DEPARTMENT STORE BUSINESS.

To the Student. In your previous work you made all records from the business documents received and issued. In your subsequent work the use of vouchers will be discontinued, as it is believed that the advanced student will derive valuable mental discipline in making records from a statement or history of the transactions, instead of from the documents that vouch for and represent business transactions. In making records from a statement or history of the transactions the student should permit his imagination to supply the correct form of document for each transaction, if he desires to do the work effectively and intelligently. The ability to add accurately and with facility will be found to be essential to performing the following work successfully.

Plan of The Work. It is supposed that you will continue as manager of the Creager Commission Company J. A. Luman, one of the proprietors of the City Department Store, requests you to open the books for that business. This you agree to do after regular business hours.

City Department Store. The City Department Store is to be conducted by a partnership to commence on this date (July 1). The members of the partnership have previously been engaged in business for themselves in different parts of the city. They are as follows: J. A. Luman, dealer in shoes, 937 Spruce street; H. T. Williams, dealer in gloves, 1710 Broad street; Thos. H. Betts, dealer in hats, 1848 Twelfth street; C. R. Evans, dealer in dress goods, 112 Washington street; Abraham Levy, dealer in clothing, 265 South street. Each of the partners invests the resources and good will of his business and the liabilities of each are to be paid by the partnership. (See page 132.) As their investments are unequal in amount, each partner is to receive interest on his investment and is to be charged interest on all withdrawals for the time they are withdrawn.

NOTE. In business a partnership agreement stipulating the rights and privileges of the partners and the conditions under which the partnership was formed would be drawn up and five copies executed, so that each of the partners would have a copy. As you have had ample practice in drawing up partnership agreements, it will not be necessary for you to draw up one in this case. When partnership agreements are of a complicated nature it may be well to have them drawn up by a competent attorney, in order to guard against litigation in the future.

Advantages of a Department Store. The advantages to be derived from merging several separate businesses into a department store are many. The advantages of a combined and increased capital are unquestioned in every line of business. Among the advantages that particularly pertain to the department store business may be mentioned the saving in advertising, as a department store can be advertised for proportionately less money than it would require to advertise as many separate businesses as there are departments in the store. Department store advertisements, as a rule, are more effective than specialty store advertisements; this is so because they are more interesting to a greater number of people, on account of the number and variety of articles to be advertised. Customers or visitors in one department are very apt to inspect and familiarize themselves with the goods in other departments; hence, each department assists in advertising every other department.' Subdivision of Merchandise Account. In this business the merchandise will be divided into five departments, as follows: Shoes, Gloves, Hats, Dress Goods, Clothing. separate account will be kept with each department instead of including all the goods under the general title, Merchandise.

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As the store and counting room are both divided into departments the student will be obliged to exercise care, so that he will not confuse the departments of the store with those

of the counting room. He should remember that Shoe Department, Glove Department, Hat Department, Dress Goods Department, and Clothing Department are the departments of the store; the other departments mentioned in the following pages refer to the counting room work.

Object of This Business. The object of this business is to familiarize the student. with the ordinary routine, forms, books and methods of keeping them, that are similar to those used in the best modern department stores. To accomplish this successfully the student will be called upon to do the work in each of the departments into which the counting room work is divided. One of the important things for the student to learn is the relation which one department, book or form sustains to the other departments, books or forms, as described in the following paragraphs.

Division of Labor. In the larger department stores the counting room work is divided into departments. While the number of departments varies in different counting rooms, yet the relation they sustain to each other will be fully exemplified and explained in this business where the work is divided into five departments, viz.: General Bookkeeping Department, Cash Department, Credit Man's Department, Time Sales Department and Purchases Department. Other departments, such as Rebate Department, Goods Returned Department, Collection and Dunning Department, etc., may be created whenever occasion demands. When the work that comes under these heads is not sufficient to justify the creation of a department it is attended to by the General Bookkeeping Department. The Credit Man's Department and the Collection and Dunning Departments are not, strictly speaking, counting room departments, but are here treated as such owing to their intimate relation to counting room work. Since the work of these departments pertains largely to the financial management of the business they are usually in charge of members of the firm. General Bookkeeping Department. The General Bookkeeping Department is in charge of the general bookkeeper, or head bookkeeper, as he is sometimes called. He often has one or more assistants, the number depending upon the volume of work to be done. In this department the private accounts of the firm are kept, such as investment, property, and allowance accounts. In addition accounts with all the other counting room departments and also with the merchandise departments are kept so that synoptical or summary information of any part of the business may be obtained by consulting the books in the General Bookkeeping Department. To obtain detailed information of any department of counting room work it will be necessary to consult the books in that department. The books or accounts containing the detailed information should agree with the corresponding summary or synoptical accounts in the books of the General Bookkeeping Department. In the counting rooms of some department stores the agreement of the books is verified daily, in others weekly, and in others monthly.

Cash Department. This department is in charge of the cashier. When the volume of cash business is large several assistants are required. The duties of the cashier are briefly explained on pages 91 and 94. The cashier makes an abstract report to the General Bookkeeping Department daily; also, detailed reports to all other departments for whose account cash has been received or paid out. These detailed reports are verified and compared with the abstract report, in the General Bookkeeping Department, before they are handed to the other departments. The forms used to keep the accounts of the Cash Department, and the relation which this department sustains to other departments are explained and illustrated on pages 126, 127, 128 and 129.

Credit Man's Department. The credit man has charge of this department. Assistants are often employed to attend to the minor details and do the clerical work of the department. The duties of the credit man are fully explained on page 99. The relation which the Credit Department sustains to other departments of the counting room is explained on page 123.

Time Sales Department. The work in this department is divided alphabetically among as many bookkeepers as are necessary. In this business four Time Sales bookkeepers will be employed; the first will keep the accounts from A to G, the second from H to M, the third from Mc to R, and the fourth from S to Z. Frequently there are as many, or more, bookkeepers as there are letters in the alphabet; a large department store in one of our large cities has its Time Sales books divided alphabetically into one hundred and five divisions, each division being in charge of a separate bookkeeper. Some idea of the magnitude of a great department store may be formed when it is stated that in the above mentioned store only about one-seventh of all the sales are time sales. The documents from which the Time Sales bookkeepers make their records are all received from the General Bookkeeping Department, where they have been verified and compared with the abstract reports furnished by the other departments. The method of keeping the Time Sales accounts and the forms used are explained and illustrated on pages 122, 123, 124 and 126.

Purchases Department. The duty of the bookkeepers in this department is to verify the correctness of the invoices, keep a systematic account of them and see to it that they are promptly paid when due, or that they are discounted before the discount time expires. No invoices should be entered which have not been checked up by the receiving clerk and the prices on which have not been approved by the buyer. The head buyer usually has the supervision of the work in this department. The work in this department, like that in all other departments, is compared and verified by the General Bookkeeping Department. For illustration and explanation of forms and books used in this department see pages 120, 121 and 122.

Books and Forms Used. The books and forms used to illustrate a method of keeping the accounts in a department store are as follows: Abstract Purchase Book, Department Charges form, Abstract Purchase Ledger, Time Index, Clerks' Summary Sheets, Abstracts of Time Sales, Summary of Daily Sales, Sales Ledgers, General Ledger, Cashier's Abstract Statements, Cashier's Detailed Statements, Abstracts of Cash Sales, Abstract Cash Account, Pay Roll. Other books and forms than the above named are often used.

In no other line of business has there been so great an innovation made by the loose-leaf method of keeping accounts as in department stores. The reason is apparent. Were bound books used, duplicate sets for alternate days would be necessary, and these would be continually going the rounds of the counting room and the various departments of the store. When a book is in use by one clerk or bookkeeper the others who desire to use it are obliged to wait until he is through with it. Another objection is that the records are not continuous, owing to the fact that two sets are used; besides dishonesty is fostered, as false entries are not so easily detected in a fragmentary system of accounting, scattered about in two sets of books, as when the records are in consecutive order.

With the loose-leaf method all the vouchers and records are kept in consecutive order. The vouchers representing the transactions for each day pass from department to department until they reach their destination, when they are filed away in consecutive order. When this method is used it is a comparatively easy matter to refer to any voucher or record

thereof. In short, when documents have to pass through several departments it is a decided advantage to use the loose-leaf method.

Abstract Purchase Book. In this book an entry is made for each invoice that is purchased. (See illustration below.) When a bill is ready to be entered a serial number is written upon it, or stamped upon it with an automatic numbering machine. This number is also written or printed in the column headed No. in the Abstract Purchase Book. The amount of each bill is entered in the total column, while the amount of goods belonging to each department is entered in the column bearing the proper heading. Whenever desired the entries in the department columns may be proven by ascertaining their total and comparing it with the footing of the total column, as shown in the illustration. All bills are filed in numerical order as soon as entered. When this method is used the entries are indexed and posted to ledger accounts.

If desired, the invoices could be pasted in an Invoice Book as previously instructed. When this is done the Invoice Book is so arranged that the invoices are pasted on the lefthand pages, while the department columns are ruled on the right-hand pages.

Department Charges Form. When the departments are quite numerous the above plans for entering invoices would not be practical, as but a few entries would appear in the department columns, consequently too much space would be wasted. In that event the department columns are omitted from the Abstract Purchase Book and a Department Charges form as illustrated on page 121 is used to receive all charges to departments. The columns headed Serial No. receive the serial number as it is written or stamped upon the invoice and entered in the Abstract Purchase Book, which will aid very materially in checking for errors or omissions, should the total of the department charges fail to agree with the footing of the money column in the Abstract Purchase Book. When this form is used an ordinary Journal, or a part of it, will serve the purpose of the Abstract Purchase Book. In the illustration on page 121 the numbers to the left of the footings are the folio numbers.

Abstract Purchase Ledger. In this business the entries will be made in an Abstract Purchase Ledger as illustrated below. The advantages of this method are: (1) excepting the footing of the Amount of Purchases column, there is no posting to be done, (2) the terms, due date and discount time limit are recorded in connection with the entry, (3) provision is made to enter the payments and discounts directly opposite each bill, (4) accounts are indexed by their serial numbers instead of by the pages on which they are entered. As it is impossible to keep a systematic account of discounts in this book, the detailed account of them is kept on the cashier's detailed statements, while the total of each detailed statement is placed on the Cashier's Abstract Statement, and from there carried to the Abstract Cash Account. The footing of Discounts column of the Cash Account is posted to the debit of Purchase Ledger account and to the credit of Merchandise Discounts account in the General Ledger. (See illustration of Cashier's Abstract Statement, page 127, and of Abstract Cash Account, page 129.)