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COMMISSION AND BROKERAGE.
240. An Agent, Commission Merchant, or Broker is a person who transacts business for another, or buys and sells money, stocks, notes, etc.
241. Commission is the percentage, or compensation allowed an agent, or commission merchant, for buying and selling goods or produce, collecting money, and transacting other business.
Brokerage is the fee, or allowance paid to a broker or dealer in money, stocks, or bills of exchange, for making exchanges of money, buying and selling stocks, negotiating bills of exchange, or transacting other like business.
The rates of commission and brokerage are not regulated by law, but are usually reckoned at a certain per cent upon the money employed in the transaction.
When an agent sells, his commission is some per cent of the sales; and when he buys, it is some per cent of the purchase price.
1. The merchandise sent to a commission merchant to be sold is called a consignment. The person who sends it is called the consignor, and the person to whom it is sent the consignee.
2. Commission corresponds to percentage.
3. The sum received by the agent as the price of the property sold, or the sum invested in the purchase or exchange of property, corresponds to the base.
4. The sum remitted to an agent, and including both the purchase money and the agent's commission, corresponds to the amount.
5. The sum due the employer or consignor, as the net proceeds of a sale or collection, corresponds to the difference.
242. Net proceeds is the sum left after commission and other expenses have been paid.
Thus, if a man receives $5000 to invest, and his commission is $200 and other expenses $ 100, the net proceeds will be $5000-$300.
243. To find the commission or brokerage on any sum of money.
1. A commission merchant sells butter and cheese to the amount of $1540. What is his commission at 5% ?
$1540 × .05 = $77, Ans.
Or, 182, and of $1540 $77. 150
SOLUTION. Since the commission on $1 is 5 cents or .05 of
a dollar, on $1540 it is $ 1540 x .05 = $77.
RULE. -Multiply the given sum by the rate per cent expressed decimally, and the result will be the commission or brokerage. Or,
Reduce the per cent to a common fraction, and take that fractional part of the given sum.
2. A commission merchant sells goods to the amount of $6756. What is his commission at 2% ?
Ans. $135.12. 3. What commission must be paid for collecting $17380, at 31% ? Ans. $608.30.
4. An agent in Chicago purchased 4700 bushels of wheat at 75 cents a bushel. What was his commission at 11% on the purchase money?
5. A broker in New York exchanged $25875 on the Suffolk Bank, Boston, at 1%. How much brokerage did he receive? Ans. $32.34375.
6. An auctioneer sold at auction a house for $3284, and the furniture for $2176.50. What did his fees amount to at 21% ?
7. An agent buys for a manufacturing company 26750 pounds of wool, at 32 cents a pound, and receives a commission of 23%. What amount does he receive? Ans. $235.40.
244. To find the commission or brokerage, when it is to be deducted from the given sum, and the balance is to be invested.
1. A merchant sends his agent $1260 with which to buy merchandise, after deducting his commission of 5%. What is the sum invested, and how much is the commission?
$1260 1.05 $1200, invested.
$1260-$1200 $ 60, commission.
SOLUTION. Since the agent receives a commission of 5 per cent for his services, it requires $1.05 to purchase every dollar's worth of goods; therefore, he can invest as many dollars as $ 1.05 is contained times in $1260, or $1200; and the difference between the given sum and the sum invested is his commission.
RULE. -I. Divide the given amount by 1 increased by the rate per cent of commission, and the quotient is the sum invested.
II. Subtract the investment from the given amount, and the remainder is the commission.
PRAC. AR. - 16
2. A man sends $3246.20 to his agent in Boston, requesting him to lay it out in shoes, after deducting his commission of 2%. What is his commission?
3. What amount of stock can be bought for $9682, and allow 3% brokerage? Ans. $9400 worth. 4. A flour merchant sent $10246.50 to his agent in Chicago, to invest in flour, after deducting his commission of 3%. How many barrels of flour could he buy at $5.50 per barrel? Ans. 1800 barrels.
5. An agent receives a remittance of $4908, with which to purchase grain, at a commission of 4%. What will be the amount of the purchase?
6. A commission merchant receives $9376.158 with orders to purchase grain; his commission is 3%, and he charges 11% additional for guaranteeing its delivery at a specified time. How much will he pay out, and what are his fees? Ans. Fees, $403.758. 7. A broker received $10650, to be invested in stocks after deducting 1% for brokerage. What amount of stock did he purchase?
245. To find the amount of sale when the net proceeds and the rate are given.
1. Find the amount of sales when the agent remits to the owner $3800 after deducting his commission of 5%. SOLUTION. The agent's commission is some per cent of the sale, and $3800 is the net proceeds after the 5% commission has been deducted. It is, there- . fore, 100%-5% = 95% of the sale. If $3800 is 95% of the $4000, Ans.
Com. Net Proceeds.
sale, the sale must be $3800 ÷ .95
RULE. -Divide the net proceeds by 1 diminished by the rate per cent of commission, and the quotient will be the amount of sale.
2. A real estate agent sold a house for a certain sum of money and remitted $19600 to the owner, after deducting his commission of 2%. For how much did the agent sell the house? Ans. $20000. 3. An agent sold a piano. After deducting his commission of 10% he sent the owner $450. How much 'did the purchaser pay for it? Ans. $500.
4. An agent sold a grocer 40 bbl. flour and sent the miller, as the proceeds of the sale, $82.32, after deducting his commission of 2%. What price per bbl. did the grocer pay for the flour? Ans. $2.10.
STOCKS AND BONDS.
246. A Corporation is a body authorized by a general law, or by a special charter, to transact business as a single individual.
A charter is the legal act of incorporation, and defines the powers and obligations of the incorporated body.
247. A Firm is the name under which an unincorporated company transacts business.
248. Capital or Stock is the money contributed and employed to carry on the business of an individual, corporation, company, or firm; it receives different names, as Bank Stock, Railroad Stock, Government Stock, etc.
249. Certificates of Stock or Scrip are the papers or documents issued by a corporation specifying the number of shares of the joint capital which the hold
250. A Share is one of the equal parts into which the stock is divided.
251. Stockholders are the owners of the shares.
252. The Nominal, Face, or Par Value of stock is its first cost, or original valuation.
The original valuation of a share varies in different companies. A share of bank, insurance, railroad, or like stock is usually $100.
253. Stock is At Par when it sells for its first cost, or original valuation; Above Par, or at a premium, when it sells for more than its original cost; and Below Par, or at a discount, when it sells for less than its original cost.