SHIPPER'S TRADING ACCOUNT
46. The trading account of the shipper is made up somewhat differently than for a mercantile business where all sales are supposed to be entered at a profit.
If all his produce is sold through commission merchants, and the inventory of produce in stock exactly equals the difference between purchases and shipments, the account, profit and loss on shipments represents the trading profit. But this state of affairs seldom if ever exists. Either there will have been outright sales or a discrepancy will appear in the inventory. The latter is usually the case in a produce business, for some value will be lost owing to the perishable nature of the goods handled.
The trading account is charged with all purchases and inventory, if any, at beginning of the period, and credited with all shipments and inventory at end of period.
The trading account now exhibits the true trading profits with a complete segregation of profits from actual sales and commission sales. The inventory does not include outstanding shipments, these being treated as a separate item in the balance sheet.
TRADING a/c
| To Purchases | $10,000 | 00 | By shipments | $9,000 | 00 |
| Profit on Sales | 465 | 00 | " Inventory | 1,465 | 00 |
| $10,465 | 00 | ||||
| By Profit on Sales | $465 | 00 |
SAMPLE TRANSACTIONS
47. The following transactions, taken from the books of John Doe, shipper of poultry and butter and eggs, illustrate the books and accounts used.
| —Nov. 1, 1908— | ||
| Commenced business with a | ||
| cash investment of | $1,000.00 | |
| —1st— | ||
| Bought for cash | ||
| 200# chickens | @ .11½ | 23.00 |
| 100# ducks | @ .13 | 13.00 |
| —1st— | ||
| Bought from | ||
| Henry Meyers | ||
| 400# turkeys | @ .16 | 64.00 |
| —2nd— | ||
| Shipped to | ||
| Richard Roe, to be sold on my a/c | ||
| 220# chickens | @ .11½ | 25.30 |
| 98# ducks | @ .13 | 12.74 |
| —2nd— | ||
| Ctg. and Exp. on above | ||
| paid in cash | 2.25 | |
| —3rd— | ||
| Bought for cash | ||
| 100 cs. eggs, 3,000 doz. | @ .16 | 480.00 |
| —3rd— | ||
| Shipped to | ||
| Richard Roe to be sold on my a/c | ||
| 95 cs. eggs, 2,850 doz. | @ .16 | 456.00 |
| —3rd— | ||
| Sold to Johnson & Sons on a/c | ||
| 5 cases eggs, 150 doz. | @ .20 | 30.00 |
| —4th— | ||
| Shipped to Richard Roe to be sold | ||
| on my a/c 200# turkeys | @ .16 | $32.00 |
| —4th— | ||
| Paid freight on eggs to Roe | 2.98 | |
| —4th— | ||
| Paid freight on turkeys to Roe | 1.80 | |
| —5th— | ||
| Received from Richard Roe | ||
| Account Sales for Shipment No. 1 | ||
| Net proceeds remitted in cash | 47.73 | |
| —6th— | ||
| Received from Richard Roe | ||
| Account sales for shipment No. 2 | ||
| Net proceeds retained by him | 518.12 | |
| —6th— | ||
| Paid for labor | ||
| cash | 9.00 | |