Tobacco Documents Online

The packaged unaffixed revenue stamps were accounted for by a count of the number of packaGes, supplemented by a detailed count of the stamps included in packages selected at random. The loose revenue stamps were couilted. Allowance for Obsoleacenco of Wrapping Stock at Factories: This account was increased during the year ended rlarch 31, 1947 in amount of M,609, by eharCes to manufacturing cost, and decreased in amount of $57,407 by write-off of discarded materials, less dis- posal credits. Advances A~ainst Purchases of Imported_Leaf Tobacco: As of March 31, 1947, the company had made advances, agoreCating $3,469,961, to the American Tobacco Company aZainst purchase of Turkish leaf tobaccos. Purch3nes of 1945 crop amounting to $3,074,500 and of 1946 crop amountinG to $225,500 were applied arainst the advances so made, leaving a balance of 0169,961 at March 31, 1947 which was confirmed to us by The American Tobacco Company. RECONCILIATIONS of INVENTORY QUANTITIES In connection with our tests of the inventories and our reviews of the related accounting controls and records, we recon- ciled the pounds of leaf tobacco transferred to the factories during the year ended March 31, 1947 with the sales of finished product in that period, based upon data shown by the statistical records at the New York, Richmond and Louisville offices. Certain adjustments and conversion factors are involved in such reconciliationa, as indicated in the following outline: 1. The number of pounds of leaf tobacco transferred to factories, as shown by analyses of the leaf in warehouse accounts, was reconciled with the number of dry pounds represented in the prodL.ct manufactured during the period, after givino effect to inventories in tha stemmery and factoxies, leaf hAndled for Stephano Bros., sales of stems and dust, etc. 10 . 1

2. The number of wet pounds (dry pounds plus casing material) reprosentod in the product Liunufucturad at Rict=ond during the fiscal year ended I•iarch 31, 1947 was found to be 104.71 per cent of the dry pounds, as compared with 1U4.83 por cent for the fiscsl year ended March 31, 1946. The correspond- ing porcentage for the product uianufnctured at Louisville for the same poriod was 103.65, as carol,_ttlod With 1(13.83 for the risscal yoar unclod March 31, 1946. 3. A compuriaon of the qu.intity of ci.garettos produced duritu; the f'iscul your ended I1-rch 31, 19,1( at Richmond with the number of wet pounds consumed in their mµnufacture showed the average consump- tion to be 2.3307 wet pounds (oquivi-lont to 38. U9 oz. ) per thouso.nd cigarettes, as compared with 2,3343 (ocluivalont to 33.15 oz.) wot pounel3 per thou- sand cigarettes for the fiscal year ended 11arch 31, 1946. `i'lje average consumption for cigo.rettes produced at Louisville during the fi3cal your ended i•:arch 31 1947 was 2.3683 wet pounds (equivalent to 37.89 oz. j per thousand with ro:3rbct to size 70 millimeter cigarettes ztnd 2.7818 vet pounds (equivalent to 44.51 oz.) per thousand With respoct to si.o 85 uLillimotdr eit,arettes. The corresponding uverAge consu::rption for ciC,::rettas pro- duced at Louisville for the fiscsl year ended Ii:::rch 31, 1946 was 2.3879 wet pounds (equivalent to 38.21 oz.) per thousand with rospoct to sizo 70 millimeter ci srottes and 2.8449 wet pounds (equivalent to 45.52 oz.~ per thousand with respect to size 85 millimeter cigarette3. 4. The quantities of cig4rc,ttes and spoking tobacco pro- duced were roconciled with quuntitios sold by taking into consid'eratio?Z i!iventories oi' manufactured atock and also sarjplo3, gouds destroyed, etc. 5. Sales quantities for the leading brarids of cigarettes were exterzded "t selling prices and the aggregates Uior©uf w0ro in approxi.uute uLreeiiiont with the ro- spective dollar sules as shown by the general ].edUer. A sizailar tost was ~-143o uiude for tlio le~:ding brnnda of smoking tobacco. GMRA L During the course of our inventory examination, as out- lined in the preceding paragraphs, we received complete cooperation 11

from officers and employees of the company and from the peraonnel at the various independent warehouses visited by us. In our opinion, the inventories of March 31, 1947 were deternined in conformity with generally accepted accountinG principles applied on a basis consistent with that of the pre- ceding year. Very truly yours, ii 4 - I 12