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 <C 51 
 
 Boston, Massachusetts 
 November 17, 1919. 
 
 Eastern Association of Glass Distributors, 
 
 New York City, N. Y. 
 
 Gentlemen: 
 
 In accordance with your instruction, we have 
 made a survey of the glass jobbing business, using as 
 
 a basis certain companies designated by a Committee ap- 
 
 % 
 
 pointed by your Executive Board. 
 
 The purpose of this survey was twofold, viz., 
 (1) to determine the average cost of doing business in 
 the departments of plate, window, and rolled glass, ex¬ 
 clusive of direct shipments, and (2) to outline sugges¬ 
 tions leading to a uniform system of accounting. 
 
 The conclusions reached in the report here¬ 
 with submitted, are based on data and impressions ob¬ 
 tained from ten organizations, which we understand are 
 typical of the trade. 
 
 Respectfully submitted, 
 
 MOYER & BRIGGS 
 By Orlando C. Moyer 
 
 Certified Public Accountant. 
 

EASTER1T ASSOCIATION OF GLASS DISTRIBUTORS 
 
 AVERAGE COST OF DOING BUSINESS 
 
 • <D • • • • ft 
 
 By the cost of doing business, as used by the trade 
 is meant the ratio of expenses to sales. To determine this 
 average ratio it is necessary that we have at least two rea¬ 
 sonably pure factors, viz., sales and expenses. To show 
 this ratio for the departments of plate, sheet, and rolled 
 glass, it is necessary that the sales and expenses be classi 
 fied with respect to these departments, as well as for other 
 departments. To make its use effective the average will 
 have to be shown by classes of expenses. 
 
 Reasonable Assumption without Foundation: 
 
 It is quite apparent that the majority of the mem¬ 
 bers of the Association assumed that the glass jobbing busi¬ 
 ness was conducted on a basis which would make it possible 
 to construct this data from information already compiled, 
 with reasonable adjustments. We are satisfied that this 
 most reasonable assumption is without foundation, and that 
 the average jobber - if not the great majority - dees not 
 know and has not seriously thought about the cost of doing 
 business by departments. We must refrain from mentioning 
 the number of jobbers having any sound basis for the distri¬ 
 bution of expenses. Certain departments may not pay if a 
 proper distribution of expenses were made. 
 
 Ave rages of D oubtfu l Value: 
 
 Knowledge of the average cost of doing business, is 
 of no benefit to any individual company, unless such average 
 reflects reasonably correct ratios of particular departments 
 in which it is interested. However consoling or depressing 
 such information might be, it would not assist the executive 
 in solving any problem, unless the average costs of doing 
 business be shown in analytic form so that the lessons 
 learned by it may be definite, pointing more directly to the 
 reasons why the net result is high or low. 
 
 Unless analytic reports be furnished, which show 
 proper or at least uniform distribution of expenses, it is 
 evident that the percentage results which could be shov/n, 
 would be confusing, misleading, and positively harmful to 
 anyone attempting to base his decision upon them, and unless 
 such averages can be safely used their compilation is with¬ 
 out value. 
 
 Some Practical Difficulties: 
 
 Some of the difficulties met are as follows: 
 
 Sales not classified by departments; direct ship¬ 
 ments from factory to customers not segregated; expenses per- 
 
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EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 
 AVERAGE COST C'F DOING BUSINESS 
 
 Some Practical Difficulties: (Contd.) 
 
 taining to some departments charged to purchase accounts; de¬ 
 partmental operating expenses, and such items as r<-nt, taxes, 
 insurance, and depreciation, were not distributed by depart¬ 
 ments; distributions of expenses were used in several instan¬ 
 ces, but on the principal of "what the department would 
 stand"; items making up a rental equivalent were not shown 
 separately and were included in similar accounts but which 
 were subject to different application; auxiliary departments 
 such as glazing, sash, packing, are in some instances 
 grouped with the departments under .investigation. 
 
 In some instances, we asked for an expense distribu¬ 
 tion, but the results obtained by this method were suffi¬ 
 ciently unreliable to preclude their use in build-ing up aver¬ 
 ages for serious purposes. 
 
 Does the Glass Job ber know his Pro fit s? 
 
 If the inventories at both beginning and end of 
 each year are taken at cost, and income and expenses have 
 been correctly adjusted as between years, and fair reserves 
 have been set up for depreciation, etc., and the books have 
 been accurately kept, we can probably answer "yes". If 
 these things have not been done, the answer is "no". 
 
 As to knowing departmental profits, the answer with 
 most executives must probably be "no". 
 
 It is generally considered unsound business prac¬ 
 tice and hazardous financial procedure to conduct a trading 
 business without knowing the profits or losses accruing from 
 its principal lines of trade, both monthly and annually. 
 
 Result of this Inve stigation: 
 
 The Association did not get what it asked for be¬ 
 cause its members are not doing business by sufficiently uni¬ 
 form methods to make it feasible to compile the data desired. 
 
 Were such information compiled, at anjr cost, its 
 greatest value would be lost because of the lack of suffi- 
 cently uniform accounting methods to make comparisons possi¬ 
 ble by particular companies. 
 
 The investigation undertaken, therefore, while not 
 giving the direct information desired, has resulted in great¬ 
 ly emphasizing the need for such data, and has also very 
 
 3 
 
EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 
 AVERAGE COST OF DOING BUSINESS 
 
 • • • • • • • 
 
 Resu lt of this Invest iga tion: (Con td.) 
 
 definitely disclosed the course of procedure the members of 
 the Association must take to add stability to the trade. 
 
 At a time when the demand for glass is high, and 
 the market strong, the wise glass jobber will give attention 
 to his accounting department, so that he may find himself, 
 and be fully prepared for the period of keen competition, 
 and greatly reduce margins. 
 

 
 
 
 
 
EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 
 SUGGESTIONS FOR UNIFORM ACCOUNTING PRACTICE 
 
 Uniform Executive Requirem ents : 
 
 All glass jobbers are alike entitled to receive ade¬ 
 quate information from their accounting departments. 
 
 Such information is equally important, whether the 
 business be large or small. It must be reliable, available 
 at regular intervals, comprehensive without being cumbersome, 
 and arranged in a form easily comprehended and readily ap¬ 
 plied. It should not be fragmentary, but .complete when pre¬ 
 sented. It should not have to be requested but instead will 
 reach the executive as a matter of routine. As to detail, 
 it will meet individual requirements. The executive will 
 soon learn to depend upon this data as a basis for making 
 current months' decisions. 
 
 S cope of Finan c ial Record: 
 
 Such a record should include (1) the Balance Sheet 
 or Statement of Condition, and (2) the Profit and Loss or 
 Trading Statement. 
 
 These statements ?;hen properly constructed and elab¬ 
 orated will indicate to what extent the business, as a whole, 
 is conducted cn a profitable basis, and whether the general 
 tendency from month to month is favorable or unfavorable. 
 
 The departmental subdivisions of the trading account 
 will localize the required information. These will show 
 both the results of the current month as well as the total 
 to date for the year. 
 
 Percentages will be shown monthly and will reflect 
 the course any department is taking. 
 
 This record may also contain other data of impor¬ 
 tance, such as budgets, insurance carried on stock, quantity 
 records, business by territory, relative value of sales 
 persons, etc. 
 
 Trade Departments: 
 
 There should be separate accounting with the follow 
 ing trade departments: 
 
 Plate glass; Sheet glass; Rolled glass; Factory; Sash, 
 Door & Blinds; Store Front Construction; Glazing; Paint, 
 
 etc.; Miscellaneous. 
 
 5 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
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EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 SUGGESTIONS FOR UNIFORM ACCOUNTING PRACTICE 
 
 9 9 • • • • • 
 
 Ware hou se & Direct Shi pmen t s (Fac tory): 
 
 In each of the departments of Plate, Sheet, and 
 Rolled Glass, the sales and purchases must be divided as be¬ 
 tween Warehouse and Direct or Factory Shipments. 
 
 Expens e Dep a rtments: 
 
 For purposes of distribution, the classification 
 should also show such expense departments, as the following. 
 Other groups may be provided for, depending upon particular 
 conditions. Packing; Carting; Heat, Light & Power; General 
 Warehouse. 
 
 Monthly Departmental Results: 
 
 Operating results should be shown monthly in a 
 Financial Record. The data for same should be compiled as 
 follows: 
 
 (1) Sales from General Ledger; (2) Cost of Sales either 
 from General Ledger or independent compilations; (3) Operat 
 ing expenses from Expense analysis book under each depart¬ 
 ment; (4) Selling and Administrative expenses from Expense 
 Analysis book. 
 
 F iscal closing of General Ledger: 
 
 When books are closed annually, the Operating, Sell 
 ing, and Administrative expense accounts should be distribu¬ 
 ted giving expression to each departmental *s expenses 
 arranged by groups. By this method the general ledger is 
 made to show concise information of each department for per¬ 
 manent record. 
 
 Ex pense Cont r ols: 
 
 In order to simplify general ledger expense con¬ 
 trols, we suggest the following general ledger accounts: 
 
 Operating Expenses; Selling Expenses, and Administrative 
 Expenses. 
 
 Each of these accounts would be supported by sepa¬ 
 rate sections in an expense analysis book. 
 
 This same analysis book may contain the departments 
 showing the expense analysis after final distribution. 
 
 6 
 
EASTERN ASSOCIATION 0? GLASS DISTRIBUTORS 
 
 SUGGESTIONS FOR UNIFORM ACCOUNTING PRACTICE 
 
 Opera tin g Expense G rou ps: 
 
 All operating expenses should first be classified 
 according to original purpose of expenditures, without re¬ 
 gard to departmental allocation. This will facilitate com¬ 
 prehensive analysis without reference to unnecessary detail. 
 We suggest the following groups: 
 
 Wages and Salaries; Ren j X Li/ A0 O ; Insurance; Heat, Light, 
 Power & Water; Maintenance & Repairs; Supplies; Freight & 
 Carting; Depreciation; Miscellaneous. 
 
 Prorat ion of Expens es: 
 
 Wages & Salaries: 
 
 The Pay Roll Analysis sheet will show by depart¬ 
 ments where the time was applied, whether in departments of 
 Plate, Glazing, Packing, Carting, Etc. 
 
 Further distributions may be made, such as Labor¬ 
 handling mirror glass, Plate glass cutters, etc. This prin¬ 
 ciple, however, will be developed only as required by parti¬ 
 cular executives. 
 
 Rent: 
 
 Whether paid as such or estimated as rent equiva¬ 
 lent, it will be apportioned in ratio of floor space used. 
 
 No attention should be paid to the fact that one part of a 
 building is worth more per foot 'than some other part. Space 
 devoted to office should be ignored and its cost distributed 
 in the total as above stated. 
 
 Taxes: 
 
 Those pertaining to land and buildings owned are dis 
 tributed to the Plant Real Estate Expense account or group. 
 
 Taxes on machinery and equipment should be prorated 
 in ratio of equipment in departments. 
 
 State corporation taxes may be distributed on esti¬ 
 mated basis of business done in the several trade depart¬ 
 ments, but should remain constant from month to month, and 
 may be adjusted annually. 
 
 Income taxes should not be charged to Operating, 
 but to a separate General Ledger account. 
 
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EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 
 SUGGES TIONS FOR UNIFORM ACCOUNTIN G FRACTICE 
 
 • • • » O • • 
 
 Proration of Expenses: (Contd.) 
 
 Taxes: (Co nt d.) 
 
 Taxes on investment property must be charged to pro¬ 
 per investment expense accounts. 
 
 In surance : 
 
 Insurance on Plant Real Estate is charged to Plant 
 Real Estate Expense. 
 
 Insurance on equipment wherever used, (e. g., Insur¬ 
 ance on auto truck is charged to carting expense group, etc.) 
 
 Insurance on merchandise charged to departments 
 affected in ratio covered. 
 
 Liability insurance e.ccording to Pay Roll, is 
 charged to departments covered. 
 
 Insurance, as incurred, is charged to Insurance 
 account in General Ledger and transferred to operating on a 
 prorata basis. 
 
 Heat, Light, Power & Wate r: 
 
 The cost of these, whether of production or of pur¬ 
 chase, must be distributed on a basis of use or service. 
 
 Each item or group should be separately determined 
 and distributed, as conditions in a particular company sug¬ 
 gest. For companies producing their own heat, light and 
 power, an expense department should be created with same. 
 
 Ma intenance & Repairs: 
 
 There will be a number of subdivisions of this 
 group, such as Motor truck repair. Repairs to machinery, 
 Repairs to buildings, etc. These subdivisions will aid the 
 distribution, which will be made on basis of service. 
 
 In case of Repairs to buildings owned, the charges 
 should be made to the proper reserve account. 
 
 8 
 
EASTEBIT ASSOCIATION 0? GLASS DISTRIBUTORS 
 SUGGESTIONS FOR UNIFORM ACCOUNTING PRACTICE 
 
 • • • • • • » 
 
 Proration of Expenses: (Contd .) 
 
 Supplies: 
 
 All supplies not of a minor expense nature, should 
 he charged to Supplies account on General Ledger. A record 
 should he kept of what is used and charged monthly into oper 
 ating, and distributed to departments affected, such as 
 Factory, Packing, etc. 
 
 Lumber used for packing may he estimated or deter¬ 
 mined by a monthly inventory. 
 
 Supplies not followed should he charged directly to 
 operating as supplies used. 
 
 Freight an d Car ti ng O utward: 
 
 Outward freight hills should he charged to Operat¬ 
 ing. Carting should he charged with a regular schedule 
 rate for same, and credited to Carting Earned. Inward cart 
 ing would also he charged, and the "Carting Earned" account 
 credited. The Carting expense group would readily disclose 
 whether the charges were adequate. 
 
 All carting by above method would he distributed by 
 departments on a sound basis. 
 
 Depreciation: 
 
 Provision for depreciation must be distributed to 
 department using the asset depreciating. 
 
 General Warehouse: 
 
 Minor items of general warehouse expenses should be 
 distributed by floor space. 
 
 S elling an d Administrative Expenses: 
 
 As a uniform method for distribution, it is suggest 
 ed that these expenses be distributed on the basis of sales. 
 This is arbitrary, and does not reflect the facts, but is 
 perhaps the only standard method that can safely be offered 
 
 at this time. 
 
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EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 
 SUGGESTIONS FOR UNIFORM ACCOUNTING PRACTICE 
 
 Financial or Ca pita l Expenses an d Income: 
 
 Business is conducted to earn a return on capital 
 invested. This return is a composite of interest, fair com 
 pensation for risk, and profit. In our opinion, no interest 
 on capital invested in the business should be allocated to 
 departments, as the net profit of the business reflects or 
 includes the interest return on invested capital. 
 
 Cash discounts whether earned or lost should be 
 treated as income or expenses due to capital operations. 
 
 Losses due to uncollectible accounts or those ad¬ 
 judged bad are charged against the combined net income. 
 
 Bonuses to employees if based on a certain percent¬ 
 age of profits should not be included in departmental ex¬ 
 penses. For this purpose we view them as profit distribu¬ 
 tion rather than as additional salaries. Bonuses to 
 officers should be treated in like manner. 
 
 If bonuses are granted monthly or annually by a pre 
 determined plan, and not dependent upon profits, they should 
 be included as operating exponses. 
 
 Net income from non-business property, from invest¬ 
 ments, and the net income shown by real estate used in the 
 business belong to this group. 
 
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EASTERN ASSOCIATION OF 1 GLASS DISTRIBUTORS 
 SUGGESTIONS FOR CLASSIFICATION OF ACCOUNTS 
 
 • • • • • • • 
 
 PURPOSE: 
 
 This classification of accounts is intended to 
 serve as suggestions for the accounting departments of glass 
 jobbing houses, but in order to meet the requirements of any 
 particular organization, it must be adopted aod may be elabo 
 
 rated. 
 
 D EPARTMEN TAL AND G ROUP DIVISION S: 
 
 Departmental designation of expenses, additions to 
 equipment, etc. may be made by numbers only. By using 
 account numbers arid department numbers in combination, any 
 particular expense item may be classified and distributed by 
 one designation. (e. 3 . 100-2 signifies account number 100 
 and department number 2 ) 
 
 ARRANGEMENT OF ACCOUNT AND DEPARTMENT NUMBERS: 
 
 1 - 
 
 49 
 
 Reserved for 
 
 Departmental Designations 
 
 50 - 
 
 199 
 
 Reserved for 
 
 General Ledger Accounts 
 
 200 - 
 
 359 
 
 Operating Expense Analysis 
 
 
 
 200-219 
 
 Wages 8c Salaries 
 
 
 
 220-239 
 
 Rent 
 
 
 
 240-259 
 
 Taxes 
 
 
 
 260-279 
 
 Insurance 
 
 
 
 280-299 
 
 Heat, Light, Power & Water 
 
 
 
 300-319 
 
 Maintenance & Repairs 
 
 
 
 320-339 
 
 Supplies 
 
 
 
 340-359 
 
 Freight & Carting 
 
 
 
 360-379 
 
 Depreciation 
 
 
 
 380-399 
 
 Miscellaneous 
 
 400 
 
 - 449 
 
 Selling Expenses 
 
 450 
 
 - 499 
 
 Administrative Expenses 
 
 11 
 
EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 
 SUGGESTIONS FOR CLASSIFICATION OF ACCOUNTS 
 
 DEPARTMENTAL 
 
 DESIGNATIONS: 
 
 Numbers 
 
 Trade Departments 
 
 1 
 
 2 
 
 3 
 
 6 
 
 8 
 
 10 
 
 12 
 
 14 
 
 20 
 
 Plate Glass 
 
 Sheet Glass 
 
 Rolled Glass 
 
 Factory- 
 
 Sash, Doors & Blinds 
 
 Store Front Construction 
 
 Glazing 
 
 Paint, etc. 
 
 Miscellaneous 
 
 Numbers 
 
 Expense Departments 
 
 25 
 
 26 
 
 27 
 
 28 
 
 30 
 
 Packing 
 
 Carting 
 
 Plant Real Estate Expense 
 
 Heat, Light & Po7/er 
 
 General Warehouse 
 (etc.) 
 

 
 
50 
 
 55 
 
 60 
 
 65 
 
 70 
 
 75 
 
 80 
 
 82 
 
 83 
 
 85 
 
 88 
 
 90 
 
 EASTERN ASSOCIATION 0? GLASS DISTRIBUTORS 
 
 GENERAL LEDGER ACCOUNTS 
 ASSETS 
 
 Cash 
 
 a- In Banks 
 b- Petty Cash Funds 
 
 Accounts Receivable 
 a- Customers 
 b- Sundry 
 
 c- Advance to employees 
 
 Notes Receivable 
 
 a- Customers n 
 
 b- Sundry 
 
 Inventories 
 
 a- Merchandise 
 b- Supplies 
 
 Accruals 
 
 Investments 
 
 a- Securities 
 b- Officers' notes 
 c- Officers’ accounts 
 d- Dwellings 
 
 Real Estate (Plant) 
 a- Land 
 b- Buildings 
 
 Machinery & Fixtures 
 
 Tools & Plant Equipment 
 
 Motor Trucks and Cars 
 
 Horses, Wagons, etc. 
 
 Deferred Charges 
 
 a- Unexpired Insurance 
 b- Prepaid Interest 
 c- Prepaid Rents, Taxes, etc. 
 
 13 
 

 
 
 
 
 
 
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EASTERE - ASSOCIATION OF GLASS DISTRIBUTORS 
 
 GEN ER AL LEDGER ACCOUNTS 
 LIABILITIES 
 
 100 
 
 105 
 
 115 
 
 125 
 
 130 
 
 131 
 
 132 
 
 Accounts Payable 
 
 a- Accounts Payable (trade) 
 b- Sundry Accounts Payable 
 
 c- Accounts due officers, stock hoi ders, employees 
 
 Notes Payable 
 
 a- Trade Creditors 
 b- Bank Loans 
 c- Equipment 
 
 d- Officers, stockholders, etc. 
 
 Accruals 
 
 a- Taxes 
 b- Pay Roll 
 c- Interest 
 d- Rent 
 
 Reserves 
 
 a- Bad and Doubtful Accounts 
 
 b- Depreciation, Plant Buildings 
 
 c- Depreciation, Investment Buildings 
 
 d- Depreciation, Improvement of Leased Property 
 
 e- Depreciation, Machinery & Fixtures 
 
 f- Depreciation, Motor Trucks and Cars 
 
 g- Depreciation, Horses, Wagons, etc. 
 
 Mortgage on Plant Real Estate 
 
 Mortgage on Investment Real Estate 
 
 Chattel Mortgage on equipment. 
 
 NET WORTH 
 
 150 Capital Stock (or 155 Proprietors' Capital Accounts ) 
 
 Preferred Stock 
 Common Stock 
 
 160 Surplus 
 
 161 Undivided Profits 
 
 14 
 

EASTERN ASSOCIATION OE GLASS DISTRIBUTORS 
 
 GENERAL LEDGER ACCOUNTS 
 
 PROFIT AND LOSS ACCOUNTS 
 
 The following Profit and Loss accounts will be 
 shown by departments. It is desirable to distribute the ex¬ 
 penses by departments on the General Ledger at the closing 
 of a fiscal year, and monthly in an Expense Analysis book. 
 
 170 Sales - Warehouses 
 
 171 Sales - Direct Shipments 
 
 180 Purchases for Stock 
 
 181 Purchases for Direct Shipments 
 
 184 Inward Freight 
 
 185 Inward Carting 
 
 192 Operating Expenses 
 
 193 Selling Expenses 
 
 194 Administrative Expenses 
 
 195 Additions to Income 
 
 a- Cash Discount on Purchases 
 b- Interest on Bank Balances 
 c- Interest Notes and Accounts Receivable 
 d- Income from Plant Real Estate 
 e- Income from Investment Real Estate 
 f- Income from Securities 
 g- Bad Accounts Recovered 
 
 196 Deductions from Income 
 
 a- Cash Discount on Sales 
 b- Bad and Doubtful Accounts Receivable 
 c- Collection and Exchange 
 d- Losses and Contingencies 
 
 15 
 

 
 
 
 
 
 
 
 
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EASTERN ASSOCIATION OT GLASS DISTRIBUTORS 
 
 CLASSI FICATION OF ACCOUNTS 
 (Continued) 
 
 400 - 449 Selli ng Expense s 
 
 Advertising 
 Salesmen's Salaries 
 Salesmen’s Expenses 
 Commissions 
 Etc. 
 
 450 - 499 Administrat ive Expens es 
 
 Executive Salaries 
 
 Office Salaries 
 
 Traveling 
 
 Legal 
 
 Donations 
 
 Telephone & Telegrams 
 Credit & Collections 
 Postage 
 Etc. 
 
 Min imum Requirement in Expense Cla ssific ations: 
 
 Some jobbing houses may not require detailed analy¬ 
 sis, but all companies adopting a uniform system should re¬ 
 quire that the operating expense groups, selling and adminis¬ 
 trative expenses are properly allocated to the various 
 departments. It is not essential that the items of each 
 group be shown. 
 
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EASTERN ASSOCIATION OR GLASS DISTRIBUTORS 
 
 COMMENTS 
 
 SALES AGOUNTS; 
 
 All sales are analyzed by departments. Packing 
 sales, excepting in Window Glass, constitute a separate 
 account. Foreign elements should be eliminated, and the 
 Sales accounts kept pure and true to their names. 
 
 PURCHASE ACCOUNTS: 
 
 Departmental accounts are kept with purchases. 
 Packing purchases, except in Window Glass, are changed to a 
 Packing Purchase account. 
 
 "Inward Freight” and "Inward Carting" should not be 
 charged to the Purchase accounts, directly. 
 
 Fr eig ht I nwa rd: 
 
 Inward freight on purchases is most conveniently 
 charged to glass purchase accounts, but it should be shown 
 as a separate item and analyzed by departments. If it is 
 not considered feasible to analyze same it should be appor¬ 
 tioned by percentage on basis of purchases, or according to 
 any other sound basis. 
 
 Carting: 
 
 Carting as between warehouses and freight terminals 
 is itself valuable data, as it indicates the cost of not hav¬ 
 ing track facilities. 
 
 Inward carting, or the cost of conveying merchan¬ 
 dise to the warehouses, and outward carting or cost of deli¬ 
 vering merchandise to the trade, is a necessary classifica¬ 
 tion. The inward carting ranks the same as inward freight, 
 but should be kept separate. 
 
 All items of cost making up this expense should be 
 
 grouped. 
 
 INVENTORIES: 
 
 EFFECT ON PROFITS: 
 
 Book profits can be made high or low according to 
 the methods employed in taking inventories. Only when in¬ 
 ventories are taken at cost can actual profits be known. 
 
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EASTERN ASSOCIATION 07 GLASS DISTRIBUTORS 
 
 COMMENTS 
 
 • » * » • • • 
 
 INVENTORIES: (Confc.) 
 
 REPLACEMENT VALUES: 
 
 An inventory taken at replacement value will include 
 in the gross profits an element of fluctuation, the amount 
 of which cannot be known without average cost data. 
 
 Even when replacement valu Q is lower than cost, it 
 is nevertheless necessary to determine the cost before ac¬ 
 tual profits can be shewn. 
 
 Appreciation and shrinkage of values should not be 
 followed on the ledger, but rather in an executive’s manual. 
 
 AVERAGE COST OF PLATE GLASS: 
 
 The only value of glass that may be safely used in 
 calculating cost of sales and inventory is the average cost. 
 
 The cost of glass at the beginning of a month plus 
 the purchases during the month gives the total feetage and 
 value to be accounted for. By dividing this total value by 
 the total feetage, the average is obtained. It is this 
 average price that is used in finding the value of the stock 
 on hand in any bracket, or the value of the stock withdrawn. 
 
 The total feetage withdrawn from any bracket, less 
 the total feetage returned to same from higher brackets 
 gives the net feetage the bracket has been reduced or 
 increased. The value of this net decrease or increase is 
 found by applying the average cost. 
 
 Accounting Me thod s: 
 
 The following records are necessary to compile the 
 information necessary with which to calculate the Inventory 
 and the Cost of glass used out of each bracket: 
 
 (1) Purchase Record 
 
 This record may be a card or sheet on which is tab¬ 
 ulated the feetage of glass purchased in each month 
 for a given bracket, arranged by prices. It will 
 show the total feetage purchased at any given price. 
 
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EASTERN ASSOCIATION 0^ GLASS DISTRIBUTORS 
 
 COMMENTS 
 
 Accounting Methods: (Cont.) 
 
 (2) Used Record 
 
 This should be of similar size as the Purchase 
 Record, but preferably of a different color, and 
 will show by months, a tabulation of feetage with¬ 
 drawn from the bracket. 
 
 (3) Returned Record 
 
 A card, preferably of another color, should be used 
 on which to tabulate all feetage put in stock from 
 higher brackets. 
 
 (4) Summary Record 
 
 Another card will show the inventory at the begin¬ 
 ning, the purchases, withdrawals, returns, and the 
 inventory at the end of the month. 
 
 Cost of Plat e S old : 
 
 At the end of each month a summary should be made 
 of all bracket inventories, shewing the total inventory. If 
 this total is deducted from the sum of the inventory at the 
 beginning and the glass purchased, the balance will be the 
 cost of glass applied against sales. This, however, is not 
 only the cost of the glass sold but includes shrinkages and 
 differences arising by dropping fractions in calculating the 
 average cost per unit. 
 
 By calculating the value of net feetage withdrawn 
 from a bracket and deducting same from the inventory plus 
 purchases, the balance will be the calculated inventory. 
 
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EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 
 COMMENTS 
 
 • • • • • • • 
 
 Illustration of a Pla te Glass Br acket: 
 1 to 2*3 S. S. Gla zing 
 
 
 
 Feetage 
 
 Cost 
 
 
 Value 
 
 Jun. 1 
 
 Ealance 
 
 4,213 
 
 .30 
 
 $ 
 
 1,263.60 
 
 
 Purchases 
 
 761 ft. 
 
 .32 
 
 
 243.52 
 
 
 
 520 ft. 
 
 .33 
 
 
 171.60 
 
 
 
 219 ft. 
 
 .36 
 
 
 78.84 
 
 
 Freight & Drayage 
 
 1,500 
 
 
 
 30.00 
 
 
 Average Cost 
 
 5,712 
 
 .313 
 
 9 
 
 1,787.56 
 
 
 Used 
 
 957 
 
 
 
 
 
 Returns 
 
 100 857 
 
 .313 
 
 
 267.94 
 
 Jan.31 
 
 Balance 
 
 4,855 
 
 .313 
 
 1 
 
 1,519.62 
 
 Freight 
 
 and Cartage: 
 
 
 
 
 
 Freight and Cartage should "be distributed by 
 brackets and based on estimates from actual freight and cart¬ 
 age bills rendered during the current month. 
 
 Beginning the System: 
 
 An accurate inventory should be taken of all Plate 
 Glass by brackets, and as near as is possible, the average 
 cost price should be ascertained for each bracket. If there 
 is any doubt, let it be on the conservative side. 
 
EASTERN ASSOCIATION 0? GLASS DISTRIBUTORS 
 
 COMMENTS 
 
 • • * * * * a 
 
 Illustration of Window 
 
 Glass 
 
 (Single) 
 
 Av. & 
 Disc. 
 
 
 Net 
 
 Date 
 
 For Stock 
 
 Boxes 
 
 List 
 
 Mar. 1 
 
 Stock on hind 
 
 7,725 
 
 $>154,565.50 
 
 . 1945 
 
 $ 
 
 30,078.45 
 
 9 
 
 Purchase 
 
 98 
 
 1,885.00 
 
 80 % 
 
 
 422.13 
 
 12 
 
 Purchase 
 
 88 
 
 1,782.00 
 
 80 i 
 
 
 373.9 7 
 
 Totals 
 
 — 
 
 7,911 
 
 1158,232.50 
 
 
 $ 
 
 30,879.55 
 
 
 Sales 
 
 500 
 
 Frt.30^ a box 
 
 37.20 
 
 
 
 7,411 
 
 $158,232.50 
 
 .1954 
 
 II i 
 
 30,916.75 
 
 This shows an average cost of .1954 which is approx¬ 
 imately SO & 2# off list. The cost of sales and cost of 
 inventory are therefore known and on same basis. 
 
 The illustration does not include inward carting nor 
 cost of boxes, which must be considered. 
 
 A separate average should be found for single, A 
 double, and B double. If the manufacturers make further sub¬ 
 division, corresponding changes should be made in the classi¬ 
 fication of the accounts used in finding the average cost. 
 
 COST OP SALES 
 
 The average cost of glass sold may be determined 
 monthly by the methods previously outlined. The method shown 
 for Plate will also apply to Rolled Glass. 
 
 RENT: 
 
 Plant real estate should be treated as though other¬ 
 wise owned, and a fair rental paid for same. This fair 
 rental equivalent must be distributed as an expense to the 
 
 departments. 
 
 The difference between the "Estimated Rental Charge" 
 account, on the one hand, and the "Real Estate Expense" ac- " 
 count on the other, reflects the estimated net income from " 
 
 Real Estate. 
 
 The "Rental equivalent" is determined by the total 
 of taxes, insurance, estimated average annual repair, depre- 
 

EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 
 COMMENTS 
 
 t • • • • • • 
 
 RENT: (Cont.) 
 
 ciation, and a fair interest return on investment. The 
 interest item should not be shown on the books. 
 
 The Company paying rent will distribute the amount 
 
 paid for same. 
 
 PACKING: 
 
 This is comparatively a small item, bat by follow¬ 
 ing the costs and returns from same, it may disclose condi¬ 
 tions which should be corrected. The cost of material used, 
 labor, and other expenses pertaining to packing should be 
 conducted as an expense department. 
 
 Window Glass boxes are charged to purchases. The 
 cost of packing sold, in other departments, is estimated per 
 case. This supported by inventories will serve as a check. 
 
 FACTORY OPERATIONS: 
 
 Standard unit costs should be developed for pricing 
 the cost of sales of work done by factory, such as beveling, 
 mirror work, etc. The cost accounts should be so arranged, 
 if feasible, to accumulate data for satisfactory checking of 
 standard values. 
 
 FACTORY: 
 
 Plate glass is transferred to the Factory at average 
 cost of full size glass used, less the average cost in the 
 lower bracket of glass returned to stock. Freight and cart¬ 
 ing are to be included in the average cost. 
 
 Warehouse labor cost of selecting and handling such 
 glass should be charged to the Factory under wages and sala¬ 
 ries. In compiling Factory statement, this labor cost 
 should be shown as a part of the Glass Cost. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 . 
 
 
 
 
 
EASTERN ASSOCIATION OF GLASS DISTRIBUTORS 
 
 ILLUSTRATION OF DEPARTMENTAL TRADING STATEMENT 
 
 Net Sales $ - 
 
 Cost of Sales 
 
 Purchases $ 
 
 Inward. Freight 
 Inward Carting 
 
 Inventory beginning 
 
 $ - 
 
 Inventory ending $ - — 
 
 Transfer -- —- -- 
 
 Cost of Sales 
 
 Gross Frofit - 
 
 0p eratl n g expens e s_: 
 
 Wages & Salaries $ - -- 
 
 Rent — 
 
 Taxes —- — 
 
 Insurance - 
 
 Heat, Light, Power & Water -- 
 
 Maintenance & Repairs -- 
 
 Supplies —* * — 
 
 Freight & Carting Outward -- 
 
 Depreciation -- 
 
 General Warehouse -- 
 
 * — 
 
 Selling Expenses $ - -- 
 
 Administrative Expenses - -- - 
 
 Net Profit - 
 
 Note 
 
 In a factory statement all operating expenses would be 
 shown as production cost. 
 
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