size is indicated by writing the size below a short line, and the number of articles of that size above the line. Thus,,, means 3 No. 7's, 5 No. 8's.

When an error is made in the count, this error may be corrected by using the "Add" or "Deduct" columns. These columns are also used when goods are purchased or sold while the inventory is being taken. By adding goods purchased, and deducting goods sold during the taking of inventory, the value of stock at the end of the inventory may be determined.

To find the cost extension, multiply the cost by the number of items in the "Quantity" column plus the number of items in the Add" column or minus those in the "Deduct" column.

If goods become shopworn or out of style, if the market price has decreased, or if, for any other reason, the value has become less than the cost marked on the goods and entered in the inventory, it is necessary to make some allowance for this depreciation in value.

Perhaps an article is worth only half its cost price. In that case a 50% depreciation should be entered in the "% Depreciation " column. Then 50% of the cost extension for that item is entered in the "Loss Assumed " column, and the total of this column is subtracted from the total of the "Cost Extension" column to determine the actual value of the stock on hand.

Oral Work

1. What does 25% depreciation mean? 10% depreciation? 20% depreciation?

2. If stock is damaged so that it is worth only of its original cost, what per cent depreciation should be entered?

3. Goods are worth of their original cost. What is the per cent depreciation?

4. Goods are worth of their original cost. What is the per cent depreciation?

5. Goods are worth of their original cost. What is the per cent depreciation?

Written Work

Rule an inventory form similar to the one on page 249 and enter the following items which form a portion of the inventory of a shoe stock. Enter one size to a line, find the value of each item listed, and

the total value of the stock shown on the page after making corrections for stock returned, for sales, and for depreciation.

2 1 3 4 2 2

Lot No. 219 B; '6'7'7' 8' 8 Men's Tan Oxfords, $3.15 per pair.

One pair of Lot No. 712, Size 7, taken home by a customer before taking inventory, was returned after Lot No. 712 was listed.

During stock taking, the following sales were made:

1 pair Lot No. 712, size 7.

1 pair Lot No. 618 D1, size 7.

1 pair Lot No. 618 D1, size 9.

Lot No. 322 A can now be purchased for $1.75.

218. Perpetual Inventory. In some lines of business a perpetual inventory is kept. It is also called a Stock Record. When such a record is kept, a book is required for the purpose, one page being devoted to each item carried in stock. Both purchases and sales are recorded at cost price. The following model illustrates a form of perpetual inventory.

219. Value of Perpetual Inventory. Considerable labor is required to maintain a perpetual inventory, but it is valuable for several

reasons.

When stock is kept in warehouses or in storerooms at some distance from the salesrooms, the perpetual inventory is a great convenience since it shows without delay the amount of stock on hand.

A "danger point" is fixed for each item. When the balance on hand has decreased to this danger point, a new supply is purchased.

An inventory may be taken at periodical intervals, and the quantities shown compared with the stock record. If the inventory and the stock record do not agree, an investigation may be made to discover the cause of the discrepancy.

Rule a page of a stock record similar to the model on this page, and enter the following facts, making a perpetual inventory of the stock of Solvay Coke.

October 29, 2 tons; October 30, 5 tons; October 31, 7,500#; November 2, 9,500#; November 5, 7 tons; November 17, 2 tons; November 19, 12 tons; November 20, 7,000#; November 23, 4 tons; November 24, 9,000#; November 30, 2 tons; December 9, 13,000#; December 11, 5 tons.

CHAPTER XXIII

GROSS PROFIT ON SALES

220. Definition. Gross Profit on Sales is the excess of the selling price of goods over their cost.

221. Cost of Goods Sold. The cost of goods sold is computed as follows: To the inventory at the beginning of the period add the purchases and the buying expenses such as freight and drayage; from this total deduct the inventory at the close of the period.

222. The Per Cent of Gross Profit may be computed by dividing the gross profit by the cost of the goods sold or by the selling price. Textbooks have usually stated that cost should be used as the basis, but business men almost invariably use the selling price as the basis. Therefore, when the expression "per cent of gross profit" is used in this text it will be understood to refer to the rate obtained by dividing the gross profit by the amount of the sales.

Oral Work

1. A hat which cost $2.00 is sold for $3.00. What is the profit? What is the per cent of profit?

2. A set of books cost a dealer $20.00. In order to sell them the dealer lost $2.00. What was the per cent of loss?

3. Through an error in an advertisement a merchant was obliged to sell some parasols at 163% less than their cost. He lost 30 cents on each parasol. What did they cost, and what was the selling price? At what price should they have been sold to gain 10% of the cost?

Written Work

1. Mr. Fisher bought a carriage for $55 and sold it for $75. What was the gross profit? What was the per cent of gross profit?

2. During a certain year a merchant purchased goods which cost him $14,000. At the close of the year this stock inventoried $3,000. What was the cost of the goods sold?