ACCOUNTING BULLETIN NO. 1.

Case 268.

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Query. Road A has trackage rights over the line of road B between two points, the consideration received being a toll of $4 per loaded car, etc., which amounts have heretofore been credited to "Miscellaneous Earnings." Should such items be shown as a credit to primary account "Operating Joint Tracks and Facilities-Cr.?" Answer. It is assumed that this payment includes the following items, and should be disposed of accordingly:

1. Maintenance, which should be disposed of to "Maintaining Joint Tracks, Yards, and Other Facilities.''

2. Transportation expenses, which should be disposed of to "Operating Joint Tracks and Facilities."'

3. Interest on valuation or rent, which should be disposed of to "Income" account.

It is also assumed in this answer that there is no Yard movement.

Case 269.

Query. What account should be charged with amounts paid by a carrier for electric lights at street crossings not at stations or in yards, the object being to make the crossing more safe for the passage of traffic on the street? Answer. To Crossing Flagmen and Gatemen."

Case 270.

Query. This line is a switching road entirely within the State of Pennsylvania, and with but few exceptions, and then only for a short time, its cars do not leave the line, and consequently there is no charge for per diem against other companies. We pay to other companies the regular per diem charges for use of their cars while on our lines, and being a switching road, are allowed the reclaim from connecting lines a certain amount for cars returned within the time limit fixed by them.

Are we correct in charging "Hire of Equipment" with the amount paid to other companies for use of their equipment, and crediting "Hire of Equipment" with the amount of the reclaim received from connecting lines, and carrying the balance as a debit or credit, as the case may be, to income acount? Answer.

Yes.

Case 271.

Query. To what account should be charged this company's proportion of the expense of maintaining and operating the mileage exchange order bureau of a passenger association? An interchangeable mileage ticket is in use in this territory, which is honored by all railroads in the association, and the record of the use of interchangeable orders is kept by the bureau mentioned for the purpose of detecting any misuse of these orders.

Answer. To "Traffic Associations.''

Case 272.

Query. The X Y Z Railroad has arrangements with a number of different roads through which the entire expense of interlocking plants protecting railroad crossings, also crossings protected by manual signals, as well as stations at railroad crossings joint with other roads, in connection with which either one road or the other pays the entire expense, both of labor and supplies furnished, and bills the other road for its proportion. The tendency seems to be to throw these bills into "Jointfacilities' accounts.

My understanding of the Joint-facilities Circular was that it applied to the properties, owned by one carrier, another carrier enjoying the facility, or, perhaps, operated by another carrier in connection with which it would be a proper charge to the different "Joint-facilities' accounts, but it does not seem to me that a station out in the country, or an interlocking plant covering a road crossing, comes It seems to me that the proper charge is I do not within the "Joint-facilities' accounts. to the different primary accounts outside of "Joint-facilities'' accounts. see how that operating joint tracks can be considered as the proper account in connection with road crossings, the train of each road passing over the crossing on their own rails. Please advise the proper disposition of these expenses.

Answer. Should be handled through "Joint-facilities' accounts.

The account

Operating Joint Tracks" is amended to read "Operating Joint Tracks and Facilities" in order to embrace items of this nature not in yards or at terminals.

The operating carrier should charge the full expense of operation and maintenance to the various operating expense primary accounts affected and should credit the proportions charged against other carriers to the appropriate "Joint-facilities” accounts in "Operating Expenses. The amount of rent (interest on valuation and proportion of taxes), if covered by settlements should be credited to "Rents" in Income Account.

The debtor carriers should charge the appropriate Joint-facilities" accounts in Operating Expenses" and "Rents" in Income Account. The account "Operating Joint Tracks' is amended to read "Operating Joint Tracks and Facilities' in order to embrace items of this nature not in yards or at terminals.

See Supplement, effective on July 1, 1908, to the Classification of Operating Expenses for Steam Roads, Third Revised Issue.

Case 273.

Query. Should amounts paid to and received from other companies for use of joint facilities, when same are based on a proportion of interest on valuation, in addition to the expense incurred in maintaining and operating such property, be included under the following accounts: Maintaining Joint Tracks, Yards, and Other Facilities" (debit and credit); "Maintaining Joint Equipment at Terminals'' (debit and credit); "Operating Joint Yards and Terminals'' (debit and credit); "Operating Joint Tracks and Iacilities' (debit and credit), and "General Administration Joint Tracks, Yards, and Terminals" (debit and credit)?

The note under each of the foregoing accounts shows the purpose of the account is to cover amounts accruing against or in favor of a carrier for its proportion of the expense, etc., and I am therefore unable to determine whether or not the interest on valuation is construed as an item of expense or should be carried through the "Income'' account as a fixed charge.

Answer. That portion of the charge which represents interest on valuation should be handled through the appropriate rent account under "Income.''

Case 274.

Query. In connection with the subaccount "Icing and Watering Cars, "' under "Train Supplies and Expenses,'' referring to the item "Also cost of refrigeration when borne by the carrier," this company has considerable revenue from refrigera tion charges which are collected in addition to the regular freight rates. No specifie mention of this is made in the classification of revenues, but as the Classification of Operating Expenses contemplates charging to "Train Supplies and Expenses'' bills of other companies for refrigeration, it occurs to me that it would be proper to credit our bills and advance charges to the same account,, notwithstanding there is a profit in the business.

What disposition should be made in regard to this matter?

Answer. Should be charged or credited to "Train Supplies and Expenses."

Case 275.

Query. What disposition should be made of bills for operating interlocking plants at crossings?

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Answer. Cost of operation of interlocking plants at railroad crossings used jointly to carriers other than the operating carrier should be handled through "Joint-facilities' accounts. If located in yards or at terminals charges should be made to the account "Operating Joint Yards and Terminals," If located at points other than in yards or at terminals, charges should be made to the account Operating Joint Tracks and Facilities." The initial expenditure made by the operating carrier should be charged to its appropriate primary accounts (other than for "Joint-facilities') in operating expenses and the proportions thereof billed against other carriers should be credited to the appropriate Joint-facilities' accounts. See Supplement to the Third Revised Issue of the Classification of Operating Expenses, for amended text of the latter account. (See Case 117.)

Case 276.

In numerous instances agents can not collect amounts charged to them by audit office corrections against freight waybills. The partial provisions in the text under "Freight Revenue" accounts does not seem to fully cover all the circumstances of these cases. The same question presents itself where agents are overcharged on basis of rates, weights or classification in one year. The suggestion is made that the amounts of which agents are relieved under such circumstances should be set up in an open account on the audit office ledger in such manner that they may be fully and readily analyzed at any time; and that such account should be closed at the end of each year directly into "Income" account.

Answer. All uncollectible undercharges in carrier's proportion of "Freight Revenue" growing out of corrections on waybills should be charged to Account No. 1, "Freight Revenue," in compliance with the Classification of Operating Revenues promulgated by the Interstate Commerce Commission, and other uncollectible items on account of corrections on waybills should be charged to "Other Expenses" under "Transportation Expenses."

Case 277.

Query. At various junctions on our line we own, maintain, and operate stations, paying total expenses in maintaining and operating such stations, rendering bills against other carriers for their proportion of cost incurred to maintain and operate such stations. Should we charge entire expenses incurred in maintaining and operat ing these stations to "Joint Tracks, Yards, and Other Facilities," under "Maintenance and Operation," or charge proportion of amount accruing against other carriers to "Joint Facilities" and the balance of costs, borne by us, to the detailed primary accounts outside of "Joint-facilities'' accounts?

Answer. Original costs for operating joint facilities should be entered in the various primary accounts of the operating company's operating expenses, and amounts billed against other companies should be credited through the "Joint-facilities' accounts. (See Case 193.)

Case 278.

Query. Where stations, interlockers, water stations, etc., are owned jointly by our company with other companies, should the cost of operation be charged to the various operating expense accounts or should it be treated as "Joint-facilities' accounts? Answer. Should be charged to the various operating expense accounts of the operating carrier and the proportion billed against other carriers credited to the appropriate "Joint-facilities' accounts; other carriers debiting like "Joint-facilities accounts.

Case 279.

Query. To what account should the revenue on a shipment lost or destroyed in transit at a given point be charged, and what account should be charged with the unearned revenue beyond the point where the shipment was lost or destroyed?

Answer. The revenue of the road on which the loss occurs should be charged to Revenue Account No. 1, "Freight Revenue." The amount paid to other companies for their proportion of freight charges accruing thereon should be made a charge to "Loss and Damage-Freight.”

Case 280.

Query. The A B Railway Company leases extensive terminals at F, from the X Y Steamship Company, and sublets certain wharf property to the C D Transportation Company. The property used by the C D Transportation Company was included in that leased to the A B Railway Company for the reason that the C D Company was a connection of the A B Company and its interests were closer allied to those of the A B Company than to the X Y Steamship Company, with which it interchanged no traffic. In fixing upon the amount of the rent, rental value of other property was considered, and to this was added the rent received by the X Y Steamship Company from the C D Transportation Company. For example, the value of other property to the A B Railway Company was, say, $80,000 per year. The C D Company paid the X Y Company $18,000 per year, and this was added to the $80,000, making the rent

paid by the A B Railway Company for the entire property $98,000. In view of the manner of construction of the rent named in the lease, we are crediting the rent received from the C D Transportation Company, less the cost of maintenance of the property, against the rent paid to the X Y Steamship Company. Inasmuch as the rent paid is an income matter, I think that the rent received is also an income matter after reimbursing operating expenses. Is this correct?

Answer. It is correctly handled.

Case 281.

Query. The revised issue of rules of the Master Car Builders' Association, under rules 40 and 106, covers the charges to be made for the cost of removing advertisements tacked or pasted upon cars. Should this actual expense be charged to "Train Supplies and Expenses" or to "Freight-Train Cars-Repairs," and should the bills for performing the service be credited to "Train Supplies and Expenses" or "Freight-Train Cars-Repairs?"

Answer. Charge or credit Train Supplies and Expenses."

Case 282.

Query. A railroad company sends out a switch engine and crew to pick up lumber lost off a freight train belonging to another company. To what account should the wages of the crew be charged and use of engine, and what accounts credited?

Answer. Should be charged to company responsible and credited to operating expense accounts originally charged. The rent of engine should be credited to account, "Hire of Equipment."

Case 283.

Query. To what operating account should be charged the proportion of joint operation of interlockers at crossings? For example, at a point on our line another company pays the entire cost of maintaining and operating an interlocker and bills on our company for a proportion of the expense. There are no yards or other facilities.

Answer. Costs of operation of interlocking plants at such railroad crossings used jointly should be handled through "Joint-facilities' account "Operating Joint Tracks and Facilities.''

See Supplement, effective on July 1, 1908, to the Classification of Operating Expenses for Steam Roads, Third Revised Issue.

Case 284.

Query. We have inaugurated between A and C in connection with another line of road, designated the second party, a through passenger-train service operated over our line of road from A to B (being intermediate between A and C), and operated over the line of the second party from B to C, our company paying all expenses, billing the second party each month for their proportion based on train mileage; crediting the account "Operating Joint Yards and Terminals-Cr." Is this correct? Answer. No; this is not a joint facility and should not be handled through the "Joint facilities' account.

Case 285.

Query. Under an agreement between the A B Railroad Company and the Y Z Railroad Company, executed before this company began operations, this company handled traffic for the A B Company, in A B cars, between certain points on this road and the junction with the A B Railroad Company. The revenue on such traffic is entirely absorbed by the A B Company. The tracks over which this traffic is handled are owned, leased, operated, and maintained by this company. Monthly bills are rendered against the A B Railroad Company based on the cost of operation and maintenance (including taxes, etc.), as the number of cars, empty and loaded, handled for the A B Company bears to the whole number of cars, empty and loaded, handled over the tracks as prescribed in the agreement. What accounts should be credited with the amounts of such bills?

Answer. 1. Maintenance charges should be handled through "Maintaining Joint Tracks, Yards, and Other Facilities-Cr."

2. Operating charges should be handled through "Operating Joint Tracks and

Facilities Cr." (for tracks), and "Operating Joint Yards and Terminals-Cr." (for terminals).

3. Administration charges should be handled through General Administration Joint Tracks, Yards, and Other Facilities-Cr."

4. Charges representing interest on valuation and taxes should be handled through the appropriate rent account under "Income."

Case 286.

Query. Passenger trains, including crews, owned by this company, operating under through schedules, run over about nine miles of tracks, owned and maintained by the A B Railroad Company. The entire expense of the crew is paid for by this company. The entire earnings of the train while on the A B Railroad tracks are absorbed by the A B Railroad Company. This company bills against the A B Railroad Company for a proportion of actual expense of the train and crew, based on the mileage while on this company's tracks, against the mileage while on the A B Railroad tracks. What accounts should be credited with the amounts of bills so rendered?

Answer. Not a joint facility; credit appropriate primary accounts under ́ ́Transportation Expenses.

Case 287.

Query. To what account should be charged a railway's proportion of expenses of an association to protect the various railroads in litigation regarding patents upon mercantile devices used in the operation of locomotives or cars, the expenses of which are borne in proportion to the gross earnings of the companies composing the associations?

Answer. "Law Expenses" under "General Expenses."

Case 288.

Query. To what account should be charged rents paid to other companies for use of their stalls for housing our locomotives?

Answer. To "Enginehouse Expenses-Yard" or "Enginehouse Expenses-Road,'' as the case may be.

Case 289.

Query. We pay the Y Z Company a specified amount per month for the use of a portion of their yards and tracks, and for another portion on the basis of the number of cars handled over such tracks. We pay all the expenses of maintaining the tracks, but they pay the taxes. Since the amount paid the Y Z Company is for rent, should not the same be debited by us to "Miscellaneous Income-Rent of Property"? Answer. Charge to appropriate rent account under "Income."

Case 290.

Query. We collect from the X Y Company for use of tracks at G a monthly rent. This track is used by the X Y Company for an outlet for their freight trains through our yard at G. To what account should this rent be credited?

Answer. Should be handled through the appropriate "Joint-facilities' accounts in "Operating Expenses" and "Income." That portion of the charge which represents interest on valuation and taxes should be credited to Rents in "Income" and that which is for maintenance and operation to the appropriate "Joint-facilities' accounts in "Operating Expenses.' (See Case 272.)

Case 291.

Query. We collect from a certain Union Station Company for rent of tracks in G from and to certain streets, same being about 600 feet in length, a monthly rent. This track is used by lines entering the Union Station at G. To what account should this rent be credited?

Answer. See Case 290.

Case 292.

Query. We collect from a Union Station Company for rent of land in G a monthly