Recording Charge Sales Slips.

Figure 6. (Reduced in size)

For various self-evident reasons, we use Form 7, shown in Fig. 6, for showing a month’s charge sales. This form gives us in a most convenient shape, a summary of that part of our (daily) Forms 4 that relates to our charge sales business, it safeguards us against the loss of any Form 4 and facilitates posting our ledger accounts. This form is kept up to date, the charge sales from Form 4 being entered thereon daily, and therefore, affords us a most efficient aid in closing our books at any moment. At the end of the month, or whenever the books are closed, we find the totals of the columns of Form 7 and post these totals as lump sums into the ledger. For example, the total of column 1 is posted as a debit in the ledger againstBills Receivable, Customers; the total of column 2 as a credit to the same account. The total of column 3 should be posted as a debit against the Store account in the ledger, this being for articles returned to the store by our customers; the total of column 4 is posted as a credit to the store account, being for articles sold from same, etc. These sheets, constituting Form 7 are 11 × 14 inches, and cost $1.75 per hundred without printed headings; a sectional post binder to fit them can be bought for $3.75. The sheet is the same on both sides and will, therefore, take care of seven departments if we use the whole width of the open book. This will be found ample in most cases. It is useless expense to have the headings, etc., printed on the sheets, because a single sheet with neatly written headings can be made to serve as a sort of index for a great many sheets, provided they are mounted above it and are trimmed off just below the headings “DR.” “CR.”, and also trimmed on the outside margin so that the date figures on the lowermost sheet will serve as an index to the lines of the upper sheets. This labor and money saving point will be more fully discussed later.

After these slips have been checked against the clerks’ reports, they must be sorted out and filed according to the names of the purchasers. For this work, have two card index drawers, each fitted with a set of guide cards marked on the tabs with the names of our charge customers. As each slip is found, file it behind the proper name. We first take all the “Store” slips and file them in this manner; we then go through this “sorting drawer” and total the slips belonging to each customer and enter these totals in the column representing that date on Form 9, (see Fig. 7) opposite the names of the respective customers. At the same time, we insert the sales slips diagonally in their proper places in the other or permanent filing drawer. The total of these entries on Form 9 should equal the total charge sales credited that date to the Store on Form 7. If it does, the slips that have been placed diagonally can be shoved down into the proper places as we are through with them; if it does not, they can easily be removed for further examination. This daily check should invariably be made for each department. We proceed in like manner with respect to the other departments, each department having its own sheet or sheets like Form 9. It is evident that this form gives us a summary of all the charge sales made each day from each department, showing the amounts sold to each of our customers. At the end of the month, each line is added across and the total entered. The “Total” column is then added up and compared with the total obtained by adding together the figures(representing the daily totals) on the bottom line. If these two totals check against each other and against the total shown on Form 7, the account may be considered correct and is a record of the daily transactions between our customers and the department considered.

Figure 7. (Reduced in size)

The book in which we bind our Form 9 is known as the “Charge Book”, and it may be well to explain here the physical make-up of this important book of record. It is, of course, on the loose-leaf principle, being of the type known as a “sectional post binder”. It costs $2.50 and the ruled sheets (without special printing) cost $1.00 per hundred. It is, however, to the manner of handling the sheets of the book that attention is especially invited. The old fashioned way would be to enter the names of our customers down the left hand margin of each sheet until all were entered, put the name of the department and the month and year at the top of the sheet and the days of the month at the tops of the successive columns with the heading “Total” at the right of the sheet. Thus, if we had five departments and enough credit customers to require six sheets for the list, we should have to prepare thirty sheets in this manner every month. Now, to show how we can eliminate unnecessary work by the exercise of a little forethought, let us assume that we have started our record in this manner. Now take six copies of Form 9, trim them along the heavy broken lines shown in Fig. 7, and bind one of these sheets in front of each of those we have previously prepared. It is obvious that the book is now ready for another month’s entries without any preparatory writing or numbering whatever other than labelling each new sheet in some convenient place with the month and department to which it pertains. Of course, to care for the five departments, we should have to do this for all five sets of sheets that we originally prepared. It follows that, provided our list of customers does not change, this same operation of inserting trimmed sheets would constitute the only labor necessary to continue this record for an indefinite period.

After considerable experimenting and actual trial in service, the following described scheme has been evolved for handling this record in an efficient manner. While no claim is made that it is perfect, it is believed that it will give thorough satisfaction wherever it is given a fair trial and will save many hours of labor in keeping the books.

1. Take a sheet, Form 9, and enter the names of your charge customers in alphabetical order, commencing on a left hand page. To allow for future changes, leave a blank line before each name and one or two blank lines at the bottom of the page for sub-totals, etc. For clearness and permanence, these names should be put in from a black “record” typewriterribbon. Write in the headings of the various columns as shown on Form 9. The object in placing the “total” column near the outside margin is to have it next the customer’s name, thus minimizing the chances of error in taking out the wrong total when we make our postings at the end of the month.

2. If our list of charge customers will require more than one sheet, take another Form 9 which we shall call Sheet No. 2 and proceed in a like manner, using the same side of the sheet as before. This should be repeated until all our charge customers are entered. Several blank lines are left at the bottom of the last sheet. Thus, when we have finished and have inserted the sheets in our book, we shall have a complete list of our charge customers all recorded on the left hand pages of our book, that side of each sheet that forms the right hand pages of our book being blank.

3. Now, in order to utilize these blank pages, thus avoiding unnecessary waste, we proceed as follows:—Open your book betweenSheets1 and 2;page1 will then be on the left andpage2 on the right. This page 2 should now be prepared in a manner exactly similar to that used in preparing page 1, except that the customers’ names are on the right hand margin with the total column next inside. This is clearly shown in Fig. 7.

4. Prepare the blank sides of the other sheets in a similar manner and we shall then have two complete lists of our charge customers, one occupying the left and the other the right hand pages of our book, the confronting pages being practically symmetrical.

5. Let us assume that the Exchange has five separate departments in which charge sales can occur. We cut five sheets along the heavy broken lines shown in Fig. 7 and insert them between pages 1 and 2. Five more trimmed sheets are inserted between sheets (whole sheets) 2 and 3, and so on for the rest of the book. In order to identify these sheets if accidentally removed from the binder and to facilitate the making of entries, we print on each of them in large letters, the name of the department and the month to which they refer. This is best done lightly with red ink as shown (in black) in Fig. 7 where the sheet is marked STORE—AUG. This red ink lettering will not obscure the black ink figures subsequently made.

6. Let us agree to use the left hand pages for the first month’s account and the right hand pages for the next month’s account. Let us take the first trimmed sheet and mark it “STORE—JAN” on one side, and “STORE—FEB” on the other. Do similarly for the sheets reserved for the “market”, “lunch room”, and other accounts. The sheets containing thetypewritten headings are not used for recording sales, but are used for guide sheets, for reasons to be set forth later.

It is easy to see from the preceding description that our charge book is a running account, and being always up to date, can be closed at short notice. When two months’ records have been entered, the trimmed sheets are lifted and filed, as will be described hereafter. Fresh trimmed sheets are again inserted in the proper places and the record proceeds as before.

The form in which we have placed our daily records of credit sales lends itself very readily to a process of summation or consolidation. The manner of doing this is as follows:—

1. Prepare a second double list of our credit customers exactly as described above, except that the columns, instead of being headed with the days of the month, are labelled with the names of the various departments, as shown in Fig. 8. Let us call this Form 6. Blank sheets trimmed along the heavy broken lines, shown in Fig. 7, are inserted as before, no recording being done on the typewritten sheets—they are simply guides or indices to the various lines and columns.

Figure 8. (Reduced in size)

2. All these sheets are bound in a separate book to facilitate the work of posting at the end of the month. Experiment seems to prove that this is better than binding these records in the same book with the charge sheets just described. This, for the reason that a clerk is apt to waste too much time in continually turning pages back and forth and is also more liable to make errors in posting.

3. Immediately after the end of the month, Form 7, is checked against Form 9 as previously described. We then take, say, the “store” charge sheets (Form 7) and enter on Form 6 the total that each customer owes the store. We do the same for every other department, also entering the balance remaining unpaid from last month in the column provided for the purpose. We also record in the proper column any credit we have given our customers during the month for goods returned, overcharges, etc.

4. By using the adding machine, we find the total of each department’s column on Form 6; it should equal the total charge sales for that department reported on Forms 7 and 9. If it does not, the error must be found and corrected before proceeding further. These totals, when correct, are entered at the foot of their proper columns on the last sheet of the record. Now add these column-totals on the machine and enter the result in pencil at the foot of the “Total” column on the same last sheetof this Form 6 record; it should check against the grand total of the charge sales for the month reported on Forms 7 and 9.

Figure 9. Actual size

5. When all postings to our Form 6 are complete, we station one clerk at the adding machine and one is prepared to make out our monthly bills or statements of account, using Form 1, shown in Fig. 9. Some person reads off Form 6 the name of each customer and the total chargesagainst him by each department. These items are added on the machine and simultaneously entered by the bill clerk on Form 1. The adding machine operator reads the total of the items he has added, which total is entered by the bill clerk on his Form 1 and by us in the column headed, “Total” on our Form 6.

6. Any credit due the customer is read off to and entered by the bill clerk on the statement. He then figures the balance due the Post Exchange, which balance should agree with that figured independently by the person reading from Form 6.

7. When the last bill has been made out, take the printed strip from the adding machine and find the sum of all the totals that have been read off by the operator. This sum should equal the pencil total described in Par. 4 above and checks the correctness of the account. If a “Duplex” adding machine is used, this does not require extra work. If the accounts do not “jibe” and the error cannot be found, take in rotation the charge slips that you have filed against each customer and add them on the machine, making a separate total for each customer. This should locate the error. If the accounts check, however, (and they should if the previous checks have been made properly) this laborious operation is unnecessary.

All our bills are now ready for mailing, and they are made out correctly. In order to obtain the full benefit of this method, our bill forms should require the minimum amount of writing. The form shown in Fig. 9 gives satisfaction. It is a 3 × 5 inch card and therefore fits standard size card index drawers; it is easily handled and will go into a note size penalty envelope without folding. The appropriate month can be stamped in and the name of the customer entered during spare moments throughout the month, so that the only work necessary at this time is to write in the figures. If the lines of Form 1 are “typewriter spaced”, that is, six to the inch, and the form is not too heavy, it can be placed directly in the adding machine and the various amounts printed on the card. The names of the various departments should be printed on this card in the same order in which they occur on Form 6. In fact, much work will be saved if some specific scheme of sequence or relative order among the different departments is invariably followed.

The writer does not know of a more economical or efficient system of handling the bug-a-boo of “getting out our monthly bills” than that just described. Sometimes, a “duplicating bill-book” is used, but it is a wasteful and inefficient method when compared to this. One of the principal advantages of the system lies in the fact that it is unnecessary to keep a private ledger account for any of our charge customers. If we were todo so, we should simply repeat information that we already have. It will be remembered that we have filed away our triplicate record of each day’s charge sales, which record describes in detail the particulars of every sale made on that day. From this, should the necessity arise, we can reconstruct our whole charge sales record for the month. We have also on file (until the bill is paid) another copy of each charge sales slip, filed according to the names of customers, which, in itself, constitutes one side of the ledger account that would be kept under the old system. These, together with the records previously described, amply warrant the abolition of customers’ private ledger accounts. Another great advantage of this system lies in the ease and rapidity with which the books can be closed at any time.

Attention is invited to the note at the bottom of Form 1. This is a labor saving item that is in accord with the practice of many up-to-date houses—to regard a canceled and endorsed check as the best form of receipt. Hence, if a customer pays his bill by check, it is unnecessary to receipt the bill and return it to him, our endorsement on his check constitutes his receipt. This same procedure can be made to apply to companies, etc.; also, if the company commander will use the sales slips as his sub-vouchers for the expenditure.

We shall now take up the procedure to be followed in recording any and all credit which we allow to customers for overcharges, goods returned, etc. It is apparent that such transaction must occur in any business. Accurate track should be kept of them and they should be handled in the most efficient and time-saving manner possible. Each such transaction results in a credit against our Bills Receivable and a charge or debit against the particular department involved.

As before stated, the clerk who receives the goods that are returned to us makes out a charge sales slip, marks it “CREDIT” and keeps the duplicate, giving the original to the customer. It is usually the rule that nobody other than the Steward or the Exchange Officer himself has authority to give customers credit in this way. In the evening, the clerk hands in these credit slips with his report. When the Steward makes up his report on Form 4, after verifying the clerks’ reports, he simply enters these credits in the last column on his Form 4, totals them and describes each separate credit transaction on the back of his report. All the data relating to the charge sales (and credits given) during the day that are shown on the face of Form 4 are abstracted to the appropriate line of Form 7, which latter sheet gives us in concise form all the data we need concerning our chargesales for the month. The credit slips are gathered up and placed with the filed charge sales slips relating to the person who returned the goods to us. At the end of the month, preparatory to making out our bills, all credits are entered in the column headed “Credit” on Form 6, and are checked against the totals shown on Form 7. This avoids the necessity of entering each credit transaction on a separate line of Form 7 as such transaction occurs. Even if the credit slip were lost, no error should result, because we check the total credits entered on Form 6 against the total credits on Form 7 before we start making out our bills. If these do not agree, we must check both Forms 6 and 7 against the credits shown daily by the various Forms 4. We also have another check in the triplicate copy of the credit slips that has been filed away.

Below is a graphic chart which shows how to handle this system of charge accounts. It shows how the various records experience a continuous process of summation until they finally reach the ledger and the customer’s bill, and how the accounts can be checked as we go along, thus avoiding errors. Solid lines show posting operations, broken lines show possible checking operations.

When any of our charge customers pays his bill, we make an entry in our cash book, giving to each such payment a separate line. We enter the amount of the payment in the column headed “Net Cash” and also in the column headed “Customers”. We donotenter any of this amount in the columns referring to the various departments because they have already been credited for their proper shares through the charge sales records and to do so again in the cash book would manifestly give them double credit for each charge sale. We also stamp “Paid” in the “Cash” column of Form 6, using a dating stamp that will fit neatly into this column. One using red ink is preferable. If only a part of the bill is paid, we enter in this column the amount received, extend the balance to the proper column and, at the proper time, carry it forward to next month’s account. Some book-keepers of the old school will keep a “blotter” or some such book wherein these payments are first noted, copying them at their leisure into the Cash Book. As the Cash Book is a book of original record, this is not only wrong, but is incidentally unnecessary labor and hence to be avoided. When payments like these come in, they should be taken directly to the book-keeper, who should immediately enter them in the Cash Book.

Figure 10.

All such payments occurring on any one day are entered in a lump sum under “Collections,” on the Form 4 for that day. In fact, all cashreceived, whether from paymasters’ collections on payrolls or any source other than cash sales by any of our departments, is taken up on Form 4 as “Collections”. If a bill is paid before the end of the month, it is treated exactly the same as if it were paid afterward, except that the date is stamped in a different colored ink. It does not confuse our accounts, because the amount paid is entered in the “Customers’” column of the Cash Book and the total of this column is posted at the end of the month to the credit side of Bills Receivable, Customers, in the ledger. The “Customers’” column in the Cash Book is solely for receipts from our charge customers and for nothing else.

If, at any time, we wish to find the total charge sales, we simply find the total of the amounts shown on Form 7, subtracting credits, if any. We also use the total sales credited to the various departments on Form 7 in making up our monthly statement for the auditing officer and for the Inspector. To find out at the end of the month the amount due us on account, we turn to Bills Receivable, Customers, in the ledger, where the balance should show the correct amount. This amount should check with the “Total” column on Form 6 reduced by credits allowed and payments received prior to the end of the month.

It will be remembered that all our Forms 9 were placed in one book and our Forms 6 in another, and that each Form 9 was to be used for two months, that is, used on both sides. After both sides have been used these forms are transferred bodily to the book containing our Forms 6, and placed between the Forms 6 referring to these months. Fresh Forms 9 take the place of those transferred, thus keeping our book “alive” and placing our dead records where they will be less in the way. The logic of this is evident when we remember that we use our Charge Book (Form 6) only at the end of the month, whereas, we use our Form 9 book every day.

As regards Form 8 (charge sales slip) our rolls of triplicate sales slips for the month should be marked on the outside of each roll with the date and the name of the department to which each pertains and kept in a convenient place until the auditing officer has finished his work for that month, when they should be stored together in some place where they can be consulted if desired. They should be preserved for such length of time as may be required by regulations or local laws, depending upon which is the greater. The original slips may be treated in one of two ways; they may be sent to the customer with his bill at the end of the month, or theymay be sent to him after he pays his bill. It is felt that the first method is by far the better.

Forms 5 for the month should be preserved until the auditor has finished with them, and it is perhaps advisable to keep them until after the next visit of the inspector. Our Forms 4 are very important and should be kept until after the inspector has inspected the accounts of the Exchange, if not indefinitely. Forms 6, 7 and 9 are a part of the permanent records of the Exchange and should be preserved indefinitely.

The foregoing description of this system of handling charge accounts may sound formidable to the layman, but in reality, it is not so. As shown in the graphic chart (Fig. 10) it is a logical system, proceeding in a simple, orderly way from the charge sales slip to the ledger and the customer’s bill. It belongs to the class of book-keeping called “controlled accounts”—each part of the system knits evenly into the others, and there is a continual process of summation going on throughout the records. There is no duplicated work and every step is one of definite progress towards the goal. It will be found to fulfil the requirements we imposed at the beginning of this essay. It has actually proved its worth wherever installed. It is equally adapted to the large and to the small Exchange. Due to the many available opportunities for checking the correctness of results, mistakes are easily located and corrected. However, if the checks described are applied, especially those relating to Form 4, there should be little excuse for a mistake to appear in any of the higher accounts.

In the light of the preceding discussion of charge sales, our methods of handling cash sales can be disposed of in a few words. In all cases of such sales, the clerk simply gives the customer his goods, receiving the money therefor, makes change if necessary, rings up the amount of the sale on the cash register and places the cash therein. The most important part of this transaction, insofar as our system is concerned, is described in the next-to-last clause. If the salesman once rings up the correct amount on the cash register, the store is sure that the transaction is closed, and closed properly. Means to this end will be discussed under the heading of “Cash Registers”.

It is customary to loan, secured by various kinds of receipts, a suitable sum to the heads of the various departments of the Exchange for the purpose of making change. In some cases, it may be advisable to require them to make a cash deposit to cover these amounts. When the Cashier or Steward is under bond, it is feasible to turn the “change money” of the whole Exchange over to him, taking his note for it.

After closing at night, each clerk enters his cash sales on his sales report (Form 5, Fig. 4) and hands it, together with the cash receipts, to the Steward or other authorized recipient. The latter counts the cash immediately, checks it on the clerk’s report and places it one side until the total cash is checked. He then transfers the item to his own Form 4, (Fig. 5) and compares the totals for each department with the cash register readings for those departments, entering the latter, if they are shown separately for each clerk, on each clerk’s report in the spaces provided for that purpose. Discrepancies are handled as previously explained under Charge Sales.

When the cash is checked and the Steward’s report is correct, he copies the amounts of cash sales for each department into the Cash Book, putting each amount in its proper column. All the cash receipts from all the departments for any one day go on the same line in the Cash Book. On the other hand, credit nothing in the Cash Book to a department except a cash sale. Every other receipt of cash from whatever source is recorded in the Cash Book, also, a separate line being given to each transaction. For instance, as before explained, whenever one of our charge customers pays hisbill, we give him a separate line in the Cash Book, entering this amount in two columns, first under “Net Cash” and also under “Customers”.

The Cash Book should have on the “Received” or debit side (the left side) columns for the following items:—Date, Explanation, Vou., Net Cash, a column for each department of the Exchange, Customers, Creditors, Interest and Discount, and at least two spare columns for entering the pay-day collections, etc. The books should not be too bulky as many cash books are, and should, of course, be built on the loose leaf plan. A cash book cannot be designed to suit all cases because of the varying number and kind of departments pertaining to different Exchanges. However, it is easy to secure uniformity of principle and method, which is the main thing. The only point that need vary between different Exchanges is the number of columns in the book and the headings to same.

Figure 11. (Reduced in size)

A cash book will be rather expensive if we have it made precisely as we want it, especially if we have the column headings printed in. There is no doubt that printed headings make a neater book, but in many cases, the advisability of incurring the extra expense is open to doubt. Considering the great variety of stock pages published by various manufacturers, there is rarely an excuse for ordering specially ruled and printed sheets. Special ruling are very expensive, especially when we can order but a small supply. It is found that the sheets shown in Fig. 11 give perfect satisfaction. The lower sample, having 20 columns, will take care of almost any Exchange, and by trimming off the two outer columns of the right hand page, we can secure a capacity of 36 columns. This would prevent us from keeping Cash Receivedand Cash Disbursed on pages that confront each other, but as the number of pages used for the former usually exceeds greatly those necessary for the latter, this objection has little weight. If convenience so dictated, there is no reason why the two sides of the Cash Book or Cash Account could not be kept in different parts of the book or even in separate books. This would lead to economy of pages.

The upper of the two forms shown in Fig. 11 would be suitable for small Exchanges where a large number of columns are not required, as the left hand side could be used for cash received and the right for cash disbursed. Several of the right hand pages would have to be wasted each month on account of the greater number of entries on the debit side. Some Exchanges use a form similar to the upper one of Fig. 11 except that it is printed and ruled to order and contains a greater number of columns than that shown in the cut. The writer knows of one Exchange that has as many as twenty columns on each side of its Cash Book. Such forms, however, are exceedingly expensive and should be considered more or less of a luxury. The forms shown in Fig. 11 cost $1.75 per hundred retail (without printed headings) and measure 11 × 14 inches, being 11 inches on the binding side. A sectional post binder to fit any number of these sheets can be obtained for $3.25 retail.

The Cash Book is used to give a detailed record of all cash transactions. On the left hand or debit side is entered all cash received and on the right hand or credit side is entered all cash paid out; the difference in the sum totals of the respective sides showing at any time the amount of cash on hand. All items on the credit side of the Cash Book are posted to the debit side of some account in the Ledger and vice versa. (Bank drafts, sight drafts and checks belong in the cash account; notes and time drafts belong to Bills Receivable and Bills Payable accounts.) Our posting is done only when the books are closed, at the end of the month or when necessity arises, thus saving an enormous amount of work. As we keep noprivateledger account for each of our creditors or customers, it follows that the totals of each column in our Cash Book are posted as lump sums to the credit of or as a debit against the ledger accounts of Bills Receivable, Bills Payable, or one of the Exchange’s departments, etc. All miscellaneous receipts that do not properly belong to one of the departments, customers, etc., are taken up under “Interest and Discounts”.

An important advantage of this method of handling our cash sales is that we are preparing, as we go along, all the data that will be required by the Inspector. A discussion of the Credit side of the Cash Book is postponeduntil the subject of Purchase Records is taken up. The above described operations are shown graphically in Fig. 12, where the heavy lines represent operations of recording or posting and the dotted lines show possible checking operations. The item of “Other Cash” is, of course, checked against Form 25, Form 6, or elsewhere, depending upon circumstances.

Fig. 12.

Figure 13, Cover (Reduced in size)

Figure 13, Coupons Actual size

Coupons, as it may be superfluous to explain, are credit slips sold to enlisted men by the Exchange. They are sold on credit, being secured bynotes signed by the purchasers; these notes constituting a lawful lien on the drawer’s pay are supposed to be redeemed at the next pay day. The credit slips can be used at any time for purchasing articles at the Exchange. Exchanges formerly used metal coins or “checks” for this purpose, but it was considered inadvisable to permit credit to be so easily counterfeited, transferred, etc., hence the use of paper coupons has become universal, being covered by mandatory orders in certain circumstances.

There are two classes of coupons, the first being the well known “Coupon Book” shown in Fig. 13. These books are made in various denominations ranging from one to five dollars. They are composed of a cover and several interior pages, the latter being divided by perforations into five coupons each, representing values of five, ten or twenty-five cents, depending upon the value of the book. For instance, a $1.00 book contains three sheets, two composed of five 5c coupons each and one composed of five 10c coupons. On the cover of each book is printed the serial number of the book, its value and blank lines for the insertion of the signature of the person to whom issued, the signature of the Exchange Officer and the date of issue. It is also customary to have printed on the cover the words “Not Transferable”. In some cases, on the back cover of each book is printed a promissory note which, after being signed by the soldier, is torn off and kept by the Exchange authorities until the value of the book is collected in cash from the soldier. A variation of this scheme is to have a separate sheet in each book so printed that it will perform a like function. In either case, it is expected that when the book is depleted, the clerk making the last sale shall take up the cover of the book in order that it may be filed in the Exchange for such period as the Exchange Officer shall determine. This, for the reason that sometimes a man will claim that, although he signed up for certain coupons at a certain time, he failed actually to receive the coupons. The possession and production by the Exchange of these used-up covers are conclusive evidence to the contrary.

These coupon books have certain inherent defects that are more or less serious. In the first place, it is found that they can be used as stakes in gambling games and can also be sold or otherwise transferred by the original drawer. This is objectionable, not merely because it is against regulations, but also because the person who so receives the coupons is not apt to draw coupons of his own, thus tending to curtail the amount of coupon sales transacted by the Exchange. This transferring of coupons can be accomplished in several ways. In large garrisons it will take a little time before the clerks will know each man by sight, especially when thereis an influx of recruits. If a customer is not known to the clerks, he might be able to use another soldier’s coupon book unless the clerk should require him to write his name and compare it with the signature on the book presented. This would be impracticable at certain times of the month when the coupon sales were heavy, as it would consume too much time, thus preventing the clerks from waiting upon other customers as promptly as they should. It is evident that this kind of a transfer could be effected withanykind of coupons, and there is no preventive except to have the clerks become acquainted with every man in the garrison at the earliest practicable moment. When there is time, the clerks should, in doubtful cases, require the customer to write his name and then compare it with the name signed on the book. All clerks should understand that when any person presents a coupon book not his own the book is forfeited to the Exchange and the occurrence is to be reported to the Exchange Officer.

Another way in which coupons can be transferred (unless each coupon is numbered to correspond to the cover) is as follows:—Private A borrows from Private B fifty cents in cash and gives him a dollar coupon book in exchange. Private B removes the staple which binds this book together, takes the book apart and throws away the cover. He then loosens the staple in a book which he himself has drawn at the Exchange and carefully inserts enough of the loose coupon sheets from A’s book to fill it up again, and bends the staple back into its original position. This scheme is of wider prevalence than most Exchange Officers would imagine, and it is very hard to detect.

Another fault to be found with the coupon book lies in the possibility of there being a wrong number of sheets of coupons in it. Printers are but human and it sometimes happens that there are too few or too many coupons in a book. Unless this is detected before issue, it causes an error in our statement of coupons outstanding. To prevent this, it is necessary to examine each book before issuing it, (even before handing them over to the coupon clerk), a tedious operation, one which consumes unnecessary time and labor.

In most Exchanges, the conviction sooner or later arises that there are coupons outstanding of which the Exchange has no record. This may occur through the suspicion that some person has acquired coupons in some unauthorized manner. When such cases arise, it is customary to place the Exchange Officer’s signature on the backs of the coupons or to employ some secret mark. This is a laborious and expensive operation and should not be resorted to unless necessary. In justice to our printers, be it said that they use every endeavor to prevent coupons from falling into unauthorizedhands, but Exchange Officers, if inexperienced, do not always appreciate the importance of taking like precautions. All coupon books should be kept in a place that is absolutely secure, and nobody should have access to same, except the Exchange Officer himself. He should use every effort to prevent a single book from reaching his customers except in the regular way. He should take from the coupon vault only enough books to supply the demand, and they should be carefully accounted for by the clerk who issues them to the men.

Some Exchange Officers use a fac-simile stamp instead of countersigning each book in person. If this is done, the stamp should be most carefully guarded, and kept in the personal possession of the Exchange Officer. When the stamp is made, there should be incorporated in it, some secret mark, otherwise, any person could secure another similar stamp, to the possible loss of the Exchange. This secret mark should be in the nature of a double instead of a single period or some other inconspicuous mark that would probably not “take” well should any person attempt to produce a second fac-simile from an impression of the genuine stamp.

The second type of coupon, shown in Fig. 14, corrects some of the faults of the coupon book. In the first place, it is much cheaper, the first order being about one-half and subsequent orders costing about one-third of the price of the coupon books. This is an important saving because the cost of coupons is a dead loss to the Exchange, and if a satisfactory coupon can be obtained at a low cost, it should be used as a matter of course, and the overhead charges correspondingly reduced.

Figure 14.

As will be noted, these coupons consist of a single sheet of stamps or coupons, separated by slot perforations, the whole sheet containing twenty 5c coupons. Considerable experience in this line prompts the statement that no real advantage is gained by having coupon books of denominations higher than one dollar. The style of coupon here illustrated makes a virtue of this fact and all slips are ordinarily made in the one dollar denomination only. In counting up the coupons after the day’s work, we know that, regardless of colors, each coupon represents 5c. Another beauty of the scheme is that it is practically impossible to have strips containing a wrong number of coupons, the method of manufacture almost precluding such a possibility, thus obviating the laborious checking process. Still another advantage is that the whole dollar’s worth of coupons is printed on a single piece of paper, thus preventing any addition to its value, as is possible with the book when partially depleted. One might think that the smaller size of these coupons would make them hard to handle and count, but an officer of considerable experience in this line of work statesthat by using the rubber end of a pencil they can be counted with more facility than can the other style of coupons. Some Exchanges would probably require each strip to have attached to it a detachable stub on which the soldier would be required to receipt for the coupons and also promise to pay for them at next pay day. In this case, as in the case of the coupon books, such practice merely adds unnecessary work and serves no useful purpose. On pay-day, we should have to handle one such stub for every dollar’s worth of coupons that each soldier had drawn; each of these stubs or cards would then have to be stamped “Paid” and returned to the soldier. This is not an efficient method.

Whichever style of coupon is decided upon for use should be printed on stock of various colors and coupons of one color only should be issued until it is desirable to have a check on our outstanding coupons. (Of course, if the books are used, it will be necessary to have the 5c and the 10c coupons of different colors.) The color should then be shifted and when coupons of the old color cease appearing, we can arrive at an approximate check on our outstanding coupon account. We say “approximate” because it sometimes happens that a man puts away a whole or a partially used book in a garment and thus inadvertently retires it from circulation for a space of time that may stretch into months. Of course, this could be prevented by issuing a notice that all coupons must be presented before a certain time, and that after that time, no coupons of the old colors would be accepted. This would give us a fresh starting point as regards our outstanding coupons, but such a proceeding should be resorted to only under the most serious circumstances, because it savours somewhat of a person refusing payment on a draft. When, however, there is good reason to believe that our Coupons Outstanding account is incorrect, such a step should be taken immediately, as it is about the only practical way in which we can correct the account—a very important one.

Before explaining at length the system of handling coupon sales advocated herein, it may be well to examine the regulations with which we must comply. First, comes par. 15, G. O. 176, W. D., 1909, which reads as follows:—

“15.Sales on Credit.When the commanding officer and council are agreed that it is to the true interest of the command, the former may authorize a credit at the exchange to any soldier in good standing to an amount not exceeding in any one month one-third of his monthly pay. This will be given upon the request of the soldier, in writing, approved by his company commander, and these credit checks will be carried on theaccounts of the exchange as “bills receivable” until paid. Soldiers granted credit will be distinctly informed that they must make prompt and unsolicited payment to the exchange officer on next pay day. Defaulters will be debarred the privileges of the exchange and are liable to trial and punishment. It is the duty of the soldier who has been given credit to pay the amount as soon as he receives his pay, and the exchange officer will be present at the place of payment to receive the money or make such arrangements as will facilitate the payment. Credit will not ordinarily be extended to a soldier between the date of last payment on rolls before discharge and the date of discharge. When the debt has remained unpaid one pay day on which the soldier was paid a balance sufficient to discharge such debt and no other means of collection is practicable, the exchange officer will notify the company or detachment commander, who will note the amount on the next pay rolls as “Due Post Exchange —— ——” and on succeeding rolls until the debt has been collected, or until it is apparent that it can not be collected, when the credit check will be turned over to the company or detachment in lieu of so much cash at the next distribution of profits as provided in paragraph 17.”

In the opinion of many, it is unfortunate that an arbitrary limitation of credit has been fixed as shown in the first sentence of the above quoted paragraph, as it tends to work a hardship upon some of our most valuable soldiers. Most of our older non-commissioned officers and N. C. staff officers are married and spend most of their pay for articles that are carried in stock by well equipped Exchanges, such as meats, groceries, etc. It is not always convenient or even possible for them to pay cash for purchases, and there is no doubt that they would do a much larger business with the Exchange if greater credit were allowed them. It is a well established custom to extend reasonable credit to all commissioned officers; it would seem but just to extend a proportionate amount of credit to such N.C.O.’s as might be vouched for by their respective organization commanders. It is hoped that this limitation may be modified, but until that occurs, the Exchange Officer has no discretion in the matter and should be careful to avoid any infraction of the general rule.

The second sentence of par. 15 also merits more than a passing glance. It requires a previous request “in writing” by the soldier before credit coupons can be issued him, and the request must be approved by his company commander. It is not specifically stated that this request must be renewed every month, nor is the writer aware that this point has ever been decided. We may, therefore, assume, when any man has once made this written request, that credit to the amount of one-third of his monthly pay be extended to him, that he need not formally renew this request monthly. Should this interpretation prove fallacious, we must have the consolidated request (Form 25, to be described hereafter) signed by the men monthly. If this is done, the list should be signed at the same time as the pay rolls, tosave trouble for the men. It is found that when there is an unnecessary amount of “red tape” connected with the operation of securing credit coupons, the men will (perhaps unconsciously) tend to shun the process, with consequent loss of business to the Exchange. There is every reason why we should make it as easy as possible for everybody to transact business with the Exchange and any unnecessary stumbling blocks should be carefully searched out and removed. The Exchange should be run on the same general principles which govern a civilian store, and if the latter subjected its customers to petty annoyances of any kind, it would soon be driven out of business by lack of trade.

Returning to paragraph 15, it might be remarked that perhaps the best way in which the men can be “distinctly informed that they must make prompt and unsolicited payment”, is by incorporating this statement on the receipt which they sign when the coupons are issued to them. Beside the other matter contained in par. 15, we should note par. 13 and par. 14 (c) and (e) of the same order. They read as follows:—

“13.Checks or Coupons.The use of checks or coupons representing values, and exchangeable for merchandise or other charges at the exchange, isencouragedmerely; but care should be taken that these checks are not disposed of to unauthorized persons, and to provide against this, they should never be redeemed in cash. When permitted by the commanding officer, they should be sold by the exchange officer and regarded as a liability until redeemed.

“The coupon-book system of extending credit to enlisted men will be used by all exchanges conducted at posts where more than two organizations are stationed, except at temporary stations and at places where conditions of service have made it impracticable to procure the coupon books.

“These coupon books will bear the name of the enlisted man to whom issued and will be honored at the exchange only when presented by the enlisted man whose name appears on the book.”

“14 (c).Bills Receivable (Enlisted Men).—To show the value of checks issued to enlisted men, and the amount of cash received from them in payment of their due bills. When checks are issued, the entry will be ‘Cash, Dr. to Bills Receivable.’ The difference between the two sides of the account will show the amount of due bills on hand unpaid.” (Par. II, G. O. 201/09.)

“14 (e).Check Account.—To show the amount of checks outstanding. When the checks are issued, this account will be credited as above, thus, ‘Bills Receivable, Dr. to Checks.’ The amount of checks received each day for merchandise will be charged to the account, thus, ‘Checks, Dr. to Merchandise.’ The difference between the two sides will show the amount of checks outstanding.”

Note that the outstanding coupons are aliability, as they may be presented as a claim against the Exchange at any time. Of course, the receipts which the men have given us for these coupons, in other words, their notes promising to pay us for the coupons, are anassetand should be carried under Bills Receivable. Some Exchanges call such assets “Bills Receivable, Credit Coupons”, thus differentiating them from such as Bills Receivable, Charge Accounts or Bills Receivable, Laundry Coupons.

Paragraph 14 (c) and (e) translated into non-technical language simply means that when we issue coupon books of a certain value to the men, we must enter this amount on the left hand or debit side of our “Bills Receivable” account in the Ledger, thus charging up “Mr. Bills Receivable”, as it is sometimes explained, with a certain amount for which he must account. Now, as the Ledger is to be kept according to the double entry system, we must obey the fundamental principle of this system, which is, “for every account that is charged (debited) a certain amount we must credit some other account with the same amount”, hence the name, double entry. In view of these facts, therefore, we turn to our Check Account—or Outstanding Coupons, if you prefer to call it so, andcreditthis account with the same amount that we charged against Bills Receivable. When we receive the cash for the men’s notes at pay day, wecredit“Mr. Bills Receivable” with the amount taken in, thus clearing him of this amount and making him no longer responsible for it. We have previously, of course, entered this amount on the debit side of the Cash Book, for the same reason noted above. When the coupons are presented by the men in payment for articles purchased by them, wecredit“Merchandise” (or the proper department of the Exchange, if departments are used) with the amount taken in. This, for the reason that said department is no longer accountable for that amount of merchandise; we must, therefore credit that department with the proper amount and charge or debit it against the outstanding coupon or Check account. It must be remembered that outstanding coupons are a liability against us and are in the nature of bills payable—except that they are payable only in merchandise. Hence, if we consider this account as a living person—one of our creditors—it will appear more logical when we place to his credit everything we owe him, i. e., the coupons we have given him, and to charge him the value of the merchandise he has obtained from us in return.

The above prolix explanation will sound puerile to an experienced accountant; it is not written for him, but for the inexperienced man with little or no knowledge of scientific book-keeping, who is trying to work this system or one like it. The writer knows from bitter experience how hard it is to avoid some of the unexpected pit-falls of double entry.

Now we are in a position to describe the manner of handling our coupon sales, starting from the very beginning.

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