and the remaining columns are the basis of credits to the accounts named at the heading of each column. The sum of all credit totals equals the total debit.

As the registers for both the accounting and the cost analysis departments are prepared simultaneously, the discussion about cost registers is given here instead of in Part III to enable the reader to grasp more easily the relation between these two registers and their preparation.

Preparation of Registers

The register sheets applying to each construction account form separate series. Those comprising each series are given a symbol for identification and are numbered consecutively as prepared. Charges and credits are entered on these sheets as they arise. Each entry is numbered consecutively when placed on the registers.

The invoices or other papers which are the authority for making an entry are fastened together. The series symbol and the entry number are noted on the uppermost paper. The entries for each series are then filed in numerical rotation. All papers forming the basis of charges or credits to each individual general ledger account are together.

Classes of Entries

The entries on these sheets consist of:

1. Deliveries by and returns to material dealers and supply houses.

2. Disbursements for payrolls and payments out of petty cash funds at the jobs or in the offices.

3. Applications and bills received from subcontractors for work performed by them.

4. Charges for insurance, including workmen's compensation, liability insurance, fire insurance, etc.

5. Corrections of errors in previous entries, either in calculation of entry or in charging or crediting an entry to the

wrong account.

journal entries.)

(Most of these take the place of

6. Credits resulting from contra charges against subcontractors, supply houses, material dealers, etc.

7. Credits for cash received from the sale of old material or for telephone charges, etc.

Material Entries

Material entries are those covering the delivery or return. of material. The papers supporting an entry consist of copies of purchase orders, job clerks' reports of material received, vendors' delivery tickets, and invoices.

PAPERS SUPPORTING ENTRIES. The first notification to the accounting department regarding material is the copy of either a purchase agreement or a purchase order. The numbers on purchase orders should be examined by the accounting department to see that copies of all purchase orders are received promptly and in sequence. When the purchase orders are few in number, they can be filed alphabetically. If many in number, the orders should be sorted according to the job to which material will be delivered and by which its arrival will be reported.

The next advice to the accounting department is the report from the job material clerk that the material has been delivered. These reports should indicate the name of the vendor, number of purchase order or date of purchase agreement, date of delivery, quantity and kind of material delivered, transportation charges not paid by shipper, and cost symbol of feature of work on which material was used. The use of Form 12 in reporting material was explained in Chapter IV. (See also first paragraph page 50.) Reports are filed with the copy of the order purchasing the material, pending receipt of bill from vendor.

Vendors' invoices are compared with purchase orders for

prices and discounts and with material clerk's reports for quantities and kinds of material delivered. When prices charged and quantities billed are correct, all papers are fastened together to form one entry, that is, the papers supporting an entry on the purchase register are the vendor's invoice, the purchase order, the material clerk's report of material received, and the vendor's delivery ticket. The invoice is then ready for entry on the proper purchase register sheet.

The quantities billed on invoices for material bought under purchase agreements are verified with the material clerk's reports, and the prices charged are compared with the agreements. The material clerk's report of material received and the vendor's delivery ticket are attached to his invoice, the three papers supporting the entry on the purchase register.

ACCOUNTING ENTRY. If the first entry on the purchase register is for an invoice dated October 10 from Patterson Brothers for ten kegs of nails at $3.50 a keg, less 2%, or $34.30 net, the entry on the purchase register (Forms 18 and 19) would read: "I" under "Register No.," "Oct. 10" under "Date," "Patterson Bros." under "From," "10 kegs nails" under "Description," and "$34.30" under "Amount." This part of the entry would appear on both the accounting and the cost analysis departments' registers. The carbon sheet does not extend beyond the amount column.

The report of material received forwarded by the job material clerk would indicate the feature or features of the work on which the nails were used. If they were used half on M2 and half on M3, the first two distribution columns on the cost analysis register would be marked "M2" and "M3"; $17.15 would be entered in each of these two columns.

On the accounting register, the $34.30 would be extended in the creditors' controlling column and the amount posted as a credit to the account of Patterson Brothers in the creditors' ledger. The total of the creditors' controlling column on the

purchase register is a credit to the creditors' controlling account on the general ledger. The offsetting entry is the cash payment in the creditors' controlling column on the cash book.

Cash discount taken should always be deducted from each entry and net amounts charged to construction, particularly on cost-plus contracts, unless contract with owner provides otherwise. "Cost to the contractor" can generally be fairly interpreted as meaning his actual cash outlay for labor and material, etc.

FREIGHT AND EXPRESSAGE ALLOWANCES ON INVOICES. Vendors make sales f. o. b. destination but often ship material freight or express collect. An allowance for the freight or expressage is then given on their invoices. These transportation allowances should be ignored in entering invoices on the purchase register. The amount representing the value of the material is the one entering into the cost of the construction. The sum paid the express or railroad company should be treated as explained under "Transportation Charges" in Chapter IX.

Two reasons exist for this treatment: One is that delay in receiving or entering freight or express bills will result in the cost records sometimes containing only partial costs of some material; the other is the necessity for having an internal check on the recharging of freight and express to shippers.

A

Unless the shipments sent collect instead of prepaid are few in number, all transportation costs paid by the contractor should be charged to a Freight and Expressage account. purchase register sheet is opened for it. The bill recharging the freight or expressage to the shipper is entered immediately. At no time should there be a balance in this account. The appearance of a debit balance for this account on the trial balance indicates freight paid to a carrier has not been recharged to the shipper.