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General and Technical Information Respecting Incorporated Companies, BY.. J. W. JOHNSON. F. O A.. OnT or Till! r.XAMI««r« roi TM« iNSTITItT* Of ClIARTRKRI) ArCOitNTANM Of ONTARIO AND H)« TWO Vk .U' FlmT Vl( K-I'RIWinRNT. JOINT AUTHOR Of "TllR CAHAIHAN AccoiiNTAMT." Author ok "rRomi^HORv Notrs, ORArrs ano CHR.iir»*." One ok Tim Principals ok Ontario Businrss Coi.i.Rnit, AND rRCSIDENT OF THE BRL... VILLE GAi Company, Limited. TBIiTTKC BIDITIOIN", RKVISEI) AM) KNLAFGKI). PUBLISHED BY ONTARIO BUSINESS COLLEGE, BELLEVILLE ONTAK'^' CANADA. FK,IOEl, SI. 75. BELLEVILLE : rRINTBD at the INTBLLICRNCEK PRINTING AND rUBLISlIINO HOUSE, LIMITED. I9OI. BY PERMISSION, THIS VOLUME IS DEDICATED TO THE HONORABLE SIR MACKENZIE BOWELL, K. C. M. G., SENATOR, EX-PRIME MINISTER OK CANADA. Entered according lo Act of Parliament of C.nad., in the year One Thnn^-and Eight Hundred and Seventy-eight, BV J. W. JOHNSON, In the Office of the Minister f Agriculture. T797' PREFACE. rmirrr^ sizszvioxt. This work is now in the tenth edition. It is intended to be an efficient aid and instructor in conducting the office work of a Joint Stock Company ; and, as well, a work of reference in general matters and technicalities pertaining to corporations of this kind, and a text book for the student of accounts, who is looking to the higher branches of accountancy as his field of operation. It is written from the stand-point of long experience and observation as account- ant, auditor, director and president in connection with Joint Stock Companies, and of a teacher of accounts. The author has the most gratifying evidence from all parts of Canada and the United States that his aim has been accomplished. The sale of the book now extends from the Atlantic to the Pacific, throughout both countries. In the present edition, as in previous ones, new and practical subjects have been added, and others enlarged upon. ■it Authors and compilers of Bookkeeping text books in Canada and the United States have evinced their appreciation of this work by drawing copiously from its pages, without authority, and without acknowledgment of the source of their infor- mation. Appreciation of their good judgment does not reconcile me to their piracy; and I hereby require that my copyright be strictly respected. J. W. J Ontario Business College, Belleville, Ontario, Canada, igoi. INDEX TO CONTENTS LAW AND INCORPORATION. Dedication and Copyright. Preface. Pai-.e. 2 3 8 9 9 9 9 lo & II 11 12 12 to 21 'S 22 to ss 32 & 33 Joint Stock Companies, definition and contrast with ordinary trading partnerships 7 1" General Partnership A Special or Limited Partner A Dormant or Silent Partner A Nominal Partner A Secret Partner The Advantages of Joint Stock Comp.inies Rush for Lipton Stock Some Disadvantages in Joint Slock Companies Dominion Legislation Information Respecting Incorporation Fees under The Companies Act The Companies Act (Dominion) and Amendments Hooks required to be kept by The Companies Act Example of a Special Dominion Act 5^ to sS Incorporation under Ontario Legislation 59 •" 6o BOOKKEEPING, THE ONTARIO TRANSPORTATION COMPANY (Limitei)). Instruction to the Student for working the Set 6l Guide to the use of Joint Stock Company Bookkeeping 77 Instalment Scrip 78 Stock Certificate 79 Transfers of Stock 80 & 81 CONTENTS. Paob. 83 Furser'i Trip Statement g Receiving and DUburunc Agents 83 to 86 Introduction to Journal 85. 1*8, 1*9. IS4 Rest Account (Surplus or Reserve) 86 t» 90 Journal ^2 to 95 Cash Book 9610103 General I-edgei 104 to 106 Stock Ledger '"' ,07 Trial Balance ^g Dividend Book _ _ ^^ Balance Sheet Assets and Liabilities Statement Profit and Loss Statement Auditor's Report jj^ Director's Report GENERAL AND TECHNICAL INFORMATION FROM PAGE ..o TO THE END. 109 109 110 A Loan Company's Balance Sheet Auditor's Report of a Loan Company A Trust Company's Balance Sheet A Life Insurance Company's Balance Sheet A tire Insurance Company's Balance Sheet III 112 112 •«3 114 US A Telephone Company's Bidance Sheet ^ ^^ A Canoe Club's Balance Sheet ^ ^ ^ Anolher Form of Slock Ledtjer Form of Stock U-dgeru.d when the accounts of Shareholders '^-^^^^"^'^^^ _,^ ^ „, Ihe General Udgcr ^^^ I'rices of Shares . . ' , ^ i la & 120 Themannerofconductingthe Annual Mectingofajoint Stock Company............^ ■■9 Kxtraordinary General Meetings Audiling What are Proper Vouchers ^ ^^^ Dank Account Biink Account kept in Cash Book only ■"■■ '^^^ I.ssues of Slock j26 Services Paid in Stock " ' 127 & 128 Expressions Regarding "Capilal" and "Revenue" Explamed. .... ...... •••-■-•;;;; J^ ^ ,^^ Dividend Stock "'" ' „ ,,„r.l and Loss Aceount not (usually) lo Ix.- closed into Capual Stock Account ..... . .... 1*9 m'itli?Running" ihe Business of a Joint' St^-ik Company being a Loss, how should ihe Loss and Gain Account be closed ? ' ' ' 120 to 123 122 124 & 125 '3« HI Watered Stock "" ^ ^ j.j j, ,^2 Ficliiious Assets. •3» Unclaimed Dividends ^ DelRiniurc Slock 133 to 137 Treasury Stock CONTENTS. Mining Company Selling Sharci at a DiacouiH '^*' Stock Supscription Form for Shares Bought at a Discount. Limited Liability, meaning of Double Liability, meaning of «37 •38 «.)8 i 139 '39 Conversion of a Private Business or Partnership into a Joint Stock Company mo * ,^„ Opening the Books for above "" ^^ " "»° A Manufacturing Business converted into • Joint Stock Compa«y '. ......'....".'.'.'.' l^° i„ ,^ Unsuccessful attempt to Evade Creditors by converting • business into a Company Bookkeeping for a Joint Stock Company carrying on a Printing, Publirfiing and Binding Business Accountant's Certificate "* ° '^ Examples of Accountant's Certificate Subscribed but Unpaid Stock a Resource 144 149 Bonds or Debentures Entries for Bonds or Debentures DilTerence between a Stockholder and Bondholder explained lei Floating Liabilities Form of Bond ^ ,,., ^ ^ ^ I ^2 Coupons on a Bond Preference Bonds Sinking Fund Rest, Surplus or Reserve Bank of Montreal Statement Analysis of Bank Statement , '"^' 15610157 >54 «S4 Dividend Notices Issue of Stock to Replace Debentures Bookkeeping Entries for Investors Questions asked and Answered A Defunct Company's Assets and Liabilities taken over and a new Company Formed! ." Founders' Shares Contingent (or Suspense) Account Preferred Stock or Preference Shares . Cumulative Preference Stock Plant Account Method of Writing off Bad Debts Examination Questions. Institute of Chartered Accountants of Ontario .....'.." Examination Questions. Certified Public Accountants Examination, Board of Regents of the University of the State of New York Making contracts with a Company Speculation in Stocks Shorts Caught Liquidationof a Joint Stock Company Ornamental Diiectors Seats on the Stock Exchanges Stock Exchange Reports " """ Stock and Bond Report of Quotations, etc ,g^ «S7 158 158 & 159 159 t" 173 169 to 171 '73 '73 '74 '75 '76 177 to Sj 183 S: 1 84 185 '85 186 187 187 & 188 Joint Stock Companies. DEFINITION, CONTRAST WITH ORDINARY TRADING PARTNEHSHPS, AND THEIR ADVANTAGES AND DISADVANTAGES. A JOINT STOCK COMPANY is an association of individuals, who havo united and have obtained incorporation for the purpose of carrying out an undertaking which would require a larger amount of capital than any single person would, ordinarily, be able or willing to risk. Each member subscribes and pays in money or property or services for shares in the capital stock. The object may be to mir:e, manufacture, trade, print, carry on a banking, loan or insurance business, or, in general, to do what an individual may do. In conducting modern trade the tendency is in the direction of the joint stock l)rinciple. Not only are new enterprises now launched in the form of Joint Stock Companies, but old established concerns are being changed from single proprietor- ships, or from partnerships, into Joint Stock Companies. The most prominent feature of a Joint Stock Company, in comparison with a gcneml or ordinary partnership, is the limited liability of the shareholders. In a general partnership, each partner is personally liable to the full extent of his means for the whole of the partnership debts ; whereas in a Joint Stock Company he liability of a shareholder ceases entirely when he has paid in full the amount of stock for which he subscribed. The limited liability principle induces people to invest in enterprises outside of their own occupation, thereby stimulating and ir.creasing the trade of a locality or a country. Mention, necessarily brief, of the various forms of partnership will be appropriate just here, in order that, in contrast with thern, the nature of Joint Stock Companies tuay be more clearly understood. Partnership is the union of two or more individuals acting under a contract, whereby they mutually contribute ih.ir property or labour for the purpose of making profits jointly. The definition of a legal partnership may be given in the l.inguage of the civil code of New York as, "The association of two or more persons for the purpose of carrying on business together and dividing ils profits between them." The usu.al criterion by which a partnership is ascertained to exist is an agreement to share profits. Mere joint ownership in property does not constitute in law a partnership, nor does the receiving of a commission or remuneration proportioned to profits by managers, clerks or servants make them partners. This is the common and ordinary form of partnership. In connec- Genenl tion with it each individual partner is liable for all the debts and Pwtncrship. obligations incurred by the partnership to the full extent of his means, to the last dollar, whether found in or out of the business of the partnership. No agreement made between such partners to limit the liability of any general partner, so far as creditors are concerned, would have any effect. Each partner is the agent of the others, and, in the ordinary course of the firm's business, can pledge the firm's credit and enter into contracts without limit, however imprudent and foolish may be his acts. The partners are practically at the mercy of earh other. Entering int j a general partnership is, next to marriage, probably the moii serious step in life. While the obligations of the partners of a firm to others are as stated, the rights and obligations existing between themselves are entirely a matter of contract. The partners may make any kind of arrangement between themselves that they choose. The law does not require that a general partnership agreement shall be in writing ; it may be made by word of mouth, but it would be folly to have it so. Unless provision is made in the partnership agreement for a definite period, the partnership is one at will, which any partner may dissolve at pleasure, subject, of course, to the jurisdiction of the Court to prevent bad faith. Dissolution, whether by effluxion of time, mutual agreement or otherwise, by which a partner retires and tht so, it would still be the best. Another advantage afforded by the existence of the great Joint Stock Companies is the opportunity they provide for people to profitably employ their savings, or .le surplus capital not required in their own business or occupation ; for instance, a man may be a farmer, a doctor, a mechanic or a teacher, and devote his whole time to his occupation, and whiK -ng this he may, by the investment of his savings in the shares of various compani^^, engage in the business of trading, banking, transporta- tion, underwriting, manufacturing, etc., without giving either time or thought to the business, and without risk beyond the sum of the shares he has subscribed for ; and if he wishes to retire from any of them he can do so by disponing of his shares when and to whom he wishes. Iking a corporation, a Joint Stock Company has a legal existence, is an entity, apart from its members ; consccjuently the transfer of shares from one person to another, or the death or bankruptcy of a memlj.r, in no way affects the company's perpetuity. Everybody in a community is interested in some way in Joint Stock Companies. They run our railways, and most of our steamboats, provide us with bankin.; facilities and currency, enable us to insure our lives, our property or our charmuer ; they develop our mines and carry on moat of the great manufacturing industries of the country. As illustrating the amount of capital awaiting investment in promising Joint Stock Companies, and the desire manifested by all classes of people, of high as well as of low degree, to secure shares, it is interesting to note the rush that took place recently in (Ireat Britain and in many other parts of the world, for Lipton stock, when the big grocery and provision concern of a proprietor named Lipton, who had sho[)s scattered throughout England, Ireland and Scotland, was converted into a limited company. The following cable messages appeared in the newr.papcrs of this continent : MAD RUSH FOR LIPTON STOCK. Applications Amount to $260,000,000, and Still They Come. ISSUi: OK THE CHINESE I,0.\N HAD TO BE I'GSTroNED IN CONSEQUENCE. " Ixinili>n, M.irch 13, 1S98. — Nothing could be more curious, as illustrating the slr.ingc new C(in(Iiiions of finance, than that a great statesmanlike measure like the Chinese lian could lie eniliarrassed by the Iranslormation of a lea and bacon merchant's business into a stock coni|)any. The rush for the shares in Sir Thomas J. I.ipton's concern has had the effect of locking up nearly $20,000,000 in cheque dejMsits, accompanying the stock applications, at the Innk. These applications, numliering some 200,000, can hardly Im; dealt with in less th.an a fortnight, during which lime a huge surplus cash is unavailable for other investments. This interferes greatly with all kinds of business, and had the effect of postponing the issue of 'he Chinese loan till March 21." 11 WONDERrUL SCENE. "The Kcne at Ihv Nntionnl Ilank of Scniltnd on WciiucMluy and Thursilay U'i;i;an (lvMri|ilicin. The bank'i first pnlnl delivery un WvdncKluy cnntiAlvd of ■ vanlond or lti,ooo letters i 27,000 folldwcd later, and on Thunulay, while the crowds <>( perxmnl applicntinm rendered the ordinary wixk >if the bonk imposuble, ord Rothschild S.coo Sir J. Faudel I'hilips and H. J. Davis I.cxxj The Premier of Canada 1 ,000 The Right 1 Ion. Lord Selborne i , 500 T. P. O'Connor, .M. P i.oofj Michaid Davitt, .M. P 1,000 Timothy He-xly, M. P 750 Right Hon. il. H. Asquith, ().C., M. P 750 Clement Scott, Daily Telegraph ofTice 750 SOME DISADVANTAGES. The running of small concerns as Joint Stock Companies has some disadvan- tages ; they cannot train up men for the lousiness and retain them for years or for life, as the great companies can. A business that may be a success under the personal direction of a proprietor, or the members of a partnership, possessing keen personal interest in its management, might (and often does) prove a failure if administered by the employees of a company in which no one has more than a meagre interest. When asked to subscribe for stock in a company formed to carry on a business which has been successfully conducted by r.n individual or a partner- ship, whose individuality and personal attention have secured its success, it would be well to ascertain what amount of stock the former proprietor or partners propose to take in the new company, and whether the personal attention and skill which made the old business successful are to be available as fully for the new company. r 13 DOMINION LEGISLATION. Thu incorporation of Joint Stock Companies may, under Dominion Legislation, bo cfTcctcU in two ways, either by obtaining a special Act of Parliament (an example of which i^ given beginning at page 56), or under " The Companies' Act," as detailed below. Banking, Insurance and Railroad Companies must be incorporated by special Act, as their requirements are such, and the powers which they seek are so extensive, that special legislation determining their limit and scope is absolutely necessary. For all ordinary undertakings, such as the carrying on of any kind of Trading, Manufacturing, Printing, Ship-building, Mining, Mechanical or Chemical business, incor|>oration under the General Act (all of which is given hereafter) is amply sufficient. It is called incorporation by Letters Patent. INFORMATION respecting the incorporation of Joint Stock Companies by letters patent under the provisions of "The Companies' Act/' Revised Statutes of Canada, 1886, Chapter 1 1 9, prepared for the use and g;uidance of intending applicants. LETTERS PATENl'. Tlic GovcrnorinCouncil may, by letters patent under the Great Seal, grant a ('hartcr to any nun\bcr of i^Tsons not less than five, who petition therefor consti- tiiti' such persons, and others who thereafter become shareholders in the company tlicruby crcitcd, a l)0r[>nratc name of the romjwny, which must not hi-, that of any other known company, incorporated or unincorporated, or any name liable to be confounded therewith, or otherwise on public grounds objectionable. Thf name of a company should, as far as it is possible, indicate its object. The prefix "The" and the word "Company" or some ecjuivalent collective appellation such as " Factory, " "Association" or "Club" must form part of the curjKiralc name of all companies incorporated under this Act. The word "Limited" must likewise be added to the proiwsed name. 31 -■1 It II. The purpoMS within the purview of the Act loi which its incorporation ii sought. nol overlook the prnviiiims which ihc Statute makcn for the the due emrrvinc omi of the unilrnakint; iif the (a.) IntrtMliii;; applleanu ihn^ uriuirins of real citalc, I 'tildingt, n , roiuiiitc for _ ^ cusin«u p'opcrly incidental ifccrcln, and »hourU|-h not ncccwarily inM'rted in the noliic. I'rovided that nothing herein conlamrd shall be construed to interfere with am nvatc rights or The pl.icc within the Dominion of Canada which is to Ik; its chief pl.icc of to confer on the said comjiany the right of building bridges, piers, or works over an\ navigal)le river in Canada, without the consent of the Governor-in-Council, or of ceding posts or placing their line of lilct;r-«' correspond in every particular with the facts set forth in the notice inserted in the Canada Gazette and should contain the following additional information, that is to say:— 14 The amount ol ttcck taken by each of the pctitioncn retpcctivcly ; the amount |iaid in thereon hy each applicant, and how it in held for the company, and whether it was paid in cash, by services, or by the purchase or transfer of property, or how otherwise. This information should be given in the form of the tabulated statement embodied in the specimen petition hereto annexed. The Stock Book of the Com- pany need not be produced. The aggregate of the stock taken must be at least one-half of the total amoimt of the stock of the company. The aggregate paid in on the stock taken must, if the company be not a loan company, be at least ten per cent, thereof.* Such aggrcg.ite must have been paid in to the credit of the company, or to the credit of trustees (at least two in number) therefor, and must be standing at such credit in some chartered l>ank or banks in Canada. A certificate must Ih: produced slinwing that this has been done, which should be signed by the Manager of the Itank in wh' h the deposit hasb«.-en made. The Manager should sign in the presence of a witness who siiould make a Statutory Declaration of Execution. If the object of the company is one rc(]uiring that it should own real estate, any portion, not more than one-half of such aggregate, may be taken as paid in, if fioiin fide invested in real estate suitable to such object, duly held !)y trustees (.it least two in number) for the company, and being of the required value, over and above all encumbrances thereon. Evidence must be produced showing the value of the real estate which it is proposed to transfer to the company. The iKtition may ask for the eml)odying in the letters patent of any provision which under the Act might be made by by-law of the Company incorporated ; and such provision so embodied shall not, unless provision to the contrary be made in the letters patent, be subject to repeal or alteration by by-law. The petition must be signed by each of the applicants in person, and in presence of a witness. If, however, this is found impracticable in any case, the applicant may sign by an attorney, but the original Power of Attorney, or a duly authenticated or notarial copy thereof, must be produced. Each signature should be verified by an affidavit or statutory declaration made by the witness thereof. PROOF REQUIRED BY SECTION 6 OF THE ACT. (a) An Affidavit or Statutory Declaration establish inj; the sufficiency of the petition and the truth and sufficiency of the facts therein stated, also that the proposed name of the company is not that of any other known incorporated or unincorporated Company. (F) An Affidavit or Statutory Declaration proving the publication in the Canada Gazette of the notice required by Section 6 of the Act, setting out the dates of the several insertions and having attached to it a copy of such notice. {c) Affidavits or Statuory Declarations verifying the signatures of the petitioners. The proofs required with reri.rence to the truth and sufficiency of the facts stated in the petition, and with respect to the proposed corporate name, may be made by * The C.-tpital of a Loan Company inu< a cop\ of sik h bylaw, under the seal of the company, and signed by the jiresident, vice president or secretary, and establish to the satisfaction of the Secretary of State, or of sui the proper handwriting of the said parties respectively. 4. That the several allegations and statements made and rnntaiiirij in the peti- tion for incorporation of " The ("ompany " (Limited) hereunto annexed, are, to the best of my knowledge and belief, true and correct. 5. That the proposed corporate name " The (Company" (Limited), is not, as I verily believe, the name of any other known company, incorporated or unincorporated, or liable to be confounded therewith, or otherwise on public grounds objectionable. * Where it is impossible for one person to subscrilie aii lo llie facts set out in tlie sevtril para- graphs of this dedaraliun, it will, of course, be necessary to oniil that portion and have it csulili:>hr(l in a separate declaration by some one possessing the requisite knowledge. •J I 6. That I have examined copies of the Cmtiada Casttti published on the and in each of said issues of that publication is inserted the noti,s than five, who petition therefor, constitutinK such persons and others who thereafter become shareholders in the company thereby created, a body corporate and politic, for any of the purposes or objects to which the legislative authority of the Parliament of Canada extends. ■ 886. The Companies Act. Chap. 1 1 9. 21 except the construction and working of railways, or the business of f:«^»p. (J.) The proposed amount of its capital stock —which, in tlic t,|,|,, case of a loan company, shall not be less than one hundred thousand dullars ; (e.) The number of shares and the amount of each share : ., (/) Tile names in full and the address and calling of each of liie applicants, with special mention of the names of not more than fifteen and not less than three of their number, who arc to be the first or provisional directors of the company, and the majority of whom shall be residents of Canada. 40 V., c. 43, s. 4. 5. At any time, not more than one month after the last publi- cation of such notice, the applicants may petition the ("lovenor in- ("ouncil, through the Secretary of State, for the issue of such letters patent : 2 Such petition shall state the facts set forth in the notice, the amount of stock taken by each applicant, the amount paid in upon the stock (if each applicant, and the manner in which the same has been paid in, and is held for the company : 3. The aggregate of the stock so taken shall be at least the one half of the total amount of the proposed capital stock of the com- pany : 4. The aggregate so paid in thereon shall, if the company is not a loan company, be at least ten per cent, of the stock so taken : if the company is a loan company the aggregate so paid in of tlic stock so taken shall be at least ten per cent, thereof, and shall not be less than one hundred thousand dollars : 5. Such aggregate shall be paid in to the credit of the C(jm- i)i>p,.«i.jf a'n.viui I) my, or of trustees therefor, and shall be standing at such credit in '''"" "''' some chartered bank or banks in Canada, unless the object of the company is one requiring that it should own real estate— in which Nailm. Pciili 11 f .1 k patriit. W (i;tt it \\i»)\ . .mt.tih, A reilriin .I'M .in>-k niiul iif tj'-.cti. Anil A I eiUiiri.1111' I'^iil up thereon. Chap. III). 7%e Compaiiiis Att 49 Vict. I (TlMiti )ir>>«i-i< I may l"* t'i'.*neii i kjters ■•airni. ri»lill,M:.irv .1,.,'. I'n ,,.!., 11.. Irfi \\ \<> \ iMleiii. Miioltier Loii iiuiiie. Nnti' e of i^Mii letter* (latent. ( asL- uny purtion not cxcccdintJ one-half of such aggrejjatu may be t.iki n as p.iid in. if it is Imna fide inve.sted ■i real estate suitable to Mil h ol'jfct, whiih is tluly held by trustees for the company, and is of tliL- ru(|iiired value, over and alxne all incumbrances thereon : 'I. I'liL' petition may ask for the embodying in the l'!tters p.iienl of uny provision wliiih, under this Art, n.' ' made by lo-law of ilie comimny ; and such provision so .i shall n.t- iiiil(,-ss provision to the contrary is made in ti.e ..lers |)atent, be subject ti) re|>eal or alteration by by-law. 40 \'., c. 13, s. 5 6. Helore the letters patent are issued, the appliiant.s shall I'tablish, to tile satisfaction of the Secretary of State, or of such otlur onicer :'s is cliari^ecl by the (lovenor-in-C.'ouncil to report thereon, tlu' sii!!i> iiiii y of tlieir notice and petition, and the truth and siiflicieiu y 11! till- fit ts therein st't forth, and that the (jfoposcJ name is not tlie name of any otlier known incorporated (>r unincorporated company ; and fur tluit purpose, the Secretary of State, or such otlier ofticcr, sluill take and keep of record any retjuisite evidence in writin;,', by iKilh or afiirmation or by solemn declaration. 40 \'., c. 4;,, s. (>. 7. 'I'le letters piteiit sliall recite surli of the e.ilabli.'.lied averments of the notice and (lelilion as to the (lovernor in Count il seems expedient. 40 \'., c. 45, >. 7. 8. Tile (lovernoiinCouniil may give to the comii.iiiy a corpdi- .lie name, dilTerent from that proposed by the a])()licanls in llu ir published notice, if the proposed name is objectionable. 40 \'., c. 4.1. **• «• 9. Notice of liie jjrantint; of tiie letters patent shall be forth- with given by the Secretary of State, in the Canada Gazette, in the form A in the schedule to this Act : and thereuiion, from the date of llic letters patent, the persons therein named, and their successors, sluU be a body corporate and politic, Ity the n.inie nientionetl tliere 111 : and a copy of every such notice shall forthwith be, by the com- pany to which such ntjtice relates, inserted on four seiwrate occ.isions in at least one newspajier in the county, city or place where the heiul oltice or cliief agency is established. 40 \'., c. 4^, ss. ij and 106. SLl'l'LEMEXIARV I.KITliRS l'.\ TEN 1'. Chaiigt of iWiiiie. 10. If il is nuule to appear, to the satisfaction of llie (in-.cnur ^iiiiiiriir,,. ip.-Coiincil, that the name of any company (whether given by tin original or by supjilen^entary letters patent, or on amalgamalii):!) incorjiorated under this Act, is the same a.s the name of an existing incorporated or unincorporated company, or so similar thereto as to be liable to be confounded therewith, the Covernor-in-Council ma} direct the issue of supplementary letters patent, reciting the former iSSf). The Comfaiiits Act. ('hap. 1 1 i). ■J."i letters and clianging the name of the company to some other name which shall bo set forth in the supplementary letters patent. 40 V., c. 4.?. s. «■• 11. \\ lien a company incorporated under thin Act is desirous of adopting another name, the < in',\;rnorin-rouncil, upon bcini; satisfied that the change desired is not for any imjiroper purpose, may direct the issue of supplementary letters patent, reciting liie former letters patent and changing the name of the company to some other name, whi.h shall he set forth in tlie supplementary letters p.itcnt. 40 \'., c. 4.'» ''• '-• 12. No aUcratioii of its name under the two sections ncM prci edin,:; shall affect the rights or obligations of the company ; and all proceedings may he continued or commenced by or against the company under its new name that miglU have been continued or conunenced by or against the company under iis former name- 40 V.,c. 4;,, s. ij. Ohlainins of Further Po-.t'crs. Ciniic uliy >ii«y . Lf of n.ii.K-1 13. 'I he company may, from time lo lime, by a resolution Crm.-.) in^.v **" I . ." ' !• , a\ilh"ri/« ilir.. I" passed by the votes of shareholders rciiresentmg at least two-thirds ai.fiN i« t^.ti'-" in value of the subscribed stock of the company, at a special general meeting called for the purpose, authorize the directors to apply for supplementary letters patent extending the powers of the company to sui h other purposes or objects, for which a company may be incor porated under this Act, as are defined in the reschition. 40 V.. c. 4;,, s. 14. 14. 'I'lie directors may, at any time within si\ months after AiTii.. the passing of any such resolution, [letition the <'iovernor-in("ouncil, through the Secretary of State, for the issue of such supplementary letters patent : . Mliy 2. The iiJiiIicants for sucli sui)pleiiientary letters patent shall give at least one month's notice in the Caii-td,i Gazette of their intention to ap[)ly for the same, stating therein the purposes or ol)jcets to which it is desired to extend the powers of the comi)any. 40 v., c. 4j;. s. 1 5. 15. Eefore such supi)lenientary letters [fatenl are issued, the ,\[)plicants shall establish to the satisfaction of the .Secretary of State or of such other officer as is charged by the CiOV.Tnor in-Council Ui report thereon, tiie due passing of the resolution authorising the .ipplication and the sufficiency of their notice and petition : and for that purpose the Secretary of State, or such other officer, shall tak.' and keep of record any reiiuisite evidence in wiiting, by oath or atiirmation, or by solemn declaration. 40 \., c. 43, s. tft. N,.li. ,-. I'r.H.f t.. 1.. be- !<: le ftini ,,yof^ .Ik-, I ute sc Chap. I If). Thi CemfHxnUt Ad. 49 Vict, Cram of «U|>t.klttctit' vrg tttitr« tMtciit. Nitiii • of is- th«rtnf. SiimiviHton of-.hi»ie», I'l'.iea^t of t-aiiltal. Hvl.itt ft-r thjt |iur|H-e. Keilii'. tiui liipii.*!. l^^rI)u^r. l.i.4liility t.i Su,h l,y-l.,iv l„ tiolilerHaiid rDnliriued I'V supplftmeiiury lclter> |iat;iit. 16. U|>on due proof ko made, the f lOvernor inCouncil may Krant iiupplcnientury letters patent under the Circat Se.il, extending the |X)wers of the com|>any to all or any of the objects defined in tile resolution ; and notice thereof shall be forthwith given by the Secretary of State, in the Canada GatflU, in the form H in the schedule to thin Act ; and thereuiion, from the date of the supple- mentary letters patent, the undertakinn of the roniiwny shall extend to and include the other purposes or objects set out in the supple- mentary letters ]>atent as fully as if such other pur[X)ses or objects were mentioned in the orininal letters [wtent ; and a copy of every such notice shall forthwith be, by the com|wny to which the notice relates, inserted on four separate wcasions in at least one news- |>a|H;r in the county, city or place where the head otli<.e or ihief agency is established. 40 V. c. 43, ss. 17 and \o(k Increase or Redu lion of Capital^ ire. 17. The directors of the coniiwny, other than ,1 loan company, may, at any time, 1 lake a by-law subdividing the existing shares into shares of a smaller amount. 40 V'., c. 43, s. \'). 18. The directors of the company may, at any time after the whole capitui stock of the company has been taken up and fifty per cent, thereon paid in, make a by-law for increasing the capital sto( k ;>f the company to any amount whith they consider reciuisite for the due carrying out of the objects of the <-oinpany : 2. Such by-law shall declare the numlier of .lie shares of the new stock, and ni«y prescribe the manner in which the same shall be allotted ; and in default of it so doing, the control of such allotment shall vest absolutely in the directors. 40 V'., c. 43, s. 30. 19. 'I'he directors of the company may, at any time, make a by-law for reducing the capital stock of the i ompany to any amount which they consider advisable and sufiicient for the due carrying out of the undertaking of the company ; but the cajiital sto( k of a loan conifiany shall never bo reduced to less than -ne hundred ihwusand dollars : 2. Such by-law shall declare the number and value (jf the shares of the stock as so reduced, and the allotment thereof, or the manner in which the same shall be made : 3. Tile liability of shareholders to persons who were, at the lime of reduction of the capital, creditors of the company, shall remain the same as if the capital had not been reduced. 40 \'., c. 43, ss. 21 and 22, part. 20. No by-law for increasing or reducing the cajjital stock of the company, or for subdividing the shares, shall have any force or efTect whatsoever, until it is approved by the votes of shareholders representing at least two-thirds in value of all the subscribed stock of 1 886. Tht Com/tttnits Act. Chap. 27 the com|)any, at a s|k.-cmI gcnt.-ral meeting or the company duly railed for considuring the same, and afierwardfi ronflrmed by suppk- tiicntary letters |wti.nt. 40 V., r. 43, s. 22, fart. 21. At any time, not more tlian six months after mu< h sanction »i><"<< ror >iip|.it. of such by-law, the clireciors may |H'tition the (lOvernor-mCouncil, i-i«ni i.iuinrinn through the Secretary of State, for the issue of supplementary letters |utent to confiriTi t'lc same : i. The (Iire( tors shall, with such ix-tition, nrodute a copy of ii\-u», A'., i"!« such by-law, under Xh". seal of the company, and "'^ned by the I'mi President, Vice President or Sc< retary, and establish ( j the satisfac- tion of the Secretary of State, i,f of such oth.T officer as is chargi'il by the ( lOvernor-in-Council to re|)ort thereon, the due passage and a|)proval of such by-law, and the expediency and bona fide character of the increase or reduction of capital or subdivision of shares, as tile case may be, thereby provided for : 3. 'J'he Secretary of State or suc'.i officer shall, for that puriwse, K>iJ»n,f m.y 1* lake and keep of record any refpiisite evidence in writmg, by oath seirtutvufsuie or affirmation or by solenm declaration, as alxjvc mentioned. 40 V., c. 43, s. .'3. 22. Upon due proof so made, tiic (lovernor in Coimi il may i.nntini! .if -nppit- mrnlary lrllri< >;rant such supplementary letters patent under the « Ircat Seal ; and luicm : IK itice thereof shall be forthwith given by the Secretary of State in tiT«i of Mi.h imtr thj Canada Ga.ttle, in the form C, in the schedule to lliis Act : '""' "' and thereuiwn, from the date of the supplementary letters patent, the capital stork of the comjiany shall be and remain increased or reduced, or the shares ,hall lie subdivided, as the case may be, to the amount, in the manner and subject to the conditions set forth by such by-law ; and the whole of the stock, as so increased or reduced, shall become subject to the provisions of this Act, in like manner, as f.ir as possible, is if every part thereof had been or formed part of ihe stock of the company originally subscribed. 40 V., c. 43, s. J4 POWERS OF THK COMl'ANV. 23. All powers given to the company by the letters patent or I'.niirsgi,,,. i,>i.e supplementary letters patent shall be c\erci.scu, subject to the ■•'""' "'""^'■ [irovisions and restrictions contained in this Ad. 40 \'., c. 43, s. 25. 24. Kvery comjiany incorporated under this Act may ac(iuire, (itnft.i ...pu.jnr hold, sell and convey any real estate rcfiuisite for the carrying on of the p"""- iindcrt.'ikinp of such company, and shall forthwith heconit; and be invested with all property and rights, real and personal, theretofore held by or for it under any trust created with a view to its inrorpnr- ation, and with all the powers, privileges and immunities reipiisltr or incidental to the carrying on of its undertaking, as if it was incorporated by a special Act of Parliiment, embodying the provi- in ■ ' intflutuva. (hap. til). TAt CitmlHtnui Ail. 4'J Vi« I. AU.-lmml ,.f.i,j,L. s|i;ire* Im t 4*ti. viil.j. • eruin c> W Twill il ..I 111 ' ipli"!!.. i-i'ih.tl ilir^ I. t,tii;('tti«Mlioii» nf \\\ -l.iw for ill. if<<» >r (i^' rfa>^ .if iiiiiiil.er 111' .Irf. I" \Mieii 1" I* \jliU. niont of ihiit Act and uf iLe letters patent -. rroviiled alwayit, that ihi' cxtrciw by loan companic* of the powers ronfcrrtd by this wction shall lie *ubject to the special pruvinions roiK'ttini; »iu h companies her .ftcr rontaint'd, 40 V., c. 43, s, 10. tAI'ITAL STOCK, 25. Ihc stock of the comixiny shall be personal ittate, and shall Ik- transferable, in such manner, and subject to all such conditions and restrictions as arc prescribed by this Act or by the letters patent «)r by by-laws of the company. 40 \'., c. 43, s. v*. 26. If the letters patent, or the supplementary JLtters patent, nuke no other deflnite provision, the stock of the com|iany, or any increased amount thereof, so far as it is not allotted thereby, shall In- allotted at sui h tines and in such manner as the direi tors prescribe by by law. 40 V., c. 4.^, s. .13. 27. Kvery share in the company shall, subject to the provision, of sub-section five of section five of this Ay .'icrs duly ;ji;'ointeil in their stead. 40 \'., c. 45, s. 27. 30. No person shall be elected orajipoinled a^: a ilirei tor their ar;i»r unless he is a shareholder, owning stoi k absolutely in his own ri;.4ht, and to the amount required by the by-laws of th.e comjiany, ami not in ariirar in respect of any call thereon : and at all times the niai ority of the directors of the companj' shall be persons resident in Cinada. 40 \'., <•. 43, s. 2,S. 31. The company may, by by law, increase to not more than fifteen, or decrease to not less than three, the number of its directors, or may change the comp.-iny's chief place of business in Canada ; hi.: no bylaw for either of the said purposes shall be valid or .icted upon unless it is .ipproved by a vote nf at least two-thirds in value of the stock represented by the .shareholders present at a special Rcneial iiicetinK fl"')' called for consi ' -ring the by-law ; nor until a copy 01 such by law, certified under the seal of the lonipany, has been depo sited with the Secretary of State, and has also been published in the Canada Gazette. 40 \'., c. 43, s. i,S. 1 8 86. Tht C^mpanht Aft. « 'hap. 1 1 1). •.'!> 32. 1 )ircL-tor» of the lomiany Khali Ik- clcitid •>) ihr xharchuld- ►'" 'i"" ■'■'"•-i' '- «r«, in gcrivral nirt-tinK of the rompany assomhlfd at »omi' place within Canada, at »ut twenty one days previously tluri' to, in some newspa|)ir published in tlie i>laee where the head oltic <• or chief place of business of the company is situate, or if there is no such newspaper, ilien in tlie pl.iee nearest tiiereto in whii h a new« paper is published : (i) At all general meetings of the company, 1 very shareholder shall be entitled to give one vote for each share then held by him : sihh votes may be given in person or by pro\y the holder of any surh proxy l)eing himself a shareholder ; bill no shareholder shall be en- titled, either in per.ion or by proxy, to vote at any meeting urde^s he has piid all tlii' calls then payable upon all tln' shares lield by him : all ([uestions propo-ed for the consideration of the sli.ireholders shall be determined by the majority of votes— the cliairinan proiding at such meeting having the easting vote in ca>e of an e(|iialily of voles ; Ml, M.,i...iix I,,. I,-. (1/.) IC\ery election of directoi^ sh.ili be by Ii.'.Mot ; iv,ii,,,. (t.) Wicaneies oicurring in the board of directors may be filled v.i..ui i.-, h,.« 1,: for the remainder of term, by the directors from among the (|ualified shareholders of the company : (/■.) The direitors shall, from time to time, elect from among r„.i,i.Mt, li.f. li>emselves a president and, if they sec fit, a vice-president of the i"'"""""" company; and may also app>ii.* all other otVicers thereof. 40 \'., e. ■1.5. s. 10. 34. If, at any lime, an election of directors is not made, or does t^'iinre 1.. rir t not take cfTeet at th.e proper time, the company shall not be held to "niciie,!. be thereby dissolved ; but such election may take place at any subse- quent general meeting of the company duly called for that purpose : and the retiring directors shall continue in office until their successors are elected. 40 \' ., c. 43, s. ;, 1. 30 Potters aiul liiitie- ilirri.lur^. Diviileiul-.. Niinil)cr, &c, liiiff' tors. A^cm> ;inil ofTi'fr^ C'unriniiiitioii of li>.|im-. C'illitirmatir.Il nf Ity-laws fur salt: nt st.i<:k li^low pic\iui rate, ^c i^el'tt to rompany may Ijc (tediit ted from dividcriiK. Is-iue of lionds, t'i;c., Iiy totii[Mitiy. Chap. 1 1 1). Tlu Companies Act. 49 Vict. POWERS OF DIRFXTORS. 35. The directors of the company may administer the affairs of tlie company in all things, and make or cause to be made for the company, any description of contract which the company may, h) law, enter into ; and may, from time to time, make by-laws not con- trary to law, or to the letters patent of the company, or to this Act, for the following puqKJses : - («ii.j! |)v»er,. bonds, debentures or other securities for any sums borrowed, at such prices as are deemed necessary or expedient ; but no such debentures shall be for a less sum than one hundred dollars ; (*•) Hypothecate or pledtr 'he real or personal property of ci,u,ii.mpr. ,«,,). the company to secure any ' vms ui/roHVil by the company ; Uut the amount borrov d &hi\\\ not, n a: . time, be greater than i.i aiio,, of ..,„„„„t seventy-five per cent, of the ■rti' i! paid-u|-. stc k of the company ; but '" '" •*'"''"''■ the limitation made by this ..'f: n s';.'!) not apply to commercial Ka tpium, paper discounted by the company. 40 V. , c. 43, s. 85. C.\LLS. Ciillili^ III UlilMtiil uri ■. 38. 'I'he directors may, from time to time, make such calls upon the shareholders in respect of all moneys unpaid upon their respective shares, as they think fit, at such times and places and in such payments or instalments as the letters patent, or this Act, or the by-laws of the company reijuire or allow. 40 \'., c. 43, s. 52. 39. A cull shall be deemed to have been made at the time i"i"fM „„ , wiien the resolution of the directors authorizing such call was passed: '""'''"■■ and if a shareholder fails to pay any call due by him, on or before the day apjjointed for the payment thereof, he shall be liable to pay interest for the s.ime at the rate of six per cent, per annum, from the day apiwinted for payment to the time of actual paynient thereof. 40 \'., c. 43, s. 53. 40. The directors may, if they think fit, receive from any i''5i"f"t in siiareholder willing to advance the same, all or any part of the amounts due on the shares held by such shareholder, beyond the sums then actually called for ; and upon the moneys so paid in i"itrc,i ,„,,j advance, or so much thereof as, from time to time, exceeds the """""'' amount of the calls then made upon the shares in respect of which such advance is made, the company may pay interest at such rate, not exceeding eight per cent, per annum, of the shareholder who pays such sum in advance and the directors agree ui)on. 40 \^, c. 43, s.54. 41. If, after such demand or notice as is prescribed by the letters patent or by the by-laws of the company, any call made upon any share is not paid within such time a.s, by such letters patent or by the by-laws, is limited in that behalf, the directors, in their discretion, by vote to that effect duly recorded in their minutes, may summarily declare forfeited any shares whereon such payment is not made ; and the same shall thereupon become the property of the company and may be disposed of as, by the by-laws of the company Funeitiire of ■ fur iiuii-pujiiicii P,;,res l..f 1^ 33 Chap. 1 1 9. The Companies Ait. 49 Vl( T. il'XiirCjTiuhiued'' "' °'^ Otherwise, lliey prescribe ; but, notwithstanding such t'orfeilure, the holder of such shares at the time of forfeiture shall continue liable to the then '.reditors of the company for the full amount un[)aid on such shares at the time of forfeiture, less any sums whirli are suhsL- (|uently received by the company in respect thereof. 40 \'., r. 43, s.55. 42. 'I'lie directors may, if they sec fit, instead of dcclariii!; f./ifeited any share or shares, enforce payment of all calls, and interest thereon, by action in any court of competent jurisdiction : and in such action it shall not be necessary to set forth the speci.il matter, but it shall be sufficient to declare that the defendant is holder of one share or more, stating the numl)er of siiarts, and i> indebted in the sum of money to which the calls in arre.ir amoimt in respect of one call or more, upon one share or more, staling the number of calls and the amount of each call, wliereby an action has accrued to the company under this .\ct ; and a certificate under tlvi: s?al, and purporting to be signed by any ofiicer of the (omp.in\, lo the effect that the defendant is a shareholder, that sucli call or cill-i has or have been made, and that so much is due by him and unpaid thereon, shall be received in all courts as /;•////« f,icif evid.-n' e thereof. 40 \'., c. 4 ;, s. '^U. liOOKS Of WW. COMI'.WN'. Kiif-trremen! of paynit-iu olLalN I'V a<:ii<>ti. WliM ..iilv iie-.l l.< ..ll,-.:^,l .,1,1 ].nni CtTliii .llf .1L..1 1 1. e;)t .tiul |.,.;.M1. 1,>-I.,. Numltr .lr^l,, 43. 'I'he company shall ;ause a book or books to be kei>l by th'.' Secretary, or by >onic other ofiicer specially charged with th;U I'u'.y, wiKT^in shall be kept recorded, — {11.) \ copy of tile l. tiers palcnl inror|)orating the companv, and of any sup|jlenientaiy letters [utent. and of all by-laws thereof : {b.) The names, ali)habelicall\- arr.inged, of all persons who are or have been shareholders ; ((•.) The address and calling of every such [lerson, while sM.h shareholder : (i/.) The numbers of shares of stock held by each sharehoIiL 1 : {e.) The amounts paid in and remaining un|)aid, respec lively, on the stock of each shareholder : Name-. &,..., r (/ ) The nftmcs, addrcssts and calling of «li persons who are or have been directors of the company, with the several (i;-.lrs at wliich each became or ceased to be such director : !;.• ;;-itr of ir.,ri-fer-. 2. A book Called the register of tranisfers shall be pro\ ided, and in such book shall be entered the particulars of every transfer of shrues in the capital of the company. 40 V., c. 43, .s. 36. li «,!;- 1.. i.e open for 44. Such books shall, during reasonable business hours of everv tTSir.hil'.Vu.n;* day, except Sundays and holidays, be kept open for the inspection o'f shareholders and creditors of the company, and their personal repre i886. Tht Companits Act Chap. 1 1 9. 33 sentatives, at the head office or chief place of business of the company ; and.every such shareholder, creditor or personal represen- tative may make extracts therefrom, .to V., c. 43, s. 37. 45. Every director, offi;er or servant of the company, who Pen.i.y fur f.ue knowmgly makes , assists in making any untrue entry in any such """" book, or who refuses or wilfuily neglects to make any proper entry therem, or to exhibit the same, or to allow the same to be inspected and extracts to be taken therefrom, is guilty of a misdemeanor 40 v., c. 43, s. 40. 46. Every company which neglects to keep such book or books Forf,.i,„„ f,, as aforesaid, shall forfeit its corporate rights. 40 V., c. 43, s. 38. "'*''^'- 47. Such books shall be prima facie evidence of all facts nook. .,. u, pn™ purportmg to be thereby stated, in any action, suit or proceeding ■^'"""''^"«- agamst the company or against any shareholder. 40 V., c. 43, s. 39. TRANSFER OF SHARES. 48. No transfer of shares, unless made by sale under execution, Tr.n fc r 1 or under the decree, order or judgment of a court of competent -'i't''"K'.f^^"" jurisdiction, shall be valid for any purpose whatever, until entry """ thereof is duly made in the register of transfers, except for the purpose of exhibiting the rights of the parties thereto towards each other, and of rendering the transferee liable, in the meantime, jomtly and severally, with the transferer, to the company and its creditors. 40 V., c. 43, s. 41. 49. No transfer of .hares, whereof the whole amount has not '■i..uii.i.>of l)een paid in, shall be made, without the consent of the directors • ''""•-■"»-''^"»"' and whenever any transf- - "shares not fully paid in has been made with such consent, to ^ who is not apparently of sufficient means to fully pay up s ;s, the directors shall be jointly and severally liable to tht ere ..ors of the company, in the same manner and to the same extenc as the transferring shareholder, but for stuli transfer, would have been ; but if any director present when any such transfer is allowed does forthwith, or if any director then absent does within twenty-four hours after he becomes aware thereof and is able so to do, enter on the minute book of the board of directors his protest against the same, and within eight days thereafter publishes such protest in at least one newspaper, published at the place in which the head office or r' ..f place of business of the company is situated, or if there is . .. newspaper there published, then in the newspaper published nearest thereto, such director may thereby and not otherwise, exonerate himsei.'-from such liability, 40 V., c. 43, s, 42. 60. Whenever the interest in any shares of the capital stock of f">vWo„ wi„„ tlie company is transmitted by the death of any shareholder or other '''"X" 'r.ri'.v'''' wise, or whenever the ownership of or legal right of possession in any '""*' shares changes by any lawful means, other than by transfer according (') iransfor of siiaics ill rcriain i asi-s. H'.w riily -x clirpLi.-r may avoid liil.ility. ;t4 Cliap. 1 1 9. The Comfaniei Act. 49 Vict. ( >r.l.T of < . I,.',.llaintil k,.|>l.. aluia. to the provisions of this Act, and the directors of the company entertain reasonable doubts as to the legality of any claim to such shares, the company may make and file, in one of the superior courts in the Province in which the head office of the company is siiuaticl, a declaration and petition in writing, addressed to the justices of llu' may court, setting forth the facts and the number of shan s previously l>clonging to the person in whose name such shares stand in tlif hooks of the company, and praying for an order or judgment adjudi- cating and awarding the said shares to the p>;rson or persons leg.jlly entitled to the same, — by which order or judgment the comjiany shall be guided and held fully harmless and indemnified and relo.iscd from every other claim to the said shares or arising in respect thereof : .\otiLeor:i])plie;itinn, Kelil. iji.ii , A 10 1:.. 1 oMii'aiiy. • Vr l.y ,1^1' I l.\ pt, 2. Notice of the intention to present such petition shall be given to the person claiming such shares, or to the attorney of such person duly authorized for the purpose, who shall, upon the filin;.; of such petition, establish his rip i to the shares referred to in such petition ; and the time to plead and all other proceedings in such cases shall be the same as those observed in analogous cases before the said superior courts : Provided always, that the costs and e\[)onses of procuring such order or judgment shall be paiil by the person or persons to whom such shares are declared lawfully to btlong ; and that such shares shall not be transferred in the books of tin; company until such costs and expenses are paid, saving the rec(.f .h.ii Irii-te' -, l.«isuli.,:iy li..M.-. .[.,■ il tv of i'l rl.. ■ l.ir WJL :i \\\ .W^ 1. 1 V.\ '111 Iktl "•a 36 Hi Chap. 119. The Companiet Act. 49 Vict. No loftn by compAiiy 10 ftharclioldcr*, ex. ccpl by loan com- VMVM : liability of directors. Liability of directors for wa|>t:s. Limitation of «iiitns siippluiHt nt |>.tlL'llt to .J \..ii. i, .1, Kiii;4„.l. I li\ iilpn:! nn Y.m ..ii.il.il. Vw. i«! ;■ n.-i.il r f ■' ,traL[ !jin(ji; or against the new company ; that might have been continued or coinmunced by or against the old company ; and it shall not be necessary in any such letters pitent to set out the names of the shareholders ; and after the issue of the letters patent the company shall Imj governed in all respects by the provisions of this Act, except that the liability of th.- shareholders to creditors of the old company shall remain as at the ..mc of the issue of the letters jatent. 40 V., c. 43, s. 80. 70. II a subsisting company applies for the issue of letters lulint under this Act, the C.overnor-in-Council may, by the letters lutent, extend the powers of the company to such other objects fcr which letters patent may be issued under this Act as the applicant desires and as the Oovernor-in-Council thinks fit to include in the letters patent, and which have been mentioned in the notice of the ai)i)liration for the same, in the Canada Gazette , and the C.ovenor- in-Council may, in the said letters patent, name the first directors of the new company ; and the letters patent may be issued to the new company by the name of the old company or by another >iame. 40 v., c. 43, s. 81. 71. All the provisions of this Act in relation to the obtaining of sup[)lenientary letters patent by companies incorporated hereundcT sliall, so far as ai)plicable, apply and extend to applications for letters p-iteni under the two sections next preceding. 40 V., c. 43, s. 82. C'.ENERAL TROVISIONS. 72. ■i'he company may have an agency or agencies in any city or town in the United Kingdom. 40 V., c. 43, s. 86. 73. No dividend shall be declared which will impair the ( i>ital of the company. 40 V., c. 43, s. 58. 74. .Sharehold'.TS wiio hold one-fourth part in value of tl;e siihsrr;',. .1 stock of the co.iipany may. at any time, call a special ni.eting thereof for the transaction of any bu.siness specified in sucii written refjuisition and notice as they make and issue to that effect. 40 v., c. 43, s. 32. />art. 75. Every deed which any person, lawfully empowered in that hehr.lf by the company as its .ittorney, signs on behalf of the company, and seals with his seal, shall be binding on the company and sh;;ll have the same effect as if it was under the seal of the company. 40 v., c. 43, s. 65. 76. I'A-ery contract, agreement, engagement or bargain made, and e,' fy bill of exchange drawn, accei)ted or indorsed, and every promis.>or>- note and cheque made, drawn or indorsed on behalf of the company, by any agent, officer or servant of the company, in general accordam-^; with his powers as such under the bylaws of the is.sci. 754^ Com/>anits Act. (*h,"|). III). 39 comiiany, shall be t)inding u[)on the company ; ami in no case sli.JI it be necessary to liave the seal of the company affixed to any siidi contract, agreement, engagement, Iwrgain, bill of exi han^;.-, pnin.i-, sory note or cheque, or to prove that the same was made, drawn, accepted or indorsed, as the case may be, in pursuance of any by l.nv or special vote or order ; and the person so acting as aijent, oiticrr (>r ,^ servant of the conijiany shall not be thereby subjected individually to any liability whatsoever to any third person therefor; Provided always, that nothing in this Act shall Ix; construed to aulbori/e liu com|)any to issue any note jmyable to the l)earer thereof, or any '• promissory note intended to be circulated as money, or as the m.le of a bank, or to engage in the business of banking or insurance. .\o v., c. 43, s. 66. 77. Proof of ai y m.itter which is necessary to be maih- umKr y this Act m.iy be made (ly oath or affirmation, or by soK nin de>i,!ra !;!, tiun, before any justice of the peace, or any commissioner for taking al'iidaviis, to be used in any of the courts in any of the Provinces r)! Canada, or any notary public, each of whom is hereby aulhorl/ed and empowered to administer oaths and receive affidavits and declara tions for that purjjo.se. 40 V., c. 43, s. 76. 78. The provisions of this Act relating to matters pnlitiiinary <■•■ to the issue of the letters patent or sup[)lementary letters i)atent siiall i ■ iio (keiiied directory only, and no letters patent or supplementary Icttrrs [latent issued under this Act shall be held void or voidahlf on account of any irregularity in any notice prescribed by this Act, or on account of the insufficiency or absence of any such notice, or on account of any irregularity in respect of any other matter preliminary to the issue of the letters patent or supplementary letters patent. 40 v., c. 43, s. 77. ..y I." tv \Vi...l "limil.,1 ■■ !>»■ jn.t'rir.i .itirr 79. The company shall keep painted or affixed, its name, witli the word "limited" after the name, on the outside of every ofrice or IdT'.li.'iio.'-,' place in which the busini '^s of the company is carried on, in a con- spicuous position, in letters easily legible, and shall have its name, with the said word after it, engraven in legible characters on its se;,l, and shall have its name, with the said word after it, mentioned in lr;;ib!e characters in all notices, advertisements and other official publications of the company, and in all bills of exchange, promissory notes, indorsements, cheques, and orders for money or goods, purporting to be signed by or on behalf of such company, and in all bills of parcels, invoices and receipts of the company : 2. Every company which does not keep painted or affixed, its name, with the word "limited" after it, in manner directed by this .t i'l'^l-VMiii' Act, shall incur a penalty of twenty dollars for every day during which such name is not so kept painted or affixed : viol.ili.ii H 40 Chap. I n). llkt Companifs Ad 4'> Vict. IVn.iIfy (in ilir»ci MiiOixn/tiii; tiM< td' i.n 11. !•••( .J.uiwn. 3- f'Vcry director and manager of the comj»any, who knowingly and wilfully authorizes or permit* such default, shall be liable to the like penalty : ; 4- Every director, manager or officer of the company, and ,' '■^'^'■y I'*'""" on ''•'• •"-■half, who uses or authorizes the use of any Hcal pur|)orting to be a seal of the comiwny, whereon its name, with the said word " limited " after it, is not to engraven as aforesaid, or who issues or authorizes the issue of any notice, advertisement or other official publication of such company, or who signs or authorizes to be signed on behalf of such company any bill of exchange, promissory note, indorsement, cheque, order for money or goods, or who issues or authorizes to be issued any bill of parcels, invoice or receipt of the company, wherein its name, will, the said word afttr it, is not m.-ntioned in manner aforesaid, shall incur a i)enalty of two hundred i.i.,„H.v. .,., I'"!'-'"' ""l "''''" ^'"^ ^ P^-rsonally liable to the holder of any such bill or exchange, promissory note, chetiue, or order for money or goods, for the amount thereof, unless the same is duly paid by the company. 40 V., c. 43, ss. 78 and 79. 80. Every prospectus of the company, and every notice invit- ing persons to subscribe for shares in the company, shall sjiecify the dates and the names of the persons to any contract entered into hy the company or the promoters, directors or trustees thereof, before the issue of such prospectus or notice, whether subject to adoption by the directors or the comi«ny or otherwise ; and every ,)rospectus or n-.' . . which does not specify the same shall, with resiject to any p.rs'... .,,,,0 takes shares in the company on the faith of such pros- pectus or notice, and who has not had notice of such contract, be deemed fraudulent on the part of the promoters, directors Lnd officers of the company who knowingly issue such prospectus or notice. 40 v., c. 43, s. 84. PtiMpeclit^, Ac, lo spct-ify certain n.n. irui t» entered intu Ny L'umpany, ur Iw deemed fraiiduknt. <".inii».iny rol tn h*-. Iial)!t, in icspti.t of trust>. I'ttcciiiiN uiiicnini- tied in 'siiiK, A:> , ^i^ain.it.ttic Luinpany 81. The company shall not be bound to see to the execution of any trust, whether express, implied or constructive, in respect of any share ; and the receipt of the shareholder in whose name the same stands m the books of the company, shall be a valid and bind- ing discharge to the company for any dividend or money payable m respect of such share, and whether or not notice of such trust has been given to the company ; and the company shall not be bound to see to the application of the money paid upon such receipt. 40 V c. 43. s. 51. 82. Every director of the company, and his heirs, executors and administrators, and estate and effects, respectively, may, with the consent of the company, given at any general meeting thereof, from time to time, and at all times, be indemnified and saved harmless out of the funds of the company, from and against all costs, charges and expenses whatsoever which he sustains or incurs in or about any 1 886. 7At Compmmut Att. Chap. ii9i 41 n«Klt:vi wr Utl.iuU. ^I'rfrilurr nf i.li.irl«r fur llull-U)i€T. in Irierrt l».l- tovvniwr-in- Cuuiiiil. action, suit or pioceedinR which is brought, commenced or prose- cuted against him, for or in respect of any act, deed, matter or thin^ whatsoever, made, done or permitted by him, in or about the execu- tion of the duties of his office ; and also from and against all other costs, charjjes and expenses which he sustains or incurs, in or about, or in relation to the affairs thereof, —except such costs, charRes or expenses as are occasioned by his own wilful neglect or default. 40 V , c. 43, ». 57. 83. The charter of the company shall Ik: forfeited by non-user during throe consecutive years, or if the company does not go into actual operation within three years after it is granted. 40 V., c. 43, s. 7 J. 84. The Governor-in-Council may, from ••me to time, estab- k li>>li, alter and regulate the tariff of the fees to bt paid on application !,y"V;o« lor letters patent and supplementary letters patent under this Act, may designate the department or departments through which the issue thereof shall take place, and may prescribe the forms of proceeding and registration in respect thereof, and all other matters rcfjuisite for carrying out the objects of this Act : 2. The amount of the fees may be varied according to the *■"'■""" "' <"- '"-'v nature of the company, the amount of the capital stock and other particulars as the Governor-in-Council thinks fit : 3. No steps shall be taken in any department towards the issue Mu^' '," lai'i ii'"" of any letters patent or supplementary letters patent under this Act, until after all fees therefor are duly paid. 40 V,, c. 43, s. 74. 86. The directors of every Company shall lay before its share- KuII .t.,inM...i ,.f holders a full printed statement of the affairs and financial position of if fw, arnunv""' the company at or before each general meeting of the company for the election of directors. 40 V., c. 43, s. 87. LOAN COMPANIES. 86. The following sections of this Act apply to lo.in c()mi)anies ■''•■"'■"- tri.,i,n;: only. 40 v., c. 43, 5«*-/i//* relaUng to loan companies. ".■ric„,„|,.inKs, 87. The capital stock of every loan company shall be divided shares. into shares of one hundred dollars each. 40 V., c. 43, s. 88. 88. Every loan company may, from time to time,— I'ower!). (u.) Lend and advance money, by way of loan or otherwise, ^^■^'^'mn ^"^"-: "'"i for such periods as it deems expedient, on the security of real estate, "" " " '"^""""' or on the public securities of Canada, or of any of the Provinces thereof, or on the security of debentures of any municipal or other lu' Cln|>. H'). Tht CoiH^nits .1,/. ■V) Vii I. \' -IHl-Iti •■t ^- UtII ■ l«|M>- n\ ,li ., I ■n ..I .1. ( Mmi'uiy iii.iv .» tiil^ atul Irn !i'''icy, tilhrr t!>Lii own !-rf). .If .,| corporation, issued under or in pursunnre of any stalulory authority, and u|K)n »uch terms and ronditions as to the company stem iiati:.' faitory or cxiH-'ditnt ; ■''•^ (/^) Aciuirc. by purchase or otherwise, any si. urity up..n whiih it is authorized to lend or advan. c n.omy, and re s. II li.c ^amc as it deems advisal)le ; (<•) Ho all arts that are necessary for adv.in. ing su. Ii siinis of money, and for receiving and obtaining; rijwynieiit llureof. and t<,r eompellinj; the payment of all interest ar.ruir.g from su. h sums >„ advanced, and the observance and fulfilment o( any ...n.litinns annexed to such advance, and for enfor.ina the forfeiture „{ any term or juoperty conscjuent on the i.on fulfilment of su.h totulhlons, or of conditions entered into for delay of payment ; '' ('/.) C.ive receipts, acquittances and discharges, citli-r alis.) lutely and wholly or partially, an.l execute such deeils, assigmm nis or other instruments as arc necessary for carrying any such purchase or re -sale into .:(Tect : ;: And for every and any ..f the forejioin;; purposes, an.l for every and .my other purpose in this Act mentioned or referred to, the 'onipmy may lay out and ap|)ly the capital and im.p.rty, for tin time being, of tile company, or any part thereof, or any of the m.«.eys authorized to be hereafter raised or received by the .-.-iipaiiy 111 addition to its capital for the time bein-, an.l may aulhori/u and exercise all acts and powers whatsoever, in the oi)inion of the director, of the com[)any re.iuisite or exi)edi..nt to be . \U) II J. The rompany ni«y also Kiurantie the rt'iW) iiiont of the prinfipal or the paynunt of the interest, or botli, of any nioneyt intrustcJ to the comiuny for investment : 4. The comji.iny ni.iy, for every or any of the foregoing purpiwes, lay out and employ the capitnl and properly, for the time lic'int;, ol" the company, or any part of the moneys au'liori/ed !i» !ie raise'.l hy the company in adilition to its rapital lor the time iuin^, or any moneys so intrusted to it as aforesaid, and m,iy do, as'.ent ti>, iw\ cxiTi-ise all arts whatsoever, in the opinion of the dirertors o( the company for the time heing reijuisitc or expeiiient to be done in riL;:'rd llureto : 5. All moneys of which the re|)aynieiU of tlie prim ipal or i'',! ','"„!,', " (laynunt of mterest is guaranteed by the com[>any, shall, for the J;"-' purposes of thiii Act, be deemed to be n)oney borrowed by the ■ 'impany. 40 V., c. 43, s. 90. Ill' ii I \„ I.- 90. The director* may, from time to time, with the consent of t!ie shareholders, obtained at any general meeting, borrow money on l)eh;df of the company, at such rates of interest as are lawful under thi-i Act, ami upon »u(-h terms as they, from time to time, lliinlc pioper; and tile directors may, for that purpose, execute any deber t'.if";, niorti^MiifS, bonds or other instruments, under the sea! of the I . impany, for sums of not less than one hundred dollars or twenty |i"unds st'.Tling each, or may as».i^n, transfer or deposit, by way v,i e jU!table mortgage or otherwise, for the sums so borrowed, any .ti'! r^i 3. If the company borrows money by way of deposit, under 1^"' i".!','Vr,i " the ni\t preceding section, the aggregate amount of the sums st> borrowed, by way of deposit, shall not at any titu'', whether '.'.e company borrows solely by way yf dejwsit or alio in other v.\iys, M k 44 Chap. 119. TAe Companies Act, 49 Vict. If llie cuirp.'iny Iwr- row^s.)|etyui, deben- tures, i<:c. If it Uirruw, in Ihjtii ways. I'lovi in liai exceed the aggregate amount of its paid up capital, and of its other cash actuaUy in hand, or deposited by it in any chartered bank or banks in Canada: 4. If the company borrows money solely on debentures or other securities, and by guarantee as hereinbefore authorized and not by way of deposit, under the next preceding section, the aggregate amount of the sums so borrowed shall not. at any time, exceed four times the amount of its paid up and unimpaired capital, or the amount of its subscribed capitu. at the option of the company : 5. If the company borrows money both by way of debentures or other securities, or by guarantee, as aforesaid, and also by way of deposit, the aggregate amount of money so borrowed shall not. at any time, exceed the amount of the principal moneys remaining unpaid on securities then held by the company, nor shall it exceed double the amount of the then actually paid up and unimpaired capital of the company ; but the amount of cash then actually in the hands of the company, or deposited by it in any chartered bank, or both, shall be deducted from the aggregate amount of the liabilities which the company has then incurred, as above mentioned, in calculating such aggregate amount for the purposes of this sub section : panir;-;;:;:,"-;::;: -...J',^^ '*'"' ^"^'"^ °^, ",7 '^'""''^"y ""'^ incorporated, availing i„j. - Itself of the provisions of this Act for the purpose of enlarging its powers to borrow money by debentures, nothing herein .ontainc.l shal be construed as affecting or in any wise impairing the right of the holders of debentures issued by such company. 40 V., c. 43, s. 95, 93. The company shall not use any of its funds in the purchase of stock in any other incorporated company. 40 V., c. 43, s. 94. 94. The company may hold such real estate as is necessary f.,r the transaction of its business, not exceeding in yearly value the s.i,.. often thousand dollars, or su<-h real estate as, bein-.; mortgaged or hypothecated to it, is ac-iuircd by it for the protection of its invest ments,-and may, from time to time, sell, mortgage, lease or other wise dispose of the same ; but the company shall sell any real est Ur acquired in satisfaction of any debt within seven years after it I, ,s been so aaju.rcd, otherwise it shall revert to the previous owner or to his heirs or assigns. 40 V., c. 43. s. 95. N..r I ' |>lir< Ii.isi ill »lhv;l r..w<-r lo l,„l.l I'nivisfi : aNln such f-Lili: ni.l liil.l f„r company'?, own use (:.mi|ianyn,..).tl,ari;i Cultllllissiull. What intrrest ci.m- pii'iy lii.iy rtivjver. 95. The company, when acting as an agency association, ni.iy charge such commission to the lender or borrower, or both, upon the moneys invested, as is agreed upon, or as is rea.sonable in tlu.l behalf. 40 V.. c. 43, s. 96. 96. The company m.iy stipulate for, take, reserve and ex.ict any rate of interest or discount that may be lawfully taken by indivi duals, or, in the lVovin,:e of Q,..bec, by incorporated companies under like circumstances, and may also receive an annual payment 1 886. T7ie Companies Act. Chap. 119 45 on any loan by way of a sinking fund for the gradual extinction of such loan, upon such terms and in such manner as are regulated by the by-laws of the company : Provided always, that no fine or Pro,i.o : .. ,„ lin.s. penalty shall be stipulated for, taken, reserved or exacted in respect ofarrears of principal or interest which has the effect of increasing the charge in respect of arrears beyond the rate of interest or discount on the loan. 40 V., c. 43, s. 97. 97. A register of all securities held by the company shall be R<-KiMtrof«.uriti«. kept ; and within fourteen days after the taking of any security, an entry or memorandum specifying the nature and amount of such security, and the names of the parties thereto, with their proper additions, shall be made in such register. 40 V., c. 43, s. 98. 98. The company may unite, amalgamate and consolidate its Cnmp.i„y m.ny >.„;„ ».. 1 .-_ __ » *. . . ... . ^itii any otiur like cutiipaii> . union - how inailr, ^('., :tn s. loi. ' 101. Upon the completion and perfection of the said a^rec- ment and act of consolidation, as provided in the next precc^in- section, the several coqiorations or societies, parties thereto, shall hi (K^emed and taken to be consolidated, and to form one corporation i.y tiie name in the said agreement provided, with a common scl' and shall possess all the rights, privileges and franchises of each of suih cor[)orations. 40 V., c. 43, s. 102. 102. Upon the consummation of such consoli.lation as afore s.nd, ail and singular the business, property, real and personal, and a.l n-hts and incidents appurtenant thereto, all stock, mort-Mgcs or other securities, subscriptions and other debts due on whu- ever account, and other things in action belonging to such corpora- tions or either of them, shall be taken and deeme.l to be transferred to and vested in such new corporation without further act or deed ' I'rovided, however, that all rights of creditors and liens, upon the property of either of such corj.orations shall be unimpaired by surii consolidation, and that all debts, liabilities and duties of either of the said corporations shall thenceforth attach to the new corporation 1 886. TAe ComfanUs Act. Chap. iig. 47 and may be enforced against it to the same extent as if the said debts, liabilities and duties had been incurred or contracted by it ; and that no action or proceeding, legal or equitable, by or against tlie said corporations so consolidated, or either of them, shall abate or be affected by such consolidation, but for all the purposes of such action or proceeding such corporation may be deemed still to exist, or the new corporation may be substituted in such action or proceed- ing ill the place thereof. 40 V., c. 43, s. 103. 103. The company shall transmit, on or before the first day of M:irch in each year, to the Minister of Finance and Receiver-General, a statement in duplicate, to the thirty-first day of December inclusive of the i)revious year, verified by the oath of the president or vice- president and the manager, setting out the capital stock of the company, and the proportion thereof paid up, the assets and liabilities of the company, the amount and nature of the investments made by ihe company, both on its own behalf and on behalf of others, and the average rate of interest derived therefrom — distinguishing the classes of securities, and also the extent and value of the lands held by it, and such other details as to the nature and extent of the business of the company and the Minister of Finance and Rccciver- (;enerr.l requires, and in such form and with such details as he, from time to time, requires and prescribes ; but the company shall, i: no case, be bound to disclose the name or private affairs of any person who has dealings with it. 40 V., c. 43, s. 104. Atinii.-il si, Minislrr .. .'iihI wh.it itement to f Kiu.iiiie. it must !ti>Visi) : .1 [M'ivuie III 1 SCHEDULE. FORM A. Public notice is hereby given th.it under " T/ie Companits Aci" letters patent have been issued under the Creat Seal of Canada, bearing date the day of incori)orating [/lere statt names, address »nd calling 0/ each corporator named in the letters patent}, for the purpose of {here state the undertaking of the company, as set forth in the letters patent], by the name of [liere state the name of the Company as in the letters patent] with a total cai)ital stock of iloUars divided into shares of dollars. D.ited at the office of the Secretary of State of C.mad.i, this day of 19 A. B., 40 v., c. 43, sch. A. Secretary. At Chap. 119, Th Companies Act. 49 Vict. FORM B. Public notice is hereby given, that under " "Hit Companies Act" supplementary letters patent have been issued under the Great Seal of Canada, bearing date the '''^y ^^ 1 whereby the undertaking of the Company has been extended to include \htrt set out the other purposes or objects mentioned in tht supplementary letters patent]. Dated at the office of the Secretary of State of Canada, this day of ,g A.B. 40 v., c. 43, sch. C. Secretary. FORM C. Public notice is hereby given, that under " The Companies Act" supplementary letters patent have been issued under the Great Seal of Canada, bearing date the '^''y of , whereby the total capital stock of \here state the name of tlie Company] is increased or reduced, as tlie case may be] from dollars to dollars. Dated at the office of '.he Secretary of State of Canada, this day of ,g A.B., 40 v., c. 43, sch. A. Secretary. 50-51 VICTORIA. PrcninMe. Applirrtfion of Act. K.S.C.c. 119. H CHAPTER 20. An Act to .Amend "Thk CoMrANiF..s Act." [Assented to 2ird June, 1 887. j ER Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows :— 1. The following provisions sh.ill apply only to loan companies, as defined by "The Companies Act" and shall be read and interpreted in conjunction with the said Act. 2, The directors may, from time to time, with the consent of i«i«;.'"r""''"™'' a majority of the shareholders present in person or represented by proxy at a meeting called for -uch purirosc, issue debenture stock, which shall be treated and considered as a part of the regular deben- ture debt authorized by section ninety of the said Act, in such i886. 7^ Compatutt Aet. Chap. It 9. 49 Siihjecl to t'criaiii liniiiaitont. stork. amounts and manner, on such terms and bearing such rate of interest as the directors from time to time think proper, but subject to the limitations in the jaid Act provided, so that the amount received as money deposits and borrowed on the security of deben- tures, mortgages, bonds or other instruments, or debenture stock, shall not in the whole exceed the aggregate amount fixed by the said Act as the authorized limit of the borrowing powers of the Company. 3. The debenture stock to be issued under the authority of Ra„u„K of this Act shall rank equally with the debentures issued, or to be issued, '''''"'""• •" liy the Company, and the holders thereof shall not be liable or answerable for any debts or liabilities of the Company. 4. The Company shall cause entries of the debenture stock RrcMration of .uci> from time to time created, to be made in a register to be kept for ""'''' that purpose at their head office, wherein they shall enter the names and addresses of the several persons and co-partners from time to time entitled to the debenture stock, with the respective amounts of the stock to which they are respectively entitled; and the register ac«s. ,0 rcgis.er. shall be accessible for inspection and perusal at all reasonable times to every f'ebenture holder, mortgagee, bondholder, debenture stock- holder, ar.i shareholder of the Company, without the payment of any fee or charge. 6. All transfers of the debenture slock of the Company shall "••K'^'^iion "f be registered at the head office of the Company ; but the Company '"""''"'" may have transfer books of such debenture stock in Great Britain and Ireland, in which transfers of the said stock may be made, but all such transfers shall be entered in the book to be kept at the head office. 6. The Company shall deliver to every holder of debenture c.rtificatw to i« stock a certificate stating the amount of the debenture stock held by '''''""''■ him, the rate of interest payable thereon ; and all regulations and provisions for the time being applicable to certificates of shares in the capital stock of the Company shall apply, mutatis mutandis, to certificates of debenture stock. 7. Debenture stock shall not entitle the holders thereof to he wi,.., ri^h.^oni,- present or to vote at any meeting of the Company, or confer any ''"''"^^'^ ^''•'" ""''« <|ualification, but shall, in all respect.- not otherwise by or under this Act or " The Companies Act" provided for, be considered as entit- ling the holders to the rights and powers of mortgagees of the undor. taking, except the right to refjuire re-payment of the principal money paid up in respect of the debenture stock. 8. The Company may, from time to time, purchase in the open R«i™p.ion of market and reu ■ any portion or portions of the debenture stock ''''""""° ""''" representing moneys, which the directors, by a resolution duly made, determine not to be required for the business of the Company ; but (r') so Bomwinf aa« MM iiftftfll Ealtttag compftniM may avail thanuclvM of IhiiAd. St. 98, 99 and 100 Modw, Companjr aujr unite with another com* pany or purchase or uU Agreement for union how made and what to provide. Chap. 119. Tkt Companies Act. 49 Vict. such purchase, paying ofT or redemption shall not in any way, extend, limit or prejudice the exercise of the borrowing powers of the Com- pany under this Act or "Tht Companiti Act." 9. All loan companies already operating under "Tht Compnnitt Act " shall be entitled to the benefit of the provisions of thi.s Act, and may exercise the powers conferred by it, in the same manner and to the same extent as if such provisions had originally formed part of " The Companies Act." 10. Sections ninety-eight, ninety-nine and one hundred of the said Act are hereby amended so that the same shall read as follows :— " 98. The Company may unite, amalgamate and consolidate its stock, property, business, and franchises with those of any other company or society incorporated or chartered to transact a like busi- ness and any other business in connection with such business, or with those of any building, savings or loan company or society heretofore or hereafter incorporated or chartersjd, or may sell its assets to any such other company or society, which is hereby autho- rized to purchase the same, or may purchase the assets of any other such company or society, which is hereby authorized to sell the same, and for the purpose of carrying out such purchase or sale, the company so purchasing may assume the liabilities of the company so selling and may enter into such bond or agreement of indemnity with the company or the individual shareholders thereof or both as may be necessary, and may enter into all contracts and agreement;. necessary to such union, amalgamation, consolidation, sale, purchase or acquisition." " 99. The directors of the Company and of any other such company or society may enter into a joint agreement under the corporate seals of each of the said corporations for the union, amalgamation or consolidation of the said corporations, or for the sale by the Company of its assets to any other such company or society, or for the purchase and acquisition by the Company of the assets of any such company or society, prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the new corporation, the number of directors and other officers thereof, and who shall be the first directors and officers thereof, the manner of converting th-2 capital stock of each of the said corporations into that of the new corporation, with such other details as they deem necessary to perfect such new organization, and the union, amalgamation and consolidation of the said corporations and the after management and working thereof, or the terras and mode of payment for the assets of the Company by any other such company or society purchasing the same, or for the assets of any other such company or society purchased or acquired by the company." 1 886. 7^ Com/anies Act. Proceedings al meetings, Ch«p. 119. 5j • . y^ Such agreement, or if no agreement hai been entered App™v,i of j»«. into but an offer hai been made by another company or society '""'"• under its corporace seal for the purchase of the assets of the Com- pany or If the Company has made any offer under its corporate seal for the purchase of the assets of another company or society, then such offer shall be submitted to the shareholders of each of the said corporations at a meeting thereof to be held separately for the purpose of takmg the same into consideration : "a. Notice of the time and place of such meetines and the v. r objects thereof shall be given by written or printed nS addressed - Xu")^? to each shareholder of the said corporations respectively, at his last known post office address or place of residence, and als3 by a general notice inserted m a newspaper published at the chief place of busi- ness of such corporations once a week for six successive weeks : " 3. At such meetings of shareholders such agreement or offer shall be considered and a vote by ballot taken for the adoption or rejection of the same, each share entitling the holder thereof to one vote, unless otherwise provided by the by-laws of the said respective corporations, and the said ballots being cast in person or by proxy ; and If two-thirds of the votes of all the shareholders of such corpora- tions representing not less than two-thirds in value of the paid up capital stock of each shall be for the adoption of such agreement, or the adoption and acceptance of such offer, then that fact shall be certified upon the said agreement or offer by the secretary or manager of each of such :. rporations under the corporate seals thereof : "4. If the said agr-jement is so adopted or the said offer so if .he agreement i, adopted and accepted at the respective meetings of the shareholders Jcce^X.'""" '"'" of each of the said corporations, the agreement so adopted or the offer so adopted and accepted and the said certificates thereon shall be filed in the office of the Secretary of State of Canada, and the said agreement or offer shall thenceforth be taken and deemed to be the agreement and act of union, amalgamation and consolidation of the said corporations, or the agreement and deed of purchase and acquisition of the assets of the Company hy such other company or society so purchasing or by the Com-.any of the assets of the com- pany or society so selling, as the case may be ; and the assets of the company selling shall thereupon, without any further conveyance, En^ect of agreement, become absolutely vested in the Company purchasing, and the Company purchasing shall thereupon beco-.ie and be responsible for the liabilities of the Company or Society so selling, the whole as fully and effectually to all intents and purposes as if a special Act were passed with that object; and in dealing with the assets of the Company selling it shall be sufficient for the Company purchasing to recite the said agreement and the filing thereof in the office of the Secretary of State of Canada. M Chip. 119. xhf CompanUt Act 49 Vict. Cppyiob«wid«iM. i.j ^ ggpy ofjuch agreement or ofTer so filed and of the certificate* thereon properly certified shall be evidence of the existence of such new corporation or of such purchase and acquisition : " 6. Due proof o( the foregoing facts shall be laid before the Govcmor-in-Council, and the Govemor-inCouncil may issue letters patent to the new corporation and notice thereof shall be duly pub- lished by the Secretary of State ;.i the Canada Gatelte, after which the new corporation may transact business : " 7. The shareholders who may vote at such meetings shall be those only whose names are duly -ntered in the books of the respec- tive corporations at the date of the first publication of the notices calling such meetings, and they shall vote upon the shares only then standing in their respective names." LMMn pamu auy iuuc 10 tht IMW cuaipuiir. Iftlio only may vo<« VI such mMiingi. 58-59 VICTORIA. H R. S. C.,C. 119,1. 94 ftmcndcii. Power to hold real estate neccssaiy for biuiinet-s. Limitations as to hutding other real estate. Revenion tbcreor. CHAP. 81. An Act to amend the Companies Act. [Assented to 22nd July, 1895.] ER Majesty, by and with the advice and consent of the Stnate and House of Commons of Canada, enacts as follows : 1. Section ninety-four of The Companies Act, chapter one hundred and nineteen of the Revised Statutes, is hereby repealed and the following substituted therefor : — "94. The company may hold such real estate as is necessary for the transaction of its business, not exceeding in yearly value the sum of ten thousand dollars, or such real estate as, being niortgaj^etl or hypothecated to it, is acquired by it for the protection of its investments, — and may, from time to time, sell, mortgage, lease or otherwise dispose of the same ; a. The company shall sell any real estate acquired in satisfac- tion of any debt within seven years after it has been so acquired, unless there is in force in tho province or territory in which such rc;'.l estate is situate an Act of such province or territory respecting the sale or disposition of lands so acquired and the provisions of such Act are inconsistent with those of this subsection, in which case tlie provisions of such Act shall apply ; "3. If real estate to wiiich subsection two of this section applies is not sold within the time therein limited, it shall revert to the previous owner or to his heirs or assigns." 1 886. The ComfaHus Act. Chap. 119. N H 6061 VICTORIA. CHAP. a;. An Act to amknu the Comi'aniis Act. {Anenttd to agth June, tSg7\ ER Majesty, by .md with the advice and consent of the Senate and House of Commons of Canada, enacts as follows :— 1. Section n o{ Tht Companies Act is hereby amended by r g c c ,. . striking out the following words at the end thereof, "but the limita- ^J'j^^ti "" tion made by this section shall not ai)ply to commercial naoer '''«'"'''''""'"<'"' discounted by the company "; -and by substituting therefor the '""""'"'""-"• following words:-" Provided always that the limitations and restrictions on the borrowing powers of the company contained in this section shall not apply to or include moneys borrowed by the company on bills of exchange or promissory notes drawn, made, accepted, or endorsed by the company." 2. This Act shall be read as pirt of TAe CmpanUs Act, and Ap,.iic..,„n „f the provisions hereof shall apply and extend to all existing companies •"""''"""'• to which the provisions of The Companies Act are applicable 61 VICTORIA. H CHAP. 50. An Act Further to amend " The Companies Act. » \Assenied to 13th June, i8g8.\ ER Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows : 1. Subsection 5 of Section 5 of the The Companies Act is fa^.fdia?' ""'■ "• hereby repealed, and the following substituted therefor : M Chtp. 119. j%t Com/aniu Jtt. 49 Vict. S!ir!p ti'T^iS " S («•) Such aggregate iluUI be depouled to the Credit of the Siri.IlJiJSilr'" Receiver-General of Canada, and ihall be itanding at such credit in lome chartered bank in Canada, and the applicants ihall. with their petition, produce the depoiit receipt for such amount ao deposited. lolr^jSIiinT™""' " ('•) A' *"y •'"'« •''•^"f the signing of letters patent incorporating .wi«.u. the applicants as a company, the said aggregate, so paid in to the credit of the Receiver-General, may be returned to and for the sole use of the company, or in case of failure to incorporate, to the applicants who have paid in or contributed to the same, under reguUtions from time to time made by the Govemorin-Council. proviso u lo portion ofMinount which may b« rcprs* stntad by i«al uuio. Preference stock may Ijc created hy by-law. "(e.) In case the object of the company is one requiring that it should own real estate, any portion not exceeding one-half of such aggregate may be taken as paid in, if it is bonajldt invested in real esute suiuble to such object, and such real estate is, by a valid and sufficient registered deed, duly held by two or more trustees for the company, and the applicants shall establish the fact by oath, affirma- tion or declaration, that such real estate is of the required value over and above all encumbrances thereon." 02 63 VICTORIA. CHAP. 40. An Act to amend the Companies Clauses Companies Act. AND THE H [Assented to nth August, iSgg.] ER Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows :— 1. Except as hereinafter provided, the directors of any com- pany -retcfore or hereafter incorporated, and to which The Com panit. Clauses Act, chapter \i%,Qt7Tie Companies Act, chapter in; of the Revised Statutes, is applicable, may make a by-law for creating and issuing any part of the capital stock as preference stock, giving the same such preference and priority, as respects dividends and in any other respect, over ordinary stock as is declared by the by-law. 1 886. Tht ComfaHM Art, Chap. 119 %% 3. The by-Uw may provide that the holden of iharea of luch "^JJ'S.'Sa !3 preference stock thull hate the right to select a cerUin tUted propor- ***" tion of the board of directors, or may give them such other control over the affairs of the company as is considered expedient. 3. No such by-law shall have any force or effect whatever until *<»9. ■r-.i.rw, namely : Wm. Allen, R. Thompson, R. H. ". ' V'ilson, Robt. Knight, Wm. Neil, Alford ( imphill. > lilson, J. W. Johnson, Wm. Green, Robt. VVjlln carry on the business of the TlMt.-> 1^ .11 » ; ' •; , ■ ^ business in the City of Brantford, .apitals, towns and places in the several .>edient to grant their prayer ; Therefore Her ' sent of the Senate and House of Commons, 1. The said Wm. Allen, R. Thompson, R. H. Simpson, S. G. Beatty, T. Wilson, Robt. Knight. Wm. Neil, Alfred Campbell, John Conger, James Brown, Robt. Ncilson, J. W. Johnson, Wm. Green, Robt. Wallace, James Cunningham, W. B. Ivobinson, and James Anderson, jr., togethet with all such other persons as now are or may hereafter Income shareholders in the Company, hereby created, shall be and they are hi rehy declared to be, and are hereby constituted a body politic and corporate by the nanip of " The Times Printing and Publishing Company (Limited), " and may by that name sue and be sued, implead and be impleaded, answer and be answered, defend and be defended in all courts of law or etiuity, and by that nanje they and their successors shall have perpetual succession, and may have a common seal, and may change and alter the same at pleasure, may establish agencies for the sale of the said newspaper, and carry on the said business in the various Provinces of the Dominion, may ac(iuire for themselves .ind their successors, under any legal title whatsoever, property, real and personal, may contract for, alienate, buy, sell, rent, lease, mortgage, or otherwise disiwse of the same or any part thereof, from time to time, and at all times as occasion may require, for the purposes of their business only, for such sums or prices, and upon such terms and conditions as they may see tit. 2. The said company is hereby formed for the purpose of continuing, extend ing and carrying on the business of The Timf.s newspaper, and generally for f-.Trryir:;.; on the business of printint;, publishing, stereotyping, engraving, wood-cuttin-, lidio- graphing, book liinding, and of dealing in and vending all articles of merchandise connected therewith. 3. The head office of the said Company shall be at the City of Brantford in the County of Brant, Province of Ontario, with establishments, branches, agencies or ofllces in any other place or places m the Dommion that the said Corporation may from time to time decide upon and desire to do business in. 37 4. The capital stock of the said company shall be fifty thousand dollars, divided into one thouiiand shares of fifty dollars each, and the said stock shall \n: transferal »lc or alienable, only in such manner and subject to and upon such conditions and restrictions as by the Dy-laws of the said Company shall be prescribed. 5. The said Corporation or Company may, from time to time, increase the amount of its capital stock, provided always that the majority of the Directors of the said ( "ompany shall by their votes resolve and declare that the said capital sto< k is insuthcient for the |)urpose thereof, and shall then call a special or general nicet'ri' of the Ntockholders of the Company, Riving at le;ist two weeks' notice of su> ti meeting.', and stating the proiKJScd increase as one of the objects of such meeting, by a written or printed notice delivered or mailed to the post office aihiresR, as in the sto< k IhhA appears, of each shareholder ot his representative, and by advertising the same for two weeks in some newspaper published in the City of Brantford afotesaid, and shall then submit such resolution to such meeting for approval ; and at such meeting the majority of votes in value of tht shareholders present may accept, endorse, anieml or reject such resolution of the Director .. and may pass a resolution authorizing; the Directors of t!ie said Company to increasr- the capital stock of tl'.' said Company to such amount u they may deem necessary therefor ; and thereupon the saiii Directors may by By law >t By-laws declare that the ' ipital stock -.hall be increased by such amount, and the time, amount and manner .f paying t'lu same, and may open stock books lor -iubscrijitions ther- of and thereto. Provided always that such resolutions of the Dir tors o increase •*uch capital stock of the Coi!)|)any may lie subniittrd to any annual mci ig of the Company, which annual meeti.ig shall have all the powers .md privilci^cs li -ein conferred upon a general or special meeting called as herein directed. G. To enable the said Corporation or Company to carry out the objirts herein nuntinned, the said Wm. Allen, R. Thompson, S. G. lieatt., W. li. KohiiMin and I. ' Johnson are hereby constituted Provisional Dir-ctors of the said Comp.iny, •vho sliall have [lower to manage the .affairs of the s, J Company until Directors under the provisions of this Act sh;!,- be elected in their place, and the said Provisional Directors shall have power ti> open stock books, receive subscriptions for stocks or shares, and generally to do all matters and tliin;^s ncccs ,iry (ui .. full organization and working of the said Company. 7. So soon as three hundred shares of the sa, 1 capitd s- . k shall have 1 . n subscribed, and ten per centum paid up thereon, the I'mvibiona! Directors shall rail a general meeting of the shareholders to be held in th Citv of JJrantford, of wlucli meeting not less than ten days' notice shall he given .y ; ilic advertisement, and notice delivered or njailed to each stockholder for tl pi pose of electing five i r seven Directors, .as m.iy by the said mcetini; he deteniun-d, and of orcani.-in? the said company generally, and upon such Direc ; bein^ elected, the powers and duties of the Provisional Directors may cease. 8. The said Company shall not be entitled to -oni! centum shall have been actually paid up on three hundr capital. encf busin' ss until ten per slwres of the sul.'^cribed 08 9. The annual meeting of the said company shall be held in the said City of Brantford. 10. At each annual meeting of the Company a full and detailed statement of the financial affairs of the Company up to the thirty-first day of December then last past, or up to such other day as may be fixed by By-law before the annual meeting shall be submitted to the stockholders, and shall be entered in the books of the Company, and be open for the inspection of shareholders. 11. At each annual meeting it shall be the duty of the shareholders to estimate and establish by resolution the then actual value of the shares of the stock ; and in case at ."ny time during the next ensuing year any shares in the stock of the Company are offered for sale, and the sale thereof has not been entered in the books of the Company or if any such shares have become transmitted by bequest, inheritance, marriage, or in any other way howsoever, then the directors of the Company shall', during two months next after such sale, offer for sale, or transmission has been notified to the Company, have the privilege, for and on behalf of the remaining or surviving shareholders generally, of acquiring such shares so to be sold or transmitted upon payment or tender of the price of such shares calculated at the last established actual value thereof as aforesaid, the said directors having the first preference of purchase, and the said shares shall be allotted and distributed among such remain- ing or surviving shareholders of the said Company as may be agreed upon by and with the said directors, either under the By-laws or a resolution of the directors. And jn case the shareholders should at any meeting neglect to fix such actual value the last actual value so fixed shall be the actual value until another resolution be' passed as aforesaid. 12. The shareholders shall not as such ba held responsible for any act, default, contract, or liability whatsoever, of the Company, or for any engagement, clLim, pay- ment, loss, injury, transaction, matter or thing whatsoever, relating to or connected with the Company beyond the amount unpaid, if any, upon their respective shares ; Provided always that amongst the officers of the said Company, there shall be a IVinter and Publisher, who shall be held responsible in any criminal proceedings for libellous matter complained of as having been published in the said Times newspaper or by the said Company at its establishment, and each and every issue of the said newspaper shall conUin the full name and post office address of such Printer and Publisher. 13. Every executor, administrator, tutor, curator, guardian or trustee of stock shall represent the stock in his hands at all meetings of the Comjwny, and shall be eligible as a Director if representing a sufficient amount of stock. 14. Ihc Charter of the said Company shall be forfeited by non-user during three consecutive years at any one time. 16. The clauses of the " Companies' Act, R. S. C, chap. 119," except as licrein altered, .md so far as applicable, shall apply to the Company hereby incorpor- ated, and shall be read as part of this Act. 59 INCORPORATION UNDER ONTARIO LEGISLATION. The General Ontario Act under which Joint Stock Companies may obtain incorporation by Letters Patent is cited as, " T^ Ontario Companits Act," to be found at chapter 191, Revised Statutes of Ontario, 1897. And amendments, 61 Vic, cap. 19, 6a Vic, cap. 11, and 63 Vic, cap. ay Short Title, s. i. Intbrprbtation, s. 2. Application of thb Act : To companies hereafter incorporated by letters patent, s. 4. To companies heretofore incorporated by letters patent, s. 5. To companies heretofore incorporated by special Act. s. 6. To companies hereafter incorporated by special Act, s. 7. Cap. 156, R. S. U. 1887, not to apply to future companies, s. 8. Incorporation of Companies by Lbtters Patent. Objects for which incorporation m^y be granted, s. 9. Applicants must be twenty-one years of age, s. 10. Name uf company must be free from ob- jection, s. 10, S.-S. (a). Word " Limited " must be the last word in each name, s. 10, a.-s. (a). Memorandum of Agreement must be exe- cuted in duplicate, s. 10, s.-s. (2). The Govemor-in-Council may make regu- lations as to notice, etc., s. 11. The Governor may give a company any name and vary its powers, t. 14. amalcamation of Companies. Two or more companies may amalgamate, s. 103, et sef. Existing Companies may apply for bx- IKNUEII powbrs, s. IC5. Rkincorporation of incorporated Com- PANIBS, S. 104. Extra-Provincial Companies. Extra-provincial companies may be licens- eo, s. 107. If licensed, must appoint an attorney, s. 107, S.-S. (1). Must make annual returns, s. 107, s.-s. (5). License may be revoked, s. 107, s.-s. (7). Anmual General, Special and first Mbetinos. Meeting for organization to be held within two months, s. 16. Notice to be given of annual and general meetings, s. 5a Annual meeting to be held on fourth Wed- nesday in January, s. 51. Special meetings called by directors or by shareholders, ss. 53-57. Annual Statement and Summary. Annual statement of income and expcndi ture, s. 78. Annual summary, s. 79. Copy of Summanr must be posted in the company's office, s. 79, s.-s. (7). A second copy must be sent to the Provin- cial Secretary, «. 79, s.-s. (7). Penai'y for defauli, s. 79, s.-s. (S). Proviso as to inactive companies, s. 79, S.-S. (10). Audit. Accounts may be audited, s. 87. Appointment of Auditors, s. s. 88-94. Books to be Kf.pt and What to Contain. Books of record to be kept. s. 71. Penalty for false entries, s. 73. Rectification of books, s. 73. When and to whom books are to be open, s. 74. Penalty for refusing to allow inspection, s. 75. Ilouks to be prima facie evidence, s. 76. Books of account, etc., to be kept, s. 77. Minutes of proceedings to be kept, s. 77. Books and records to be kept at head oSice, s. 10, S.-S. (c). Capital, Shares, Etc. A company may alter its capital or rc-dl- vide its shares, ss. 17-21. A company may create preference stoc S. 32. 60 OiKECIOKS AND THEIK POWEKS. rrdTisional directors to act until successors elected, s. 41. Directors must be stockholders and not in arrears, s. 42. Election of directors and fillinR of vacan- cies s. 43. S.-SS. (i), (J) and (3). Numlwr of directors may be increased or decreased, s. 45. I'owers and duties of directors, s. 46. Liability for transfer of shares to insuffi- cient person, s. 38. Directors of insolvent company not to declare dividend, s. 83. Directors not to make loans to sharehold- V.., s. 84. Directors liable for wages, s. 85. Fees, Etc. Regulation and payment of fees, s. 95. Prepayment of fees compulsory, s. 95. (3). lORFEITURE OR SUERENDEROF A CHARTER. Forfeiture within two years by non-user, s. 98. Revocation for cause, s. 99. Penalty for irrying on business with less than five shareholders, s. 100. \'olunlary surrender of a chart'T, s. 101. Company may be wound up, s. 86. Inspectors. May be appointed by a Judge, 5. 80. >fay be appointed by the company, s. 80. (2). LlAniMTIES FOR FaI.SB STATEMENTS. False returns, etc. , s. 97. "Limited," How the Word must he Used. Muit be the last word in the name of every company, s. 10, s.s. (a). Word must not be abbreviated and must Ije legilile, 5. 2j. Word must i>e used in all notices, invoices, etc., s. 2J. Liability of directors for default ; Penally, s. 23, S.-5S. (2) (4) and (5). Provisions as to companies not carried on for gain, s. 23, s. -s. (6). Limited Liaiiii.ity on Sharks. Li.ibi!ity of shareholders to creditors, s. 37. Trustees not personally liable, s. 38. Murlcagees nut personally liiblc, s. 3y. Name— How Changed. Objectionable name may be changed l.y the Licutenant-Govcrnorin-Council, s. 24. Notices, Summons, Actions, Etc. Copy of by-law, under seal, to be //»/«a /acii evidence, s. 66. Writs, etc., may be signed by director, etc., 5. 67. How notice may t«c served, s. 68; and Proof of service, s. 69. Action may be maintained between com- pany and shareholder, s. 70. Powers of Companies. Powers on incorporation, s. 15. Incidental powers flowing from inc*r|x>ra tion, s. 35. Proviso as to land, s. 25. Borrowing powers, s. 49. Power to issue bonds and delicntures, s. 49, S.-S. (<■). Power to mortgage property and rights of company, s. 49, s.-s. (eing its items : Dr. side. Freight $3,539.30, Passengers I790.00, Grain over 940.50 : Cr. side. Wages $396.00, Fuel 8438.oo,Provisions $377.50, Canal and Harbor Dues $350.30, Commission and Agency $136.00, Lighterage and Elevating $380.00, Engineer's Dupt. $30.00, Mate'.s Dept. $35.00. Aug. 3— Retired Note favor L. Shickluna $35,500 by Cheque No. 7. 4— Cash received from Purser "Erie," remittance for third trip, $1,800. "—Deposited $1,800. "—Journalize Trip Statement No. 3 of Propeller " Erie, " the following being its items : Dr. side, Freight $3,950, Passengers $785.50 ; Cr. side, Wages $333.50, Fuel $394.30, Provisions $419.50, Canal and Harbor Dues, $23 1. 00, Commission and Agency $115.35, Lighterage and Elevating $396.50, Engineer's Dept. $10.00, Grain short $30.00, Mate's Dept. $15.00. Transfer paid-up stock as shewn at page Si, make cut the form, and post to Stock Ledger as instructed at top of page 81. Aug. 8— *Credit the Purser of the Propeller " OnUrio " by Jas. Scott, for freight charges uncollected at end of season, $47.00, and by R. Thompson, for ditto, $150.00. " t Received from Purser Propeller " Ontario," Cash to close the season. " t Received from Purser Propeller " Erie," Cash to close the season. " — Paid A. B. Gilbert bal. of Salary, $300 per cheque 8. "—Paid M. MacCormick " " 450 " 9. " — Paid by resolution of the Board, $600 to the Directors for their services by cheque 10. "—Credit A. B. Gilbert with 4 months' salary at $100. "— " M. MacCormick " " " 150. Read again carefully the explanations at pages 83 to 86. Take olTa tri.il balance. 10 — Determine the profits of each vessel by making the working account entries in the Journal, as done in examples at page 89 to 90. A " Working Account " is the same as a loss and gain (or profit and loss) or revenue account, and the difference between the debit and credit side either a net loss or gain. The "Ontario's " net gain is ?4, 343.44 ; the "Erie's " $4,008.30. Having determined the gain of each vessel, now find the total gain of the Com- pany for the season, by closing all the remaining representative accounts into Profit and Loss. They are Discount and Interest, "Ontario" Working acct. and " Erie " Working acct. To Profit and Loss ; and Profit and Loss to General Expense ; the credit side of Profit and Loss is in excess of the debit side $6,739,31, being a profit upon the capital of the Company of nearly 13}^ per cent. ($13,48.) •This is done because the Purser was charRcd with this freight, and u it has not b«en collected hy liim frum Sroll and Thompson, we chartje the amounts to those men. and give the Purser credit. I The debit balances of the Puner's utts. at this date are the aowunls they severally owe the Company. 6S Refer to page 74 for the minutes of the last meeting of the Board when after e«nun.ng the statement of the Company's profit, an annL divideS t S;i":; Divid^erdt '"''""' ""' ""'"' •'^"P" °" ^' '^ '^"^'"« d^^l-'ation of As instructed at pages 84 and 85. make the Dividend entry in the Toumal «„,» also the entry placing l.ooo at the credit of Rest account ^ ' ,h. ^^IV^ *' ^'^'^""^ ^^^'' **''•"« ^''^ "«"•« °f «!«'■"«! Shareholders from Che^uT^ T' •*' •"k'"""." *' P^^ "«• P^y "^^ dividend with p "2 Cheque 1 1, and make the entries in Cash Book. proceeas ot rfown^r'?,^"'* '"r u'"^ •" ^^''' '"** P°^' »"d <='°''e 'he Cash Book brine down the balances of the Real Accounts, and make out the Asset ^nTr' ^T^ Statement and the profit and Loss Sutem^nt after the fo™ on p:^ 09 " in J^pii rwint/h': = T^trntr -- '--" -^ — Read carefully the instructions regarding Auditing Stock Si;^:'' "'' ""' ^'"'^ '^•='""' '""^ «-- '"^--'ion -Pecting Join. JOINT STOCK COMPANY BOOK-KEEPING Havmg n the precedmg pages shown how Joint Stock Companies are formed Ithri!' Tr.^T °' ''*^ '^''^ ''"■'^''"S them, we now proceed to il "'.'!"'; method by which the books of such Companies should be kept and for o„r create The Ontak.o Transportation C^panv (iIL) We J^'hHf '"'■^"' Illustrate the n.ethod equally well by a company eiJeTiLZlTtt "' facturing, or any other kind of business tL'that'c'hosen but he pr „ciS "" H methods that we shall adopt in the following set are app icab e to alll^oin Sto"ck Company Book-keeping, be the business of the Company whS it may ^ '"^ It is in the existence of and in the manner of dealing with the sharo r^n.f,! a the vanous books and forms which it necessitates, that Jo nt slck Book T differs from the ordinary methods of keeping accoums. Book-keepmg Below is a list of the books and forms used in carrying on the affairs of the Ontano Transportation Company (Limited), each of which'is Lplained llZtt Prospectus ano Stock L.st. Transfer Book. M.NUTE Book. ITa' '"'"' ^^'"--\D.v..ENn Shekt. Instalment Lists. Ss^Book "^T ""^ "^^ Instalment SCR.P. GENERArLEncKR a '^^""^•"'^• SXCK CERT..CATE. STrLEO^r' ^^^T ''^"'"" «««SLi^/the"A?f 4W'4r*'**^ '^ *** ''^P* '^ '»''. Bee page 32. M PROSPECTUS OF THE ONTARIO TRANSPORTATION COMPANY, (LmrnD.) CapiUl $50,000, in 1,000 (haret of I50 each. Pnviaonol Dinetors. R. C HooPKR, Esq., Kingston. J. W. Johnson, Esq., Belleville. T. S. Ford, Esq., Whitby. S. G. Biattv, Esq., Toronto. W. B. Robinson, Esq., Belleville. Jas. Baker, Esq., Belleville. E. Thompson, Esq., Belleville. Sterttary: A. B. Gilbert. Bankers : The Bank of Montreal. The Ontario Transportation Company (Limited) is formed for the purpose of carrying on the business of forwarding freight and passengers between Canadian ports and American ports on the St. Lawrence River and the Great Lakes. Owing to the opening up of the Catudian North-West, the enlargement of the Welland and St. Lawrence Canals to a depth of fourteen feet, and the greatly increased traffic between Liverpool and Chicago and other lake ports, both in grain outwards and general merchandise inwards, it is evident that a much larger fleet of steam propellers than has hitherto been required will find remunerative employment in the carrying trade of our inland waters. Judging from the past it is safe to predict that a profit of at least 12 per cent is assured. For this purpose the Company propose to give a contract for building two propellers to the well-known ship-building firm of L. Shickluna & Son, St. Catharines, Ont., and, immediately after they are complete<5, to enter vigorously into the proposed business. In order that there shall be no delay, it is proposed to apply for a Charter, under the Dominion General Joint Stock Companies Act, as soon as oi tif of the proposed Capital Stock is bona fide subscribed. It is proposed (o make calls upon the subscribers for stock as follows : 35 per cent, before the Charter is obtained ; a$ per cent about one month thereafter ; and the balance of 50 per cent about two months thereafter, according as the Directors nuty deem advisable. Witneu tigni opposite each lubfcription. u ■u i:S' 9 11 •S-H b •2^ Q «£ fe •§•1 APPLICATION FOR SHARES. To THE DiUCTOM OF THE ONTAKIO TtUNSrOltTATION COMPANY (LIMITED). Be pleued to allot me ten shEret in thii Compuiy, and I thall lign the Stock Lilt whoi presented. I enclose herewith e cheque to the order of the Treasurer of the Company for 35% of the Bmount of my subscription, and I promise to pay the remainder when requested to do so by the Directors. Full Name Address Dated Belleville, January 7, 1901. NOTICE THAT SHARES HAVE BEEN ALLOTTED. Sir, The Directors of the Ontario Transportation Company (Limited) have this day allotted you ten shares in the Company, as requested in your application. A. B. Gilbert, Secretary. Belleville, February i, 1901. FORM OF PROXY. I, John Smith, of Montreal, in the District of Montreal, being a member of the OnUrio Transportation Company (Limited), hereby appoint W. B. Robinson, of Belleville, in the County of Hastings, to vote for me and on my behalf at the ordinary cr extraordinary («r tht case may be) General meeting of the Company, to be held on the day of ; and at any adjournment thereof {or at ar-,^ meeting of the Company that may be held within the year). Witness my hand this, day of Signed in the presence of «9 BY-LAWS. manner m wh.ch thty .re m.de. No two Companie. will have theo, e«ctly the stS°"; '" T ! ^""'P'"'' " •"'«*" "«« ^ *^"'"'»'« '«» "'»^' the power of Shareholder, to wll .t pleasure to whom they chooM-«, for inuance. B«,k Stock or Iniurance Stock. BY-LAWS OF THE ONTARIO TRANSPORTATION CO. (Limit.d). Passed at a Meeting or thc D.rectors, hild at the OrricE o, the Company ON Fkidav May joth, 1901. MEETINGS. 1. A general annual meeting of the Shareholders shall be held at the office of loM^rr/K^t Tvf. "".''''*' "°"" *•"" ^ 8iven by circular to each Share- holder), on the first Wednesday m February in each year, for the purpose of hearing the report of the D.rectors for the year last pas,, and to elect Director for the nexl ensuing year, and for all other general purposes relating to the management of the Company, and at each such general meeting full and clear statemenU of the affair, of the Company for the preceding year shall be submitted. 2. A general meeting of Shareholder, may be called at any time (the same not.ce to be g.ven as for the annual general meeting) by the Directors when they may deem the same necessary or advisable for any purpose, and it shall be incumbent ol the President to call a general meeting of the Shareholders whenever required so to do .n wr.t.ng by one-fourth part in value of the Shareholders of the Company, for the transact.on of any business specified on such written requisition and notice as they may issue to that effect. ' require. '^^^ ^'''^'°" ''"" ^ '^^^'"^ '°^*'''" ^^ '*"= ^''^''^*"' " °<=°'*'°" ""»> vrJnt. ill ''"''''°'" " ""1:'"^' """" ^' ^"^'^'^ ^y ^ ""'J°"'y °f '^^ '"'-■"'bers wh Jh ^h,ll r r TT!! °' ^^ P'°"^' '° ^ ^^'"^ '" ">« "'^•^^ °f 'he Company, and which shall be to the following effect :— t- /. " Proxy.— This is to certify that I,- •Iran^nnrt^f^., n .r ■ '■ ,7 " ' '^'"^ ^ shareholder in the Ontario aZ nte^l^H S^^^'k^^""""'^ '° '''' •="''"' of —shares, have nominated and n S r "^' "°"""''" """^ '^PP*''"' • ''ho is a Shareholder n the said Company; to represent me at all meetings of the Shareholders of the afore- tl rT7' '^"^ P"'P°'* ""* ""'^ ™*y ^ «=»"«»• »nd subject to the By- laws of the Company, the vote or votes of my above-named representative shall, in M TO rctpccti, be coniidived u my tote or voto, until I ihall have i^nified in writing to the President of the Conpuiy my witbdraml of this proxy. Dated thii day of A. D. WiTNUs: 5. Shareholder! ihall be entitled to one vote for each and every ihare held by them in the Company, but no shareholder being in arrear of any call upon his or her stock shall he entitled to vote at any meeting of the Company. DIRECTORS. 6. The affairs of the^Company shall be under the control of a board of seven Directors, of whom five shall form a quorum. 7. The President and Vice-President of the Company shall be chosen by the Directors from amongst themselves, at the first meeting following the annual meeting of the shareholders. 8. The duty of the President shall be to preside, if present, at all meetings of the Directors ; call meetings of the Directors and Shareholders when necessary ; to advise with and render such assistance to the Manager as may be within his power. 9. In the absence of the President, the Vice-President shall have and exercise all the rights and powers conferred by these B^ -laws upon the President 10. It shall be the duty of the Secretary to keep a correct record of the pro- ceedings of all meetings of the Board and of the Shareholders of the Company and to deliver, when authorized to do so by a resolution of the Board of Directors, all books, papers, or other property belonging to the Company that may be in his custody or possession to such person as may be indicated in said resolution. 1 1. *Any shareholder, to the extent of ten shares and over, who is not in anears for payments for calls upon stock, shall be eligible to be elected as a Director. 13. The Directors shall hold office for one year, and until their successors shall be elected. 13. In the event of the death of any Director, or should any Director become incapable of acting, or cease to be a Stockholder in the Company, the vacancy there- by created may be filled for the unexpired remainder of the term by the Board from among the qualified Shareholders of the Company. 14. The Directors shall, from time to time, determine by resolution the salary or wages to be paid to the officers of the Company, 15. A corporate Seal shall be provided for the Company of such design as the Directors may determine, which seal shall be in charge of the Secretary of the Com- pany, but shall, whenever used, require] for its authentication the signature of the President and Secretary. STOCK. 16. Any shareholder may, by leave of the Directors, but not otherwise, transfer his share or shares by making an entry of such transfer in a book to be provided for that purpose, such entry to be signed by him and his transferee, and witnessed, and no person shall be allowed to hold or own stock in, or be interested in the business •It U not dainbh 10 commit the manactmmt of lb* aflkin el the company to thou who ban only a inall interest in it, conatquntly the qualifications for tb« Dincton an placed at not law than tan ihant. 71 "' "^ ^'^T^l ''''*'°'" "^ '=°™*"' '^ »»« ^««o" fi"« »««J wd obUined .• nor ihaU dividendi be pti» be obliged to receive full p.y»«„t of any .h«e. until the Mine ihall have been demanded by call i8. Calif upon the lubKribed capital itock of (he Company .hall be made at vuchtiine. at the Director, may determine, provided, however, that no call .hall esceed ftfly pet cent, of the .ubKribed capital, and that there .hall be an interval of at leatt one month between any two call.. 19. The Directors ihall have power .ummarily to forfeit all .hare., and the money paid thereon upon which any call .halt have remained unpaid for a period of ..X month, after the ttme. hall have become du. .nd payable, and .uch farfeited »tock thereupon .hall become the property of the Company. 20. Certificate, of .took .hall only be issued for fully paid up .hare^ but for payment, of any call upon the .tock. receipts on the Company', form .hall be granted ; both the certificate and the reroipt shall be under the seal of the Company. »nd .igned by the Prwident and Secretary. AUDITING. a I. One or more auditors shall be appointrd miually by il.e Shareholder, at the annual general meeting, whose duty it shall be to examine and audit the book, and account, of the Company, and any and all documents having reference to the busmes. of the Company, and prepare from the Company's books a balance sheet and abstract of the Company's affairs, to be submitted to the Directors on the last Monday m January, accompanied by any recommendations or suggesUons they may deem proper. ' ' BANKING. «2 A bank account shall be kept in the name of the Company at such Bank or JJanks as the Directors may appoint, and all cheque, shall be signed by the .Secretary and President. ■'■;• ■■'*i»- AMENDING BY-LAWS. c. *3. "These By-laws having been sanctioned at the first annual meeting of the Shareholders the Directors may, from time to time, as circumstances may require, repeal amend, and re-enact the alK,ve By-laws ; but such by-laws and every repeal amendment or enactment thereof, unless in the meantime confirmed at a general mcctmg of the Cnmp.-,ny duly called for tlul purpose, shall only have force until the next annual meetmg of the Company, and in default of confirmation thereat, shall at and Irom that time only cease to have any force. «-k .ha, U „„. fully p,Ud up. "Th. «. hoLIXTw U ^r^Z!M^\^'^';.'ZM°^"^ """" '"""'""^ 1^ 73 MINUTE BCXDK. This book is kept for the purpose of recording the business done by the Directors at their meetings, and should be written up by the SecreUry from notes taken as the business of the meeting proceeds. The reading and adoption of the minutes of a previous meeting is the first order of business at any meeting of Directors. The minutes of shareholders' meetings would be kept separately, and would record the transactions done at annual meetings and extraordinary meetings of the shareholders. MINUTES Of a meeting of the 'Provisional Directors of the Ontario Transportation Company (Limited), held at the office of J. W. Johnson, Esfj., in the City of Belleville, on Saturday, the first day of April, 1901. Present : R. C. Hooper, W. B. Robiksow, S. G. Beatty, E. Thompson, T. S. Ford, J. W. Johnson, James Baker. The Acting President announced that all the legal formalities had been complied with, and the Company was duly formed under the Dominion Joint Stock Company's Act, with a capital of $50,000, divided into one thousand shares of fifty dollars each, all of which has been subscribed. He also stated that the duties of the Provisional Board were now performed ; and moved, seconded by Mr. Ford, that a meeting of the Shareholders be called for Wednesday, the nth April, 1901, for the purpose (as required by the charter) of electing a Board of Directors, which was carried. R. C. Hooper. Minutes of a meeting of the Directors of the Ontario Transportation ComiKiny (Limited), held at the office of J. W. Johnson, Esq., in the city of Belleville, on Wednesday, the 19th April, 1901. W. B. Robinson, S. G. Beatty, R. C. Hooper, E. Thompson, J. W. Johnson, T. S. Ford, Jas. Baker, Who were duly elected Directors of the Company at a meeting of Shareholders on Wednesday, the nth day of April, 190 1, as per the following certificate : The undersigned Scrutineers, appointed by resolution at a meeting of the Share- holders of the Ontario Transportation Company (Limited), held at the office of J. W. Johnson, Esq., on Wednesday, the 12th day of April, 1901, hereby certify that the following gentlemen were duly elected Directors of the said Company for one year by receiving the largest nun'.ber of votes, viz: — R. C. Hooper T. S. Ford, W. B. Robinson, J. W. Johnson, (Signed). S. G. Beatty, Jas. Baker. L. W. Yeomans, E. Harrison, E. Thompson, Scrutin-.crs. Sworn before me at Belleville, this 19th day of April, 1901. A. Mackenzie, J. P. *NoiK.-- Ttir Prov'tsiunial Direct. r% are the Committee uf Management up tu the time of the kni aimttal mcctini; o( the Shareholders, when a lioatd vf Dirixtuu is elected. The minutes of Sharcholdcrk' meetings axe kept in a separate l>ook. 73 The minutes of the last meeting of the Provisional Directors were read and approved. Mr. Beattv, seconded by Mr. Ford, moved the following resolutions, which were adopted : — Resolved, that W. B. Rohinson, Esq., be President of the Company, and T. S. Ford, Esq., Vice-President. The action of the President in taking steps to procure and furnish an office for the Company, at 51 John Street, was approved on motion of Mr. Ford, seconded by Mr. Beatty. Mr. Johnson, seconded by Mr. Baker, moved the following resolutions, which were adopted : — Resolved, that Mr. A. B. Gilbert be SecreUry and General Manager of the Company. Rb-iOLVED, that Mr. M. MacCormick be Treasurer and Accountant. It was resolved, on motion of Mr. Beatty, seconded by Mr. Hoopkr, that the necessary books of account for recording the business of the Company bt; procured by the Secretary and Accountant. It was also resolved, on motion of the same gentlemen, that the first call of 25 per cent, be made upon the Shareholders, to be payable at the Company's oflTice on the sth day of May, 1901. Adjourned to meet on the aoth May. A. B. Gilbert, Surctary. W. B. Rohinson, Vtiiidtut. Minutes of a meeting of the Directors of the Ontario Transportation Company (Limited), held at the Company's office, 51 John Street, in the City of Belleville, on the 20th of May, 1901, all the Directors being present. The minutes of the last meeting were read and approved. The Secretary reported that the first call of »s per cent, of the Company's capital had been made and responded to by each Shareholder The President stated that L. Shickluna, of St. Catharines, had offered to sell to the Company two first-class propellers (ready for launching), full We'land Canal size^ with a capacity of 27,000 bushels of Wheat, havmg condensing engines by Oille, of St. Catharines, for the sum of $2;f,ooo each, and having examined them, with Capt. Pollock, he advises the Company to buy them at once and place them on the route iHitwcen Chicago and Montreal. It was resolved, on motion of Mr. Beatty, seconded by Mr. Johnson, that the recommendation of the President be forthwith carried out. Adjourned to meet on the 30th inst. A. B. Gilbert, Secretary. W. B. Robinson, Preudent. fi- ll 74 (LimSTeM Jl T^r'^ °' *t' ^"^ '^ '••• °"*""° Transportation Company the ,o^ M« . ,??P?!)'^' °®'^ 5' J"*"* «'««'• » *« City of BellevUron the 30th May, 190,, .u the Directon.being present. The minutes of the Ust meeting were read and approved. "Sc"«T.A^I. l•""'"!^° ^ ^"^■"•»' ""^ "•""'^ *em respectively. motio?orT'T'""''°*'r/"''*''^*' '^ '*''«" '"'o consideration, and on mofon of Mr. Bak.«. seconded by Mr. Johksoh, the following were appointed :- Pkopkllkr "PACIFIC." Captain Wm.H«.nay SaUry. |,ooo Purser, J. T. Rose .. I,„^ Engineer, Wm. Walsh ",'■■' ., | ^^ Propkluir "ATLANTIC." Captoin, A. Pollock q,,.„ - Purser, E. Hayne ::.:.:::; Salary. |, 000 Engineer, O.St John- ••• ""* „ |°^ ment^' balance of the crews to be engaged by the ijfficen." each in hi, oln depart- Mr. JoHNsoM moved, seconded by Mr. Bkattv. and it was resolved that the purser, be required ,0 send to the Treasurer abst^ct sUtementrof r^lt. and disbursements, accompanied with vouchers, on the completion of each roS trip .ppro';^ 5t otlc't'o^"'"'^"^ "''' '"''"'"•^' '' ''' ^-'"^' -^ ----'V A. B. G.LB.RX. Se^r^Ury. ^^ ^ r^^,^^^^^ ^^.^^^^ ^LimST,? '.T?^ °^ "•' ^'"'''°" °^ "'^ Onurio Transportation Company ( L.m.ted). held at the Company's office, in the City of Belleville, on Friday, the ^.th day of Augus, .90: all the Directors being present, and the P esident in e cJ r The mmutes of tne last meeting were read and confirmed. After examining the sUtement of the profits of the Company for the season of Johnson. ar.d carried unanimously, t u a dividend often per cent., payable forthwith Jlo^rSler" "^ "''''^' ^'"' "'"^ Company, for the cu^ent year, and tha." of ProJt td lII" '^'^'"^ '° ''"' ^"°""'' ''"^ ">^ ^'-- --'" - ^' -dit the ^sz't^i^;:^::^^:^'^ ^^^ ""^- '^^' ^^^ «'-- ^ p^^^ A. B. G.LBEKT. &,r,,ary. VV. B. Rob.nson. resident. 76 INSTALMENT LIST. INSTALMENT Na i. In accordance with a resolution of the Board of Directors of the Ontario Transportation Company (Limited), the first call of twenty-five per cent of the Capiul Stock of the Company is due and payable on the sth day of May, 1901. When Received. Subscribers' Names. 1 Instalment. Interest. Amount Received. Remarks. 1901 May 5 II James Baker, E. Thompson, 300 SO $a.5oo 6«5 $».Soo 625 II Fred Wilson, 75 937 50 937 50 ,1 Francis Murphy, 100 1,250 i.*5o II R. T. Bell, so aso 250 15 Ed. Harrison, 60 750 46 75' 46 II L. W. Yeomans, 70 «75 70 876 70 <■ W. B. Robinson, 100 1.^50 43 i.»S» 43 II J. W. Johnson, 100 i.»5o 43 1,252 43 »o S. G. Beatty, 75 937 50 82 939 32 u T. S. Ford, »5 3«» SO 60 3>3 10 II R. C. Hooper, «»S 1.56* SO 3 04 1.565 54 1,000 $12,500 00 '3 48 •Interest. «3 4R 48 $i2,5'3 $'».S'3 48 Entered Cash Book, folio i. NriTK.— An Inttalment likt i« prcpu:«l immediately after any call 1% made upon the Capital Stork. Three ralU nri: made by this Company, tvu of 35 per cent, and a final one of 50 per icnt., and consc<)ucntIy ihret: listi art mad* out. *Vou will olraerve that the call ii due and tnyable on the 5th day uf May. TboM wliu failed to pay un thai date Are charged mtcrcat for the tinw artrdue. 76 INSTALMENT LIST. INSTALMENT No. a. In accordance with a. resolution of the Board of Directors of the Ontario Transportation Company (Limited), the second call of twenty-five per cent, of the Capital Stock of the Company U due and payable on the aoth day of June, 1901. When Received Subscribers' Names. 1 Instalment. Interest. H^^ ^-"^«- 1 1901 June 20 W. B. Robinson, 100 $'.aSo I'.aSo 1 (1 J. W. Johnson, 100 1,250 i.aSo 1 i( S. G. Beatty, 75 937 S 937 S 1 II T. S. Ford, 25 3" 5 3>> 50 1 «i R. C. Hooper, "S i.S6a 5 1,562 50 1 II Jas. Baker, 200 2,500 2,500 ■1 E. Thompson, SO 63S 625 II Fred Wilson, 75 937 5 937 5 30 Francis Murphy, 100 1,250 2 43 »,»5* 4 3 «i R. T. Bell, 30 250 49 250 4 9 41 Ed. Harrison, 60 750 I 46 75« 4 5 It L. W. Yeomans, 70 875 I 70 876 7< 3 1,000 $12,500 o< > 6 08 Interest. 6 0? ! ! (12,506 oS 1 1 2,506 of Entered Cash Book, folio 77 INSTALMENT LIST. INSTALMENT No. 3. In accordance with a resolution of the Board of Directors of the Ontario TransporUtion Company (Limited), the final call, being fifty per cent, of the Capital Stock of the Company, is due and payable on the 20th day of July, 1901. When Received. Subscribers' Names. J3 Instalment. Interest. Amount Received. Remarks. 1901 July 30 It II II II II II II 11 VV. B. Robinson, J. W. Johnson, S. G. Beatty, T. S. Ford, R. C. Hooper, Jas. Baker, Wm. Shannon, Fred Wilson, Francis Myrphy, 100 100 75 25 "5 300 50 75 100 $2,500 2,500 ',875 62s 3.>»5 5,000 ».»5o '.875 2,500 $2,500 2,500 '.875 62s 3. '25 5,000 1,250 •,875 2,500 3i R. T. Bell, 20 500 1 07 501 07 II Ed. Harrison, 60 1.500 3 20 1.S03 20 II L. W. Yeomans, 70 '.750 3 74 1.753 74 1,000 $25,000 00 8 01 Interest. 8 01 $25,008 01 $25,008 01 Entered Cash Book, folio 3. 78 I o B B u u e V "o « .c en -8 s CO c B "3 c d 1 1 o Ul 4jL II Ik S M O ^ fi ^ i •r O SI e a ^ I 5 .^ I & « " .a N IS E '■■■■■■'■■■■■■— •I 'oit J sbsekszjqkM o 0^ 43 >• a V Q u •< H o « •< 8 cn M S I u s •< (A PC 0. u u M Pi a 14 ^ ^ < 79 ■■■■■■■■■■■■ii •fi 'OVL 'ajBDuiwaj) JI30JS 's 'ovi t A^J^J^^^^^A.^J^M'.M.M.M.M.M.M.M.M.M.-mr^^ a u H O M H •< U H M U U u < X W3 O o O o o H CO o Q M o Q w Q H SS u U X H Q u > w u ui 3, s 80 } I ^ ««e««««««««eMM t H c M U) u hi o d •a u I a § m I I a a .3 o -a •ts . • 60 ^ ^ H "^ 1 .a— 3 « •« « 5^84. OS SI'S,. J 2 to. c« e ;->''• 5 a -" « •■'■' 5 5 "S 3-2 2 -s 3 t g t- . >^ ft T5 .5 w "-H J; a eC » 5 L- c: •* ^ ^ u hk •» 5 i; E . , ■|5 81 f] i s. I I % w o e ^^r^. 0««roo to 1 If 3 3 to K1 •O o -c H E o ^ ^ I o 2 (i4 d •c H •2 S & C s 9 Vi V f fe krt 1 « s ?! c d 9 Q < o 9 2i 9 a RECEIVING AND DISBURSING AGENTS. The itatement on the precediiv P«ge «nd the method of treating it at the head office. .Uustrate the principle upon which any receiving and dLrting agem handling caih, should be dealt with. "-••■ng ageni, .^H f ?r^ °?! " "•''^ P*""***- '''°*'"8 °" ""^ '^'- "d crediting the various account, for which the «.h wa, received ; follow that with another entry, debiting the several accounts for which he made disbursements, and crediting him for the total. The difference between the two sides of the agent's account in the head office will agree with his balance of cash as shown in his cash book. As the sutement is accompanied by vouchers, it will be seen how easily the audit can be performed. THE JOURNAL. It IS not necessary here, as it would be in a primary work on book-keeping, to explain the nature of the Journal ; hence we will confine our explanations to entries peculiar to Jomt Stock Companies and this particular set. The opening entry, "Sundries Dr. to Capital Stock," is the first entry of any kind make m Joint Stock Books. By it we debit the original subscribers for stock with the amount of their subscriptions, and place at the credit of the Capital Stock MICROCOPY nSOlUTION TtST CHART {ANSI and ISO TEST CHART No 2) _A APPLIED IIVMGE I ^K '653 East Mam Sir^^t B^S Rochestef. \ew vori, U609 uSA '■^B (?'6) 482 - 0300 - Phor* ^S ('!«) 288- 5989 - Fa, 84 Account the total of these, which is the nominal capital of the Company until all calls upon stock are paid, when it becomes the paid-up capital. To find the paid-up capital of the Company at any time before all calls are paid, you wou.d deduce from the amount at the credit of Capital Stock the several sums standing at the debit of the Shareholders. As payments upon stock are made, credit the amounts from the C. 15. in the accounts of the shareholders in the General Ledger, and at the same time credit the accounts of the shareholders in the Stock Ledger. Another way of dealing with the Capital Stock is to credit the account only as instalments are paid, and post at the same time to the credit of shareholders' accounts in the Stock Ledger, and not open accounts with the orif^inal stockholders in the General Ledger at all. ( This system is explained further on.) We prefer the system adopted in this set when it is intended to call up the Stock within a short time, for the reason that original stockholders bind themselves by their signatures on the stock list to pay all calls upon stock, and there- fore we treat them as debtors to the Company, to be looked after as any other debtors till such time as their obligations are discharged. Stockholders are often desultory in their payments, and it is therefore proper and desirable that the sums owing by them should be shown in the Company's Ledger. This system likewise prevents confusion, as, having placed the total Capital Stock on record in the Ledger, no further dealing with the account is necessary until it is desired (if ever) that it shall be increased or diminished. Only the aggregate amounts of receipts and expenditures of the several vessels are recorded in the general books. The Pursers being the receiving and disbursing agents, we open an account with each, charging him with all he receives and crediting him with all he pays out, as shown in his trip statement, which is an abstract from his books. When the Pursers, at the end of the season, pay their balances in to the head office, and are credited with any outstanding freights, their accounts close, as shown in the ledger. The Purser of the "Atlantic" closes the season without any outstanding freight charges ; the Purser of the " Pacific " with accounts against two individuals, which are journalized to his credit and their debit, as shown in example. A Journal entry transferring partially paid stock is made in the Journal and explained with the Transfer Book. The transfer of paid-up stock does not alTect the General Ledger. On July the 31st, the "Pacific," and on August the 4th, the "Atlantic," complete their third trips and their season's work, and between the last date and the loth of August, when the Directors meet, the closing entries in the bo re made. After the last Cash Book and Journal entries, of August 8th, are post .e take off a trial balance, as shown in example, and then proceed with the closing ^ ries leading into Profit and Loss. As it is desirable, indeed necessary, that the profits of each vessel should be determined separately, we open a "Working Account" for each, to whicii we transfer its own income and expenditure from the general accounts, the difference 85 between the debit and credit being the net amount made or lost by each vessel We next cbse into Profit and Loss any general accounts that have produced pSt aid after that the workmg accounts of each vessel. Any general accounts stow Tg a loss Tn'r" trn' °r °"''"^ '^''' '°"°"^' "^y '""^ ''-•''"g accounts of any'vesse that might be unfortunate enough to lose money. Having gone this far you are The r-rectors. finding that the sum of $6,739.04 is the total profit for the year bo.ng ,3^ per cent, upon the capital stock, proceed to the consideration of the d v ' dend. It seldom occurs that any properly managed Company declares a divldeni amountmg to the full sum of if, profits. It is customary ?o reserve a certa iTum agamst possible future contingencies ; hence we declare a ll d of ,0 pe'"c „T c el!,rT ^ . r'" "u ''"' ^"°""^' ^"*^ ^"°'' '»>« balance to rem^Jn'a the credit of Profit and Loss, the two sums being a liability to the shareholders. Canadian Joint Stock Banks usually have a -Rest Account " to the credit of wh,ch a certam sum .s carried annually from the Profit and Loss account untHt reaches a certam proportion of the Capital Stock ; and . is customary also whh ^h to leave a certam amount at the credit of Contingent Account, or Profit and Iss or both. The prosperity of the Bank of Montreal, selecting it as the most prom n'm example, .s m a large measure due to following this wise course. Its "Rest^ now amounts to seven millions of dollars. (See the Bank's Statement further on.) tZ gure. The Bank would have to lose -n bad debts the sum of seven millions before "R^i'" r '7T'- ''"'■'" '""^ ^'^°^'^''°" ^^-"^ '^^ possession o?" Rest makes agains unforeseen contingencies and bad debts, it serves the exceed- ingly useful purpose of enabling the Company to pay as nearly as possible a unTfo m dividend from year to year. In any one year the profits of a Company 1^^^ a ha f per cent., but the possession of a rest will enable the Directors to eciualize the dnidend and preserve the Stock of the Company from the fluctuations Tn price to winch a constantly changing rate of dividend would subject it. The Directors having declared a dividend of ,0 per cent., we make the necessarv Journal entry, debiting Profit and Loss, and crediting Dividend No. . • we n" n"ke irofit and I oss Dr. to Rest Account for the amount to be placed to the c^; d t of t. account which is the last Journal entry made. We immediately begin to pay o t he dividend as per Dividend Sheet No. ,. which contains the names of the S ockholders taken from the Stock Ledger. Companies whose shares are consVjt y ch..ngmg hands close their Transfer Books for about ten days, while the dlSend chc,ues are being sent out. As each shareholder .eceives his diWdend. he stns hi^ a^e as a receipt upon the Dividend Sheet ; or a cheque payable to his' ordeTwhich «ill have his endorsement on the back when you receive it back from the Bank nt the end of the month, will be sufficient. We credit Cash and chaJeDvLnd with he sum total of t e Dividend Sh .. Wc now close and post the cfsh Account. Id proceed to bring down the balances of the Ledger Accounts that are unclosed, which 'See Rest or ReMrvc, further on. 86 are the Asset and Liability Accounts, all others lu^nng been dealt with before the dividend entry was made. This being done, w« make out the yearly Balance Sheet, or Asset and Liability, and Profit and Loss statements, which ar& usually printed for circulation among the Stockholders, after being examined and certified by the Auditor or Auditors. JOURNAL. Bbllkvillb, Ontario, May 5th, 1901 J.F.L I Sundries Dr. to Capital Stock, W. B. Robinson, For 100 shares at $50, J. W. Johnson, "100 " " S. G. Beatty, " 75 T. S. Ford, " as R.C. Hooper, " 125 James Baker, " 300 E. Thompson, " 50 Fred. Wilson " 75 Francis Murphy, " roc R. T. Bell, " 30 Edward Harrison, " 60 L. W. Yeomans, " 70 1000 as p, Fuel, " " Provisions, •< Canal and Harbor Dues, " Commission and Agency, " Lighterage and Elevating, " Engineer's Department, " Mate's Department, " Grain Short, " II II II II II II II II I3th Purser Prop'ler "Atlantic" Dr. to Sundries, Freight, u per Trip Smement No. '. Passenger, " " " « Sundries Dr. to Purser Propeller "Atlantic,' Wages, u per Trip Suieraent Na i Fuel, " " " " Provisions, " " " " Canal and Harbor Dues " " " Commission and Agency " " " Lighterage and Elevating, " " " Engineer's Department, " " " Mate's Department, " " " Grain Short " " " July I St Purser Propeller •' Pacific " Dr. to Sundries, t reight, as per Trip Suiement No. a. Passenger, " " " " Sundries Dr to Purser Propeller " Pacific, " Wages, as per Trip Statement No 2, Fuel, " " " " Provisions, " " " " Canal and Harbor Dues, " " Commission and Agency, " " " Lighterage and Elevating, " " " Engineer's Department, " " " Mate's Department, " " " Grain Short, " " " Forwarded 134880 1914 310 67 3l8 346 131 «S 58 3« '89s '15 74 197 3?S >«7 340 17 39 5 37«9 320 500 429 374 133 429 14 58 4 ^'47237 00 06 64 18 10 87 49 '7 63 60 94 13 00 SO 40 30 00 90 SO 40 90 40 00 00 30 20 90 37 5° 60 134880 1840 73 '371 «797 97 1392 3«9o 429 2164 38 $147237 00 56 SO 73 63 50 90 40 00 07 38 Belletille, Ontario, July 8th, 1901. F. 4 r i r L. r, 4 4 4 6 4 5 S 5 S 5 6 6 6 Forwarded - Purser Propeller "Atlantic" Dr. to Sundries. Freight, u p«r Trip Suitmrni No. i, Passenger, " " " •< Grain Over, " " " " Sundries Dr. to Purser Propeller "Atlantic." Wages, u per Trip Suinmnt Na t. Fuel, " " " " Provisions, " " " " Canal and Hprbor Dues, " " " Commission jf-.J Agency " " " Lighterage . nd Elevating " " " Engineer's Department " " " Mate's Department, " " " .13th. Wm. Shannon, Dr., To E. Thompson. For Uock Transfer Ihii day of partially paid stock as per Transfer Book. ' .3"t_ Purser Propeller "Pacific" Dr. to Sundries Freight, as per Trip Suiemenl No. 3. Passenger, " " " " Grain Over, " " " " Sundries Dr. to Purser Propeller "Pacific," Wages, as per Trip Statement No. 3 Fuel, " " " •• Provisions, " " " " Canal and Harbor Dues, " " " Commission and Agency, " " " Lighterage and Elevating, " " " Engineer's Department, " " " Mate's Department, " " " August 4th Purser Propeller "Atlantic" Dr. to Sundries. Freight, as per Trip Sutement No. 3. Passenger, " " " " '47*37 3799 297 497 474 »S3 »33 413 S 10 1250 4347 »9S 429 376 »S» "5 379 20 34 3738 Sundries Dr. to Purser Propeller "Atlantic," Wages, as per Trip Statement No. 3. Fuel, " " " " Provisions, " " " " Canal and Harbor Dues, " " " Forwarded - $165640 232 394 420 220 a8 4* 00 64 60 40 90 20 60 90 00 80 SO 00 20 40 75 40 SO 20 27 SO 20 50 90 06 »47a37 319a 560 47 2086 28 4* 00 00 34 1250 00 35*4 784 39 1912 60 20 00 9S *9S4 784 1834 $166206 27 00 73 69 H ¥ 89 Bbllkville, Ontario, August 4th, 1901. J. F. S . F. 6 L. r 5 6 6 8 6 Forwarded Commission and Agency Ligh.vrage and Elevating Engineers' Department Grain Short. Mates' Department, 7 4 4 8 7 5 5 S S S 6 6 6 6 4 _August Sth_ Sundries Dr. to Purser Propeller " Pacific " *Jas. Scott, ' Robt. Thompson, For frIn Propclki "rtdSc," Muga igoi. "Atlantic" Working Account, Ntt gain Prop«ll*r "AtUnUc," muoo igai. Profit and Loss Dr. To General Expense. For S«Moa 1901. Profit and Loss Dr. To Dividend No. i. For 10 per cent, on Caplul Stock declared at > nmtinx of th« Directors this day. Profit and Loss Dr. To Rest Account, For amount traniferrad in Kcocdanc* witli the rcMiution of the Directors. 197883 85 «9S33» 699 366 1151 3» 65 35 soo 8379 »7 57 433» 5» 4018 95 1640 00 1640 Sooo 00 5000 1000 00 1000 $213901 89 $213901 3» 60 »3 30 85 'S 40 00 04 00 00 Note— In closing accounts into Profit and Loss at tlie end of the year, it nuy or may not l>e dcsirabh to ori the closing entries in the Journal CASH BOOK. m M C. B. F. I. Ur. CASH. lOoi May •5 if To Ja«. Bakar, " ■■ Tbompaon, "Frad. Wllaon. Murphy, 'fl. BarrlaoB, ' L. W. Taoowiw, • W. B. Aobtaaoii. ' X W. JoluMon, ■ B. O. BMtty. T. 8. rord. ' R- O. Hooper, 1 8 13 II . 20 II II II II II II II 2 30 2 It 2 II 2 41 3 Kirsi Indalmcnt on aoo Sharrii of Slock, 50 75 106 M to I ic. 100 75 as " Dlwonnt and Intoroat on pa>t due iiMUtlmcnts, " Bank of Moatroal, Che4ue 1. Total til Debit of Cash. To balance lirnu|;ht ilown, $0S.4S J""'' .', * ' Pumar PropoUer "PaolflO." Rcmiltoncc for Trip I, ■ PuTMr Prop«Uer"AtUuitlo," ' Bank of Montroal, Cheque 2, ■ Bank of Montreal. Chw|uc 3, tioo, ti5o, 9340, ' Bank of Montreal, cheques 45 6, ' W. B. Robinson, Second Inst, on loo Shares of S'ocic ' J. W. Johnson, " •• ior> •• SOBeatty, •• " 75 ' T. 8. Ford, " " 25 ' B. O. Hooper, •• " 125 •• ' Jas. Baker, ■■ •• 20a •• 'B. Thompson, " " 50 " ' F. Wilson, " " 7j •• ' X^anois Murphy, •* •> 100 " • B. T. Bell, " " 20 " ' B. Harrison, " •* 60 ' Ij. W. Teomans, " " 70 " ' Discount and Interest on post due Instalmcms, Total to Debit of Cash, Balance from last month. Note.— The mcihod of kuping the Bank a/c wlely in tht Cash Book ii illuslralcil furihtr c OCk. •121 00 00 937 5" 1250 CX) 250 CO 7$o 00 «75 00 1250 00 1250 03 937 50 3'* so 1562 so 13 48 -- ICXXIU 00 •»»5'3 "48" I. 500 00 475 uo 200 CO 200 00 490 00 ck. 1250 oo 1250 00 937 50 3'» so 1562 50 2500 00 62s 00 937 so 1250 00 250 00 75° 00 875 00 6 f>S "437" 08 68 48 «I4439 56 t n if Ii CONTRA. 1901 Mav 1 ¥, 5 •J 20 10 ao »') 7 30 30 Ry Bank of MoatMai. PoTMrProp. "Bftolflo." :; f«ffi|«r '">P "AUantlo. ** BaiQSiaaa, <«! ucccmm „( I'mcliase, {•hciinc I Depotil, Aitranc«l fur u>ic uf Idmi. ToLilioCmliiofCaih, llaUiicr, 3 Ry Bank of Montreal, 4 " Inraranco, " Insunuioe, :: |i«!a* :: gaTWass"' ;; Bank of Montreal, rVposii, I'olicy in Roval Canadian, $jo,ooo <>n " I'acific," at one per eenl., ••AtUtntle,'* " jfd Mid iMtlMttlmcBi oa loo Sharci of Slock, <• •• 100 " H •• Jt •• It 11 3< •• •I •• 13c ** I ■< •• aoo " I !• •• KO ** •• •« «c *• I •• •• 100 " JO " te " 70 " J.W. ft O. jMttr. jM.Baiwr •' W. BhMmon, F. WUaoa. ' mnOMKarv^T, R.T.B^ " ■.BMrrlaoB. Xi. W. Tcpmuu, " DlMOOBt aad IntWft mi put due loslklmenu, Pnn«r PfOP«ll*r "PMlflO," Kemlutnci: for Trip 3. Total to Debit of Cuh, BaUac* from laM mwiih, To Balance brought down, $4i7-S7 To Bank of KontrMO. Cheque 7, _ , " POTMrProp'r "AtUUltle,'' Kemlltanca from Trip 3, " Panwr PrOP'r "PaOlflO" to cIom account for icaun, "PunMrPTop'r"AtUuiUo, I300, $450, " Bank of KontTML Cheques 8 9. " Bank of llOnttWU. Cheque 10, ••BankofKoiitrMU. '' n. Total to Debit of Cash, 3alanee ftoa last month. *NOTB,— Trial Balance taken at this point. IS 1000 asoo atoo 187$ 6jS 3«»S 50QO 1150 187$ S500 $00 IfOO .7,0 1300 •30408 «09 •y>5'T 37440 1850 »33 493 750 • 600 5000 •46367 4«7 00 CO CO oo 00 no 00 00 00 00 00 00 CO 00 01 OO 01 56 57 00 00 05 95 00 00 00 00 57 •46784 57 »a CONTRA 00 00 OS 9S 00 CO oo oo 57 Brn^ Orifontl>MU, Deposit, Balance of Salary Retired our Note, favor L. Shickluna By Bllla Parabto, " Bankorifont A. B. OUtMit. M. MMOormlok. Balance , ,"f Saiiry, OCnaiml ■xpana*, Amount paid to I)ircctor« for lerviccs, TMvl<4.n^ »i- » „" P*' resolution of the H<«url, 57 •37440 1850 300 450 •600 5000 1144 Total to Ciedit of Cash, I •NoTB.— Trial Balaa taken at this point. 00 00 00 oo 00 00 57 •46784 57 GENERAL LEDGER. The first accounts in the General Ledger are those of original subscribers for Stock, and the Capiul Stock Account ; the former close as soon as all calls of stock are paid ; the latter is a permanent credit, only affected when the Capital Stock of the Company is either increased or diminished. In the event of the Ledger being closed before stock is fully paid up, close the accounts of shareholders "By Balance," as you would any othor personal account showing a debt to the Company. In the Balance sheet put the matter thus : Capital Stock subscribed, say 950,000 " " unpaid, 60 per cent 30,000 " " paid up 920,000 Capital Stock Account in General Ledger will agree with the first figures ; the total debit balances against the shareholders in General Ledger will agree with the second figures : and the total of the amounts credited to shareholders in the Stock I-«dger will agree with the last. L. F. I. Dr. W. B. ROBINSON. Cr. IQCI May To Capital Sl«ck, 1901 1 $000 00 May June July 20 20 $5000 00 Ry Cash, 41 4( 11 11 J. W. JOHNSON. 1901 May To Capital Stock, 1901 I Sooo 00 May June July 'S 20 20 •sooo 00 By Cish, S. G. BEATTY. IQOI May To Capital Slock, 1901 I 37SO 00 May June July 20 20 20 •3750 00 By Cash, (( II if 11 T. S. FORD. R. C. HOOPER. I 1250 00 I 1250 00 3 2500 00 •sooo (lO I90I May 5 To Capital Stock, I 1250 00 1901 May June July 20 20 20 By Cash, 4( «( t( (( I 1 3 3«2 3" 625 $1250 SO 50 00 $1250 00 00 I90I May To Capital Stock, 1901 I 62SO oo May June July 20 20 30 t62SO 00 ByCaih, It «i 97 UR. JAMES BAKER. Cr. 1 901 M.y S To Capital Slock, > 10000 00 1901 June July I 20 30 By Cash, It 14 • 1 (1 1 I 3 asoo 2500 Sooo 00 CO 00 lioooo 00 tioooo 00 E. THOMPSON. 1901 May To Capital Stock, 1901 I 3500 00 May June July S 30 '3 tasoo 00 By Cash, " W. Shannon, FRED. WILSON. 1901 May To Capital Stock, 37SO J37SO 00 00 1901 May June July By Cash, •f i« FRANCIS MURPHY. 1901 May To Capital Stock, 1901 I 5000 00 May June 5 30 July 20 •sooo 00 By Cash, R. T. BELL. EDWARD HARRISON. 1901 May To Capital Stock, 3000 •3000 1901 May June July By Cash, L. W. YEOMANS. 1901 May To Capital Stock, I90I I 3500 00 May June July 'S 30 30 •3500 00 By Cash, 625 625 1250 I2 500 00 00 00 00 I 937 50 1 937 SO 3 187s 00 •3750 00 I2;0 1250 3500 00 00 00 95000 I 00 I 250 00 I 250 00 3 500 00 $1000 00 7SO 750 1500 13000 00 00 00 C) I 87s 00 1 87S 00 3 1750 CO •3500 00 L.F. 3. Dr. 98 CAPITAL STOCK. Cr. 1901 May 5 By Sundries, PROPELLER "PACIFIC." 50000 00 1901 May 5 To L. Shickluna, 33540 00 PROPELLER "ATLANTIC." 19011 May 5 To L. Shickluna, 23900 L. SHICKLUNA (St. Catharines). XI »9 39 To Bills Payable, To Cash, I 3 37440 loooo 00 00 1901 May 5 By Sundries, •47440 00 I 47440 00 *47440 00 BILLS PAYABLE. 1901 Aug To Cash, 37440 1901 May 29 By L. Shickluna, i 37440 DISCOUNT AND INIEREST. 1901 May To Profit and Loss, 1931 6 27 57 May June July 30 30 31 «27 57 By Cash, 13 6 8 I. •27 ( 4S 08 01 57 BANK OF MONTREAL. 1 901 May 5 «5 20 June 12 20 July 30 I 8 20 Aug 3« 3« 4 12 To Cash, 1901 3 5500 00 May 29 2 4125 00 June 12 2 2420 00 12 3 900 00 12 2 8000 00 Aug 2 2 4500 00 8 1500 00 8 1550 00 12 21000 00 3750 00 2300 00 1850 00 : "44 57 — = •58539 57 ~57" 3859 By Cash, Balance, loooo 200 200 3 3 493 37440 600 3 5000 3859 •58539 00 00 00 00 00 00 00 00 57 57 ■r' To Balance, Nora. — When th«re is only one entry at the debit or credit of an account and it r^nr*«*».. .5 ia the case ofcapiul itoek, aoJ the Propeller acwunts, there is no oecwSJ^o tolance"E^ " '"*' " ''"'"'">■• Dr. PURSER PROPELLER PACIFIC. L. F. 4. Cr, 1901 May June July 30 8 I ToCMh, " Sundries, 2 a 3 300 1914 3719 00 06 40 1901 June ruly 8 8 I By Sundries, "C«»h, 2 I 1 «37i 500 1500 7a QO 00 J« 4 4347 80 Aug I 3« 'I 8 " Sundries, II II "Csh. II II " Sundries, 3 4 3 3 5 3104 1912 3300 833 199 07 95 00 05 47 tioiSi 26 SroiSi 26 PURSER PROPELLER ATLANTIC I90I May 20 une 12 uly 8 Aug 4 To Cash, " Sundries, 1901 3 300 00 June 13 2 1895 «3 13 3 3799 4a |uly 8 4 3738 27 Aug 8 4 4 8 1 •9633 82 By Sundries, " Cash, " Sundries, " Cash, •• Sundries, " Cash. FREIGHT. 1901 Aug To Pacific w'ng,ac, '• Atlantic " 1901 5 8655 56 June 8 5 7944 32 July 13 I 8 Aug 3' 4 •16599 88 1 By Pur'r. Pacific, " Atlantic, " Pacific, " Atlantic, " Pacific, " Atlantic, 2 1840 S6 3 '797 »^ 3 3290 40 3 319* 4* 4 35»4 60 4 29S4 27 $16599 88 INSURANCE. PASSENGER. 1901 Aug To Pacific w'ng.ac. ■' Atlantic " 1901 5 1286 70 June 8 S 1441 SO July Aug 12 8 3' 4 •2728 30 By Pur'r Pacific, " Atlantic, " Pacific, " Atlantic, " Pacific, " Atlantic, 3 73 3 97 3 429 3 560 4 784 4 784 •2728 50 00 00 20 CO L.F. s. Dk. 1901 Jane July Aug To Puncr Pacific, " Attaniic, " Pacific, " Atlantic, " Pacific, " Atlantic, 100 WAGES. Cr. 3 10 a7S 320 297 295 23a •163064 1901 Aug By Pacific w'ng ac, " Atlantic ' FUEL. 1901 June July 8 13 I 8 3« To Puner Pacific, " " Atlantic, " " Pacific, " " Atlantic, " " Pacific, 67 74 500 497 429 18 SO 00 64 00 1901 Aug 10 10 By Pacific w'ng ac. " Atlantic " S 6 996 966 Aug 4 " " Atlantic, 394 30 11963 _5i_ •1962 18 34 Sa PROVISIONS. I90I Jnne July 8 13 I To Purser Pacific, " " Atlantic, " " Pacific, 3 3 3 3l8 197 439 10 40 IS 1901 Aug 10 10 By Pacific w'ng ac. " Atlantic " 5 6 1023 1092 60 SO 8 " " Atlantic, 3 474 3« " " Pacific, 4 376 30 Aug 4 " " Atlantic, 4 420 $21 16 so 10 82116 10 CANAL AND HARBOR DUES. 1901 June July Aug To Purser Pacific, " Atlantic, " Pacific, " Atlantic, " Pacific, " Atlantic, 1901 3 346 87 Aug 10 3 325 .30 10 3 274 20 3 aS3 40 4 253 40 4 220 90 •1473 07 By Pacific w'ng ac. ■ Atlantic 5 6 773 699 47 60 81473 07 COMMISSION AND AGENCY. 1901 June July 8 13 8 31 To Purser Pacific, " " Atlantic, " " Pacific, " " Atlantic, " " Pacific, 3 3 3 3 4 131 "7 «33 '33 125 49 00 90 90 7S 1901 Aug 10 10 By Pacific w'ng ac. " Atlantic " 5 6 3St 366 14 '3 Aug 4 " " Atlantic, 4 "S «3 •747 27 1 1747 27 Dr. 101 LIGHTERAGE AND ELEVATING. L.F.6. Cr. 1901 June 8 13 July t 8 V Aug 4 To Puraer Pacific, ■' AiUntic, ' I'acific, ' AlUntic, • Pacific, ' Atlantic, 1901 2 391 i7 Aus 10 .? 340 90 10 3 4*9 37 3 413 30 4 379 40 4 397 20 By Pacific, w'ngac, " Atlantic, " 1200 1151 •£35' 34 04 30 ENGINEER'S DEPARTMENT. To Purser Pacific, " Atlantic, Pacific, " Atlantic, " Pacific. •' Atlantic, MATE'S DEPARTMENT. To Purser Pacific, " Atlantic, " Pacific, " Atlantic, " Pacific, " Atlantic, 7 58 60 2 39 40 3 58 60 i : 10 90 4 34 20 4 1 »4 95 •216 I 65 GRAIN SHORT AND OVER.* To Pursci Pacific, " Atlantic, •' Pacific " Atlantic, " Pacific w'nR ac. " Atlantic I1901 3 3' 94 July 8 2 S 90 V 3 4 20 Aug 10 4 29 SO 10 s 39 00 s 47 »ns that are given on pages 83 and 84. we open accounts in the General Ledger, as well as in the Stock Ledger, with original .ulMcribers for stock, or tho«» who receive a transfer o.' stock before all calls are paid ; for all who may become possessed of paid-up stock by transfer subsequently, we open accounts in the Stock Ledger only. This book therefore. conUins nothing but the name and addrcM of each shareholder, the numbed of shares of the capital stock of the Company held by each, and the instalments that have been paid upon them. The entries on the Cr. side are posted from the C B as payments upon stock are made. When paid up stock is transferred you have simply to make the seller Dr. to the buyer in the Stock Ledger from the stub of the Transfer Book, as in the example of August 6th ; the General Ledger is not affected Transfers are posted as explained at pages 80 and 81. Before all calls upon stock have been paid, the aggregate credits of this Ledger and the amounts at the debit of stockholders in the Genend Ledger should correspond w.th the amount at the credit of Capital Stock in the General Ledger. After all the calls have been paid, the aggregate credits of this Ledger should agree with the credit of the Capiul Stock Account in the General Ledger. Two other forms of Stock Ledger are given. That at page 1.8 is the form wc recommend when it is not intended that the whole subscribed stock shall be called up for a number of years, if at all. Under this plan shareholders' accounts do not appear in the General Ledger. Dm. 105 W. B. ROBINSON, BiiLiviiti. S.L. F. I Ck.. Folio Sham 1 100 1350 1 1350 i 3500 Hy i»t IniUlmvnt, " 3Bd '< " JrU " By Balance, S. G. BEATTY, Toronto. I3$0 1250 35cn ll>5ooo _ Isjoo 1901 Vlay June July By i«t IiuUlmcnt, " 3nd " " 3rd •' 7S 937 937 1875 SO 5° oo T. S. FORD. Whitdv. 1901 May 20 June 20 July 30 By 1st Instalment, "2nd ■ " 3fd ' I as 313 SO I 3«» so 3 635 00 R. C. HOOPER, KiNGSTOM. 1 >90I May June July 20 20 20 By 1st Instalment, 2nd " 3k1 " I2S II 1562 1562 3'2S SO SO 03 JAMES BAKER, Belleville. '901 1 May 5 liy 1st Instalment, |une 2oj "2nd " luiy 20 " 3rd " I I 3 200 2500 2500 5000 E. THOMPSON. Montreal. 1901 July To. W. Shannon, 6$ SO 1350 91250 1901 May June By 1st Instalment, " 2nd " SO 62s 625 ||2S0 For other forms of Stock Ledger, see pages 117 and 118. loe a L. F. a. Dr. FRED WII.SON. Chicago. Ck. Folio 1901 May JUIM uly Hy IM Iniutmcnl, " and laol "3rd ' Kollu Sitwretl 1 75 9J7 S" 1 9J7 so i «87S «u FRANCIS MURPHY, Milwaukee. 1901 May uly By (»l Iniulmem, ^' and " '• 3rd " 100 1250 1150 3500 Um R. T. BELL, Belleville. 1901 May Jan* July By IM Initalnient, " and " " 3rd " aso »5o Soo 00 (X) 00 E. HARRISON, Belleville. 19U1 May }un« uly IS By lit Instalment, 30 " and '• 31I "3rd " 60 750 75° 1500 L. W, YEOMANS, Belleville. TT 1901 ^fay June uly Bv lit Initalment, " and ' "3rd 1 70 8rs (O 1 «7S 00 3 1750 00 W. SHANNON, Belleville. 1901 iune 1 13 uly 130 By E. Thonipv>n,| " 3rd InstalmentI 65 3 W. A. SHEPARD, Belleville. II 1901 Aug SO 1250 on I2S0 |oo 6 By J. W. Johnson,! 66 I y> ||$2Soo |oo i: 107 TRIAL BALANCE 50 fo 00 uu - -? 00 00 n 00 = -; io CO 00 10 00 ^zr - s fJO 5 00 00 00 00 FOL. ACCOUNT. Dr. Cr. Capital Stock I50000 00 Propeller " Pacific." ■ . . . •a3540 00 Propeller "Alwntic," .... »39.^ 00 Discount and Interest, .... »7 57 Bank of Montreal, .... 77>5 00 Freight, 16599 88 Insurance, 400 00 Passenger, 3728 30 Wages. 1630 64 Fuel, 1963 5a Provisions, 3116 10 Canal and Harbor Dues, '473 07 Commission and Agency, 747 27 6 Lighterage and Elevating, »35« 34 6 Engineer's Department, 93 48 6 Male's Department, .... 216 65 6 Grain Short and Over, ... •4 46 6 James Scott, 49 »7 6 Robert Thompson, .... 'SO 30 7 General Expense, .... 1640 00 7 Office Furniture, 340 00 7 Cash, as per Cash Book,* . "44 57 $69370 II •69370 II N •T "■■— Tbc babnccs only (not the footings) ara given in above Trial he Cub BaUncc is ukn from the Cuh Book, u ibe accoual it not Balanc. potted to date in the L edger. 100 DIVIDEND BOOK. ONTARIO TRANSPORTATION COMPANY. (Limited). Dividend No. i, lo per cent, declared Auguit loth, 1901. Names of Shareholder*. No. of Amount of Shares. Dividend Date. Receipt. W. B. Robinson, - too I500 00 Aug. ta W. B. Robinson, J. W. Johnson, - . 50 »50 00 u II J. W. Johnson, S. G. Bcatty, • 75 375 00 II II S. G. Beatty, T. S. Ford. ■ »5 "5 00 14 II T. S. Ford. R. C. Hooper, - - '»5 6»S 00 II II R. V Hooper, Jas. Baker, aoo 1000 00 II II Jas. Baker, Fred Wilson, - 75 375 00 II II Fred Wilson, Francis Murphy, 100 500 00 II II Francis Murphy, R. T. BcII, - 30 100 00 II R. T. Btll, E. Harrison, - 60 300 00 i II E. Harrison, L. W. Ycomans, 70 3SO 00 II II L. W. Yconians, Wm. Shannon, 50 250 00 II " Wm. Shannon, W. A. Shupard, SO 'SO 00 II II W. A. Shf[)ard, 1000 1 (5000 00 Entered C. B. 4. ^y^!^-^s^,'i'tn;^'ti^^'::^ Itf u. J J 3 i 6 6 7 BALANCE SHEET. Rwt Annual Sutement of Ands and Uabilltiea. ONTARIO TRAI SI'ORTATION COMPANY (r.iM.TKi.). AuoufcT laih, 1901. ASSKTS. Prop. "Pacific," " "Atlantic," Bank of Montreal, Jas, Scott, Rol)crt Thompson, Office Furniture, Amount. •»3S40 00 3 »3900 00 j8| 3«S9 57 \b\ 49 *7 •SO 30 140 00 •SL739__04 LlAMILITlM. A.MOUNT. Capital Stock, Profit and I.iws, Rest, 950000 739 1000 00 04 00 •S«739 04 It will be ob«:rved that there arc no liabilities to the public There is th. •So.000 of stock fully paid up by the shareholders, and |.;39.04 undiviied ^r.;...; First Annual Profit and Loss Sutemcnt. (OR REVENUE STATEMP-Nt). ONTARIO TRANSPORTATION CO: i 'ANY (Limitkp). ^ August, ijth, 1901. Dr. To General Expenses, " Dividend No. i, 10 per _^ cent, on Capital Stock, Balance, reserved for con- tingencies. R«>'T"i'^ •hith 'Undi al the Cr. of 11(640 5000 '739 '98379 00 00 04 04 Cr. By Discount and Interest, " Prop. " Pacific," net gain as shown in working ac, Prop. "Atlantic," net gain as shown in working account, • a7 433» 4018 1^8379 57 5' 95 mc.Lra7d^!i;,^r"^i:k™'^„".d„™™P^^^ would b. u„der„ood by J'e »..< suitable fo, Joint StoXCompinU^S^^^^^^ office would hare an» interest. l.r.l,.lu,e, (accompiied by the AuXrWnort? uTwi., Ih ' ^ ? ""'k'ng and of the Aaet, and «'*.andtheymu.tbedmwn«.p|JilythIt'Sl cJi underi.^^^^^^^^ shareholders are entitled to 110 AUDITORS' REPORT. The undersigned beg to report that they have carefully audited the general books and those of the pursers of the Propellers of the Ontario Transportation Com- pany, (Limited), and have pleasure in stating that they approve of the system of book-keeping pursued ; that they have examined thoroughly the receipts and expenditures of the vessels and those of the head office and find them correct ; that they have verified the entries aflecting the Company's Share Capital, and the transfers of Stock, and that the statements herewith presented are true abstracts from t!'.2 Company's books, and correctly represent its financial position. Belleville, August 25th, 1901. CHAS. HAGERMAN, ) JOHN MACOUN, / Auditors. DIRECTORS' REPORT. It is customary for the Directors to submit a report regarding the past year's operations, and make suggestions as to the future, at the annual meeting of the shareholders. i 1 The books of the Ontario Transportation Company, Limited, end here. Hi GENERAL AND TECHNICAL INFORMATIO' ' I From this point to the [end the reader will find General and Technical Information relating to Incorporated Companies. To afford the student an opportunity of anal _, balance sheets (a most excellent practice) a number are given here. See also the financial statement of the Bank of Montreal, with analyses. Ill A LOAN COMPANY'S BALANCE SHEET. TWENTY-SECOND ANNUAL REPORT OF THE HASTINGS LOAN AND INVESTMENT SOCIETY. To THE Shareholders : Auditor's Report thereon. -^^'''''^s. <^»^ Kcvenuo Account, together with the RECEIPTS. I!.ilancc per l.-ist Statement $ 3'8 6; kcpaymems on Ixmns and Mortgages, 42i;6? 12 Kcpaymenis on Uians on Slock w 00 Savings Hank deposits gogSy 32 Kcciived from Shareholders on Stock. «2S 00 Merchants Hank (withdrawals) 105872 61 General Interest received 25548 w Extra Interest received "73 g^ Msism DISnURSEMENTS. ASSETS. lAins on Mortgages $440169 80 I. 747 94 5.265352 71 LIABILITIES. Due t.y Sh.ireholders ■■.■■" ,,Sco e6 ( Wice Furniture, safe &c ]'. ', ?074 Jo At Credit in Merchants Umk 01 Jo 81 *- '^^l' ■" "«"'cc : ^'jIj^ •457023 43 Capital Stock (Authorized $250,000) SulKCrihcd ... t-y,rr,r^ Deposits in .Savings Hank.' ■.■;: ! ] ' ' "jAJ^ ?° Sterling Uel«ntures ;^io,ooo @ Oi . . . 4.S66O 67 ran.idian Debentures*.. .. . -** tcnnn n^ Dividend due 1st Jan. ^r^ °° Reserve Fund. . .. /S?' 22 ^""'JjIBt-?' rund .■..■.■.■.■;; $,M7'33 °° Added this year $137965 3266 98 *tS7023 43 REVENUE ACCOUNT. NET EARNINGS AND HOW DISPOSED OF. nividend mid 1st July « 6569 48 Dividend I)ue 1st January 6571 22 r.x|)ensei of Manacemcnt »? i,- e. X|)ensei of Management 2504 Interest on Debentures .^ „ Ir.lirest on Rink Account ; . . 76 00 interest on Deposits in Savinp Hank. 3928 05 Interest on Loans transferred 28S 04 Cnnmiission on Loans «« X^ MuniciplTax ' '• J^,^ 'o%ofl'office Furniture iZ m S"fp'u3 carried to Contingent Account 1379 65 Interest earned Extra Interest received. $ 25420 66 473 ('4 $25894 30 J- r. $ 25S94 30 C. PniLLIP.S, 113 AUDITORS' REPORT. To Iht Frtsiitnt and Dinttors <^ tkt Hattings Loan and Invtslmnl So«r,»o -_ Interest and rents accru;d: '. '. '. '.'. '. \ \ [ l^g ^ '^"'*' ^^'^ |l86789i^5jL l •Exclusive of I97.3SS.82 bonus additions included in claims. Surplus over all liabilities . faoR7994 4S 869047 44 _f»9S7p4i_89 .$16704417 00 410416 62 117114833 62 1564082 oj 81867891S 67 ANALYSIS. PolW Jn'jf ''''""'"' •'y ^^^^ P»'d durinp iHr year amounted to 8770, 168 4.; and Policy endowment poltc.es for l.aS,.,...,, having n.atured.'thcse sums as CUans. well as »2,8,48r.29 for profits, i.4S,4M..8 for surrenders, and an holders duringTe'L ''°°'°°°' "^"""^ '" ''" ^'■^^3.307.84, were paid to policy- The income receipts of the year were «2,9S3,»72.83, and deducting Increase therefrom all payments to policy-holders for claims by death for pro In Assets, fits, and for matured endowment policies, as well as all other outlays including expenses of management, there was left the sum of «i 272 '- 4«..os, which increased the Company's assets to 118,678,915.67. ' ' As appears by the abstract of assets and liabilities, after providing fully Surplus, for the necessary reserve for all policies of the company, and for all its other liabilities, there is shown a surplus of $1,564,082.05. The total business in force at the close of the year was $72,710 e„ 20 of assurances, under 33,407 policies, upon 24,469 lives, (c) 114 A FIRE INSURANCE COMPANY'S BALANCE SHEET. FINANCIAL STATEMENT OF THE PERTH MI;TUAI, KIKE INSURXNCK COMPANY, STRATFORD, ONTARIO. FOR THE YEAR EXDIXG 31ST DECEMHER, 1895. 32Ni> YEAR. Dr. Profit and Zjoss Account. Op. To Losses, 1894 I 4991 3j " Losses, 1895 . . 6J027 yi " Rebates and Abatements 4652 39 " Re-Insurance 9616 90 " Agents' Corn's and Ilunuscs 15848 43 " Law Costs 1034 22 " Working Expenses 9138 50 " Balance 74764 24 •183073 91 By Balance trom 1S94 | 72^92 ^7 " Premium, income 9^X43 7.^ F'xtra Premiums an' 'Vcs 497 .; " Interest . ,,v, ," Re-Insumnce, L.vscs 14058 S4 $183073 91 Assets and LiabiUtles. Stratford Debentures | 12000 00 Mortgages 4587500 Accrued Interest 811 00 Bank of Commerce Savings Branch. 2225 01 Bank, current account 3820 36 Instalments "55 39 Bills Receivable 529 go Agent and other Co'ys' balances. . .. 4770 65 Furniture and Goad's plans. 3868 63 Undertakings '42330 32 •217386 26 Amount required to re-insure all cur- rent risks on cash system Due to agencies and oilier com- panies Losses under adjustment Balance of assets over li.ihilitics Claims for which no liahility is ad- mitlni amounting to $2950. . . , I 33769 6.' 291 7n 2255 .S5 181069 o>) $217386 2(> Amount deposited with the Ontario Government, $12,000.00. Number of policies in force, 10,010. Amount at risk, $1 1,602,1^5 IIS BALANCE SHEET OF THE BELL TELEPHONE COMPANY. REVENUE Ar:COUNT, j.st DECEMBFK, ,8,/,. EARNINGS. Kichanges I-ess Unearned Rental Reserve •860525 79 4957 12 /yinj} Distance Lines WS5568 67 Private Lines .....'.' '9S72I 93 Miscellaneous ..." 12603 57 69840 98 EXPENSES. $"33735 'S Operating Legal v.'.'.'.*'.'.'.'.*',. 17734*0 07 Insurance. ''_'_*_ K657 63 liond Interest '.'.'.".'...'.'. '2945 16 Miscellaneous 327'4 3* '043 99 8828781 17 Net Revenue for 1896 — Less Dividend* (including Jan iVth. VsoVl ' '304953 98 "" 253440 00 Balance Revenue from 1895 •Si5»3 98 35047 37 Carried to Contingent Fund . . • „ I76561 35 Carried Forward to .'897 .. . 12050875 " 5605*60 _ *7656i 3 5 BALANCE SHEET ASSETS. Plants ,ind Patents, 31st Deccmlier, 1895. . ..J4029270 90 I'urchase of Patents, '^'96 4291 75 Construction 1896 169005 05 riantsand Patcnts,3ist December 1896 $4202567 79 Siures on hand 165407 76 Kcal Estate 53S259 02 Siuck in other Com- pn'<-'» 1^2455 00 Sundry Debtors 52921 ^q Due from Agencies.. . . 74082 22 '""*' 144OJS oS >5»973' 2 7 Audited and certified. P. S. ROSS & SONS, Chartered Afcouutanls, 3rsT DECEMBER, 1896. LIAIilLITIES, .Stock Account Bond Account Contingent Fund $910000 (. Add transferred from Revenue Account. 2050S Add Bond Premium Account ig^g, Kevenue Account Unearned Rental Service Insurance Reserve Accident Reserve Bond Interest Reserve.. Sundry Creditors '- $3168000 00 873500 00 75 25 ! 950000 CO 56052 60 '40799 99 SI 729 28 8188 51 10731 25 50729 64 f 533973 « 37 CHAS. P. SCLATER, Seinli -y- Treasurer. 116 TORONTO CANOE CLUR Statement of Receipts and Disbursemeriu for che current year. RECEIPTS. BsUne* from Uut yor— 0«ii«nil account f 186 34 Lift mnnbcnhip accoum i8e oo SubKrlptioni fioSo 00 lUcki 376 80 Lockfln 60 }o $'S'7 30 LcManein 41 f3«<34 '37* 30 Amui paid 33 50 ]jr« mcmbara tttcctad in 1896 tSooo Interest on bank accounli 1060 Procctds from lale of tickets for Minstrel Show , . 60 73 Proceeds from sale of tickets fur Annual Supper. . too ou Proceeds from «ale of tickets for Hallowe'en Party 34 y^ Proceeds from sale of Club llad^cs and Pins 70 5.1 Proceeds of Annual Reiiatia, July 4lh 13J 00 Amount collected as subscriptions for racing camie 15 oo *??*?_"? DISBURSEMENTS. Rtnl, 0«Btr*l BxptBMI. Membership ticket holders $30 00 Printing and suiionery 31 7. Poslajre... ,6 6, Hcpnirsto floor 13 00 Sundries g ,, _ ^■^^— irn an KtffUU OommlUt*. Gbnrral Exiensks— l'\*:* ; $7398 IVintiRK and iKMUge 8 25 .Sundries g 55 Expcnieii on war canoe 14 aj AKNUAt. KKOATTA— Refreshtncntft $50 to MuMc ao «, Fnntinfc proKrammw 14 7 Sundrien g 50 Racing canoe purchased 70 < . . BoQM Oommlttea. Furniture purchased »q 7 - Entrrtainmemt Account— ExpenMs of" Indies' Nichti" Ijq 15 Kxpense of Annual Supper 107 ab Expense of Satunl.iy Nights .W 2a Expense of Smol .la Concerts 10 or> Expense of Hallowe en Party ig 78 "5 4' Exi'ENSB Account— I''K*« 68 44 Water ,3 JJ Wajies 3,8 00 Telephone 43 7^ Siit>M:ription to papers ij jj New lockers and repaint 84 05 Sundries, cleaning brushes, soap, oil.etc.iso 50 Club badges and ribbon . fi JO r,Q B&lanett in Bank. General account J^ji 76 Kife membership (Iwing 7$% of the amt. at credit of iiccount on Nov. 30). _ 370 en 401 76 Cc*t of Minstrel Show 77 ,^1 Statement of Assets and Liabilities. ASSETS. Fumiiutc $ 066 IS Club Boats. ::.;.::::::::;:* ?^ ]t, AnBEaas— l^:::=:::z=::::::::::::z *"*'° Lockers 1895 Arrears „ „..„ 91 00 3 so a 00 Cask in Bank— General account f i^i 7^ lAt* membership account 970 < 4°' 76 $1650 50 NO LIABILITIES. 117 ANOTHER FORM OF STOCK LEDGER. l>ate 1899 May June uly 1900 May 1900 Dec. JOHN JONES, MOKTREAL. By first Instalment t$ per cent., " second '* aj •• second third SO To James Brown, Balance, By Balance, 31 j*By Dividend Stock, 10 per cent. No. No. of Shares Transfer. 10 Dr. Cr. 250 250 500 S 31 500 Soo 00 00 5 liooo 00 tiooo 500 1 so 00 00 00 00 00 oc JAMES BROWN, Bellevili.k. 1900 j M.iy IS I>>-c. 3t By John Jones, " *nivi>I..ml < Dividend Stock, 10 per cent. SOO SO 00 00 'As explained on page 126, Com(«nifs sometimes p»y dividends in st.K^k ; al«ve is an illustn- H>n of ,0 per cent, stock dividend place.l ,0 the credit of shareholders. The en ry would o"ina,e7n the Journa nstead of makinR I'rofit and Lo., Dr. to Dividend, and Dividend to Co.!, .T.s done when the duidcnd is paid in Cash, make <- •" 10 wasn, as is done Trofit and Loss Dr. To Capital Stock. For 10 per cent, on lso,otX3 placed to Cr. of shareholders, as under, S.L.K m lieu of cash dividend. I Ji>hn Jones, on $500, i share $jo. I James Brown, on $500, i " $50. And so on, Cr. each shareholder with the shares or fraction of a share that will amount to 10 per cent, on the stock he has paid up. FORM OF STOCK LEDGER USED WHEN THE ACCOUNTS OF SHAREHOLDERS DO NOT APPEAR AT ALL IN THE GENERAL LEDGER. There are m.iny Joint Stock Companies that either do not purpose making calls upon their shareholders for the whole of the stock subscribed, or postpone doing so for years. In that case we would recommend that the shareholders' accounts should appear only in the Stock Ledger. The following form is used by many of the leading insurance and other companies in Canada. As cash is received on account of shares 118 make Cash Dr. to Capital Stock, and make entries in the Shareholdcre' accounts in the Stork Ledger as in example. W. N. Ponton has here subscrifx-l 'rx loo shares, and on Moy islh pays a call of 25 jK-r rent. On June joth he p.iys another call of as per cent., so that on the 6th of Au«ust, when he transfers 25 shares to W. * ' .rd, he is in the position of havini; subscribed for 100 shares, with 50 per c .n them. He is made debtor to .Shepard, the figures under the various heads . „ changed to correspond with his position now, which is that of 75 shares subscribed and 50 per cent. paid. An account is opened with Shepard, who is shown to have subscribed (by transfer from Ponton) for 25 shares, upon which 50 per cent, is paid. The transfer would lie posted from the transfer book, of course. By this method is shown both what the shareholder has paid and what he still owes. W. N. PONTON, Belleville, Omt. Date. I'articulars. Ko. C.B. or No. ofTr'ns'r No. of Shares. Subscrilied Stuck' Paid thereon. Dr. 100 Cr. »5 Bal. 100 75 Dr. 5000 Cr. 1250 Bal. Sooo J7SO Dr. 62s Cr. 1250 ■ 250 n»i. I« premium or at a discount, they are always at par in the Company's books, anJ on the par value the dividend is paid. The first issue of shares at the inception of a con, pany will usually be at par. Subsequent issues may be offered at a premium if the old stock IS above par in the market. After the stock authorized by the charter h -; been taken by subscribers, a company's shares are no longer within its own contr..! It has none to sell, and their real value will be the investing public's estimation of them, based upon the efficiency of the company's management, the past earnings and an estimate of its powers in that direction in the future. If you desire to buy sto. k in a company whose shares have all been taken up, you must find some holder willini; to sell, either by your own seeking, or the employment of a stock broker. What yoii pay for the shares is a private bargain between yourself and the holder, with whi( li'tlu company cannot interfere. If the company whose shares you buy is a large aiui important concern, like a loan company, or a bank, the stock will be quoted on the stock exchange, and you will be guided in your purchase by the latest quotations. ll» THE MANNER OF CONDUCTING THE ANNUAL MEETING OF A JOINT STOCK COMPANY. who nmst himself be a sharehildcr (sec form of ,X at^Kc'osr "^ ^' " ^''"''' ■ K- to scroml the motion." The president isk^ • "A,- n '*"■ ' rt-'-'UL-nt, I tions?" 'I'hcre bein" none h.^ ^,vl "V u x ? .""^'■'-' '''">' °"^*-''' nomma- (W.„rne, seconded ";> Mr. haker'u/u Mr^JZ.Cl """, 7","" "'"^'■■'' ''^ ^'^- stind iiDorovi'd ?" Th«r.. i. :., i- .'"^ l'f'-'>'"»-ni asks . Do the mmutes si,nshiiCe'iLhe Mbute'a"" '"'^""°"' ''"" '^^■^'^"^ '" '"-"--'iv-. and iiiiPissiiii (I ^1 130 Motions, of which notice in accordance with thii h« !.•» k.j u™ • on paper each vote, sin, tLm un and r^^Jrt »n ,h^ '^"*" '^"'^^""y EXTRAORDINARY GENERAL MEETINGS AUDITING. .ho to « a ,h»„^gh l,„„.l4°Sd™bK$ Ck.kLptg.''""" "''"' '"''"'" in If Ihey are not thorough accounUnti it is unrcawnable to expect that they will be- able to detect accidentally or wilfully falie cntriei, or form an intelligent opinion of the work they have underUken ; hence a report under such circumsUnces is the very opp nitc of the security desired, and which an audit by competent men would atford to a company or corporation. That auditors should be men of established character it is unnecessary lo point ^..Jii •""'?•'*"*''■■"• '• '"'' ">«!' »^''nK uninfluenced Gy interested parties, is Kiually plain. Companies or cor,)orat,ons are equally bound to employ m auditors comjKtent accountants who jK)..e.. ne moral .jualitics indicated, as they are to employ only such to keep their l«oks. Do your duty if you assumi such a L,H,ni" We iM>s.tion as that of an auJitor. I have known treasurers to becon,c .IKhon" st through the temptations which mcom|K.tent audits placed in their way and I have S;.si;fc i^^rTXT'- '" " "'" «""- ""'■ "»' •^"' """ '"- .nn..^"*^'"'"'^'^°-"'^"''j!.*^°'"P'*"''-"'"''= appointed by the shareholder., at the ZXrr.'h'^'"''"*'-. Th'. reason why the shareholders, and not the directors s KH, (I make he a,.,K>intments is rcry plain. The officers of the Company arJ anexammation of the faithfulness to the shareholders of \Mh the officers an. diruLtors, It IS necessary that the shareholders themselves should ap,)oint the auditors. The duty of auditors is laid down in the Comiiany's By laws, which would b- somewhat as follows :-"One or more auditors shall I J appointed annually I y tt shareholders at the annual general meeting, whose duty itVll be to examine an 1 audt the books and accounts of the Company, and any and all documents having nhn^^.K »*■■ TT "f 'heCom{xiny, and prepare from the Company's l.o„ks a balance sheet and abstract of its affairs, to be sent to the Directors on th.. last Monday m January, for presentation to the shareholders at the annual mcLtin- accoP'ianied by any recommendations or suggestions they may deem projier." Inn , H*'i! ''"}^''°" "P°" being duly apfK)inted should at once begin their duties, as a ong delayed audit is far less effective than a prompt one. particularly if only one audit laKus place in the year. I would suggest to those who are engaged, or likely to engage, in auditing, that vpcrience and common sense are, together with the thorough knowledge of aaounl irg mentioned above, the rcjuirenients of an auditor. Take every .mportunity of studying the printed statements of such institutions as banks, l.nm or insur.ince companies, read the best works on accounting and auditing, and be willing to l-arn from any source. No man-not even an auditor-" Knows it all." Carrying on an AmH. When commencing a new audit, ask for a list of the books in use. and study the system of accounting in vogue. As the audit proceeds you will find it desirable to make notes on a piece of paper, or memorandum book, of matters that rcjuire to be further iniiuired into or <'f improvements that may be possible in the book-keeping, or in the manner of l.r.serving or arranging documents. You have a right to insist upon vouchers :in" inct ve tickS „sc . o^^'"^' ^T "«'■"" -;''"''«•'"-•" ' '-1' IV. II tn ^h. — . A „.-T .."*'- "" •"" ""•• "5'^ -^ ink or [.(■nn'. wh ch it u„„i,i agai or i>(ji!< i I to , which it would Ik to each p.son. with a direct reqSt'feS^;^^;;^^^::^,-- --;- ^--"^ THE HELL TELEPHONE CO. OK CANADA. Mcs,rs. F{„bi„,„n >V J„hnson. 'J-H'-villc. ly.h M..rcl,, „jc,. ^.. Ontario Uusiness CoIIc-rl-. c.ul,f :^;;i; 's\i:z^^]^ii't:^ -^^^ -«-, r n.. „.„ .. r»ise 1 iJull osbuint thai vou lulmit ihu c„rrcctnt« of ||,i. chariji (Signed) A. W. UAKNAUI), Auditur. ."i,.ht 1... n/J,an a,; corr c an-dT^be t^'l-'n '-■'" ^"T''' '''"^^ '*^'-- She..' whi,:l, arc valueless; all the hi iE Im-h 1? '-"• •^'''-■"'. '"'-'" '^'-' '""'■l"^-'! The lus.s and Kain staten^n o L^ \- " s r 'nr^'^ '';'™"''''^ ""' '^^^ '"''"'l-'- statement) n>i,lu be falS for 'a j urpoL ^'^ ^°'"'=""'^^' "^'•' ^^•^-"'■- - -''^^ing m The auditor't duly i» to lee, lo far u he may Ixs able, that the invintoric* wire taken at actual worth, that h«d debt, and worthliM note, were written Tthut *l.c a™tr. Z Th" '"' «'-/'V"-«'«n i" P''»nt. office furniture and aU prj. "f r Twli u "'"' 'J" "'^""""» »»»««» included in the balance .hcet. .u.h uh h'^K 'h'.u' ^'•I''"''' "^' "'• '*« » •»«^« «^'«"- The auditor .houki alert .in ± ,h' ? H " ''' *" ""'"«• »'yj'"-: ^''"'P'ny °r Cor,K>r.tion have been duly car d into the ledger and apjiar in the balance »heet. The revenue .tatemcnt. which .how* the profit, and Iossm. or wt)rkini' of tlu- . onrern. .hould be thoroushly analyzed, on thJ debit .ide to i^e tlu ul ian mr^ l pro,M-rly chargeable to revenue have l*en placed thrr.. .„d not chared , a "^^^ account^ or a. the technical phraw i., "Cha ged to Capi al ;" also on the tre . h^ , to .ee that no fictitioui profit, are .hown. ^ " ' '*- All wcuritie. held by the Company or Corporation .hould In: examined In ra«, of a loan Company, the pre«:nt value of ..ad, mortgage .houH b^ w.rk.d out n^urance policie, .hould be examined, and it would alsofK^an aud to^. duty to h"c that a .ufllcient amount of insurance wo. carried. If then- are Der'onal icounN :S:"e^he «ui''*" """"'"' '" ■ '«"« ""«^- •' » "^^ ^"" oTtrLudiVort In connection with Ixwn and I)c,)o.it Companiea, auditor, should bv stifc r; ■l"°''f.u^1 T^' '"^°r ""''y ''«"°*" "f 'he balance aga nst S'and cJJr. dejjositor of the balance at hi. credit. ' ^ The auditor should see that the Capital authorized has not been exceedetl I k- jhou d aHcertain whether the amounts at the credit of the stockhold.ron S Sto, k ht fen ,,1 l^ correspond with the sum at the credit of the Capital Stmk account in iJe jul't ^ear. *^"' "' **"'"''^ "'""""'■' '*""• ''''°''^' "^ ">« '""»f'-" "^ ^^oci^ f'- hi- ,i!.l ""J ""'"'?' '■'"•J" that dividends have been declared and paid nut of Ca,.ii.il tllis Sk r'" ^" "''"" '" '"«'""• <^"'-' **''=''"" 58 of the Ac. at p.,ii; of the tSilJi^trt^lJ'^^S' "'"" ""' ""' '''*' '" '"^^'"'^ '^'"'^^ '^'^-'^ --'' nn,I -^i"!;!!; *''•■"' °" '''^ "** J""" ".""^ '"'"^■•'" °" <'*'-'''^"'-' '«^^« "'"^t ''^- accounted for • and all other revenues, such as licenses, police court fines, dog taxes, frontal (axes' KM s, etc See that the sinking funds and the interest upon^h.in a Li m^stS ^ authorized and required, and tha; the securities are sound. See forms of Auditors' Reports at pages no and 112. hvUUUonlT) 1". '""i'''i"P' '"' '"" '^'«^^:"' '■"'^■rnKdiatc and fmal c.xan.inalums of il„. BANK ACCOUNT. :., .../."";"?"'■;''!"?, r'"' I''"" ^}' ''^ thToiurio Transportation Cohmmih, I.in,i.,.,l. ••W..I. work, u wiil be observed ll.al a Jiank Account is kept in tile kd^Jr iii.l ih , adv. mage, and is preferred by many Auditors, among them the autlmr of this l»,„k • s, however, the practice of keeping the Hank Acount solely in t lie Cash liook is I me a common one, the method of doing so is presented to the student in tie lollowmg illustration Uken from the Cash Book of a Water Works Company 134 Dr. Cash. Date. Fhdm Whom ReciivKo. Aug 3 Judge Kralecic, 9 Rev. D. Bugcrt, I^ R. Tcrwilligar, S. J. WoMen, " U. McLean, Itank ut Cummerce. R. Tannaliill, Norris Hrus., I). Oraham, 1>. Cojie, K. J. Giaham, Ciea. Ritchie & Co Trenton Electric Co W, J. Andrews, O. T. R., (J. T, R. (Kxira) I). & U. Initilute John Smith, Halance in Uaiik, ' on Hand, Sircat. Moira W. Bridge Moira N. Front Alexander Front George (Show) Charles Front Culentan Dundas '■'4« 3-99 645 1 88 98 «4 75 '5 i3o s 6u« 684 724 5» In this Cash Book the Method of Cash Book only BBXjIjEJ'T'ZLLEI FUt. 46. How Ratio. Lawn. Meier. 576 69a Meter Rent. Sundries ■< 3 33 f 5' "7 9 5' 8 7 5' It 6 I. '7 6 ,. 37 ■ 1 5' 6 9 5' »5 3 5' >4 r 6 39 80 •7 SO 51 ■ »4 36 51 39 36 '7 16 10 u,. »3 461 5" "3 576 73 16 450 .-. ■J 3ol <„ 125 EeepiDg t''% Bank Account in the is Illu t-ated. V s' Bani XV \ ^ V- J±f i/±s:s CO. Cr. Cash. ■< Pate. c Account. T . 1 Dr. Ok No. CK. . < )r. r Dal. < '"W 5" ;ui» 7 Dtp 6s CJO Dr. 6s 5" 8 76 39 00 16 G. T. R.-Frcight. C.al a/c. '7 3? 00 5" Pay ShcM 6. Services. iS 6 37 tX) F. n.itcr. " CartinK. ") .so U.1 Irt '5" " '7' 5" 13 77 83 78 " 9a 22 The Rathl.un Co. Coal. 20 B; 5" 1 6 " 1039 aS " 1131 50 5" 2U 78 »5 07 " 1106 4.1 Walker Co. Pay Sheet 7. .Mains. Services. 21 22 25 ■4 "7 7^ 8o 26 79 .,6 00 " 960 43 W. Alfi.rd. Mains— on a/c. 2.3 146 5" 27 " 450 cx> " 141a 43 54 »9 80 '75 ' "35 43 Siandanl Fuel Co. Coal. 24 275 o„ '7 J" 3i to so ' "M 93 J. W. Walker. Pump House Ex. 35 ao SO 5" 7S Balance in Hank, 1114.93. '* OD handi 3.99. iiiS 0' 1 - 704 ^L ^ j'-li 'Jj-±* ?3_ ipo -M Dr. 1114.93 m ISSUES OF STOCK. The Ontano Transportation Company (Limited) at its inception, issued and obtamed subscnpfons for the whole capital stock (see the minutes at page 72 and s.l.h°'l ,'?'T- '^^' '"*^ subsequently called it all up by three instalments (see the Instalment L,st for each call at pages 75. 76 and 7: respectively). Oth.r Compamesm,ght not deem it advisable either to issue at once all the stock their Charter m.ght authorue, or to call up so speedily the subscriptions. The action of the Directors ,nth.s connection would likely be determined by the prospect of employmg profitably the whole or any part of the Company's capital. It is usual when makmg a new issue of Capital Stock to offer it to the existing Shareholders at nuoZn'o ' H ?r'"7'' "°/' '^ '' ' P""'"" ^' ""')• -'"- ""'l- 'he market SWh Th^kk, "'•'■' '"'^ ^''°"''^^» 'he issue not be taken by the present Shareholders, the balance is offered to the public. Companies frequently purchase their Plant or Real Estate for paid up Stock or pay for services rendered in the same way, and it is, perhaps, desirable that we should Prn II " «aT^ -> r'- ^°' ''"stancc-this Company might have bought the 1 rope ler "Atlantic" from the builder, and paid for her with Stock, and the Journal entry for the transaction would have been : . j ai Propeller "Atlantic" Dr To Capital Stock .$23,900 ?23.90o For the vessel's cost, paid by the issue to L. Shickluna of 478 paid-up Led'^'cr <^-"™Pa"y. which have been placed to his credit in the Stock And in the Stock Ledger. L. Shickluna. credit by 478 shares at »so-$23,9oo. SERVICES PAID IN STOCK. Again, the Directors might have determined to reward the President for his cZ I'f ?r ' "'T 'i^C°"'P»"y'« '"'-«' -lo''-''y. by giving him, say (in the case of a Company that had not issued all its stock), ten of the shares held in reserve, the Journal entry for which would be :— Expense Dr. To Capital Stock . .?5oo 6500 For ten paJd-up Shares voted to the President by a resolution of the Directors this day. And in the Stock Ledger. W. B. Robinson, credit by ten shares at «so-$soo. 127 It will be observed that in neither of the examples given, though they arc both ong.nal tssucs of Stock do we charge the individuals receiving it. asl done 2nt Company .sstartea; the rc«on is that there is nothing owing by the parties: , hey rccc,vepa.d.up stock for value given, the Ledger account representing the thin' roce.ved by the Company bemg charged ; whereas in the other case, the parties sub scr.bmg are mdebted to the Company until they have paid for their stock. Dividends are not always paid in cash. In small Companies, with whom it is an object to retam the.r profits to add to their working capital, or make pernian.nt improvements or extensions, shares and fractions of shares are frequently placed "to the credit of the Stockholders in lieu of cash dividends. See the illustrafion of this m form of Stock Ledger, page 117. It is not unusual with some Companies in their early days, though a fair profit may be earned, to refrain from declaring a dividend until a surplus capital be crtate.l out of profits. "-"K-w Dividend Stock may be issued under such a circumstance as is mentioned on page 1 20. Expressions Regarding "Capital" and "Revenue" Explained. Authorized Capital, means the amount of stock that may be issued by a Comn-- . under its charter, which it cannot exceed. take RED Capital, means the amount of stock that persons have a-rccd pay for, as shown on the Stock List. to Paid up Capital, means the total amount paid upon the stock subscribed for. Revenue Account. The expression " Revenue Account." as used and understood by Accountants, docs not refer to cash received and disbursed. It has reference to the profits and losses as they are finally exhibited under one ledger heading after being transf -' from the working accounts. A statement of Receipts and Expenditures (or Disbursements) is a statement showing cash received and paid out : On the other hand, a Revenue Statement is a statement showing the sources and amounts of the profits and losses of the business or, m other words, the earnings and the cost of working. For example of each see the statements of the Hastings I^an & Investment Society at page in. 128 Capital There is a sense in which the expression " Capital Account," used in Account book-keeping, does not refer to the Capiul Account. For example, you hear it said, "That item should not have been charged to 'Capital,' but to 'Revenue,' " which means that the item was not what might be considered an asset or resource, but an item of expense or loss to be written off into Loss and Gain Account at the end of the year. The following clipping from a newspaper is apropos : " The financial success of the great Manchester ship canal, about which there has been much doubl, appears to Ijc assured. A report from Manchester states that the revenues from tolls and dues for the five months ended May first last were 133,701, which more than covered all expenses connected with the tiaffic, including wages, salaries, and stores, rates and a full proportion of oflice ex|K-nses. Mainten.ance was not included, and, until the work is complete, all outlay on works will lie charged against tafilal." Expenditure on "Capital Account" means outlay on things that are regarded as assets, which is charged to the respective accounts (not to one account, as the expres sion "charge to Capital Account" would imply) that represent those particular resources, and will remain at the debit of the accounts until they are disposed of. On the other liand, e- nenditure on "Revenue Account" refers to the outlay for expenses, or the cost o. working, The items are charged to their respective accounts, but at the end of the year the balances at the debit of these accounts are transferred to the debit side of the Profit and Loss Account, and are thereby charged to (or if you like, against) Revenue. Occasionally at the inception of a company, preliminary legal and other expenses are regarded as capital expenditures for a few years, and are allowed to remain charged to their respective accounts ; but they should be written off by degrees yearly, until they finally disappear from the Ledger. DIVIDEND STOCK. Dividend Stock will be most easily explained by giving an example. We will suppose that a certain Gas Company has been in existence for a score of years in :i prosperous con>munii.y, enjoying the monopoly of supplying it with light. The price charged is high, and in consequence the Company is making large profits, so large, indeed, that the Directors fear that if the truth should become known, they would be confronted either with a demand for a reduction in the price, or the formation of a rival company. In order, therefore, to make it appear to the consumers that the profits are not excessivcj they declare a reasonable dividend in cash, and place a certain amount to the credit of the Rest account, of which the public are informed, and they also distribute a Dividend in Stock of which the public are not informed. When this has be"i done for a number of years, the Capital Stock will have greatly increased,— we will say for our present purpose of illustration, to double the original money paid in. Now, while the annual profits upon the original capital (if they were known to the public) would appear excessive, the profit upon both the original stock and divid-nd stock combined is reasonable ; and the directors say : "Why, we are only making eight per cent, of profit on our capital, and cannot afford to sell gas for less than we are now charging." 129 profit fo, ho ,e„ „p„„ . capM of »,„„,oc«., ,hi, i, ,« po, con.. A div dond o? , Profit and Loss Dr. f 16,000 To Divider^ ly.ooo •^tsi 2,000 " Capital Stock 7,000 When the dividend has been paid, that account will clo.c. In the Stock I cIl-c r dot r t"'-"'°"'-r"' ""''' P'°P°^"'°" °f '•-- «^-°. and issue ce^ificttef ' n dome th,s. of course, there will be fractions of .hares to be credited in some cats. The above mode of creating stock ,s simply equivalent to the existinrr shar. holdc-rs subscn .ng for new stock and paying for it out of the ear in'o the cW rdin.^ the r' ^ '"''°" ''f ''" ''' ""'"'^ ^Sainst it is. that it deceivt. the pul r..'ardmgthe Company's profits, and by the manipulation the Conmany nuinHi s excessive pnces for .ts wares. In the case of a Company in which the ,1~ o mterest, there can be no objecfon at all to the payment of stock divide ds Profit and Loss Account not (usually) to be Closed into Capital Stock Account. In a bus ness not earned on as a Joint Stock Company, the net profit is carried to the proprietor's or partners' accounts. The net profit of a Joint sLk Com n n v sould «./ be earned to the Capital Stock Account (unless, as shown in e"an pie Uove. d.vdend stock is to be paid). Carry to the creditof the Dividend ™ Pro" t and' r '" '''^ ^'"f '"'^^^' ^"' '^"'"^^^ '^^ "^<= ^^^'-^ ^t the cr^ of 1 ofit and Loss account, or close it into 'Rest account. It stands in either en o as .J l.ab,hty to the shareholders, but it is not put in the forn. of Sto^k C fica," Tr.X ;'°"\^^^'''^^ates agree. Auditors should see that the amount at the credit L til f h """"' T"^ ''^"" "'''' "^^ •^'^^'^ ^-''«-^- -"ed, and with ti.c total of the amounts at the credit of the shareholders in the Stock Ledger •"Rest" is fully explained at page 85 and illustrated at (H) page 154. 130 i' IMPAIRED CAPITAL. THE RESULT OF RUNNING THE BUSINESS OF A JOINT STOCK COMPANY BEING A LOSS, HOW SHOULD THE LOSS AND GAIN ACCOUNT BE CLOSED? The following question received from ar> accountant in New York City, with my reply, will suggest the line of action to l)c followed under the circunistancts named : — QUESTION. Supposing a company should be so unfortunate as to lose money, what would iif the proper disposition to make of the loss ? Should it be credited to Profit and Loss and charged up against the Capiul Stock ? ANSWER. The Loss and Gain Account is the account that showf the loss you mention ; that is to say, when the various accounts that showed losses and gains througlioiii the year were closed into the Loss and Gain account, the debit side was found to l.c the larger, showing the net loss for the year. If there was a *" Rest " or "Surplus Capiul " account in existence, as the result of undivided profits of former years, 1 would close Loss and Gain account, under these circumsUnces, into it. I!ut if thcff was no "Rest" or "Surplus Capital" account, I would, in that case, open an account uniier such a heading as "Impaired Capital" and close Loss and Gain into it. If thr loss is only for one year, it should be charged back next year to Loss and Gain account, and "Impaired Capital" account closed ; but if the loss were to go on, it would be necessary, before long, to reduce the Capital Stock account, and make a proportionate reduction in the shareholders' accounts in the Stock Ledger, and in the Stock certificates. Say that "Impaired Capital" account has been charged witli the net loss for three consecutive years, audit now amounts to 25% of the capital paid in, I would, after the consent of the shareholders had been obtained, with lcg;il sanction, make • Capital Stock Dr. To Impaired Capital. This entry, when posted to the General Ledger, would cut down the Capital Stock account to the right amount, and close "Impaired Capital" account. I'acli shareholder's account in the Stock Ledger would, correspondingly, be made Dr. to "Impaired Capital" for 25% of the sum at its credit. Former certificates of stock would be called in and new ones issued, the latter being 75% of the .ormer. • "Rest" is fully explained at page 85 and illustrated al page 154. 131 WATERED STOCK. n,.v T"" "/ 7'f"^ "^""'^'ing "ock, called watering, to which serious objection Zc^Hv' r " !'' "r'"« "P "''''' '■''''' '''"^'^ '->°"d «hcir cost or worth nl tanir . r ' T*^'' " '""'" '''' '""= "^ «'^'' "S^i''^' '^hich there arc IhTk .^'^"""'^ ""PP^*"* ''^'yf'"' instances where such, course $ oooo^haT.:;"'"?f'\.''"^''°"'' '"^'"^ case of amine, for which J iuTh.:;™ " ^"' '"' '^"^'^ '''°^^^' ^' '^^ °P-''- ^- y--. 'o be worth I The following newspaper paragraphs will be interesting in this connection :- Chica'Jill rr ^°7'"'"" "•= P'»>'"g 'heir usual tricks upon the consumers. In Ch.cagoalltheex.stmgcompan.es have agreed to combine. The capital actually rt:::hi;:rtT/.r""'^'°''°"?"''''"'''°''' ''"' '^^ amalgamatioVint^nd:": «atcr th.s up to $25,000,000, in order to conceal the size of the dividends yielded by cxtort.o„ate rates. In New York the Consolidated Gas Company was estal i l.^, K M . ; , P ^" "°'' ''*^^" *=''^'<^'J "P '° «39,078,ooo. The rule tint should be enforced is, that corporations using such franchLs should not be p"n i S o water the.r stock, and that their profits should be restricted to a reasonab annu percentage of the money actually invested." nr.f I'^^/t*"'!,'/''"''' ^"'''" ^" '"''"^ °^ debentures, has $60,000,000 of FICTITIOUS ASSETS. assets such Lr' OH wn "T""^ ''^^' Companies sometimes create fictitious Strth.; ^ ?r* '°''^'''"''- P°'«'""P''^.- Company wants to water the ok to the extent of $50,000, creating and using Good Will for the purpose. Good nd .^:; V'?P'''' '''^'^'' ^50.000, and new stock is issued to that extent and cred.ted .n the Stock Ledger to the persons to whom .ssued. offorlatior^.tir'""'^-^''?*"'' Account" of a Company, which represents the cost formation and organ.zat.on. ,s often continued on the Ledger for a few years, the 133 amount being reduced each year. Say the cost was f 1,000, write the amount off in five years by a journal entry each year : Loss and Gain f 300 00 To Preliminary Expense fjoo 00 For ao% written off. The following letter of inquiry, with my reply, will further illustrate the subject of " Fictitious Assets." "A Joint Stock Company on starting; business sells say Fifty Thousand Dollars of its stock at lj.50 per share, the par value being Is.oo. What Journal ICntry would you make to show that the Company was liable for the par value $5.00 the purchasers of this stock would have to be credited for the full value of the stock anil some account charged to make up the $25,000 difference? I would be obliged if you would give me your entry." "In reply to your favor of the ifth, 1 beg to say that you have the correct ide.i in your mind. Cash would be made Dr. to Capital Stock for the amount actually paid in, and a fictitious asset account would be made Dr. to Capital Stock for the dlfferenc e between the amount paid in Cash and the par value of the shares. The name of this fictitious asset would likely be "Good Will" or it might be " Patents." The name, however, will depend upon the nature of the business and the circumstances thni warrant the Company in considering stock at par for which only half of the par value has been received." In the Stock Ledger each shareholder would be credited from the Cash nook with the payment in ca.sh, and from the Journal with the fictitious credit. UNCLAIMED DIVIDENDS. i I I'or various reasons dividends occasionally remain unclaimed. Instead v( allowing the amount of unclaimed dividends to ren.aiii at the credit of Divident! account, write it off each year as follows : Dividend, To Unclaimed Dividend, giving in l»»c explanation the names of the Shareholders and full particulars of each case. 133 DEBENTURE STOCK. Lonn Companies are authon/cd l.y an an.cndmtnt to " The Companies Act " (50s I \ -ctona Chap ,o, sec i^gc 48 of this book) to issue Debenture Stock. The ci.rcctors may do th.s fron. time to time, with the consent of a n.ajority of the share holders, present in person, or represented by proxy at a meeting called for such Debenture stock ranks with the ordinary debentures, and the holders are not answerable for any debts or liabilities of the Company. Unlike ordinary debentures, however. Debenture Stock is rcKistered at the head oltue o. the Compny. In the register the names and addresses of the several ivrsons entn ed to the Debenture stock are recorded, with the respective amounts • anu all transfers of Debenture Stock are similarly recorded. This register is accessible for mspection and perusal at all reasonable times without fee. to any shareholder mortgagee, bond-holder and debenture stockholder of the Company. The Company delivers to every holder of Debenture Stock a certificate statins the amount held by him, and the rate of interest payable thereon. The holders of Debenture Stock are not entitled to be present or to vote at any mcetmg of the Company. They are simply in the position of mortgagees of the ( ompany except that they have not the right to require re-payment of the principal of the Debenture Stock. The Company may, from time to time, purchase in the ojien mirket and redeem any portion or ,)ort.ons of the Debenture Stock, which the directors, by a resolution duly m.ide, deternnne not to be required for the business of the Company TREASURY STOCK. In these days of active gold mine development, the public hear a good deal about 'Treasury Stock." Ordinary trading or manufacturing Companies have no siK'h tli!''^;. Mauling advertisements in the newspapers are inviting the public to buy "Treasury Stock" in Mining Companies, shares having a par value of one dollar licing offered for a few cents. I have taken the precaution to consult sound legal authority in this matter and submit the following :— MININd MKMORANDA. 15y W. N. I'ONTON, M. A., Barrister. Remember -(i) There are Brokers and brokers ; deal only with those in trood bt Hiding. (2) If a venture .succeeds, it is called an itives/ment, if it fails it is called a sya,uUum, but there are certain "wildcit" schemes and inflated bubbles which . rinut succeed, e. g-, where the capitaliitation is immensely disproportionate to the parchase price or value. 134 (j) Obtain copies of the proipectui and all circuUn iuued authoritatively by the Company or it« proniotert, and see not merely what names are attached, but what financial interest is represented by these names. Are the incorporators worthy of trust ? ' (4) Have proof that the Company is duly incorporated, and where ; that the liability is limited, and that the shares offered, at whatever price, are considered fully [laid up ; that the difference between the price paid and the par value cannot be called for by the Company, nor demanded by the creditors. (5) Be satisfied with the ideH/ify of the property advertised with thot invested in. Sec that it is owned or Icasad by the Company and not subject to forfeiture ; and if in a foreign country, the General Mining Law of that country should be consulted. (6) Is the money raised on JSrst sale of stock to be devoted to development ? Has any development work been done? Will the working capital and location justify further cxi)enditure on development before returns can be expected ? (let a report of this from your own mining expert if the sum involved be a large one. (7) If purchasing an "option" on private property, see that the land has been patented; that the description will admit of registration, and that witness makes Affidavit of Execution for this purpose. (8) The Ontario Mmes Act, 1893 (cap. 9) as amended by cap. 13 of Ontario Statutes, 1896, should be consulted as to royalties and Crown Regulations in this Province. The Book-Keeping in Connection with Treasury Stock. '. number of capitalists, say five, have acquired a mining property, and they pi icccd to form a Joint Stock Company to develop it. They capitalir.e the property at half a million dollars, say 500,000 shares of *i.oo each, of which each of thu owners takes one-fifth. It will be seen that there is no money available for working the mine, nor do the original five propose to furnish it. Each one of them now donates to the Company a portion of his shares to be sold for the purpose of raising cash capital -hence the term "Treasury Stock." The entries when opening the books of the Company would be : — The Mine 8500,000 To Capital Stock - - - - ^500,000 Post to th« General Ledger, and in the Stock Ledger credit each of the five holders with 100,000 shares. Each of the holders now contributes 10,000 shares for "Treasury Stock." M.iku Treasury Stock Contribution - - - $50,000 To Working Capital, - - - - 850,000 and post to the General Ledger. The Treasury Stock being purely a speculation on the part of the purchasers, it will, of course, sell at a discount. We will suppose that it is all sold at 50 cents on the dollar. Make Cash $25,000 Working Capital 25,000 To Treasury Stock Contribution $50,000, and post to the General Ledger, which will now be as follows : — 1» GENERAL LEDGER. CAPITAL STOCK. TREASURV STOCK CONTRIIIUTION. |T,. Working Cpital. Jjj^UoJL Illy Sund,U». ■ . i^««Jo„ WORKINO CAPITAL To TriMMiry Sti>ck, Rtlanci-, •25000 •25000 •50000 lly Traiuury Slock, By Dalancc •5000. •50000 I 00 •35000 I 00 IT(i Treasury Stock, CASH. •25000 I 00 II I STOCK LEDGER. n hen the ongmal five sh.ireholders (M. liowell, L. W. Yeon.ans, W. H. Rol.inson J W. Jd,nson and J. W London,) donated the 50,000 shares, each one in the Stock I edger would be dehued with ,0,000 shares, and Treasury Stock would be credited w,th 50,000 shares, as shown below ; and as Treasury stock is sold, each lurchaserwtll be credited at par for the amount of stock he bought, and Treasury •Stork account will be debited, Take, for example, the following purchases : r. Spencer ,000 ; S. I.. Horsford. 5.000 ; H. R. Rdd, 4.000 ; R. A. Nimmo -',000 ; 1'. Davis. 8,000 ; E. Burbridge, 6,000. ' M. BOWELL. To Treasury Stock, •10000 00 Fty Capital Stock Oavwojhart^), !!$iooucx) ; o,. L. W. YEOMANS. To Treasury Stock, 810000 liy Capital Stock I (100,000 Shares), Ifiooooo 00 I > H IM W. B. ROBINSON. I lioooo I. W. JOHNSON. By Capital Slock (100,000 ShaM) tiooooo ou To Trc'iiMiry Stuck, •lOOOO j 00 J. W. LONDON. By Capital Slock (100,000 Sharci) >. llll To TrcoMiry Slock, •lOOOO 00 TREASURY STOCK. By Capital Stock (100,000 Sham), 100000 I 00 fiooooo To K. Spencer, " S. I,. lI.ir»ford, I " II. k. Rci.l. i " k. A. Ninimu, " V. Davis, " K. IJurbridni., " Balance, t looo 5000 4000 JOOO 80CO 6000 34000 I50000 By ContrilHillimx from M. Bowcll, L. W. Viiinians, W. B. kobir.s.111, J. W, Jiihnson, J. W. London, By Balance, F. SPENCER. By Treasury Stock, 1,000 Shares, S. L. HORSFORI). By Treasury Slock, 5,000 Shares, H. R. REID. By Treasury Stock, 4,000 Shares, R. A. NIMMO. By Treasury Stock, 3,000 Shares, F. DAVIS. By Treasury Stock, 8,000 Shares, K. UURBRIDGE. Iioouo looou loouo lOQOO 10000 •50000 ou CM 00 OU (JO $34000 I 00 •1000 %S"O0 •4000 |2000 tSouo iBy Treasury Stock, 6,000 Shares, I6000 m U «ll the TruMury Stock wa, ,old. « i, .uppo^d i„ ,hc third Journ.M entry and the .n n«. ,K«l«i. the Treasury Stock .rcount in the Ccneral l,.|...r nnd Tn ih Stock L... «er would f. cl.ned. But. as ^t i, hkely .ha. i, w.n.!.! .a e „ " , 1' r..ooo .hart., have been ,old, and the ..Unce of unsold Trcasu y St Jk i, ,r down on the credit «de of the account iu the Stock I^-dgcr. ^ Thcdeneral Udger account would corre,,K,nd with .t a» follow, the balance king brought down on the debit side :— iwunn. I'o Workliii; Caiiiial, To Ilal.4iicc, TREASURY STOCK. #50,000 00 •so.ooo no SJ4,oim I uo " Wnriiini; Cjiiil.il, " Biil.inct, Legal in Ontario for a Mining Company to sell Shares at a Discount. will, '"-"''r"f ^r"^V'""' ""'■"^"'^' •'-' '••«■»' »"l'-i'i- r...nove.s all du.,l„ «.lh rc.s,H..ct to the loKal.ty of Minin, Companies .n Ontario is-uii,,. shar.s ,t Jl.scount ; ami also makes it dear that purchasers of sl.ar.s l,o,„ht fri „, a Mi,", v' (.ompany at a .l.scount are non-assessa!.le and free fron, personal liability TOKOMO, (Jclnlicr IM, I,S.j(,. lil.AKE, LAslf .S; Casski.s, Ilarri.itrs .'v Sulicili.rs Mkssks. .KMKLIUS JARVIS A: CO.. Tokon r„. •il'.Srl.EMKN, i<« acres n.urc or Ils„ I W-r 1,. sav th Ilv^C.. „ ' r J^"; '' '>»'' '*''''•• «"I"^^nor, .•..ni.ii.i,,.. 1-imi Titles < Hll.e. dated ScDtemlJr i. , .w ., , .i 'I'^o Uforc mc the certil.oate from ll„- called ..;i Torrcn, ^y^^x^:iij:T^^!;::^:z'Zt::!:;:j:i:r' "'"""^ " *"^' '^ -^^"^^^^"^ . ..e :^i:^M^x: VhavJr-^r^H^^::;^,::: z- z^i^'T; 'v''\1'"""t "V- -■•"■■-" I.^' issued for the Shares wlW^r"™ J t,, for'l '" ^rr'th' "o ll' "" '''" "-■,-"■'-'- "■ - make .h. Shares free Oo.n ,^r«.„al liil •;;;^ t^Uf ^^^ i ' ha e u^i: ^'dlllll^^ -""' ^ "^ Yours truly. [Signed] Z. A. I.ASH. 138 Stock Subscription Form for Shares Bought Discount From a Mining Company. at a THE EMPRESS MINING COMPANY. LIMITED. NON-PERSONAL LIABILITY. T„ Ik inc..r[xual«l in pursuance of The Ontario Joint Stock Companies' Letters I'atent Act and The Mines Act 1892 and amendinR AcU, with the above name or such other name as the Government inay Grant. CAPITAL $l,00(V00a In 1,000,000 shares of $1.00 each. Taken at loc. on the dollar. • - . . . ^jo.ooo shares, Now offered at 25c. on the Dollar, ... Joo,ooo shares Treasury Stock. 3SO.000 shares. I he undersigned do hereby severally subscribe for the riumber of shares of the f,nT 'Tu ■ *°f°;i°°? ^^f ?.f>'' TP^""^ °"' respective names, at twenty-five cents on the dollar in full of all liability thereon, payable in cash at the time of subscription here o, said Shares to be issuwl to us free from assessments and with non-personal habihty beyond said twenty five-cents on the dollar, the purchase money of said Shares to be deposited with The Trusts Corporation of Ontario, and interim receipts given therefor, and such money not to be paid over to said Company until said Shares are issued and certificates therefor delivered in accorda^ .ith the above SUBSCRIBER'S SIGNATURE. NUMBER OF SHARES. AMOUNT ENCLOSED. H The Meaning of the Terms "Limited Liability" and "Double Liability." The term "Limited Liability" expresses the position of shareholders in loint Stock Companies other than Banks. (See section 54 of the Act at page 34 of this book.) It means that the responsibility of shareholders for the liabilities of a Company does not extend beyond the amount of stock subscribed for. I( that be fully paid up. no further calls can be made ; but if it be not fully paid up. share holders, in toe event of its being required, can be compelled to pay the balance due' upon the shares subscribed for. The extent to which the resources of this Dominion have been developed is largely owing to the efforts of Joint Stock Companies, formed on the limited liability i)rinciple. Indiviauals will contribute of their means and become partners in a concern formed to develop a local or general industry, that will benefit the .ommunity, when doing so will involve no risk beyond a definite sum; while they wouk refuse to join an ordinary partnership, with its attendant risks and unlimited liability, formed to effect the s„me purpose. Refer to jxige ic uil nun tM> oi Citt R /• W°hnson, account..nt ; Carl Strom. Jeweller; U'. N. Ponton lum.stcr, R. J. Graham, manufacturer ; and C. M. Stork, banker; for the purpose „ carrying on the fbundry business by the name of the " Craham Manul-.^; I V: . f Lei levi He (Limited)." with a total capital stock of seventy-five thous.vnd d.:! ,r s divided mto seven hundred and fifty shares of one hundred dollars each. JanuarTn;'.'."' °''" "' ''" '""'"' "" "''^" "' '^"'"^'^' "^'^ '"^■•^"' ''•''>■ ^^ R. W. Scott. Secretary of State. We shall now open the books of the Yeomans Manufacturing Co. (Limited) by h following journal entry, based on the assets and liabilities of "the old comp n ' which the new company has assumed : "i"pan), Krai Eslale, I'l.inl, MLTch.indisc. Ca.sh, liank. A. S. I'.i(;e, Koljcrt Ahrams, W. A. I\*lcT & Co , W. W. Jones \-0>., A. k. I'alicrson, W. U. C'olinian, Now make liank of .Montreal, To tlills Payal.l,-, " ('apilal iSlock, To Capilal .Stock, for the new stock subscribed and fully paid and the money on deposit in the P., for which block Certificates have been issued to the owners, at whose credit respective amounts will be found in the Stock Ledger. Open the General Ledger by posting the above entries as follows : ink, the 142 ' it V I' I GENERAL LEDGER. Dr. CAPITAL STOCK. Cr. By Sundries, " Hank of Mont' , 1 •30000 4SO0O 00 00 REAL ESTATE. 1 jTo Sundries, I 30000 00 PLANT. To Sundries, I lOCOO 00 1 ji 1 "^ n-nufactunng com^nM e business of I nnting. Pubhshmg and Bookbinding being chosen for the purpoTe. known a'tthlT'dnrT '''''^"'^^^-'"' -^ '»"-' business as a whole should be rccorSThe'^ru'ls^crlrnch'-s^Vara rTsT'^ """^ "j ''^' '" '' ^ -" statement with respect tonfchtSS^Cnt'':^!, ^1^^ £ aSble^''' '"^^ ^"^ «^'"> create and keep tL proper workinraccounU f^rtch branch. '"'"'■''"' "^"^ '^ ''' Forth, iy^'h '''^"'u ^' '^" following:- "Job Plant." to which would ll^ ^ '•"'^ "'" '°'' °^ ""^ "'^'^'''""'y- »yi^. «'<^-. belonging to that JobOHice department; "Job Work." to which all mater al used such a aepart,., . ^C^^^I^^^^J^ ^^^^ -'Z^^S^ ^" ePn'.s^th^t^ Forth. t?"" fT!^ ^ "Newspaper Plant." to which would he charged For the the cost of the machmery, type. etc.. of that department ; "Publishing " Newspaper or "News." to which would be charged the cosVof paper and ink. and credited; "Subscriptions."'?:thich^tSbTc^Vtilwt^^ *°"'' '^ There should be "Bindery Plant." to which would be charged he cost of the machinery, tools, etc., belonging to that department ; Bmdery Work." to which all material, such as leather, cloth straw board, paper, gold-leaf thread, etc.. would be charged, and to which all "r u [*?"' dep..-tment would be credited; "Bindery Waces " to whirh ,k For example : For the Bindery wrnings in u« JOB OFFICE WORKING ACCOUNT. To Job Plant «c., (written off for (icprvcialiun) fob W :i(;e» ac. , Job K\|><.'nM; ac, Ijiss ami (Jain ttc. (fur nt-t );ain un job ofTici) • 300 00 9700 00 500 00 4500 CO •iSooo 00 By Job Work «r, (I'rofil shown) NEWSPAPER WORKING ACCOUNT. To Newspaper Plant ac., (written off for depreciation) " Publishini; ac, " Newspaper Wages ac. " Newspaper Kx. ac, " l>)ss ami Gain, • 300 14000 ISOOO 800 00 00 00 00 By AHvertisinf; ac, " Subscription ac, $25000 iKonn 00 00 (for net gain on newspaper) 13000 00 00 y^ •43000 I43000 00 BINDERY WORKING ACCOUNT. ! To Bindery Plant ac, (written otT for depreciation) " Bindery Wages ac. , " Bindery Kxpense ac, " I.0SS and Gain, (for net gain on bindery) l!y niiulcry Work ac, \ V'' The general office expenses, such as book-keeper's salary, rent, taxes, interest, etc., would be shown through a General Expense account, which would he closed into Loss and Gain account at the end of the year. We will su[)posc that it amounts to $2,500. The Loss and Gain account will show the following as the result of the business for the year : LOSS AND GAIN. To General Exp. ac, Bal.incc, Net Profit (to be carried to the credit of Dividend and Rest.) % 2500 16700 $19200 By Job Working ac. , " News|)ni)er work'g .ic " Bindery working ac. « 4500 13000 1700 00 on 00 $19200 00 147 We will suppose the assets and liabilities to be as follows :- ASSETS AND LIABILITIES STATEMENT. ASSETS. Assets. LlAHIMTIES. J..|jf)fficc PUnt .'"bOftice Stock ■ . . ' ' " " Mcwspaper J'l.int " ' ' • 6000 2800 GO 00 Newspaper .Snick ■ - . " ' ' 8500 00 Bindery Plant • . . ' ' 1700 00 Himlery Stock ... 3000 CO Office Furniture . . 800 00 General PUint • . . 300 00 Cash .... " ■ • • 700 00 liank of Commerce ■ - . . 35° 00 Personal Accounts receivable • . 3000 00 (ai per statement in detail) Bills Receivable • loao 00 »7So 00 LIABILITIES (to the public). Bills Payable .... Personal accounts payable • - . ' ' 2500 00 (■IS per statement in detail.) 750 00 LIABILITIES (to the Shareholders). Rest • . . . C.»pital Slock • . . ■ . . . Sooo 00 22670 00 1 830920 00 830920 00 ,„Ph , Z 'u'u'VT^ '"*^ """""'" book-keeping, and arrive at definite results such as those exh,b,ted above, the book-keeper and foreman of each of the depart- mentsofthe bus.ness must work in harmony, and with the disposition to be pains aking and exact. The Job foreman will keep a blotter, or day book in which he W.11 enter all work done in his department, and the foreman of the BTnderrwUl do the same. I-rom these books, say at the end of each week, the book-keeper will •■BinlvVT"' '^""' '^'"''''° '^' ''■'^e^'- »"d credit the "Job Wo'k" and WnrlTf^ k°'k n'"'u'^""'' respectively, with the amount of work done on credit Work for which Cash is received will be entered in the blotters, but the amounts wii ^niTu^ 'T ^" '""^r ^"l"-"" headed "Cash," the column no which thl amount to be charged are carried w 11 be headed "time" The iJHitionc of !!, *'"<'""'» fof'.ri S'l '^r '"^ r°""' °^ busbess done. Jusl af stnTs .^o y"^ rel™ nLt ^A i^' ^^' "^' *''="" '^''"S'^d '° "" individual it will be entered i.^ the Cish £n?L' tV^' ''",•" C. B., with the folio, should be placed oppostte he entry in the blotter rhe auditor W.II thus be able to ascertain whether work done^ nrmJrlv haSt Cash '' w"' ""J^^ '^^^ "'^l" '^''"8'^'^ '° '''"^'^^'^y '" the ledger T^^n /u^f.K . '"p^h. We would suggest that it might be desirable to have order blanks ^ ''ubs) containing full particulars of the work to be done, which would be mad. work" %°^'=',r'^, ^^-t-^r 'he foreman as his warrant for proceeding «^th the ZZ f 7?''^ Pl'^ce the date when he received it, and keep it on file tiU the work bbttcr^^S"'' ^'""r ^^ 7,"V^ ^''' '' "Sain. and from it make the tn r in the IT J tl^ "'^"'^ "'°"''^ ^« consecutively numbered in printed fi-urcs The entry in, he hotter would have the order number added, and the orde wou d have f'om r//°''?- ^'" '^r'^^'^P^^ ^''°"'^ '^h-'' '^^ '■"'^•"''"■s entnesYn "he blotter rom these orders, nd file them away carefully for reference, or for the auditor No kenri;,',^^^''^ to be kept by the foreman of the newspapw department t will be kept in the office and the entries taken from each issue of the paper ' 148 When goods arc obtained by one department from another, care must be taken by the department transferring the goods to hand the particulars to the book kcei)er, so that he may charge the one department and credit the other. One Pay-sheet will do fur the whole establishment, but the book-keeper will show, in addition to the t(»ial sum paid for wages, the proportion to Ikj charged to each department The cash book will have special columns on each side, under such headings as the following: — I)r. Sid.. Job W.,tk. A(Ivcrli.iin(». SulMcri|iliim. Ilinilcry Work. Suniiri Cr. Side. Jot) Expcn.sc. Ncws|iapcr Kxp. Bindery Exp. Interest, I)isc. Sunilric There would be a general nay-book as well as a general Journal in the office, Liit there would not be many entries in these, as |Msting lo the ledger would bo done direct from foreman's blotters, from the Cash book, from llie Invoice book, and from the stubs of the Cheque books, and (wrhaps from the liill books. The book-keeper must be careful to appr i invoices and bills and contra accounts to the proper departments. After pic: ^ i.ut and adding tlie items under the various heads on a piece of paper, it wou be well to write in red ink on a corner of the invoice or bill, the sums to be charged to each dcjwrtment, and show that they correspond with the total amount of the invoice. I do not think it is well to burden a Ix-dger with details and items — these are already in the books of original entries, and it is just as easy for a book-keeper when making out accounts to get the items from them as from the Ledger. I may mention that with some companies that carry on the job printing business 1 publish a newspaper, a different plan of book-keeping from that outlined above Is pursued. The cost of setting up the newspaper and printing it is ascertained by careful experiment, including wear and tear on plant, and is charged to newspaper account ; this account is credited with the income from the newspaper. I am of the opinion that as accurate knowledge of results as is desirable, cannot be obtained by this plan j guess work and omissions could hardly be avoided. 119 ACCOUNTANTS CERTIFICATE. Examples of Accountants' Certificates. Copy of report by Messrs. Rattray Brothers & Cairncy. Chartered Accountants. We have examined the Books and Accounts of Messrs. Bulloch Lade & Co ampbc town and Islay. and have to report that the books are carefully and correctW kept, and have been proj.rly balanced each year, and that the profiuf:' Ty^ 3'st July, 1894, were;^37,878, 31st July, 189s, were pf 38,480, 3 « St July, 1896, were;^4S,si3, dcDreciatiin h f" '■'^' ''"' ""'^^y °'*"=^ "'-'"^^"y deduction, including i;C;:idrt^rpr.r"' ''•^ '-''''' ""'''' '^^^" °" '"'^ works and plan? ISO W further certify that the Uook value of the Anet* at 3 ill July, i8«)6, was (Signed) Ratthav Urotiikhs & C'AiHNiiV, C A. Ciresli II llou.sc, 45 West Nile Street, iilav;'>w, 18th August, 1896. Toronto, t»n;ust 18, i«i>>;. MeiM A i, » mc» & Co,, Toronto : ' in'u ic .., — We htve examined the iMXjks and accounts of the Sales Book and A ! '!r.('l •>: f. leister businesi of the Carter-Crume Company, of Niagara Falls, N. Y., . !' ' i jror o, Ont., for a period of five years from Aiigisst lU, 1894, to July 31st, 181, ,. ai; ' ' j4 10 inform you that, after charging, against the profits all opcratinn expcr ';<. '\ ! I .ing rem .neration of officials, wu find the annual .irofits have been a^i fol .;» - V> ir ■. - t July, 1895 1109,338.14 " " 1896 108,663.87 " " " 1897 126,830.37 " " " " 1898 141,637.69 " ' " 1899 151,819.51 Total for five years $638,489.48 All expenditures in connection with the maintenance and repairs of the property have been charged against the profits, and we are of the opinion that a proper amount has lieen annually written off for depreciation, and that the works have been kept in good condition. The losses from bad debts have averaged less than one-half of ori', per cent, during the past five years. Yours truly, (Signed) CLARKSON & CROSS, Chartered Accountant Subscribed but Unpaid Stock a Resource. ii It is not unusual for Companies, other than banks, whirh desire to secure puMic confidence, without which they could not exist, to obtain subscriptions for stock to u much larger amount than the capital necessary to carry on their affairs. To illustrate : A Life Insurance Company must command public confidence to be successful. The capital required to carry on its operations, beyond the amount deposited with the Dominion Government in the interest, and for the security of policy-holders, is small in comparison with that of a bank or an imjK)rtant manufacturing concern ; hut the permanance of the Company and its ability to pay its liabilities to the widows and orphans, who will be its chief creditors, is of vital importance. liy obtaining subscriptions for stock to -in amount much larger than the capital required, and calling up, say only a fourth of the amount, it has a reserve, which, in the event ol its being required, can be calltd for at any time. This reserve, in the case of Life Insurance Companies, is as tangible an asset as the double liability resource of a bank. As an example of this I may mention that the subscribed ca])ital of the Confedera tion Life Association is one million dollars, but only ten per cent, of this has been called for. thereby leaving, practically, a reserve fund of fn us property held by truste.s for the bondholder, and t'hJy are cald firs mortgage b,..,ds. if the mortgage ,* the f.rst lien on the property. I^„ Companies b<,rrow money upon the.r l«nd, n.«. as in the case of a Railway or Mining Company, because they are hard up but to obtain money at a cheap rate to lend ..a high rate! If the Company l.e an old and sound one. .t could probably borrow at par in England upor, as bonds at four per cent, or less. The proceeds would U. brought to Canada. and loaned at six or se.cn per cent., the result l^-ing a handsome profit u,K,n fund. not cntnbuted Sy .ts ^ureholder, just as the l>anks n,ake a prof.t by 1 nding the funds eft w.th them on deposit. Suppose a company has disposed of 6 ,.. cent. delH.nture.s. ,. , l«,.ar.n« . erest at 6 ,H;r cent, pc-r annum, to the amount of «so.ooo at a premium of 5;^%. the entry wou-ld be : C.ish Dr. $51,750.00 To Debentures $50,000.00 To Profit and I^oss $ 2,750.00 l-he Company's liability h only $50,000 ; the ^2.750 is a profit. ^^^ ^ Suppose they had l)een disjwsed .fat a discount of =; per cent, the e.^lry woul.I i?}7, 500.00 Cash Dr. I'rofit and Loss 'I'o Debentures & 'oOCc ^tO.OOO.OO The Company', liability is 850,000, which .,ust l.e i.own . :, the cTcdit side of Debentures account. The $2,500 1, .. loss. The difference between a STfK,K^ UP. .nml BoNm.oLDF.R of a Company will of < ourse, be apparcnt-the st.,ckhold - is partner, the bondholder is a cre'litor' ■"vernments and municipalities also I. ,n. ,v upon debc^ntures or bonds. The bonds of the British Government are !!e^ "( .nsois.' which is an abbreviation of the i-erm "Consolidated bonds." The term Floating Lr.Ami.riKs f.rs to debts that are not in the form of bonds or mortgages, but personal at ou , or bills payable. ft J ** I 152 No. :$i,ooo' : : mOVINCK OF ONTARIO, CANADA. THE CATLING GOLD AND SILVER MINING COMPANY, Imorferated by Ait 3b Victoria, Cap. itx), and amended by ActsjS I'ic. Cap. (xf, andjg I'ic, Cap. Sg. FIRST MORTGAGK BOND. THa OATLma gold and SILVUI MININO OOUPANT acknowledge to owe, and promise to pay to the holder hereof, at the Office of the Merchants Bank, in the City of Belleville, Ontario, the sum of On* Thousand Dollars, on the Twentieth day of August, one thousand eight hundred and ninety-three, together with interest on the same, at the rate of Eight Dollars for every hundred dollars by the year, to be paid semi-annually on the Twentieth day of February and Twentieth day of August in each year, on the delivery of the annexed Warrants or Coupons, as they shall severally become due, at the Office of the said Merchants Bank, in the City of Belleville, aforesaid, and with like interest thereafter until the principal of this Bond is paid in full. This bond is one of a series amounting in the aggregate to Seventy Thousand Dollars, secured by a Mortgase bearing date the Twentieth day of August, one thousand eight hundred and eighty-eight, for a like sum on the I^inds, Mines and Mills of this Company, to James Frederick Dennistoun and George Edward Shaw, of the Town of Peterborough, Trustees, which Bonds are numbered from One to Seventy inclusive, and countersigned by the said Trustees. And the said Company agree that this obligation, and all rights and benefits arising there from, may be transferred by delivery as if the same was a note of hand and iwyable to bearer. This Bond is subject to the following conditions, to wit : 1. That no iliviilcnd shall be paid on the stock of this Ci>m|iany until the whole of the s.iiil IJonds ami the intc est thereon are poid, or a sufficient amount to meet the same is deixisitcd in one of the chartered Uanks in the City of lielleville, and specially appropriated for the iiaynient of I In s.tmc. 2. That the saiy advir tisement once in the Ontario Cazitle, an(l by letter deixisited in the I'ost Otiicc, aildnssed li, tin- holder thereof .it his l.-vsl known Tost UIBce address, and on the expiration of the sjiid notice of six months the interest on the Uonay the Ile.ucr at (lie M|-.k( mams Hank, in the City of Bdleville. Ontario, on the 2oth day of February, iSyi, FORTY DOLLARS, Interest due on that ;iy the Hcanr at Ihi- .Mi.;K(ii\M^ Hank, in the City of Itillcvillc, Ontario, on the 2olh ilay of Aii(;Hst, 1S90. FtJRTY DOLLARS, IiilLrcst due on that day. at the rate of S twr • eiii. iKT annum, on Bond No rrc/ary. The Gatllng Gold and Silver Mining Company Will |«y the lli-arir at ilr Mi.i;. ii,\-, , , Hank, in tin- City of Hfll.vilk., (Jntari , the 20lh clay of February, i.S.^o, FORTY DOLLARS, Interest due cm that clay, at the rale cil S ih r cent. |)er .inniiiii, cm Uoiid No $40. St't'rctflry, The Gatllng Gold and SUver Mining Company Will |«y the Hearer at the Mkrc itANis Hank, in the City of Ilelleville, Ontario, cm the 20th day of August, 1SS9, FORTY DOLLARS. Interest due cm thai , ctary. The GatUng Gold and Silver Mining Company Will p.iy ilie Iteirir at the Mkkc iiam^ Hank, hi Hie City of licllcvilh-, ( liit.irio, ,,n the 2otli day of February, liJSy, DOLLARS, liilciesl clue cm tiial clay, at the rale- c.l S per cent. iH;r annum, cm Bond No Hciretary, 154 PREFERENCE BONDS. It frequently occurs in connection with large corporations like Railway Companies that they have exhausted their borrowing powers upon bonds secured by mortgagts. Already they have outstanding first mortgage bt)nds and second mortgage bonds, and possibly third mortgage bonds. Money must be obtained to keep the undertaking in operation, or it will be overtaken by' disaster. A special meeting is called of both stockholders and bondholders, and their sanction is ob'iined to the issue of Prefercncu Uonds, which will take precedence in point of secuiity over all previous issues. It is only in desperation that the holders of mortgage bonds would consent to relegate their securities to a less favorable position, and waive their claims in favor of new creditors. SINKING FUND. A Sinking Fund is created for the purpose of meeting bond or mortg.ige debts at maturity, by laying aside certain sums annually for that purpose. As the money is invested, the sums arc charged to " Sinking Fund No. i," a, 3, etc. r J' REST, SURPLUS OR RESERVE. I have often noticed on the part of even intelligent persons a diflficulty in under- standing the figures denominated " Rest " or "Reserve" in a ledger or balance sheet. They will ask such a question as, " Well, where is this rest or reserve ?" Now, in the case of a " Sinking Fund " there is no difficulty, because it is a tangible, single asset or resource — a fund that is actually on deposit in bank, or invested in somu security, and it stands on the del>it side of the Sinking Fund account in the ledger. The figures of the " Rest " or " Reserve," on the contrary, stand on the credit side of the Rest account as a liability — but a liability to the shareholders. The " Rest " represents, !n brief, the amount which the assets of a company arc in excess of its liabilities, and the capital actually paid in (and is usually the result of undivided profits). For example, take the statement of a sup{)osed company . Assets foot up §220,000 00 LiAiui.iTiKs (to the public) . . . - g 10,000 00 Cai'Itai, (or liability to the proprietors for capital paid in) ?20o,ooo 00 Re-st, or surplus 10,000 00 8220,000 00 In other word.s, there are assets to meet the $ic,ooo of debts to the public, also to meet the ?20o,ooo due to the proprietors, and leave a surplus of $10,000 over. The reality of the rest, then, is in the fact that there is a surplus of assets over all liabilities to represent it. I'he institution must be solvent if there is a genuine rest ; but it might be insolvent and possess a sinking fund ; because the liabilities might exceed the sinking fund and all other assets. 155 BANK OF MONTREAL. statement of the remit cf the business of tlie Bank for the haljycar ended jist Octtber, igoo. Balance of Profit and Loss Account, 30th April, 1900 - « 427,180 So rrofifs for the half-year ended 31st October, 1900, after deducting charges of management and makinK full provision for all bad and doubtful debts - - . . ra 082,903 24 $1,110,084 04 600,000 00 8 510,084 04 Dividend 5 per cent., payable ist December, 1900 Balance of Profit and Loss, carried forward Norii.-Markct I'ricc ofltank of Montreal St.«:k. 3 is. Oa„bcr, .900 - 25.;% (cwl to 85,8 n.r bharc. Samcdatelast year, 265%.) ^ '3 (>•• Analysis of the above Profit and Loss Statement for the Student. Tlie statement of the half year's operations sliows that the Bank's net earnings were ■*/«,, Out of the earnings a dividend of 5% for the half year upon the paid upcapitalof«i2,ooo,oco was paid 600,00000 Leaving a balance of i "82,903"^ to be added to the amount at the credit of Profit and Loss acct. April 30th, 1900 427,18080 Balance of Profit and Loss carried forward - - - ,? 510,084 04 which sum you will see in the liabilities statement, under the h.v.d of Liabilities to Shareholders. GENERAL STATEMENT, BANK OF MONTREAL. 81st October, 1«00. LIABILITIES. To THE Shareholders— Capital Stuck Kcst .... Dulancc of T" i.fits carrictl furward Uncluiined Diviclvmls . - ■ . Half-yearly Dividend, payable 1st UcccniUr, lyoo To THE Public— Notes of the Bank in circulation I>epr>slts not liearlng inletest DciKisits l)earing interest Ualances due tu uther Banks in Canada 7,oiio,ooo oo 510,084 04 7,510,084 04 3,102 01 600,000 00 9l3,C00,00O UO ASSKTS. (•old and Silver Coin Current ... . j Gov»'inment I)em.ind Notes ..... Uepos I with Dominion (lovernmenl rei|iiire(l Ijy Act of I'arliament for security of general liank note circulation Due by agencies of this bank and other banks in Great Britain . - - • $ 2,337,697 61 Due by agencies of this bank and other banks in Foreign Countries - - 2,084,482 52 Call and Short Loans in Great Britain and United States .... 20,691,750 00 Dominion and Provincial Government securities Uailway and other lionds, deljcntures and stocks . Notes and cheques of other Banks .... Bank Premises at Montreal and Branches Current Loans and Discounts in Canada and elsewhere (reliate interest reserved) and other assets .... Debts Secured by mortgage or otherwise Overdue debts not s|)ecially secured (loss provided for) - 8,112,186 05 $20,112,186 05 $ 7.384.408 00 18,104,058 62 49,127,812 28 37,930 74 74,654,209 64 •94.766,395 (X) 2,090,885 26 2,422,130 50 310,000 00 2S.''3.y.{o 13 825,850 j6 2,988,9,2 80 «. 591,267 51 $58,621,304 10 13S,«26 74 63,238 29 35.343,026 51) boogcxx) ou 58,823,369 13 •94,766,39s (') {•'••' Analysis of the Above Statement of Assets and Liabilities for the Student. Tht; student will find it a profitable study to analyze the above statement of the largest Bank in America, and one of the great financial institutions of the world. Ik'gin with the assets, noting each item, and particularly "Current Loans and Discounts" (over 58^ millions of dollars), which shows the important factor in the business of the Bank, namely, the amount lent upon the security of promissory notes and bills of exchange, principally to merchants and manufacturers. This will 157 in The assets amount to - . . The liabilities to the public amount to 894.766,395.69. 74.6S4i209.- shown in the B nkrLel a„d in ,^"''^°'"'"--*--'' l^-'"- eighty years ago. as e uanKs Ltdgtr, and m the above statement under these heads. Ca|)ital stock Rest - . . . . ■ ■ Balance of Profits carried forward Unclaimed Dividends Half yearly dividend, payable Dec. i, 1900 ¥12,000,000.00 7,000,000,00 510,084.04 2,102.01 600,000.00 r>o you consider that the Dank of Montreal is sound ? !?20,II2,l86,OS DIVIDEND NOTICES. (I'UHLISIIED IN NEWSPAPERS.) BANK Oh MONTREAL. By order of the Board. Montreal, i8th October, 1900 E. S. CI,OUSTON. Cdicral ^ -agcr. FREEHOLD LOAN .t SAVINGS COMPANV. Dividend No. 78. Notice is hereby given that a dividend at the rito of r. nor . ., the Cai)ital Storlc nf »!,« n^. u l ^'^^ *^''"'- P*^"" ^"num on ahl/^ ^ f Company has been declared for the current half year niv able on and after ist Day of December next, at the Office of ih r ^' comer of Victoria and Adelaide streets, Toronto. ^"'"^"">'' inclu^^. """"'" ''"''' *'" ''^ '^•"^"^ ^-^ '•'•^ '«'h to the 30th November, By order of the Baird. S. C. WOOD, Managing Director. Toronto, 26th October, 18.38. ') 108 Issue of Stock to Replace Debentures. In the early history of companies engaged in extensive enterprises, they frequently, as has been shown, raise money on debentures secured by mortgage on their property ; hut as time goes on, and success is assured, they deem it expedient to obtain the money in another form : so they seek the power, or exercise authority already possessed, to convert the debenture debt into ordinary shares. In other words, they take in new partners, who furnish fresh capital, with which they pay olT the mortgage on the property. This relieves the company of mandatory obligations on which payments of interest must be met, and leaves the earnings to be divided among all who have furnished funds. BOOK-KEEPING ENTRIES FOR INVESTORS. The proper entries to be made by investors in stocks will suggest themselves to any competent lx)ok-keeper. It may be well, however, to give a few examples here. You bought ten shares of the stock of the Montreal Cotton Company at the par value $ioo each. Later you sold them at a premium of 15 per cent. The Ledger accounts and entries are as follows : — j; ; Dr. STOCK IN MONTREAL COTTON CO. Cr. If : i : To Cash, " I^tts and Gain, 1000 ISO 00 00 By Cash, 1150 00 (1150 00 $1150 00 li CA SH. li' . To Stock in M. C. Co., 1150 LOSS 00 A^ ID GAI ny Stock in M. C. Co., N. 1000 ai .,, r.y StiKk in M. C. Co., ISO 00 When the sale is made, you might make Cash Dr. to Stock in M. C. Co. for 81,000, and to Loss and Gain direct for the profit, $150. This would be the belter way if you had sold only a part of the shares you held, as in the following exampli': You purchased 100 shares of the stock of the Bank of Commerce at the par value of ^50 for $5,000, and later transferred 20 shares to B. at a premium of 10 per cent., receiving 1 1,100. The Ledger account and entries are as follows : — 159 n». SHARE S_[N DANK OF COMMERCE. To shares in Bk. Com., " Loss and Gain, looo 100 oo 00 I!y shares in Bk. Com., _LOSS AND GAIN. I By Cash, QUESTIONS ANSWERED. will be fo'und in thJfSing pages '' "' ''"''"°"'' *''"^ ""-' ='"''^^'^«. J^rom Sar, Francisco. '^"TSgcJ loA'h.^ri'"'"^ ""' '°'' ^^"-^ °^ "^"^ c^p'-''" stock of more shares for me on '^mrS'' mviK.honT^ ^ ^''""^u' *'''^.''"y'' 5oo certificate, of course). ^ ^ ^ ^"' ■''°°° (''" "^^' security of my '■~'^'*"^ Stock is now worth S20 n<-r «:lnr,. t ^^a 1 1 the 1,000 shares for $20 000 He I . ! r ""^ ^''°^^' '" '^"- "« '^^"^ ANSWLR-Lcdger accounts and entries arc as follows :— Dr. To Cash, Gain, MINING STO<: k (Kirsjjnvestment). _ Cr. 375 962s loooo 00 1! 00 I Hy Ca.sli, 1 0000 lOOOO 00 MINING STOCK (Second Investment). iTo Broker, Gain, 1000 9000 00 0O| fl.KXO 00 By C.ish, " lir.ikur. BROKER. |ToMin'gSt'k(2ndIn.)!| looo 00 ii I jHy Mlii'y Si-k (2mi In.))'! 1000 CASH. To Mining St'k (ist In.) loooo I" " "(2nd 111.) 9000 By Mining St'k (m In.) 37; 00 in From Nm York City. Question— John Simpson diet and leaves an estate which is carried on by executors for three years after Simpson's death. Amongst the effects of Simpson is a manufacturing business which is sold to the heirs by the executors by bill of sale. January 15TH, 1899. The books were closed and a balance sheet showed the following effects : — ASSETS. Store "Uid Office Fixture* Machinery Milse. (Inventory) - Cish Accounts Kcccivmbic John KicK-inltion, Ailv. Money Jiu. I'ulcrsun " " • 40686 2899 63 ISWi9 13 57a 8S 117*4 94 a 85 19a 30 LIABILITIES. Rent - ... - Commission Discount and Interest ■ Estate of James FIcinn G. Cleveland .... M. Morton ... C. Harrison .... Kstatc of John Simpson (Present Worth) t »o8 34 51 76 703 SO 3 67 19 80 a 9S 11169 79 19528 74 I 31688 55 « 31M8 55 I! If In the meantime, between January the isth and March 20th, the parties decide to form a stock company among seven of them, say $2,000 worth of stock to each, and take the balance sheet of January 15th as a basis. You will notice the balance sheet of January credit of Estate of John Simpson to be 819 528.74. is $14,000, March 20th, difference $5,528.74. 15th shows the amount to tic The certificate of incorporation Now, what I desire to know is, what journal entry to make in such a case to close the estate of John Simpson and open the new account, say "Morley M'Pg Co.," ap ^ company of seven. Capital Stock $14,000, shares to be equally divided. VVha ^urnal entry would you make to close the old books and open the new as per enclosed balance sheet ? In my opinion the old books should have been closed and a new set opened January 15th, but as this has not been done I would like your valuable decision as to the best method of getting the books of such a concern into proper shape. 161 .^^.rriss;Lr.ts*Lr.t^LJSioS^.^L- Kjtate of John Simpiion, Dr To Capital Stock "Surplus Capital (or Kat) •19518 ■ I 74 914000 S5»8 no 74 close >.'Sj'!';?'?'r^c"'"''' ''"''>"° the General U-dgcr, and its cfTcrts will be to as a rest or reserve Next nr«.n a vt^HT /'•"J^-cuvciy the latter will be regarded SUNDRIES Dr. TO SUNDRIES. Aueta. Store ami Office Fixtures Machinery - . . _ Milsc. (Invcntiirv) Cash . . Accounts Receivable John Richardson Adv. Money Jas. I'atterson " " To „ ^ LiabiliUes. Rent Commission - niscount and Interest Kstaleof James KIcinn - - G. Cleveland M. Morton C. Harrison Capital Steele (Surplus Capital or Rest) • and open the general Ledger as follows t 406 86 J a«99 6? ISSS9 12 - S72 85 1 1724 04 2 «5 - 192 30 9 208 5' 703 3 «9 2 11169 14000 SSJ8 I7 So 95 79 00 74 - $31688 js[ 831688 JL General Ledger. CAPITAL STOCK. By Sundries, SURPLUS CAPITAL. 14000 00 iTo Sundries, By Sundries, ^'ORE AND OF FICE FIXTURES. 406 86 552S 74 0) Dr. US MACHINERY. Ck. To Sundrict, a899 63 MERCHANDISK. To Inventor)', liSSo CASH. To SunilrlcK, 57* 85 ACCOUNTS RECEIVAIJLR. To Siinilrii'ii, 11734 94 (Open a icpnratc account fur each individual or firm.) JOHN RICHARDSON. To Sundries, a 8s JAS. I'ArrERSON. To Sundric!!, 19a 30 LANDLORD. Hy Sundries, 2aS 31 COM. AGENT. Hy Sundries, 5' 7f> INTEREST. Ily Sundries, 703 50 ESTATE OF JAS. FLEINN. Ily Sundries, i 3 f'7 G. CLEVELAND. 1 1 liy Sundries, "9 So Next open the Stock Ledger as follows : STOCK LEDGER. (Shows ny 140 .hares oflioo each, held a. follow, ;) JOHN DOE. No. of .Shares. Hy Cipilal Slock, RICHARD ROE. 30 2000 00 I By Capital Stwk, JOHN SMITH. By Capital Stock, jo MRS. JOHN SIMPSON. MOO 00 3000 00 Hy Capital Slock, JOHN C. SIMPSON. 3000 00 By Capital .St. 10k, ROBERT G. SIMPSON. 20 I 3000 OO I II I THOS. BROWN. By Capital Slwfc, 20 zocxj Hy Capital Stock, 30 00 IM fivm Niw York City. Question.— Ii it customary in closing the books for the year to dose Capital Stock account To Balance and Bjr Balance as in partnership^ or let it remain undis- turbed at the date upon which it was placed on the books ? I have read with interest your article on Impaired Capital and would like to know how this is treated in the Balance Sheet. Is it added in the list of assets or arc the liabilities given first in the sheet and then the assets deducted showing the impaired capital ? It is shown on the books on the debit side showing that Impaired Capital owe^i us for the amount with which it is charged. Answer.— It is not necessary to close Capital Stock account ; it may be closed " to balance " when there are several entries, then ruled and fiioted, and the hnlant u brought down on the credit side and left there undisturbed. Regarding "Impaired Capital," at page i^o, I explain, I think, your question. I fancy you are under a misapprehension. Impaired Capital docs not mean, necessarily, that the Company is insolvent, that its liabilities are in excess of it^ assets. It means that through losses the capital is not so large as the ori(;in:il investment. It has lost a part of the capital, but not all. Say the Capital paid in had been 850,000 ind the loss made had been $10,000, the Capital would lie impaired to that extent, and would stand at $40,000 when the Capital Stock had been made debtor to Impaired Capital, as explained at page 130. In a statenimt of the assets and lialilities you could, in showing the Capital, put it in this wa> Original Capital I PrcrirreU Sli«l(, S^'joo 00 UvCiuh, •^ Uiu:. on Stock Sales. 33500 00 7500 «> i'RElERRED STOCK. ft) Siocl. Ill Treasury, 50000 00 CASH. T.I Stuck in Treasury, aascxj 00 1 1 DISCOUNT ON STOCK SALES. 1 1 St.K-k In Treasury, 7500 00 By Mine, ! 7SOO 1 ' ■ STATEMENT OF ASSETS AND LIABILITIE.S. ASSETS. LIADILITIES Mine Si.ick in Treasury Cosh S7500 30000 33500 00 00 00 Ordinary Slock I'referreil Slock SiX'yj or 5000:) i liooooo CO liooooo 00 J^rom riattsiurg, N. Y. Question.— My Merchandise Department consists of two accounts-Cracker Depart- ment and Candy Department. I wish to show up at inventory tho gross profits on Merchandise in these two departments. We sell crackers by the barrel and these barrels I have heretofore charged to "Cracker Department Ex|,ense Account." Is this correct? Should not the barrels be charged to "Cracker Department Merchandise Account ? " We cannot sell the goods unless they are put up in saleable shape. 1 166 Again, wc put up our candies in 5 lb. boxes (iwikt), with cardboard layers, wax paper, tissue paper and fancy labels. They are not saleable or ready for tin; market until so put up. Query : Should these boxes, etc., be char};ed to "Candy Department Merchandise Account," or to "Candy Department lujiense Account?" In short, do they not enter into the cost of our candies or merchandise ? Again, when we ship our candies another cover is, of course, necessary, viz., wooden boxes. Should these boxes be charged to "Candy Department Merchandise Account," or "Candy Department Expense Account ?" Lastly, we put up crackers in wooden boxes containing about 30 lbs. each. These boxes come to us "knocked down," and we purchase staples, hinges, fastenin^^s, nails, etc., to put them together. Should these several items be charged to "Cracker Merchandise Account," or " Cracker Expense Account ?" The goods are not ready for market until so put up ; they are not properly in saleable shape until boxed as stated. Answer.— (1.) I think you were right in charging the barrels to "Cracker Depart- ment Expense Account." The cost of the packages for shipping does not enti:r into the cost of producing the goods, hence should not be charged to "Cracker Department Merchandise." (2.) On the same reasoning, boxes, piH)or, labels, etc., for makmg candies attractiw, do not appertain to the cost of production, and you were right in charging them to "Candy Department Expense Account." (3.) Wooden Uoxes for final packing should also be charged to "Candy Dei)artnient Expense Account." (4.) The cost of making boxes should be charged to the Expense Account of tin; departments to which they resiMjctively belong. In order to arrive at the net result of each department, I suggest that at the end of the year you open a Working Account for each, as is done for the several vessels in this book. For the Candy Department, carry from its Merchandise Account to the credit of "Candy Department Working Account," the gain shown in its Merchandise Account, and any other gains that there may be ; carry to the Debit side of the Working Account the cost of running the department, as shown in the "Cindy Department Expense account," and also any other losses ; the difference between tin two sides of "Candy Department Working Account" will show net profit, and would bj carried to the credit side of the "General I^ss and Cain Account" of the business. Do the same with the Cracker Department. Instead of showing the net result of tin several departments through the resi)eciive Merchandise Accounts you will show it in each department's Wurking Account. From Perth, Ont. Question.— I have secured a position with the Water Works Company, Limited The system \i under construction now and will be completed by December ist. The comiKiny is composed of Montreal and Ottawa capitalists and at present the he.id office is in Ottawa. 1 have been with the company since the work was commenced, acting as inspector and ai;ent for them here. I have the promise of i 167 the position of Superintendent of the Works and would like to have your advice W. " w Tr ''""^'''\'"»""«'- °f keeping the above co .pany's books. The Sh ut -^"^ have taken over the Tay Electric Company's plant here, which will be run in connection with the Water Works. Answer^ You can keep the accounts of both concerns in the same U-dger. Keep a Water Account to show income from that source; an Electric Light Account to show income from that source. Keep Water Expense Account ta show cost of maintenance for that department, and Electric Light Expense Account to show cost of n.amtenance for that department. These Expense Accounts may. or may not, include a// the cost of working, for you may desire, and find it necessary, to keep separate Accounts for the various branches of maintenance, such as Electric Light wages, Electnc Light fuel, etc., and Water wages. Water fuel, etc Cjose these various income and outlay Accounts at the end of the year into Electric Light Working Account, and Water Works Working Account re.spectively. each of which will show the gain or loss separately on each enterprise! Fh.se Uorking Accounts will be closed into the general Loss and (lain Account. 1 he latter would be charged with expense items that were general. In addition to t..e various income and outlay Accounts for each branch of the business, you witl .IrH I if'" f ^^*^°""' '" ""■ ^'^"'-■^''' Ledger, and an account with each shareholder m the Stock Ledger ; you would also have in the (Jencral Ledger such accounts as Electric Light I'lant, \V'ater Works Plant, Rc.d Estate and the usual accounts with IJank, Dills Receivable, liills Payable, Personal etc., common to all Ledgers. The cash Iwok should be ruled with special columns on each side, so that the items of the accounts for which money is most frequently rece.ve.l and disbursed may be posted weekly or monthly. (See C I) at pages 1.4 and 125). You would have weekly pay sheets similar to those- •n he .3tl. set of the Canadian Accountant. Cenerally speaking.-, this is an outline of the system to be pursued. From linffalo, N. Y. (JUKSTiON.-A Joint Stock Con.pany has been incorporated with a capital <.ff 40.000, and have been conducting business for several years. The Company consists of l'-.'; -'»n. ...«h hoKlmg forty shares of .«,oo each. The capital is paid up. We W..I say that tins Company is engaged in the gas business, and that their profits are enormous. I hese .same ten men jointly own another gas plant, worth about 9^0,000, the business of which is not conducted by a Joint St.H:k Company hey desire to turn over this plant to the Company, and to issue paid-up stock to themselves for same. The profits being about 30% on the present capital of *4o,ooo, would it n<.t be advisable for them to value plant No. 2 at .«,ooooo and would th,- law allow them to issue paid up stock for that amount, and hJ domg so would the Company incur a greater liability to the public in general than If their caiiital stock w.is only increased to ?6o.ooo ? ■^"'mnv fU^erve^tf V'^ T" ''"'f 'f ""^>' ^''^ "'^'^^ ^ <^-^'" the existing Con. u ly take <,ver .iml absorb into itself the other gas plant anil issue paid un sto.k ■xctd r'Z n", ''^T"^"', "■'•:,"•' ^^' 1-V^ - the Stock issu'ed does not certainly may I so"' ' '" ''" "-""""">' '-"^"-^' "^ "^^ "^ --H-ation. ,t 168 The other question is : Having acquired the extra plant can the Company "water the stock" of the Company from $60,000 to 1 100,000 ? There is no h'.w in this country to prevent a company from "watering" its stock, and I am of the opinion that there is no such law in any of the States. The Company n"ght deem its street franchises worth 140,000 and make the following entry : $40,000, $40,000. The Capital Stock Account would Franchises Dr. To Capital Stock. and issue paid up slock for that amount, now show at its credit : $40,000 30,000 40,000 Of course I assume that the charter permits the Company to have a capital of $100,000. From HuntivilU, Ont. Question.— We will say that a manufacturing concern change their business from :i partnership to ? Joint Stock Company (Limited), and "water" the stock lar^uly by the value of their property and plant, though perhaps not beyond fair i)ossi bilities of what it may be worth. Of course the expectation is that the profits will be very large. The capital stock, including a further sum to be paid in addition or apart from the watered stock, would be fully paid up. Would a peison purchasing a part int.-rest in such business, and as one of the applicants for charter, be liable for any amount beyond the amount paid for such int'.rcst in case of failure ? Answer.- -I am inclined to the opinion that the promoters of such a comi^ny would be personally liable, in the event of failure, for any misrepresentation orexaggir ation in the company's prospectus, by which subscriptions were obtained for tlic stock. Such misrepresentation and exaggeration would, however, have to be clearly proved. I do not think there would be any personal liability en the part of such promoters to the company's creditors. From Detroit, Mich. Question.- What would be the proper entry to make for the following: ruriiis interested in a patent form a Company, and hold $100,000 of the stock, ttiL balance, ' 0,000, is sold at 500 on the dollar. Answer. The Patent being the only asset beside the cash paid, the debits to C:asli Account and Patent Account should equal Capital Stock Account, hence llic following Journal entry : Patent Dr. $125,000 Cash " 25,000 To Capital Stock, $150,000 Post above to the General Ledger, and then credit each holder in tln^ Stoik Ledger with his shares at par. Mt From Davenport, lewa. Quest.on.-The first entries on the books of The J. Smith Mnfg. Co. are • Real Estate Dr. «"o,ooo. to Capital Stock «, 20,000 ; the Real Estate is made up of tactory "A |. 00,000, and Factory "B" 820,000. They run along several years and prosper. Having some spare money, they, as a Company, buy aco shares of stock m the J. Jones Co.. at $30 per share, or $6,000. and charge the J. Jones stock a/c. with this amount. After a time the J. Smith Co. get tired of lookmg after so much business, and sell to the Jno. Jones Co. Factory " A " for ?. 20,000. What would be the proper entries to make on the J. Smith Co books to dispose of this matter ? ANSWER._When Factory " A " was sold (say for cash) the entry would be :- Cash Dr. $120,000 To Real Estate $100,000 " Loss and Gain 20,000 I'ay the $20,000 profit on the s;ile of the Factory as a divic'cnd. 'I-I.c Capital Stock IS to be decreased $100,000, and that amount refunded l.ro rata to the shareholders. Make Capital Stock Dr. $100,000 To Cash, $100,000 (.et back the old certificates of stock, cancel them, and issue new certificates in accordance with the reduction ; and debit the individual holders of shares in the Stock Ledger with the reduction ; balance e.ich of their accounts, and brin- down the balances, which will show their present interest. The sum of these credit balances will agree with the reduced amount now at the credit of the Capital Stock a/c. A Defunct Company's Assets and Liabilities taken over and a New Company Formed. from an Ontario Tinvii. QUKSTION.-We have bought tlie assets of a defunrt eotiipany wl,„ originally ..,.t , bonus from the town, and at the tim, of failure owed on account U thu bones $5,600.00. The town, of course, holds a lien on the business until the ruiuire- nients are complied with :-of engaging a certain number of hand.s, \-c, for a specified number of years. There was also a mortgage of $^,000.00 held against it at time of failure. fe'- 170 The proiKTty was wld by auction and bought subject to the bonus and mortRaRe 1 hen a Joint Stock Comjiany was formed with a capital of ilities. under I,e :;;ni:^Lr;::^;rr- ^"' "'^^ "- -''- ^-^ '-^^ '- ^-^ "-^^ of fifty dollars each. Oj.en the Stuck Lclyer and credit the following : A wiih 260 shares It wilh 260 shares 6 ij.ouo 00 C with 220 shares . . . . . iJiOoo 00 1> wilh 55 shares ll.ocxj CO I-" with 55 shares .'.,'. 2,75000 2.7SO 00 ,,., , $i3,S"0 00 :ti"r;^t'Slh^-"v'rf 'f"^ '" ''^ '''"' '^''''' ^^- -"> "- -" the crtd.t of the Capital Stock account in the Cleneral Ledger. There is no occasion for the individual shareholder, accounts to appeal in t^e (^:i."; There is the sum of $57,500 of stock to ivsue. if that is deemed desirahle at any time I cannot regard the lK,nus item in any other light now than as a liahiiuy. I," aft.r a J(jurnal Lntry transfernii- th.e amount to " Rest." Bonus account To Rest account When t^^s entry is pelted to the ledger the item wouKl then .Ik.,,... I, a lial.luy to the public to a liability to the shareholders. * The $180.52 goes to " Rest" or "Surplus Capital - aa:ount, Ffom Fort Colborne, Out. Will you kindlv answer the following question : A subscriber wishes to sur.en.hr l„s shares o p.^ul-up sto.k without any -ash e,,uiv..l,.n,. would it be p,,,,,, . ^ s n, c:ih i;i:rr''"T'/'"'r-^'"^ ,,,,„ , „^.„^ ^^ ^^ .uVit'through i?. a,h 1,00k ? I am inclined to think that a balan,:e of Stock I.e.l.er a/, i, .ii Ihalesli^r °""''^'"'"""""^ '^ ^'^""^ '" j^^* "'^' "»'"'- -' educes the .-apital hab.luy by the amount of the surrendered shares and ,nve the remaining shareholders the benefit, an entry sh.n,Id be made to redu.-J'the '■apital and s.iow the profit resulting. I su^.-est the following journal Knlry bupiwsing the surrendered shares to be $400 : Ca[)ital Stock $.joo.oo To I.oss and Cain .(oo.oo Ledgl^ld'nr h on^^^"^^^" '-"'^^^ ""^ ^'-' ^' •''' '"^ ^'--'"''i- ''^ a ... in the St... k ITS From New London, Conn. I would like lo ask you a question which does not seem clear to me. I refer to your explanation of Stock Ledger, page 84, "Johnson's Joint Stock Book-keeping." In the General Ledger you advise us to charge shareholders with the shares and credit and close their accounts from the Cash Book. How then are we able to |)ost instalments from the C. B. in the Stock Ledger, having already posted them in the General Ledger ? 1 trust you will reply soon as you can. I appreciate your book and havt learned mart from it than from any othtt source. Answer.— In reply to yours of the 2 2nd I beg to say that in the method of charging original subscribers in the General Ledger with the amount of stock subscribed, and crediting them in the General Ledger with the payments, the jKirsonal accounts will be footed and closed when the stock has been fully paid. It is necessary, therefore, to have an account with each shareholder in the Stock Ledger to show who holds the shares. The Stock Ledger is an auxiliary ledger while the shares are not wholly paid up, but after the shares have been paid up, it is the only ledger for shareholders' accounts, the sums at the credit of the several shareholders agreeing with the sum at the credit of Capital Stock in the C.cneral Ledger. In other words, the Stock Ledger shows at a glance who holds the Company's shan-s, and how much each shareholder has paid up. It is not necessary to have accounts in the CJeneral Ledger with shareholders. Set- " I'orm of Stock Ledger used when the accounts of shareholders do not apiM.ar at all in the General Ledger" (page 117) and also the paragraph to whicii you refer. ftom Ottawa, Out I li;ive opened ihe books of a printing company, who have bought the business of a single proprietor. Some of the stockholders have preferred stock. Will it be dealt with differently from the common stock ? Answkr— Ordinarily, in the General Ledger there would be Capital Stock Account, at the credit of which the Capital would be sho>vn. In the case you refer to I would have Common Stock Account and I'referred Stock Account ; at the credit of the former would be the amount of the issue of ordinary shares, and at thi- credit of the latter the amount of the issue of preferred shares. In the Stock Ledger it would be well to have two separate sections, the first for ordinary sliareholders, and the last for preferred stockholders. See ijage 174. From Hudson, N. Y. My firm is about to be incorporated as a Stock Company. I am to be otic of tlie three shareholders and llie Secretary and Manager. We incorporate with ;i capital stock of 83,000, while the anio'.mt at the credit of the [jroprietor's sto(k account at the end of the year is aijout $20,000. How am I to deal with the matter to allow for all this difference ? 173 ANSWER.-I would suggest that you put the difference between the f 20,000 and the l3.orii;ic>r'» name, Jj.oco no l7,rxio («) FOUNDERS^ SHARES. I'romotcrs of Joint Stock Companies very often manage to ol.tain a.ivant avs more or less valuable, over ordinary shareholders. The lat c.t schen.e in this lint s what .. known as Founders' Shares. ,t is worked in this w.ay : The promote , -ompany, we w.ll say twenty ,n numlH..r. who call themselves the .oun lers. indivi 1 ho da founder's share which entitles tl>em under the act of incorpor tion o t . balance of the net profits (or a large proiH-rtion of it), over and alive the anu.^ required to p.ay the ordmary shareholders a dividend of say seven per cent!" Companies of this n.iture have recently come into pron.incnce in Kn.lan.l l.v reason of the d.ssat.sfaction existing among ordinary sLrcholders caus'ed by t e tremendous profits pocketed by the few, made from capital provided by ^nnn he princple of Founders' Shares has not been admitted in Canadian leislaZ' .hough a strong effort was made at a recent session of the Dominion ."trnTmio mcorporate a comp.any in which it was asserted. -^CONTINGENT ACCOUNT. It frequently occurs at the close of a year that losses or rhnrrmc „ ■ • the exact amount of which cannot be ascertained It sls.J^n", '""^ ','"":'"'"'. stances to carry such a sum from the I-^Tn^ctn A c^L'^X "ytr^ h^^'e^^^^^ of Contmgent Ac-ount, as will be equivalent to tl e oossil.l. lnT« • ' mto which they can be- written off in the future Cy tl i^ U^';!: °: r.'^"^'^' '''"'' chargeable shows the loss, and provision is made to mee it bv n.t n" ^ '""^'7'^ would otherwise likely be paid with the dividend ^ "'"^ " ""•" "^^" Suppose this to h.ive been done, and there stands it fh,. rr^^it „r n .• rs^r:^':r '-'- '"' ™' '»'™ •'"-i..- in X" n<;nr= Contingent a/c. Dr. To Plant alt It may be from bad debts, make Contingent ajc. Dr. To the Several Personal Aecoiinti u , ^ , . "•■ P«-'fhaps to Bii/s Xea-vaM: It may be the cost of a law suit, make Contingent ajc. Br. To Cash. ■Called also "Su,p.n« Account;" also " Re^rvc for OouUful tVI,.,," ifhcIU for ,lul p„rpos. „„|, NoTu.-Korthcmelhod of wrilin!; olT.lchis uuwly U»l sec lugc 176. 174 Preferred Stock or Preference Shares What is known as Preferred Stock is usually issued under circumstances like the following : A Joint Stock Company has been in existence for some years, and has met with only moderate success. It is found necessary to bring in additional capital ond to induce sales of new stock ; tlie existing shareholders agree that the new stock shall have the preference in the division of the profits. The agreement might be after this manner : if the profits warranted a payment of seven jkt cent, upon all the stock, this Mte would be jwid; but in the event of the profits not warranting a dividend upon the wlujie of the stock to that extent, then the seven per cent, dividend to bo confined to the Preference Stock, and the lulance of the profits to be divided among the holders of ordinary stock. Or, ai;ain, the arrangement might be that a dividend of seven [ler cent, upon the Preferred Stock should \>e the first charge upon the profits. After it was provided for, the tnlance would go to the ordinary stockholders. In the event of the profits of any year not being sufficient to pay the seven per cent, on Itio I'l icrred Stock, then whatever sum was available would be jwid Ujjon it, and tin- ordinary stockholders would r^'ceive nothing. Of course, the buyers of Preferred Stock take the risk of there being no profits whatever to divide. l!y Act 62 r.^ Victori.i, chapter 40, the Directors of a company may create Preference Stock by " Hy-law." See page 54 of this book. The accounts in the Stock lAidger with those who hold Preferred Stock should l)c ajwrt from the accounts of the holders of Common Stock ; and in the Oeneral lAidger tlnre should be Common Stock Account and Preferred Stock Arronnt, instead of i!ie usual Capital Stock Account. Cumulative Preference Stock Cumulative Preference Stock is similar to the Preferred Stock described above, but differs in this way : Should the profits of any year not warrant the payment of the full dividend promised on Preference Stock, the deficiency will remain a charge uiK)n the profits of future years, which must be met before the Common Stock can partici pate at all in the profits. The Canadian Portland Cement Company, Limited, forried in 1900, offered for sale $200,000 of 7 per cent. Cumulative Preference Stock, ruuking for an additional tlividend of i per cent, on the following conditions : "The Preference Stock is entitled to a first cumulative dividend of 7 per cent, per .innum, payable half yearly ; and after the Common Stock has received a like dividciul, shall 1m; entitled to share with the Common Stock in any surplus profits up to, Inn not exceeding, a furtlier i per cent, upon the Preference Stock." The Dominion Iron and Steel Company of Sydney N. S., offered for sale in March 190T three million dollars of seven per cent. Preferred Stock on the following tern)s : "The preferred shares arc entitled to cumulative preferential dividends at the mte of seven per cotit. |Kr annum, payable semi-annually. They may, at the option of thr holder, be exchanged for common sl-.ares, and are subject to l)e called in by the roni piny at .Si 15 per share. The total issue of the preferred stock is $5,000,000, the present issue being three-fifths of the whole." 17ft •PLANT ACCOUNT. Tnn.,K,rtation Comliy. ' '''•''^'^■"'' °"'-' °^ «'^«-' v«scls of the Om.rio I'-luccd. and not anything that my I ,1^^' 'T ^ "'*'"'*''''' »^'^^^^ WhcndosinfitheUxlgLthlarctr^LLTl •? ^ '"''^ "' manufacurcd. .o wear and tear, the p^ant of the c„l:^ ^f^r: '.l V"'^"' r ""'• ^*"'« you purchased it. or when you last closed your books Ti "'" "' " *"' *"'" a IK.rtK,n of the amount charged to the atroun Tj ' , ^*°" '""'' *""-" "'^" .ICit at the amount you estinu.e yol cou ^ '. : H.r.i:' 'T' ^" ^ ""-^ "- 5 ...r cent, by making this journal entry and i Jing it '" ""' ""^" ""■ "^ Z<»K ««vliy wriit; f om off at all? What harm can ll v ru l)c in allowing them to remain on the books / 'I'he answer is, if you v -ntmue them they stand as resource* or assets of your bii inoss, which, being worthless, they arc not. In nearly every r.i>c of insol- cy, the book debts > ield on an average not more than so [kt cent. ; imd in not i I'ew instances the insolvency itself is in a large measure produced by allowing worthless accounts to remain on the I^-dger, and regarding them, and representing them to creditors, as assets of the business. Suppose you h.ivo upon yiiur Ledger the follDwin).; accounts considered bad; Jones, 1P57 ; r.inwn, #31.50 ; Cireen, $41. (jO ; write them ofT by the following journal eiil !cs : — Bml I>eljts Account, Dr. 'I'o Jones, " Ilrown, " Green, $130 10 $57 00 3» 50 41 90 For amounts at their debit that we consider impossible to collect. \ja%% and Gain .\ccount, Dr. To Pad Debts Account For amounts written off, transferred. •130 40 $130 40 It will be observed that the accounts arc first written into Bad Debts Account, and the latter is closed into Loss and Gain. If they were left in Had Debts Account, they would still be in the form of assets. Of course they might be written into Loss and Gain at once, but the object desired in dealing with them as we do here is, to have an account showing distinctly the sum written off yearly for bad debts, as well as the names of delinquents, each of which occupies a line by itself in the account. Recording them thus in the Ledger, you can turn to the account at any time and hi-sve the whole list, extending, it may be, over many years, before you. "From *'Th« Canadian Accountant." NcjiK.— For the >ncth«l uT pioviiling Tor Joukiriii „..ljia that may become worthlcits, m< pagt: i;]. m BsMiinaUon Quertloin, lutitute of Chartered Accottiitaatt of Ontario. nOM PAOK 177 TO PAGE l8j. 'OnfT ITOOX OOMFAMIM. eurin; JctuSil'!^^^^^^^ "" equjtl p.rt„er. in the bu.i„e,. ofnunufac Plant (includes machinery and tools) Real Estate .... Manufactured goods per inventory 130,000 00 '5.0OO 00 15,000 00 $60,000 00 1500 shares of lioo each Ten men »wh.W.. « • k '^ »'5o,ooo.oo. divided into ■Ut for .00 shar« (,o cach^^d reX^cer ui^Tth^r ''"'' ''' ^'"^ (a) State the steps that should be ulcen to form such a Company. W Suggest the books of account necessary to oronerlv r,.., ,m .1 r- business, as well as those required to be keptTy law. '^ '^ "" ^ ""''''">' the lS.kr' "' """"'^ "'"" '"' •"' "^«'^"°- 8'-" "'-ve in order to open at a p'remiurrL"^ 'T"1°' ' '^^ ""' '•-''"•"'*^* '° '"'^ «"-""' «f »So.ooo. premium of 5|4^. Give the necessary entry for the transaction $8,000 to be paid in cash dividends ; li,5oo to be passed to rest account ; «5oo to remain at the credit of profit and loss. Make the journal entries. shnr.t /« ^^^ ^"^^ If^"' °^ " ''""'^"y- ^- »'«*" '■* "-''''"J with .0 ,«id „„ !.hares of |ioo each. He sells to-day to W B Rohin«nn n, . } ' r..^zz^:;::C- """' '" '"' --^ ---- :-';: (K) MCROCOTY RBOWTION TBT CHART (ANSI and ISO TEST CHART No 2) I.I ■ 45 178 ■ 2^ Ijo ■iB WH tit l£ m Hi |3^ lb Ki U. Ib IllaiB huu i 1.8 ^ /APPLIED IIVMGE In '653 Eost Mom Street Rochester. New Vorfc 14609 USA (716) 482 -0500 -Phone (716) 288- 5989 -Fo« 178 6. What is the extent of the liability of shareholders in Joint Stock Companies, other than banks, and what is the liability of shareholders in banks ? 7. What is the advantage in keeping a " reference book " for the use of shareholders ? 1. («) What arc the qualifications for the office of Director of a Company incorporated under the provisions of the " Companies Act? " (d) How far may these provisions be varied by a By-law of the Company or otherwise ? 2. What restrictions or conditions require to be observed in seeking incorpora- tion under the " Companies Act, " or the Ontario " Joint Stock Companies Letters Patent Act, " respectively, as to (c) Capital Authorized, (#) Capital Subscribed, (c) Capital paid in. 3. State clearly what a Company may and may not do in the matter of dealing in or acquiring its own shares. What authorities govern ? 4. What are the successive steps necessary to render a By-Law for the creation of Trcfcrence Stock legal and operative ? 5. What, if any, are the limitations upon the powers of Directors relating to the payment of calls on shares by transfer of property or goodwill ? 6. What is the procedure necessary to enable a creditor of a Company to compel payment of uncalled or unpaid capital for his benefit ? 7. (a) What obligations are assumed by persons acfjuiring partially paid shares either by transfer or by sale under execution ? (*) What obligations remain upon persons parting with shares in these ways? 8. (a) What takes place if the number of Sharclioklcrs in n Company falls below the number required to secure incorporation ? (*) What takes place if there arc not sufficient shareholders in a Company eligible for re-election as Directors ? 9. What liability or penalty is incurred by an Accountant for f.. ^r insufficient information supplied by him for purposes of a prospectus, and so used •' 10. A Company desires to acquire the name and business of another Comjiany without becoming liable for the debts owing by the latter. How would you advise that this be done? 179 SHAREHOLDERS AND PARTNERS. .. Wha. book. .,c requited b, ta lo be kepi b, . Join, Slock Co™pa„, , «. held, J^^b" r°' " ""^■'""''" '" """ >" "■'■° « ""■" "" -»' " 'Hare, orbef„,:ra:d";^:r?::;freXr'"" ■■»'""'■"' i-^™---- »..^.*rbre^r^:rd^oX1Se^:t;rrr---- ;po;ibe::r^or.-rs; st^r.isrsrcr^^^^^ rend';b,SL'Ser.'SSl?r,r°"- "°" "»' ' ■-'""«- ''"-' 9. Wb., i. ,be liabili,, or a firing p.„„„ fc, Ibe debl, of Ihe talc partnc^hip? .he L.talt™;??;:^ ""'"""■ °"'""" '""»""- "»•""« -■!■.■» -i.x:sNoZ^btvx;srrr,r^^^^^^^^^ (/i) What determines the distinctive features of each ? 180 6. What is the significance of a stock certificate o- "scrip" to a person holding shares ? (live fisrms of certificate illustrating your reply. 7. What entries should be made to show : — {a) A sale of shares at a premium ? {/>) A sale of shares at a discount ? (c) A sale of forfeited shares at twenty per cent discount, ten per cent, hrving been previously paid thereon ? 8. What ledger entries arc necessary to show the conversion of a partnership business (mauufacturing) into a Joint Stock Company ? 9. Describe minutely the books which are, by Statute, rcrjuircd to be kept by a Joint Stock Company ? 10. What is a special partner ? A limited partner ? How would you exhibit in the Ledger ' the interests of each and also of general partners ? Introduce apportion- ments of losses and of profits. AUDITING. 1. What objects other than checking the posting"? ' the ledgers ought to be obtained by an independent auditing of accounts ? 2. Is an auditor responsible for the accuacy of the value of the stock as carried into the merchandise account from the inventory ? Give reasons for your answer. 3. Suspicion as to the accuracy of the accounts having arisen on the part of the silent partner, a special audit is made of the books. How would you proceed to verify the bills payable and bills receivable accounts ? 4. How do you consider an auditor can best test the accuracy of the cash balance as shown by the cash book ? 5. Give the outline or skeleton of a revenue accour* or trading and profit and loss account of a partnership of three persons engaged in a manufacturing business. 6. In a partnership business, how far can an auditor go in correcting entries made in (a) the capital account ; (b) the nominal account ; (c) the personal account ? Give full re.isons for your answer. 7. As auditor for a Joint Stock Company, you find fictitious nominal accounts in the private ledger ihrough which several sums of cash pass. How would you proceed to verify the correctness of such cash payments ? 8. Give outline of a balance sheet of a purely commission and consignment business. 181 n ■> ">it<;a short report as the rciult of a special audit of previous year's work were C^t ' """"' '"'"' °'^°"'-" "^'^''"^' »"-"'^- Otherwise- the books 10. The errors in the above question occurred in .Sy,, I„ ,Snr the mrtn.r sfup was unaltered with the profus for the >.ar bein, 8^600,'^^^ $800. How would you proceed to adjust the errors ? Illustrate -our answ r ly means of adjustment accounts. ' -""swer i,y 1. What is the object and scope of an audit? 2. You are appointed auditor for a new TradinK Con.pany, and are asked ,o draft some general instructions for the guidance of the offic staff with a v e^ to wnat would be embodied in your memorandum. 3- (a) What do you understand by the term " Voucher?" (/') For what entries would you require them ? produced^? '" "''" ^°°'" "'"" "'"" '*-' '"""'^ '°^ ^^•h''^" vouchers should be 4- What steps would you take to verify the followin« Assets of a Mm„f ,,-.,„• Company .-Cash. Bills Receivable, Stock. Machinery? Manufacturing 5. Vou are auditing the books of the Brow Furniture Co. State what stei.s you would take to ascertain whether there was a sufficient sum char xd a4 Revenue to meet the probable loss in Book debts ? ° ° 6. (a) How would you determine the propriety of a dividend ? entitled to lh":7''"'' ''^^ "'''^' ^°"^'°-^"^ "^^^ ''^ '^''-''^ '^' '-' -^ '" ""'- 7. In auditing the accounts of a partnershij, you f,„d that Creen's dishonored note n.rms part of the balance of Bills Receivable Is this «,rr..,.t ? """"""/"^ fully what should have been done with it ? '^ ""'' ''"'^■ S. U-hat procedure would you follow in auditing the Capital A, count of a M ,„ ufacturing Company, no previous audit having b.cn made ? .;. What is an Income and E.xpenditure Account ? Point out in what res.K vl If any. it differs from an Account of Receipts and Payments? wouldl.!'r""'^'"'r' '^" ^°"^' "' " Manufacturing Establishment, what vou.hcr w u d you re.,u,re for wages paid, and how would you satisfy yourself that the \Vages hst did not contam the name of fictitious employees? 182 1. Under what circumstances do you consider "Goodwill " or " Patent Rights' legitimate Assets ? As an auditor how would you advise such assets being dealt with year by year ? 2. Explain fully the items cm ring into Costs Account in a manufacturing business consisting of three Departments, each semi-dependent on the other. Give full particulars as to the methods you would pursue to arrive at the Net and the Gross cost of production. 3. In taking Stock what valuation is a mauufacturer justified in placing upon goods in the process of manufacture, fmished stock unsold and finished stock sold but not delivered ? Give reasons for your answer. 4. What do you consider th<; best system for arriving at the depreciation to be written off or provided to redeer tiie foUowi 'g assets : — (a) Fixed or permanent Machinery. (6) Loose Machinery, Utensils, Tools, Implements, etc. (c) Office and Shop Furniture and Fittings. (d) Horses. {e) Leasehold property. (f) Goodwill. 5. A Joint Stock Company whose capital has become greatly impaired, but which is at last making a small profit, wishes to write off half its Subscribed Capital in order that it may be able to pay a 6% dividend. The Stock is fully paid up. What steps are necessary to be taken in order to do this, and what entries would you make in the books to record the transaction ? How will this affect each Stockho'der's liability ? 6. To what extent do you consider it an Auditor's duty to examine into and report upon the Stock Inventories and the mode in which the stock has been taken and valued 7 7. Set out in detail the form of Balance Sheet (without figures) you consider best suited to show the position of an ordinary manufacturing Joint Stock Company 8. year ? Should the following items be Capitalized or charged to Revenue for the (a) Premium given for a lease. {6) Costs attending a mortgage. (c) Commission on an issue of Debenture Stock. (ccial adjustment would you suggest in regard to it ? 10. You have in hand the examination of the cosh and bank account of a mercantile firm that uses cheques very freely. Draft a reconcilement account, bring- ing the cash-book and bank pass-book into harmony at the close of the period under review. 11. What cheque has the auditor on fictitious entries showing purchases, and on returns of goods sold ? 1 3. In auditing the accounts of a gas comfuny, what evidence of the receipt of amounts due from customers should be required ? 13. Should any fluctuation in the valuation of permanent assets be permitted to affect the result of the loss and gain account ? Give reasons for your answer. 14. Expenditures are made by a corporation for items of Mf A of the following classes : (a) taking down a machine in one part of a factory, moving it, and putting it up in another part, (b) expenses of incorporating the company, including State charges and lawyer's services, (c) brokerage on purchase of a piece of property, (- *-d'. 'hat the Co.n .an not undertaking to do that which i, has no legal power to do. No mat. r ,.w cRular a contract might appear to be. it would be utterly worthless if the C „ , a,w had no legal power to make it. As a rule, contracts with a Company should a the Company s seal attached, bc-cause a corporate body speaks by itVsL. 1, w o^l 1 then inTrr- ''°'*'-'""- ^' f ^"-"-^ '-"'"« -'- -/bills, and endorsing them, n he ordmary course of business, to attach its seal. All contracts made l.v a mun.e.pal corporation should be under the seal of the corporation. ^ SPECULATION IN STOCKS. and r?„' ^'^7 '^^^^rumkrs of stock hitherto alluded to have been genuine sales. hoie"; .?wS.H "'°°'- '^"'^ '" ' '"^^ ^'"°""' °^ ^P-"'''"- '" ^to.'.s rTr'\ '." "° '""-■""°" ^'^'"''"y '° *^^"^" °' ''=«='-ive them. This is called buyng on margin." which, with the peculiar jargon used in conne- Jon wit .^ .s not easdy understood by the uninitiated. A contr'a ct is made th ough L: to buy a eertam number of shares of some particular stock at a fixed price within so The broke;~ ShTr^"' ',! ^"' ""' °' '''' '""°""'> ''^'"« P'"'^^'^ '" '^e hands of to se^a^d ,ft . "u' '" "'^ '"'''"^'' '''' ^P'-""''''°' "■•'y «^der his broker l?h!r K h' u JT^ *""" •"" ^°"""i«'0". pocket a handsome profit. On the other hand, should the stock decline, the speculator must keep up his margin by makmg further payments, and it may be that, no favorable turn taking place imme'i ately. he is unable to continue to carry the stock, and loses all he has invested. I' *i" be seen that this kind of speculation simply amounts to a bet that a par- ticular stock W.11 be above a certain figure in the future. If it prove to . Z speculator wms; ,f not. he loses. Son.e curious phrases are used on 'change (this is a^ is dl to thn .' , ;• ''°'''" "'°"«" ""' "P"'" °' "''^'■" The name "bull." .s given to those dealers who are endeavoring to force up the price of certain share and those are called "bears" whose object is to lower them. A "comer" is the resul of certain operations between these opposing forces. When it become, known that IfZ? T Tl" °' "''°'' ''"'''''''" °"' '" '^ "^'^'" ^'o^^' -'^vantage is taken wh. n »h I '^ ^T"' *''° P""''^'" ^" ""^ '^^''' 'hey can get hold of. so that "shortSatT-""" %f fulfilment of their contracts, the holders have the shorts at their mercy. The latter are compelled to purchase at greatly advanced prices, and are "cornered," unless they can break down the come, when the Lbles 186 may Ik; lurncd upon the "longs." A "put" or "call" h a contract wlicrchy, for the iwymtnt of a sniall sum of momy, one dtakr may require another to take or deliver within a limited time, say one day, a certain amount of itock at a lUtud price. The operation known as "going short of the market," or selling stock with none on hand, in the expectation of buying at a lower figure when called u|K)n to deliver, iH not favorably considered by the outside public who occasionally "dabble in >V'all street ;" they, as a rule, prefer to " bull" the market. "SHORTS" CAUGHT. /•'rem Tkt Monlnal Star, March aoth, tgot. During the time the Dominion Iron and P'>(1 Company was asking the public to subscribe for ?^,coo,ooo worth of their preferred seven per cent, cumulative stock at 85, the stock was selling on the Stock Market from 87 to 88 1-4. This was a promising sign for the success of the issue, but it tempted a number of people, IkjIIi inside and outside the Exchange, to sell stock at the high prices, which they did not at the momen. jwn, but which they expected to get in a short time. That is what is called selling "short." To-day the gentlemen who went short showed signs of repentance. As has alrcidy been stated in the Star, the issue was a great success, being about three times over-subscribed. The result has been that \\ je who subscribed for, .say, 100 shares, will only get 25 shares, so much has t!:c proportion of allotment been riiluced. The loo share subscribers doubtless hoped to get at least 50 shares, but they were disappointed. Having made a contract to deliver a certain number of shares within a cerUin time, and not being able to get the shares at 85 from the company, there was nothing for the shorts to do but get down to the stock market and seek the goods there. The most natural thing that could occur there in the event of such an abnormal demand for the stock was for the price to rise, and rise it did with a hop, step and jump. Yesterday the final transaction was at 89 3-8, but at the opening of the market this morning, 90 was the figure asked, and business commenced at that basis. The next sale was a point higher, at 91, and it was then that the shorts took fright and plunged in to get the stock they needed, no matter what the price might be. There is not much sentiment in business, and when a man wants a thing very badly, in fact must have it, the price is very likely to go up on him, and that is just what happened to the steel shorts. The price went up to 95 so quickly that it almost took their breaths away. Once the shorts got what they wanted the price assumed an easier tone, and gradually dropped back to 92 1-2. The trading was not what would be called very heavy, about 800 shares changing hands. 187 LIQUIDATION. A Joint StiK t ComiKiny uiwn which a demand han been nia.lo for a ,K l.t aniountmR to Jjoo, and which rcmain« uni«id after 60 days, may be forced into Ii-iuidation by iu creditors. Application » made to the Court for a winding up order after four days' notice to the Company. The Court m.iy in it.s discretion ^rint the order forthwith or adjourn to make inquiry. The Company n.ust show its books. After the order h.- b..< n made and a li.juidator api^inted, no transfers of .tock rrn be effected, »nd the busineu of the Company must cease, unless the liquidator deens It best that It should go on. With the appointment of the liquidator the functions „f the directors cease, for in him is vested full j)owcr to do all thing, necessary to wind up. He may appoint a solicitor to assist him. An execution cannot be enforced against a Company in liquidation, and remedy against it cannot be obtained by suit but by an order of the Court. The li.iuidator is subject to the Court. I le must noi deiwsit the Company's money in the bank in his own name only, but in his official capacity, and he must produce the bank pass book at meetings. He is i)aid as the Court directs. After the final order is made, the money in hand is deposited and left for three years subject to any legitimate call, and at the end of that time is paid over to the Receiver-General. The Statute of Liquidation in force in Ontario is R S O .88^ cap. ,83. The Dominion Winding-up Act is R. S. C. cap. „.,, as amended ORNAMENTAL DIRECTORS. -' -stom has grown-up in England in connection with Hoards of Directors of Joii .k Companies that has both a serious and amusing side. Promoters of new joint stock enterprises often endeavor to attract subscriptions to the stock by the parade ofa Board of Directors containing the names of people of title and sociil position, who are secured as directors purely on account of the handles .v.achcd to their names, while the qualification is provided for them without investment on their part. The remuneration paid to these directors is usually a guinea (^^ 1 i o ) for attendance at each meeting ; and in th- financial world they arc humorously called " Guinea Pigs. " / v^ Apropos "the above I clip the following advertisement from an English paper of recent date . - 011 DIRECTORS WAK ED-OF GOOD SOCIAL STANDING- for a new 17 Company now in course of formation ; qualification will be found for selected applicants and remuneration wjlj be on a liberal scale. IM To this HI rcplio* arc ulatwl to have iK-cn rccuivtd ; - One carl, i viiruunt, » lxiron!t, 7 liaronct!!, i knJKht, 13 honouraltlorih Ameri n-tllfaa lluiikiiig t'o. .., JI'Vil llaiik iif Caluiia tS«w llruntwit.k Suva SirtU .... '■'■"t'!« « iiiMik ..f iiui'ifai l'>-'.|ik. Hank of N. II. >' Mulilwn'* .... 1 i.i,i.ltank, Halifi.,.';; 1 ariiiuuth Ka^Urtl Townihip* ■ lij^hvLtKa {•rovin.ialll..nk„fCaM,|'a' 1^ Kiiuiui! Nali.miilo . . jKn haiiit Uank uf Cinaiia Mi>nlru«l MiilftulM Uiii •un Ihink uT CiuuUa Hr. 4h Cututrihia . . . } a.u,lian llank uf Commcrci I'oiiiiniun Il.uniltiin I riipvrUI Oritario . Ottawa . . .'^tiinilan i'liriinto I'raiters VV'c»t«rn LOAN COMPANIES. •.FECIAL ACT WIM. ANt> ..NT. Can,vla IV,™n.n. .„d ATwlcm CatuJa ■>lorlgai;c Corporation UNI.KK llUll.niNi; ■iOCIETllt% ACT, Acri. ultural Savinji. and I,,»n Co.'. loronto .Morti;nKe Co Can:iUun .SavinK» and l^m iCo " ' " • ".munion Saving, ami lnv,»t,n,n, Society jjoron and kn. I^n and Saving, Co ' iTr'. ."!"< ' '".'"J"t and l^n Soci.t, [•an, ,d lankinK and Ixwn Co l-mdon l/)an Co. of Canada o";"™ J-^" ""'I l>'l:«nlnre Co./i.ond, On .1 no U«.n and Saving., Co., 0>h.*a ' toiile > Loan and Dcposil Co t-NtlER IKIVATK AC IS. <-uit al Canada l^jan and .SavinKs Co. . m',"„ V i '-■'?■ '■" i* '^«V. Co.. Ltd., do Man. *i Northwcsi L<«n Co. (Dora, tar.) "Tlir COMfANtEs' ACT," 1877.1889. Imperial I.oan and Invc«ni.nl Co. Lid ean. Landed and National InH Co., Ltd Kcal fcsutc Loan Co "XT. JT. STK. LETT. PAT, ACT. 18-4. llritish MortRa™ Ixian Co. . . Ontario Industrial I.o.in and Inv.'Co!" I oronio Savingj and Lou Co CANADA'S STANDARD BUSINESS BCXDKS DESCRTOED. A 38-Page Illustrated Catalogue describing ''The Canadian Accountant, NOV IN THE I2th EDITION, e e 'Joint Stock Company Bookkeeping/' NOW IN THE l(Wi EDITION, e e o t> >t "Promissory Notes,Drafts & Cheques NOV IN THE 9tk EDITION, Will be Forwarded Free to any Address Throughout the World • e e These Books have a wider demand than any similar works published in Great Britain or America. Address, ROBINSON & JOHNSON. F. O. A, BELLEVILLE, ONTARIO, CANADA. 1 ESTABLISHED IN »86«. THE FAMOUS ONTARIO BUSINESS COLLEGE (AHilUted with The Institute of Chartered Accountants.) 24 YEARS UNDER THE . . . SAME PRINCIPALS. This Institution continues to occupy its pre-eminent position as the Most Thorough and Most Widely Attended nusincss College in Amcriea. Every section of Canada and the United States eleven of the West India Islands, South America and England have been represented among its students. THE TWELFTH EDITION OF *' The Canadian Accountant, ft The Celebrated Text Hook of ihp D n r- . u- u ■ • iiooK 01 the O. n. C, which IS in demand throughout the English speaking world, was recently issued from the press. t^^'^ !l™f exceptional success, both In teaching and In authorship, places Ontario Business OoUego far Send for the O. B. C Catalogue. Address, ROBINSON & JOHNSON, f. o. a, BELLEVILLE, ONTARIO, CANADA.