Part 19

—5th— Sold to Gaston & Co., 156 Hammond St. 20 cs. eggs., 600 doz., @ .20 (Lot 2) 120.00

—5th— Sold to Francis & Gates, 948 37th St. 30 cs. eggs, 900 doz., @ .19 (Lot 2) 171.00

—5th— Sold to H. B. Niles, 364 Fuller Ave. 25 cases eggs, 750 doz. @ .19 (Lot 2) 142.50

—5th— Paid expense on Lot #2 7.13

—5th— Rendered account sales for Lot #2, commission 3%, crediting amount to shippers' account.

—5th— Received from John Doe to be sold for his account 200# Turkeys Lot #3

—5th— Paid expense on Lot #3 1.25

Commission Merchant's Receiving Book, Journal and Sales Book ]

Commission Merchant's Cash Journal ]

Commission Merchant's Consignment and Sales Ledgers ]

Commission Merchant's General Ledger ]

EXERCISE

=57.= During a certain period a commission merchant transacted the following business:

Purchased goods on his own account $3,000.00 Sold goods on commission 5,000.00 Sold his own goods 2,500.00 Commissions earned 150.00 Received cash for goods sold 6,250.00 Paid expenses on consignments 37.50 Rendered account sales with which cash was remitted to cover net proceeds 2,712.50 Rendered account sales on which net proceeds were credited to the account of principals 2,000.00 Paid cash on account of goods purchased 2,200.00 Paid cash for sundry expenses 75.00 Inventory of goods owned at the close of the period 800.00

Prepare trading and profit and loss accounts and balance sheet.

STORAGE

=58.= Storage, as here used, is the business of furnishing storage for merchandise on its way to market until such time as it is sold and delivered to the purchaser. The source of supply and customs of the trade in certain classes of merchandise render the question of storage an important one. This is particularly true of the grain trade. Large buyers of grain, located in important distributing centers which have become the principal grain markets owing to their manufacturing or transportation facilities, locate their buyers in the grain producing sections to buy grain from the producers. At these points are located small grain handling plants or elevators, where the grain is received from the farmers and shipped to the distributing centers.

Here, extensive storage facilities must be provided, that these shipments, aggregating enormous quantities of grain, may be held until the condition of the market is favorable for selling. If it were not for this custom of storage it would be necessary to market all of the grain—except the small quantities stored by the farmers—soon after harvest, which would result in lowering prices to all concerned, from the farmer up.

These conditions have resulted in the organization of warehousing companies to provide storage for the owners. When grain, or other classes of merchandise, is received for storage a warehouse receipt is issued, and the merchandise will not be delivered without the presentation of the receipt. Warehouse receipts are negotiable and since they are evidence of the ownership of certain merchandise stored in a warehouse, bankers will loan money to the owner and accept the warehouse receipt as security.

Manufacturers and jobbers of certain products also find it necessary to store large quantities of their wares at distributing centers that they may promptly supply the trade. Another reason for this practice is a financial one. When a manufacturer exchanges his wares for a warehouse receipt, he can immediately borrow on its security, thus securing capital to carry on his business until the regular selling season for his particular product.

The merchandise broker and manufacturers' agent sometimes have their own warehouses and combine the business of buying and selling with that of storage and, if they possess sufficient capital, advance money to the manufacturer.

Perishable products handled by the produce commission merchant are also stored in cold storage warehouses, both to preserve them and to hold for more favorable market conditions.

STORAGE ACCOUNTS

=59.= Storage charges are usually based on a 30 day period, though sometimes for shorter periods, and any period less than a full month is charged for at the 30 day rate.

The storage is frequently charged for the exact time that goods are in the warehouse, that is, the amount is figured for each amount withdrawn. The following example demonstrates this, storage being charged on each quantity withdrawn at the rate of 10c per case per month.

════════════════════╤═══════════════╤═════╤════╦═══════ Received │ Delivered │Time │Rate║Amount ────┬──┬────────────┼────┬──┬───────┼─────┼────╫────┬── Nov.│15│600 cs. eggs│Dec.│10│100 cs.│1 mo.│10c ║ 10│00 │ │ │ │ │ │ │ ║ │ │ │ │Jan.│ 6│300 cs.│2 mo.│20c ║ 60│00 │ │ │ │ │ │ │ ║ │ │ │ │Feb.│14│200 cs.│3 mo.│30c ║ 60│00 ────┼──┼────────────┼────┼──┼───────┼─────┼────╫────┼── │ │ │ │ │ Total │ │ ║ 130│00

This is known as simple storage.

Another method is to charge storage for the average time at a given rate per month of 30 days. This method is most commonly used when receipts and deliveries are frequent, and is called average storage. The following example demonstrates the method.