PRODUCE SHIPPER'S BOOKS
38. The most common branch of the commission business is that of shipping and selling produce. The books used vary somewhat from those used by a manufacturer's agent selling to jobbers, but the principles are the same.
Two Column Shipment Book
Sometimes the same man conducts both the business of shipper and broker, buying certain goods which he in turn ships to other brokers to be sold for his account. In the produce commission business, however, the shipper is usually a buyer, located in the country, who buys produce from the farmer and ships to a commission merchant in the city.
The books required by the shipper are purchase book, shipment book, shipment ledger, cash book, journal, and general ledger.
39. Purchase Book. This book is of the same form as used in other businesses, with as many columns as may be desired to separate purchases of different classes of produce.
40. Shipment Book. This is the book of original entry for shipments in which each shipment is recorded in detail, showing each item, with prices (usually at cost) extended. The book can be ruled with columns for segregating shipments of different classes of produce. The total of each shipment is posted to the debit of the individual shipment account in the shipment ledger. The footings of the columns are carried forward to the end of the month when they are posted to the credit of shipment accounts in the general ledger. These general ledger shipment accounts are opened for each class of produce for which a separate record is desired, and correspond to the sale account of a mercantile business.
At the end of the month the total of all shipments is posted to the debit of a controlling account in the general ledger known as shipment ledger account.
If more than one class of produce is shipped to an agent at the same time it is best to make invoices for each, treating them as independent shipments. Each package should bear a number or other mark by which it can be identified as belonging to a particular shipment.
41. Shipment Ledger. An ordinary ledger can be used or a special form prepared. Since the debit side of the account will require much the greater amount of space, special forms are quite desirable. A convenient form is illustrated on page 55.
42. Cash Book. Tabular cash books with special arrangement of the column headings are used. The special features are the column on the credit side headed shipment expense, and the debit column headed shipment ledger. The shipment expense column is for the expenses paid on each shipment. Expenses are posted direct to the debit of the individual shipment accounts, and at the end of the month the total expense is posted to the debit of the shipment ledger controlling account. The shipment ledger column is for net proceeds remitted with account sales. The amounts are posted to the credit of shipment accounts, and the total is posted at the end of the month to the credit of shipment ledger controlling account.
The sundries column is for receipts other than remittances with account sales—as payments by agents who have not remitted with account sales.
Shipment Ledger for Commission Business
Cash Journal for Commission Business
43. Shipment Ledger Account. This is the controlling account of the shipment ledger. It is charged with total shipments through the shipment book; with advance expenses through cash book or journal; credited with net proceeds through cash book or journal. It must also be charged with profits on shipments, or it will not represent the total balance of shipment ledger.
When net proceeds are credited, the individual shipment account should be charged, through the journal, with the net profit, which is credited to Profit and Loss on Shipments. A special credit column is provided in the journal for profits, or if a record of profits on each class of produce is desired, two or more columns are provided. Monthly totals are posted to the credit of profit and loss on shipment account, or to more than one such account—as profit on poultry, profit on butter and eggs, etc. The total of all profit columns, which represents debits to shipment accounts, is charged to shipment ledger account.
It is to be supposed that losses will be few, and when one is incurred the entries should be made through the journal. The amount will be charged to profit and loss on shipment account and credited to both the individual shipment account and shipment ledger account.
44. Journal. As already explained, the journal should be provided with extra columns for profits on each class of shipment.
When an agent transmits an account sales without a cash remittance, the transaction must be journalized to close the shipment account. When proceeds are to be charged to his account, the entry is:
| Dr. | Cr. | Cr. | |
|---|---|---|---|
| Richard Roe, Agt. | $160.00 | ||
| To Shipment Ledger | |||
| Richard Roe Shipment No. 1 | $160.00 | ||
| Richard Roe, Shipment No. 1 | 18.00 | ||
| To Profit and Loss on Shipments | $18.00 |
If a note to cover net proceeds is received, the entry is the same except that Bills Receivable is debited instead of Richard Roe, Agt.
When a loss is incurred the entry is:
| Dr. | |||
|---|---|---|---|
| Profit and Loss on Shipments | $18.00 | ||
| To Shipment Ledger Account | |||
| Richard Roe Shipment No. 1 | $18.00 |
and postings will be made direct to all accounts affected.