, and when, instead of receiving cash, the consignee's account is debited for the net returns of the shipment. Account Sales. When the consignee has sold the goods, or at certain regular intervals, if agreed upon, he renders a statement of his dealings for the consignor. This is called an account sales. It is a formal statement in detail of the sales made, the charges for freight, drayage, commission, |