Music Trade Review

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14
THE MUSIC TRADE REVIEW, MAY, 1941
is proposed that the other entry be made to record the sale in the
purchase and sales record, which has been described herewith.
The amounts of such cash sales should be indicated as charge to
"cash sales" in the Accounts Receivable column and credited to sales
of new or used merchandise, as the case may be. Recognizing that
sales must have a cost of sale assigned to all such transactions, it is
suggested that if your experience indicates that small merchandise car-
ries a gross profit of SQ'A, then the proper costing of the cash sales
would be to debit an amount equal to 50'A of the sale to cost of goods
sold and credit such amount to inventory. These latter entries are neces-
sarily made a part of the purchase and sales record.
General Ledger
Accounts Receivable
Accounts Payable
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A division of the journal entries in this manner provides the remain-
ing figures necessary for control of the accounts receivable and accounts
payable, irrespective of the controlling account in the general ledger, i.e.
a summarization of the entries to the accounts receivable and payable
from the cash receipts and disbursements record, the purchase and sales
record and the general journal would supply the figures to which the
subsidiary ledgers of accounts receivable and payable should balance.
All entries for accounts other than accounts receivable and accounts
payable would be shown as debits or credits in the General Ledger
column. The individual items of each journal entry, except those affect-
ing accounts receivable and accounts payable, would be posted to the
proper account in the General Ledger. Accounts Receivable or Accounts
Payable entries, however, would be posted to the respective ledgers.
The columns of these two accounts would be totaled at the end of the
month, and the total debits and credits posted to the controlling accounts
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STOCK CARDS
In order to support the inventory account as indicated by the General
Ledger, it is proposed that stock cards be maintained, indicating the
description, serial number of the merchandise, the cost or inventory value,
and such other pertinent information as might be advisable in your
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particular case. A stock card is to be made for each purchase or
acquisition of inventory at a value, and when such merchandise -is sold,
the card should be properly marked and removed from the stock card
file. Periodically the inventory value shown on the stock cards should
be added so that the proof of the record of the inventory could bo
determined by comparison of the aggregate of these stock cards with
the amount carried as the balance in the General Ledger, identified as
inventory.
SALES TAX INFORMATION
At the extreme right of the purchase and sales record, columns for
sales tax memorandum are provided. This sales tax memorandum is
solely for the purpose of indicating the non-taxable sales which were
recorded during the period as sales. The presumption is that all sales
would be taxable if the State in which the dealer is located has a sales
tax law, or if the municipality in which the dealer is located has a sales
tax ordinance. Therefore, if the total sales shown on the purchase and
sales record is presumed to be the taxable basis, this record -would
provide the basic information for such sales tax. However, inasmuch
as various sales tax laws provide exemption from payment of tax on
certain sales, being by reason of the sale having been made and
delivery made in interstate commerce, or that the sale was to a religious,
educational or charitable institution, or such other exempt organization
as would be covered by the local sales tax act. then the insertion of
the reason for non-taxability and the amount of the non-taxable sal©
shown at the extreme right of the purchase and sales record would be
very helpful in the preparation of sales tax returns required by law.
It is recommended that a six column standard journal be used, which
would provide for three classifications of accounts, viz:
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of receivables and payables carried in the General Ledger.
The foregoing presents the basic rudiments of an accounting system.
An accounting system is merely a means of establishing information
which can be elborated upon in the development of reports and statistics
that would prove most helpful for the successful guidance of business
policies or the information so obtained can be used in such a limited
way as to cause management to place its talents under a bushel and
trust to luck that success will be attained.
In order to expedite the development of information which would be
helpful to management and cause the results of operations to be more
definitely shown, consideration must be given to the proper amortization
of prepayments and accruals and to the analysis of expenses and costs
of operation which are next in logical order.
(To Be Continued in June)
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