CHAPTER XXXI

BOOKS AND ACCOUNTS OF A COMMISSION BUSINESS

In Chapter XXIII of Part II the method of handling a few shipments to be sold on commission and the necessary entries in the books of both the consignor and consignee were explained. In a large business devoted entirely to sales on commission or where the sales are largely of this character, the opening of a separate shipment and consignment account for each shipment would involve too much work. The accounts must be so kept that account sales may be easily and quickly rendered and the books proved. This is especially true in the sale of fruits, vegetables, and other produce that is more or less perishable.

The principles given in Chapter XXIII apply to a large commission. business as well as to a few accounts but a larger business necessitates special books of entry and record, special columns in others, and special accounts.

Books of Entry and Record. The books kept in a commission business depend to a large extent on the size of the business and the kinds of goods handled. In a commission business for the sale of produce of different kinds both on commission and for the business, the following books of entry may be used: a receiving book, a combined commission sales book and a merchandise sales book, a special column cash book, a special column journal, and an account sales register. Three ledgers should be used unless the sales are mostly for cash, a general ledger, a sales ledger and a consignment ledger.

The Consignment Ledger. This is an auxiliary ledger in which, the accounts of consignments are kept. A controlling account is kept for it in the general ledger called Consignments.

Each consignment of goods is given some distinguishing mark such as a number or a letter and number by which it is known and opened up in the consignment ledger.

The Loose-Leaf Consignment Ledger is a decided advantage as consignments are soon closed up and the open consignments can by this method be kept separate from those that are closed. The form here illustrated is in the form of an account sales. It may be made in duplicate and one copy sent to the consignor when account sales are

CONSIGNMENT Ledger

CHICAGO COMMISSION COMPANY

CONST.

No..

To

58

Chicago, Ill., Nov, 10,19—

J.J. Maxwell,
Waterloo, Iowa,
Nov 4,19-

For Merchandise Received

Nov 1 Read, 50 bbl. S. Flour

rendered, or a copy may be made of the ledger account when account sales are rendered.

The account is opened up by transferring the items received from the receiving book to the consignment account. No prices are specified unless the consignor has fixed the minimum price at which the goods shall be sold.

The freight, drayage, advances and other cash charges are posted to the consignment ledger from the cash book. The sales are posted from the commission sales book. When the consignment of goods has been sold, commission and other charges are entered and the net proceeds found.

The Receiving Book. This book is a book kept in the stock room by a clerk. The records in it are usually make in pencil. At the close of the day, it is turned over to the bookkeeper. Frequently two receiving books are used on alternate days, so that the clerk can be making the entries in one while the bookkeeper is posting the previous day's entries. The bookkeeper daily transfers these records to the consignment ledger under the proper consignments. It is here that each consignment is given some distinguishing mark by which it is known in the books.

Commission Sales Book. The sales book used in a strictly commission business is usually called a commission sales book. Where some sales are made for the account of the business, they are usually entered in the same book. It contains columns for sales from consignments both for cash and on account. The cash sales are also entered in the cash book and checked in both books. Sales of merchandise for the account of the business are entered in a separate column.

Daily all sales on account whether from consignments or from merchandise, must be posted to the debit of the personal account in the sales ledger in the usual way. Each item sold from consignments must be posted to the credit of the proper consignment account in the consignment ledger as shown by the number of the consignment. Each item should be checked in the check (v) column after it has been posted.

Monthly the total of the Accounts Receivable column is posted to the debit of Accounts Receivable. Consignments is credited for the total of the Consignments on Account and of the Consignments Cash columns. Sales is credited for the total of the Merchandise column. Before posting totals the sum of the first column should equal the sum of the last three columns.

The Cash Book. The form of the cash book is similar to that of Set VII. The Cash Receipts are entered and posted both daily and monthly the same as the Cash Receipts in Set VII. On the Cash Payments, no column is kept for Accounts Payable because there are only a few payments on account and no purchase ledger is used. But a column is kept for Consignments Dr., in which is entered all payments for the account of consignments. All payments for freight, drayage, advances, net proceeds, etc., are entered in this column. Daily the items are posted to the proper consignment accounts in the consignment ledger as charges. Monthly the total is posted to the debit of Consignments in the general ledger. The closing of the cash book is similar to that of Set VII.

Journal. A four-column journal will be used. No purchase book will be kept since there are but few purchases of goods to be sold for the account of the business. Instead, a Purchases column will be kept, which will be posted in total only. The credit to the creditor from whom the goods were purchased is put in the general ledger as his account will be opened up there. No purchase ledger is necessary. The two credit columns are the same as those used in Set VII.