extension on the accounting register is in the Payroll and Petty Cash Disbursement column. All entries are in red. The offset to this charge to the Payroll and Petty Cash Disbursement account is the credit on the cash receipt side of the cash book. Closing Dates The day selected for closing purchase registers should be the one on which job payrolls end. The registers should be closed weekly when the job payrolls are prepared and cost reports compiled weekly. Monthly closing should, without exception, not be based on a calendar month, but be made as of the date of the last job payroll during the month. If the reports of the cost analysis department are prepared at the end of each payroll week and the records of the accounting department are kept on a calendar month basis, a discrepancy is immediately created between the cost of construction used by the accounting department in preparing balance sheets and with the total cost shown by the reports of the cost department. If the payroll ended Thursday night, October 26, all cost reports would be based on cost to October 26. The last day of the month would be five days later and the balance sheets would include cost to October 31, making a discrepancy between the cost reported by the cost analysis department and that shown by balance sheet equal to the sum of the expenditures for the five days from October 27 to October 31. Closing Register When closing the purchase register, all columns on the cost analysis register and the accounting register are added. The sum of the totals of the distribution columns must equal the total of the Amount column on the cost analysis register. (See Form 18.) The sum of the totals of the Controlling Account columns must be the same as the total of the Amount column on the accounting register. (See Form 19.) The total of the Amount column must be same on both registers. Purchase Register Summary The completed sheets are given to the general ledger keeper, who files them until ready to prepare his monthly summary. The monthly summary is merely a tabulation of the totals shown by the different columns of all sheets used during the month. The sheets are sorted according to the general ledger account to which they are chargeable. The amounts shown as the totals of the different columns on the accounting register sheet are listed one under the other in summary columns similarly marked; the columns on the summary are added and totals cross-proved. The totals of the individual sheets of a group affecting the same general ledger account are entered in short and the sum of all indicated as a single debit to be posted to the general ledger account. The totals of the credit columns on the summary are carried forward from page to page of the summary and one credit posting made to each ledger account. In preparing this summary, the general ledger-keeper should see that all sheets in use during the month are accounted for and entered on the summary and also that the first register sheet appearing on one month's summary is the one next in consecutive order to the last one on the preceding month's summary. The Ledgers CHAPTER XI THE CONTRACT LEDGERS There are two contract ledgers, or sets of contract accounts. One contains the details of subcontractor's accounts and the other those connected with transactions with owners. THE SUBCONTRACTORS' CONTRACT LEDGER Description The accounts with all subcontractors are carried in this ledger. Subcontractors are firms to whom the contractor sublets work in which they specialize and for which they manufacture or install the material, or both, such as elevators, ornamental iron, finished woodwork, plastering, etc. The term "subcontractors" does not include the furnishers of bulk material, such as sand, broken stone, cement, brick, etc. The ledger sheets (Form 21) contain a memorandum and a regular account with each subcontractor. The first column is the memorandum account and is a record of the original contract and orders given him for additional work or for work omitted. The remaining columns on the sheet are the regular account with a subcontractor and show the balance due him for work performed. This balance is included in trial balances and appears as a liability on the balance sheet. One column is provided for credits for work done and several columns for cash payments and charges. Credits represent monthly applications for payment and are few in number. Charges for cash or services are of much more frequent occurrence. BLANK CONSTRUCTION COMPANY SUB-CONTRACTOR APPROVED BY ARCHITECT Sept.30/22 PUBLIC LIABILITY EXPIRES June 30, 1923 DESCRIPTION OF CONTRACT: BOND REQUIRED FOR $ 25,000.00 BOND FURNISHED BY Fidelity and Deposit RETAINED PERCENTAGE 10% APPROVED BY CASHIER J FINAL PAYMENT APPROVED BY ARCHITECT Furnishing and installing ornamental iron. ALTERNATE CLAUSES: If elevator fronts are glass enclosed, add $10,000.00 PAYMENTS AND CONTRA CHARGES PAYMENTS AND REF. NO. DATE AMOUNT REF. NO. DATE 5 000 4 Form 21. Subcontractors' Contract Ledger Sheet Ledger sheets are filed so that all accounts of each job are grouped together and arranged alphabetically. The column at the extreme left is the memorandum account with the subcontractor. Other columns are his regular account. The "Work Done" column is the credit to the subcontractor and the remaining columns are debits against him. In the printed form there are three more group columns like the last group and at the top right section are lines for "Name" and "Address" of subcontractor, for "Job" and "Job No. and Letter.' The difference is the trial balance figure. This is a more convenient arrangement for ledger-keeper than having the credits at the right and the debits adjoining. Why Memorandum Account is Used The contract between the contractor and the subcontractor covers the furnishing of labor and materials and includes the subcontractor's profit. After signing a contract, a subcontractor could not immediately go to court and maintain an action for the recovery of any sum for labor or any amount for material. There has been no performance under the contract. The subcontractor would not have a claim for profit without performing work, unless the contractor discontinued the work and thereby deprived him of the opportunity to make his profit. This is a claim for damages that develops only from abandonment of work by the contractor, and as it results from some future act, any claim of the subcontractor based on such abandonment is not contingent at the time the contract is signed. As no legal liability exists on execution of the contract for either labor, material, or profit, no liability should be shown on the books of account. Memorandum Account The method of arriving at the price at which work is let to a subcontractor was detailed in Chapter V. The amount of the contract is entered in the memorandum account (Entry 1, Form 21). Each subcontract should be carefully read when received by the accounting department. All important clauses having a bearing on the sum to be paid the subcontractor should be entered on his account. The importance of inserting the date when actual work at the site is to begin arises from the necessity of having the subcontractor furnish liability insurance certificates prior to the date his employees commence working. The risk of loss to a contractor through failure of his subcontractors to insure their workmen against accidents was explained in Chapter VI. |