But from this we can draw no conclusion. The debit side amounts to $12,062.54 and the credit side to $7,403.32, but the difference, $4,659.22, is not an asset, for that would be assuming that we have sold at cost price; and it cannot be a loss, for that would be assuming that there is no balance remaining. If we know the profit, we can ascertain the balance; if we know the balance, we can ascertain the profit.

415. The balance on hand, ascertained by inventory, is the key to the situation. Assume that it is $6,894.16. Then we compute the profit thus:

and the profit must be

416. We can now complete our account.

$6,894.16 goes to the balance-sheet; $2,234.94 to the Profit and Loss Account.

417. This is the traditional form of the Merchandise Account and suffices perfectly for "balancing the books." Its defect is that it nowhere presents a clearly contrasted statement of the same goods at the two prices-in and out-and consequently the average percentage of profit could not be obtained without effort.

418. When there are goods returned, whether purchases returned by us or sales returned to us, the confusion is still greater, for each side contains some values at cost-price and some at selling price. To illustrate this, let us vary the above figures slightly, the final results being the same.

419. It will be readily seen that the difficulty of obtaining intelligible information as to the comparativ values, in and out, is even greater here, and that to obtain such information the account would need to be taken to pieces and made over.

420. AN ACCOUNT WHICH NEEDS TO BE MADE OVER IS ONE WHICH OUGHT TO HAVE BEEN MADE DIFFERENTLY AT FIRST.

421. The modern practice is to separate the Merchandise Account into three: Merchandise, Sales, and Purchases; or at least the former two.

The above transactions would be posted as follows:

422. The cost of goods sold is now obtained by subtracting

423. The only two accounts remaining open are Merchandise and Sales.

Sales/Merchandise

$5,168.38

Having posted this entry, the Merchandise, a pure asset account, is closed into the balance sheet; the Sales account, a pure Outlay and Income account, shows the cost and the proceeds of the same goods, and the difference is carried to the economic summary.

Centralized Consumption of Anthracite Coal.*

BY HOWARD MCNAYR JEFFERSON, M. C. S.

PART I.

CENTRALIZATION OF ENTERPRISE.

The extent, location and diversity of the coal supply of a country determine, in a large measure, its progress. Professor Tyndall, prior to 1866, made the following statement, which is as pertinent to-day as it was to the time in which it was written:

"I see no prospect of any substitute being found for coal as a source of motive power. We have, it is true, our winds and streams and tides; and we have the beams of the sun. But these are common to all the world. We cannot make head against a nation which, in addition to these sources of power, possesses the power of coal. We may enjoy a multitude of their physical and intellectual energy, and still be unable to hold our own against a people which possess an abundance of coal; and we should have, in my opinion, no chance whatever in a race with a nation which, in addition to abundant coal, has energy and intelligence approximately equal to our own.

"Coal stands, not beside, but entirely above all other commodities. It is the material energy of the country-the universal aid the factor in everything we do. With coal, almost any feat is possible; without it, we are thrown back into the laborious poverty of early times."

The estimated area of the coal fields of the world is given. as follows in Chisholm's Handbook of Commercial Geography:

*This article was accepted by the faculty of New York University School of Commerce, Accounts and Finance in fulfillment of the thesis requirements for the degree of Master of Commercial Science.