History of 19th century whaling bookkeeping in New Bedford question:

USA Discussion in 'General Accountancy Discussion' started by BrianAGlennon, Sep 14, 2018.

  1. BrianAGlennon

    BrianAGlennon

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    I need help with a historical bookkeeping concept. Question: Why would the 19th century New Bedford bookkeepers (~1840s) put the Whaler's 'lay' (fractional pay) on the right hand side of the balance sheet?? Thank you!
     
    BrianAGlennon, Sep 14, 2018
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  2. BrianAGlennon

    Steve-LevelUp VIP Member

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    If they follow a standard pay cycle, and the fractional pay occurs at the end of the month, then this would represent the pay liability that the have incurred (but not paid) by the end of the month.
     
    Steve-LevelUp, Sep 15, 2018
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  3. BrianAGlennon

    BrianAGlennon

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    Hi Steve, thanks for your reply. Now for some more information. I don't think the 1840's New Bedford Whaling bookkeepers followed a a standard pay cycle. The Whale Ship was gone for up to three years (or more) before the crew got paid. What bookkeeping rationale would make those 1840s bookkeepers put the 'lay' (a percentage of the total profit from a three years voyage) in the 'right hand side of the balance sheet'? So debiting the pay three years before making payment might "represent the pay liability that the [sic] have incurred (but not paid)"? Is that a 1840s bookkeeping practice or a modern accounting method?? Thanks!
    "
     
    BrianAGlennon, Sep 15, 2018
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  4. BrianAGlennon

    Steve-LevelUp VIP Member

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    I think the same approach would apply. Accounting policy is regularly reviewed and updated, so I cannot speak to accounting history, but I suspect this still represented wages owed.

    Typically, financial statements are produced on a monthly or quarterly basis. Even though wages are not paid, the expenses are considered incurred when the services have been rendered. So, every month, the bookkeeper would expense $100 (total wages for sailors - left side entry) and a liability of $100 (accumulated wages earned but unpaid - right side entry)

    However, this is only based on what you provided, so I cannot speak to exactly what policies were in place at the time, nor the standard accounting practices that were followed.

    However, I hope that the above helps.
     
    Steve-LevelUp, Sep 16, 2018 at 7:43 PM
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  5. BrianAGlennon

    BrianAGlennon

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    Hi Steve, Thanks for all the effort put into answering my question. It does help. Take care!
     
    BrianAGlennon, Sep 17, 2018 at 2:48 PM
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  6. BrianAGlennon

    BrianAGlennon

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    Hi Steve, actually, upon further research, your answer was extremely helpful to me. It helped me zero in on an accounting/bookkeeping explanation which had eluded me. Thanks again.
     
    BrianAGlennon, Sep 17, 2018 at 4:00 PM
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