THE J. G. WARD COMPANY'S BALANCE SHEET.

Otago Daily Times, Issue 10589, 5 September 1896, Page 2

THE J. G. WARD COMPANY'S BALANCE SHEET.

' The. "New Zealand Journal of Insuranco, j ' Mining, aud Finance," disposing the Ward I . Company's balance sheet and his Honor Mr , Justice- Williams's strictures in connection j therewith, puts the matter very clearly in the : following article :— j The question of the month has continued to j be the banking inquiry, which is still proceed- • ing at a snail's pace. One important matter j has been brought up during tho month, and thafc j is: whether the construction ol the last balance j sheet of the J. G. Ward Farmers' Association ! W»s misleading or nofc, and the Premier, as well j as Mr Watson, president of the Bank of New j Zealand, who was inspector of, the Colonial j ! Bank at the time the balauce sheet under re- ', view was. published, considered that such was j not the case, and that'his Honor Mr Justice \ Williams was wrong in commenting upon'ifc so j strongly. Now, as this is a question of serious j moment.-to every trading "co'icem, let us con- i sider the matter aB it actually stands, and in ! order to do so we will first turn to the remarks ! o£ the judge, made when "delivering judgment, j Mr Justice Williams said: "The attention of I the courtj'was first directed to the balanoe sheet ; of the association for, the; year ended June 29, ! 1895. Thafc balance sheet is framed somewhat curiously. Among the assets there is one item i of £6830 bills receivable. There is no entry oE ■ bills under discount among the liabilities. This ' latter entry had, however, appeared in former balance sheets" Now, the whole kernel of this ■ particular case lies in tbe words we have j italicised. In order that our readers may see it j clearly for themselves, vie will show the reading of the two balance sheets in juxtaposition: , Corr or tub i. G. Ward Association Balance Sheets, j • ' Liabilities. June 30, 1594. June 20,1895. £ s. d. :■£. s. d. Capital .. : ... .. 27,189 0 0 27,450 10 0 -association'sdrafts against shipments' ... ... 51.(M3 911 — Debentures ■ '.. .... — 40,000 0 0 Bills under discount .. 33,917 110 — Amount to credit of shareholders in clients-' 1 cufrent accounts .. 0,094 17 B 10,103 S 2 Bauk.ovordraft .. ..20,584 810 1,185 4 1 Drafts accepted .. ~ 8,030" 2 2 Reserve fund .. .. 1,000 0 0 2,000 0 0 Unclaimed dividends ~ 310 6 — Profit and -Jo&s account— Profit .. ... '~ 7,777 19"'8 0,51017 3

---",:■'.. ''■•■" -6160,846 16 4 £87,250 19 6 1 Prom the above it will be seen that whereas ' i there appeared to be in 1894 £33,917 Is lOd ! I' bills nnder discount, and an overdraft at the j bank of £26,584 8s lOd, we find that in 1895"; there were, no bills under discount stated, and . the bank "Overdraft! is shown; as reduced'"to j £1185 4s Id, and in place ot these is a sum of £40,000 for debentures,: while, by the way, in } the annnal report submitted to the shareholders I and signed by the chairman, one paragraph j Treads thus: "During the year the directors j issued £50,000 of 6 per cent, debentures, with a currency of 14 years, of which £40,000 has been ; sold, and the balance of £10,000 is open for purchase, These debentures are recommended to \ shareholders and clients as offering a first-class I investment." '......: We will now turn to the ■ statement of assets for the two years : ■ "' Assets. '*"'-' June 30,1894. Juno 29,1895. £' s. d; £, "s; d; Advances os-ainßt produce ■ afloat and in store ' ..74,929 17 4 34,430.9 9 Bills receivable ~ ~. 37,477 511 ■ 0,830 7 5 Current accounts .. .. 10,372 5 0 10,468 17 0 Stock on goods on hand andailoat .. .. 20,605 4 2 17,810 2 8 \Vorlting ; plant-, &c. * '.. 2,042 8 9 2,638 '5 2 Goodwill account,. ... 15,000 0 0 15,000 .0 01 .Goodwill paid , United ■ Farmers' Agency Co. .. 1,278 3 0 Sharei in Saieyards .. 40 12 Ci 47.17 Q Cash.ln hand', .... 35 4 2 _;'...'. -100,846 10 4 £87,25519 0 In 1894 the bills receivable appear aB £37,477 5s lid, antl'in 1895 they are reduced to £6830 7s sd, which would certainly lead any person read-, ing it without'any explanation iu the report to consider that the association had gone more ■into a cash business, ind that the £40.000 received from debentures had enabled them to reduce their overdraft. Had such really been' the case, the directors would have had reason to recommend the remaining £10,000 nnsold debentures "as a first-class investment." We will conclude by appending the actual facts as disolorsed by Mcßsrs Cook and Gray in Mr Cook's statement of the position in which he found the true reading of the balance sheet mads by him about nine months later (March 20, 1896),: or about six months after the shareholders' meeting: Copr op Ma. W. It. Cook's Stating or Balance Shbbis oi' thb J. G. Waiid Farmers' Associates "AS.'at ilAiicu 20, 1896. Liabilities. ■C s, d. £ s. d. Blind of New Zealand debentures :.. :. ' 20,000 0 0 Colonial Bank,: of New , . Zealand .. .. .. 20,000 0 0 . ••' . Grain and rail account .. 9,005 0 0 Local bills .... .. ~ 8,312 4 0 C*>!onial bills ." „ ' „ 425 0 0 Inland bills.. _ .. '951 17 Past duo bills ~ ... 32,850 3 7 _ , 72,170 9 2' Sundry creditors ~ _ .. .. 18,970 511 Trade accounts (Iocs.)) 1,009 6 7 ™""*'">' „ , ISO 0 0 Bank of New Zealand unurescntcd cheques .. .. * „ .. ~ 362 5<£112,797 .7.2 Assets. Book debts _ 1m _% 10 ' Stocks .. 12 080 0 0 Plants j' ]B1 j- o Sharon in saieyards ~ ~ ' 50' 7 0 Waddcl's property .. .. '" " 2 60 0 0 0 New Zealand Land Co.'s scrip 033 9 3. Bank of New Zealand special account .. .. t_-_f n 0 Bank' of New Zealand ~ ordinary account.. .. 12 0 0 „7 ..' 29 0 0 Deficiency iT . „ _ „ .. 48,456 16 4 £112,797-7 2 Here wo see thb destination of the debentures, and in the item " past due bills £32,850 3s 7d," we leave with our readers the key for deoiding whether his Honor Mr Justice Williamn or Messrs Seddon and Watson are correct. We have uofc touched uuou other items c£ the

balance sheet;, as the point of difference is regarding the bills; u'or have we gone into .plotters which ongh(i to have been known between the date the balance sheet waS framed— June 29, 1895—and. the date oE the meeting of shareholders—September 7,—but the judge stated :' m It i? impossible to suppose that the framers of this balance sheet on June 29, when they putit forward on September 7,'were nßt; aware thsit, it was au utterly false one." The Premier produced the balance sheets of .several, respectable" compauiee, and asked questions upon them quite irrelevant to the point at issue, and, without explanation, he would have the public believe that the balance uhcets ol those respectable and solvent companies were framed on the same lines as thatjgstj reviejrsd. , -.-.,-