(5) Stocks may be proved under this system in the following way :Pledge Stocks (as already given).

Sale Stocks. To the balance of stock shown as on last balancing day is added all cash purchases (per Balance Book). It must be remembered, however, that the stocks have also been increased by certain credit purchases not entered in the books of account. The true total is therefore arrived at by adding on the difference between the total creditors (for purchases) at the commencement of the period and at the end. Both these figures are taken at cost.

(6) To make up in some degree for the absence of subsidiary books of account the small pawnbroker finds great benefit in making out each day what is called a " daily balance slip." This does away with the old-fashioned slate, and has the advantage of being a permanent record of the day's trading. These slips show on the one side a summary of the day's transactions as per the Balance Book, and on the other his original computations of the totals of "ticket-money," " redemptions," interest," etc., as well as a note of the contents of the till, making up the cash balance at the close of day; in other words, one side gives the details conveyed in total to the other.

A SYSTEM OF ACCOUNTS AS APPLIED TO A FIRM WITH BRANCHES

So far we have dealt with the accounts of single establishments only. We will now endeavour to apply the various books and methods of account to a firm or limited company carrying on a pawnbroking business with various branch shops and a head office.

The general principle upon which we would found our system under such circumstances is to provide each branch shop with its own accounting machinery, so that each day's balanced results of trading can be forwarded to the head office, certified by the manager. This can easily be arranged by installing in each branch the system of accounts already given, and arranging for a "daily balance slip" to be sent to head office daily. The following modifications only would become necessary:

(a) The devising of some easy system of dealing with the inevitable transfers between such branches.

(b) The centralising of the branch purchases at the head office.

To accomplish these modifications in the scheme already given let the branch managers be provided with requisition forms for all goods required. The head office will then supply the same either from stores or by calling on another branch. If supplied from the head office a special column on the receipts side of the branch Balance Book is credited and the branch goods bought" debited. All transfers are kept by the branch manager in a separate account debited with all incomings and credited with all outgoings, the balance of such account going into the "branch stock account" at balancing day. The manager does not need to analyse his transfers as between the other branches, as this is done so much more easily in the head office books.

Each manager will be able to send to head office daily a Redemption Sheet made out on the model of that given. This should be made out in duplicate by carbon sheet or otherwise, so as to admit of the manager retaining a copy, and the continuity of transactions guaranteed. Briefly given, this is the procedure of the branch managers in connection with purchases and transfers.

The only remaining special account required to be kept by the branch

manager is one for keeping a check on stocks, which account is made up. of three parts, relating to (1) Pledge stocks; (2) Sale stocks; (3) Book debts.

(A) Pledge Stock Account.-This commences with the last inventory total. The manager debits it monthly with the total amount lent, crediting it at the same time with the total amount redeemed plus the total unredeemed pledges taken to sale stock. The balance at any date is stock on hand, and should agree with the inventory total.

(B) Sale Stock Account.-As in the case of pledge stock, this account opens with the last inventory total. Debit the account with all receipts at cost from head office or other creditors, including forfeited pledges at price the same have been taken to sale stock, and the balance of the transfers account. If the outgoing transfers exceed the incomings from the branches the balance goes to the credit of the Sale Stock Account, and vice versa.

(C) Book Debts.-This account opens with the amount of outstanding debtors at last balancing. Monthly debits must be made of the total credit sales (cost and profit), and monthly credits of amounts received on account of credit sales. The discount allowed in reference thereto must also be credited. This should give a correct summary of the book debts.

Head Office Books

The books required at head office are as follows:

(a) Cash Book.-A form of ruling is given suitable for cases where the branches do not exceed more than three or four. Where there are many branches the best plan is to post the "cash receipts from" and "cash payments to" the branches to separate accounts, instead of having analysis columns as shown.

The whole of the items herein are posted to the personal accounts in the Bought Ledger. Items of purchases for the branches are also posted to the account under the name of the specific branch for which the goods are required. The head office columns are for recording goods stocked, while provision is made under the head of "commission" for the head office to credit itself therefor in the purchase of special lines, which are invoiced to the branches at an enhanced price. The special columns are capable of extension where necessary.

There is little need to enlarge upon this ruling, being of the ordinary type.

(d) General Ledger.-For recording the branch trading in separate accounts, showing the individual trading of each shop. This book should be ruled, or rather a section of it, in columnar form, so as to show on a page what is practically a summary of the Balance Book of each branch.

Other accounts entered in this book are the Stock Accounts of each branch, as also the Sundry Debtors and Sundry Creditors. Accounts should also be opened for the Expenses and Purchases, each such account showing the apportionment of same among the branches and the balance chargeable against general profit. Transfers Account will also appear, showing the balancing of the total outgoings with the total incomings of the branches inter alia. The usual account for Discounts and Bank Charges will also be shown.

(e) Private Ledger.-For the final accounts. These include accounts for Buildings and Fixtures, Partners' Drawings and Capital Accounts, and Trading and Profit and Loss Accounts.

Final Accounts

(a) Stock Accounts.-These should be made out in the ordinary way, and should be found in agreement with the Stock Accounts made up by the branch manager. These again should be found to agree approximately with the inventory totals of each branch. Transfers are debited and

credited to the Sale Account, as previously noted.

As to the very important question of check on stocks, in the case of a company with branches where the total stock value runs into an enormous amount, there is no universal plan. The following plan of check was recommended by a committee formed in the trade many years ago, and has been found to work with great success where properly carried out. A chest of drawers is provided for the accommodation of the pawn-tickets as the same are redeemed. In gauging the size of such nest of drawers attention has to be directed to the number of tickets issued per month. If 5000 tickets are issued monthly, then accommodation would be required for, say, fourteen times 5000, equalling 70,000 tickets. This is necessary because tickets unredeemed often run for thirteen months before forfeit, and in experience it is found advisable to provide for fourteen months. The procedure is then quite simple. The smaller half of the pawn-ticket (detached from the pledged parcel) is sent to the head office, when such parcel is redeemed, along with the redemption list. All these are then classified in the ticket drawers in the exact order in which they were issued. The drawer, being divided by partitions into grooves, is calculated to hold a certain number of tickets, and it is this calculation which governs the size

1900.

of the chest when the same is instituted. These wooden grooves are again subdivided into spaces calculated each to hold, say, 100 tickets, this being done for the purpose of facilitating the filing of such tickets. Having conducted this plan for one year, it follows that such tickets as are not restored to place must be represented by unredeemed pledges, and these detached from their parcels on the transfer of the same to sale stock should complete the ticket sequence. If there are gaps in the sequence it will prove the necessity for an investigation. If the branch manager stamps all the redeemed tickets on sending them in to the head office with a date stamp on the back, this again facilitates inquiry, should such be necessary.

Trading and Profit and Loss Account. This account where the branches are not numerous can be got out in the fashion of the account given below. In other cases a separate account for each branch is best. In the case of a limited company there would be other items requiring entry.

Cr.

£ s. d.

In practice there would be provision made for bad debts and discounts, and the items chargeable against profit would be accordingly increased.

Balance Sheet.-There .are generally special items either of assets or liabilities coming under each branch, and it will be found that a separate Balance Sheet for each branch is the best plan.

(a) Buildings. It will often be found in the case of a firm with branches that the buildings in which the business is conducted belong to the firm or company. Where this is the case, rent is chargeable against