The Automobile Storage Battery Part 43

Seventh Oolumn--"Cost of Goods Sold, Less Cost of Goods Returned."

The total of the sales extended at cost prices for each day, minus the amount showing in the fourth column, should be entered in this column.

It should be totaled every week and every month.

Eighth Column--"Gross Profits."

To arrive at the figures to be entered in this column deduct the amount in the seventh column from the amount in the sixth column.

Total this column every week and every month.

Ninth Column--"Per Cent to Sales."

This percentage should be figured every day, and every week and every month, and is arrived at by dividing the figures in the eighth column by the figures in the sixth column. It will pay you to watch this column closely. You will be astonished at the way it varies from day to day, week to week, and month to month. If you watch it closely enough, you will soon learn a great deal more about your business than you ever knew before. You do not need to total this column.

Tenth Column--"Accounts Receivable."

On the day the Daily Exhibit is first started, the figures for this column must be taken from whatever records you have kept in the past.

Do not total this column.

Eleventh Column--"Collections."

Every day you collect any money from those customers who run charge accounts with you, enter the amount collected in this column. Total it every week and every month.

Twelfth Column--"Cash Sales."

Every day enter the amount of cash sales in this column, and total it every week and every month.

Thirteenth Column--"Charge Sales."

The amount of daily sales made to those customers who do not pay cash but run a charge account should be entered in this column. Every week and every month this column should be totaled.

General Calculations.

To arrive at the amount of "Merchandise on Hand" after the first day, which is, as has been previously explained, an actual physical inventory, add the amounts showing in the first and second columns, and deduct from this total the sum of the fifth and seventh columns.

Enter this result in the first column for the next succeeding day.

Continue as above throughout the entire month.

After the first day the figures in "Accounts Receivable" column are obtained by adding together the amounts showing in the tenth and thirteenth column and deducting from this total the amount in the eleventh column. This balance will be entered in the tenth column for the next day, the same procedure being followed for each day thereafter.

"Merchandise on Hand" after the close of business on the last day of the month should be entered in the first column on the line marked "Month Total." This same amount will be carried forward to the first column of next month's sheet and entered on the line of the particular day of the week on which the first of the month falls.

Following the "Month Total" are the "Year to Date" and "Last Year to Date." These figures are important for purposes of comparison. Arrive at total for "Year to Date" by adding the total for the present month to the total for "Year to Date" found on the previous month's sheet.

The figures for "Last Year to Date" are taken directly from the sheet kept for the same month last year. It is, of course, evident that this cannot be done until one year's records have been completed.

Expenses and Profits.

Under the heading "Summary" at the bottom of the sheet, provision has been made for finding out how much net profit YOU have made for the month.

On the line marked "Gross Profits" enter the "Month Total" figures in the eighth column. Below this enter all the various items of expense as follows:

(1) Advertising: By advertising is meant such copy, signs, etc., which may be prepared and used for the purpose of keeping the public informed as to your ability to serve them--in other words, any s.p.a.ce which is used for general publicity purposes, such as for instance, your card in the cla.s.sified telephone directory, or blotters, folders, dodgers which you may have printed up and distributed.

Do not load this account with church programs, contributions to the ball team, tickets to the fireman's ball and the like. These are donations, and not advertising.

(2) Electricity: All bills for electrical current will be charged to this account.

(3) Freight: Charges for all freight and express will be made to this account.

(4) Insurance: The total yearly insurance should be divined by twelve, to obtain the amount to be charged to this account monthly.

(5) Proprietor's salary: Many battery service station proprietors do not charge their own living as an expense. That's a serious mistake, of course. If those same men should hire a manager to run their service station, the manager's salary would naturally be charged to expense. The amount of money withdrawn from the business by the proprietor should therefore be charged to expense.

(6) Rent: The amount of money you pay monthly for rent should be charged to this account. If, on the other hand, you own your own building, charge the business with rent, the same as if you were paying it to someone else. Every business should stand rent; besides, the building itself should show itself a profitable investment. Charge yourself just as much as you would anyone else; don't favor your business by undercharging, nor handicap it by overcharging.

(7) Supplies: The cost of all supplies, small tools and miscellaneous articles which are bought for use in the business and not for sale should be charged to this account.

(8) Taxes: The yearly amount of taxes paid should be divided by twelve, in order to arrive at the monthly proportion to be charged to this account.

(9) Wages: The amount of wages paid to employees should be charged to this account. Care should be taken to determine the actual amount for the month, if wages are paid on a daily or weekly wage rate.

(10) Miscellaneous: Any expenses of the business not listed above will be charged to this account. This may include such items as donations, loss on bad accounts, and such like items of expense. You may itemize these into as many headings as you desire, but for the purposes of the Daily Exhibit combine all of them under "Miscellaneous Expense."

All these expense items are then added together, and this total is entered on the line marked "Total Expenses."

Deduct "Total Expenses" from "Gross Profit" to arrive at "Net Profit."

To arrive at the totals for "This Year to Date," carry the figures forward from the previous month's sheet and add figures for present month.

The figures for "Last Year to Date" will be found on the sheet for the corresponding month of last year, and are copied in this column.

All percentages should be figured on sales. The figures shown on each line in the "Amount" columns under the headings "This Month," "This Year to Date" and "Last Year to Date" should be divided by the "Month Total" of the sixth column, shown above, i. e., "Goods Sold, Less Goods Returned."

When you take inventory, the amount of stock should equal "Merchandise on Hand," as shown by the Daily Exhibit. But there will generally be a discrepancy, varying with the size of your stock, and that discrepancy will represent the amount of goods gone out of your station without being paid for; sold for cash and not accounted for; sold on credit and not charged, and the like. It's worth something to know exactly what this amounts to. The place for this information is under "Inventory Variations" on the sheet.

The s.p.a.ce headed "Accounts Payable" is provided for recording, on the last day of every month, just what you owe for accounts and for notes, and also the same information for the corresponding date of last year.

Invaluable Monthly Comparative Information.

You see now that by the use of the Daily Exhibit you have a running history of your business by days, weeks and months. But this is hardly sufficient for a clear view of your business, since you will want some record which will tell you what the year's business has been, and how it varied from month to month.

[Fig. 188. Statistical and Comparative Record]

This is provided for in the Statistical and Comparative Record, ill.u.s.trated by Fig. 188, on which the amount of sales, cost of sales, gross profit, expenses and net profit are entered for each month of the year. All the figures for entry in this record are taken directly from the Daily Exhibit at the end of the month, which makes the work of compiling it a very easy task.

The advantages of a record of this kind can hardly be overstated. The figures in the upper part of this statement will show which months have been profit payers and which have not, while from the figures in the lower part of the report you are able to determine the percentage any group of expenses bears to sales, and are thus in position to subsequently control such items.

Do not let the fear of doing a little bookkeeping work prevent you from keeping these records. They should go a long way toward solving the problems which the average proprietor faces today:

1. Selling his goods and services without a profit.

2. Failure to show sufficient net profit at the end of the year.

3. Constantly increasing cost of doing business.

You may think at first glance that it will require a great deal of extra work to keep these records, but in this you are mistaken. They are very simple and easy to operate. The American Bureau of Engineering, Inc., will advise you where to obtain these forms.