The primary object of the monthly statement is to give the Exchange Council and the Commanding Officer a clear and concise understanding of the operations and financial standing of the Exchange. The statement, therefore, should be so simple in construction that it can be understood at a glance by anybody, regardless of their knowledge of book-keeping. Most statements submitted to Exchange Councils either show nothing or lead to a waste of time, due to the necessity for asking for explanations of obscure items. The statement should also contain such information as will be required by the Inspector. The form of statement here shown fulfils all of the above requirements and is a form approved by certified public accountants. It is divided into three parts, which will be discussed in their relative order.

General Balance Sheet.

This, Form 32, is shown in Fig. 31 and is almost self explanatory. Attention is invited to the scheme of segregating different classes of assets and of liabilities. A stock form of this nature would do for all Exchanges, regardless of their size, as there are sufficient blank lines to suit all requirements, but perhaps better satisfaction would be obtained if the form here shown be merely taken as a model and only those items be used as apply to the particular case in hand. Pains have been taken, in this form, to insert a sufficient number of entries to show clearly how any ordinary item should be handled.

Of course, the item, “Exchange building”, should be omitted if the building belongs to the Government and not to the Exchange. The item, “Cash Reserve”, covers the amount required by regulations to be set aside before dividends can be declared. Under the liabilities, there will ordinarily be no entries under “Funded Debt”; this entry merely shows how such items should be handled in case any should exist. “Commissions due” is the amount we owe for goods already sold on consignment; the same item under the assets refers to the amount due us for goods sold on consignment or commission. A declared dividend is a liability until it is paid. Outstanding coupons are also a liability. Under the deferred liabilities come any amounts that are payable at some future date, but are meanwhile bona fide debts owed by the Exchange. The term “Total Surplus” refers to the surplus at the end of the month in question, and, while not really a liability, it is put in this place in order to properly balance the account.

Surplus and Adjustments.

Under this head, we show the changes in the net worth of the Exchange which have occurred during the month, this being, to all intents and purposes, a repetition of the Post Exchange Account in our general Ledger.

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.