Part 8

Under “Re-valuation”, take up any increase in the value of buildings or fixtures that may have occurred other than through the cash book (upon appraisal, for instance). Under “Adjustment”, take up any increase of amount owed us on any account, that is, if any account has been corrected during the month and the amount due us on this account has been increased, the amount of such increase should be taken up under the head in question. The net profits for the month are obtained from the Statement of Income and Profit and Loss, to be described later. All of the above items serve to increase our surplus or net worth, and hence, must be added to the net worth shown at the beginning of the month.

Under the deductions would come all amounts written off for depreciation; dividends actually paid; appropriations paid or put to the credit of any particular fund, such as the Athletic Fund; and all decreases in accounts owed us, caused by the adjustment of same.

After the above notations are made, the surplus at the end of the month is entered in the proper space in the general balance sheet. This surplus is the net worth of the Post Exchange, and should, of course, be equal to the balance of the Post Exchange account in the Ledger.

Statement of Income and Profit and Loss.

This, Form 16, gives us a very clear and concise statement of the operations of all of our departments during the month. It is printed on the back of Form 32. It is filled in as follows:—

_a_ Enter on the first line, the total sales for cash as shown by the footings of the respective debit columns in the cash book.

_b_ On the second line, enter the total coupon sales of the various departments shown by the footings of the respective columns of Form 26 (Fig. 17).

_c_ On the third line, enter the total charge sales made by each department as shown by the footings of the respective columns of Form 7 (Fig. 6).

_d_ Add the above, both horizontally and vertically and see if the grand totals check.

_e_ Enter on the fourth line all credits given during the month.

_f_ Subtract _e_ from _d_; the remainder shows the net sales made by each department during the month and should be entered in the proper spaces.

_g_ Under “Inventory ... 1st”, is entered the cost price of all merchandise on hand in the various departments at the beginning of the month, which amounts are obtained from the Inventory Book or Inventory cards as before described.

_h_ Under “Purchases” are entered the cost values of all merchandise sent to the various departments, that is, the difference between the footings of the Dr. and Cr. columns referring to each department on Form 13 (Cost Price). No cash discount is considered.

_i_ Under “Labor”, charge each department with its proper share of the wages paid by the Exchange. If any employee divides his time between two or more departments, his wages should be distributed between said departments proportionately. Book-keeper’s wages should be charged to Office. To counterbalance this charge, some Exchanges credit all cash discounts to Office instead of taking them up under Other Income. This is entirely proper, as is also the procedure of crediting the Office with mail order profits, etc. In the usual case, there being no accrued wages, the figures for labor are taken from the Labor column in the cash book.

_j_ Under “Maintenance”, transfer from the cash book all amounts paid out for

(1) Articles bought to replace other similar articles worn out. (2) Paints, cleaning material or repairs and spare parts, etc. (3) Labor charges in connection with the foregoing. (4) In general, any expenditure for up-keep.

_k_ Under “Board”, should be entered all amounts paid out for board of employees.

_l_ Under “Expense”, enter the value of all expendable supplies issued to the various departments, such as paper bags, etc., or, as illustrated in the case of a Laundry, the cost of all soaps, starch, soda, etc.

_m_ Add items (_g_) to (_l_), inclusive, and enter the totals on the proper line. Also, add the items horizontally and check the grand totals obtained by these two operations.

_n_ Enter under “Deduct Inventory”, the cost price of all articles found on hand in the various departments at the end of the month.

_o_ Subtract (_n_) from (_m_) and enter the respective remainders in the spaces for “Cost of Goods Sold”. Check these remainders vertically and horizontally.

_p_ Subtract the Cost of Goods Sold from Net Sales and enter the remainders in the spaces for “Gross Profit”. Check results as before.

The lower part of this form is made out as follows:—

_a_ Under “Cash Discounts” (unless credited to Office as before explained), enter the total of the Discounts column in the cash book.

_b_ Cash in excess of daily checks is self explanatory.

_c_ Under “Goods Sold on Consignment”, should be entered all such sales actually made during the month.

_d_ Miscellaneous credits is self explanatory, being for such items as junk, receptacles sold, etc., as are not credited through the stock records.

_e_ Entrance fees cover all payments by organizations joining the Exchange.

_f_ Interest on Bank balances is self explanatory.

_g_ Lost Accounts collected refers to amounts that have previously been dropped from the books as lost, but have afterwards been collected.

_h_ Under “Income not otherwise accounted for”, is entered the amount that will make the books balance. As it is impracticable to give precise weights on bulk merchandise and as mistakes will sometimes occur, the books will never balance exactly and all discrepancies are thrown into this item. As an example, suppose we unintentionally give short weights on our sales of, say, crackers. At the end of the month, we will have more money on hand than our sales would call for, and such excess is taken up under this heading. If, as sometimes happens, there is a deficit (for example, caused by melting and wastage of ice) it should be taken up under the “General Expense” side of this form. It should be noted that this item cannot be filled in until the General Balance Sheet is made out.

_i_ “Freight and Express Out” refers to transportation charges on goods returned to our creditors or sold to our customers.

_j_ Under the item, “Insurance”, should be entered the total premiums paid out during the month, but not the pro-rata share that is charged off monthly.

_k_ Under “Paid on Consignment”, should be entered the net amounts paid to our creditors for the goods sold by us.

_l_ To the Total Gross Profit, add the total Other Income, from this amount, subtract the Total General Expense and the remainder is the net profit for the month; it should be carried to the Surplus and Adjustment part of the general balance sheet.

PAY ROLLS.

A thoroughly satisfactory form for pay rolls is shown by Form 2 in Fig. 33. The Recapitulation at the bottom of the form is for the purpose of distributing the cost of labor among the various departments when we make out our statement of income and profit and loss. If employees are not paid up to date, that is, if a part of their pay due is withheld, this form allows such information to be recorded. In some cases, it has been found practicable to pay off three times a month, especially in the case of civilian employees. In any case, all hands should be paid promptly at the last of the month, thus getting all of these wages out of the way and avoiding the necessity of any reversing entries or other expedients to show the real operations of the Exchange. If any wages due the employees are not paid by the end of the month, these amounts become “accrued wages” and must be carried as such.

FIGURING SELLING PRICES.

This is done by some employee designated by the Exchange Officer; sometimes it is done by the Exchange Officer himself. It is sometimes prescribed by the Council that when organizations (shareholders in the Exchange) order articles not in stock, the selling price shall be actual cost to the Exchange of such articles. This cost would, of course, include any transportation charges, etc., that were incurred, but the Exchange would get the benefit of all cash discounts. It is also prescribed in some instances that persons not stockholders in the Exchange who order merchandise that is not in stock shall be charged a commission of 5%. Both of these rules are sound, because, in the first case, any profits made by the Exchange would simply revert in dividends to the organizations from which the profits were made, assuming that all organizations transacted the same amount of this kind of business. If they did not, it would still be unjust to penalize one company for patronizing the Exchange by taking from it money for distribution in dividends to other companies, regardless of the amount of patronage the latter gave the Exchange. The second rule is sound because the transaction is a quick sale, and the money of the Exchange is tied up in stock for the minimum length of time. The selling price in the above cases is, therefore, very easily determined.

In figuring out the selling price for the ordinary run of goods, the process, while different, is never very difficult. We must base our calculations on the smallest value used in coupon sales, except in the case of staples sold only to charge customers. Ordinarily, the smallest purchase that can be made with coupon books is five cents. We should, therefore, in every possible case, make our selling price a number divisible by 5. Cheap articles may be sold “2 for 5”, etc. It is a bad policy to sell articles for 4 or 9 cents and have the clerk hand back change when a coupon sale is made.

Articles that can be quickly and easily sold can be handled at a small margin of profit, but articles that may prove to be “stickers” or those representing a considerable investment should be made to pay a larger profit.

In this connection, the general policy of the Exchange may be made to take one of two trends. The first policy is to sell all articles at the minimum price consistent with making the Exchange self-supporting. In this case, the amounts paid to the organizations in dividends will be proportionately small, and consequently, the various companies will receive little money to spend on their messes, athletics, etc. This plan would be of considerable benefit to such customers of the Exchange as are not stockholders.

The other policy is to charge about the same prices as obtain in the stores of nearby towns. In some cases of isolated posts, the prices could be put even higher. This plan would result in larger dividends paid to the companies but might entail the loss of customers, especially in these days of mail-order and catalogue houses. This latter policy is upheld by many able authorities, especially since the passage of the “anti-canteen” law. According to one of the most able officers the writer has ever known, this policy was stated about as follows:—“We should charge as high a price as the traffic will stand. I do not want my men to spend their money in town, for obvious reasons. I want them to spend it where they themselves will get the benefit of the profits made on their purchases. Therefore, give them good value for their money—as good as they can get anywhere—but do _not_ try for low prices and _do_ make the Exchange so attractive that they will naturally gather there and patronize it.”

In view of the above facts, and knowing the general policy of the Exchange it is not difficult in the ordinary case, to fix a selling price for our goods. We simply add the cost of transportation to the cost price of the goods, add the desired profit and this gives us our approximate selling price. In some Exchanges, other items of overhead charges, such as clerk hire, depreciation, etc., are taken into consideration in fixing the selling price. There should be ample space in the right hand columns of Form 28, the receiving record, in which to figure the selling prices.

One of the results to be tried for in every Exchange is QUICK SALES. It is a serious mistake to keep money tied up in stock any longer than is absolutely necessary. A vivid illustration of this point is obtained by taking the case of, say, an Italian banana vendor on the street. Let us assume that he buys a bunch of bananas in the morning for $1.00. We may rest assured that he will have sold out by evening; it is a certainty; he is too good a merchant to do otherwise. Even supposing that he had a bad day, and was compelled to close out part of his stock in the evening at cut prices, he will have realized anywhere from $1.50 to $2.00 on his sales, thus giving him from 25% to 50% gross profit. At this rate, he will turn over his capital at least 25 times during one month, thus transacting a total amount of business 25 times greater than his actual net resources, and securing a profit equivalent to that of the greater amount. This is the ideal toward which the Exchange should strive.

In this connection, do not state your profits as a percentage of the COST price of your goods, but of the SELLING price. In other words, if an article costs the Exchange $10.00, do not add one dollar to this for the selling price and then imagine your profits will be 10% of your sales. If you desire 10% profit, then the cost must constitute 90% and you must sell the article for $11.11 in order to make 10% on the sale. Take a pencil and figure it yourself. A very good talk on this subject (and many others of interest) is given in “A Better Day’s Profits”, published by the Burroughs Adding Machine Company.

Another most excellent book containing many hints which would prove of value to any Exchange Officer is one entitled, “Where Have My Profits Gone?”, published by the American Sales Book Company of Elmira, New York.

LAUNDRIES.

Many Exchanges run laundries and while no attempt will be made here to show how a laundry should be handled, it is thought proper to explain how the books should be kept. The handling of actual laundry work can be learned only by experience and it is an exceedingly difficult task to prevent a flood of complaints unless careful supervision and checking is in force.

As far as the Post Exchange Books are concerned, the Laundry need furnish but three items:—

(1) The amount owed by each customer for laundry work done during the month.

(2) The total value of expendable articles on hand at the end of each month. (Inventory.)

(3) The data for paying the wages of employees.

Any other records that may be kept are for the information of the Laundry management, and are not essential to the proper running of the Exchange. The above three headings will be discussed in turn.

Bills Receivable for Laundry Work.

The methods used in the case of enlisted men differ from those used in the case of Officers and others of like classification; the former is rate work and the latter is piece work. The former will be explained first.

The system about to be explained hinges about the Laundry List, Form 20, shown in Fig. 34. These are 5 × 8 inches in size, made up in pads of 100, fifty originals printed in black ink on white paper and fifty duplicates printed in red on white paper. Thus, each book or pad will last one man about one year. Each original and duplicate are on the same piece of paper, folded at the bottom and the lower (duplicate) forms are bound by their top edges, a piece of carbon paper being bound into each pad so as to fall between the two copies. A glance at a “Paragon” style of duplicating sales book will show clearly how this simple arrangement works. The backs of all sheets should be fairly well covered with advertising or other matter in order to prevent persons from ekeing out their supply of stationery by using these forms. If desired, the instruction shown on the face of the blank in the illustration could be placed on the back instead. In quantities of 1,000 or so, these books should cost in the neighborhood of 7 cents apiece.

With this arrangement, each man makes out two copies of his laundry list with as little trouble as he formerly made out his single copy. The amount of clerical labor which this simple expedient obviates is simply enormous. It makes the system practically automatic and saves labor costs in the Laundry. The man puts both copies of his list in his bag of laundry, and the laundry wagon calls at the company at the proper time and collects same. The bag of wash is given to the “Marker”, who checks off on the duplicate slip, all wash found in the bag. If everything is right, the marker places the duplicate slip in a sorting tray, and lays the original aside to be filed. If the list contains a mistake, the whole bundle is immediately placed aside and is not touched until the owner has been sent for, his mistake explained to him, and he has personally corrected both copies of the list. This not only prevents controversies, but, also, makes the men careful in making out their lists in order to avoid the necessity of visiting the laundry to correct their lists.

In case any article is damaged when received at the laundry, it is examined to see if it is properly marked, and then placed aside for the inspection of the Officer in charge. This point will be touched upon later.

The duplicate lists remain in the sorting tray behind numbered guides until the time comes to sort out the finished wash of the organization to which the slips belong. When “marking in”, the marker either uses the space “MARKING O. K.” provided for the purpose, or, as is usually the case, we depend upon the personal check mark she places opposite each item on the list. This marking is done on the duplicate list only.

When the finished wash is sorted, preparatory to delivery, the sorter makes another check mark (different from the first one) opposite each item that is put in the batch. No batch is allowed to go out with a shortage if it can possibly be avoided; if any article is held for re-washing, it is rushed through “special” and the whole bundle belonging to that particular man is held back to wait for it. This prevents the laundry from acquiring garments belonging to customers. If this is not done, a receipt for the shortage should be delivered to the customer with his wash, and a duplicate kept as a sort of tickler, to insure the missing articles being put in the next batch of washing received from and done up for that customer.

The original slips are inserted in alphabetical order in loose-leaf binders, one binder for each organization. These binders should have a 2 inch back in order to hold one month’s slips conveniently. They form our retained record and are invaluable in case of disputes. The duplicates are given to the men when they come for their wash. While it is a great convenience to the men to be permitted to get the wash of their friends, at times, it has been found that this privilege is abused. In such a case, each man may be compelled to come for his own wash, which will be found to have a salutary effect. Ordinarily, it is sufficient to tear off the top of the duplicate slips at the time of delivery, thus showing that the wash has been called for and delivered.

At the beginning of each month, each organization makes out a list of the men in the company, a carbon copy of Form 25 is the easiest to furnish. On the first day upon which any organization sends wash to the laundry, some designated N.C.O. of that organization marks in the first blank column opposite each man’s name, information as to whether or not he sent laundry on that date. Such entries would be “YES” (by using a rubber stamp) if the man sent laundry; “S”, if he did not, through being sick in hospital; “A”, meaning temporarily absent; “D”, meaning discharged, etc. When the batches of wash belonging to this organization are received at the laundry and each bundle or batch has been checked as before described, the entries on the consolidated list are checked against the original laundry slips as the latter are being placed in the binders. This is to insure the correctness of the consolidated list. After this is done, the consolidated list is returned to the organization, and the above operations are repeated upon every succeeding wash-day during the month.

At the end of the month, all extras, such as charges for pressing uniforms, excessive number of pieces in wash, etc., are charged up on the original lists, the totals for the month found by mental addition and said total entered on the last original list for the month pertaining to each man, also, if desired, but only for cogent reasons, on the consolidated list. These totals are then sent to the Post Exchange for incorporation in the pay table collection sheet. If the binders are taken to the Exchange, the totals can be read from them without the necessity of entering these totals on the consolidated list at all. At this time, all of the original lists are lifted from their binders, temporarily bound with twine, and sent to the Exchange for file until the bills are paid, when they may be destroyed.

Piece Work.

In this case, a different list is used. See Form 21, shown in Fig. 35. These lists are made up into duplicating pads just the same as the soldiers’ laundry lists, and are handled in exactly the same manner, except that no consolidated list is kept. They measure 5 × 8 inches, like the others. At the end of the month, the amount of laundry bills on each retained original list is carried forward and the total entered on the last slip. These totals are then transferred to the Charge Accounts Book previously described. (Tearing a half inch off the upper right hand corner of all but the last slip for the month for each customer makes the binder self-indexing.)

The above shows how all amounts due the laundry are transferred to the Exchange books, but there are one or two points in this connection that deserve at least a passing notice. The first of these is the

Damage Report.

This, Form 24, shown in Fig. 36, should be made up in the form of a duplicating pad, 3 × 5 inches being a standard size. One copy of this form, preferably, the original, is retained in the book or filed in a card index drawer; the duplicate is returned to the proper customer with his wash in which the damaged articles were found. As before noted, when damaged clothing is found in any wash during the “marking in” process, the damaged articles are placed aside. They are then entered on this form, inspected by the officer in charge, or person designated by him, and then sent through the wash.

Claim Settlements.

When a claim for damages, loss, etc., is settled in favor of the claimant a report should be made on Form 22 (See Fig. 37), to the Post Exchange. This form should be made up in triplicating pads, one copy for the Exchange book-keeper; another, plainly stamped “duplicate”, for the claimant, and a third to be retained by the Laundry, either in the book or in a card index drawer, preferably the latter.

Inventories.

These are taken in the same general way as in other branches of the Exchange except that the cost price alone is considered. When finished, the totals shown by the various cards are added on the machine and the result given to the Exchange book-keeper in order to permit him to make out the profit and loss sheet. The cards are filed in a card index drawer until they are used up, when they may be transferred to a dead file.

Pay Rolls.