£X£ ^jB^ : '-W : : JP' '8c' ^^t «-' ' "~L ^^T' ' ■ jflr'! : -. : ::.^sisr ; jBfc: «t38y-' •ja f «»i.*a :H! '.*:'v.'.T: ::/''.: : '.•.::? ;. .". .'-■ :.::'. '-"-x£r.^i*;U" Ibbj^bB^BBH^B^b : . : - ; -?& vv. f^ -.::'• : !.v.:. .•.:..•:•: •-:.: 5 ::.:.. •...^.•.r/-'^: s - The New Inductive Bookkeeping -by- SAMUEL H. GOODYEAR, A. M. Joint Author of the Goodyear Commercial Series CARL C. MARSHALL Author of the Learning by Doing Series AND LLOYD E. GOODYEAR, Master of Accounts- Joint Author of the Goodyear Commercial Series CEDAR RAPIDS, IOWA GOODYEAR-MARSHALL PUBLISHING COMPANY 1913 Copyright, 1911 Goodyear-Marshall, Publishing Company Introductory The New Inductive Bookkeeping comprises a thorough course in General Bookkeep- ing-, and Office and Accountancy Methods. The careful working out of the course will pre- pare the student for more advanced work where special column books of various kinds are used. The aim of the work is to present, (1) a logical and systematic development of the underlying principles of Debit and Credit; (2) an application of these principles showing the forms and inter-relations of ledger accounts; (3) a further illustration of the principles as applied to Journalizing; (4) a progressive series of sets of transactions, carried out as nearly as possible as in actual business, requiring records illustrating fully all the general methods of modern mercantile accounting and business procedure. The Text is bound complete in one volume, and Parts One and Two are also bound in separate volumes. It is believed that the student who masters this course will be well prepared to do the work required in any ordinary bookkeeping position. THE AUTHORS. 4C2229 CONTENTS-PART ONE PAGE Study of Accounts 5 Original Entries 25 Journalizing 27 A Model Set of Books 31 Set One — Business Practice (Jobbing Grocery) 47 Set Two — Bookkeeping (Flour and Feed) 85 Set Two, Supplementary — Bookkeeping (Wood and Coal) 90 Set Three — Bookkeeping (Produce and Provision) 95 Set Four — Business Practice (Retail Grocery) 103 Supplementary Journalizing" Drills 122 Elementary Exercises Business in its broadest sense is that which busies one, generally referring to the occu- pation in which he engages for a livelihood, as agriculture, manufacturing, commerce, art, or the professions. In a commercial sense, business consists of the exchange of values, either in material, money, or service. A farmer may raise more farm produce than he can use. A mechanic may manufacture more products than he needs for personal use. A laboring man may be able to do more work than is required in his own home. Each of these persons we have named has a sur- plus of products, skill or labor, and other persons in every community have need of their sur- plus, and they in turn have something else of value to give in exchange for what they want. Necessity for Business Records. Many thousands of years ago men who were engaged in trade learned that it is not safe to carry on business without keeping written records of all transactions. The process of keeping such records is called Accounting or Bookkeeping. In Bookkeeping, the records of business transactions are kept in various kinds of blank books, each conveniently ruled to show the dates, amounts, and character of the transactions, and their results as they relate to the person for whom the books are kept. An Account is a list or group of items of money value under one heading or title, which relate to that part of the business indicated by the title. Thus the group of items showing payments and receipts of cash, is called the Cash account, and the group of items showing the sales and cost of goods, is called the Merchandise account. Accounts are also kept with the several persons from whom we buy or to whom we sell on credit. The number and kinds of accounts required depend upon the nature of the business. Bookkeeping consists mainly of two processes: (1) making a careful and plain record of each separate business transaction at, or near the time that it occurs; (2) arranging the several amounts into various groups or accounts. As the student cannot learn to make orig- inal records intelligently and in proper form without understanding the form and nature ot accounts, we shall first give attention to the latter. The several accounts of a business are kept in a book called the ledger. The following cut illustrates the rulings and entries for an ordinary ledger account with cash, or a Cask account. The student should study this form carefully, and the appended explanation of its several parts. Note. — In ordinary business, the cash account is not kept in the ledger, but in a special book called a cash book. We have chosen to illustrate the ledger form of a Cash account, however, because it is prob- ably the account that can most easily be understood by a beginning student. —5— NEW INDUCTIVE BOOKKEEPING FORM OF A LEDGER CASH ACCOUNT '£ /.rhi £^ZS~ ? /£ yjr T-ZL /# A / 72 U m ^ J/n 20 u / 62 n? / z/C ¥■ JT / 7 T i> z s EXPLANATION 1. The above form shows a Cash account with records of four amounts of cash received and three amounts paid. 2. Observe that the account is divided by the three-line ruling into two equal parts. The part to the left of the dividing line is called the debit side of the account ; the part to the right is called the credit side. 3. The title of the account, "Cash," is written over the middle of the page, on the first blue line. The title is usually written in a somewhat larger or bolder hand than the other writing on the account. 4. Notice that the debit and the credit side of the account have the same kind of rulings. 5. An entry is what is written on the line of either the debit or the credit side of an account. Thus, each entry on the account here shown, consists of the date and amount. 6. To debit an account is to make an entry on the debit, or left hand side, of the ac- count. Such an entry is called a "debit entry," or, more briefly, a "debit." • 7. To credit an account is to make an entry on the right-hand, or credit side of an ac- count. Such entries are called "credits." 8. The total, or sum, of either money column of an account is called a footing. The difference between the footings is called the balance of the account. If the footing of the debit side of an account is greater than the footing of the credit side, the account is said to have a "debit balance." If the footing of the credit side is greater, it has a credit balance. QUESTIONS How many debits are there on the account here shown? How many credits? How many entries? What is the amount of the debit footing of this account? What is the amount of the credit footing? What is the amount of the balance of this account? Has this account a debit or a credit balance? General Purpose of Accounts. There are four fundamental elements relating to every business, viz : The Resources, the Liabilities, the Gains, and the Losses. By Resources, we mean everything of value belonging to the business ; as money, mer- chandise, or other property, and amounts owed by others to the business. By Liabilities is meant the debts which the business owes to others. PART ONE— STUDY OF ACCOUNTS By Gains is meant any values received for which there is no further obligation to pay, as profits obtained by selling goods for more than their cost, interest received on notes or other debts owed to the business, discounts or rebates allowed to the business by others, rents paid to the business for the use of property by others, etc. The Losses of a business include the ordinary running expenses, as rent, salaries, taxes, etc., usually kept under an Expense account, also discounts allowed to others, and interest on the liabilities as well as the loss sustained by selling goods for less than their cost. The general purpose of accounts is to afford the proprietor complete information as to these fundamental elements. THE PRINCIPLES OF DEBIT AND CREDIT In the system of bookkeeping called "Double Entry," whenever an account (or ac- counts) is debited, some other account (or accounts) is credited for an equal amount. GENERAL RULE 1. Debit the account that costs or receives value. 2. Credit the account that produces or gives value. Let the student study very carefully the following: APPLICATIONS OF THE RULE 1. When the proprietor invests cash in the business, we debit the Cash account, which receives the value turned into it, and we credit the proprietor's investment account, because the proprietor gives the Cash to the business for business uses. 2. When we buy merchandise for cash, we debit the Merchandise account, because the merchandise costs us the cash paid out, and we credit the Cash account because this account gives the value which the merchandise cost. 3. When we pay our rent in cash, we debit the Expense account, because the rent serv- ice costs value, and we credit the Cash account because this account gives the value which the rent costs. 4. When we buy goods of Mr. Jones on account, (that is, on credit), we debit the Mer- chandise account, because it is this account that has cost the business the amount we owe Mr. Jones, and we credit Mr. Jones's account because it is this account that has given to the busi- ness the value of the merchandise. 5. When we sell goods to Mr. Smith on account, we debit Mr. Smith's account, be- cause it is this account that has received the value of the goods we have parted with, and we credit the Merchandise account because it is this account that has produced the value repre- sented by what Mr. Smith owes us. 6. When we pay Mr. Jones cash for what we owe him, we debit Mr. Jones's account because this account has received value and we credit the Cash account because it is this ac- count that has given the value represented by the payment of our debt to Mr. Jones. 7. When Mr. Smith pays us cash for what he owes us, we debit the Cash account, be- cause this account has received value, and we credit Mr. Smith's account, because it is this account that has given the cash received. The logical application of the Rule of Debit and Credit produces the following results: (a) The Cash account is debited when cash is received and credited when cash is parted with. (b) The Merchandise account is debited for all purchases and costs of goods bought, and credited for all sales. (c) Persons are debited for what they owe us at the beginning of the business, or for what we pay or sell to them on account, and they are credited for what we owe them at the beginning of the business, or for what we buy or receive from them on account. NEW INDUCTIVE BOOKKEEPING Keeping a Set of Books. In actual bookkeeping, the first step in connection with any transaction is to write a history of it in some book (usually a Journal, Cash Book, Sales Book, or Invoice Book), which is used for that purpose. This first record is called the original entry. Afterward, the amounts recorded in the original entry are posted to the accounts affected. In the following practice exercises in the use of accounts, the records printed in the text-book describing the transactions may be considered the original entries, and the student's work will be to prepare the required ledger accounts, and make such entries in these accounts as are required by the General Rule for Debit and Credit. The student's first step in practical bookkeeping must be to learn to apply this rule to the different accounts. ILLUSTRATIVE SET NO. 1 CASH TRANSACTIONS RELATING TO THE PURCHASE AND SALE OF MERCHANDISE The simplest form of business is that in which goods are bought and sold for cash. The bookkeeping for such a business would require but three accounts, one with Cash, one with Merchandise, and one with the owner, or proprietor. The following set shows the account records of a series of transactions for a strictly cash business. The forms on page 9 show the three accounts as they should appear after the required entries have been made for each transaction. Let the student read each transac- tion and determine the required entries, working with deliberation and care until he clearlv understands the rule for debits and credits, and can apply the rule to all transactions of this class. TRANSACTIONS Jan. 1, 19 — . T. M. Carpenter began the buying and selling of corn, oats, and wheat, for cash, starting with a cash capital of $600. Note. — Assume that you have opened accounts with T. M. Carpenter, Investment, with Cash, and with Merchandise as shown ,on page 9. As each transaction arises, name the accounts to be debited and credited, then refer to the model form to compare the entry you would make with the one actually made. Take time to analyze the entries carefully, for by so doing, you will be able to correct at the start any tendencies to error. Jan. 2. Bought for cash 200 bu. wheat at 75c. Here debit Merchandise and credit Cash for the reasons stated under "General Rule for Debit and Credit" on page 7. Find the entries. Jan. 3. Bought 300 bu. corn at 50c, paying cash. Debit and credit as in previous transaction. Jan. 4. Bought for cash 400 bu. oats at 30c. Find the entries. Jan. 5. Sold 100 bu. wheat at 80c. Find the entries and give reason for each. Jan. 6. Paid cash for 200 bu. corn at 45c. Find the entries, also those for each of the transactions that follow. Be sure that you can give the reason for the required debit and credit in each case, referring when necessary to "Applications of the Rule," on page 7. Jan. 7. Sold for cash 300 bu. oats at 35 cents per bu. " 8. Bought for cash 300 bu. corn at 45 cents per bu. " 9. Sold for cash 100 bu. oats at 40 cents per bu. " 10. Bought for cash 200 bu. corn at 50 cents per bu. " 11. Sold for cash 100 bu. wheat at 80 cents per bu. " 12. Sold for cash 500 bu. corn at 50 cents per bu. " 13. Bought for cash 200 bu. wheat at 75 cents per bu. " 14. Sold for cash 400 bu. corn at 55 cents per bu. PART ONE— STUDY OF ACCOUNTS Jan. 15. Bought for cash 400 bu. oats at 25 cents per bu. " 16. Sold for cash all the grain on hand as follows : 100 bu. corn at 55 cents per bu. 200 bu. wheat at 80 cents per bu. 300 bu. oats at 35 cents per bu. Enter the above items in one amount. It is now assumed that Mr. Carpenter, having sold all his grain on hand, wishes to know the results of his series of dealings as shown by his accounts. ACCOUNTS IN ILLUSTRATIVE SET NO. 1 \z^9t/^^^-^i^^G^J^ , 6 0 w£k /I // /J t IS 'jL /J- ^?±r_ 2 c? 6 J~ Ay /#— /U 7r 1 / j- 4 t v/V 6 -66 ^ 4-? / ... wry. /J *A 7 ^r / r<3 M 4J _£_ / a / *'# o zt«/ ':-:■;■,' **T&&Xr$ir /#... II 1 ■ (fasrt&s '/ 2?^r AL / -^ \f? t ^^ ^- f d> //S\ 22 /A LA s# so ¥3 7 7 A / a (2 ^■0 jra 3 9 S0 THE OLD TIME JOURNAL— RARELY USED IN MODERN ACCOUNTING yj^^^z^C^^z^ /&, /f/ty . 7)7y77^z^y TT/czU^ // 7, — /z — tZslsCZs-yT^S c.^/^^^eu •^L&^ /¥■ /J- 777 TT/c^u^. ¥3/ 7* T/ L / 0.0 J V S0 J-0 S-0 ¥3 7 7- 77 6,0 / o J¥ S0 SO J-0 After making the day book records, trie debit and credit for each transaction, with the ledger title of the account affected, were entered in a book called a journal. This book had two money columns, the first, or left hand, column was used for debits, and the second, or PART ONE— JOURNALIZING 27 right hand, column for credits. The process of determining the debits and credits arising from a transaction and entering them respectively in the journal was called journalizing. The subsequent transfer of these amounts to the ledger accounts is called posting. The student should now read the original entries in the day book, shown on page 26, and notice how the required debits and credits arising from the several transactions were entered on the journal. Journal-Day-Book or Modern Journal. Bookkeepers, after a while, found that it is much more convenient to include the history of a transaction and the debits and credits arising from it in one entry, and in one book, instead of using separate entries and separate books. The book used for this purpose was at first called a journal-day book, historical journal, explanatory journal, etc., but the book when now used is usually referred to simply as a journal. This more modern form of journal shown on this page, records the same trans- actions, as those recorded in the separate day book and journal which precede it. Practical bookkeepers now seldom use the two-column journal for original entries, this book having been largely displaced by the cash book, sales book, and various kinds of special column or columnar journals, having more than two columns. The two-column journal as here illustrated should be thoroughly understood by the student, however, since it is the basis of all other books of original entry. THE JOURNAL-DAY BOOK, OR MODERN JOURNAL yjfc&^Z^^Y^^ /#, /f - // /2 A/ /s SO ^S^cy. /%-£*&c. vS~ Z2. S0 V-3 / 7 s T^^^X&y^TfTe^i^T- £?- -/u^-. /t^cz^>tA-£~ o / o o J¥ 77* (Z> .// SO SO SO ¥3 ? 7 s 7 f 7 £ / J¥ S0 SO so Journalizing. In the narrow sense, the term "journalizing" means recording the debits and credits of a transaction in the journal, but in a broader sense the term is used by bookkeepers to imply a mere oral statement, or mental judgment as to the debits and credits arising from a transaction and without regard to the formal entry of the transaction in a journal. - In this course, the journal, as a book of record, is used only where the use of the book would be justifiable from the standpoint of practical bookkeeping. But in the journalizing 28 NEW INDUCTIVE BOOKKEEPING drills, at the close of Part One, the student is required to prepare journal entries for many kinds of transactions that, in practical bookkeeping, would not actually be entered in a journal. The use of the journal for this purpose is simply to afford the student a con- venient method of showing the debits and credits that arise from a large number of transac- tions. A practical bookkeeper must be able to form quick judgments as to debits and credits, and to acquire this facility, he must have much practice in journalizing. The student should carefully study the form of entry, and the debits and credits of the following illustrative journal entries. The debits and credits are, of course, determined by the General Rule that the student has heretofore applied to the entries made directly on the ledger accounts. Note. — The so-called "Rules for Journalizing" given in many texts on bookkeeping are merely the application of the general laws of debit and credit to entries made in the journal. ILLUSTRATIVE TRANSACTIONS FOR JOURNALIZING 1. March 6. Sold to L. C. Tuttle for cash, groceries per bill rendered, amounting to $39.60. fa 7t?*u*s. 37 &a 3? Co 2. April 10. Bought of J. M. Bell & Co., on account, 12 tons of coal in store. (2jLr. /tP (Zszy?ze^rz^l-£-s rfD#¥ _^£t- ^C^-^t^Le^ v r $4.00 for use ^y 3. May 9. Sold to O. H. Spence, on account at 30 days, 15 brl. flour @ $5.25 and 5 brl. pork @ $13. 4. June 15. Paid T. C. Price store rent for June in cash, $45. ts /-a*^/ /, C li^^Jc-e^ dtH^JL^ir-P" ¥3- 5. July 7. Paid cash for repairs on property at No. 9 Oak Street, $21.50 ¥S JUy 7 /^--t^^C/^-^-^i-^^sz-*-^-"/ so 7. Sept. 14. Received from A. C. Harmon, cash on account, $25. J^f-. /¥ C&dsf^' Cf. Cs. A^iA^rurn-- /hrZA€^isi*-&*f 0-t^S a^C^csr: zs 4MSO I 25 PART ONE— JOURNALIZING 29 8. Oct. 1. Bought of Walker Bros., on account at 30 days, 75 bu. potatoes @ 40c. O^. / 3 3 9. Nov. 16. Paid the Union Produce Co., cash on account, $125. ??w. ;i f^cist^e/ - & C-^e-^^C--- f£j- >s- t-yyf j~v y r ^c^--r9^€^Z(^i l -€^\^i^cZZZ^-^ -^£-l>C<£-c^L£J74 f < ^ yj-£ J £{. ^z-^iJL^K^s (_---gg-6^C^y-7-t--^€ < g>»-t-ig'f t^SifyS >o >' j-a / £s" ro J 73/«^v-(^ -^£tsX^<^x-c*S yjyu.ft / 7-S- 7< ^C^^Zm/ e~n^s/ltzsn*i( 1<5~C.¥0 ^77* 7 : tefJt&'/tM oy€<^-A^<^ , Jfc W^ /£j:ro ". />/)'< 3 ^P^A2^ct^ny S3 z± fy ,W, W,7~r ■£-*' 7*~ ^ ^^ )CSU^^£^£5^ J^ *A0 )S&^<^ d^ ys/J^tSCXz^e-^zS (Z> y '/J.^ -£*- ^ * & '*=££> / C^ Zi^x 24 . s^xj- j . J^C^//^{. ty^Xi^m^S olSc .jr.* yJ£ 0* %£L*ns (£), /^~^ yjT*/ >J fytZtes. yJ^J~ gz^y, J ^J- PART ONE— MODEL SET OF BOOKS 33 PAGE TWO OF THE JOURNAL /? g-V sty, &f>L. S *L/<^ '# J Cs(. Sfc^dL&-???-*%^ f&J (^a^a^/ J / '/ J~a >J~ a-y ^L^ 2£^^^V^}^ f ~yr. /-st /tys^ />-- ^ £± /j-£ ?~6 y iX^Zj ^Z_ JTJL. 0~?tss?z^i5/- /-a^-/y(yL*Jpy (Q JaI.-To -^ J Y3i.^*-&~ -4^ k %3£.^^j* <2^.4*J„. ■9* /^< > *Z2*26.&^ IsO^S* ■-*Ci**jr . /-f^ ^T/f £JL. 2%^L ^>x / r S^J?^ S s*r jCfes ^yS- SY^-r*-- /J" &ti^£i*j && *j£t~<'*/ (g >. ^-^/ /r J±. /fy ' >-■/" ^^£^ f ^U^- / ^-» / >- ^JAl^t^7<~^t^/-~ £j- / ^ // 7 ^Le^. (jU^C' 6£ (g, *//.- /r <7(0-£is\ ft ^^4^z2^<-^^^- ^=f?z^r- £o r£ J */o Jo s ^~a9^ y ^^7~ /f j-0 ■^ o2- /J '7 J-o J/ ^t=3z2L-^£^z--e-e^ '/J-y 4^ The Ledger Explanation Column. This is the wide column to the right of the date column in the ledger. It is used for entering the initial of the book of original entry from which the amount has been posted. (J — journal, C — cash book, S — sales book, P — pur- chase book, etc.) This column is sometimes used in the Bills Receivable account for entering the names of the makers of the notes, and in the Bills Payable account, for the names of the payees. It is often used in personal accounts, to enter the terms of sale. Checking the Ledger. This means going over the postings from the books of original entry to see that they have been properly transferred to the ledger. It frequently happens that, through incorrect postings, the books are "thrown out of balance," that is, the sum of all the debits, as shown by the proof sheet, does not equal the sum of all the credits. In this case it becomes necessary to locate the error by checking the ledger. In doing this, each entry that is verified, is checked by means of a check mark ( \/ ) entered lightly with a sharp- pointed pencil, just before each amount in both books. EXERCISE You may now check the postings in the model ledger, taking first the entries from the journal and then those from the cash book. Use a sharp-pointed, hard pencil, and make small neat check marks. This work will greatly aid you hereafter in the work of posting, the use of folio numbers, etc. When you have finished this exercise, all the entries in your books should show check-marks. The Trial Balance. This is a proof sheet in which the balances of the several accounts are listed instead of the totals. Since the sum of all the debits of a properly kept set of books equals the sum of all the credits, it is evident that the sum of all the debit balances of the PART ONE— MODEL SET OF BOOKS 35 RIGHT FOLIO OF THE CASH BOOK ^^X_^^/ * V -2-*> y¥v-T<-^r / '/ 2 C^^-^^T-^e^ Ptbi/y Movies eL^r-/t&- '7 7 j/ A±J~7 ? -Z- SS* v f-77« > 7 sr C 2?ju~ .&0U *z^t?C-<~. .Ce^ /*- 'f- ZW" •*-' £ / >'*<>./ jro ■ _J6*^ / / f £j 7 / J-4 >«/ a / /** j-o yJ~ a y /j-t >f y sr rC -J- *- #7 *J~0 Jo y / >f 6* > 7 -A y 7> /e J *Jj~f ^o yr y >-70 j j r v *~0 *? r -J- y J-f ro y d y r 7 jr* // & 7" it Jo Cs y M /J- J -£> J-e PART ONE— MODEL SET OF BOOKS 37 PAGE TWO OF THE LEDGER • J'f- y / 7 o? />J* <& - 7 9 J-0 \ *=* Ld ■ &(^Csn. ■ / >onsT ^<* J"" >f a >^ sr v £ / > J- /r ?- - / j-£ / '* *- ' 7 a a \ /&^& >& K^-t^zZ^-i u. 7 7f- "?- ££&**. 1 ** £ / "7 J-0 JW 7* / / 7 s £.r Jfa j- & J J a 7- juj- jU & J f * >/ r 1 3- 7 *7- £ / V ( >tt> 1 '• v ^ >■ /*£ ■4~0 . / £ / iSZt/ f (5 >- / o ?•* X24. '^sf- — *" ^ d f-r 'f- '9- #Z*c/. T^r A ■y / **-J- 7' >o & J /s- J -J? / ff M* j. < ^ ^ 3- *JF ~y^ •2 <*—l?—CC*- -rz^s /f~ '.<7- J^. J / / £j 7f QeL*>. XL e, >- 4f* r *? f >■ 7 J- ? ^ s -J J- 7^ &* T ?/ 0-^-e£ -4tsK S * ^ / 'f /?- JLrv rr n 7- ?~7* j&sn/ 7 fi. 7 >oT- J-0 ir jr %£^-* ■2-e^7* '^- /j-£ i/asff. >7 • ?- sj-t: r -t/cry ±2- ^T^^-rc^Tz^zLs^^eT^C^e^ ^77 */ 7^1 ^j>? £s- / ay £r ■^C> ■ T --i>i^ f^-7S- J 2- f £* A*3 Z4 V- > zjj?r^/ 7^ .Jc*^**' ,.? '* 'f- ^ (■ -e^-^-^C^ 4tS~y ±2_ ^T/Y-^^^^^^^^-^^^-^^ >£ > ( 7-7£c^£Zc^l^> -/ z-j~a a/ a- J J7± J^£I Z£l Jfc^?- ty*-*^**^. J--L/-V err r-f 6a 6 a J Afs~ *& /.>/ 77 y/y. ?J C-?*^-^^^ ^£^- / try £ \f fa^g^^y-. '} £j- (.jro ^TT^t^CZf. y^&trJ-c ?r- ^(uyf^Xu^^)P^(Z^*^J C£j>^L^- 3y«.f< ±jL/d^ /fro' \^t^t/-7^/. 2-TO. 7-6f.- / t>f~ #o yj 32-: ££- W^-z^tf-^S^z-S-^z-^ - 9 77* 7 f(_^^--^7?!t^?-L^ J ?-> ff X^yt-e^^Csr?^-- ^^/^X^ As? <7 7 A ^L? The sum of the losses of Expense, Teams, Furniture and Fixtures, $173.05, is then ex- tended and deducted from the total gains, leaving $322.88 for the net gain of the business, which, being the balance of the Profit and Loss Statement, is entered in red ink, and followed by closing rulings. The Balance Sheet Proof. In this form, the net gain, as shown by the Profit and Loss Statement, $322.88, is added to the original investment, $3774.75. The result, $4097.63, is entered in red ink, and is the present worth of the business. As this result agrees with the present worth, as shown by the financial statement, the balance sheet is said to "prove." Arrangements of Accounts in the Ledger. With reference to their position in the ledger, accounts may be conveniently divided into two groups. (1) Personal Accounts, and (2) General Accounts, which terms include the account with the proprietor or partners, and all other accounts except persons to whom we sell or from whom we buy on credit. (Accounts Receivable and Accounts Payable.) Since the general accounts are known and are few in number, their titles and the ledger 42 NEW INDUCTIVE BOOKKEEPING space to be reserved for them can usually be determined at the time the books are opened. As a rule, the proprietors' investment accounts come first, and these are followed by the othet general accounts. The relative position of the latter is usually immaterial, and the space to be reserved for them will depend on the nature of the business. It may or may not be desirable to have the accounts receivable and the accounts payable occupy different parts of the ledger. Ordinarily the personal accounts are opened in their proper order, as determined by the posting. The order of posting the books of original entry is usually as follows : (1) journal, (2) cash book, (3) purchase book, (4) sales book. This order of posting will be followed in the sets of this book. Closing the Ledger. To close a ledger is to balance and rule up the commercial ac- counts, also, any other accounts that are in balance, and which are not to be continued. If the business is to go on, the financial accounts are not usually closed. The Loss and Gain Account. An account under this title is sometimes carried on the ledger for the purpose of showing certain exceptional losses or gains, that cannot consistently be entered in other accounts. Thus, if we were to lose a sum of money by theft or otherwise, or if we were to lose a debt through the failure or bankruptcy of a debtor, such losses would be charged directly to the Loss and Gain account. Also, if the business were to gain cash or property through some exceptional circumstances, or if a bankrupt debtor whose account had been closed into Loss and Gain, were afterward to pay us what he owes or any portion of it, the gain would be credited to Loss and Gain. In a complete scheme of accounting, it is usually advisable to keep tivo accounts under this title. The first, "Loss and Gain," is for the entry of the exceptional losses and gains al- ready mentioned. The other title is "Loss and Gain Closing." This account is used to ex- hibit the amount of net loss or net gain, as shown by Expense, Merchandise, Interest, and other commercial accounts. These items are entered in the Loss and Gain Closing account only at the time the ledger is closed, and as a part of such closing. Thus, the Loss and Gain Closing account for the Model Set on page 44 shows the items of gain or loss exhibited by the profit and loss statement for the accounts with Merchandise, Interest, Expense, Teams, and Furniture and Fixtures. Procedure in Closing the Ledger. In the process of closing the ledger, the following steps are taken in the order given. Let the student study these and the closed accounts on pages 43 and 44. 1. The inventories of Merchandise, Expense, Teams, and Furniture and Fixtures (as shown by the financial statement) are entered in red ink on the credit side of these accounts. (Find these entries.) Red Ink Entries. It is well here to note the use and purpose of red ink entries. The ob- ject of using red ink in a ledger entry is two-fold: (1) to indicate that the entry has not been transferred from any other book of record or account, (2) to show that the opposite debit or credit is to be made later on. Thus, in your present closing, the Merchandise gain is entered in red ink on the Merchandise account, for the reason that this entry was not trans- ferred from any other book or account. The same rule holds in the case of the loss entries on Expense and Furniture and Fixtures. But when these entries are transferred to "Loss and Gain Closing," they are entered in black ink for the reason that on this account they are trans- ferred entries. From the foregoing rules, it follows that all closing or balancing entries, also, all inven- tory entries, are to be entered in red. In general, the red entry may be considered as a sort of "danger signal," indicating that the entry has not come to the account in the usual way, and that it is yet to be forwarded in order to restore the balance of the ledger. 2. A new ledger account is opened under the title "Loss and Gain Closing." The ac- counts with Merchandise, Expense, Furniture and Fixtures, and Interest, are then closed into this account as follows: The net gain on Merchandise fas shown by the statement of profits and losses). $488.96. is entered in red ink on the debit side of Merchandise, and in black ink on the credit side of Loss and Gain Closing. The Merchandise account is then ruled up. PART ONE— MODEL SET OF BOOKS 43 PAGE ONE OF THE CLOSED LEDGER &,tf.y&A/sj^^^z^^ ^= i / ^C^j3^^^ ^ 77* f % s-r "">f 7 / i «'f7 {J ■^£-0< / ft*sShz^C^er-^n-<^e^ *'■*} {j sy% • / e \%^cZ~stt^t iC*_^ \&S 'f~ /^>-r J-0 Jh-rtS / J / £j 7J~ ft J #* / / r* //O r */ IT f / / OJ 7- J ft- / yyr /' ft a / <*•<# y¥ ft / /& ^ro >J~ ft y / j-£ yf ft / y /r yc ft -JL y *7 j-o Jo ft JL y £>f Co V ft J y 7 y /O ft J •Vyy yo ?-r J y >j* J/ /Zi?L^C^Zs ^\ ■x- ft 1 J y j-f ro -J> / 7 6/ J f 7 J /£ / /£ j£X£ ( ^Jrrr -*a-*s?tI£i>-*-ts /■ — C/ / oT \ro Mpc^- j/ trr>z^z^-£^»z^Z5-7 t -^^ ^6 > J~a J«OT^ J7 ^^^zJ^Z^z, ■>£ '%- iy >J-0 - 44 NEW INDUCTIVE BOOKKEEPING PAGE TWO OF THE CLOSED LEDGER V^s 'f- '7* •3a & LrY *=A r'^r?-7 < -z ^...rr? i/ ^(^-c (?-? ? ^ -*u *ZztfK^*-£^*-^V?^Y ^-J~a ^L^: f^^rr ^^ ^£1 ^ -y i^r J^c 7 &. J/ A ^Z- -& C o 2^£L gjT^. tf^w/y^ 94> 2=!& -«-£--*: -<^ i_ ^ ■£-f-<£-<: * 4; ^C - £ . s C^L±&i. *A\^Ct* -Jf- '-?=■ > ^ -£ ><*-£ ^£> Jkm 2&. -A /r u ^ //• <3 r^- -*?- 4 Sj-<£ %3,'SA v i2. T-^ ->?- > tf ■A'/?6 -M£ of o^ jfZ //7 ^ >- which you will take from the Community Cash envelope. If the Community Cash envelope is not used you will receive it from your teacher. This is your cash capital and it should be placed in the cash compartment of your office file. Note. — For the convenience of student and teacher, the transactions have been numbered in bold faced figures. These figures do not represent dates, but for convenient reference they should be recorded on the left margin of journal, cash book, and sales book, and in the explanation column of the ledger. Counting Money. The ability to count money accurately and quickly is an important business qualification. In case a considerable sum is to be counted, put the bills or coins of the same denomination in separate piles, or in such combinations as to make amounts of $100, $20, $10, $5, or $1 each. These amounts are then added and the result recorded. The money should then be recounted, the coins and bills being combined and added in different order. Unless the sum is very small, never attempt to count money by taking the bills or coins "just as they come," large and small denominations alike. In receiving money, or in paying it out, always count and recount the sums to insure its correctness. Opening Entry. When one engages in a business for himself or with others, it is cus- tomary to write a short statement setting forth the name of the business, the date and place of beginning, the person or persons by whom it is to be carried on, the amount and kind of capital invested, etc. This statement is usually written in the journal, and the statement itself is called the Opening Entry. On page 1 of your journal, write your place of business and the current date above the ruled headings. Below these lines make your opening entry, following the form given on the next page, with your name as proprietor instead of T. M. Carpenter. When your opening entry is prepared, submit it to your teacher for approval. Note. — As this is a mere memorandum entry, the amount is not entered in the money columns of the journal, but in the cash book. SET ONE— JOBBING GROCERY BUSINESS 49 OPENING ENTRY IN THE JOURNAL \=£^&Z^&^^^ ^c^a^sy <^-gg^-?^^--^g<-^^>z--«g^^-<^^gX^ C^C^^^z^t^c/. L^tZ_^^y7^L^^. /? j ///? 3. Buy a lot of furniture and fixtures for your store room, consisting of shelving, counter, scales, office desk, chairs, etc., paying cash for same, $168. Office Course. Receive a receipted bill for the furniture, etc., at the Commercial Exchange, giving the cash in payment there, delivering a larger amount and receiving change if you cannot make the exact change. Tablet Course. Place the currency in Com- munity Cash, taking change if necessary. The receipted bill from the Spokane Furni- ture Co. will be found in your Commercial Ex- change pad. Remove and properly fill out this in- voice, entering the name of your town, the date, and your own name, as in the case of the receipt re- ceived in Transaction 2. Invoices and Bills. When goods are soid, it 'is usual for the seller to give to the buyer a complete list of the goods sold, with prices, terms, discounts, and amounts. Such a list is called by the buyer an Invoice and by the seller a Bill. When a bill is paid, the seller usually receipts for the payment by writing the word "Paid," or "Received Payment," below the list of items, and signs the firm name. A bill thus receipted is a voucher and should be kept on file as an evidence of the payment. In the present course your invoices are to be filed with "Receipts and Vouchers." Note. — An invoice or other voucher, should, of course, not be filed until the entry has been made in the cash book or other book of original entry. Numbering Invoices. It is a great convenience in bookkeeping to number all invoices in the order that they are received. The number is usually entered on the left-hand margin. You may now number the invoice received in the last transaction, by writing "No. 1" near the left margin. The Furniture and Fixtures Account. The purpose of this account is stated on page 20. The account is debited whenever we buy anything included under its title, which is needed in carrying on the business. It would be credited if any of this property were afterwards sold, but this seldom occurs. 52 NEW INDUCTIVE BOOKKEEPING You may now make a credit entry in your cash book for the purchase of the furniture, etc., bought in the last transaction. Except the date, your entry is the same as the second entry in the form shown below. FIRST TWO CREDIT ENTRIES IN CASH BOOK C^tz^zJty ds. 'f V* i G&^L&aa^A&L ^U- ^^tiC^ £j_S Now, file your Invoice No. 1 in "Receipts and Vouchers." 4. Pay cash for cleaning your store room, $2. Tablet Course. Deliver the currency In Com- munity Cash as usual. No receipt. Office Course. Make this payment at the . Commercial Exchange without taking a receipt. De- liver with the money a slip of paper with the ex- planation : "For cleaning store room." This transaction credits Cash and debits Expense, the same as in Transaction 2. Enter the cash credit in the cash book and post the debit in the second line of Expense account in the ledger. Write the page of the cash book 3 in the folio column of the ledger and the ledger page 2 in the folio column of the cash book. 5. Buy of the National Register Co. a cash register for use in your store, paying cash for same, $60. Office Course. Make this purchase at the Tablet Course. Deliver the currency as usual Commercial Exchange, taking a receipted bill, and and take a receipted bill from your Commercial Ex- delivering a ticket with the currency for filing in change pad. Fill out, and number the invoice (No. the office. Number the invoice (No. 2), as pre- 2) as previously instructed, viously instructed. In this transaction, Cash is credited and Furniture and Fixtures is debited as in Transac- tion 3. Make similar entries in the cash book and ledger, and enter the page-numbers in the folio columns as previously instructed. 6. You are now to purchase for cash a bill of Merchandise from Dalton & White, amounting to $289,75, SET ONE— JOBBING GROCERY BUSINESS 63 " — 1 — — — 1 ' Notice. If you are using the Office Course and are to deal through a General Whole- sale Office, enquire of your teacher as to the firm from which you are to make this and sub- sequent purchases. You will then make all your purchases from this firm instead of. from the firm named in your text. The Duplicate Order Book. In ordering goods at wholesale, the buyer usually makes a memorandum of the amounts and kinds of goods ordered. When the seller delivers the goods with the invoice, the buyer compares these with his order sheet to see if the goods delivered are the ones ordered. To avoid errors or misunderstandings, a carbon duplicate of the order is made, one copy is delivered to the seller, while the other is retained by the buyer. When goods are ordered through a salesman, the latter prepares the order, delivering one copy to the buyer and the other to his firm. In this course you are to make out duplicate orders of all Merchandise purchased, your "Duplicate Order Pad" being used for the purpose. Instructions as to using this pad will be found on the cover. The following is the form, except as to name and date, required for the present order from Dalton & White, (or from the wholesale firm designated by your teacher). LOCAL ORDER TICKET Phase Deliver - Terms You may now prepare duplicate copies of the above order, in your Duplicate Order Pad. Using the paper cutter, carefully tear out the original, (that is the first, or white sheet) for delivery to Dalton & White. Office Course. Deliver the order to the Com- Tablet Course. Deliver the order through mercial Exchange or to the Wholesale Office, re- "Outgoing Papers," and receive from the Wholesale ceiving a receipted bill and the merchandise tick- pad the receipted bill and merchandise tickets from ets, paying cash for the same. Fill out and number Dalton & White. Pay the required cash . through the invoice (No. 3). Community Cash as in the case of previous cash purchases. Fill out and number the invoice (No. 3). Verify the invoice, comparing the quantities represented on the merchandise cards with the items in the invoice, and see that all amounts are extended correctly. Use your paper cutter or ruler in separating the merchandise tickets in slips from right to left, spacing these slips in your compartment "Merchandise." This transaction requires the opening of an account with Merchandise. The debits and credits involved are discussed in connection with Application 2 on page 7. The accompany- ing form shows the credit side of your cash book as it should appear after the present trans- action is entered, and before it is posted to the ledger. The entry for this transaction is shown on the last line. Use the current date, as heretofore, for all transactions. 54 NEW INDUCTIVE BOOKKEEPING FIRST FIVE CREDIT ENTRIES IN THE CASH BOOK, FIRST FOUR HAVING BEEN POSTED (l^z^Ay &*± 7f P&m/ 2 /,. /fflf jA^ ^L Jb: 2Joc4^i/X c&z^A^ W^g^.^*. LAA ^hz^^zJ <*jZ^.^j& ~u> 2££ 1b£L Open an account with Merchandise on the upper half of page 3 in your ledger, and index the account as previously instructed. Now, post the cash entry to the debit side of the Merchandise account, making the proper folio, initial, and date entries in cash book and ledger as heretofore. After this posting, your Merchandise account should appear (with the exception of the date) like the accompanying form. File the Invoice as previously instructed. THE FOURTH TITLE IN THE LEDGER— WITH FIRST ENTRY Z^L^±^^^^2^^=^^ '-*S 7. Pay cash for an invoice of blanks and stationery for office use, $32.50, taking a receipted bill. Office Course. Carry out this transaction at Tablet Course. Take your receipted bill from the Commercial Exchange. the Commercial Exchange pad and deliver the cur- rency as usual. Notice this distinction between what is charged to Expense and what is charged to Furniture and Fixtures : the latter account is for an article or fixture that can be sold again when we go out of business or buy new fixtures, whereas the Expense account is for things that are regularly consumed in carrying on the business and on which we realize value only as they are used. To which account should the last purchase be charged ? After making the necessary entries for this transaction, number and file the invoices as previously instructed. 8. Sell the following merchandise to C. W. Hammond & Co. for cash : 10 gal. Sunlight Syrup 10 cs. Coe's Wh. Flakes 5 bx. Joy's Soda Crackers 5 bx. Cal. Sil. Prunes .60 per gal. 2.40 per cs. .80 per box. 2.00 per box. Make a bill of these goods on one of the blank bill heads in your equipment, taking the invoice, or bill, received from Dalton & White as a model. Enter the number of the transac- tion (8) in the upper left corner of the bill for convenience in verifying the amount. As soon SET ONE— JOBBING GROCERY BUSINESS 56 as the bill has been approved by your teacher, remove the required cards or coupons from your merchandise slips and deliver them with your receipted bill, collecting cash for the amount of the sale. All cash received or paid out should be carefully counted by the student. In making these and subsequent sales, be very careful to deliver the right kind and num- ber of merchandise cards. If any error is made in delivering the merchandise, it will affect some of the sales to be made later on, and cause you delay and annoyance. Take enough time to be accurate. Office Course. The student will deliver the invoice and merchandise cards at the Commercial Exchange, receiving the cash. Tablet Course. The bill should be folded so as to enclose the merchandise cards and should be placed in "Outgoing Papers." The cash for this in- voice should be taken from Community Cash. In these early transactions we want the student to learn that for every debit in the cash book there is a credit in some ledger account, and likewise for every credit in the cash book there is a debit in some ledger account. For every cash sale, Cash is debited because this title receives the value, and Merchan- dise is credited because it produces the value. At a later date we will use the sale book and post the total sales for a given period, but until the debit and credit principle is fully mastered, each sale will be posted from the cash book to the credit of Merchandise. Record your sale to Hammond & Co., as in the second entry below. FIRST TWO DEBIT ENTRIES IN CASH BOOK, FIRST ONE HAVING BEEN POSTED (Z^^Ay ■ £?7t£*J J^kJZ*/ h^-z^-e^Z^-, Zs-Ttf /7 -~zr*= Jl sb^^/^ ^^a^ey(3^hfl^a^>T^^^^ {A Post this entry to the credit of Merchandise account on page 3 of the ledger, writing the page numbers in the folio columns as usual. 9. Sell the following merchandise to R. M. Gray for cash : 10 gal. Sunlight Syrup @ .60 per gal. 5 bx. Joy's Soda Crackers @ .80 per box. Make a bill as in Transaction 8, have it verified, deliver the invoice and merchandise, re- ceive the cash and enter the same in cash book. Post to the credit of Merchandise, the same as in preceding transaction. The Cash Proof. No detail of accounting is more important than the daily verifying, or "proving" of the cash account. This is effected simply by counting the cash on hand to see if the amount is the same as the "balance," or difference between the totals of the two sides of the cash book. In many business houses, however, a written form of cash proof is used, which shows the work of the proof in detail. Such cash proofs are to be used hereafter in your work, and will be called for from time to time. Included in your outfit is a pad of forms to be used for this purpose. The form on page 56, except name and date, shows your cash proof as it would appear if made out at the end of Transaction 9. EXPLANATIONS OF CASH PROOF On the line for "Previous Cash Balance," we enter the amount of the investment, $2500. In subsequent reports, this line will show the cash balance as shown by the previous report. On the line for "Cash Received," we enter the total of the items in the first column of the debit side of the cash book, $54. On the line for "Cash Paid," the total cash book credits is entered, $592.25. 56 NEW INDUCTIVE BOOKKEEPING THE LEFT FOLIO OF THE CASH BOOK AFTER BALANCING ^^V <^L*. (fan/ / ^y/l^> OX ^^>7l^£^J^^^^^^9^^^l^~- £^f~ 1.75 per bu. 18 brl. Onions @ 3.60 per brl. SET ONE— JOBBING GROCERY BUSINESS 59 21. Sell to A. P. Sheldon & Co. for cash, the following goods of Invoice 6, charging them an advance of fifty cents per barrel over cost for the "Daisy" and rye flour and rolled oats, and an advance of fifteen cents per sack for the Graham flour : 30 brl. Daisy Flour 7 brl. Rolled Oats 15 brl. Rye Flour 100 sk. Graham Flour You can find the cost of the flour and rolled oats by referring to the invoice. Make an informal test of your cash as instructed on page 56, after which prepare a cash proof as instructed under Transaction 9. Pencil on the proof "Trans. 21" to enable your teacher to identify it. When your cash proof is approved by your teacher, balance your cash book as instructed on page 57, using the entries on your cash proof as data for the closing. Correcting Errors. If an error has been made in an entry that may be corrected with- out re-writing the whole entry, neatly cross out the word or amount that is incorrect and write the correct word or amount in red ink just above the incorrect one. If the error is of such a nature that the whole entry should be re-written, write the word "Void" in red ink at the point in the book where the folio figure would be written, then re- write the entire entry in black ink. Do not, under any circumstances, erase entries or so cor- rect them that the original figures are illegible. Large sums of money have been lost through court decisions based on erased or obliterated entries. In such a case, there is no means of knowing why the erasures were made, and a judge will usually rule that such a set of books cannot be received as evidence. Checking the Ledger. Careful bookkeepers test the accuracy of their posting by check- ing the ledger, and the student should test his work in this manner before every trial balance. We can best describe the process by directing the student in checking his ledger entries. First sharpen your pencil to a fine point. Turn to the debit side of your cash book and see if the $2,500 is posted to your credit in the ledger. If this entry is correct, make a light pencil check (V) on the double red line to the left of the amount (2500) in the ledger, and a sim- ilar check mark in the cash book. We are sure of a debit for a credit thus far. The next entry (44) should be checked in the credit side of Merchandise and also in the cash book. In the same manner, the other entries in the debit page of the cash book should be traced to the ledger, and if correct, the amounts should be checked in each book. The credit side of the cash book should next be compared with corresponding debits in the ledger, and all correct amounts should be checked in both books. If the page numbers have been correctly written in the folio column, it will be an easy matter to turn from the cash book to any required ledger entry. After all corresponding entries in the two books have been checked, the student should look carefully through the amounts to see if any entry remains unchecked. Such an entry is likely to be an error and the same should be carefully considered. If an error is found, correct it as previously instructed — Remember: Do not erase! The Trial Balance. It has already been shown (page 10) that if the books have been cdrrectly kept, the total debits of the ledger will equal the total credits. From this it is evi- dent that the excess of debits (that is, the sum of all the debit balances) must equal the excess of credits, or the sum of all the credit balances. A trial balance can therefore be made by means of the balances of the several accounts instead of the totals. This form of trial balance is generally preferred, by bookkeepers, and is the form that will hereafter be used in this book. A trial balance composed of totals is properly called a "Proof Sheet," since its purpose is to afford "proof" that the ledger is in balance. You may now prepare a trial balance, as in the form on page 61, except that you are to use your own name for the proprietor's investment account instead of T. M. Carpenter. After the first account title, "Cash," we write the amount of the present cash balance, $2,511.50. As there is but one entry on each of the next three ledger accounts, these entries are "balances," and are accordingly entered on the trial balance. The present total of the 60 NEW INDUCTIVE BOOKKEEPING debits of the Merchandise Account is $1,308.50, and the credit total is $1,634.50. The credit balance of this account is therefore $326, which amount is entered in the credit column of the trial balance. The two columns of the trial balance are now added and as the total, $2,826, is the same for both columns, the books are assumed to be "in balance." ( See First Trial Balance, , page 61.) Hand your blank books, including the trial balance, to the teacher for inspection, then study the following instructions as to Bank Deposits and 'Bank Checks. BANK DEPOSITS It is customary for business men to keep their money "on deposit" in banks, and to draw out or pay out this money when required, by means of orders on the bank, called Checks. A Deposit is a sum of money or other funds, placed in a bank and subject to check by the depositor. A Bank Balance is the amount of money due the depositor, and it is equal to the sum of all his deposits 1 ", less the sum of all his checks. x.r.T.^o^^^.o „™ TA ™ TT ^ FORM OF SIGNATURE CARD DEPOSITOR'S SIGNATURE The person opening a bank ac- count is required to leave his signa- ture at the bank in the exact form that he will use it in signing checks, notes and other commercial papers. This signature may be recorded in a signature book kept by the bank, or it may be written on a card giving the same information. The card is more convenient and is rapidly coming into use in place of the signature book. If the de- positor is introduced to the banker by another person, the name of the latter is also recorded on the card. NAME OF CORPORATION, FIRM OR INDIVIDUAL, For the EXCHANGE BANK, Clinton, Iowa Signatures and by whom made Address / g '^^^L ^rL V aZ/^-/ Date U72^l^y. /°. ' f£ ^k &££_£ Z. c^L^^^i^^^^^^^-4^^ J- -^^s ^^f y ^ 2Zf 2 fJ> / c?^ 2f2£ The Pass Book. This book (often called a "bank book") is a small blank book kept by the depositor in which an officer of the bank keeps the depositor's account, by entering the amount of the deposits and checks. The deposits are entered on the debit side of the book at the time they are made, while the amount of the checks is entered when the book is "balanced." This is usually done monthly. This method is still followed by savings banks and many of the smaller commer- cial banks, but of late the more important commercial banks enter the deposits only in the pass book, and send a special monthly statement to each depositor, accompanied by his checks that the bank has paid since the previous statement was rendered. (See "Depositor's Statement," page 76.) In your present course, the latter method will be followed. FORM OF PASS BOOK Dr. EXCHANGE BANK, la Acc't With.. £&>^^ 7* j-0 7 Tjo-.v- SOO-/&*. /ffa^r?^ . /2 2¥ c o ' 7 /& 2/ / s s■kfc-•^^'2-'*•t-«-<£" ty-7 \ i / ^ ? *T0> 9a / S0 NUMBER 4 Jan. 6. Sold to A. L. Baker, 17 Pine Street, on his note at 60 days, 18 tons L. V. Coal @$6. (As this sale is settled by note, we enter a check mark opposite Mr. Baker's name, indi- cating that the item is not to be posted to his account. When the item is posted to Bills Re- ceivable account, the folio "24" is entered in the sales book.) SET ONE— JOBBING GROCERY BUSINESS 65 MODEL ENTRIES IN CASH BOOK, DEBIT SIDE Wtzw. J V s /L 7 S /z *S 73^Jk. ?7^ .Jl*'/x ■2 J jT^ / \J^y 'fec^. b^gL-^r^ vXV 7*jT J~ . .fe-V 6£l*^c^s «^W : ^?L^> ^m^t^p *j <*-- <£V CJ-^—^U^/ / \J~~a "^-^jS ■jLL 2*7 2/ 4 J" b 3 /TT n 2- {i?y 1 'i 3 V 7* — The Western Milling Co. have a larger credit than debit, and the excess should be writ- ten in the same manner in the credit explanation column of their account, and also in the trial balance to the credit of this firm. Read "Inventories," page 40. Regarding inventories, it may be further observed that the inventory of merchandise un- sold is generally a very important factor in determining a firm's progress in business, as illus- trated in the following examples : (a). Mr.Turner began business with a cash capital of $1000, and without any debts. At the end of one year, after collecting all balances due him from other firms, and paying SET ONE— JOBBING GROCERY BUSINESS 73 all balances he owed other firms, his books showed a cash balance of $700, and his inventory showed merchandise on hand worth $800. Has he gained or lost ? If his inventory amounted to only $200, would he have gained or lost ? (b). Mr. Graham began business with a cash capital of $2000, and without any debts. At the end of one year, after paying all balances he owed other firms and collecting all bal- ances due him from other firms, his books showed a cash balance of $1200, and his inven- tory showed merchandise on hand worth $500. Has he gained or lost? If his inventory amounted to $1500, would he have gained or lost? The preparation of an inventory of merchandise often requires several days or weeks, depending on the magnitude of the business, and the process is called "taking stock." In "taking stock," the goods are usually listed at invoice cost, unless there should be some deterioration in the value of the goods, (as in the case of shelf-worn, soiled, or out- of-date stock), or some marked rise or fall in prices after the goods were purchased. The pur- pose of an inventory should be to show the actual cash value of the goods, in case they should be thrown on the wholesale market in bulk. You may now proceed to "take stock" or prepare an inventory of such unsold goods as are indicated by the coupons in your Merchandise envelope. The following form contains a correct list of the goods that should be on hand. If it does not agree with the coupons in your envelope, you have either lost some of these, or have made an error in delivering them to customers at the Commercial Exchange. In this case, report the fact to your teacher. Using a sheet of journal paper, write the heading, "Inventory of Merchandise on hand 191 — ," and prepare an inventory of the goods, referring to the invoices for prices. Enter the value of each lot in the first column and extending the total to the second column as in an ordinary bill. . When your inventory is prepared, submit it to your teacher for approval. INVENTORY OF MERCHANDISE ON HAND 1 brl. XX Hams. Inv. 8, 300 lb. 5 brl. Mess Pork, 130 cans Leaf Lard, " 1300 lb. 6 brl. Br. Bacon. " 1800 lb. 13 bx. Oakdale Butter, Inv. 9. 650 lb. 30 cases Eggs, " 900 doz. 150 bu. Potatoes, 20 bx. Lemons, " 18 brl. Onions, 30 brl. Daisy Flour, Inv. 10, 40 brl. Rye Flour, 60 sk. Graham Flour, " 20 brl. Rolled Oats, Total INVENTORY OF FURNITURE AND FIXTURES Fur. and Fixt. on hand estimated at 90 per cent of cost $205.20 QUIZ See if you are able to give satisfactory answers to the following questions relating to your books. If you are unable to answer all of them, report the fact to your^teacher. 3. How much have you invested in business, and what account shows it? 2. What do you understand by Resources ? 3. What do you understand by Liabilities? 4. What do you understand by Gains ? 5. What do you understand by Losses? 74 NEW INDUCTIVE BOOKKEEPING 6. What do you understand by an Inventory ? 7. Besides the cash balance and the inventories, what three ledger accounts show resources ? 8. What account besides the proprietor's shows a liability? 9. What have you paid for merchandise since you began business ? 10. What have you received for merchandise during the same period? 11. How do you ascertain these facts about merchandise? 12. If you were now to sell the goods on hand for their inventoried value, would you gain or lose on your merchandise? How much? 13. If you were now to sell your furniture and fixtures on hand for their inventoried value, would this account show a gain or loss? How much? 14. If there were no inventory of furniture and fixtures, would this account show a loss or a gain, and how much ? 15. Allowing for the inventoried value of furniture and fixtures at 90 per cent of cost, have you gained or lost on this account, and how much? 16. What is the total amount paid out for expenses? Is it a loss or gain? 17. How would your net profits be affected by increasing the cost of merchandise? By decreasing your expenses? By selling goods at a higher price? By buying merchandise at a lower price? By increasing expenses? 18. Under what conditions would increased sales increase your profits ? Under what conditions would increased sales diminish your profits? 19. Does the proprietor's account always show the net value of the business ? 20. At what time does it show the net value of the business? 21. Would the net value of the business be increased or diminished if there has been a gain ? If there has been a loss ? CLOSING THE LEDGER 1. Read Closing the Books on page 35 and the Balance Sheet on page 40, after which prepare a Financial Statement of your present business as in the form of financial statement shown on page 39, copying the same in your trial balance book just below your last trial balance. 2. Study the Statement of Profits and Losses for the Model Set, page 41, and the ex- planation of this form on page 40, after which prepare this statement as required by your present business and, when approved, copy it in your trial balance book. 3. Study the Balance Sheet Proof on page 41, and the explanation, then prepare your Balance Sheet Proof for this set and, if approved, copy in your trial balance book, following the last form copied. 4. Read all the instructions as to closing the ledger, pages 42 and 45, and then open an account in your ledger on lower division of page 1, under the title "Loss and Gain Closing." 5. Enter your inventories of Merchandise, and Furniture and Fixtures, in red ink on the credit side of the accounts, and complete the closing of the ledger, following the steps as described in the instructions relating to the Model Set, pages 42 and 45. Proceed carefully and thoughtfully and do not call on your teacher, unless it is absolutely necessary. 6. When the ledger is closed and ruled up, forward your inventories and the balance of the proprietor's investment account, after which take a trial balance of your ledger, which, when approved, should be copied in your statement book. Preparing Books for Inspection. Remove all blots, finger marks, or other deface- ments from your books. Do not erase the pencil footings on the unclosed accounts, as these will be needed in preparing future trial balances. When your books are ready for inspection, deliver to your teacher vour blank books, last trial balance and statement, office file, envelope for outgoing papers, and check-book. You are now to receive your returned checks from the bank, with the bank's statement of your account. Before proceeding with this transaction, carefully read the following in- structions relating to depositors' statement. SET ONE— JOBBING GROCERY BUSINESS 75 TWO METHODS OF RENDERING DEPOSITORS' STATEMENTS As indicated on page 61, there are two common methods used by banks to render state- ments of their depositors' accounts. We may designate these respectively as the "Pass Book Method" and the "Statement Method." Lists of Cancelled Checks The Customer Will Preserve This The Exchange Bank Checks Paid and Charged to Account of C. H. Benton From. Jan. 1 19. To. Feb. 1 .19. BALANCING THE BANK PASS BOOK The Pass Book Method. In business, the paid checks of a depositor are returned to him periodically by the bank, usually at the end of each month, or oftener if the de- positor wishes them. The returned checks are accompanied by a list showing their amounts and totals, and by the depositor's pass book, duly written up and balanced. As soon as the depositor receives the cancelled checks, he should compare them with his check stub entries, checking all en- tries for which the checks are returned. If any of the checks issued have not been pre- sented to the bank for payment, the stub entries will remain unchecked, and the bank balance on the check book will exceed the balance on the pass book by the amount of these unpaid checks. The accompanying forms illustrate the bank's list of returned checks, also a pass book after being written up and balanced by the bank clerk. In place of the above forms of listing returned checks, many banks list the depositor's checks on the adding machine and hand him the tape-list with his cancelled checks. 9 £5 199 50 100 4 75 50 363 50 THE PASS BOOK BALANCED ». EXCHANGE BANE .» Acc't With. ^2^/&JL^^^r^ Cr. ^ ^ l a^t// & /^ £*£> jL oJ-e^L^ / 000 kT^.ZuT Ztxf'PKj- P ■■'£- & £ i/~Z^a,/.-4-4 ft 4 JJl 'f 16 'I J~* /J" j^r 5 f« fa- 17 Si f / J rV t*i nS- 6 •ai ff 18 -A /A r 7 -y* q> 19 t q'f qj~ 8 / yi -r^ 20 1 J 'f s 'J- \3 9 li I s 21 io ■fit Vi 22 tl ,J I #/** 23 12 "ya / o 24 Credits J~fS su + i'j * -r Debits JUtf /S Balance vTf ?/ Please examine balances and vouchers and report at once if any error is found. EXPLANATION The above form shows a monthly statement rendered by the Exchange Bank to a de- positor, Arthur Jones. There are two general divisions for checks and one for deposits, since, in nearly all cases, there will be a much larger number of checks than deposits. Each check division has three columns; the first is for consecutive numbering, the number enabling the bank clerk to determine the number of entries without counting them. Thus, the last check drawn, being entered opposite the number "16," the clerk knows that sixteen checks or othe: vouchers are to be accounted for. The second column is for the day of the month. As the statement covers business for but one month, a column for the month, as in ordinary date col- umns, is unnecessary. The deposit division has columns for dates and amounts. If there is a balance carried forward from the previous month, this is entered opposite the word "balance" at the top of the column. If the first check column is filled, the footing is entered and forwarded to the top of the next column. In the summary at the bottom of the deposit columns, the total amount of the checks (debits) is subtracted from the total deposits (credits) and the differ- ence shows the bank balance at the close of the month when the statement is rendered. Another form used by many bankers is to carry the deposit columns to the left, and the two check columns to the right. The tablet statements will follow this form. You may now call for your bank statement and your paid checks, and compare the latter with the entries of same in your check stubs. If any checks are unpaid, their sum added to SET ONE— JOBBING GROCERY BUSINESS 77 your bank balance shown on your last check stub will equal the balance as shown on the bank statement. A memorandum of this should be penciled on the last stub balance. Office Course. You will get the statement and the returned checks at the bank. 45. Tablet Course. You will find your bank state- ment in the Bank compartment of your community file, and the teacher will hand you your paid checks after he has inspected your outgoing papers. Sell to Thornton & Blake, 125 North Main Street, on account : 5 brl. Mess Pork @ $9.50 per brl. 40 cans L. Lard @ .12^ per lb. 3 bx. Oakdale Butter @ .19 per lb. Proceed as in previous sales on account. Open a ledger account with Thornton & Blake on page 8. 46. Order of Dalton & White (or your Wholesale Office firm) to be paid for with your note at sixty days without interest, the following bill of goods : 15 bg. Java Coffee 100 bx. Joy's Soda Crackers 20 ch. Japan Tea 50 cans Sunlight Syrup Promissory Notes. A promissory note is a written promise to pay a stated sum of money at a specified time. The Original Parties to a note are the Maker, or party who, by the act of signing the note, makes the promise, and the Payee, or the party to whom the note is made payable. Note. — In law, the persons who enter into any legal relation are called "parties," as the "parties to a contract," or the "party to a suit," etc. The accompanying cut illustrates a standard form of promissory note and its stub prop- erly filled out. In entering the amounts on a note the same care should be observed to pre- vent "raising" or other alteration as in the case of a check. In business, notes are usually made payable at a bank which is specified in the note. In the absence of such specification, the law makes a note payable at the legal. residence of the maker. FORM OF NOTE WITH STUB ENTRY To J?.d ?k^ ££™ . For.. D ate i^-w-'. /&£+-r7Jr&-\k f 23 v/> 47. Sell to A. W. Sumner, 426 Delmar Avenue 10 ibrl. Daisy Flour @ $4.40 per brl. per brl. per bx. 5 brl. Rolled Oats @ 6.30 10 bx. Lemons @ 2.90 10 cs. Eggs @ .18^4 per doz. Receive in payment Mr. Sumner's note payable on or before thirty days after date with- out interest. A note of this kind is payable at the option of the maker, any time before maturity. Tablet Course. Deliver the merchandise with receipted bill through Outgoing Papers and receive the note through your Commercial Exchange pad. Office Course. Carry out this transaction at the Commercial Exchange, delivering the merchan- dise with receipted bill, and a note filled out in your favor for Sumner's signature by the clerk in the Commercial Exchange. Remove this note from the back of your note book, making no stub entries. See entry No. 4 in Model Sales Book, page 64. As Sumner will not be debited in the ledger, a check mark is made in the folio column next to his name. Debit Bills Receivable, opening an account in the ledger on lower half of page 5. Enter the ledger folio opposite Bills Receivable in the sales book. Enter Sumner's name in the explanation column of Bills Receivable. 48. Pay cash for your drayage bill to date, $15.25, taking a receipted bill which you will file with Receipts and Vouchers. Charge to Expense in cash book. 49. Sell to Braille & McKnight, receiving their check in payment : 2 bg. Java Coffee @ $ .24 per lb. ch. Japan Tea @ .82 bu. Potatoes @ .65 cs. Eggs @ .19 per doz. per lb. per bu. 2 50 10 3 brl. Onions @ 3.70 per fori. 50. Find from your ledger the amount due you on account from Campbell & Crane. • Collect cash for the same, giving receipt in full of account. Office Course. Leave your receipt at the Tablet Course. Deliver your receipt through Commercial Exchange and receive the cash from Outgoing Papers and receive your cash from Com- that office. munity Cash. Post the entry to Campbell & Crane's credit, checking the debit and credit in their account by using the X-mark as explained in Transaction 35. 51. Receive a check for $75 from A. W. Sumner, to apply on his Transaction 47. note received in Office Course. mercial Exchange. Receive this check at the Corn- Tablet Course. Receive this check through your Commercial Exchange pad. Make entry in the cash book, crediting Bills Receivable. Endorse this payment on the back of Sum- ner's note, right end, writing the current date and "Received on within note ($75) Seventy-five Dollars." Do not sign your name to this endorsement, as your signature might transfer the note in blank and make it payable to anyone who might get possession of it. Partial payment of a note should be endorsed on the end of the note opposite the place for transfer endorsements. SET ONE— JOBBING GROCERY BUSINESS 79 ' 52. Draw your check for $500 to be applied as a payment on the note you gave in Transaction 46. Office Course. Make this payment at the Tablet Course. Deliver this check through office department where you delivered the note. See Outgoing Papers. Take the note from Outgoing that the payment is properly endorsed on the note. Papers and hand it to your teacher, who will make the proper endorsement, after which return the note to Outgoing Papers. Make entry in cash book, debiting Bills Payable. An endorsement for part payment of a note should always be made by the payee of the note or by his direction. 53. Sell to T. C. Martin & Co., 963 Fairfax Avenue, on their note payable on or before 30 days from date: 15 brl. Rye Flour @ $3.75 per brl. 20 sk. Graham Flour @ .90 per sk. 5 brl. Rolled Oats @ 6.30 per brl. 2 bg. Java Coffee @ .25 per lb. 5 ch. Japan Tea @ .75 per lb. Follow the instruction given in Transaction 47. 54. Close out the remaining goods of Invoice No. 10, by selling the following to Hill, McNair & Co., on account : 20 brl. Daisy Flour @ $4.45 per brl. 25 brl. Rye Flour @ 3.75 per brl. 40 sk. Graham Flour @ .85 per sk. 10 brl. Rolled Oats @ 6.25 per brl. 55. Send your order for the following invoice of flour, using an order ticket and asking them to bill on account: 50 brl. Daisy Flour 50 brl. Rye Flour 40 brl. Acme Oats 200 sk. Graham Flour Follow the instructions governing previous purchases, ordering of the Western Milling Co., unless the teacher designates another firm. 56. L. P. Moore & Co. settle their account to date by delivering their note at ten days for the amount, bearing interest at six per cent. Office Course. Fill out a blank note in your Tablet Course. Receive the note through favor, on the conditions named, and take it to the your Commercial Exchange pad and deliver the re- Commercial Exchange for signature. ceipt through Outgoing Papers. Make a journal entry, debiting Bills Receivable and crediting Moore & Co. Post the two items to the ledger, making proper explanatory entry in Bills Receivable as instructed in Transaction 46. As this note pays in full your bill for the sale in Transaction 37, check off both ledger amounts as instructed in Transaction 35. 57. Give the Western Milling Co., or the office firm that takes their place, your check for the balance due on your purchase in Transaction 34 less the payment you made in Trans- action 38. Post to the ledger and check off the credit and the two debit entries that balance it. 58. Receive from Hill, McNair & Co. currency in payment of their debit in Transac- tion 32 less their credit in Transaction 40. Post to the ledger and check off the debit and the two credits that balance it as in the previous transaction. 59. Make your cash proof and balance your cash book. Hand the cash proof and your cash book to the teacher for inspection. 60. Deposit in bank all checks on hand and $200 in currency. Indorse the checks. 61. Sell to Thornton & Blake, 125 North Main Street, on account at 5 days : 1 brl. XX Hams @ 15c per lb. 3 brl. Breakfast Bacon @ 14c per lb. 80 NEW INDUCTIVE BOOKKEEPING In posting a sale on account for a given period, write the period of time in the ledger accomit, in the explanation column, like the second debit entry in model form below. LEDGER DEBIT WITH TERMS OF SALE 3 V ^J / 2 4 2-J' ^r 3 / *? / 7* 62. Give your check for $6.75, favor Central Lighting and Power Co., to pay for lighting your store room to date. They hand you receipt. Office Course. Leave this check at the Com- mercial Exchange, taking a receipt. Tablet Course. Deliver this check through Outgoing Papers. The receipt will be delivered through your Commercial Exchange pad. 63. 64. Sell to Hall Bros., 29 Walnut Street, receiving their check in payment: 5 bx. Oakdale Butter @ 19y 2 c per lb. 10 cs. Eggs @ 16c per doz. 20 bx. Soda Crackers @ 85c per bx. Sell to Campbell & Crane, No. 16 River Street, on account : 10 brl. Daisy Flour @ $4.45 per brl. 10 brl. Rye Flour @ 3.65 per brl. 5 brl. Acme Oats @ 6.25 per brl. 40 sk. Graham Flour @ .85 per sk. 65. Close out the remaining goods of Invoice 8, by selling to C. W. Melville, No. 21 Maple St., on his note at ten days, the following: 90 cans Leaf Lard @ $ .12^ per lb. 3 brl. Bacon @ .14 per lb. 66. Receive Thornton & Blake's check for $125 to apply on account. Collect this in the usual manner, giving a receipt. 67. Draw cash from bank on your own check, $75, to use for currency payments. Should a cash book entry be made for the last transaction? After deciding as to the last question, report your conclusion to your teacher. 68. Give your check for $250 to apply as a second payment on your note given in Transaction 46. Do not forget to itemize this entry in Bills Payable. Proceed as in Transaction 52. 69. Receive cash in payment of T. C. Martin & Co.'s note. Write across the face of the note "Paid," and the date, and deliver the cancelled note for a receipt. Office Course. Deliver the note at the Com- Tablet Course. Deliver the note through Out- mercial Exchange and receive the cash. going Papers and receive the cash as usual. 70. Make a cash proof and balance your cash book. Foot your sales book and post the merchandise credit. 71. Check your ledger accounts and take a trial balance, following instruction after Transaction 21 regarding the entry of ledger totals and balance in pencil. If your trial balance does not balance, read carefully and follow the instruction below regarding the detection of errors. DETECTION OF ERRORS IN TRIAL BALANCES • 1. Review carefully the addition of the columns in the trial balance, adding from the top to the bottom and verifying the results by adding from the bottom to the top. SET ONE— JOBBING GROCERY BUSINESS 81 2. Add carefully all columns in the ledger and verify all pencil footings, which should always be in small figures below the last item of each account and never on the next writing line, which should be kept for the next entry. See that the correct balances are carried to the trial balance. 3. Find the exact amount out of balance and look for this amount in journal, cash book, sales book and ledger. Also look for one-half of this amount if it is an even number, and see if such an amount has been posted to the wrong side of the ledger. 4. If the amount out of balance is divisible by nine, the error is likely to be a transpo- sition of figures, (as 725 written for 527, making an error of 198, which is divisible by 9). If it becomes necessary to re-check the ledger, (see paragraph 8 below) it will be well to watch for numbers transposed, as this is one of the most common errors with inexperienced bookkeepers. 5. If the error is composed of l's as 1, 11, 111, etc., or 9's-as 9, 99, 999, etc., it is prob- ably an error in addition and the columns likely to produce the error should be carefully added. 6. See that your cash book and sales book have been correctly added; and also that the sales footings have been properly posted. 7. Look through your ledger and see if all balancing entries have been correctly for- warded and all inventories have been brought down correctly. 8. If the above methods do not locate the error, the ledger entries should all be checked again, a different check mark being used. In this second checking you should see that there is a debit for every credit. Any item unchecked will throw the ledger out of balance. Note. — Notwithstanding that the Trial Balance proves, several kinds of errors may have been made in the bookkeeping, as for instance the following: 1. Errors in computation, by which incorrect original entries are made. 2. Posting an item to the wrong account. 3. Failure to enter a transaction in the journal or other book of original entry. 4. Failure to post both debit and credit of a journal entry. TRANSACTIONS CONTINUED 72. Hand your books and office file to the teacher for inspection. 73. Have your pass book balanced or call for a bank statement with your cancelled checks. You will receive the statement and cancelled checks as explained on pages 76 and 77. Compare the returned checks with your check stub entries as previously explained, and file away your paid checks which should be carefully kept as receipts or vouchers to prove payments that may be called in question at a later date. Reconcile bank balance with bank statement, when the bank does not report all checks paid. 74. Sell to L. P. Moore & Co., 125 Main Street, the remaining goods of Invoice 9 at the following prices : 10 bx. Cal. Lemons @ $2.90 per bx. 5 bx. Oakdale Butter @ .21 per lb. 100 bu. Potatoes (a) .65 per ibu. 15 brl. Onions @ 3.75 per brl. They hand you their check for $100 to apply on this sale; balance on account. Enter the entire sale from the sales book to the debit of Moore & Co., and credit them for the $100 from the cash book. Give credit on your invoice to Moore & Co. for the check, which you will receive when you deliver the invoice and merchandise. 75. Pay cash, $12.75, for city taxes on your stock of goods, taking a receipt, which you will file. Charge to Expense. 76. Order the following bill of produce for which you are to give your note at fifteen days in payment, the note bearing interest at 6 per cent : 20 bx. Oakdale Butter 100 bu. White Beans • 25 cs. Eggs 250 bu. Potatoes Follow previous instructions, ordering of the Fenton Produce Co., unless the teacher designates an- other firm. This invoice will amount to $515, and your note should be written for this amount. 82 NEW INDUCTIVE BOOKKEEPING 77. Receive currency from L. P. Moore & Co. in payment of their note with ten days' interest at the given rate. Rule for Writing Fractional Amounts. Fractions of a cent are never written in money columns. If the fraction is one-half cent or more, it is recorded as a cent ; if less than one-half cent, it is dropped. Fractions are written and used for prices, weights, etc., the foregoing rule applying only to amounts ex- tended to money columns. Office Course. Collect cash for this note at Tablet Course. Mark the note paid and de- the Commercial Exchange. liver it through Outgoing Papers, taking cash for same from Community Cash. Make two entries in the cash book, crediting Bills Receivable with the face of the note and Interest with the amount received for interest as shown in the entry for Jan. 18, in the model cash book, page 34. Post these credits, opening an account with Interest on page 4, reserving all of page 3 for Merchandise. 78. Give your check to pay the balance due on your note given in Transaction 46 This note should have two indorsements for the payments made in Transactions 52 and 68, and the remainder after deducting these indorsements will be the amount you should pay. Office Course. Make this payment at the office Tablet Course. Take the note from Outgoing department where you delivered the note and re- Papers and hand it to your teacher, who will mark ceive the cancelled note. File the ncte in "Receipts the note "Paid" if your check is written for the cor- and Vouchers." rect amount. Place the check in Outgoing Papers and file the note in "Receipts and Vouchers." Turn to the stub of this note in your note book and write diagonally across it "Paid" and the cur- rent date. When you post this payment to the ledger, check (X-mark) the three debits and the one credit per- taining to this note, indicating the payment of the note in full. 79. Sell to C. M. Harlan, 126 Park Avenue, receiving currency in payment : 3 bg. Java Coffee @ $ .24 per lb. 3 ch. Japan Tea @ .85 per lb. 20 cans Sunlight Syrup @ .55 per can. 10 brl. Daisy Flour @ 4.45 per brl. 80. Deposit in bank all checks on hand and $250 in currency. 81. Receive currency of A. W. Sumner to pay balance of his note due you. The bal- ance due on this note will be the face of the note less the amount received to apply on the note in Transaction 51. Cancel the note by writing across the face "Paid" and the current date. Office Course. Deliver the note at the Com- Tablet Course. Deliver the note through Out- mercial Exchange, where you will receive the cash. going Papers and take the cash as usual. When you post this credit, check the debit representing the face of the note and the two credits in- dicating the note paid in full. 82. Hill, McNair & Co., 45 Eagle Street, hand you $250 in currency to apply on ac- count, and purchase the following goods on account : 5 ch. Japan Tea @ $ .82^ per lb. 40 bx. Joy's Soda Crackers @ .85 per bx. 5 brl. Acme Oats @ 6.35 per brl. 80 sk. Graham Flour @ .85 per sk. Give credit for the cash in the cash book, rendering a receipt, and enter the sale in the sales book, delivering an invoice with the merchandise. Office Course. Leave the receipt and the in- Tablet Course. Deliver the receipt and the voice and merchandise at the Commercial Ex- invoice and merchandise through Outgoing Papers, change, where you will receive the cash. taking cash as usual. 83. Sell to L. P. Moore & Co., 125 E. Main Street, the following goods' on account: 10 brl. Acme Oats @ $6.20 per brl. 20 brl. Rye Flour @ 3.75 per brl. 2 bx. Butter @ .21^ per lb. 5 cs. Eggs @ .17 per doz. 50 bu. Potatoes @ .65 per bu. SET ONE— JOBBING GROCERY BUSINESS 83 They hand you their check for $150 to apply on account. Proceed as in Transaction 74. 84. Receive a check for $175 from C. W. Melville to apply on his note. Indorse the payment on the back of the note as usual. 85. Give the Western Milling Co., or the firm you deal with in their stead, your check for $200 to apply on account. 86. Sell to Chapman & Sons, 75 No. Hall Street, for cash, the remaining goods of In- voice 11 at the following prices : 8 bg. Coffee @ 25c per lb. 5 bx. Japan Tea (250 lb.) @ 85c per lb. 40 bx. Soda Crackers @ 80c per bx. 30 cs. Sunlight Syrup @ 65c per can. Make out your cash report and balance your cash, reporting to your teacher as usual. 87. Receive cash from Thornton & Blake in full of their account. Write after the firm name in the cash book entry in the explanation column, "Bal. acct." Check and rule up the account. 88. Pay your note No. 2, issued in Transaction 76, and fifteen days' interest at the given rate, making the total payment in cash. Office Course. Make this payment at the of- Tablet Course. Deliver the cash through flee where you gave the note, receiving back the Community Cash. Remove the note from Outgoing cancelled note. Papers and have the teacher mark it "Paid." File the paid note in your "Receipts and Vouchers." Make entry on the credit side of your cash book, following the model form as shown in the entry for Jan. 14 in the model cash book, page 35. 89. Receive cash from Campbell & Crane to pay for their purchase in Transaction 64. Give a receipt in full of account. 90. C. H. Manning buys for cash all your remaining merchandise at ten per cent above cost. You should have on hand for this sale, the following goods : 80 sk. Graham Flour 18 bx. Oakdale Butter 30 brl. Daisy Flour 20 cs. Eggs 20 brl. Rolled Oats 100 bu. Wh. Beans 20 brl. Rye Flour 200 bu. Potatoes Bill these goods at cost prices as shown by your invoices ; then add ten per cent to the footing of the bill. Receipt the bill and receive payment in currency as in previous transac- tions. 91. Receive currency from Hill, McNair & Co. to balance their account, giving a re- ceipt in full. 92. Give your check to the Western Milling Co. in full of their account, taking a re- ceive for same. 93. Receive currency for balance due on note of C. W. Melville. Mark the note paid in full and deliver it when you receive payment. 94. Receive currency from L. P. Moore & Co. in full of their account, giving a receipt. 95. Sell your furniture and fixtures to L. P. Moore & Co. for cash, $100, giving a re- ceipt for same. 96. Deposit all checks and cash you have on hand, indorsing the checks as illustrated on page 67. 97. Make your cash proof and balance your cash book. Complete your posting, check your ledger and make a trial balance and statement. 84 NEW INDUCTIVE BOOKKEEPING 98. Write a check in favor of your teacher for the balance of cash you have in bank and charge this to your investment account. 99. Leave your pass book at bank to be balanced or call for a bank statement with your cancelled checks. Proceed as in Transaction 73. . 100. Verify your bank statement, comparing your returned checks with the correspond- ing stub entries in your check book. Close your cash book and ledger and submit your books and office file for inspection, also deliver your "Incoming Currency" to the teacher. GENERAL REVIEW QUIZ 1. What is the general rule for debit and credit? 2. What is the rule for debiting and crediting persons? 3. What results may be shown by a personal account, if not in balance? 4. What is the rule for debiting and crediting Cash? 5. What kinds of business papers are considered as cash? 6. Can the credits of Cash exceed the debits ? 7. What results does a Cash balance show ? 8. When should Bills Receivable be debited, and when credited ? 9. What business papers are classed as bills receivable? 10. What result is shown by Bills Receivable account, if not in balance ? 11. Can the credits of Bills Receivable exceed the debits? 12. When should Bills Payable be debited, and when credited ? 13. What result is shown by Bills Payable account, if not in balance ? 14. Can the debits of Bills Payable exceed the credits? 15. When should a proprietor or partner be debited, and when credited ? 16. When should Merchandise be debited, and when credited ? 17. What kinds of property are classed as merchandise ? 18. What record is made of unsold merchandise when we wish to show results? 19. What result may be shown by Merchandise account ? 20. When should Real Estate be debited, and when credited ? 21. What kinds of property are classed as real estate ? 22. What record is made of unsold real estate when we wish to show results? 23. What results may be shown by Real Estate account? 24. When should Expense be debited, and when credited ? 25. Are inventories ever recorded in Expense account? 26. Wh." 1 results may be shown by Expense account ? 27. Whe.i should Interest and Discount be debited, and when credited? 28. Are inventories ever recorded in this account? 29. What results may be shown by this account? 30. When should Loss and Gain be debited, and when credited? 31. May other titles be used than those already named ? 32. What are the Commercial Accounts of the last business ? The Financial Accounts ? Set Two— Flour and Feed Business In this set you will not handle the cash, merchandise tickets, and business papers, as you are to keep books for Mr. J. A. Lane, a dealer in flour and feed, who with his other employees will carry out all transactions and write all business papers, giving you the historical mem- oranda as printed below for entry in the books. Preparing Your Blanks. Four books are required in this set — journal, cash book, sales book, and ledger. If loose leaf blanks are used, the student will place ruled paper in the binders for this set as follows : , Journal, Notes, and Cash 1st Cord — 1 sheet journal ruling for Journal. 2d Cord — 1 sheet journal ruling for Cash Book. Purchase and Sales •1st Cord — 1 sheet journal ruling for Sales Book. Ledger and Trial Balances 1st Cord — 2 sheets 2 acct. ledger with index tip for Ledger. 2d Cord — 1 sheet journal ruling for Trial Balances and Statements. MODEL OPENING ENTRY &-^-£^n^£^-2?[ iZ~y /fe-g — -zf A^n — &f <~-4r—zt^-t ^/ <2~^-^ZZL*^' (^-tt^^L^y <^z^~^/ ^>^t^-t/ _^-<^— i^£&^- ^o-iSZ^y c^^z^^jy ^2u £i fc^-Z— g-y-yix? J2J' ^2^C #tC^«/ -£L */■# f /J2-l-^^<£-^f^/!2^Z/. {2***, J~-s£J^^l-^-*U?^ - 1 - 7 v -f' 7 J " J/2^"^J~ // / SL« / /J \^rtr~> . ^Z^^^^z^^ / jTA 6 tfcOa^z^y '(J^^6, 2.// Aaj~ 2- 7 V^" 7 In the same manner, post all journal credits to their proper ledger titles, recording the amounts in your side slip under the heading "Journal Credits." The footing of this column on your side slip should amount to $3500.20, the same as the total of your journal credits. You are now to post your cash book debits, omitting the first item (checked) from the journal, also all checked items from the sales book, since these last will reach the credit of the Merchandise account when the sales book footings are posted. The total of these several cash sales should be entered on your side slip, however, so that its total will agree with the cash book total after the posting is completed. Head your side slip "Credits from Cash." Turn to your ledger and post the debit of Interest, entering the same amount on your side slip and checking the cash book entry. In the same manner, post each cash debit, being- careful to enter each on your side slip. The footing of this column of your side slip should amount to $1019.95, the same as the total of your cash book debits, not including the opening entry. In the same manner, post the cash book credits to the debit of the proper ledger titles and carry the amounts on your side slip under the heading "Debits from Cash." The footing of this column of your side slip should be $1064.95, the same as the total of your cash book credits. In posting from the sales book, the student will bear in mind that a sale for cash is checked and carried to the debit side of the cash book, while sales on account are carried as debits to the proper ledger accounts. The first sale to A. N. Price is carried to the cash book and does not appear in the ledger, but the amount of this sale should be entered on your side slip. The side slip should be headed "Debits from Sales." Turn to the ledger and debit W. T. Davis for the amount of the second sale, entering the amount on your side slip and check- ing the entry in the sales book. In the same manner, post all other sales. The footing of this column of your side slip should be $1478.35, the same as the total of your sales book entries, which you are now to post to the credit of Merchandise. By means of your side posting, you have tested the entries in your ledger by sections and the careful addition of the ledger columns should now enable you to prepare a correct trial balance. SET TWO— FLOUR AND FEED BUSINESS You are now to close your books, carrying out in order the instructions previously given, referring if necessary to the closing of the Model set, pages 42 to 45. The inventories for this business are as follows : Merchandise unsold $963.45 Prepaid rent 45.00 . Coal on hand for heating office 43.50 Present Value of Chattels 299.25 Note. — The prepaid rent and coal on hand comprise an Expense inventory. When approved, copy your statements in "Sales, Purchases and Statements," and close and rule up the ledger accounts with J. A. Lane, Investment, Expense, Merchandise, Chattels, Interest, and Loss and Gain Closing Nov. 30. Next, forward the inventories of Merchandise, Chattels, and Expense, and the pro- prietor's balance, after which prepare a final trial balance. See trial balance after closing, page 45. Prepare your books for inspection as previously instructed. While waiting for their return, prepare yourself to answer the questions of the General Review Quiz. GENERAL REVIEW QUIZ 1. What is an account ? 2. What improved methods of keeping accounts have been devised by modern accountants ? 3. What is the "Double Entry Principle?" 4. What is meant by the term "Journalizing?" 5. In what way is the student of bookkeeping benefited by journalizing drills? 6. Name the two general classes of acccounts, and give examples of each. 7. State the general rules for debiting and crediting property accounts. Illustrate each. 8. State the general rules for debiting and crediting personal accounts and illustrate each. 9. State the general rules for debiting and crediting loss and gain accounts. 10. What is usually included under the term "Cash ?" 11. Define and illustrate Bills Payable. 12. Define and illustrate Bills Receivable. 13. Give rules for debiting and crediting Bills Receivable and Bills Payable. 14. Give rule for debiting and crediting the Interest account. 15. In the following list of property, which, at the time of purchase, should be charged to Chattels, and which to Expense? Postage Stamps, Lamps, Coal Oil, Ink, Lumber (for boxing) , Brooms and Brushes, Drays, Telephones, Fuel, Incandescent Lamps, Lamp Shades, Harness, Hav for dray horse, Scissors or Knives used in store, Twine, Nails, Scales, Office Books, City Directory, Wrapping Paper, Shelving, Dictionary, Lubricating Oil for Machin- ery, Typewriter Ribbons, Cigar Lighter, Ice stored in ice house and used in business for refrigerators. Copying Books for letter press, Stoves, Fly Paper, Zincs or other material for electric batteries. Bunting for decorations. Soap and Towels for lavatory, Book Covers or Binders for card system, Shipping Tags, Awnings. * 16. What property is included under the term "Real Estate?" 17. For what are the real estate accounts usually debited? For what credited? 18. Give rule for debiting and crediting the General Loss and Gain account. 19. For what is the Proprietor's Investment account debited? For what credited? 20. For what is the Proprietor's Personal account debited? For what credited? Set Two, Supplementary— Wood and Coal Business This set requires the same kind of books and accounting methods as those used in Set Two, and the following transactions are introduced to reinforce the work of the preceding set. Preparing Your Blanks. If loose leaf blanks are used, the student will place ruled paper in the binders for this set, as follows : Journal, Notes, and Cash 1st Cord — 1 sheet journal ruling for Journal. •2d Cord — 1 sheet journal ruling for Cash Book. Purchase and Sales 1st Cord — 1 sheet journal ruling for Sales Book. Ledger and Trial Balances 1st Cord — 2 sheets 2 acct. ledger with index tip for Ledger. 2d Cord — 1 sheet journal ruling for Trial Balances and Statements. In this business the student will act as bookkeeper for J. L. Hammond, a dealer in wood and coal. He will write up the entire set in the original books, but will post no entries to the ledger until directed to do so later in the text. TRANSACTIONS OPENING STATEMENT Dec. 1. Retail Wood and Coal Business conducted by J. L. Hammond, at 54 Main Street, Auburn, Ohio. Invested Resources: — Cash per balance in City Bank, $1500. Mdse. inventory of Coal and Wood in yard, $745.50. Teams, office fixtures and other property as inventoried under chattels, $425. Bills Receivable, notes on hand, $342.60, listed as follows : A. P. Lowe, $80; Charles Ranger, $92.10; H. I. Carman, $170.50. H. S. Chase, balance on account, $52.20. Liabilities: — Bills Payable, proprietor's outstanding notes, $241.50, listed as follows : A. P. Johnson, $50; J. L. Holmes, $125; G. C. Miller, $66.50. Dec. 2. Handed A. G. Miller my check for office rent to Jan. 1, $25. Received a car of Coal from Western Coal Co., per their bill of Dec. 1, at 30 Paid cash for freight on coal shipment from Western Coal Co., $17.50. Sold to L. M. Farnsworth on account, 6 tons Hocking @ $3.75. Cash sales of Coal and Wood to date, $85.90. (See entry No. 7, Model Sales ) Sold to Thos. Lynch, at 30 days, 16 tons nut coal @ $5.50. Received from H. S. Chase cash on account, $25. Paid to C. A. Jarvis for first quarter's rent of coal yard, $150. Cash sales of Mdse. to date, $148.90. Handed A. P. Johnson my check for $50 in payment of my note of May 1. Sold to C. B. Daniels on account, 5^ tons Coke @ $7.80. Received a carload of Scranton coal from A. Burnett & Sons, Pittsburg, Pa., billed Dec. 5, at 60 days, for $179.60. Dec. 10. Paid cash for freight on coal shipment of A. Burnett & Sons, $27.40. " 11. Cash sales to date^ $172.45. " 12. Sold to H. S. Chase on account, iy 2 cords 4-foot Hickory @ $4.75. Note. — When the amounts involve fractions of a cent less than y 2 , the fraction is dropped. When the fraction is % or more it is considered one cent, thus, $7.91 % would be entered $7.91; $7.91^ would be entered $1.92. This rule does not apply to prices, but to amounts only. Dec. 13. Bought of L. T. Jones on my note at 90 davs, 50 cords oak stove wood @ $1.45. Dec. 14. Received from A. P. Lowe, cash for his note of June 18, $80, with six months' interest at 6 per cent. —90— tt 3. days ;, $146.50. Dec. 3. it 4. n 4. Book, page 58 Dec. 5. tt 5. tt 6. tt 7. it 9. tt 9. tt 10. SET TWO, SUPPLEMENTARY— WOOD AND COAL BUSINESS , 91 Dec. 14. Handed my check to the Eagle Mining Co. in payment for coal delivered in yard per bill of this date, $249.60. Dec. 15. Sold to A. P. Cooper on his note at 60 days, 9 tons Nut Coal @ $5.50, 8 cds. 4-foot Hickory @ $4.75. Dec. 15. Cash sales to date, $158.75. " 16. Gave check for $154.20 to Hocking Valley Coal Co. in payment of carload of coal received this day. Dec. 16. Paid cash for freight on above coal, $11.25. " 18. Sold to Thos. Lynch on account, 9 tons Coke @ $7.80, receiving his check for $50 to apply on sale, balance on account. Dec. 19. Paid J. L. Holmes cash for my note of Sept. 20, $125, with 90 days' interest at 6 per cent. Dec. 19. Cash sales to date, $215.25. " 20. Bought for cash of Central Hardware Co., a set of platform scales for use in coal yard, $22.75. Dec. 20. Bought of the Eagle Mining Co., 3 carloads of steam coal, cost as billed, $269.50. Gave them cash to apply, $100. Balance at 30 days. Enter whole amount of bill in journal and charge Eagle Mining Co., in cash book, for the amount of the payment. Dec. 21. Sold to C. B. Daniels on account, 7 tons Hocking @ $3.90. " 22. L. M. Farnsworth gave us his check for $15 to apply on account. " 22. H. S. Chase has settled his account to date by giving his note at 30 days for $62.83. Dec. 23. Remitted to A. Burnett & Sons, Pittsburg, N. Y., cash per draft, $125, to apply on account. 'Dec. 23. Paid cash for teamster's salary to date, $56.25. " 24. Sold to C. B. Daniels, 12 tons Pocahontas @ $7.60. He hands us his check for $60 to apply on sale. In this transaction, we charge Mr. Daniels with the whole amount of the sale in the sales book, then credit him in the cash book for the payment. Following are the forms of entry: SALES BOOK ENTRY CASH BOOK ENTRY Dec. 24. Loaned F. T. Beach cash $250, for which he has given his note at 60 days. " 24. Cash sales to date, $227.40. " 26. Chas. Ranger has given us his check in payment of his note of Oct. 27, for $92.10, with 60 days' interest at 8 per cent. Dec. 26. Paid Harper & Sons cash for office stationery, per bill rendered, $7.40. " 26. Settled our account with the Eagle Mining Co. to date by giving them our note at 60 days. Dec. 27. Sold to H. S. Chase on account, 17 tons Lehigh Val. Coal @ $4.90. " 27. Bought of the Eagle Mining Co. at 30 days, 2 carloads Pocahontas, per bill of Dec. 24, $257.60. Dec. 28. Received from G. C. Miller, cash for overdue interest on his note of Jan. 1, $7.55. Dec. 28. Bought of Western Coal Co., 3 carloads Hocking Valley, per their bill of Dec. 27, $273.50. Gave them our check for $150 to apply on bill. 92 NEW INDUCTIVE BOOKKEEPING Dec. 29. Bought of the Martin Implement Co. on our note at 30 days, coal wagon for our delivery department, $145. Dec. 30. Paid in cash, Daily Journal advertising bill, $15.25. " 30. Handed the Eagle Mining Co. our check for $175 to apply on account. " 31. Cash sales to date, $325.90. Balance your cash and foot your journal and sales book. Before beginning to post your books, carefully study- the following instructions : . Safe-Guard Systems. These comprise various devices used by accountants for testing the accuracy of ledger postings. The sideposting exemplified in the previous set is one of them. Other systems are based on the so-called "check-number," or the number that remains after dividing a given number by another number,, as 9, 11, 13, etc. There are several check- number systems, but the "Check-Eleven System" is the one most favored by accountants, and will be used in this set. In the Check-Eleven System, the check number is the number that remains after dividing a number by 11. Thus, the check number of 25 is 3, since 3 remains when we divide 25 by 11. In like manner, the check number of 37 is 4, while the check number of 60 is 5, of 117 is 7, and so on. By the application of certain arithmetical principles, the check number may be obtained more easily than by dividing the whole number by 11. These principles may be stated as follows : 1. A number is exactly divisible by 11 when the sum of its odd digits equals the sum of its even digits. Note. — By "odd digits" we mean the units, hunreds, ten-thousands, millions, etc. The "even digits" are the tens, thousands, hundred-thousands, etc. Thus, in the number 8264579, the "odd digits" are 9, 5, 6, and 8 (the 1st, 3rd, 5th, and 7th orders), while the "even digits" are 7, 4, and 2, (the 2nd, 4th, and 6th orders). For illustration, the number 351296 is exactly divisible by 11, because the sum of its odd digits (6 + 2 + 5 = 13) equals the sum of its even digits (9 + 1 + 3 = 13). 2. The sum of the odd digits less the sum of the even digits equals the check number or the remainder obtained by dividing the whole number by 11. Thus, in the number 123456, the sum of the odd digits is 12, while the sum of the even digits is 9. The check number, therefore, is 3. (123456 -+- 11 = 11223 and a remainder of 3.) 3. When the sum of the even digits is greater than the sum of the odd digits, add 11 to the sum of the odd digits (or subtract 11 from the sum of the even digits) before subtracting to get the check number. Thus, in the number 654321, the sum of the odd digits is 9, while the sum of the even digits is 12 ; to get the check number we may add 11 to 9, obtaining 20 ; then 20 — 12 = 8, the check number, or we may subtract 11 from 12, obtaining 1 ; then 9 — 1 = 8, the check number. Note. — If after subtracting the sum of the even digits from the sum of the odd digits the re- mainder is greater than 11, the check number Is found by subtracting 11 from this remainder. Thus, in the number 171348, the sum of the odd digits is 18, and the sum" of the even digits is 6. 18 — 6 = 12 —11 = 1, the check number. EXERCISE Find the check number for each of the following amounts : $ .35 $ 25.90 $172.19 $211.10 .76 123.50 63.40 . 304.23 1.21 327.54 21.00 192.83 6.54 128.76 50.07 641.17 12.40 321.15 500.05 370.20 Casting out the ll's. In the case of larger numbers, the same results may be secured and the process considerably shortened by dropping or "casting out the ll's" during the pro- cess of adding. Thus, the check number for 48769538 is 4. Instead of adding all four of the odd digits in the usual way, we proceed as follows : 8 -f- 5 = 13 — 11 = 2 + 6 + 8 = 16 — 11 = 5. Then, dealing in the same way with the even digits, we have, 3 + 9 = 12 — 11 SET TWO, SUPPLEMENTARY— WOOD AND COAL BUSINESS 93 = 1 + 7 +4 = 12 — 11 = 1. Then 5, the resultant of the odd digits, less 1 = 4, the check number. Again, the check number of 996761 is 7, found as follows : 1 — (- 7 -j- 9 = 17 ; 6 -f- 6 = 12 — 11 = 1 + 9 = 10. 17 — 10 = 7, the check number. EXERCISE Using the process illustrated in the previous paragraph, find the check numbers of the following amounts : $9876.59 $47698.37 $96875.97 8769.78 98765.87 87968.75 4796.58 86597.48 68975.98 Note. — Some bookkeepers prefer to get the check-number by the method of the totals, without cast- ing out the ll's. Others prefer the latter method. In your subsequent work you may use your own pref- erence as to these two methods. Application of the System. The value of the check-eleven safeguard system in ac- counting depends upon the following principle: In any column of figures, the check-numbers of the several amounts will, when added, give the same check-number as the footing of the column. The accompanying form shows a balanced opening entry the posting of which has been tested by applying the foregoing principle. The check-numbers of the several amounts, after each has been posted to the ledger, are entered in "check columns" ruled for the purpose. The check-numbers are then added (the ll's being "cast out," as previously explained). As the two check columns give the same check-number, 10, and as this agrees with the check- number of the general footing, the posting is assumed to be correct. AN OPENING JOURNAL ENTRY WITH CHECK FIGURES j- fyj/js / ' f//S 7 4. Z yJ^f n J~0 & ^J//> 1J" /&£££*■ tfLr^J^U, cT2f -7 O LsL *J?^£^UZ-<£-4{~^ jlL IS- / z 2 7^- J j£ A/"~ *■• v f 7^7 z r -7 j 7 The student should bear in mind that the purpose of the safeguard system is to prove that the right postings have been made in the ledger, also, that to secure this end, the check- numbers must be obtained not from the amounts as entered in the journal or other book of original entry, but from the amounts as actually entered in the ledger. The check-numbers thus obtained are then entered opposite the posted amount in the journal, and serve as a post- mark instead of the check-mark ( V ) used in the last set. The check-mark is then unneces- sary, as the check-number not only shows that the amount has been posted, but (through the final test when the column is proved) it shows that it has been posted correctly. 94 NEW INDUCTIVE BOOKKEEPING Note. — It should be observed that the check-eleven system will not show a posting error in any case where the totals of the odd and even digits remain unchanged. Thus, if the amount 735.62 is posted 732.65, the error will not appear, as this transposition does not affect the totals of the odd or the even digits, and the check-number, 5, remains the same in both amounts. Transpositions of this kind are, how- ever, very unusual. But if, as is more likely to happen, an even digit and an odd one are transposed, the error will be shown. For instance, if 7.65 be posted 6.75, the check-number of the incorrect entry will differ from that of the correct one. As to the practical value of this safeguard system to the student, it may be observed : (1) The use of the system is required in many counting rooms and business offices. (2) It will enable the student to avoid incorrect trial balances in his own work, as these usually result from wrong postings. (3) It affords most valuable mental drill in the manipulation of numbers. As your books are not provided with "check columns," the check-numbers are to be entered in small figures to the left, near the double ruling and a little above the amounts, to indicate that the check-numbers are not a part of the amounts. You are now to post your books of original entry, carefully following your instructions. Use the check-eleven safeguard system for all postings in this exercise unless otherwise instructed by your teacher. Be sure to get the check-number from the amount posted in the Jedger, not from the amount as entered in journal, cash book, or sales book. Ledger Folios. Before posting any book, enter the ledger folios opposite all entries, as instructed in the previous business. As you are to use the check-eleven safeguard, you will, of course, not use the side posting employed in the previous business. After posting the journal, prove the correctness of your journal postings by the check-numbers, as shown in the form on page 93, before proceeding to post the cash book. Prove the latter book in the same way as the journal, then the sales book. This proof of the ledger, a section at a time, goes far toward assuring a correct trial balance. In the case of sales for cash, the check-numbers should be entered for these amounts in both sales book and cash book. It is believed that a careful study of the foregoing instructions will enable the student to safeguard his postings in the present set, but as an additional aid we will give here the check- numbers of the journal, cash book, and sales book totals. Journal debits and credits each, check-number, 5. Cash Book credits, check-number, 1. Cash Book debits, check-number, 1. Sales Book total, check-number, 10. Note. — The fact that the check-numbers on the two sides of the cash book are alike is, of course, a mere coincidence, as the debit total $1667.83, happens to be a number that has the same check-number (1) as the credit total, $1713.48. Do not omit to post your sales book total to the credit of Merchandise. As soon as you have completed your posting, pass your journal, cash book, and sales book to the teacher for inspection. When your postings have been proved, (1) prepare a trial balance; (2) prepare a state- ment of resources and liabilities and of losses and gains, taking into account inventories of Chattels $230, Expense $102.50, and Merchandise $250.25; (3) close the books as in pre- vious business. Prepare your books for inspection and submit them to your teacher for approval as heretofore. Set Three — Produce and Provision Business In this set the student will act as bookkeeper for a partnership firm, using the journal, cash book, and sales book for original entries the same as in the preceding set. The student should post no entries to the ledger until instructed to do so later in the text. Preparing Your Blanks. If loose leaf blanks are used, the student will place ruled paper in the binders for this set, as follows : Journal, Notes, and Cash 1st Cord — 1 sheet journal ruling for Journal. 2d Cord — 2 sheets journal ruling for Cash Book. Purchase and Sales 1st Cord — 2 sheets journal ruling for Sales Book. Ledger and Trial Balances 1st Cord — 3 sheets 2 acct. ledger with index tip for Ledger. 2d Cord — 1 sheet journal ruling for Trial Balances and Statements. In this business only one ledger account will be required for each partner. This account will contain all of his debits and credits without making any distinction between investment and personal debits and credits. Unless otherwise instructed by your teacher, you will use the check-eleven safeguard as in the previous business. This business begins with a schedule of the resources and liabilities as invested by the two partners. The form of opening entry shown on page 96, with the exception of date, amounts, and check numbers, is identical with the required entry. The form shows the entry as it would appear after being posted and proved. Note. — In the case of an opening entry involving a number of amounts, it is well to post to the ledger and prove as soon as the books are opened. Entering Amounts of Notes. In a business where a great many notes are handled, a special registry book called a Bill Book is kept for the purpose of listing all notes. When there are but a few notes, a bill book is unnecessary, but it is well to list in the journal the notes on hand and outstanding when the books are opened. This is done in the model opening for this set. The accounts in this set are to be paged as follows : C. F. Roberts, Partner, page 1 ; George H. Adams, Partner, 1 ; Chattels, 2 ; Expense, 2 ; Interest, 3 ; Merchandise, 3 ; Loss and Gain, Closing, 4 ; Bills Receivable, 5 ; Bills Pavable, 5 ; A. N. Davis, 6 ; Charles Daniels, 6; Randall & Sons, 7; Western Milling Co., 7; f. W. McLean, 8; S. B. Potter, 8; Central Produce Co., 9; L. Matthews, 9. TRANSACTIONS Jan. 2, 19 — . Conditions of partnership and schedule of investment : C. F. Roberts and George H. Adams have this day formed a partnership for continuing the business of C. F. Roberts, under the firm name of Roberts & Adams, at No. 29 Market Street, Lincoln, Neb. They are to invest equally and share equally in gains and losses. C. F. Roberts invests cash, $127.95; a stock of merchandise inventoried at $1,485.25; safe, scales and store fixtures (classed as chattels) inventoried at $359.75; notes receivable amounting to $456.25, listed as follows: L. T.Upson, $174.60, Charles Hall, $128.50, Geo. Harmer, $29, C. A. Winter, $124.15 ; accrued interest on notes receivable, $11.75 ; balance due from A. N. Davis on account, $64.50; balance due from Charles Daniels on account, $95.15. The firm assumes the following liabilities for C. F. Roberts : Notes outstanding signed by G F. Roberts, $342.50, listed as follows : H. Walker, $87.40, C. M. Bell, $100, A. P. Hall, $105.10, E. C. Mallory, $50 ; accrued interest on notes outstanding, $12.50 ; balance due Ran- dall & Sons on account, $245.60. George H. Adams invests a delivery wagon and team (classed as chattels), inventoried at $325, and cash $1,675. —95— 96 NEW INDUCTIVE BOOKKEEPING Jan, 2. Paid Seymour & Co. cash for an invoice of Butter and Eggs, $41.90. " 2. Paid cash for store rent to April 1, $180. " 3. Sold to A. N. Davis on account at 30 days : 15 brl. Snowflake Flour @ $5.50 25 doz. Eggs @ .28 MODEL OPENING ENTRY— PARTNERSHIP— WITH CHECK FIGURES ^-^-d^^-^^^^f^ g^-^Z^. -g^T" <^^^^U^^^Z^c_^>^2^^^^^< -^Z^L^S^-zg^^-^ =z^?~7^£^J /J^JJ 2Z. J &£#^££^Zy /S^^^J &*£££& yf fxS j Z d~~ (, C 3- £ /3^Z^^/f^cJ ^-^L^y^z^^^ z^^ y /^^// cyjL^^^^^ / & /? & ■- 27"" Jan. 10. Petty cash sales today, $71.90. V 10. M. F. Carter presents an order from S. B. Potter requesting us to sell Mr. Carter Mdse. to the amount of $85 and charge the same to his (Mr. Potter's) account. On this order Mr. Carter buys the following goods : 5 brl. Snowflake Flour @ $5.60 300 lb, Dairy Butter @ .19 Enter in the sales book as follows : A SALE ON ORDER FROM THIRD PARTY j£fea&: L#. ti ^^A L^f«z5S^£< x^^L^^*r^a~**-£/. s&S^ . ^*^r &-tZ^L^f' /£-&cz50>^?-~ ^-£ ^~y _Zk£l /^^^i^^> /^/^x-st/'*^ A*z*/~&* ^-^^c^ When the sales book is posted, this order will, of course, be posted to Mr. Potter's account. A check mark is entered opposite the name of Mr. Carter. Why? Jan. 11. Cash purchases of produce today, $181.72. " 11. Chas. Hall has given us a check to apply on his note, $128.50. " 12. Paid Robins Bros, cash for set of harness for delivery team, $37.50. " 12. Bought of Geo. Harmer 38 bu. Potatoes @ 50 cents, the amount to be applied as a payment on his note of Sept. 1. Jan. 12. Geo. H. Adams has had delivered to him at his residence, 1 brl. A Sugar, 296 lb., @ 6 l / 2 c; 2 brl. Apples @ $3.25; 5 bu. Potatoes @ 65c. Enter in sales book and debit Geo. H. Adams when you post. Jan. 12. T. W. McLean, one of our customers, orders 25 sk. Richland Buckwheat Flour. As we do not have this brand, and as it is sold by S. B. Potter, we have given Mr. McLean the following order for the goods: Mr. S. B. Potter, City. Dear Sir : — Kindly deliver to the bearer, Mr. T. W. McLean, 25 sk. Richland Bk. Flour at the current price, 75 cents per sk., and charge the same to our account. Roberts & Adams. Decide what journal entry should be made in this case. Having decided, write the entry in a piece of practice paper, submit it to your teacher, and if approved, record in your journal. Jan. 13. Sold to A. W. Monroe on his note at 60 days : 15 brl. Pork @ $14.00 25 brl. Snowflake Flour @ 5.40 Jan. 13. C. F. Roberts withdraws cash on account, $25. " 13. Bought of the Central Produce Co. on account, Mdse. per bill rendered Jan. 10, $274.40. Jan. 13. Paid office salaries in cash to date, $61.50. 13. Bought of the Chicago Safe Co., an office safe for use in business, $185. Gave them check for $100 and the firm's note at 30 days for the remainder. (Journalize this transaction on a piece of practice paper and submit to your teacher for approval before entering in the journal.) SET THREE— PRODUCE AND PROVISION BUSINESS 99 Jan. 13. Paid cash for freight on safe, $21.60. (As this freight charge is really a part of the cost of the safe it should be charged to Chattels.) Jan. 14. The Hamilton Tribune presents bill for advertising to date, which is paid in cash, $12. Jan. 14. C. F. Roberts' note (one of the Bills Payable assumed by the firm) in favor of A. P. Hall, for $105.10 with accrued interest, $6.15, has been paid to Mr. Hall in cash. Jan. 14. Sold to A. N. Davis: 24 bu. Wh. Beans @ $2.10 5 brl. Apples @ 3.40 50 bu. Potatoes @ .55 He has given us his check for $40 to apply on sale. Jan. 14. Petty cash sales today, $94.45. Geo. H. Adams draws cash on personal account, $50. Sold to L. Matthews, 50 bu. Potatoes @ 70c ; 25 brl. Acme Flour @ $5.40 ; @ $2.75, on account. Sold our old office safe to Chas. Daniels on account for $75. Sold to T. W. McLean on account : 16 brl. Sn. Flour @ $5.75 10 cs. Eggs . @ 2.65 Bought of Hall, Davis & Co., on our note at 60 days, Mdse. per bill of Jan. Paid cash for freight on above bill, $18.70. A note signed by Geo. H. Adams, in favor of L. Moore, for $560 with ac- crued interest, amounting to $17.40, has been paid in cash by the firm. Charge these items to Adams' account in the cash book in one entry. Jan. 16. C. F. Roberts purchases on his personal account, 1 brl. Apples @ $3.50; 5 bu. Potatoes @ 65c; 50 lb. Sugar @ 5^c. Jan. 16. L. T. Upson hands us his check to pay balance of his note, $124.60, and ac- crued interest, $17.50. Jan. 17. Sold to S. B. Potter on account : 25 brl. Pork @ $14.00 60 bu. Potatoes @ .60 Jan. 17. T. W. McLean has given us his check for $75 to apply on account. Jan. 17. S. R. Day, proprietor of the Hamilton Tribune, has presented advertising bill to date amounting to $32.75. It has been arranged to pay this bill by giving him an order for merchandise on Chas. Daniels. Give careful thought to this transaction before journalizing. Jan. 17. Remitted to the Western Milling Co. on account, cash per Chicago draft, $100. (Bank drafts are designated by the name of the city where they are payable, as "Chicago drafts;" "N. Y. drafts," etc. They are, of course, treated as cash.) Jan. 17. Petty cash sales today, $113.35. Jan. 18. Sold to C. S. Munson : 20 brl. Sn. Flour @ $5.75 150 bu. Potatoes (a) .60 15 bu. Wh. Beans @ 2.20 He hands us cash to apply on sale, $100, and his 30 day note for balance. We give on page 100 the form of sales book entry as it would appear after posting. Why are the check marks entered opposite the name of C. S. Munson and Cash? a 14. " 14. 15 brl. Onions Jan. 16. tt 16. 12, Jan. 16. $244.75. Jan. 16. (< 16. 100 NEW INDUCTIVE BOOKKEEPING A SALE FOR CASH AND NOTE // y C/ot 'T^i^^d^^y J2 a ^J^t^y '_x^*iS <&£*--&^-^ ifst J~~ / i/~> <-£toS &L&-?t^zL a /\f „ 3£/y /&^^^ f.2a ^ (jLtZ^^Ay /a/9 r /j&A/^Y&Ui) /&f. — \£v <£*e^s ^rr^frj / Jan. 18. Geo. H. Adams has delivered to the firm his check for the amount of his note and interest, in favor of L. Moore, and which was paid from the firm funds on Jan. 16. Jan. 18. Sold to A. N. Davis on account, subject to discount of five per cent for pay- ment within 30 days, 450 lb. Lard @ 7%c; 260 lb. Butter @ 19>^c; 40 bu. Beans @ $2.30. Enter terms in the sales book as follows : A SALE ON ACCOUNT WITH A DISCOUNT OFFER ^Ja& u'ZZ >^y^? <^^^^i-^-7s/ £^7Z/ V* V Jan. 18. Handed E. C. Mallory cash, $50, to apply on Roberts' note in his favor of Nov. 15, assumed by the firm in the opening entry. Jan. 18. Bought of F. J. McCormack 175 lb. live poultry @ 8^ cents. Gave him in payment an order for merchandise on T. W. McLean. Jan. 19. T. S. Appleton has sent in his bill for stationery for office, $17.25, which has been paid in cash. Jan. 19. Remitted to Central Produce Co., cash on account, $150. " 19. Geo. H. Adams has drawn out cash for personal use, $75. " 19. Cash sales today, $391.70. " 19. Bought of T. S. Bell for cash, 5 tons Coal @ $7.20, for use in store. " 20. Sold to A. N. Davis : 18 brl. Pork @ $13.50 125 bu. Potatoes @ .70 He has given his check to apply on sale, $200, balance at 10 days. Jan, 20. Gave J. B. Jones, our produce buyer, cash $750.25, for sundry purchases of produce per bills rendered. Jan. 20. Sold to the Central Produce Co. 120 cs. Eggs (a) $2.55, 375 lb. Live Poultry @ 8^2 c. They have given us their check for $250 to apply. Balance at 30 days. Jan. 20. C. F. Roberts has had delivered at his residence, 2 tons of the firm's Coal pur- chased Jan. 19, for which he is charged at the rate of $7.50 per ton. Journalize this transaction on a piece of practice paper and submit it to your teacher for approval, before entering in your journal. Jan. 20. Bought of C. A. Winter a bill of produce amounting to $28.75, which is to be applied in part payment of his note of Aug. 15, and now held by the firm. Jan. 21. Settled our account with Randall & Sons to date by handing them our 30 day note for $220.60. Jan. 21. Petty cash sales today, $162.55. SET THREE— PRODUCE AND PROVISION BUSINESS 101 Jan. 23. Sold to Central Produce Co. on account : 65 cs. Eggs @ $2.40 428 lb. Live Poultry @ .08 Jan. 23. Received cash from L. Matthews to apply on account, $200. " 23. Sold to N. Smith & Co., for cash: 140 bu. Potatoes @ $ .60 25 bu. Wh. Beans @ 2.20 756 lb. Lard @ .07 Jan. 23. Geo. H. Adams has withdrawn cash for personal use, $15. " 24. Paid cash for telephone rent for January, $3.75. " 24. Bought of S. P. Martin & Sons, Merchandise per their bill of Jan. 23, $348.25. Gave them our note at 60 days for $250 and cash for the balance. Jan. 24. Paid cash for freight on goods purchased of S. P. Martin & Sons, $34.90. " 25. Sold to Chas. Daniels, receiving his check for $150 in part payment, balance on account : 800 lb. Lard @ $ .07^ 35 brl. Sn. Flour @ 5.60 200 lb. Butter @ .18 Jan. 25. Purchased from A. T. Brown a quantity of Butter amounting to $19.25, giv- ing in payment our order on Charles Daniels for cash. Jan. 26. C. A. Winter has given us his check in payment of his note of July 10 for $95.40 with accrued interest, $4.25. Jan. 27. S. B. Potter has given us his check for $250, to apply on his account. " 28. Bought of the Madison Vehicle Co., on our note at 60 days, a dray for use in our delivery department, $75. Jan. 28. Chas. Daniels has given us his note at 60 days for $200 to apply on account. " 29. Sold to R. Shaw & Co. 50 brl. Apples @ $3.75, 25 brl. Acme Flour @ $6.40, receiving in payment their check for $250 and their note at 30 days for the balance. Entry as in sale of Jan. 18 to C. S. Munson. Jan. 29. A. C. Talbot of 25 Harper street, has presented the following order : Roberts & Adams, Lincoln, Neb., Jan. 26, 19 — . Lincoln, Neb. Dear Sirs : — Kindly deliver to the bearer, Mr. A. C. Talbot, goods from your store to any amount not exceeding one hundred dollars, and charge the same to our account, sending us bill for same. Very truly, Randall & Sons. On above order Mr. Talbot has purchased 5 brl. Flour (5) $6.50, 50 bu. Potatoes @ 60c, 200 lb. Bacon (a) 13^ c. Entry as in sale on order of S. B. Potter, Jan. 10. Jan. 31. Petty cash sales today amount to $171.20. Balance the cash book and foot up the journal and sales book ready for posting. Post the ledger, and prepare trial balance as previously instructed. Partnership Balance Sheet. The Financial Statement and the Statement of Profits and Losses for a partnership do not differ from those required in an individual proprietor- ship. In the Balance Sheet Proof, however, the investment balance of each partner is entered, and the net gain of each is added to show the present net investment of each partner. A form for a Balance Sheet Proof as required for this business is given on page 102. Study it carefully before preparing your Balance Sheet Statements. After which close your books, as previously instructed, prepare them for inspection, and deliver them to your teacher for approval. The inventories for this closing are as follows : Chattels $ 900.00 Expense, prepaid rent 120.00 Interest Receivable 7.50 Interest Pavable 6.25 Merchandise 2225.37 102 NEW INDUCTIVE BOOKKEEPING Note. — The inventory of interest receivable is entered to the credit o* the Interest account, and the interest payable to the debit. Why? In closing the ledger, close the Expense, Chattels, Interest, and Merchandise accounts into "Loss and Gain Closing Jan. 31." Then close the latter into the partners' accounts, crediting each with one-half of the net gain. While waiting for the return of your books, prepare for the General Review Quiz On this page. PROOF OF BALANCE SHEET PARTNERSHIP GENERAL REVIEW QUIZ 1. What is the use of the Cash Book? 2. In what respect does the Cash Book differ from the Cash account in the Ledger ? 3. How do we post from the Cash Book? 4. How is the Cash Book balanced ? 5. How do we mark the Cash Book entries that do not require posting? 6. What is the use of the Sales Book ? 7. Of what does each Sales Book entry consist? 8. How do we post debits from the Sales Book? 9. What credits do we post from the Sales Book? 10. What is the object of a Trial Balance? 11. Does the Trial Balance always prove that the Ledger is correct ? 12. What steps should be taken if the Ledger is not in balance? 13. What should be done preparatory to closing the Ledger ? 14. What inventories are resources, and what ones are liabilities? 15. How are inventories recorded in the Ledger? 16. What Ledger accounts are usually closed? 17. How should the closing Loss and Gain account be closed ? 18. How should the proprietary account be closed ? 19. Name your Commercial Accounts in Set Three. 20. Name your Financial Accounts in the same set. Set Four— Retail Grocery Business In this set, the student is to assume the proprietorship of a retail grocery business fol- lowing the latest and most practical methods in current use among retailers. The books are to be kept in the first part of the set, by the method known as "Single Entry." In this form of bookkeeping, accounts are kept with cash and personal accounts only, and the "double entry principle" (see page 7) is applied only in the case of cash trans- actions. Thus, if a sale on account is made, the buyer is debited, but, as no account is kept with merchandise, there will be no corresponding credit, as there would be in double entry. Also, if we pay out cash for expense, we credit cash, but, as there is no Expense account, no debit entry is made. Note. — In "pure single entry," no accounts would be kept except with persons, but such method is rarely if ever used, since it is always necessary to keep the cash account, and very often an expense ac- count is also kept. In fact, as many accounts may be kept as is desirable, but the method is still called "single entry" unless there is a complete system of accounts, involving a debit for every credit, in which case the system is called "double entry." Single entry is adapted tq> small retailing shops, or stores, where the most important ac- counts are those with persons, and where the proprietor does not care to keep special accounts with the various sources of loss or gain. To afford the student means of comparing the methods and merits of these two general forms of accounting, the first seventy-three transactions of this set will be recorded by the single entry method and the remainder by double entry. The books generally used in single entry are the day book, cash book, and ledger. THE DAY BOOK This book (also called "journal") is ruled like an ordinary journal, except that the vertical blue lines, to separate titles from explanation, is not used. The money columns are not used to distinguish debits and credits, as in the double entry journal. The first money column is used for items, the second for totals, while the debits are distinguished from the credits by writing the abbreviations "Dr." and "Cr." after the title in each entry. The day book is also used for "memorandum entries," that is," brief records of transac- tions, not involving a debit or credit on any account, but a record of which it is desirable to keep. The accompanying form of day book illustrates the method of keeping this book. The entries, except as to dates and amounts, are the same as those required by the students' day book in the transactions indicated. FORM OF DAY BOOK WITH ILLUSTRATIVE ENTRIES '^ ^A^t^^^^^f^y^ ^z-^AJ^r. -~-^- opt? •(£>?. '■ ^ ^t^i-tSi/ Ssf .-!&«■ ^&t- <&^ <**-*# «Yr- ^d ^^r^^^^i^ ^ ^Z^-^zX> ^51 ^ / 2^ ^S^Z-^d^^^-^l^cX 2 "/, 6. Sell C. E. Bonner, 229 Fourth Avenue, to be delivered by 10 a. m., 6 lb. G Sugar @ 6 J / 2 c, 2 cans Peaches @ 25c, 6 cakes Ivory Soap @ 5c, 5^ lb. Butter @ 22c, 1 pk. Turnips @ 18c, 2 gal. Maple Syrup @ 75c, 2 lb. Coffee @ 35c, collecting cash for the bill. Follow the routine given for Transaction 5. 7. The Union Hotel Co., 316 Park Avenue, order on account for delivery at 10 a. m., 100 lb. G Sugar @ 6V 2 c, 20 lb. Mocha Coffee @ 40c, 10 doz. Eggs @ 18c, 1 doz. Canned Peaches @ 25c per can, 5 lb. Tapan Tea @ 45c, 15 lb. Ham @ lie, 1 box Grapes, 20 lb., @ 12c. Select one of your account pads for the Union Hotel Co., writing their name on the cover. Make entry on the first white sheet and carbon duplicate on the yellow sheet, like the form on page 110 except that the amount forwarded will be blank on the first sale. Office Course. Deliver this sale ticket at the Commercial Exchange. Tablet Course. Deliver through Outgoing Papers. this sale ticket Enter the amount of this sale in your cash register in the column marked "Sales on Account." 8. Sell John Emery, 492 Third Avenue, 2 pa. Rolled Oats @ 10c, 2*/ 2 lb. Cheese @ 15c, 4 lb. Prunes @ 12^ c, 3 lb. Java Coffee @ 35c, collecting cash for the bill. Follow the usual routine for cash sales. If the time for delivering the merchandise is not specified in the order, the time will be left blank in the sale ticket. 9. Pay John Turner cash for cleaning store room, $2, taking no receipt. Follow the usual routine, delivering a slip of paper with the currency descriptive of the transaction. Take the money out of your cash register, leaving a ticket in the register for entry at the close of the day. 10. Sell the City Restaurant, 168 Second Street, for delivery at 11 a. m., 1 brl. Apples @ $3.25, 75 lb. A Sugar @ 6c, 10 bu. Potatoes @ 50c, 5 lb. Rice @ 9*4c, collecting cash. Hereafter .the student will follow the usual routine in the case of cash sales unless special instruc- tions are given. SET FOUR— RETAIL GROCERY BUSINESS 107 11. Sell A. R. Baker, 212 Second Street, on account, 4 lb. Apricots @ 15c, 6 cakes Ivory Soap @ 5c, 5 lb. Butter @ 20c, 50 lb. C Sugar @ 5>^c, 3 lb. Java Coffee @ 35c, 2 gal. N. O. Molasses @ 40c, 10 lb. Beans @ 5c. Give Baker an account pad and proceed with the transaction as you were instructed to do in Trans- action 7. 12. Sell Mrs. N. Hammond, 217 Sixth Street, j/ 2 lb. Japan Tea @ 45c, V/ 2 bu. Potatoes @ 50c, 4 lb. Rice @ 10c, 10 lb. C Sugar @ 5^c. 4 lb. Rio Coffee @ 25c, 1 sk. Flour @ 75c, 12 lb. Mess Pork @ 9c, collecting cash. 13. Sell Henry Keister, 459 Sixth Street, 1 bu. Onions @ 95c, 6 cans Corn @ 16^c, 4 head Cabbage @ 10c, -V/ 2 doz. Oranges @ 25c, 10 lb. Beans @ 5c, 12 lb. G Sugar @ 6^c, collecting cash. 14. Sell Mrs. M. J. Fletcher, 326 Archer Avenue, on account, to be delivered by 3 p. m., 5 lb. Butter @ 20c, 2 gal. Maple Syrup @ 75c, 5 lb. Laundry Starch @ 10c, 10 lb. Rio Coffee @ 25c, 2 doz. Lemons @ 25c, 2 sk. Flour @ 75c, 1 lb. Eng. Breakfast Tea @ 50c. Give Mrs. Fletcher an account pad, and proceed as in Transaction 7. 15. Sell N. M. Martin, 424 Third Street, 6 lb. Grapes @ 12c, 3 lb. Java Coffee @ 35c, 8 lb: G Sugar @ 6^c, 6 lb. L. Starch @ 10c, 4 doz. Lemons @ 25c, 1 lb. Eng. Break- fast Tea @ 55c, collecting ca^sh. A DAY'S RECORD SHEET Cash Sales j/i/" Sales on Account 2 6j 2/ 7* ACCOUNTS RECEIVABLE. Balance Forward Sales on Account Credited on "Account: Cash Balance of Accounts Receivable *&- /AjT Allowances $. / £ 2* fS f*t In order to secure uniform results in Set Four, we have arranged for proving cash and making entries at the close of Transactions 16, 31, 42, etc., and these entries will have the current datings on the student's books. The student's cash register at the close of Transac- tion 16 will show entries in three columns, each of which should be footed up. The footing of "Cash Sales" will show the cash placed in the register ($35.73), the footing of "Cash Paid" will show the money taken out ($17.20), and the difference between these footings SET FOUR— RETAIL GROCERY BUSINESS 109 will show the balance in the register ($18.53.) As the student's work in Transaction 17 is likely to follow the balancing of the cash register without much delay, the student may place $10 in the safe (cash envelope) and keep $8.53 in the register for making change. Entries from the Cash Register. Enter the total of "Cash Sales" in your Cash Re- ceived, like the second entry in the model cash book on page 104. The two tickets for cash payments should be entered in your Cash Paid, like the second and third entries in the model cash book on page 105, the entry from the check book being written first. The model entries do not always have the same amounts that the student's books will have. In making the daily cash proof, the amount in register plus the amount in safe will make the cash on hand. Before beginning the next group of transactions, remove the first record sheet from the cash register pad and enter on the second sheet in the "Cash Sales" column, the balance of cash in the register, drawing a circle about the amount, to indicate that it is to be deducted from the total of the column to show the cash sales for the day. ( See Model Record Sheet on page 107.) 17. Sell W. C. Norton, 213 Third Avenue, 25 lb. A Sugar @ 6c, 4 lb. Apricots @ 15c, 2 sk. Flour @ 75c, 1 sk. Corn Meal @ 45c, 5 lb. Mocha Coffee @ 40c, 6 doz. Eggs @ 18c, collecting cash. 18. Pay cash for sundry farm produce, $5.10. Dispose of this transaction the same as you were instructed to do in Transaction No. 16. 19. Sell to John Thomas, 419 Grand Avenue, on account, to be delivered before 1 p. m., 2 doz. Bananas @ 15c, 4 lb. Prunes @ 12>4c, 2 gal. Crystal Syrup @ 35c, 3 lb. Java Coffee @ 35c, 2 doz. Oranges @ 25c, y 2 lb. Cheese @ 15c, 2 lb. Japan Tea @ 35c, 50 lb. G Sugar @ 6^c. Give Thomas an account pad. 20. Sell E. H. Preston, 195 Second Avenue, 1 lb. Y. H. Tea @ 45c, 2 doz. Bananas @ 15c, 2 gal. Crystal Syrup @ 45c, 4 lb. Java Coffee @ 35c, 7 lb. Bacon @ 12y 2 z, 12 lb. G Sugar @ 6j4c, collecting cash. 21. Order the following merchandise on account, using an order ticket as usual : 1 bag Mocha Coffee, 1 brl. N. O. Molasses, 1 sack Rice, 1 box Starch. Follow instructions given in Transaction No. 4, ordering of Dalton & White, unless the teacher designates another firm. 22. Sell Mrs. E. M. Sawyer, 419 Third Street, 3 doz. Eggs @ 18c, y 2 bu. Apples @ $1.50, y 2 bu. Turnips @ 75c, 2 bunches Radishes @ 10c, 2 lb. Cheese @ 15c, collecting cash. 23. Deposit cash in bank, $100. 24. Sell Cyrus Upton, 498 First Avenue, 6 cans Peaches @ 25c, 12>^ lb. Ham @ 14c, 7 lb. Apricots @ 15c, 20 cakes Ivory Soap @ 5c, 15 lb. Beans @ 5c, collecting cash. 25. Give Wilson Bros, check for $50 to apply on account, taking a receipt for same. Office Course. Leave this check at the Com- Tablet Course. Deliver the check through mercial Exchange and call for the receipt. Outgoing Papers and remove the receipt from your Commercial Exchange pad. 26. Sell E. M. Webster, 212 Fourth Street, 2y 2 bu. Potatoes @ 50c, 10 lb. Rice @ 10c, 12 lb. C Sugar @ 5y 2 c, 11 lb. Bacon @ 12>4c, 4 hd. Lettuce @ 5c, 2 sk. Table Salt @ 10c, collecting cash. 27. Sell Henry Custer, 399 Center Street, on account, to be delivered at once, 50 lb. Mess Pork @ 9c, 4 sk. Flour @ 75c, 10 lb. Butter @ 20c, 5 bu. Potatoes @ 50c, 1 bu. Onions @ 95c, 5 hd. Cabbage @ 10c, 2 bunches Radishes @ 10c. Give Custer an account pad. 28. Sell the City Restaurant, 168 Second Street, for cash, to be delivered at once, 10 pkg. Rolled Oats @ 10c, 10 lb. Y. H. Tea @ 40c, 10 gal. Crystal Syrup @ 35c, 10 lb. Cheese @ 15c, 1 brl. Apples @ $2.75, 1 brl. Flour @ $5.50, 5 cans Peaches @ 25c, collecting cash. 29. Sell the Union Hotel Co., 316 Park Avenue, on account, to be delivered at once, 10 lb. Cheese @ Uy 2 c, 50 lb. Butter @ 18#c, 25 lb. Bacon @ 12c, 1 brl. Flour @ $5.50, 6 gal. Maple Syrup @ 70c, 120 lb. C Sugar @ 5%c. Enter this sale on the second white sheet of the Union Hotel Co.'s account pad, bringing 110 NEW INDUCTIVE BOOKKEEPING forward the amount of the previous sale as illustrated on page 112. Remove the white sheet and deliver it to the customer in the usual manner. 30. Sell A. R. Cushman, 116 Ninth Street, 5 lb. Java Coffee @ 35c, y, bu. Onions @ 95c, 3 gal. Maple Syrup @ 75c, 3 hd. Cabbage @ 10c, collecting cash. 31. Sell A. R. Baker, 212 Second Street, on account, to be delivered by 1 p. m., 16 cans Corn @ 16 %c, 10 cakes Ivory Soap @ 5c, 4 doz. Eggs @ 15c, 25 lb. A Sugar @ 6c, 2 sk. Corn Meal @ 45c, 50 lb. Bacon @ 12y 2 c. Enter this sale on Baker's account pad, forwarding the amount of the previous sale. Total your cash register, and transfer all cash except $12.43 to your safe (cash envelope) as instructed after Transaction 16. Make summary entries as you did after Transaction 16, enter in cash book, and test your cash book footings without balancing. 32. Sell Hiram Oxlev, 672 Tenth Street, 2 gal. N. O. Molasses @ 50c, 3 lb. Java Cof- fee @ 35c, 2 l / 2 lb. Cheese @ 15c, 7 lb. Mess Pork @ 9c, 4 hd. Cabbage @ 10c, 3 hd. Lettuce @ 5c, 2 sk. Flour @ 75c, collecting cash. 33. Sell John Thomas, 419 Grand Avenue, on account, to be delivered by 2 p. m., 12 lb. Bacon @ 12^c, 2 sk. Table Salt @ 10c, 4 doz. Eggs @ 18c, 25 lb. A Sugar @ 6c, 5 lb. Mocha Coffee @ 40c, 12 lb. Beans @ 5c, 6 lb. Rice @ 10c. Enter this sale on Thomas's account pad, forwarding the amount of the previous sale. A SHEET FROM AN ACCOUNT PAD s™£» General Merchandise. T Salesman- (2*C Vm f"*™- Forwarded ^£i {j£*t dLi^JL^eJ. xr- * vs 4U\- 6 go 3^2_ ££ \J\f~*A3 SET FOUR— RETAIL GROCERY BUSINESS 111 34. Sell Chas. E. Gordon, 617 Fifth Avenue, on account, to be delivered before 4 p. m., 25 lb. C Sugar @ 5 J / 2 c, 2 doz. Bananas @ 15c, 4 lb. Cheese @ 15c, 1 bu. Potatoes @ 50c, 5 lb. Butter @ 20c, 4 lb. Java Coffee @ 35c, Sy 2 lb. Ham @ 14c. Give Gordon an account pad. 35. Sell J. C. Jackson, 457 Eighth Street, 2 doz. Bananas @ 15c, 9 lb. Bacon @ 12y 2 c, 2 sk. Flour @ 75c, 2 lb. Eng. Breakfast Tea @ 55c, 16 lb. G Sugar @ 6>^c, 3 lb. Mocha Cof- fee @ 40c, 2 doz. Oranges @ 25c, collecting cash. 36. Deposit cash in bank, $50. 37. Sell Cyrus Gordon, 422 Fourth Street, 2 lb. Y. H. Tea @ 45c, 25 lb. A Sugar @ 6c, 3 cans Peaches @ 25c, 6 l / 2 lb. Ham @ 14c, l / 2 bu. Turnips @ 75c, 5 lb. Mess Pork @ 9c, collecting cash. 38. Pay cash for Butter and Eggs, bought of farmers, $12.50. 39. Give your check in payment of the invoice purchased in Transaction 4, after de- ducting a cash discount of 2 per cent. Office Course. Make this payment at the of- Tablet Course. Make this payment through fice where you purchased the merchandise and call Outgoing Papers and take receipt from your Whole- for a receipt in full. sale pad. Enter this transaction in day book and cash book in the following manner, using different firm name and amount if necessary. DAY BOOK ENTRY FOR PAYMENT WITH DISCOUNT CORRESPONDING CASH PAID ENTRY j£*£c ^C^ /2^-^AJ £^?>cz^>tJ &-*-*(& 3jk£3 40. Sell Mrs. M. J. Fletcher, 326 Archer Avenue, on account, 4 pa. Rolled Oats @ 10c, 2 cans Peaches @ 25c, 1 bu. Apples @ $1.25, 5 lb. Butter @ 25c, 2 sk. Flour @ 75c, 20 lb. G Sugar @ 6^c, 2 lb. Cheese @ 15c. Enter this sale on Mrs. Fletcher's account pad, forwarding the amount of the previous sale. 41. Pay Thomas Trenton cash for delivering merchandise to city customers, $2.75, taking no receipt. Deliver this cash in the usual manner. 42. Sell Charles Daniels, 214 Seventh Street, 3 pa. Rolled Oats @ 10c, 7 lb. Bacon @ 12y 2 c, 3 gal. Crystal Syrup @ 45c, 4 lb. Rio Coffee @ 25c, 6 doz. Eggs @ 18c, collecting cash. Total and prove your cash register without making any transfer to the safe, make your summary entries, and write up and test the cash book without balancing. 43. Sell Mrs. J. G. Vance, 192 Third Avenue, iy 2 lb. Grapes @ 12c, 6 lb. Beans (a) 5c, y 2 lb. Eng. Breakfast Tea @ 55c, 10 lb. A Sugar @ 6c, 6 cans Corn @ 16 ^c, 1 gal. Crystal Syrup @ 45c, 2 bunches Radishes @ 10c, collecting cash. 112 NEW INDUCTIVE BOOKKEEPING 44. Collect cash from the Union Hotel Co. on account, $30. Forward the amount of their account to the next white sheet in their account pad ami give credit for cash, showing balance unpaid, as illustrated in the form below. A SHEET FROM THE ACCOUNT PAD WITH CREDIT ENTRY CHARGE SALE TICKET ?» General Merchandise* Sold to- **- ^£2^ Salesman- Time- Forwarded r^y /&, (Z^^O Enter this cash in your "Cash Register" in the column "Received on Account." 45. Collect cash from Henry Custer on account, $10. 46. Pay cash for produce bought of sundry farmers, $12.50. Enter in cash register, "Cash Payments," and place ticket in register. 47. Sell City Restaurant, 168 Second Street, for cash, to be delivered at once, 5 lb. Japan Tea @ 42c, 12 gal. Maple Syrup @ 62^c, 12 lb. Mocha Coffee @ 37^c, 25 lb. But- ter @ 18c, 24 lb. Beans @ 4^c, 6 doz. Lemons @ 23c, 6 doz. Bananas @ 13c, collecting cash. 48. Purchase the following merchandise on account, writing an order ticket as usual : 10 sacks Corn Meal, 20 sacks Flour, 2 cases Oat Meal. Follow the usual routine, ordering of the Western Milling Co., unless the teacher desig- nates another firm. 49. Sell C. E. Bonner, 219 Fourth Avenue, 12 lb. Beans @ 5c, y 2 bu. Turnips @ 75c, 1 doz. Lemons @ 25c, 3 hd. Cabbage @ 10c, 12 lb. Bacon @ 12^ c, 1 lb. Cheese @ 16c, 1 lb. Butter @ 18c, collecting cash. SET FOUR— RETAIL GROCERY BUSINESS 113 50. Collect cash of Mrs. M. J. Fletcher to apply on account, $10. Proceed as in Transaction 44. 51. Sell T. R. Rich, 482 Fourth Avenue, 6 lb. Prunes @ 12y 2 c, 2y 2 lb. Cheese @ 15c, 6 cans Corn @ 16%c, 6y 2 lb. Ham @ 14c, 5 lb. Rio Coffee @ 25c, 1 lb. Japan Tea @ 45c, collecting cash. 52. Give your check to pay for the invoice received in Transaction 21, less a discount of 2 per cent. Proceed as in Transaction 39. 53. Sell Mrs. John Leonard, 616 Fifth Avenue, 3 doz. Bananas @ 15c, 2 sk. Table Salt @ 10c, 2 hd. Lettuce @ 5c, 11^ lb. Mess Pork @ 9c, 1 sk. Corn Meal @ 45c, 2 pa. Rolled Oats @ 10c, collecting cash. 54. Sell Henry Custer, 399 Center Street, on account, 3 cans Peaches @ 25c, 1 sk. Corn Meal @ 45c, 2 lb. Cheese @ 15c, 50 lb. G Sugar @ 6^c 4 doz. Eggs @ 15c, 3 lb. Java Cof- fee @ 35c, 2 gal. Maple Syrup @ 75c, 4 lb. Butter @ 22^c. 55. Pay cash for farm produce, $7.50. 56. Sell E. A. Inman, 412 Fourth Avenue, 2 lb. Mocha Coffee @ 40c, 2 lb. Java Coffee @ 35c, 20 lb. B Sugar @ 6y 2 c, 12y 2 lb. Ham@ 14c, iy 2 bu. Potatoes @ 50c, 3 cans Corn @ 16%c, collecting cash. 57. Sell Charles E. Gordon, 617 Fifth Avenue, on account, 25 lb. A Sugar @ 6c, 3 doz. Eggs @ 18c, J4 bu. Apples @ $1.50, 1 bu. Potatoes @ 50c, 1 sk. Flour @ 75c, 2 hd. Let- tuce @ 5c. 58. Sell C. D. Fletcher, 219 First Street, 3 gal. Maple Syrup @ 75c, 5 lb. L. Starch .@ 10c, 2 doz. Lemons @ 25c, ^ lb. Eng. Breakfast Tea @ 55c, 2 bunches Radishes @ 10c, 2 sk..Corn Meal @ 45c, collecting cash. Total and prove your cash register entries and transfer $80.00 to the safe. Make sum- mary entries, write up and. test the cash book without balancing. The cash debit will include "total cash received." Place and enter small bills and fractional, $15.17, in the cash register preparatory to the next group of transactions. 59. Henry Custer returns 1 sk. of Corn Meal, reporting it damaged. Make an entry in Custer's account pad, like the model credit on page 108, naming the item returned instead of Cash, and deliver the white sheet the same as in a sale. Place a ticket in the register recording the value of goods returned, for entry in the summary sheet. 60. Sell S. L. Johnson, 119 Second Street, for cash, 18 lb. Bacon @ 12y 2 c, 6 lb. dried Apricots @ 15c, 5 lb. Butter @ 22c, 2 lb. English Breakfast Tea @ 50c, 3 doz. Lemons @ 25c, 3 lb. Cheese @ 15c, 20 lb. C Sugar @ 5c, 30 lb. Rice @ 10c. 61. Pay cash for farm produce, $5. 62. Buy the following merchandise on account, delivering an order ticket and receiving the invoice : 1 box Hams, 1 brl. Mess Pork, 1 box Bacon. Follow the usual routine, buying of the Harmer Packing Co. nates another firm. 63. Sell John Thomas, 419 Grand Avenue, on account, 1 bu. Apples @ $1.50, 5 lb. Butter @ 24c, 12 lb. G Sugar @ 6y 2 c, 1 bu. Potatoes @ 50c, 2 gal. Crystal Syrup @ 35c, 4 doz. Eggs @ 18c, 2 lb. Japan Tea @ 45c. 64. Five sacks of Corn Meal purchased in Transaction 48 are unsalable and should be charged back to the firm who sold them to you, and at the price billed in your invoice. Make entry in your day book like the form below. DEBIT FOR RETURNED GOODS IN SINGLE ENTRY DAY BOOK unless the teacher desig- / &. oAs. / -J~l? Jtr ijfZ*£^? ^tx^^Zk^t/ <& — ^g 114 NEW INDUCTIVE BOOKKEEPING Notify the firm and ask them to give you credit for the returned goods. 65. Give your check for one month's rent of your store room, $30, taking a receipt. Office Course. If you have a Real Estate Tablet Course. Write the check in favor of Agency, make the check payable to the manager of J. Harper, and deliver the check through Outgoing the agency and take his receipt; otherwise, make Papers. Take the receipt from your Commercial the payment at the Commercial Exchange, writing Exchange pad. the check in favor of the Union Real Estate Company. 66. Sell Cyrus Gordon, 422 Fourth Street, 2 lb. Mocha Coffee @ 40c, 25 lb. A Sugar @ 6c, 4 doz. Eggs @ 18c, 1 bu. Apples @ $1.50, 10 cakes Ivory Soap @ 5c, Yi bu. Onions @ 95c, collecting cash. 67. Sell Union Hotel Co., 316 Park Avenue, on account, 60 cakes Ivory Soap @ 4^2 c, 25 lb. Java Coffee @ 33^c, 50 lb. Ham @ 12^c, 6 doz. Lemons @ 20c, 100 lb. A Sugar @ 5^c, 10 hd. Cabbage @ 8c, 5 lb. English Br. Tea @ 45c. 68. Collect cash of A. R. Baker on account, $15. Proceed as in Transaction 44. 69. Pay cash for sundry farm produce, $2.50. 70. Sell C D. Fletcher, 219 First Street, 3 doz. Bananas @ 15c, 2 gal. Crystal Syrup @ 45c, 4=y 2 lb. Cheese @ 15c, 20 lb. Mess Pork @ 9c, 4 hd. Cabbage @ 10c, 2 bu. Onions @ 95c, 4 hd. Lettuce @ 5c, collecting cash. 71. Collect cash of Charles E. Gordon on account, $5, giving a receipted account slip. 72. Sell A. R. Cushman, 116 Ninth Street, 5 lb. Grapes @ 12c, 16 lb. Rice @ 10c, 8 lb. Rio Coffee @ 25c, 4 sk. Flour @ 75c, 16 lb. Bacon @ 12^c, ?0 lb. G Sugar @ 6^c, col- lecting cash. 73. Deposit cash in bank, $80. Total and prove your cash register entries and transfer all cash to the safe. Make the summary entries, write up and test the cash book, and balance the cash book preparatory to making a statement. Test the sales on account pads by making a total of the balances there shown to com- pare with the balance of Accounts Receivable given in summary. Posting to the Single Entry Ledger. As explained on page 103, the single entry ledger contains accounts with persons only, and when account pads are used, the ledger will only have accounts with persons other than customers. In posting from the day book and cash book to date, only five ledger titles are required. Reserve the first seven divisions of your ledger sheet for the general accounts that will be introduced, when you change to Double Entry, and begin your personal accounts with Wilson Bros, on the middle division of page 3, following with the other personal accounts in the order of their first appearance in the books. The student will post the debits and credits from the day book and cash book to these accounts in the usual manner, postmarking all items posted, as explained in preceding pages. The Single Entry Statement. It is now desired to change the system of bookkeeping to double entry, and preparatory to this step a statement is required. The sources of informa- tion for the statement in this set are the ledger, cash book, and inventories. The following are the inventories : Cash register, scales, etc., $125, merchandise unsold, $823.11, rent pre- paid, $25, and the balances shown on the six account pads. The student may make a statement like the model form on page 115, using the balances from his cash book and ledger. Changing from Single to Double Entry. The change from single to double entry is very simple, requiring only an opening journal entry, in which are given all titles and amounts belonging to resources and liabilities, with a credit to the proprietor for the net SET FOUR— RETAIL GROCERY BUSINESS 115 A FORM OF SINGLE ENTRY STATEMENT ^^ 3£z^L^r^^/C$U-~*x^/ #-^s 3£z^u^^ / 9?tu^&^ & ±;/ e>^*-^C<^JL£*J £^^7ZU--iX^L^ ^ J 7 /^ r^c, 3 hd. Cabbage @ 10c, 14 lb. Bacon @ 12^c, 2 gal. Crystal Syrup @ 45c. 76. Buy the following merchandise on account, delivering an order ticket and receiving the invoice : 2 cases Canned Corn, 1 box California Prunes, 1 box Dried Apricots, 2 barrels Apples. Follow the usual routine, buying of the Fenton Produce Co., unless the teacher desig- nates another firm. Journalize this entry in the form illustrated in the third entry on page 32, showing terms of dis- count allowed. 77. Receive cash from John Thomas to apply on his account, $1 5. The cash book will be written up from the check book and cash register after Transaction 87. 78. Sell Henry Keister, 459 Sixth Street, 2 lb. Japan Tea @ 45c, 15 lb. Ham @ 14c, 8 lb. Grapes @ 12c, 2 sk. Flour @ 75c, 2 sk. Corn Meal @ 45c, 6 hd. Cabbage @ 10c, collect- ing cash. 79. Pay cash for books and stationery for office use, $7.50, taking a receipted bill in the usual manner. 80. Sell to Union Hotel Co., 316 Park Avenue, on account, to be delivered at once, 50 lb. Rice @ 9y 2 c, 20 lb. Beans @ 4>^c, 40 lb. C Sugar @ 5^c, 12 cans Peaches @ 22^c, 12*4 lb. Ham @ 14c, 12 lb. Java Coffee @ 33>^c, 5 gal. Maple Syrup @ 75c. 81. Give Wilson Bros, your check for $100 to apply on account, taking a receipt as usual. 82. Sell Mrs. John Leonard, 616 Fifth Avenue, 10 ^i lb. Butter @ 22c, 20 lb. G Sugar @ 6y 2 c, 4 lb. Java Coffee @ 35c, 12 lb. Mess Pork @ 9c, 3 bu. Potatoes @ 50c, 2 lb. Cheese @ 15c, collecting cash. 83. Give your check to pay the invoice received in Transaction 48 less the deduction in Transaction 64, the balance being subject to a discount of 3 per cent. Take a receipt as usual. Make a compound journal entry like the following, and make corresponding cash entry when you write up your check book. COMPOUND JOURNAL ENTRY FOR PAYMENT WITH DISCOUNT A/ / 1^> ■I*. pCL ig.%*£^ ^ Z41\ Merchandise Credits. Two methods are followed by accountants in disposing of merchandise sales, one of which has been illustrated in preceding sets. In a retail business where there are frequent sales on account, many business firms credit Merchandise only with the cash, notes and other property received for Merchandise, and consider the sales on ac- count as not fully completed until payment is made, at which time the amount received will be credited to Merchandise. The student will follow the latter plan in the present Set, crediting Merchandise both for cash sales and for cash received' from previous sales on account. TRANSACTIONS— CONTINUED Record the balance in the cash register on the next record sheet in the usual manner. 88. Sell E. H. Preston, 195 Second Avenue, 5 doz. Eggs @ 18c, y 2 bu. Apples @ $1.50, 2 bu. Potatoes @ 50c, 5 cakes Ivory Soap @ 5c, 5 l / 2 lb. Butter @ 22c, 12 lb. G Sugar @ 6y c, collecting cash. 89. Sell to Chas. E. Gordon, 617 Fifth Avenue, on account, to be delivered before 2 p. m., 4 gal. N. O. Molasses @ 44c, 2 bu. Potatoes @ 55c, 4 lb. Prunes @ 12y 2 c, y 2 doz. Lemons @ 25c, 12 lb. G Sugar @ 6^c, 3 doz. Eggs @ 18c, 5 lb. Rice @ 15c. 90. Give your check, favor of C. C. Lane, for $8, to pay for clerk hire. Write at the bottom of the check to the left of your signature, "For clerk hire," and take no receipt. 91. Receive a check from the Union Hotel Co. to apply on their account, $53. Proceed as in Transaction 44. 92. Sell T. R. Rich, 482 Fourth Avenue, 6 lb. Java Coffee $ 35c, 2 doz. Oranges @ 25c, 15 lb. Mess Pork @ 9c, 2 sk. Flour @ 75c, 4 lb. Prunes @ 12>4c, 6 cans Corn @ 16 y,c, collecting cash. 93. Buy the following merchandise on account, delivering an order ticket and receiving the invoice : 1 brl. G Sugar, 1 brl. A Sugar, 1 brl. Crystal Syrup, 1 chest Japan Tea. Follow the usual routine, buying of Dalton & White, unless the teacher designates an- other firm. 94. Sell John Thomas, 419 Grand Avenue, on account, to> be delivered at once, 6 lb. Bacon @ 13c, 3 lb. Apricots @ 17c, */ a bu. Apples @ $1.50, ±y 2 lb. Butter @ 20c, 2 lb. Mocha Coffee @ 40c, 25 lb. A Sugar @ 6c, 2 gal. Maple Syrup @ 75c, y 2 bu. Turnips @ 85c. 95. Receive cash from A. R. Baker to apply on his account, $5. 96. Pay cash for sundry produce, $4. 97. Sell to Henry Custer, 399 Center Street, on account, to be delivered before 3 p. m., 4 bu. Potatoes (5) 55c, 4 hd. Cabbage ?c, V 2 lb. English Br. Tea @ 50c, 4 doz. Eggs @ 17c. Receive from him a check for $7 on account. SET FOUR— RETAIL GROCERY BUSINESS 119 98. Deposit in bank, $150, taking the cash in safe and two checks from register to make up the given total. Enter the amount taken from register in "Cash Payments" column. 99. C. E. Gordon reports an overcharge on sales in Transaction 89. The Rice should have been billed at 10c per lb. instead of 15c per lb. 100. Pay cash for sundry produce, $5. 101. Give your check to pay invoice received in Transaction 62 less a discount of 5 per cent. . 102. Sell Mrs. E. M. Sawyer, 419 Third Street, 15 lb. C Sugar @ 5^c, 6 lb. Bacon @ 5c, 5 lb. Rio Coffee @ 25c, 2 gal. Crystal Syrup @ 45c, 2 doz. Bananas @ 15c, 1 lb. Y. H. Tea @ 50c, collecting cash. Total and prove your cash register entries and retain all cash for making change. Com- plete your summary entries in the usual manner. Write up your cash book and journal and test your cash book, without balancing. Record the balance in the cash register in the usual manner. 103. Sell C. E. Gordon, 199 Third Street, 4 bu. Potatoes @ 50c, 2 bu. Turnips @ 75c, 5 lb. L. Starch @ 10c, 16 lb. Bacon @ 12^c, 12 cans Corn @ 16 2 / 3 c, 5 doz. Eggs @ 19c, 5 lb. Coffee @ 26c, receiving his check. 104. Give your check to pay the invoice received in Transaction 76, less the usual dis- count of 2 per cent. 105. Pay cash for sundry produce, $6. 106. Receive cash from Mrs. M. J. Fletcher' to apply on her account, $5. 107. Buy the following merchandise on account, delivering an order ticket and re- ceiving the invoice : 15 sacks Corn Meal, 25 sacks Flour, 1 case Oat Meal. Follow the usual routine, buying of the Western Milling Co., unless the teacher desig- nates another firm. 108. Sell the Union Hotel Co., 316 Park Avenue, on account, to be delivered at once, 25 lb. Butter @ 19c, 6 doz. Eggs @ 18c, 5 bu. Potatoes @ 55c, 100 lb. C Sugar @ 5^c, 6 lb. Mocha Coffee @ 37c, 10 lb. Raisins @ 12^ c, 8 lb. Cheese @ 15c. 109. Give your check to Wilson Bros, for $25 to apply on account, taking a receipt. 110. Sell C. E. Peters, 498 First Avenue, 16 lb. Ham @ 14c, 5 lb. Apricots @ 15c, 3 doz. Lemons @ 25c, 2 sk. Corn Meal @ 45c, 4 pa. Rolled Oats @ 9c, receiving his check. 111. Pay cash for sundry produce, $3. 112. Sell A. R. Baker, 212 Second Street, on account, to be delivered before 3 p. m., 8y 2 lb. Ham @ 14c, 4 pa. Rolled Oats @ 10c, 4 cans Peaches @ 25c, 2 doz. Eggs @ 18c, 24 lb. A Sugar @ 6%c, 2 sk. Flour @ 75c. 113. Deposit cash in bank, $25.25, including the two checks received today. 114. Sell Mrs. M. J. Fletcher, 326 Archer Avenue, on account, to be delivered before 2 p. m., 2 doz. Bananas @ 15c, 3 lb. Laundry Starch @ 8^c, 6 lb. Java Coffee @ 33 */$c, 2 gal. N. O. Molasses @ 40c, 10 lb. Beans @ 4ty 2 c, 6 lb. Bacon @ 12y 2 c, 3 doz. Eggs @ 18c, 2 lb. Raisins @ 12c. 115. Pay cash for cleaning floors of store room, $1.50. 116. Sell Mrs. J. G. Vance, 192 Third Avenue, 6 lb. Java Coffee @ 35c, 8 lb. Rice @ 10c, 4 gal. N. O. Molasses @ 50c, 12 lb. Mess Pork @ lie, collecting cash. • Total and prove your cash register entries and retain all cash in the register for making change. Complete your summary entries in the usual manner. Write up your cash book and journal and test and balance your cash book. Record the balance in the cash register in the usual manner. Post your ledger and take a trial balance. Make a statement of your business using the following inventories : Merchandise unsold, $961.05, the accounts receivable at the balance shown on your last summary, store fixtures, $120, rent prepaid, $10. Follow the form of double entry statement given on pages 39 and 41. By comparing this statement with the single entry statement made before changing to double entry, the student will observe the advantage of double entry over single entry, in the more complete information given. Each form of statement gives an exhibit of the re- 120 NEW INDUCTIVE BOOKKEEPING sources and liabilities, but the single entry statement fails to give the sources of losses and gains, which are given complete in the double entry statement. 117. Sell John Thomas, 419 Grand Avenue, on account, to be delivered at once, 4 hd. Lettuce @ 5c, 2 bunches Radishes @ 10c, 1 bu. Apples @ $1.25, iy 2 lb. Ham @ 15c. 3 doz. Eggs @ 18c, 5 lb. Butter @ 22c, 14 lb. G Sugar @ 6y 2 c. 118. Give Wilson Bros, your check for $75 to apply on account, taking a receipt as usual. 119. Sell James Armstrong, 127 Third Street, 20 lb. A Sugar @ 6c, 6 cans Peaches @ 25c, 2 lb. Japan Tea @ 45c, ^/ 2 lb. Butter @ 22c, 3 lb. Prunes @ 12^c, 2 hd. Cabbage @ 10c, collecting cash. 120. Collect cash from Mrs. M. J. Fletcher, in full of account, entering on the sale slip that has the balance forward, "Paid in full," with the current date and your signature. De- liver the receipted slip in the usual manner, keeping the duplicate in the account pad. 121. Pay cash for sundry produce, $3. 122. Sell Cyrus Upton, 498 First Avenue, 50 lb. C Sugar @ 5>4c, 10 lb. Rio Coffee @ 24c, 1 lb. Y. H. Tea @ 45c, 12^ lb. Ham @ 14c, ]/ 2 bu. Apples @ $1.50, collecting cash. 123. Give your check to the Michigan Furniture Co. for $18 to pay for an office desk. 124. Collect cash from A. R. Baker in full of account, giving a receipted sale slip, the same as in Transaction 120. 125. Sell Henry Custer, 399 Center Street, on account, 3 hd. Cabbage @ lie, 1 bu. Potatoes @ 50c, 2 hd. Lettuce @ 5c, 25 lb. A Sugar @ 6c, 3 doz. Eggs (5) 18c, 1 sack Corn Meal @ 45c, 10 lb. Pork @ 12c, 2 doz. Bananas @ 15c. 126. Deposit cash in bank, $50. 127. Give your check to pay the invoice received in Transaction 93, less a discount of 2 per cent, taking a receipt as usual. 128. Pay cash for sundry produce, 60c. 129. Sell the Union Hotel Co., 316 Park Avenue, on account, 12 doz. Eggs @ 18c, 40 lb. Butter @ 20c, 10 bu. Potatoes @ 50c. Receive cash from the Union Hotel Co., in full of account, including above sale. Deliver the sale slip, including the above item, receipted in full. 130. Sell N. H. Martin, 424 Third Street, 2 doz. Eggs @ 18c, 4 gal. Maple Syrup @ 75c, 12 lb. Bacon @ 12y 2 c, 4 lb. Java Coffee @ 35c, 24 lb. A Sugar @ 6c, collecting cash. 131. Pay A. R. Gordon cash for delivering merchandise, $2.50. No receipt. (Ex- pense.) Total and prove your cash register entries and retain all cash for making change. Complete your summary entries in the usual manner." Write up your cash book and journal and prove your cash balance. Record your balance in the cash register, on new sheet, ready for advance transactions. 132. Sell T. R. Rich, 482 Fourth Avenue. y 2 bu. Turnips @ 75c, 4 lb. Cheese @ 15c, 2 sk. Corn Meal @ 45c, 4 lb. Prunes @ 12^c, 5 lb. Butter @ 22c, 20 lb. G Sugar @ 6^c, collecting cash. 133. Pay cash for sundry produce, $3. 134. Collect cash of John Thomas in full of account, giving a receipted sale slip as usual. 135. Deposit cash in bank, $25. 136. Give your check to pay the invoice received in Transaction 107, less a discount of 3 per cent, taking a receipt. 137. Sell E. M. Webster, 212 Fourth Street, 15 lb. G Sugar @ 6^c, 2 sk. Flour @ 75c, 12 lb. Ham @ 14c, 4 lb. Cheese (S> 15c, collecting cash. 138. Sell Charles E. Gordon, 617 Fifth Avenue, on account, to be delivered at 1 p. m.. 25 lb. A Sugar @ 6c, 5 lb. Java Coffee @ 31c, 10 lb. Rice @ 10c, 1 brl. Apples @ $3.25. 139. Make a small sale, receiving cash for same, 21 cents. 140. Pay cash for sundry produce, $2. 141. Collect cash of Charles E. Gordon in full of account, giving a receipted sale slip. SET FOUR— RETAIL GROCERY BUSINESS 121 142. Sell W. C. Norton, 213 Third Avenue, 3 lb. Java Coffee @ 35c, 2 gal. Maple Syrup @ 75c, 1 lb. Eng. Breakfast Tea @ 55c, 12 lb. G Sugar @ 6^2C, y?. bu. Apples @ $1.50; 10y 2 lb. Mess Pork @ 9c, 2 hd. Cabbage @ 10c, collecting cash. 143. Collect cash of Henry Custer in full of account, giving a receipted sale slip. 144. Prove the cash register, transfer all cash to safe, and make summaries as usual. 145. Sell your office desk for $11.85, receiving currency. Place this money in the safe and enter at once in the cash book. 146. Sell the remaining merchandise and other assets to John C. Jones, receiving his check in settlement. The merchandise is valued at $860, the store fixtures at $90, and rent prepaid at $10. Make three entries in the cash book. 147. Deposit the check received in Transaction 146 and $41.14 in currency. 148. Give Wilson Bros, a check in full of account, taking a receipt in full. 149. Write up your cash book and journal and test your cash balance. Post your ledger, balance cash, and take a trial balance. 150. Leave your pass book at bank to be balanced, or call for a bank statement of your cancelled checks. Verify your bank statement, comparing the returned checks with the corresponding stub entries in your check book. File away your paid checks which should be carefully kept as receipts or vouchers to prove pay- ments that may be called in question at a later date. Make a statement or balance sheet and close your ledger without inventories, bring down your present worth in your investment account, which should agree with your cash balance. Deliver the contents of "Outgoing Papers" with a list of same to the teacher, and make a report of the cash you have on hand and in bank. Deliver the contents of your other filing cases to the teacher with a list of papers in each. GENERAL REVIEW QUIZ 1. What blank books are commonly used in Single Entry? 2. Explain the use of the cash sale pad. 3. How may four amount columns be used in the cash register? 4. Explain the use of the summary book. 5. How are entries made in the cash book from the cash register? 6. Explain the use of the charge sale ticket. 7. How are the books changed from Single to Double Entry ? 8. What is the difference between Single and Double Entry? 9. To what lines of business is Single Entry especially adapted? 10. Describe two methods of making merchandise credits. Supplementary Journalizing Drills These and subsequent journalizing drills have been prepared as a basis for either written or oral recitation. The teacher may require them to be written with pen and ink in regular journal entry form, with proper explanation, the student using regularly ruled journal paper; or he may require the journalizing to be given in the "Skeleton Journal" form, that is, the account titles and amounts being recorded without explanations. In the latter case the jour- nalizing may be done with pencil on ordinary blank paper. The numbers preceding the transactions may be treated as dates for the month and year., given, in case journal entries are written up in correct form. Drill No. 1 CASH, MERCHANDISE AND PERSONAL ACCOUNTS Throughout these Drills the student should bear in mind that in practical bookkeeping but few of the transactions given would be actually recorded in the Journal, but in the Cash Book, Sales Book, or other specialized books that modern accountants have devised for the purpose of lessening their labors. As previously indicated, the purpose of the Journalizing Drills is to train the student to perceive readily the debits and credits arising from the vari- ous classes of business transactions. The question as to the number and kind of the books to be used in forming the accounting records of a business, is one that will depend upon the nature of the business, and is usually determined by an accounting specialist. Its considera- tion is not appropriate to an elementary treatise, and is, therefore, omitted in this work. TRANSACTIONS FOR JOURNALIZING, DECEMBER, 19— 1. Sold R. Miller on account, Mdse., per bill rendered, $21.40. 2. Sold C. H. Dalton for cash, Mdse., $35.90. 3. Gave James Bell currency in payment for Mdse., per bill this date, $65. 4. Received of C. P. Hammond currency on account, $50. 5. Received of H. Martin to apply on account, 155 lbs. of butter at 20c. 6. Handed Harlan & Son our check for $75 to apply on account. 7. Received of D. F. Mundell his certi- fied check for $100 to apply on account. 8. Sold to T. M. Brown groceries per bill rendered, $24.90. Mr. Brown hands us in payment his order for cash on Moore Bros. Note. — The bookkeeper would here charge Cash, assuming that the order will be paid on presenta- tion. The procedure to be taken in default of such payment will be discussed later under "Correction Entries." 9. We have handed Mclntire & Jones our check on the Merchants Bank for $25 to apply on account. 10. Delivered to Henry Hope 5 brl. flour at $4.50, to apply on our account. 11. Bought of George H. Daly & Co., 150 bu. potatoes at 40c; gave in payment our check on Farmers Bank. 12. Sold to Richard Lane 15 cases eggs at $2.50, receiving in payment his check on Merchants Bank. 13. We have received from Eugene Herbert & Co., St. Louis, on account at 60 days, shipment of groceries per bill of Dec. 1, $224.40. 14. We have handed to L. Miller for R. Cook & Co., currency $50 and our check for $67.50, to balance their account to date. Note.— The explanatory record should always show complete data for all payments made or re- ceived. Neglect of this may give rise to vexations, disputes or even litigation. 15. Sold to Chas. Nelson on account at 30 days, Mdse., per bill rendered this date, $65.45. —122— JOURNALIZING DRILLS 123 16. Henry James & Co. have remitted their check for invoice of goods sold them Dec. 10 on account, amounting to $121.50. 17. John Carter has settled his account to date with currency, $21, and his check for balance, $28.15. 18. Chas. Thornton has sold to us, to apply on account, 15 bu. turnips at 20c, and 18 dozen eggs at 25c. Note. — Endeavor to get results mentally in trans- actions like the last one. 19. J. B. Carterlin has handed us a cash order on Vinton &-Wright for $28.75 in set- tlement of his account to date. ( Note trans- action 8. ) 20. We have shipped to Fillmore Bros., Chicago, to apply on account, 25 brl. Ben Davis Apples at $2.50. Drill No. 2 LOSS AND GAIN AND PROPRIETORS' ACCOUNTS The general Loss and Gain account is for losses or gains that cannot be properly in- cluded under Expense, Interest, Discount, or the other special loss and gain accounts. The general Loss and Gain account is debited for all losses, and credited for all gains not provided for in other accounts. Accounts with the proprietor (or with the partners, if the business is a partnership) are kept like any other personal accounts, the proprietor being debited for all that he receives from the business, and credited for all that he contributes. Two accounts, however, are usually kept with the proprietor (or with each partner), the investment account and the per- sonal account. The proprietor's investment account shows his original investment, and addi- tions to it or withdrawals from it, also the entries for losses or gains at the close of any busi- ness period. The proprietor's personal account is used for items of debit or credit not suf- ficiently important to affect the investment account, as purchases of merchandise, or allow- ances of cash for living expenses, etc. The amount that the respective partners are permitted to withdraw from the business for this purpose may be determined by mutual agreement, or the matter may be adjusted by allowing a fixed salary to each partner. In the following Drill the student will use his best judgment as to whether the transactions given affect the proprietor's personal or investment accounts. TRANSACTIONS FOR JOURNALIZING, JANUARY, 19— 1. A robber entered the store and took from the till, currency amounting to $81.85. 2. A note for $72.90, purporting to be given by Cook & Co., and assigned to us by Robert Steele, proves to be a forgery. Steele has absconded and the note is a loss. 3. We have received from the Bright- ville Street Fair Association, a prize of $100 in cash for the best decorated store window. 4. Arthur Miller, partner, has been al- lowed to withdraw a portion of his invest- ment, amounting to $250, and has received the firm's check for same. Note. — The titles of proprietor's investment and personal accounts are indicated as follows: "Ar- thur Miller, Investment," "Arthur Miller, Per- sonal." 5. The firm has assumed payment of a note for $575 given by James Moore, part- ner and secured by mortgage on his town property. Mr. Moore is to make all interest payments. 6. We have discovered a counterfeit twenty dollar bill in the cash drawer, the source of which cannot be traced. 7. Through a fire which broke out in the basement, canned goods to the value of $65.50 have been entirely destroyed. No insurance. Note. — No rules can be laid down for determin- ing practically, to what extent the Loss and Gain Accounts should be used to show incidental or un- usual losses of this character. Probably, as a rule, no journal entry would be made, the loss, especially if inconsiderable, being left to show itself in reduced inventories at the end of the year. If, however, it is desired to show a strictly ac- curate record of the sources of all the losses and gains of the business, the Loss and Gain account should show all items of the character of those given in the Drill. 8. B. F. Nelson, partner, withdraws cash for personal expenses, $50. 9. An error has been discovered in the computation of rentals of our store building, previously paid and charged to the Expense account, which has been corrected by our re- ceiving a check in rebate from the owners for $27.15. 10. In accordance with an amendment to the partnership contract, A. J. Monroe, part- ner, has increased his investment in the busi- 124 NEW INDUCTIVE BOOKKEEPING ness by assigning to the firm a note in his favor for $1500, secured by a first mortgage on property at 256 Water St., which is re- ceived by the firm at its par value. 11. There is a debit balance of $61.50 on our books against the account of C. W. Chase, recently deceased. The administra- tor of his estate reports that there is no prop- erty available for the payment of the debt and we lose the amount. 12. Sold A. J. Monroe, partner, a bill of Mdse. amounting to $36.90, on his personal account. 13. Henry Nelson, father of B. F. Nel- son, partner, has made a free gift to the firm, of an office safe, valued at $350. 14. A. M. Chase, a brother of C. W. Chase, deceased, has called and handed us his check for $61.50, the amount of the bal- ance against his brother's account, which was recently passed to the Loss and Gain account. 15. Our note for $650 in favor of A. C. Scott has been presented for payment. The firm, lacking funds at this time for the ad- justment of the obligation, payment is made by A. J. Monroe, partner, who turns over the cancelled note, and receives credit for same. 16. Our coal shed at the rear of the store has been destroyed by fire, and we lost five tons of coal, previously purchased for office use, at $6.75 per ton. 17. It has been discovered that the coun- terfeit twenty dollar bill recently found in our cash drawer (Transaction January 6) was paid to us by the Mason Hardware Co., and they have given to us a good bill in its place. 18. B. F. Nelson, partner, has accom- modated the firm with two tons of coal for office use from his own cellar, price $7.25 per ton, which is credited to his personal account. 19. Thieves broke into the store and made way with fancy groceries, value esti- mated at $250. 20. S. Moore reports an error in our favor of $11.45 in expense account previ- ously submitted by him, and which was paid by us in cash, remitting us Chicago draft for amount of the error. Drill No. 3 BILLS PAYABLE, BILLS RECEIVABLE, AND INTEREST .The term "Bills," as here used, includes all promissory obligations to pay money, as notes, accepted drafts, etc. "Bills Payable" comprise the written obligations of the pro- prietor or firm. "Bills Receivable" include the written obligations of others, the title of which rests in the proprietor or firm. The Interest account is one of the "loss and gain" ac- counts. It affords a record of all interest paid or allowed on the accounts or written obliga- tions of the proprietor, and of all interest allowances or payments from others to him. All in- terest received is a direct gain to the business ; all paid out is a loss. SPECIAL JOURNALIZING RULES (a) The Bills Receivable account is debited when any bill receivable comes into our possession ; and credited when one is paid in whole or in part, or otherwise disposed of. (b) The Bills Payable account is debited when our own written obligations are paid in whole or in part ; and credited when we deliver them to others. (c) The Interest account is debited for all interest paid or allowed by us on our own accounts or written obligations ; and credited when interest is paid or allowed by others to us. TRANSACTIONS FOR JOURNALIZING, FEBRUARY, 19— 1. Sold to Chas. Vinton on his note at 30 days, Mdse. per bill rendered, $85.90. (a). 2. Adjusted our account with Wilson & French by giving our note at 90 days for balance, $146.50. (b). 3. Received from Walter Drew his check on Merchants Bank for $75 to apply on his note of Jan. 10, 19 — . (a). 4. Bought Mdse. of Carter, Stone & Co., per invoice of this date, giving our note at 60 days in payment of same, $145.15. (b). 5. Venable & Co. have adjusted their account to date by handing us their 90 day note for $175.20. 6. Chas. Miller has handed us his check for $15.40 in payment of interest to date qii his note of Jan. 5, 19 — . (c). JOURNALIZING DRILLS 125 7. We have paid to Esterbrook & Son $75 in currency to apply on our note of May 6,19—. (b). 8. S. Davis has assigned to us, to apply on his account, John Markharm's note in his favor for $50 without interest, and given March 7 last. 9. Received of George Moore, 12 bu. potatoes at 35c, to be applied to the payment of accrued interest on his note of Feb. 8 last. 10. W. H. Scott gives us a cash order on A. C. Hamlin & Co. for $25 to apply on his note of July 2 last. 11. Gave Miller & Stone our check for $27.10 to pay accrued interest on our note, their favor of Oct. 15 last. 12. C. L. Mason has given us his note at 60 days in payment of a bill of Mdse. amounting to $84.20 sold him on Dec. 6 last, charged to his account on that date. 13. Harvey Brown has handed us his check for an amount sufficient to pay ac- crued interest at 6 per cent on his note of $500 in our favor issued 8 months ago. Note. — In the interest and discount computa- tions in this book, days of grace are not considered. 14. Fred Holmes has given us his 30 day note for $41.50 to adjust accrued in- terest on his note in favor of Jones & Davis, which was assigned to us Jan. 15 last. 15. We have assigned Robert Watson's note of Nov. 16, 19 — , our favor, for $150, without interest, to H. Stevens & Sons to apply on our account. 16. M. A. Phillips has presented to us, to be applied on his account, our note of Oct. 6, 19 — , for $75, in favor of T. C. Stewart and assigned by the latter to Mr. Phillips. 17. We have handed to C. F. Allen & Co. our note at 30 days, in payment for an invoice of Mdse. on account, amounting to $176.90 and billed Nov. 17, 19—. 18. Received of C. Walker on account, 60 lb. honey at 15c, and 56 lb. poultry at i2.y a c. 19. J. P. Wilder has settled his account, amounting to $249.60, by giving us his 90 day note. 20. Henry Parker paid 3 months' ac- crued interest on his note of $700 at 8 per cent, by handing us an order for Mdse. on C. H. Day & Sons. Drill No. 4 EXPENSE, CHATTELS, AND REAL ESTATE ACCOUNTS The Expense Account is charged for all current costs in conducting the business, as rents, fuel, salaries, taxes, insurance, etc. It may happen that materials purchased and charged to the Expense account, may be again sold, in which case this account must be credited. Unexpired rents, insurance, etc., may also be inventoried as a part of the re- sources, when the books are closed. The Chattels Account includes all movable property acquired in conducting the busi- ness, as office furniture, trucks, teams, tools, etc. In many business houses the ledger title "Furniture and Fixtures" is used in place of "Chattels." As the property included under Chattels deteriorates in value, this account usually shows a loss. It is debited for all property acquired for carrying on the business and which is neither regularly consumed nor purchased to be sold at a gain; and credited when any of the property for which it was originally charged, is disposed of. Real Estate includes land and the fixtures upon it, as buildings, timber, fences, fruit trees etc., also the fixed furnishings of buildings, as doors, steam and gas pipes, furnaces, etc. Separate accounts are usually kept with the different real estate properties, as "House at No. 30 Pine St.," or "Cooper Building," "Oakwood Farm," etc. When this is done, the several real estate accounts are charged respectively with all items of their cost, as insurance, repairs, taxes, etc. ; and credited with what they yield in rents. In the Drills, charge or credit the ac- counts as indicated by the property described. Note. — In a manufacturing business, the Real Estate and Chattels accounts would be included in accounts with Plant, Machinery, Tools, etc. 126 NEW INDUCTIVE BOOKKEEPING TRANSACTIONS FOR JOURNALIZIING, MARCH, 19- 1. Gave A. C. Bates our check for rent of store for January, $75. 2. Bought of the Darling Vehicle Co.. on account at 60 days, a wagon for deliver- ing goods, $90. 3. Bought of Webster Coal Co., on our note at 90 days,, for store use, 10 tons Le- high Valley Coal at $8.25. 4. Paid with our check, janitor's salary at Hope St. Building for January, $65. 5. We have bought for $2500 a resi- dence property at No. 165 Elm St., giving our check for the same. 6. C. H. Hammond, tenant of Flat B, "Hope St. Bldg.," hands us his check for rent to Jan. 1, $45. Note. — In real estate business, where there are dealings with a number of tenants, personal ac- counts with these are not, as a rule, kept in the general ledger, but in a subsidiary "Rent Ledger," or "Rent Roll Book." A special cash book is also used, in which there are separate columns for pay- ments on account of the several buildings, the totals of these columns being posted periodically to the credit of the buildings accounts. The trans- actions here presented are not for the purpose of showing the actual methods employed in real estate bookkeeping, but to familiarize the student with the debits and credits involved in them. 7. A. P. Moore, traveling salesman, re- ports the week's expense bill, $61.20, and we remit Chicago draft for same. Note. — Money is usually remitted to distant lo- calities by means of bank drafts drawn on the banks of the larger cities and, hence, called "N. Y. drafts," "Chicago drafts," etc. 8. Store lighting bill to Feb. 1, $8.60, has been presented and paid by check. 9. A neighboring firm, A. W. Randall & Co., are unable to purchase coal for their store on account of team drivers' strike, and we have sold them, on account, two tons of our own stock at $9.50 per ton. 10. An office desk which we do not need has been sold for $45 to H. Parker on his 30 day note. 11. Paid cash for taxes on No. 165 Elm St., $41.20. 12. A. C. Tilton, a tenant of Flat C. Hope St. Bldg., has given us a 60 day note for $125 in- adjustment of rent to Mar. 1, last. 13. T. S. Metcalf, printer, has rendered us a bill for $19.40 for printing advertising matter. We have passed the amount to his credit. 14. Thomas Dixon has made and deliv- ered to us a show case for store use, price $23.50, receiving his pay in groceries per bill rendered. 15. Gave to Chas. Mason, plumber, our check for $4.25 for repairing water pipes in store. 16. Henry Way, traveling salesman, is credited with one month's salary, $125. Note. — Salaries are usually charged periodically (once a month or once a year)" to the Expense ac- count, the several employees being credited. Pay- ments on account of salary are in this case charged to personal accounts of the employees, at the time the payments are made. Sometimes a salary account is kept. In concerns where there are many employees, salaries are usually paid weekly, and the Expense or Salary account is charged, and Cash credited at the time the weekly pay rolls are made out and paid. 17. We have purchased on account from the Lindell Furniture Co., a roller top desk for the office, $56.50. 18. The Consumers Oil Co. present their bill for gasoline supplied for engine during February, $7.25. Gave our check in pay- ment. 19. We have passed to the credit of the Eagle Coal Co. their bill of this date for coal supplied to the Hope St. Bldg., $148.60. 20. George Denman has sold to us 1 dozen brooms for use in the store, receiving his pay in Mdse. as per bill rendered, $3.50. Drill No. 5 TRANSACTIONS FOR JOURNALIZING, APRIL, 19— 1. Remitted to A. B. Johnson & Co., N. Y. draft for $261.50 for Mdse. per their bill of Nov. 1, and previously credited to their account. 2. Bought of Dale & Co. on account, a rug for the office, $45.75. 3. C. E. Snow has given us his 90 day note for $85.40 in settlement of his account to date. 4. We have sold to Charles Warren to apply as a payment on our note of Jan. 12, Mdse. per bill rendered, $48.20. JOURNALIZING DRILLS 127 5. Samuel Hart, carpenter, has rendered a bill for labor, $28.50, in making certain repairs in our store room, and the amount has been placed to the credit of his rent ac- count, for occupying our tenement at No. 20 Olive St. 6. R. Stevens has delivered at the store 115 lbs. of live poultry at 6c, the amount to be endorsed as a payment on his note of Aug. 1. 7. We have handed our check for $150 to the law firm of Bryant & Wilson for their services in recent litigation, to which our firm was a party. 8. S. R. McGuire hands us his check for $41.20 to pay balance on his account to date. 9. A horse used in our delivery service has died, value $75. 10. We have received a Postoffice Money Order for $58.70 from Henry Snyder, of Winona, in payment for a bill of goods sold him on account. 11. A. C. Wells has presented a bill for drayage, amounting to $21.25, and received payment in Mdse. from our store per bill rendered. 12. C. R. Dean has handed us a cash order on Hamilton & Co. for $25, to be applied in paying accrued interest on his note of Aug. 5, last, 13. By mutual agreement, S. R. Peters assumes a balance on account owed by D. E. Warren, amounting to $26.40, and the amount has been transfered to Mr. Peters' account. 14. N. S. Palmer has assigned to us a note for $50 made in his favor by A. B. Manley, the same to be applied to Mr. Pal- mer's account with us. 15. The thieves who recently broke into our store have been captured, and goods amounting to $150 recovered. ( See Drill 2, Trans. 19.) 16. We have given our check for $35.40 in payment for water rent at "Hope St. Bldg." 17. A. W. Watson, traveling salesman, reports expense bill for the week, $61.25, requesting that the same be credited to his personal account. 18. A coal stove belonging to the firm, and hitherto used in the store, has been sold on personal account to B. F. Nelson, part- ner, for $18.50. 19. Sold to A. B. French a bill of gro- ceries amounting to $65. He pays for same by assigning to us C. H. Smith's note of Mar. 2 in his favor. 20. The Eureka Electric Light Co. pre- sents a bill for $19.60 for lighting building at 165 Elm St., requesting that the same be passed to the credit of their account. Drill No. 7 ORDERS, DRAFTS AND ACCEPTANCES An Order is a written request to pay money or deliver merchandise or other property to the person to whom the order is issued. A Check is an order addressed to a bank requesting the payment of money on deposit. A Draft is an order drawn by one bank upon another, or by a person or firm, directing the payment of money through a bank. Note. — Orders drawn by one firm upon another requesting the payment of money to a third, were formerly used to a considerable extent, and were called drafts, but such orders are now but little used, and when they are, are usually spoken of as orders. The Original Parties to an order or draft are three, viz! : the drawer or maker who issues the order, the drawee or payer upon whom it is drawn, and the payee to whom it is pay- able. Thus, if A orders B to pay C, A is the drawer or maker, B is the drawee or payer, and C is the payee. The Subsequent Parties to an order or draft, are those into whose possession it may come by assignment. They are variously known as assignees, assignors, and endorsers, ac- cording to their relation to the instrument in question. Orders or drafts may be drawn payable "at sight," that is, upon presentation, or a cer- 128 NEW INDUCTIVE BOOKKEEPING tain time "after sight" or "after date." In the former case they are known as sight orders or sight drafts, and in the latter as time orders or time drafts. A time order or draft should promptly be presented to the drawee for his verification, or "acceptance," as it is called in business. The drawee accepts a draft by writing or stamp- ing the word "Accepted" across the face (usually in red ink) followed by his signature and the date. An instrument thus accepted is known in business as an acceptance. It is treated as a bill payable by the acceptor and as a bill receivable by others. Checks are customarily sight papers, and are not "accepted" in the ordinary way, though as a means of enabling the drawer to use them as commercial paper, banks often "certify" them by stamping the word "Certified" over the cashier's signature. Drafts for Collection. The principal use of drafts in modern business is in what is known as drafts for collection. These are used as a means of collecting debts and are drawn by the creditor through his local bank upon debtors in other cities. The bank, though named as the drawee, acts merely as a collecting agent, and is not debited when the draft is issued, as in the case of other classes of drafts and orders. Neither is the drawee credited until the bank reports payment or acceptance. DEBIT AND CREDIT RULES FOR DRAFTS AND ORDERS (a) Upon issuing a sight draft or order (except in the case of "drafts for collection" drawn through a bank or other collection agency) credit the drawee, and debit the property received, or if given on account, the person receiving it. Note. — In the case of eight orders, etc., it is assumed that they will be paid on presentation. (b) When you are advised that a time draft has been accepted, debit Bills Receivable, and credit the drawee. (c) When the bank notifies you of the payment of a sight draft drawn through them "for collection," debit Cash (or the bank, if a bank account is kept,) and credit the drawee. (d) When you pay a draft or order drawn on you, debit the drawer and credit what- ever is paid. (e) When you accept a draft, debit the drawer and credit Bills Payable. (f) When another's acceptance is paid to you, debit whatever is received, and credit Bills Receivable. (g) When your own acceptance is paid, debit Bills Payable, and credit whatever is paid. (h) The drafts, checks, or orders of others, payable in cash "at sight," when received or transferred by you, are treated as cash. TRANSACTIONS FOR JOURNALIZING, MAY, 19— 1. We have given to Thomas Malloy on account, an order for Mdse., to the amount of $25 on T. C Smith & Co. (a). 2. We have accepted at 60 days the draft of A. P. Wallace & Co., Chicago, for invoice of Mdse. delivered April 30, $187.90. (e). 3. T. S. Miller presents A. R. Johnson's order on us for Mdse. amounting to $20 and receives the goods as per bill rendered, (d). 4. The Merchants Bank notifies us that a sight draft for $75 for collection, drawn by us on Harlan & Miner, Evansville, 111., has been paid and the amount passed to our credit, (c). 5. On April 26, we drew for collection through the Drovers Bank, a 90 day draft for $175 on N. P. Barnes & Co., St. Louis. The bank has delivered to us their accept- ance, (b). 6. We have received from L. W. Baker & Son a Chicago draft for $126.15 in pay- ment of their acceptance of April 5, in our favor, (f). 7. We have adjusted the balance of our account with C. B. McLean & Co., Cincin- nati, by giving them an order for cash, $240.60, payable on presentation to Randall & Brown, Covington, Ky. (a). Note. — Orders of this kind are often referred to by authors as "drafts," but among business men they are usually called orders. 8. We have bought a Remington type- JOURNALIZING DRILLS 129 writer for office use, from the agent, S. W. Williams, handing him in payment our order on W.H.Martin & Co. for cash, $100. 9. Remitted to Hall & Swift, Rock Island, 111., a Chicago draft for $265.90 in payment of our acceptance of April 10, in their favor, (g). 10. M. F. Munson has assigned to us, to be applied on his account, a 60 day ac- ceptance in his favor for $75.20 issued on May 2, by T. B. Arthur & Sons. 11. We have given our check in pay- ment of a cash order for $25 drawn on us May 10, by Chas. Benson and presented by Geo. P. Cook. 12. The Merchants Bank notifies us that a demand note for $150, made in our favor May 1, by B. T. Robinson and given to that bank for collection, has been paid on pre- sentation and the amount passed to the credit of our bank account. 13. We have received from T. B. Thurs- ton & Co., Chicago, an invoice of Mdse. amounting to $142.60 and have sent them in payment our cash order on the Union Com- mission Co., Chicago. 14. C. H. McGee presents our accept- ance for $125 in favor of Hammond & Co., assigned to him by the latter firm, and re- quests the same to be credited to his account. We comply with the request and take up the acceptance. 15. Chas. Tomlinson has accepted our 30 day draft on him for $75 for overdue rent of Flat C in Hope St. Bldg. 16. Arthur Miller, partner, has received on account, the firm's order for Mdse. on Venable & Co., amounting to $50. 17. Our 60 day draft for $150 on Spen- cer & Hill, Kewanee, 111., drawn for collec- tion through the Merchants Bank, was ac- cepted May 15, and the acceptance returned to us. 18. We have remitted the Chicago Gro- cery Co., on account, our 30 day draft for $217.59 on A. B. Mason & Son. 19. S. H. Baker has remitted us on ac- count his 60 day draft for $73.25 on Jones & Middleton, which draft has been pre- sented this day and accepted. 20. George Peterson, of Ames & Peter- son, coal dealers, and a tenant of Flat D, Hope St. Bldg., has handed us, on account of rent, an order on his firm for $60, payable in coal. We have presented this order and the coal has been delivered for use in our store. Drill No. 8 COMPOUND JOURNAL ENTRIES INVOLVING PREVIOUS ACCOUNTS Compound Journal Entries are those that exhibit debits and credits affecting three or more accounts, as for instance, when an account is settled with note and cash, or cash is given in payment of a note with accrued interest. Although in practice, such transactions are not usually journalized, the journal entry is the best means of testing the student as to his correct perception of the debits and credits involved. TRANSACTIONS FOR JOURNALIZING, JUNE, 19- 1. Sold A. W. Long Mdse. per bill ren- dered, $65.20, receiving cash, $50. Balance on account. Note. — In practice Mr. Long would be charged in the sales book for the whole bill, and credited in the Cash Book for the payment. 2. Henry Baxter hands us his check in payment of his note for $200 with 60 days' accrued interest at 6 per cent. 3. Bought an invoice of Mdse. of Har- mon & Scott per bill rendered, $2890. Gave them our note at 60 days for $2390 and our check for balance. 4. Gave our check to the Merchants Bank for our note in their favor for $500 with 90 days' accured interest at 6 per cent. 5. Bought of Turner & Co. an invoice of Mdse. amounting to $742.75. Remitted them N. Y. draft for $400 to apply ; balance on account at 30 days. 6. George Wells has renewed his note of Jan. 1, 19 — , for $175, with accrued in- 130 NEW INDUCTIVE BOOKKEEPING terest, $20.03, giving a new note at 90 days for the whole amount. Note. — In this transaction our B. Rec. account is increased by $20.03 ; but in order that the items of the B. Rec. account may correspond to the entries in the Bill Book, it is well to debit the B. Rec. ac- count for the note received, and credit it for the one cancelled, and the Interest account for $20.03, instead of merely as a simple journal entry charg- ing B. Rec. and crediting Interest. 7. Sold S. Maynard an invoice of goods amounting to $476.90. He presents in pay- ment our note in his favor for $250 with ac- crued interest, $18.90, and his check for bal- ance. (Three debits.) 8. Bought of Steel Bros., an invoice of Mdse. per bill of June 5, amounting to $214.25. Gave them as part payment our check for $150, balance on account at 30 days. 9. Sold to R. S. Parker a bill of grocer- ies amounting to $96.50. He hands us in payment Hart & Jones' 60 day acceptance of June 5 for $50, and his check for balance. 10. We have purchased of H. A. Allen for $75, a second-hand typewriter for office use, giving him in payment our cash order for $60 on his brother, T. S. Allen, who owes us rent on cottage at No. 16 Clay St., and our check for balance. 11. G. S. Martin has assigned to us J. Webster's note in his favor for $125, with accrued interest to date, $11.45, the same to be applied to Mr. Martin's account. 12. J. S. Cook, Mendota, 111., has re- mitted to us a N. Y. draft for $75 as part payment of his acceptance of May 1, for $127.10. 13. The salary for May of the janitor of our building at No. 20 Vine St., amounting to $60, has been paid with an order for Mdse. on Kendall & Co. for $35 and our check for balance. 14. We have paid our note of Jan. 1 for $75 in favor of R. S. Carver, with accrued interest to date $2.06, with our cash order on C. H. Snow & Co. 15. We have assigned to B. F. Nelson, partner, on account, L. W. Martin's note for $46.90 with accrued interest, $3.41. 16. A. K. Medill, an insolvent, is charged on our books with a balance of $75.40. The receiver has made an adjust- ment of his affairs, the creditors being al- lowed 25 per cent of their claim. We have received a check for settlement on this basis, and closed the account. 17. Sold to A. R. Stillwell a bill of gro- ceries amounting to $92.50. He gives us his check for $50 and his note at 30 days for balance. 18. We have bought of Hamilton & Co. on our acceptance at 30 days, two Smith Premier Typewriters at $95 each, and 3 dozen typewriter ribbons at $5 per dozen. Note. — The ribbons should be charged to Ex- pense. agreement 19. Pursuant to previous Arthur Miller, partner, has added $1000 to his investment by assigning to the firm, S. F. Benson's note in his favor for $600, with accrued interest, $21.70, and a check on Merchants Bank for balance. 20. Sold to Amos Cook a bill of Mdse. amounting to $146.20. He assigns to us George Parker's note in his favor for $75, with accrued interest, $14.20; balance on account. Drill No. 10 DISCOUNT, COMMISSION, AND COLLECTION ACCOUNT Discounts, Commissions, and Collections include losses and gains that are usually kept as separate accounts, instead of being entered directly in the Loss and Gain or the Expense account. Entries for such charges are usually provided for in special columns, but for rea- sons previously stated the student is here required to present them in the form of Journal entries. Discounts include allowances or rebates from the regular trade prices of goods. They are usually given to encourage prompt payments. The Discount account is debited for all discounts allowed, and credited for all discounts received. JOURNALIZING DRILLS 131 Note. — A distinction should be made between commercial discounts, as here defined, and bank dis- counts, which really consist of interest paid or charged in advance, and which should properly be entered in the Interest account. Commission Accounts are kept when goods are disposed of by an agent. They repre- sent a gain to the agent and a loss to the principal, and are credited or debited accordingly. In most cases, separate accounts would be kept with "Commission Paid" and "Commission Received." Collections are the charges allowed to individuals, banks, or collection agencies for the collection of debts. They are usually computed as a percentage on the amount collected, ex- cept in the case of banks, which usually make a "lump charge" of from fifteen cents to a dollar or more, according to the amount of the draft, note or other paper collected. If collection charges of this nature are comparatively infrequent, they would probably be charged to the Expense account, but if they are of sufficient importance to constitute a material increase in the cost of conducting the business, a Collection account should be kept. The Collection account is debited for all collections allowed or paid by us, and credited for all collections allowed or paid by others to us. TRANSACTIONS FOR JOURNALIZING, JULY, 19— 1. Barrow Bros, remit, on account, their check in payment of our bill of June 21, $175.60, less allowed discount of 5 per cent. 2. We remit to Hammond & Co. on ac- count, Chicago draft for their bill of June 22, $85.60, less 6 per cent. 3. The Hayward Collection Agency, of St. Louis, report the collection of our ac- count against S. W. Markham, Richland, Mo., for $56.20, and remit check for the amount less collection charges, 5 per cent. 4. The Merchants Bank has collected C. F. Noble's acceptance in our favor for $245.60, and has placed the proceeds to our credit, less 50c collection charges. 5. On June 21, we sold R. M. Fernald a bill of goods amounting to $138.40 at 30 days, less 5 per cent. Mr. F. has remitted a N. Y. draft for $50 to apply on this pur- chase. Note.— Divide the $50 by 95 per cent to find the amount for which Mr. Fernald should be credited. 6. O. P. Harvey, of Beatrice, Neb., has remitted his personal check for the balance of his account, $22.60. We have deposited the check with the Merchants Bank and it has been passed to our credit, less collection charges, 25 cents. 7. Our agent for the rental of apart- ments in our building, No. 60 Walnut Ave., has remitted rent collections for June, $175, less his commission of 6 per cent. Note. — If a firm collects many rents through an agent, an account with "Rent Commissions," or "Rent Collections," would probably be opened. If the charge was exceptional, it would be entered on the Expense account. In these Drills the student may charge all agents' commissions to "Commis- sions." 8. H. S. Randolf buys country produce for us at market prices, receiving a commis- sion of 5 per cent on all goods bought. He has delivered at our warehouse, goods amounting to $162.50, and we have given him our check for the amount plus his com- mission. 9. The Merchants Bank reports the col- lection of C. W. Miller's acceptance of May 6, in our favor, for $79.20, collection charges 25 cents. Proceeds to our credit. 10. Albright & Clark remit their check, in payment of our bill of May 20, $246.15, less 8 per cent discount. 11. The Commercial Bank reports col- lection of T. B. Spencer's note of Jan. 1, 19 — , in our favor, $79.50, with accrued in- terest to date, $7.30. Collection charges and fees $3.15. They remit proceeds in cash. 12. We have been selling on commission a line of goods for F. W. Baker & Co., Chicago, keeping an account with these goods under the title of "Baker's Cereal Foods." We have reported sales credited to this account during the past 30 days, $214.75, and have remitted our check for this amount less our commission of 20 per cent. Note. — Goods handled ^nder these conditions would not be treated as ordinary commission con- signments. 13. We have made a proposition to G. P. Moore to allow him a special dis- 132 NEW INDUCTIVE BOOKKEEPING count of 5 per cent on the balance of his account to date, $358.90, for immediate cash payment. He accepts the proposition and remits his check for settlement on these terms. 14. We hold R. Smith's note for $250, without interest, due three months from this date, and have discounted the same at the Merchants Bank, at 8 per cent (bank dis- count), the proceeds being placed to our credit. 15. H. S. Randolf, our produce buyer, has rendered a bill for $175.90 for goods purchased and delivered as per our contract (See Transaction 8), adding commission, and has credited on this bill, $25 for one month's rent of Flat A, Hope St. building, which he occupies. We hand him our check for balance. 16. R. S. Walters & Co. offer us a spe- cial discount of 6 per cent for immediate payment of the balance we owe on their account, $348.60, and which is not due until Aug 1. We accept their proposition and remit check for the sum sufficient to adjust the account. 17. We remit on account a N. Y. draft to A. M. Snyder & Co., Cincinnati, Ohio, in settlement of their bill of June 1, $213.50, less 5 per cent discount. We pay cash for the draft and 50 cents for exchange on the draft. (Two debits and two credits.) Note. — Banks, as a rule, do not charge their regular customers for domestic exchange paper for remittances. When such charges are paid, they are usually debited to Expense. 18. On May 29, we purchased of Allen & Sons an invoice of Mdse. amounting to $259.29, on account at 60 days, less 6 per cent for cash. We remit our check for a sum sufficient to give us a credit of $200 on the bill. 19. Three months ago, H. Markham settled his account amounting to $180, with a note bearing interest at 8 per cent. As we are in need of money, we offer him a rebate of 10 per cent for immediate pay- ment of the obligation. He accepts our proposition and hands us his check for the amount. Note. — A question may arise here, as to what ac- count this rebate should be charged. Clearly it is not an interest item, and it does not seem to come within the scope of a discount account, which is for discounts allowed for cash payments on goods purchased or sold. In case of doubt as to items of this kind, it is quite proper to enter the charge to the Loss and Gain account. 20. We have deposited for discount our 90 day note for $1000 (without interest) with the Merchants Bank, and they have credited us for the amount less their dis- count at 8 per cent per annum to maturity. Drill No. 11 CLASSIFIED MERCHANDISE, FREIGHT AND SPECIAL EXPENSE ACCOUNTS It is often desirable to keep accounts with special departments of Merchandise, as "Boots and Shoes," "Provisions," "Crockery," etc. Special items of expense, as freight, drayage, packing, etc., being charged to these, instead of to the General Expense account. It is quite often desirable, also, to subdivide the Expense account into several accounts, as "Insurance," "Taxes," "Rents," "Salaries," and the like. In the following Drill, special accounts will be kept with "Produce" (including butter, eggs, poultry, etc.), "Flour and Feed," "Crockery," and with "General Mdse.," for all other goods. The expenses of the business will be kept under "Rents," "Salaries," "Office Expense," "Insurance," and "General Expense" for other charges. Freight, drayage, expressage, etc., when incurred in connection with the several merchandising or "trading" accounts, will be charged to the account affected, in other cases to "General Expense." It is expected that the student will use his best judgment as to the entries required. Special instructions will be given when necessary. JOURNALIZING DRILLS 133 TRANSACTIONS FOR JOURNALIZING, AUGUST, 19— 1. A shipment of flour has been received from the Acme Milling Co., St. Paul, Minn., per their bill of Jan. 20, $425.40, terms 60 days net. Paid freight charges, $61.45. 2. Paid weekly salaries of clerks per pay roll, in cash, $95. 3. J. A. Martin has delivered butter and eggs as per bill $23.50, the same to be credited on his account. 4. Bell & Davis, Cleveland, Ohio, send us v Memorandum of Credit for $38.50, for breakage in an invoice of Crockery recently purchased of them as per our bill rendered July 21. Note. — It Is assumed that the Crockery account has been charged for the invoice when received. 5. Sold to A. W. Mason on account a bill of goods amounting to $147.20, of which $45.50 is Flour and Feed, $62.90 Crockery, and the remainder fancy gro- ceries. 6. Gave to R. Miller, a check for $250 for rent of store building for July. 7. Paid cash for additional insurance on our stock of goods, $21.40. 8. The bookkeeper's salary is paid to date, $150. (Office Expense.) 9. Bought of T. D. Macomb & Co., St. Louis, on account, an invoice of goods amounting to $165.20. consisting of 75 sacks of buckwheat flour at 40c, and the remainder, canned goods. Paid freight charges $23.40, $7.25 of which is for the flour. 10. Bought of the Adams Supply Co., Chicago, on account, a refrigerator for use in the Produce Department, $125. Paid cash for freight on same, $6.25. 11. C. E. Pomeroy has delivered at our warehouse butter, eggs and poultry amount- ing to $178.20, as per bill, the amount plus his commission, 6 per cent, and freight charges, $11.40, is paid with check on Mer- chants Bank. 12. Paid the Hawkins Transportation Co. for drayage to date, $34.90. 13. Sold to C. A. Wise on his 30 day note, 500 lb. butter at 20c and 15 brl. flour at $4.50. 14. A. W. Seymour has delivered to us on account, 40 bu. oats at 30c, for our de- livery stables. 15. Gave to H. Watson, agent of ware- house rented by us, a cash order on Hamlin & Allen for $45 rent for February. 16. M. O'Hara presents drayage bill to date, $21.15, receiving his pay in canned goods $6.90, dishes $4.50, and cash for bal- ance. 17. Bought of Carter & Co., Chicago, on our acceptance at 60 days, a bill of Mdse. amounting to $269.20, of which $90.15 is for glassware, dishes, etc., and the remain- der general merchandise — Freight charges. Crockery, $9.40, and other Mdse. $11.50, paid with check. 18. C. D. Moore presents bill for office stationery, $21.50, which is passed to his credit. 19. We have sold to Hammond & Co. on their 30 day acceptance, a bill of goods consisting of chopped feed $75, and pro- duce $84.20. 20. S. W. Callahan, our porter, is dis- charged, receiving cash for salary to date, $14.20. Drill No. 12 SPECIAL MERCHANDISE AND EXPENSE ACCOUNTS, ETC.— (Continued) TRANSACTIONS FOR JOURNALIZING, SEPTEMBER, 19— 1. P. C. Watson presents bill for $3.50 for printing posters to advertise our Pro- duce Department, which is paid in cash. 2. Twenty-five dollars has been turned over to the head bookkeeper, to be used for current office expenses. Note. — The small daily expense of an office are often kept in a "Petty Expense Book," the total of which is posted periodically. A fund for this pur- pose is given to the Bookkeeper or Secretary. This saves the trouble of entering trifling expense items on the general books. 3. The agent of the Western Fire In- surance Co. has handed us a check for $50 for adjustment of loss occasioned by a small 134 NEW INDUCTIVE BOOKKEEPING fire in our store. This damage is appor- tioned as follows : Flour $15, produce $25, general merchandise $10. 4. We have remitted to A. B. Thomas & Co. a check on First National Bank, Chi- cago, in payment of their bill of Feb. 21, which we assume has been entered on our books to their credit. Amount of bill $164.20, terms 6—30. Note. — The student will remember that a special account is kept with this bank. 5. T. M. Spencer has been employed on salary to canvass the country for the pur- chace of produce. He presents bill for one week's salary and expenses, $42.35, which is paid with our check. 6. Paid cash to S. N. Walker, window dresser, for arranging displays of goods in store window, $7.50. 7. Bought on account, a bill of flower pots, stone jars, etc., from the LaGrange Pottery Co., $82.90. Paid freight on the same, $11.50. 8. We have employed R. Jones, a but- ter packer, to work in our Produce Depart- ment, and have handed him $10 on account of salary. 9. By the overturning of a pile of empty crates in our store, a quantity of crockery was destroyed, the invoice cost of which is $42.25. 10. The weekly salaries of store em- ployees has been paid in cash, $90. 11. Received of Eugene Blair & Co. their check for bill of crockery sold them on account Aug. 23, amounting to $78.40, terms 5 — 30. 12. We have received from the Grocers' Supply Co., of Milwaukee, Wis., a "Walker Butter Worker" for use in our Produce De- partment. The machine is billed to us at $53.90, which with the freight charges, $6.20, we have paid in cash. Note. — Chattels of this kind are charged. to the special department in which they are required. 13. Some months since we endorsed for security, a note for $50, given by L. David- son, to the Merchants Bank. It now ap- pears that the maker has absconded and the Bank presents the note to us for payment, with accrued interest $2.75, and protest fees $1.50. We give our check for the amount, and take up the note. Note. — An endorsement for "accommodation" or security is not considered a bill payable by the en- dorser. 14. We have received from the Western Straw Board Co., Iowa Falls, an invoice of egg crates, amounting to $27.12, for which we give our check on the Merchants Bank. Note. — A drayage charge directly chargeable to a department should not go to the General Ex- pense account. 15. We have sold a bill of flour and feed, amounting to $35.60, to N. P. Hanley, coal dealer, receiving our pay in coal for store use. 16. Oliver Gray presents his bill for poultry crates for our produce department, $62.25. The bill is paid by a credit to his personal account for balance to date, $27.50, and our check for balance. 17. Twenty brl. of salt from our stock, invoiced at $1.30 per brl., have been reserved for use in the Produce Department. 18. We have sold to A. P. Monroe & Co., on account, goods as follows :■ Crock- ery $62.50, canned goods $54.90, flour $65, packed butter $41.20, terms 6—30. 19. Chas. H. Day presents bill as per contract, for filling our ice house at Little Lake, $175, which we pay in cash, after de- ducting balance of his store account to date. $42.90. Note. — This ice is for our refrigerators in the Produce Department. 20. T. M. Jones, by mutual agreement, has become a partner in our business, and contributes as his investment a certified check for $5000, and S. B. Balcom's note secured by mortgage, for $1250, with ac- crued interest, $75.50. Index— Part One Page Acceptances 128 Account Pads 110, 112 Accounts 5 Accounts, Classes of 15 Accounts Payable 23 Accounts, Purpose of 6 Accounts Receivable 23 Actual Business Practice 47, 103 Arrangement of Ledger Accounts 41 Balance Sheet (or Statement) 40 Balance Sheet Proof 41 Balancing the Cash Book 57 Balancing the Pass Book 75 Bank Account on Check Stub 62 Bank Balance 60 Bank Checks 62 Bank Deposits 60 Bank Pass Book 61 Bank Statement to Depositors 75 Bills Receivable and Payable 22 Bookkeeping 5 Business 5 Business Practice 47, 103 Business Records 5 Capital 19 Carbon Duplicating 53, 105, 110 Cash Account 10 Cash Book 31, 104 Cash Proof 55 Cash Reigster Accounting 106 Cash Sale Pad 105 Changing from Single to Double Entry 115 Charge Sale Ticket 110 Chattels Accounts 20, 125 Check Book 62 Checking Ledger Entries 70 Checking the Ledger 34, 59 Check Stub 62 Classified Accounts 132 Classes of Accounts 15 Closing the Books 35 Closing the Cash Book 31 Closing the Ledger 42 Closing the Ledger from Journal Entries 46 Collection Account 130 Commercial Accounts 15 Commission Account 130 Commercial Paper 22 Compound Journal Entry 97 Correcting Errors t 59 Counting Money 48 Credit Entry on Charge Sale Ticket 112 Day Book 26, 103 Daily Cash Proof 55 Debits and Credits 7 Deposits 60 Depositor's Signature 60 Depositor's Statement 75 Page Deposit Tickets 60 Detection of Errors in Trial Balances 80 Discount Account 130 Drafts for Collection 127 Duplicate Order Book 53 Duplicate Sale Pad 105-110 Equality of Debits and Credits 7 Errors in Trial Balances 80 Expense Account 17, 125 Financial Accounts 15 Financial Statement 40 Flour and Feed Business 85 Forwarding Sales Book Footings 68 Furniture and Fixtures 20, 55 Gains 7 General Rule for Debits and Credits 7 Grouping Ledger Accounts 41 Headings 13 How to Indorse 67 Indexing the Ledger 50 Indorsing Checks 67 Interest Account 23 Inventories 40 Invoices and Bills 51 Jobbing Grocery Business 47 Journal-Day Book 27 Journal Forms 28 Journalizing , 27 Journalizing Drills 122 Keeping a Set of Books 8 Ledger 34 Lodger Accounts Closed t 43, 44 Ledger Balances in Pencil 72 Ledger Explanation Column 34 Liabilities 6 Loss and Gain Account , ,42, 123 Losses v , 7 Making a Deposit 60 Merchandise Account , 10 Merchandise Credits 118 Model Cash Book 34, 35, 50, 57 Model Cash Proof 56 Model Day Book 26, las Model Check 62, 67 Model Deposit Ticket 60 Model Depositor's Statement 76 Model Financial Statement 39 Model Journal 27, 30, 32, 33, 46 Model Ledger 36, 37, 38, 43, 44 Model Loss and Gain Closing 44 Model Opening Entries 85, 96 Model Order Ticket 53 Model Proof Sheet 10 Model Profit and Loss Statement 41 Model Receipt 69 Model Sales Book 64 Model Signature Card 60 Model Statement 39, 41, 115 Page Model Trial Balance 39, 45, 61 Net Capital 19 Net Gain 42 Numbering Invoices 51 Opening a Set of Books 19, 48 Opening Entries 21 Orders for Merchandise and Cash 127 Original Entries 25 Original Parties 77, 127 Parties to a Check 62 Partner's Accounts 95 Partnership Business 95 Partnership Entries 96 Pass Book 61 Pencil Footings 11 Personal Accounts 15 Posting to the Ledger 31 Posting from Sales Book 63 Postmarking 31, 87 Preparing Books for Inspection 74 Produce and Provision Business 95 Present Worth 40 Promissory Notes 77 Proof Sheet 10 Proprietor's Account 123 Queries 6, 12, 16, 17, 18, 22, 73, 84, 89, 121 Real Etate Account 20, 125 Receipts 69 Records in Business 5 Page Red Ink Entries 42 Reopening Ledger Accounts 45 Resources 6 Results Shown by Accounts 6 Retail Grocery Business 103 Review Quiz — Same as Queries. Rule for Debit and Credit 7 Ruling 13 Safe Guard Accounting 92 Sales Book 62 Side Posting 87 Signature Card 60 Single Entry Bookkeeping 103 Single Entry Cash Book 104, 105 Single Entry Day Book 103 Single to Double Entry 115 Single and Double Entry Compared 116 Single Entry Statement .' 115 Special Rulings 13 Statements of Profits and Losses 40 Statements 40, 115 Subsequent Parties 127 Summaries from Cash Register 107 Taking Stock 73 Trial Balance after Closing 45 Terms of Sale in Ledger Entries 80 Trial Balances 34, 59 Wood and Coal Business 90 GOODYEAR'S Advanced Accounting WITH BUSINESS PRACTICE BY OFFICE AND TABLET METHODS -by- SAMUEL HORATIO GOODYEAR, A. M. Author of the Goodyear Commercial Series Cedar Rapids, Iowa Goodyear-Marshall Publishing Company 1911 CONTENTS PAGE Statements and Balance Sheets 3 Set Five — Lumber Accounting 9 Business Forms 33 Set Six — Business Practice in Jobbing and Commission.— 73 Set Seven — Special Column Books 93 Journalizing Drills... 107 Copyright 1909 GOODYEAR-MARSHALL PUBLISHING CO. Statements and Balance Sheets. Any document summarizing in tabulated form a series of transactions or facts bearing on business affairs is called a Statement. Statement of Account. This is a statement exhibiting the condition of a debtor's account, as shown by a creditor's books. For a full discussion and illustration of this form of statement, see pages 51 and 52. Depositor's Statement. This is a statement of account rendered by a bank to a de- positor. It consists of a list of deposits received and checks paid for the depositor for a given period, usually a month. Financial Statement. This is a detailed statement setting forth the condition of a business as to resources and liabilities, volume of business, etc. It is often required by banks or wholesalers, from firms seeking credit, or it may be made out in any other case where the solvency of a business concern is under consideration. Bank Statement. This is a financial statement made under oath by the officers of a bank, setting forth the resources and liabilities of the bank. The law requires bank state- ments to be rendered periodically to the proper state or government officer, for public of- ficial record. Other Classes of Statements. The various kinds of "Financial Reports," "Treas- urer's Reports," "Agent's Balance Sheets," etc., that are rendered periodically by corpora- tions or public officials having various kinds of financial affairs in charge, are all in the nature of statements, and are properly so called. In fact, the term "statement" has a very wide application in business affairs. Balance Sheet. This term is properly applied to any complete statement of the con- dition and result of a business as shown by the books. The Balance Sheet shows an equilibrium of the accounts as to debit and credit, and takes its name from this "balanced" condition of the accounts from which the results are derived. Various forms of balance sheets are used by accountants, but with respect to the proper application of the term "bal- ance sheet," the form is immaterial. Balance sheets are commonly spoken of as "state- ments," but strictly speaking, the latter term is much more general in its application. We illustrate on succeeding pages three forms of balance sheets that are used by ac- countants. The student should study these forms carefully before attempting the practice work in balance sheets on page 8. -3 — ADVANCED ACCOUNTING TWO-COLUMN BALANCE SHEET— INDIVIDUAL T&W. /£, /f#f. -&*^ <^?^£y d2Z-CC^l^zy\ ^L<^t^r~~^ *z^7^^L-£^rz^Z^-^&' S^f? 2- e^J 'J //,^ Vv-Tf <&T^xnf/ J? &J~7 ■j ^r y^Z^aC^^y ^g^^Y ^J 6 kJ j.JJ ±& C^L^&S / / ft. -jfd &S 2 S.f* jOt^L^i^r^? •*<£& // / At.r.^s //c? Lr_ THE TWO-COLUMN BALANCE SHEET Two-column journal ruling can be used for this style of balance sheet. The Double Entry Principle in accounting is apparent in the two methods of obtaining the esent Worth. The difference between resources and liabilities is the same as the sum of t'J net gain and the net investment. k balance sheet in a partnership business differs from the individual balance sheet, mei jiy in the distribution of the gains or losses showing the interest of each partner at the date of the balance sheet. In the individual balance sheet given above only two inventories are used: Merchan- dise unsold $1196.55, and furniture and fixtures estimated worth $205.20. In the partnership balance sheet given on page 5, the following inventories are used: Merchandise unsold $6029.31, rent of store room prepaid $42, value of chattels on hand $480. Each partner receives one-half of the net gain. BALANCE SHEETS TWO-COLUMN BALANCE SHEET— PARTNERSHIP &!L*^z^£<( <**>>,.> <3?*t£ $J^ J ? 7S'? *-?- ^ t2^o^?Z-^ 3%^,^) ^^i^-^-t^6^l^ 6 <7 £ ?<3/ o^rr &^Zs yJ-7 2 o ./ / 2*3 a f c^z^^L^^y- — - <^~ (2^<£/ £ 1 C? 3s1 / 6 'J,* *-&z^-^-*CltiLsL4/ -^ft?. M. ■J 4 7 t 3 £4- '"Pt^^=>^L^^^y > / £01 £jL (Z^rfa^u^ £ Y-y tf f / & £>tJ^^n-y--^r^±jc^ S?*f £Z ADVANCED ACCOUNTING LEFT FOLIO OF TWO-PAGE BALANCE SHEET .-^fev ^9ta^n^!. \ = f?z~-t*--£^>7^C<*-4>6' ofy \47 / ^ * x J-^ 04&f S~ /> o jA ^_ SECOND PAGE OF THE PURCHASE BOOK WITH FIRST CLOSING jT L 2-jT X CASH BOOK ENTRIES— CREDIT SIDE— FROM PURCHASE BOOK ^C^xa ^ *s x a x f * x / 9-e S~o LUMBER ACCOUNTING Jl FIRST PAGE OF THE SALES BOOK /f*7 v* xx x * (E^J^C- V 2? ?U. / JjL^fJU V< * t^7 4-^-c-o-tSt^t-«j^ / // / 9- '7\ / /'£ So So /-t2L^t-i?\ X A *7 V g/f s^> 32 6o f * fi / c6n T-r CASH BOOK ENTRIES— DEBIT SIDE— FROM SALES BOOK ^Jw^ 6 /¥S 7° 12 ADVANCED ACCOUNTING PROMISSORY NOTES A Promissory Note is a written promise to pay a certain sum of money at a specified time. The Parties to a note are the maker and payee. The maker is the person who, by the act of signing the note, makes a promise. The payee is the person to whom the note is made payable. The following is a commonly used form of promissory note, with its stub which should be filled out by the maker before removing the note from the book: r n & */ 7tr;sjL~.. JZS£ Date J h™s- '. t/^i^Co-^. .. // /, 1 i BILLS Date Recorded No. DRAWER OR INDORSER DRAWEE OR MAKER IN WHOSE FAVOR FOR WHAT WHERE PAY /4 / ■r/&JL/ /CLCCLcLe^nJ^ (v. (rC. >J-^^r^-i^cU^ ~h^*LlJL; CW£.&rc4. V Iff ft 1, C)ccl.. /Jcu^c/ fi^^^U- SkJL. C3Jc jLnstsCfiS 2. // II €*«£.. (gc^JL (Pj-.Cfe^ji^rho. ZL U. <3Jh (/ LUMBER ACCOUNTING 13 Days of Grace. In some states the maker of a note is allowed by law three days in which to pay the note, after the date of maturity specified in the note. These additional days are called days of grace. If you live in a state in which days of grace are allowed, add three days to the due date of all your notes, when registering them in your Bill Book. When a Note is Paid. Upon payment of a note in full, it should be returned to the maker with the word "Paid" written or stamped across the face by the payee or his agent. The maker should then file the note as a voucher, showing its payment. Indorsement. On disposing of a note to a third party, the payee usually indorses it, in order to authorize the person who receives it to collect it; but this indorsement renders the payee liable for the payment to subsequent holders, unless he expressly disclaims lia- bility by writing the words "Without Recourse," or "I hereby disclaim responsibility for the payment of this note," or words of similar import before his signature. Bills Payable and Bills Receivable. In bookkeeping, all notes or other written obli- gations to pay money, that are made by the proprietor of the business, are known as Bills Payable, while all notes or written obligations of others, and owed to the proprietor, are called Bills Receivable. Bills Receivable are resources, while Bills Payable are liabilities. The Note Book or Bill Book, should contain an itemized list of all notes received and issued by the firm, separate columns being provided for every item of information required concerning these notes. The column, when due, is subdivided into special columns for each month of the year, the maturity date recorded being the due date, including days of grace when such days are allowed. Bills Receivable and Bills Payable accounts are usually kept in the ledger, the note book being used for recording detailed information concerning each note. The amount of unpaid notes receivable recorded in the bill book should agree with the debit balance of Bills Receivable in the ledger, and the amount of unpaid notes payable in the bill book should agree with the credit balance of Bills Payable account in the ledger. BILL BOOK RECEIVABLE Datk TERM When Due Int. Year Mo. Das Year i 2 3 i 6 7 8 9 10 11 12 Disposed of 1 fo- n-ua^ J-o •J~ d-OA+iS / v H Year Mo. Daj Year 1 2 3 4 S 6 7 8 9 10 11 12 Disposed of Ho- ~hte^i /4 / O cbujtL. /fo~ It, /A f <5 o @L.. -7x(,//<7° — / JC- a IH A3 cLojl^. /1°- X ifQS — (Pjl. y*./ n . — (fo- 9~s li i°- "f- SLfZ. S~o ! 7 ■ ■- 7 U 14 ADVANCED ACCOUNTING THE ESTIMATE BOOK Another very important historical book, peculiar to the lumber business, is kept by lum- ber dealers who make estimates to architects and contractors for supplies required in sep- arate buildings. This is called an Estimate Book, each estimate having the two pages of an open folio. The left page is subdivided vertically into two parts, the left part containing a list of all lumber and material included in the estimate, with the prices agreed upon. The right part of this page contains memoranda of lumber delivered as it is required for the given building, the date and quantity being recorded, but no price being extended. It frequently happens that some lumber of a given variety is left over after completing the building and is returned to the lumber dealer for credit. The right page of the open folio is also divided vertically, the right half being used for recording contract lumber re- turned, and for varieties included in the estimate that were not required. It frequently hap- pens that extra material is required beyond the estimate, and the left half of the second page is used for recording extras purchased for the given building. In this manner lumber and building material pertaining to a given contract may be taken in loads or installments from day to day during the time required to complete the building, the excess lumber can be returned, extra lumber and materials can be secured for the given building, and no amount will be extended and no entry will be carried to the regular books, unless cash payments are made to apply on the contract, until the given building is completed, and all excess lumber has been returned. After extending and footing the amounts in the estimate column, the amounts in the extra column are extended and the total is added to the total estimate. The credits for re- turned material and contract material not taken are extended at contract prices and the total of the credit column is deducted from the total of estimates and extras. The remainder shows the net amount of material furnished for the given building. This amount is carried to the sales book without itemizing, as Lumber per Estimate No. — , (giving the estimate number) and the net amount. Sales of lumber except on contracts will be entered in the sales book at the time of sale, like the first, second and third entries in the model sales book. The journal is only used for the opening entries, for memoranda, and for occasional transactions that cannot be recorded in the other books used. The student is already familiar with the cash book which is in many respects the most important book in its relation to the business. The note book in the present business gives on one open folio an itemized list of all notes received, and on another open folio a similar list of all notes issued by the firm, sepa- rate columns being provided for every item of information concerning the notes. The col- umn, when due, is subdivided into special columns for each month of the year, the maturity date recorded being the due date, including days of grace when such days are allowed. If the loose leaf blanks are used, the following paper will be required ; In the Journal, Notes, and Cash binder 1 sheet journal ruling for Journal, 1 sheet B. Rec. and B. Pay ruling for Bill Book, 3 sheets journal ruling for Cash Book; in the Purchase and Sales binder 1 sheet journal ruling for Purchase Book, 3 sheets journal ruling for Sales Book ; in the Led- ger and Trial Balance binder 5 sheets two-account ledger ruling with index sheet for Led- ger, 1 sheet journal ruling for Trial Balances, 1 sheet six-column ruling for Balance Sheets. ESTIMATING LUMBER In estimating lumber, the unit of measure is a board one inch thick, one foot wide, and one foot long, making one foot of lumber; in other words, a foot of lumber is a square foot with a thickness of one inch, and in computing all dimensions of boards, joists, scantling, and timbers, we virtually reduce them to inch boards and then find the number of square feet in each board. If the width of lumber were given in feet or fractions of a foot, we would not require a special rule ; but the width is always given in inches, which are twelfths of a foot. Thus, an inch board 10 inches wide and a foot long would contain iVxlO=i$ft. board measure, and if it were 12 ft. long it would contain 11x12=10 ft. board measure. If the board were l l / 2 inches thick, there would be one-half more lumber, or 15 ft. ; or if 2 inches thick, there would be 20 ft. Lumber sawed less than one inch thick is counted the same as inch lumber in computing the number of feet, board measure. LUMBER ACCOUNTING 15 RULES FOR ESTIMATING LUMBER 1. When the thickness is one inch or less. Multiply the width in inches by the length in feet, and divide the product by twelve. Or, Multiply the width in feet, or twelfths of a foot by the length in feet. 2. When the thickness is more than one inch. Multiply the thickness in inches by the width and length, the latter two being expressed in feet or twelfths of a foot. The result in either case will be the number of feet of lumber. The process of cancellation can be used to good advantage in making lumber cal- culations. EXAMPLES 1. How much lumber in a board 18 ft. long, 8 in. wide and 1 in. thick? (1x8- — 18.) £_ X 4, =. / 2- ^h 2. How much lumber in 6 pieces 2x4 in. and 16 ft. long? (6 pes. 2x4 — 16.) It frequently happens that the result in a computation ends in a fraction, in which case the "give and take" rule is followed; that is, if the fraction is one-half or more, it is taken as an extra foot ; if less than one-half, it is dropped. Lumber is usually estimated and quoted by the thousand feet, board measure. Shingles by the thousand, the standard shingle being 4 inches wide; thus, a shingle that is 8 inches wide will be counted as two shingles in buying or selling. Lath are estimated by the thous- and. The denomination thousand is represented by the Roman character M, and hun- dred by C. EXAMPLES 1. What is the value of 753 ft. Finishing lumber @ $37.50 ? 2. What is the value of 2,124 ft. Flooring @ $24? Logically, in the second example, we should multiply 24 by 2,124 ; but for convenience, we multiply 2,124 by 24, which gives the same product in the abstract, (1) (2) 37.50 2.124 .753 24 11250 8496 18750 4248 26250 50.976 Ans. $50.98 28.23750 Ans. $28.24 Since lumber is usually quoted by the thousand feet and the quantity sold may be less than a thousand feet, we would suggest the following RULE FOR ESTIMATING VALUE OF LUMBER Multiply the price per thousand by the number of feet expressed decimally as thou- sandths. The product properly pointed off will give the value. In the present set the student will keep the books for A. M. Porter & Co., the trans- actions being described in historical memoranda without any vouchers or papers. 16 ADVANCED ACCOUNTING MEMORANDA JUNE 1, 19— A. M. Porter, Henry Horton, and J. C. Simmons, enter into partnership this day as wholesale and retail dealers in lumber and building material, each partner receiving a salary of $125 per month and each sharing in the net gains or losses in proportion to his net investment. A. M. Porter invests a stock of lumber and building material inventoried at $9,752.50, two teams for delivering lumber inventoried at $950, and office furniture inventoried at $275. Mr. Porter owes the following wholesale firms and the new firm assumes payment of these amounts: Lane & Thomas, Hastings, $1,375.50, Jones & Lambert, Minneapolis, $2,653.25, Harvey & Son, Bellingham, $948.75. Henry Horton invests cash $2000. J. C. Simmons invests cash $4000. JUNE 2 Paid cash for postage and stationery for office, $3.75. Sold Henry Trenton, Toddville, on account: 2000 feet Hemlock Ship Lap @ $24.00 per M 10 pes. 6x8—14, Pine @ 25.00 " " 10 pes. 6x8—12, Pine @ 25.00 " " 15 pes. 6x8—16, Pine @ 25.00 " " 5 M Lath @ 3.00 " " Paid cash for rent of barn to June 30 for teams, $7.50. (Debit Team Expense.) Sold J. G. Noyes, on his note at 20 days : 3500 feet Hemlock Ship Lap @ $23.00 per M Received Invoice of posts and pickets from H. B. Morton & Co., Edgewood, dated June 1, amounting to $362.50, billed on account 30 days or 2 per cent 10 days. Paid the Commercial Railway for freight on above invoice of posts and pickets, $37.50. As the in-freight on lumber is an essential part of its cost, the freight paid on incoming invoices should be entered in the purchase book and checked in the cash book. In an extensive business it might be desirable to keep a separate account with Freight, in which case the freight payments would not appear in the pur- chase book, but would be posted to the ledger from the cash book. Sold P. J. Franklin, 219 Second Avenue, for cash: 18 pes. 6x8—12 Hemlock @ $22.00 per M 40 pes. 2x4—12 Hemlock @ 22.00 " " 16 pes. 6x6 — 16 Hemlock @ 22.00 " " 12 pes. 4x6 — 18 Hemlock @ 25.00 " " 1500 ft. No. 1 Flooring @ 35.00 " " 1250 ft. Hemlock Sheathing @ 20.00 " " 4 M No. 1 Shingles @ 4.25 " " Enter in Sales Book and Cash Book and check each entry. Paid Holton Real Estate Co. cash for 1 month's rent of lumber yard and office, $75. ( Expense. ) JUNE 3 Sold G. M. Null, 180 Second Avenue, on account : s 15 pes. 1^x16—16 No. 2 Pine @ $45.00 per M 9 pes. 1^x16—18 No. 2 Pine @ 45.00 per M 500 ft. ^-in. Yellow Pine Ceiling @ 32.00 per M Sold H. C. White, 222 Third Street, for cash : 742 ft. Common Boards @ $15.00 per M 1500 Lath @ 2.50 per M Bought an invoice of lumber of J. N. Thomas, Canton, dated June 1, 1908, amounting to $816.25, giving our two notes for same, one at ten days for $400 and one at twenty days for $416.25. Each of these notes draws interest at six per cent per annum. (See third entry in Purchase Book.) LUMBER ACCOUNTING 17 Paid cash to the Commercial Railway for freight on invoice from Canton, $139.75. Sold G. E. Ellis for cash : 850 feet Maple Flooring @ $49.00 24 pes. 2x8—16, Pine @ 25.00 Herefater our quotations will mean per thousand feet in the case of lumber unless a different denomi- nation is specified in the quotation. Bought of John C. Gay for cash without invoice : 150 Railroad Ties @ 80 cents Itemize in Purchase Book and enter in Cash Book, checking both entries. Sold R. O. Graves, Webster, on account : 30 pes. 2x6—16 Hemlock @ $24.00 4 M No. 2 Shingles @ 3.75 480 ft. Hemlock Sheathing @ 21.00 Paid cash for 10 bales hay for teams, $5.50. Debit "Team Expense" for all outlays for feed and care of teams, repairing wagons, etc. Sold E. C. Butler, 112 First Street, for cash : 1800 Lath @ $3.75 per M 2 Doors 2 8 x6 8 xl^ @ 2.50 per Door 4 Windows 12x14, 8 lights, @ 1.75 per Window Sent cash per bank draft, $175.50 to Lane & Thomas, to apply on their account. Paid cash for exchange on the draft 15 cents. Made the following estimate to L. J. Rickord for lumber and materials for dwelling, to be built at 327 Fourth Avenue, the supplies to be delivered as he may send for them. 48 pes. 2x12—12, Pine @ $27.00 11500' No. 1 Fence Flooring @ $38.00 8 pes. 2x12—14, Pine @ 27.00 12000' 3 d Flooring @ 29.00 14 pes. 8x 8—12, Pine @ 27.00 6000' No. 1 Siding @ 33.00 200 pes. 2x10—20, Pine @ 27.00 300' 4" Crown, per foot .03 135 pes. 2x12—20, Pine @ 29.00 1000' % Round, per C .40 160 pes. 2x 8—20, Pine @ 26.00 69 Windows, 12x30, 4 ft. w £j ow 1.50 250 pes. 2x 6—20, Pine @ 26.00 5 Doors 2 8 x6 8 , 1%" , No. 2 @ 2.00 80 pes. 2x 2—12, Pine @ 24.00 2 Doors 3x7, 1^", No. 2 @ 4.25 1000' 6" No. 1 Sheathing @ 27.00 11 Rolls B. Paper @ .60 13825' 2x6, D. & M. @ 20.00 42 sq. Rubberoid Roofing @ 2.00 In writing lumber dimensions the accent mark (') means feet, and the double accent (") means inches. In estimating board feet of lumber, it is customary in case of a fractional part of a foot to drop the fraction if less than J / 2 , and to write the next unit higher if the fraction is y 2 or more. The same rule will apply also to fractional parts of a cent when written in the money columns. Copy above items and prices in the Estimate columns on the left side of the first open folio of your estimate book, and carry out the extensions in the proper columns, footing the amount column and entering the total estimate. JUNE 4 Bought of Henry Roberts, R. F. D. No. 17, on account without invoice : 200 Railway Ties @ 80 cents Paid Jones & Lambert's demand draft on us for $153.25, to apply on account. Sold to M. I. Martin, 239 Fifth Avenue, on account: 20 pes. 2x 4—12, Pine @ $27.00 30 pes. 2x 8—16, Pine @ 27.00 16 pes. 2x 6—18, Pine @ 28.00 20 pes. 2x10—20, Pine @ 28.00 18 ADVANCED ACCOUNTING LEFT FOLIO OF THE ESTIMATE BOOK (3stimate > (V? A. //C t^SLicKorci Estimated Quantity Feet 1 Price Amount Delivered <+ 1 /"•*. 2-X / i - ' a-y <^<-»-u>-^ ^ x 7 - 3/ 1 yy. — ¥r •" V „ l y / 1. - itf- t „ J-iy fc 7 - C o^r 9V-* >« / ^X^aZA^^mc. / OO O a 7 - *7 - '/y-w. y//- 34." /jrtj-' a.x<. ^r«-3*i. . iztts- i. V fc .To %,,-/»*>• ^u-/a*ld""' x ' ^. x >c j- >e->-^-s t r /4' A /^J f| >Lo. x. a. - / • - V/3- S« a- „ *> 7 fi'fy ** : «- r r-T r 5"o V/3-2-^ // f?~tU^ 0, w-cu^™^ mi 3 / Delivered to L. J. Rickord on his estimate for 327 Fourth Avenue : 48 pes. 2x12—12, Pine 6 pes. 2x12—14, Pine 100 pes. 2x12—20, Pine Enter these in "Delivered" column of Rickord's estimate. (See model Estimate Book.) Received cash from Henry Trenton to apply on his account, $50. Paid cash for shoeing horses, $2.50. (Team Expense.) Sold to E. C. Martin, for cash : 4 pes. 1x10—14 4th Finishing @ $44.00 8 pes. 1x10—18 4th Finishing @ 44.00 2 pes. 1x10—16 Ship Lap @ 30.00 600 ft. 6" Hemlock Sheathing @ 20.00 2 M 5/2 Red Cedar Shingles @ 4.25 Received invoice of Red Cedar Shingles from Harvey & Son, Bellingham, dated June 3 and billed on account, $275.25. Paid cash to the Commercial Railway for freight on the last invoice, $74.75. JUNE 5 Delivered to L. J. Rickord on his estimate for 327 Fourth Avenue: 12 pes. 8x 8—12, Pine 150 pes. 2x10—20, Pine Sold H. Orton, Belleville, on account, car No. 9763 Commercial Railway, freight un- paid: 4000 ft. No. 1 Fencing @ $22.50 100 pes. 2x6—16, Pine @ 25.00 50 pes. 2x8—16, Pine @ 25.00 2 M 3-inch Pickets (a) 17.50 LUMBER ACCOUNTING 19 RIGHT FOLIO OF THE ESTIMATE BOOK ^/Jwellinq, 327 ^j/ourtn t^s£ti>enue, K^itu. Feet 1/3 c J ■ to =L£ 24 '/ f?~tJU. ft. P*M~r- f-b'oo Zfoo /■i'oo c7»*-*- Received cash from G. M. Null to apply on his account, $15. Bought of Henry Roberts, R. F. D. No. 17, on account without an invoice : 150 Railway Ties @ 80 cents 100 Split Fence Posts @ 25 cents Handed C. E. Jones, of Jones & Lambert, cash to apply on their account, $100. Sold O. M. Gray, on his note at 20 days, bearing interest at 6 per cent: 36 pes. 2x 8—16, Hemlock @ $24.00 28 pes. 2x12—16, Hemlock @ 25.00 48 pes. 2x 4—12, Hemlock @ 23.00 3 M cut Shingles @ 5.00 Paid cash for office books, $5.25. Received cash from J. G.' Noyes to apply on his note, $25. Sold Henry Trenton, Toddville, on account : 1500 ft. #1 Flooring i 900 ft. #1 Yellow Pine Ceiling i 15 pes. I%x6 — 12, Cypress i $36.00 32.00 58.00 f? '7 if x 7* Si V4 ye 7-Tf- JUNE 6 Paid cash for premium on insuring your stock of lumber for $4000 for one year, $60. If you carried large insurance, you would want a ledger account with Insurance. In the present set the insurance transactions will not be frequent, and they can be carried to Expense. Delivered to L. J. Rickord on his estimate for 327 Fourth Avenue. 50 pes. 2x10—20, Pine 35 pes. 2x12—20, Pine 80 pes. 2x 2—12, Pine 20 ADVANCED ACCOUNTING Sold C. E. Jones, 1329 Madison Street, on account : 40 pes. 2x4—18, Hemlock @ $28.00 18 pes. 2x8—14, Hemlock @ 24.00 24 pes. 2x6—16, Hemlock @ 24.00 6 pes. 1^x12—16 Finishing @ 60.00 Received invoice of Hemlock Lumber from Lane & Thomas, Hastings, dated June 3, billed on account, $392.55. Sold Henry Cushman for cash : 1500 ft. 10" #1 Hemlock Ship Lap @ $25.00 40 pes. 2x6—14, Hemlock @ 23.00 1450 ft. 6" 2 d Siding @ 28.00 Paid cash to the Commercial Railway for freight on the last invoice from Lane & Thomas, $79.95. Made the following estimate to H. C. Johnson for lumber and materials for dwelling, to be erected at 292 Grand Boulevard, the supplies to be delivered as he may send for them : 65 pes. 2x4—12, Hemlock @ $25.00 300 ft. Com. Flooring @ $34.00 8 pes. 6x6—14, Hemlock @ 28.00 4 pes. 2x12—12, Hemlock @ 30.00 4 pes. 6x6—12, Hemlock @ 28.00 60 pes. 2x 4—16, Hemlock @ 25.00 4 pes. 4x6—14, Hemlock @ 28.00 60 pes. 2x 4—14, Hemlock @ 25.00 1800 ft. 8 in. Com. Drop Siding @ 33.00 1750 ft. No. 1 Hem. Ship Lap @ 27.00 900 ft. Hemlock Sheathing @ 23.00 120 ft. 12 in. Stock Boards @ 35.00 8 M 6/2 R. C. Shingles @ 3.50 12 pes. 2x 6—14, Hemlock @ 27.00 13 pes. 2x8—14, Hemlock @ 25.00 3 pes. 1x12—16, Stock @ 35.00 22 pes. 2x8—12, Hemlock @ 25.00 10 Barn Sash, 8x10, 4 lights, per sash .60 Copy above items and prices as Estimate No. 2 on the second open folio of your esti- mate book. Carry out the extensions and record the total estimate. Paid cash for wages of workmen in the yard, $27.50. In a large business requiring the subdivision of Expense account this outlay would be charged to Yard Expense. In the present business a general Expense account will be sufficient for all outlays of this class ex- cept outlays for the teams, already provided for. The cash on hand and in bank at this time amounts to $5378.12. Delivered to L. J. Rickord for dwelling, 327 Fourth Avenue, but not included in his estimate : 213 ft. 2 d Ship Lap @ $30.00 Enter this in Extras in estimate book. Foot your purchase book and sales book, preparatory to posting. Accountants make it a rule to arrange the general accounts in the ledger as nearly as possible in alphabetical order. Every account should be indexed when given a place in the ledger. For the sake of uniformity, the ledger accounts should be opened in the following order, each account having a half page unless otherwise stated. The arrangement we have given classifies the ledger into three groups — general accounts, purchase accounts, and sales ac- counts. First Group — A. M. Porter, Henry Horton, J. C. Simmons, Bills Payable, Bills Receiv- able, City Railway Stock, Collateral Cash, Collaterals, Discount, Interest, Expense (page), Merchandise, Office Furniture, Out-Freight, Team Expense, Teams, Loss and Gain Closing. Second Group — Lane & Thomas, Jones & Lambert, Harvey & Son, H. B. Morton, Henry Roberts, Simmons & Co. Third Group — Henry Trenton, G. M. Null, R. O. Graves, M. I. Martin, H. Orton, C. E. Jones, Central Construction Co., L. J. Rickord. H. C. Johnson, C. E. Turner. Post your ledger to date from the original books in the following order : Journal, Pur- chase Book, Sales Book, Cash Book. The terms of each purchase should be entered in the explanation column of the ledger for reference in paying bills. Balance your cash book and take a trial balance, recording the same in your trial bal- ance book. LUMBER ACCOUNTING 21 JUNE 8 By mutual agreement of the partners, A. M. Porter has reduced his net investment by withdrawing cash, $2000. Bought of Henry Roberts, R. F. D. No. 17, on account without invoice : 225 Railway Ties @ 80 cents Paid Henry Roberts, cash on account, $100. Delivered to L. J. Rickord on his estimate for 327 Fourth Avenue : 160 pes. 2x8—20, Pine 25 pes. 2x6—20, Pine 2500 ft. No. 1 Siding Paid cash for new office desk, $22.50. Sold G. M. Null, 180 Second Avenue, on account : 1500 ft. 4-in. 2d Siding @ $33.00 50 pes. 2x8—18, Pine @ 26.00 Jones & Lambert have sent us a statement showing balance due them on account $2400, and offering a cash discount of three per cent for immediate payment. Accepted their propo- sition and sent them a bank draft for net balance due them after deducting the discount pro- posed. Gave cash for the draft and also for exchange on the draft, 30 cents. Such a discount transaction can be entered through the cash book, on the credit side debiting Jones & Lambert for the full amount of their account, $2400, and on the debit side crediting Discount for the amount deducted. In case of the payment in full of a personal account, it is good bookkeeping to post the debit or credit at once to the ledger account and rule up the account as closed, even if it is to be opened again for new transactions. The closing of a personal account marks the agreement of both parties and the adjustment of all entries in the account above the closing lines. In posting an entry before the regular posting period, care should be taken to enter the proper post- marks to avoid second posting of such an entry. Received invoice of dimension lumber from Simmons & Co., Austin, dated June 6, and billed at 2 per cent for 10 days, net at 30 days, the invoice amounting to $319.25. Sold the Central Construction Co., Franklin, on account: 725 Railway Ties @ $1.05 Paid cash to the Commercial Railway for freight charges on invoice of Simmons & Co., $76.25, and for prepaid freight charges on our shipment to the Central Construction Co., $72.50. Follo'v previous instructions regarding entry for freight charges on incoming invoices. Freight on sales shipments does not properly belong to cost of merchandise, but should be charged to "Out-Freight," if it oc- curs frequently, or to "Expense" if only occasional small payments are made. In this set an account will be opened with "Out-Freight" for payments of this kind. Delivered to L. J. Rickord for dwelling 327 Fourth Avenue, but not included in esti- mate : 4 pes. 8x 8—14, Pine s 4 s @ $30.00 25 pes. 2x 6—26, Pine (S) 30.00 40 pes. 2x12—20, Hem. @ 29.00 Dimension lumber, such as 2x4, 4x4, 2x6, 2x8, etc., usually is delivered without being planed or sized. If planed on one side, it is marked s 1 s, on two sides, s 2 s, on four sides, s 4 s. Made sundry small sales of lumber for cash without billing, $27.25. Enter in sales book in one line without itemizing, "Sundry Cash Sales." Delivered to H. C. Johnson, on estimate for dwelling, 292 Grand Boulevard: 30 pes. 2x4—12, Hemlock 4 pes. 6x6 — 12, Hemlock 4 pes. 4x6 — 14, Hemlock 800 ft. 8-in. Common Drop Siding Enter in Delivered column of estimate No. 2. 22 ADVANCED ACCOUNTING Received cash from H. Orton on account, $100. Sold R. O. Graves, Webster, on account: 24 pes. 2x8—14, Yellow Pine @ $24.00 40 pes. 2x8—16, Yellow Pine @ 24.00 80 pes. 2x4—18, Yellow Pine @ 24.00 50 pes. 2x6—16, Yellow Pine @ 24.00 2400 ft. 10-in. Ship Lap @ 22.00 Paid cash to the Commercial Railway for freight charges on the last out-shipment, $17.25. Gave Henry Trenton a special discount of $2.35 and collected cash for the balance of his account, $150. Post your books hereafter at the close of each date, except the total sales and purchases, which will be posted when you are required to take the next trial balance; Personal accounts should be ruled up when in balance. JUNE 9 Delivered to L. J. Rickord on his estimate for 327 Fourth Avenue : 2000 ft. No. 1 Siding 640 ft. 6-inch No. 1 Sheathing 2400 ft. 3d Flooring 40 Windows, 12x30, 4 light Collected cash of G. M. Null on account, $25. Sold Henry Trenton, Toddville, on account: 100 Split Fence Posts @ 30 cents each 100 pes. 2x4—16, Pine @ $25.00 1600 3-in. Pickets @ $15.00 per thousand pickets Deducted 2 per cent cash discount on balance due Harvey & Son, June 1, (Porter's in- vestment) and sent them a bank draft for the proceeds, paying cash for the draft and for exchange on the draft, 25 cents. As this is not a settlement in full, the entry will not be posted until the regular posting period. Delivered to H. C. Johnson on his estimate for 292 Grand Boulevard : 13 pes. 2x8—14, Hemlock 12 pes. 2x8—12, Hemlock 750 ft. No. 1 Hem. Ship Lap Received cash from R. O. Graves on account, $30. Received invoice of hard wood lumber from Jones & Lambert, Minneapolis, dated June 6, and billed at 3 per cent ten days, net sixty days, the invoice amounting to $613.25. Made sundry sales of lumber for cash without billing, $36.25. Received cash from L. J. Rickord, $75, to apply on his account. This will post to Rickord's credit in the ledger, and will not appear in the estimate book. Paid cash to the Commercial Railway for freight on Jones & Lambert's invoice of lum- ber, $125.75. Sold to Central Construction Co., Franklin, on account: 20 pes. 4x4—18, Hemlock @ $24.00 100 pes. 2x6—12, Hemlock @ 23.00 50 pes. 2x4—18, Hemlock @ 23.00 4500 ft. 10-in. Hemlock, Ship Lap @ 25.00 3200 ft. Fence Flooring @ 38.00 Paid cash to the Commercial Railway for prepaid freight charges on last sale, $27.75. Received cash from J. G. Noyes for balance of his note, $55.50. Sold C. E. Jones, 1329 Madison St., on account: 2500 ft. 4-in. 2d Siding @ $33.00 2800 ft. 10-in Hemlock Ship Lap @ 25.00 To accommodate J. N. Thomas, of Canton, we have sent him cash per draft, $200, to apply on our note due June 13. Enter in the cash book and interline in the paid column of notes payable. LUMBER ACCOUNTING 23 JUNE 10 Made the following estimate to C. E. Turner for lumber and materials for dwelling, to be erected at 416 Park Avenue, the supplies to be delivered as he requires them: 96 pes. 2x8—14, Yellow Pine @ $21.00 1400 ft. 3-in. Y. P. Flooring @ $42.00 75 pes. 2x6—16, Yellow Pine @ 21.00 800 ft. ^-in. Y. P. Ceiling @ 25.00 150 pes. 2x4—18, Yellow Pine @ 22.00 980 ft. 8-in. 2d Ship Lap @ 25.00 100 pes. 2x4—10, Yellow Pine @ 21.00 8 Windows, 12x28, 4 light @ 2.00 2800 ft. 10-in. Ship Lap @ 20.00 2 Doors 2 8 x6 8 xl% @ 2.50 3500 ft. 6-in Sheathing @ 19.00 4 Doors 2 6 x6 8 xl^ @ 2.25 17 M 5-2 R. C. Shingles @ 4.00 150 ft. 4-in. Crown Molding per ft. .02^ 2400 ft. 4-in. 2d Siding @ 28.00 320 ft. y 4 Round, per ft. .00^ 800 ft. 4-in. 3d Finishing @ 50.00 150 lbs. Tar Felt, per lb. .03 Delivered to L. J. Rickord on his estimate for 327 Fourth Avenue : 5700 ft. No. 1 Fence Flooring 3700 ft. 3d Flooring Lane & Thomas have drawn on us in three drafts, one for $400 payable on demand, one for $400 at 15 days sight, and one for $400 at 30 days sight, for the balance of their credit of June 1, less the payment we made June 3. We have paid the demand draft and ex- change on same, 40 cents, and have accepted the two time drafts. Enter the payment of the demand draft in the cash book and journalize the acceptance of the time drafts, entering the acceptances in notes payable. Sold to J. C. Brown, 223 Fifth Avenue, for cash : 556 ft. 6 in. Sheathing @ $22.00 12 pes. 2 x8— 14, Pine @ 26.00 25 pes. 2 x4— 18, Hemlock j@ 27.00 2 pes. I>4x6— 10, Cypress @ 57.00 Delivered to H. C. Johnson on his estimate for 292 Grand Boulevard: 1000 ft. 8-in. Common Drop Siding 6 M 6-2 R. C. Shingles 4 pes. 2x12—12, Hemlock 60 pes. 2x 4 — 16, Hemlock 60 pes. 2x 4—14, Hemlock 1000 ft. No. 1 Hemlock Ship Lap 12 pes. 2x 6—14, Hemlock Received cash from Central Construction Co., $250, to apply on account. Sold M. I. Martin, 239 Fifth Avenue, on account: 750 ft. 6-in. 2d Siding @ $35.00 50 pes. 1x8—16, Hemlock Ship Lap @ 27.00 Received an invoice of finishing lumber from H. B. Morton, Edgewood, dated June 9, and billed at 2 per cent ten days, net thirty days, the invoice amounting to $472.28. Delivered to L. J. Rickord for dwelling 327 Fourth Avenue, but not included in esti- mate : 6 ft. Oak Threshold @ '5 cts. per foot 10 ft. 2-in. y A Round @ 2 cts. per foot Paid cash to the Commercial Railway for freight on the invoice from H. B. Morton, $67.25. Paid cash for repairs on one of the wagons used for delivering lumber, $2.75. Made sundry sales of lumber for cash without billing, $31.50. Delivered to H. C. Johnson for dwelling 292 Grand Boulevard, but not included in estimate : 8 pes. 2x6—16, Hemlock @ $25.00 6 pes. 2x6—12, Hemlock @ 25.00 200 ft. 3d Finishing @ 50.00 24 ADVANCED ACCOUNTING Received cash from L. J. Rickord, $100, to apply on account. Sold E. E. Sanford, Benton, on his note at ten days with interest from date at six per cent: 50 pes. 2x8—16, Pine, s 2 s @ $28.00 100 pes. 2x4—12, Pine @ 27.00 60 pes. 2x6—12, Pine @ 27.00 8000 ft. 3d Flooring @ 30.00 500 ft. Y. P. Flooring @ 40.00 Paid cash to the Commercial Railway for prepaid freight charges on last sale, $31.50. JUNE 11 Delivered to C. E. Turner on his estimate for 416 Park Avenue : 96 pes. 2x8—14, Yellow Pine 75 pes. 2x4—18, Yellow Pine 75 pes. 2x6 — 16, Yellow Pine 50 pes. 2x4—10, Yellow Pine Received cash from H. C. Johnson, $50, to apply on account. A ledger account will be required for H. C. Johnson, the same as for L. J. Rickord. Sold G. M. Null, 180 Second Avenue, on account : 24 pes. 2x8—14, Hemlock @ $26.00 800 ft. Common Flooring @ 34.00 60 pes. 2x4—16, Hemlock @ 26.00 Bought of Henry Roberts, R. F. D. No. 17, on account : 150 Railway Ties @ 85 cents Received two notes from the Central Construction Co. to balance their account, both notes being dated June 11, and drawing interest from date at six per cent, the first note at ten days for $390, and the second note at fifteen days for $400. We have discounted the bal- ance of their account. Enter in journal and notes receivable, post the debits and credits of the Central Commission Co., and rule up their account. Delivered to L. J. Rickord on his estimate for 327 Fourth Avenue : 360 ft. 6-in. No. 1 Sheathing 300 ft. 4-in. Crown Molding 350 ft.'K Round 3000 ft. 3d Flooring 12500 ft. 2x6, D. & M. 5800 ft. No. 1 Fence Flooring Sent our note at fifteen days for $200 to H. B. Morton, to apply on account. Delivered to H. C. Johnson for dwelling 292 Grand Boulevard, but not included in estimate : 10 pes. 2x 4—10, Hemlock (S) $26.00 20 pes. 2x10—12, Hemlock @ 28.00 Received cash from M. I. Martin to apply on account. $50. Made sundry sales of lumber for cash without billing, $28.25. Received invoice of Hemlock lumber from Simmons & Co., Austin, dated June 9, and billed at two per cent ten days, net thirty days, the invoice amounting to $416.28. O. M. Gray, with our permission, has paid his note of $64.66, before it falls due, also paying interest on the note for six days at the given rate. Paid cash to the Commercial Railway for freight on the invoice of Simmons & Co., $92.29. LUMBER ACCOUNTING 25 Sold E. A. Porter, 365 North Avenue, receiving his note at 20 days without interest for $50, and cash for the balance : 120 pes. 2x4—12, Hemlock @ $22.00 60 pes. 2x6—16, Hemlock @ 24.00 3000 ft. 10-in. Hemlock Ship Lap @ 24.00 2200 ft. 6-in. 2 d Siding @ 28.00 300 ft. y A -'m. Y. P. Ceiling @ 32.00 Sold Gordon & Co., Huntsville, Car No. 9763, Com. Ry., receiving cash $64.28, and their note at 10 days for balance : 4 M No. 1 Fencing @ $27.00 100 pes. 2x6—16, Pine, s 2 s @ 28.00 120 pes. 2x8—16, Pine, sis @ 28.00 80 pes. 4x4—14, Pine, s 4 s @ 28.00 2 M 3-inch Pickets @ 24.00 Deducted the discount offered in Simmons & Co.'s invoice of June 8, and sent them cash per draft to pay the proceeds of this invoice, also paying cash for exchange on the draft, 40 cents. Borrowed cash, $900, of the Exchange Bank on our collateral note, payable on or be- fore 30 days with interest at six per cent from date, leaving as security the following notes which the bank will collect for us : Notes of Central Construction Co $790 Note of Gordon & Co 250 Such a transaction is called a Collateral Loan, and the collateral note will be entered as a note payable. When we deliver notes receivable to the bank as collateral, we should make a journal entry debiting "Collateral" and crediting Bills Receivable. JUNE 12 As an accomodation to Henry Horton, who needs $500 cash for personal use, we have bought of him five shares of City Railway Stock at par, paying him cash for same, $500. Open a ledger account with City Railway Stock, debiting it for the cost. Received cash from C. E. Turner, $100, to apply on account. Turner will also require a ledger account. Delivered to H. C. Johnson on his estimate for 292 Grand Boulevard : 300 ft. Common Flooring 900 ft. Hemlock Sheathing Paid cash to the Commercial Railway for prepaid freight charges on the shipment to Huntsville, June 11, $38.75. Received invoice of Doors and Windows from Harvey & Son, Bellingham, dated June 10 and billed at 2 per cent fifteen days, net sixty days, the invoice amounting to $415.20. Delivered to L. J. Rickord on his estimate for 327 Fourth Avenue : 1325 ft. 2x6 D. & M. 650 ft. y A Round 29 Windows, 12x30, 4 light 30 Squares Rubberoid Roofing Received cash for sundry sales of lumber without billing, $42.16. Paid cash to the Commercial Railway for freight on Harvey & Son's invoice of lum- ber, $65.25. Sold M. I. Martin, 239 Fifth Avenue, on account : 3000 ft. 6-in. Hemlock Sheathing @ $21.00 15 M cut Dimension Shingles @ 4.50 6 columns 5x5 — 9, per column 1.50 8 windows 12x28, 4 light, per window 2.00 4 doors 2 6 x6 8 xl^, per door 2.75 120 ft. 4-in. Crown Molding, per ft. .03 600 ft. 3 d Finishing @ 50.00 26 ADVANCED ACCOUNTING Paid cash for hay and straw for teams, $7.50. Delivered to H. C. Johnson for dwelling 292 Grand Boulevard, but not included in estimate: 15 pes. 1x8—16, Drop Siding @ $28.00 20 pes. 1x6—12, Hemlock @ 23.00 900 ft. Common Flooring @ 34.00 Delivered to C. E. Turner on his estimate for 416 Park Avenue : 75 pes. 2x4—18 50 pes. 2x4—10 1500 ft. 10-in. Ship Lap JUNE 13 Delivered to L. J. Rickord on his contract for 327 Fourth Avenue : 4 Doors 2 8 x6 8 xl^ No. 2 2 Doors 3x7x1^4 No. 2 12 Squares Rubberoid Roofing Also delivered to L. J. Rickord for same building, but not included in estimate : 600 ft. ^-in. Yellow Pine Ceiling @ $25.00 Received from the Commercial Railway cash for overcharge on freight shipment to Huntsville, June 12, $5.25. Credit this to Out-Freight. Harvey & Son have discounted 2 per cent from their invoice of June 3 and have drawn on us on demand for the proceeds of the invoice which we have paid, also paying for ex- change on the draft, 30 cents. L. J. Rickord has returned for credit on his estimate for 327 Fourth Avenue : 500 ft. No. 1 Fence Flooring 25 ft. 4-in. Crown 50 ft. y A Round Enter these in credit column at prices estimated. Delivered to H. C. Johnson on his estimate for 292 Grand Boulevard : 120 ft. 12-in. Stock Boards 3 pes. 1x12—16, Stock 10 Barn Sash, 8x10, 4 light Sold to the Central Construction Co., Franklin, on account : 150 Railway Ties @ $ 1.10 100 pes. 8x8—18, Hemlock @ 26.00 Paid cash to the Commercial Railway Co. for prepaid freight charges on the shipment to Franklin, $33.55. Received cash from R. O. Graves on account, $50. Sold one of our teams (two horses, harness, and wagon) to Henry Shepard for $500, receiving cash $250 and his note at 30 days without interest for the balance. Compound Journal entry. Delivered to H. C. Johnson for dwelling 292 Grand Boulevard, but not included in his estimate * 3 pes. 1^x12—14, Stop @ $60.00 4 pes. 1x8—14, Finishing @ 45.00 Received cash from L. J. Rickord on account, $200, and he reports that no more supplies will be required for 327 Fourth Avenue. Enter in "credits" the undelivered supplies in esti- mate. Close the estimate and carry the net amount to the sales book as a sale on account. LUMBER ACCOUNTING 27 Received cash from C. E. Jones on account, $100. Paid cash for wages of workmen in yard, $22.75. Delivered to E. C. Turner on his estimate for 416 Park Avenue : 1200 ft. 10-in. Ship Lap 1800 ft. 6-in Sheathing The cash on hand and in bank at this time amounts to $581.92. Post your books, including total sales and purchases, and take a trial balance. JUNE 15 Received cash from L. J. Rickord on account, $200. Sold R. C. Gandy, Galena, Commercial Railway, Car No. 2916, receiving cash $84.56 and his note at 12 days with interest at six per cent for balance : 125 pes. 2x12—20, Pine @ $30.00 60 pes. 2x 6—20, Pine @ 30.00 80 pes. 2x 8—18, Pine @ 28.00 50 pes. 2x12—16, Pine @ 28.00 Paid H. B. Morton cash for balance of his invoice entered June 2, $162.50. Delivered to C. E. Turner on his estimate for 416 Park Avenue : 1700 ft. 6-in. Sheathing 15 M 5-2 R. C. Shingles 2400 ft. 4-in. 2 d Siding 900 ft. 8-in. Ship Lap Received cash from E. A. Porter in payment of his note, $50. Paid cash to the Commercial Railway for prepaid freight charges on our last shipment to Galena, $29.92. Paid J. N. Thomas cash for balance of our first note, $200, and interest due on same. Use the regular partial payment rule in computing this interest, estimating 6 days' interest before the first payment, and 6 days' interest on balance due after first payment. Received invoice of flooring from Lane & Thomas, Hastings, dated June 12, and billed at 3 per cent ten days, net thirty days, the invoice amounting to $520.16. Received cash for sundry sales of lumber without billing, $41.50. H. C. Johnson has returned for credit on his estimate for 292 Grand Boulevard : 250 ft. No. 1 Hemlock Ship Lap 20 ft. 12-in. Stock Boards 200 ft. 8-in. Common Drop Siding Paid cash to the Commercial Railway for freight on Lane & Thomas's invoice of lum- ber, $73.72. Received cash from G. M. Null on account, $9.75. JUNE 16 Drew on H. Orton, Belleville, at sight, for balance of his account and left the draft at the Exchange Bank for collection. Make pencil memorandum in ledger, credit side of Orton's acct. "St. Draft 6-16 Exch. Bk. for Col. $91.68." Do not carry any amount to the money columns, as the draft has not been paid yet. If drafts were drawn frequently on customers for collection, they would be recorded in a collection regis- ter with proper rulings for all data pertaining to the collections, and in such case would not require pencil memoranda in the ledger. Received a cash dividend of four per cent on our City Railway Stock, $20. Paid cash for Jones & Lambert's invoice of June 9, less the discount they offer. L. J. Rickord has settled his account in full, giving us cash $396.31, a note for $400 at six days with interest at six per cent, and a note for the balance of his account at twelve days with interest at six per cent. As this final transaction involves cash and bills receivable, make a compound journal entry, crediting Rickord in full from the journal and checking the cash entry. Post and rule up Rickord's account. 28 ADVANCED ACCOUNTING Sold C. E. Jones, 1329 Madison Street, on account : 2400 ft. 3 d Flooring @ $30.00 60 pes. 2x8—16, Hemlock @ 26.00 1200 ft. Drop Siding @ 34.00 Delivered to C. E. Turner on his estimate for 416 Park Avenue : 750 ft. 4-in. 3 d Finishing 1400 ft. 3-in. Yellow Pine Flooring 8 Windows 12x28, 4 light Received cash from H. C. Johnson on account, $50, and he reports that no more sup- plies will be required for 292 Grand Boulevard. Enter in "credits" the undelivered supplies in estimate. Close the estimate and carry the net amount to the sales book as a sale on account. Received cash for sundry small sales of lumber without billing, $39.29. Paid cash for books and stationery for the office, $6.75. JUNE 17 Paid cash to Henry Roberts on account, $205. The Exchange Bank have collected our draft on H. Orton and have paid us the amount of the draft less 25 cents kept out for collection charges. Make the required entries in the cash book, crediting Orton in full and debiting Expense for the collection. Received invoice of dimension lumber from Jones & Lambert, Minneapolis, dated June 13 and billed at 3 per cent ten days, net sixty days, the invoice amounting to $278.75. Sold R. O. Graves, Webster, Commercial Railway, Car 19654, on account: 48 pes. 1x16—18, Finishing @ $50.00 40 pes. 1^x12—16, Finishing @ 48.00 20 M 5-2 R. C. Shingles @ 4.25 20 Doors 2 8 x6 8 xl^, per door 2.25 150 pes. 2x6—14, Pine, s 2 s @ 28.00 Paid cash to the Commercial Railway for freight on Jones & Lambert's invoice of lum- ber, $53.75, and for prepaid freight charges on the shipment to Webster, $22.35. Borrowed cash, $800, of the Exchange Bank on our collateral note, payable on or be- fore 30 days with interest at six per cent from date, leaving as security the two notes of L. J. Rickord for $1000, which the bank will collect for us. Proceed as in former collateral note (June 11). Paid Simmons & Co. cash per check for their invoice received June 8, less the discount they offer. Received cash for sundry small sales of lumber without billing, $42.38. Gave the Central Construction Co. a discount of 2 per cent for immediate payment of their bill of June 13, receiving cash for the balance. Delivered to C. E. Turner on his estimate for 416 Park Avenue : 800 ft. ^-in. Yellow Pine Ceiling And for the same building, but not included in the estimate : 1000 ft. 6-in. No. 1 Sheathing @ $21.00 1250 ft. No. 1 Fence Flooring @ 40.00 JUNE 18 Sold our 5 shares of City Railway stock to G. A. Clews for cash, $550. Paid Henry Roberts cash on account, $180. Delivered to C. E. Turner on his estimate for 416 Park Avenue : 2 Doors 2 8 x6 8 xl^ 4 Doors 2 6 x6 8 xl^ LUMBER ACCOUNTING 29 Received cash from H. C. Fenton for desk space in office, $10. Sold A. R. Foote, R. F. D. No. 29, receiving cash, $22.90, and his note at 30 days with- out interest for balance : 900 ft. 4" 2d Siding @ $30.00 200 ft. 4" 3 d Finishing @ 50.00 600 ft. 3" Yellow Pine Flooring @ 42.00 1200 ft. 8" 2 d Ship Lap @ 28.00 36 pes. 2x4—14, Hemlock @ 22.00 48 pes. 2x8—14, Hemlock @ 22.00 Delivered to C. E. Turner for dwelling No. 416 Park Avenue, but not included in esti- mate : 5 M 4-in. Hemlock Lath @ $ 5.10 38 pes. 2x6—12, Yellow Pine @ 21.00 40 ft. 2-in. Bed Molding, per ft. .02 Paid H. B. Morton's sight draft on us for balance of his account, after deducting a dis- count of 2 per cent, the face of the draft being $462.83. Post and rule up Morton's account. JUNE 19 Received cash from Henry Shepard in payment of his note due July 13, on which we have allowed a discount of $1 for payment before maturity. This kind of discount is properly classed as interest, as it is an allowance of 6 per cent interest on the note for the length of time to maturity. Paid cash for feed for teams, $3.50. Delivered to C. E. Turner on his estimate for 416 Park Avenue : 150 ft. 4" Crown Molding 300 ft. y 4 Round 150 lbs. Tar Felt Received cash from C. E. Turner on account, $75. Lane & Thomas have offered us a discount of 2 per cent on their invoice received June 6, if paid at once, and we have accepted their offer and have sent them cash per draft for the proceeds of the invoice after discount. Also paid cash for exchange on the draft, 40 cents. Sold E. C. Pinney, 224 Grand Avenue, for cash : 24 pes. 2x4—18, Hemlock @ $28.00 600 ft. Maple Flooring @ 49.00 10 pes. 1x10—14, Yellow Pine @ 48.00 JUNE 20 The Exchange Bank reports the collection of the Central Construction Co.'s note $390 and interest on same 65 cents. They will keep this cash in a special fund until you settle your first collateral note. Do not enter this cash in your cash book, as the cash is not now in your possession. Make a journal entry debiting Collateral Cash and crediting Collaterals and Interest. Delivered to C. E. Turner for dwelling No. 416 Park Avenue, but not included in his estimate : 5 pes. 1x8—18, 4th Finishing @ $44.00 25 lbs. Tar Felt, per lb. .03 Received cash from G. M. Null on account, $80.70. Sent cash per draft to Jones & Lambert, to pay their invoice of June 13, less the dis- count they offered. Also paid cash for exchange on the draft, 30 cents. 30 ADVANCED ACCOUNTING Received cash from the Commercial Railway for overcharge on last shipment from Minneapolis, $10, and for overcharge on our last shipment to R. O. Graves, of Webster, $5. Paid cash for wages of workmen in yard, $14.50. The cash on hand and in bank at this time amounts to $785.12. i Post your books, including total sales and purchases, and take a trial balance. JUNE 22 Received cash from E. E. Sanford in payment of his note now past due, $330.92, and for interest on same from date at the rate named. C. E. Turner has paid us cash on his account, $100, and has returned for credit on his estimate: 20 pes. 2x4—18, Yellow Pine 200 ft. 6-in. Sheathing Turner reports that no more supplies will be required for 416 Park Avenue. Enter the undelivered supplies in "credits" and close the estimate in the usual manner. Paid Lane & Thomas cash for invoice of June 12, less their offered discount. Received cash for sundry small sales of lumber without billing, $38.80. The Exchange Bank reports the payment of Rickord's note for $400, left with them as collateral, and 40 cents interest on same. JUNE 23 Received cash from H. C. Johnson on account, $88.73. Paid cash for our note favor J. N. Thomas, $416.25, with interest from date at the given rate. Settled in full with M. I. Martin, receiving cash $39.08, and his note at 10 days, with interest 'at six per cent, for $200. Sold to J. A. Parker, Parkerville, Commercial Railway, Car No. 9221, for cash : 10 pes. 6x 6-48, Hemlock @ $27.00 60 pes. 2x12—18, Pine @ 28.00 80 pes. 2x 6—18, Pine @ 28.00 120 pes. 2x 4—16, Hemlock @ 27.00 4000 ft. Common Flooring @ 34.00 Paid cash for Lane & Thomas's note due June 25, $400. Received cash from C. E. Jones on account, $90.42. JUNE 24 Received cash from H. Trenton on account, $80.68. Paid cash to the Commercial Railway for prepaid freight charges on our shipment to Parkerville yesterday, $21.75. The Exchange Bank reports the collection of Gordon & Co.'s note left with them as col- lateral, $250. Received cash for sundry small sales of lumber not billed, $42.24. JUNE 25 Sent cash per draft to Harvey & Son to pay their invoice received June 12, less the of- fered discount, also paying cash for exchange on the draft, 50 cents. Received cash from G. M. Null to apply on account, $55.49. Sold G. A. Camp, Sterling, Commercial Railway, Car No. 4998, discounting 5 per cent from quoted prices and collecting cash for the bill : 120 pes. 2x 8—14, Hemlock @ $22.00 50 pes. 2x 6—16, Hemlock @ 22.00 200 pes. 2x 4—16, Hemlock @ 22.00 200 pes. 2x10—20, Pine @ 27.00 200 pes. 2x 6—20, Pine @ 26.00 3000 ft. No. 1 Siding @ 33.00 As this discount is allowed on the original bill, the total of the sale should be written in the first column in the sales book and the discount should be deducted and only the net amount after discount should be extended to the second column. LUMBER ACCOUNTING 31 JUNE 26 The Exchange Bank reports the collection of the Central Construction Co.'s note for $400, left with them as collateral, and $1 interest on same. As the last transaction closes the collection of the first set of collaterals, we have taken up our collateral note favor the Exchange Bank for $900 and fifteen days' interest on same at given rate, and have received collateral cash, $139.40. The cash received from collateral cash goes into the regular funds and should appear in the cash book as a cash debit. Received cash for sundry small sales of lumber not billed, $38.55. JUNE 27 Received cash from R. O. Graves on account, $82.86. Paid cash for our note favor H. B. Morton, $200. Received cash for sundry cash sales of lumber not billed, $85.82. Received cash from R. C. Gandy for his note, $200, and twelve days' interest at the given rate. Paid cash for workmen's wages in yard, $12.75. JUNE 28 The Exchange Bank reports the collection of Rickord's note left with them as collat- eral, $600, and thirteen days' interest on same at the given rate. We have taken up our collateral note favor the Exchange Bank for $800 and twelve days' interest on same at the given rate, and have received from the bank the balance of our collateral cash. JUNE 29 Paid each partner's salary for one month. The cash- on hand and in bank amounts to $818.09. Post your books, including total sales, and take a trial balance. The following inventories have been taken, in preparation for a balance sheet : Lumber and building materials $11186.09 Teams 515.00 Office Furniture 285.00 Books, stationery, and postage 8.75 Make' a six-column balance sheet, showing present interest of each partner, after which close all ledger accounts except those with persons, Bills Receivable, and Bills Payable. Prove your Bills Receivable and Bills Payable accounts with your bill book entries. 32 ADVANCED ACCOUNTING QUESTIONS FOR REVIEW 1. What is meant in business by the term, statement? 2. What is a statement of account? A depositor's statement? A bank statement? A financial statement ? 3. What is a balance sheet? 4. What three general forms of balance sheets are used by accountants? In what respect do they differ? 5. Explain the use of the purchase book and give its advantages. 6. What account-title is credited for a purchase for cash? 7. What account-title is credited for a purchase on account? 8. What account-title is credited for a purchase on note signed by us? 9. What debit entry will equal all of the purchase book credits? 10. Explain the use of the sales book and give its advantages. 11. What account-title is debited for a sale for cash? 12. What account-title is debited for a sale on account? 13. What account-title is debited for a sale on note in our favor? 14. What credit entry will equal all of the sales book debits? 15. What is a promissory note, and what parties pertain to a note? 16. Explain the use of the bill book. 17. Define bills receivable. Define bills payable. .18. Explain the use of the estimate book. 19. What is the unit of measure in estimating lumber? 20. Give the rule for computing dimension lumber. 21. Give the rule for estimating the value of lumber. 22. When an account is discounted and paid, how can the discount be entered in the cash book? 23. When should personal accounts be closed? 24. What distinction is there in accounting between freight on incoming invoices and prepaid freight on sales? 25. What is the effect of accepting a draft drawn on your own firm? 26. How can discount dates — dates when bills can be discounted — be shown in the ledger ? 27. What ledger account should be kept with bills receivable left at the bank as col- lateral security for bills payable? 28. How is Collateral Cash account closed? 29. How is Collateral account closed? Business Forms. The following business forms should be studied carefully by the student before he at- tempts to write the papers and forms that are required in the course in Business Practice. RECEIPTS A receipt is a written acknowledgement that the maker has received into his possession money or other property from the person to whom the receipt is given. A receipt should always be required when money is paid on account, and the receipt should state clearly the purpose of the payment. Receipts should be carefully filed and never destroyed until there is no longer any possibility that they may be wanted. j^L*^ ^J2/y^. (2 — . , y /& Jti . . $ /£>& For — Co^c^etz^^u^. -^*~ "tr't^"'"/' S>~3^r S & ^- -*-~r~-r~r^*^ ^A. $/Co^r> ^*S 36 ADVANCED ACCOUNTING HOW TO INDORSE A CHECK To indorse a check or other paper, is to write one's name on the back. This should be done across the left end of the paper. When checks or other commercial papers are pre- sented at the bank, either for payment or deposit, they should be indorsed by the payee. A CHECK INDORSED A DEPOSITOR'S STATEMENT At the end of each month, or more frequently if desired, the bank returns the checks they have paid for the. depositor, with a statement sheet listing the paid checks, and also giving the deposits and the balance in bank to the credit of the depositor. The form below represents a depositor's monthly statement. DEPOSITOR'S STATEMENT Statement of Account ^^^^€/n dw ^^^<<^/ isr.v ' L^^£^<^C^-/^^ Z^_J/ouchers returned. in account with THE, EXCHANGE BANK OAKLAND No. Day <^? /l ^ lA 3^ ^h rs LjkJU. *9- yi /A -UL jAl *& f- I'J Lt£ 4- > 0*. \__ C l-l b o ^~ n O TO ffi ft ,-s Sherwood, course. HN Sones W ft (A w > O M o u ft 3 Q «oi O m ft W 5 so o m ^ > C. i — , o 3 o O i— i v 8 o TO j_ in 3 -to Pay to Hen order, without •*s •*o 1*4 g o co o c V. C) '5- TO O C c Or £ ° 8 o c o -M TO "+" 1 r/5 W ft o ' , r/) "^3 5b fc .§ W o £ i— » bjo Ho «? «4i -to O *v 5^ ■§ * ^ O £ en o o Referring to the Model Forms of Indorsements above. A transfers the ownership from Sones to Sherwood, and makes Sones responsible to Sherwood in case the maker or payer of the paper fails to pay it. B transfers ownership, but relieves Sones from any responsibility if the paper is not paid when due. C transfers the ownership to any party who may hold the paper, making it in effect pay- able to the bearer. D transfers the ownership as in Form C, except that it relieves Sones from further responsibility. E is a receipt for money paid to apply on the promise indorsed. Such indorsements need no signature. F does not transfer the ownership of the paper to the bank, but merely gives authority to the bank to collect the paper as Sones's agent. G renders' Sones liable as surety without a formal notice of protest, as the law usually requires. The student will follow Form C in indorsing drafts and checks for deposit, and Form E in indorsing a partial payment on a note. CERTIFIED CHECK This is an ordinary bank check that has its validity acknowledged by the Teller's writ- ing or stamping the word "certified" with date and signature across its face. This is usually done in red ink as in accepting a draft. Certification of a check by a bank is equivalent to an acceptance, and the certification is at once charged to the depositor's account. Like a cer- tificate of deposit, a certified check may be transferred by indorsement, also, the indebtedness evidenced by it is not subject to withdrawal until the certified check is returned. 38 ADVANCED ACCOUNTING Certified checks are a convenience to the holder, who, upon identification, may deposit them at any bank and draw against them, as in the case of any other deposit. They are also used in the transmission of money, and may be used, generally like bank drafts, in making cash payments in cases where an ordinary personal check would not be available. A CERTIFIED CHECK ^_^ J# Gfys/d BANK DRAFTS Bank drafts are drawn by one bank upon another, and are used chiefly for the trans- mission of money. Unless for very large amounts, they are drawn "at sight" and, in com- mercial transactions, are considered as cash. They are usually drawn on banks in the large cities and are spoken of as "New York Drafts," "Chicago Drafts," etc. The following is an ordinary form: A BANK DRAFT (J^? *y ,44^^^^^^^ ^ssTf- / s, — |tei To FIRST NATIONAL BANK NEW YORK. If Guthrie, Manning & Wright purchase above draft to send to Hallett & Preston, they would indorse the draft, "Pay to the order of Hallett & Preston," followed by'the firm name. In purchasing a draft for remittance to another firm, it is best to have the draft payable to your own firm, after which it can be indorsed payable to the firm to whom you send it. Many firms, however, prefer to have the bank drafts made payable directly to the persons to whom they are sent, thereby saving the time required for indorsing. Banks in all cities and towns, except a few commercial centers like New York City and Chicago, will have deposits with banks in these centers and will keep balances to their credit by remitting drafts for collection and credit, and currency or coin by express if necessary to keep up their balances, thereby enabling them to sell drafts to parties who may wish to remit to other cities. It is customary to charge a small amount per hundred dollars, called ex- change, in addition to the face amount of the drafts, to cover the cost of issuing the drafts and maintaining the account. BUSINESS FORMS 39 REQUEST FOR BANK DRAFT Wanted by The Student College City, May 16, 19 _ When a draft is wanted at bank, a Drafts on »mYwk request should be presented . to the teller, giving all information that the latter m a y need in filling out the draft as de- sired. If any ex- change is charged, the amount of the exchange is added as shown in the form. TO THE ORDER OF AMOUNTS The Anchor Mills 125 75 Exchange, ' ' 10 Total, 125 85 CERTIFICATE OF DEPOSIT It is sometimes desirable to place a sum of money in bank, which the owner does not wish to draw out through his personal checks. In this case the banker gives the depositor a certificate of deposit, (see accompanying form) which is an acknowledgement by the bank that it has received the money, and that it is held subject to the depositor's order upon sur- render of the certificate. A certificate of deposit may be transferred by indorsement, as in the case of a note or check. If it is desired to withdraw the money covered by a certificate of deposit, or to con- vert it into an ordinary deposit, subject to check, the certificate is surrendered. A CERTIFICATE OF DEPOSIT (Se» Apt^wa. /%W Jl^ /f I $J?s* (/ ^vz^^?^^^^<9^f/5>2^^i^^ / \2kttittC4tC At^ei-^yendtrnteto oo %«i&«tt <&»&& -~*^L*~i*~^J^/5?y. ^J^< Drafts are used to adjust accounts without the transmission of money. If Fremont owes the Student $75, and Stone owes Fremont, the latter firm can draw on Stone payable to the Student, and the payment of this draft will adjust the several accounts. When the draft is made payable at sight or on demand, the drawee is expected to pay the draft when first presented. BUSINESS FORMS 41 AN INDIVIDUAL TIME DRAFT The above draft is drawn at thirty days sight, meaning thirty days after sight, and it should be presented to Preston as soon as possible for acceptance. To accept this draft, Preston should write across the face of the draft (red ink being preferred) the word "Accepted," the current date, and his signature, using two lines. The draft, after Preston has accepted it, is called an acceptance. AN ACCEPTED DRAFT Commercial drafts are more commonly used as a means of making collections from dis- tant firms through the agency of a bank. In this case the drawer makes out the draft pay- able to the order of "Myself," or "Ourselves," and endorses the draft in favor of the bank "for collection," or he makes the draft payable directly to the collecting bank, who forwards it for payment or acceptance. Goods are often paid for with the buyers' acceptance at the time of purchase, the accept- ance in such case being used in place of a promissory note. Dishonor and Protest. If, upon the presentation of a draft, the drawee declines either to pay it or accept it, the draft is said to be "dishonored." In the case of a refusal to pay an acceptance it should at once be protested, as in the case of a refusal to pay a promis- sory note. (See page 12.) 42 ADVANCED ACCOUNTING Theory of a Draft. When drafts are used in business, the presumption is that the drawee owes the drawer, and that the latter owes the payee, but drafts are frequently em- ployed when these conditions do not hold, especially in the case of drafts delivered to a bank for collection. In this case the drawer does not owe the bank, the latter merely acts as his agent in making the collection. The principles of debit and credit apply to drafts in the same way as to orders. For both drafts and acceptances, they may be summarized as follows : 1. Credit persons when you draw on them and dispose of the drafts, or they accept the drafts. Note. — In the case of drafts drawn for collection do not make the credit until the draft is accepted or paid. 2. Debit persons when you pay or accept their drafts on you. 3. The acceptances of others are Bills Receivable to you, while your own acceptances are, on your books, Bills Payable. EXERCISES IN COMMERCIAL DRAFTS After carefully considering the foregoing principles, take a blank sheet of paper and give in the form of Journal entries the debits and credits required for the following suppositional transactions : 1. Bought 50 barrels of Sugar @ $11, and gave in payment my sight draft on Cook & Allen. 2. Paid cash for Roberts & Co.'s draft on me for $75.80. 3. Accepted C. H. Parker's draft on me at 30 days' sight for $150. 4. S. Jones & Son accept my draft on them at 30 days' sight for $250. 5. Gave Wilson & Brown on account my draft on Davis Bros, for $75. 6. Discounted at the Citizens Bank, Jones & Son's acceptance, for $250, less 6 per cent of face, receiv- ing the proceeds in cash. 7. Henry Bell & Co. pay me on account their draft on Miller & Parks for $100, which draft the latter firm accepts. 8. Paid cash for my acceptance favor C. H. Parker, $150. 9. Miller and Swift pay me cash for their acceptance of Jan. 6, $87.50. 10. The First National Bank remits cash for my draft on Mansfield, Carter & Co. for $400, less 2 per cent for collection. 11. Sold 20 brl. Flour @ $4.00 to Snyder & Locke, receiving in payment Hill & Morlin's acceptance in their favor for $50. Balance on account. 12. Sold to A. H. Harper & Sons 2560 lb. Butter (2> 10c, taking in payment my acceptance favor of Cooper Bros, for $140 and their draft at 30 days on Day & Co. for the balance, accepted by the latter firm. PROPRIETOR'S PRIVATE ACCOUNT When the proprietor or partner in a business withdraws goods or small sums of money for personal use, it is usual to charge such amounts to a private, or personal account, kept with the person making such withdrawals. It is assumed that these withdrawals are from the profits, rather than from the investment in the business, and it would therefore not be proper to charge them to the proprietor's investment account, unless they are for amounts obviously exceeding the proportion of profits accruing to the person making the withdraw- als. The private account is to be credited with any sums due for salary, also for any ordi- nary expenditures made in behalf of a business by a partner who uses private funds for this purpose. Upon closing up a business, the profits may be closed into the proprietor's or partner's private account, and withdrawn at his convenience, or they may be closed into the regular investment account, thus going to increase the capitalization of the business. The latter course is usually followed. LEASE A lease is a written agreement between two parties for the renting of property. The owner of the property is called the landlord, and he agrees to give possession and use of the property described for a length of time named in the lease. The person renting the property is called the tenant, and he agrees to pay the landlord the amount named in the lease for the use of the property during the time named. The lease is signed by both landlord and tenant, because each one makes an agreement ; and two copies of the lease should be made, so that each party may hold one. BUSINESS FORMS 43 Standard Form of Lease This Agreement, Made between A - R - Andrews of College City of the County of Johnson and State of Indiana The Student of the first part, and of College City, Johnson Co., Indiana, of the second part, witnesseth. That the said party of the first part has this day leased unto the party of the second part the following described premises, to- wit: Room No. 5, in the sec ond floor of Building Nos. 129—133 Second Street, College City, Indiana, for the term of Three months f rom an d after the Tenth day of September A. D., 19 — , at the monthly rer ,t of Ten Dollars to be paid as follows, to-wit: on the date of this lease and on each m onth thereafter in advance And it is further agreed that if any rent shall be due and unpaid, demand therefor being waived, or if default be made in any of the covenants herein contained, it shall then be lawful for said party of the first part to re-enter the said premises and remove all persons and property therefrom, or he may recover possession thereof, by action for the forcible detention of said property. And the said party of the second part agrees to hire said premises, and to pay the party of the first part therefor the monthly ren t of Ten Dollars to be paid as follows, to-wit: on tne date of this lease and on each month thereafter in advance except when said premises are untenable by reason of fire from any other cause than the carelessness of the party of the second part, or of persons of n ^ s family or in n ^ s employ, or by superior force or inevitable necessity. And the said party of the second part covenants that ne will use said premises as a " office an d for no other purpose whatever; and that ne especially wi 1 l not use said premises nor permit the same to be used for any unlawful business or purpose whatever; that he w ni no t assign this lease or let or underlet said premises without the written consent of the lessor, under the penalty of the forfeiture of all *" s rights under the lease: and that ^ e will use due care and diligence in guarding said property from damage; that ^ e will keep the same in such repair as the same now are, or may at any time be placed in by the lessor, damages by superior force, inevit- able necessity, or fire from any other cause than that from the carelessness of the lessee, or persons of ft' s family or in his employ, excepted; and that at the expiration of this lease, or upon a breach by said lessee of any of the covenants herein contained ne will, without further notice of any kind, quit and surrender the possession of said premises in as good condition as reasonable use. natural wear and decay thereof will permit, damages by fire as aforesaid, superior force, or inevitable necessity, only except*, d IN WITNESS WHEREOF, the said parties have hereunto subscribed their names on this Tenth dav nf September A . D., 19— A. R.Andrews per John Simmons. Agent. The Student 44 ADVANCED ACCOUNTING SHIPPING ORDER AND BILL OF LADING When a consignor delivers merchandise to a transportation company for shipment, he usually brings a shipping book, or a set of loose sheets, describing the shipment in triplicate. The printed matter is different on each of the three sheets, but the blank spaces to be filled in by the shipper are the same in each form, so that the set may be completed in one writing by using carbon sheets. The interstate commerce commission has prescribed a form to be used by all common carries, called a non-negotiable, straight bill of lading. The original copy is a shipping or- der that is kept by the transportation company. The two duplicates are signed by the agent of the transportation company, the first being a bill of lading which is sent to the consignee, and the second being a memorandum of the shipment which is kept by the shipper. The form below represents a set of shipping bills filled out by Cyrus Martin, the sig- nature of the transportation agent, A. H. Hooper, being written on the bill of lading and memorandum. THE TRIPLICATE SHIPPER'S RECEIPT BOOK with tbt •UixWd form of Straight Bill of Lading .pprored or thr IsSentste Comaini Coaauaioo by Order No 787 ol Jaae 27. 1909 RAILROAD COMPANY. THIS MEMORANDUM wledgment Ih.l a bill of lading boo beeo Iftssi - ol Lading, oor o copy or duplicate. < oodod oololo (or filing < Shipper** No. £— Agent's No.- riffs in effect on date of the r r of the property described i delivery "~^^W^t^^^a^ iL^ ^L^ \^-*tA-aJ £2-zt^?*s / y the Original 19- — ., i noted (contents and condition < y agrees to carry to its usual place < iid destination. It is mutually agreed, as I laid route to destination, and as to each party at any time interested i nder shall be subject to all the conditions, whether printed or writtei : agreed to by the shipper and accepted for himself and his assigns For -r w rrf ii ri iia with the ataadard for* el Strati Bill of U6na approved by the latenute Conaace Cmm^ion by Order No. 787 of Jhk 27. 1906 ^-^^^C^t^L^J-^^^^ RAILROAD COMPANY. THIS SHIPPING ORDER ■ i Indelible Pencil, or in Carbon, Shipper** No. X— Agent'* No. RECEIVE, subject to the classifications and tariffs i i ~~tZtysti^./?l f &*4*£tWLSX)i* property described below, in i of this Shipping Order. ~J. = ir smcui r* ir SimcUI - ~" of packages unknown), marked, consigned delivery at said destination, if on its road, otherwise each carrier of all or any of said property over all or all or any of said property, that every service to be performed hereunder shi herein contained (includh nd destined i I deliver to a i back hereof) and i The Rate of Freight from. 'dL£r1?£-*L!dL-^&^. to ^&A*t^tZ*zz--f^ y )J£&' r *f .■^5?!^iC^dk±k^^^^Cat=^ ■DESCRIPTION OF ARTICLES i ^^^.: ^^^."t^r^?^^ Umform Bill of Lading— Sland«.d form of Siraiahl Bill of Lsd.Bf approved by tke Ini STRAIGHT BILL OF LADING- ORIGINAL- NOT NEGOTIABLE. Coo™., by Odor No. 767 ol Joor 27. 1906. RAILROAD COMPANY. Shipper's No.^_ Agent's No RECEIVED, subject to the < s Original Bill of Ladit ty&£4*d *?sag/ ■Z—19- itually agreed, as t all or any of said property. herein contained (including conditions on back hereof) ami which i The Rate of Freight from *"nr ^fx -^JM^m ^Fi j jrf^.1 ^ *K- *$ * * * f *^ ..is in Cents per 100 lbs. ir •mcui ir Smcw Jfy S?Z*zJ%#ni$n\ V rssOau I IT B.k.« ^~ rstacuM irm Consigned to Destination, ..„^T«^a*5rir!fel*>aseft Route odL^, 6£y, >***•■ State ol ... Car Initial . . County of ..... - Car No /MJ!JL3L (/^. ^VZ^tA**^ /%Z>4j!*^-J-a--^ - AcA-uj^Lu. 3/Iu^JIj. GLl, 2&c~m " To THE COMMERCIAL RAILWAY COMPANY. Dr. For Transportation of Merchandise as specified below: Consignor Ztfe^fel?) ityall*^* -$d From ~s0JL^^ DESCRIPTION OF MERCHANDISE WEIGHT RATE AMOUNT #* JjU; fj. £JLj>J No.ofW.B. ^./Y4 ^¥ .. Jtr-r PJs^lj . Date of W. B. ?/ / 4^//<^tri> 3-0 ., Cty ^J-Lh^z-*^ y \5~~o~0 \jro yy^. T^ Initials of Car . or. Jfo. No.orCar \3 -4J. fty^cJu . .-

fLdl?ts» ^^AL^jS, DESCRIPTION OF MERCHANDISE WEIGHT RATE AMOUNT From C—A—<^e-tt—. «-o ^ *JJ^ cH.i£A~t^ No. of W. B. Q- 7 *f fc> &* .. JfAJ. . €fy ^^-ttCt^i^f^t , //vf~~\S~0 U~d *4- JBC Initials of Car cJ/. Jp . No. of Car \3 tT"£ / f Consignee The two papers above are usually so arranged that the written portion of the con- signee's receipt, except the signature, is a carbon duplicate of the expense bill. Another plan followed by express companies and some railway companies, is to have a Freight Received Register with columns for recording all information pertaining to the ship- ment in a single line ; a column also being provided for the consignee's signature. In such case an expense bill would also be required. 46 ADVANCED ACCOUNTING INVOICES OR BILLS When goods are sold, it is usual for the seller to give the buyer a complete list of the goods, with prices, discounts, amounts, etc. Such a list, made out in due form, is called by the buyer an invoice, and by the seller a bill. Note. — In business, the terms bill and invoice are to a considerable extent, used interchangeably. As a rule, however, the buyer refers to the list of goods included in the given purchase as an invoice, while the seller usually speaks of the same list as a bill. The term, bill, is also used broadly to mean any written state- ment of indebtedness that is presented by the creditor to the debtor. When the goods have been paid for, the seller should certify the fact on the face of the bill. This may be done either by stamping the word "Paid" on the bill, or by writing the words "Received Payment'' at the bottom, over the seller's signature. The following form illustrates a receipted invoice, or bill. AN INVOICE VERIFIED AND "O. K.'D" RICHARD WALSH.Pp.cs. JNO. P. BOVLE.V. Puts. FRED. J. LANGE.Trcas. JAMES M.BURNS. StCY. 5-7-9-1 1-13 State St. -4M£. Terms:- ^^L^^jy V Jyfc*-^^-^ */ .?^v ^ -^ z (L^Z.*£^- */ (C»^^r />VL^L-,^/^/ ^2 ^£*&r^ 6~ \iL_ »&2A /cr-^—j^r-^i y -t^y^^m^r-^? S r^yT. : , y^J ,>*?>7 ji^isr C^fy &C£ WHAT TO DO WHEN AN INVOICE OF MERCHANDISE IS RECEIVED 1. Verify the invoice, by comparing the several items with the accompanying merchan- dise, "checking off" the items of the invoice as they are found to be correct, using the check mark ( V ) before each item, as shown on the above invoice. 2. Verify and check the extensions. (Extensions are amounts entered in the first money column of the invoice opposite each item. They are found by multiplying together the price and the number of articles mentioned in each item.) 3. Verify and check the total, adding the several extensions, and if any discounts are allowed, see that they are correctly computed. 4. If the invoice is found to be correct in every particular, write or stamp the letters "O. K." or the words "Correct" or "Verified," upon it in some conspicuous place. Special Notice. Whenever, in the course of your work, an invoice of merchandise is received, carry out the foregoing directions in the order given, and with the greatest care, until the matter of the proper disposal of your merchandise purchases becomes a fixed habit. BUSINESS FORMS 47 TRADE DISCOUNTS Trade or commercial discounts, are deductions from prices, or from the face of the bill, allowed by the seller to the buyer. These discounts may be allowed as means of adjusting catalog prices to the variations of the market, or to encourage prompt payment, or to induce the purchase of goods in large quantities. Discounts when applied to the whole bill, are specified in the terms of sale on the face of the bill, (see "Terms of Sale,") or there may be special discounts allowed on different items. The accompanying form of bill shows the manner of entering the discounts and terms of sale, where special discounts are allowed, and where a general discount of 5 per cent is given, provided the bill is paid within 30 days. Co/umluo, 0Lo, _^JA 19 MASON, CLARKE & CO., Q)o/l> Q)o/J to. A. C. Preston, Terms: 5/30 10 8 40 Doz. Ginger Ale, 14 Root Beer, Gal. Cider Vinegar, $1.00 Less 10 per cent. .90 " 5 " .12 " 8 Less 5 pei cent Received Payment, Mason, Clarke & Co. 9 6 84 4 42 20 26 1 01 19 25 Terms of Sale. The terms upon which the goods are sold should always be stated in the bill. "Terms Cash" implies that the bill is to be paid in from 10 to 30 days, according to custom. In most parts of the country cash terms are allowed if the bill is paid within 30 days. "Spot Cash" means that the goods are to be paid for on delivery. "5/30" implies that if the goods are paid for within 30 days, a discount of 5 per cent will be allowed. "Cash 10 and 2 per cent off" implies that a discount of 10 per cent is given on the face of the bill, and an additional discount of 2 per cent on the proceeds if cash is paid. Sometimes three or more successive discounts are allowed as "10, 5 and 2 off,'' these are known as "Series Discounts." The terms of Sale should be given in the Sales Book or Purchase Book entry, and also entered in the explanation column of the Ledger, at the time the amount of the sale is posted. Note. — The entry of terms of sale in the Ledger affords a ready means of arriving at the exact status of a customer's account, and is a convenient guide in preparing statements. The practice is generally observed by accountants in wholesaling, and should not be neglected in your present business. t_yX3amilton <#• Qjo 19 - 19 Jan 4 • i 19 Feb. 3 20 I S. B. 30 days 7 156 70 Feb. 2 60 " 18 249 25 Mar. 5 30 '• 27 125 2-10, n 60 " 38 200 C. B J. 26 47 156 125 70 DISCREPANCIES IN BUSINESS PAPERS It sometimes happens, through carelessness of the writer, that there is a disagreement in the amounts given in a check, note, or other business paper. In such case the amount as written in the body of the paper is taken, and not the figure amount in the margin. 48 ADVANCED ACCOUNTING 12 3 b 1 a 4 5 c k 6 7 8 9 horse 12 3 No 4 5 2 6 7 8 9 now b e quick COST-MARKING GOODS In business it is often desirable to mark various articles of merchandise with their cost, and in such a way that only the merchant or his salesmen can interpret the markings. This is usually done "in cipher," that is, by. selecting a word or phrase, containing just ten letters, all different, and using these letters instead of the ten figures, in making the cost marks. The following are illustrations of cost-mark ciphers : No. 1 5 6 k h No. 2 t 5 6 ) e q Explanation. — In case of an article that cost $3.25, the cost mark in cipher No. 1 would be "alk," and in cipher No. 2 would be "woe." To avoid repetition of the same letters, "repeaters" are often selected. Supposing x, y, and z were to be used, the amount $22.22 instead of being marked from cipher No. 1 "1111" could be " 1 y z x." MEMORANDUM OF CREDIT In case of errors in billing, shortages (that is, the shipment of a smaller quantity of goods than the invoice calls for), the shipment of damaged goods, etc., the matter is usually adjusted between the parties through a Memorandum of Credit, which is a written acknowl- edgement of the error, sent by the party at fault, to the party in whose favor the amount is to be credited. The person or firm receiving the memorandum of credit, debits the person who sends it, crediting whatever account was affected by the original transaction, which, in most cases, is the Merchandise account. The person sending the memorandum of credit, credits the person to whom it is sent, and debits the account affected. The form here given illustrates the usual method of making out a memorandum of credit. MEMORANDUM OF CREDIT Vincennes, Ind.,. Oct. 5, 19 From... S. H. Baker «S Co., WHOLESALE, GROCERS 56 Main Street. To. James H. Bell Elkhart, Ind. Special discount on Invoice Oct. 3. 190- correct overcharge INVOICE BOOK to 75 Merchants frequently file their invoices in such a way as to make an invoice book from which postings can be made to the ledger. To secure this form, the invoices are filed in con- secutive order as they are received, the firm name, date, and terms being left visible, and the amount of each invoice being recorded on the right margin opposite the firm name. The lower part of each invoice is pasted to the leaf of the invoice book, and the upper is left loose, so that it can be lifted if we wish to see the items of any invoice immediately preced- ing. The amounts of the invoices extended to the right margin can be added and forwarded, BUSINESS FORMS 49 A PAGE OF THE INVOICE BOOK &!&&&»«&«* R. L. Davis & Co. , Marion, la <%?i»nj y */,. ft/*. Mar. 9, 19., salesman Kucker Texms 60 d. 2% 10 d SHIPPEDVIA C. &. N. W. /V^as,^^-r?y ^fh^ss-T*^ AU ctat*u for lessor D^^ : J2M. v A/< / ^ /J?u No. 1-One Debit. m yM&rt^. ^7/&/A ^tM^^ ±&L <-/Q 52 ADVANCED ACCOUNTING No. 2— Several Debits ^A. &Z/3*SAjif.~.^/ sv X -7* ££. .A5L -/- s &S± JZS " No. 3-A Debit and a Credit 42L4L21 JL. j£r/3,yA /%>,^s -4» L£ ££L &* J2l 'JZsr. -f- Cg2-a£-^L^ /^AJZ>,~,^/. J.S-0 AL /S. ^^J^.^^, j,^ P^^J.. 2Zl ^ J2* -^L>/. j(Z£ «j rrTn * ^ s£- S^_ ^g_ JS BUSINESS FORMS 53 BUSINESS LETTERS Hereafter a portion of your business will be conducted through correspondence. Nothing in the every-day work of a business man is more important than the proper management of his business correspondence. When business letters are received they should be answered promptly and the matters to which they relate attended to at once. In most business houses, all letters received are carefully filed in receptacles provided for the purpose, and copies of all letters sent out are also kept on file. We can best describe the general form and spacing of the various parts of a letter in the diagram given below, which should be followed by the student in all of his business letters. In this diagram, line 1 represents the address of the writer, which should begin about half way across the page from left to right, and usually on the first ruled line from the top of the page. The address line should contain the writer's address, town and state, and also the date of the letter. If the writer's address is a city, his street and number can be written on a line immediately above the town and state. Line 2 represents the name of the party addressed, and line 3 the address of the same party. Line 4 represents the title of respect, as, Sir, or Madam ; Dear Sir, or Dear Madam ; Gentlemen, or Sirs. Usage varies as to the point used after the title of respect. It may be a dash ( — ), comma and dash (, — ), colon and dash ( : — ), or the colon ( :). The last form is most commonly used. DIAGRAM OF A BUSINESS LETTER 54 ADVANCED ACCOUNTING Line 5 represents the beginning of the body of the letter on the next line below the title of respect. Lines 6 and 7 represent new paragraphs. Each new topic, or general division of an ex- tended topic, should be made a distinct paragraph. The first line, of each paragraph is in- dented, in order that anyone desiring to refer to some point in the letter can do so without reading the entire letter. Line 8 represents the complimentary closing; as, Yours truly, Yours respectfully, Very truly yours. There is a tendency in this age of electricity, to great hurry and brevity in all business composition, and hence to drop all needless expressions; such as, the title of respect at the opening of a letter, and the complimentary closing just preceding the writer's signa- ture ; but it would be a great loss to have the civilities and courtesies of life crowded out more than is absolutely necessary to business success. Line 9 represents the writer's signature. This should be written so plainly that it could be easily read by a stranger. The accompanying letter conforms to the foregoing diagram and illustrates, also the punctuation required. Take it as a model in your business correspondence. C? ' &r/&J£v-@^ &£t*-7^<&'. BUSINESS FORMS 55 Folding. Business letters are, as a rule, written on standard sized paper 8^x11 inches, and are inclosed in "No. 6" or "No. 6y 2 " envelopes (that is, envelopes 6 or 6 l / 2 inches in length). No. 6 envelopes are supplied with your office equipment. To fold a letter for insertion in an envelope, proceed as follows : 1. Place the sheet before you face upward ; take hold of the bottom margin and turn it upward to within one-fourth of an inch of the top margin, being careful to have the side margin even, then fold by running the finger nail firmly across the bottom of the folded sheet. 2. Turn upward about 2 l / 2 inches of the right hand margin of the folded sheet to the left, and fold. 3. Bring the left hand margin over to the right within one-fourth of an inch of the last fold, and fold firmly with the finger nail as before. Be careful to have the margins in the right position before folding, and keep the sheet free from creases, finger marks, etc. Enclosures. By an "enclosure," is meant any paper, as a draft, receipt, money order, or the like, which is enclosed in a letter. The enclosure should be placed face upward across the top of the letter and folded with it. When one or two stamps are enclosed, they may be pinned (not stuck) to the top of the sheet, and circulars, extra letters, etc., should not be folded with the letter as in the case of other enclosures, but inserted separately. Superscription. The address on an envelope should occupy three lines, the name of the person addressed being written on the first line, his town on the second line, and his state on the third. If he has a postofnce box or street number, either of these may be given on the third line to the left of the state. If the person addressed is a stranger in- the town and his letter is sent in the care of another person, the address of the latter should be written on the third line in place of the street and number. The first line of the address should begin a little below midway between the top and bot- tom of the envelope, and far enough to the left to allow writing the name plainly. If the writer wants the letter returned in case it is not delivered to the person addressed, he will write his own name and address in the upper left corner of the envelope. The diagram below represents an envelope addressed and stamped ready for mailing. r ' " \ . c 56 ADVANCED ACCOUNTING Business letters should be plain, brief, and courteous. Great care should be taken to have the letters correct in the matter of spelling, capitalizing, and punctuation. They should be neat and business-like as to folding and addressing. The following letter is merely suggestive to the student as to the general style and phraseology of a business letter. The student should conform, to the general style of busi- ness letters, but he should study to make them express something of his own personality. In no part of the work should he allow himself to become a mere copyist. LETTER WITH FIRST ORDER FOR MERCHANDISE College City, Iowa, Sept. 1, 19 Dalton & White, Central City. Gentlemen: -- We have just commenced business in this city, dealing in general merchandise, with resources consisting of Bills Receivable, Merchandise, and Cash, amounting to ($4033.80) Four Thousand Thirty-three and 80-100 dollars, and no liabilities. We enclose order for merchandise now required, and, no doubt, will need other supplies as soon as our business is fairly opened up. We would refer you to the Exchange Bank and to J . C. Thomas, of this city, who will advise you as to our responsibility. If our statement and references are satisfactory, kind- ly favor us with early shipment, billing on account at fifteen days with your best discount offer for cash in five days. Very truly yours, A. Learner. ORDER BLANKS The order blank illustrated below is used for ordering merchandise from firms in other cities. Such orders should specify method of shipment and terms of puic'ase. Order No. L ORDER BLANK College Citv, Sept. 1, 19 M Dalton & White Central City, Kindly send at once, via and bill on the following terms:. B. C. Ry. On acct. 15 days The Student. 24 24 Brls. Flour Cases Corn Meal 36 Cases Rolled Oats i BUSINESS FORMS 57 LOCAL ORDER TICKETS The order ticket illustrated below is used for ordering merchandise from other firms in the same city. It should specify the terms of purchase, but as it is used only in local pur- chases, no shipping instructions are required. The student will use his local order pad in his purchases from local firms. LOCAL ORDER TICKET College City, Sept. /, 19. M r. C. M. Brown Please deliver. 1 box Dried Apricots 2 boxes Cal. Prunes 3 boxes Raisins Terms: c/t * to my acct. The Student Invoice of Shipment. This is an itemized statement of goods that are shipped to a commission firm to be sold on the account and risk of the owner. It should be sent by mail - to the consignee at the time the goods are shipped. Neither the price nor the value of the shipment is ordinarily entered on the Invoice of Shipment, since the goods are not sold to the consignee, but merely delivered to him to be sold for the owner. Sometimes, however, the cost of the gt>ods may be entered in order to serve as a guide to the commission merchant, who is expected to effect their sale, if possible, at a gain to the owner. The form below illustrates one of the student's invoice of shipment blanks properly filled out. A MODEL INVOICE OF SHIPMENT \~&* m k-y a si sr k ^ . 5~Oa. 58 ADVANCED ACCOUNTING AGREEMENT OF CO-PARTNERSHIP This Agreement Witnesseth, That C. H. Benton of Akron, O. and ^- P- Monroe of Akron, 0. an d of have this day agreed to associate themselves together as a co-partnership, for the purpose of engaging in the business of buying and selling for profit and on commission, dairy products and general produce. at A kron j n Summit County, Ohio, under the firm name and style of. C. H . Benton & Co. _ the term of said co-partnership to continue one year , from and after the fiftn day of January, 191 ( unless sooner dissolved. The investment contributed by the aforesaid partners is to be as herein set forth to-wit : C. H. Benton contributes tne net resources of the mercantile business heretofore conducted by him. A. P. Monroe contributes Seven Thousand Dollars in Cash and good securities. •% contributes The profits or losses of said partnership business are to be shared in the following pro- portions : C. H. Benton, one-half: A. P. Monroe, one-half. With respect to the time and service given, and the compensation to be received, it is agreed that C- H- Benton is to d evote his entire time to the busin es s, and is to receive in additi on to his proportion of the profits, a salary of ($200) Two Hundred Dollars per month. It is also agreed that aside from the profits and compensation heretofore mentioned, neither partner is to withdraw from the business any money or other property, except with the written consent of his co-partner. It is especially agreed that neither of the parties to this contract shall sign or indorse any bond, note, draft or commercial paper, nor sign any official or other bond, nor do any other act to create a financial liability or obligation, without the written consent of his co- partner. At the expiration or sooner determination of said co-partnership, the business and property of said firm may be closed out by sale; and after all debts and liabilities are paid and discharged, the amount remaining shall be divided between the partners in the ratio of their respective interests; or, if the parties so agreee, the co-partnership may be continued for such further time and upon such terms as the members thereof may be able to agree upon. Witness our hands this fifth day of January 191 ( A. T. Simson Witnesses < j G. H. Patterson c. H Benton A. P. Monroe BUSINESS FORMS 59 DAILY CASH PROOF No detail of accounting is more important than the daily verifying, or "proving," of the cash account. This is effected simply by counting the cash on hand and combining it with the cash in bank to see if the amount is the same as the balance, or difference between the totals of the two sides of the cash book. In many business houses, however, a written form of cash proof is used, which shows the work of the proof in detail. The form below, except name, date and amount, shows the student's cash proof as it would appear if made out at the end of Section One of the Business Practice. EXPLANATION OF CASH PROOF On the line for "Previous Cash," we enter the amount of the investment, $3000. In subsequent reports, this line will show the cash balance as forwarded from the previ- ous report. On the line for "Cash Received" we enter the total of the items in the first column of the debit side of the cash book, $84.48. On the line for "Cash Paid," the total cash book credits is entered, $425.89. The "Cash Balance," $2658.59, is, of course, the difference between the total debit of cash and the cash paid. The next line shows the amount on hand in the cash drawer. If there has been no error either in handling the money or in keeping the cash book, this amount added to the cash in bank will equal the cash book balance. CASH PROOF. Name Date : Previous Cash $ 3000.00 Cash Received ' & 84.48 Total Debit of Cash $ 5084.48 Cash Paid •* 425 -80 Cash Balance $ 2658 ' 59 5 45 Cash on hand per Cash Drawer $ _ Cash in Bank per Check Book ft £6 55 .14 Total Equal to Cash Balance $ 2 658.59 KEEPING ACCOUNTS OF SHIPMENTS In some works on Accounting, the student is instructed to keep a separate ledger account with each shipment, but this method is now seldom used in business. In other words, he is instructed to keep a general account with "Shipments,'' but in this course we prefer. to have the student consider shipments as his merchandise until they are disposed of- Following this plan, when goods are shipped for sale on commission, a memorandum of the shipment, with- out prices or extensions, is entered in the sales book, as illustrated on page 60. 60 ADVANCED ACCOUNTING MEMORANDUM ENTRY OF A SHIPMENT Oct. V Shipment to A. B. Hamlin & Co. 500 doz. Eggs, 875 lb. D. Butter, (Acct. Sales Received Oct. 20.) (Should be written in red ink) When you receive an account sales, refer to the original memorandum of the shipment in your sales book and enter 1 in red ink under it "Acc't Sales Received," with the date. This will enable you to ascertain readily what shipments have been reported and what ones have not. When the proceeds of the shipment are received, the amount is entered in the sales book as follows : ENTRY OF THE NET PROCEEDS OF A SHIPMENT Oct. JO V V A. B. Hamlin & Co., Proceeds Shipment Oct." p per Acct. Sales of Oct. 18 Reed. Cash 257 5° Quite often, the amount of the proceeds is not remitted at the time the account sales is rendered, but is left to stand against the account of the consignee. In this case, write below the entry the words "on account," and when the sales book is posted, carry the amount to the consignee's account in the ledger, as in the case of an ordinary sale on account. CONSIGNOR'S EXPENSE BILL When the shipper prepays freight charges on a shipment of merchandise, he will receive from the transportation company a consignor's expense bill or a receipt for prepaid freight. These prepaid freight receipts should be carefully filed as vouchers. FORM OF CONSIGNOR'S EXPENSE BILL Receipt for Prepaid Freight Charges Collected at College City The Student consignor. To apply on prepayment of charges on freight consigned to Central Produce Co. At Consignee Central City W. B. No. 632 Dated 9/6 19 Car Initials B - C- R - Car No. 2916 40 000 Capacity of Car_ Pounds Consignor Dr. To BUSINESS COLLE.GE. RAILWAY CO. DESCRIPTION OF ARTICLES WEIGHT Rate Amount Prepaid / Car Wheat 27.000 15 40 50 Total to Collect 40 50 Received payment J c Lon S Agent Se P*- 6 19 BUSINESS FORMS 61 COMMISSION SALES BOOK This book differs from the ordinary sales book in having three amount columns, the first for extending sales of consignment goods, the second for sales of merchandise, and the third for totals. If a bill is discounted, the items in the bill are short-extended in the com- mission sales book (the amounts being written next to the first amount column) and the proceeds after discount are carried to the proper column. In the model form below, the first entry represents an ordinary sale. Each of the other sales includes some consignment goods. FORM OF COMMISSION SALES BOOK 19- o fa Consts. Mdse. Total Jan. 2 4 62 V IO V V IO V Amt. For'd R. W. Day do bu. Potatoes .40 Ace' t 10 days N. S. Barker 40 es. Eggs C—i 4.50 Ree'd Cash L. IV. Lane 20 tubs Butter, ppo lbs. C — / .20 10 es. Eggs 4.50 Ree'd Cash 180 ip8 3 r 9 24 45 20 24 l8o H3 5 V L. Robinson - IO 60 es. Eggs C — / 4.60 276 IO *9 jo tubs Butter, i,4po lbs. C — / .21 B. Rec. Note jo days J12 po 588 po V C. S. Peters 60 lbs. Dr. Poultry .12 y.20 2 tubs Butter, p6 lbs. .20 19.20 26.40 Less 10 per cent 2.64 2 3 7 6 ii V 80 brl. Apples C — 2 1.60 Ree'd Cash $100 128 I 5 I 7 6 T 9 B. Rec., Note jo days, $31.76 Mdse. Cr. 411 9 6 62 ADVANCED ACCOUNTING CONSIGNMENTS AND CONSIGNMENT ACCOUNTS In the commission business it is necessary to keep separate accounts with each consign- ment received. All claims that we have against a consignment for money advanced, expenses paid or assumed by us, or charges made by us, are entered on the left page as debits. All proceeds arising from the sale of a consignment are entered on the right page as credits, no distinction being made between cash sales and time sales, as these do not affect the. con- signor, the commission merchant assuming all risks in case of time sales. When the commission merchant deals in merchandise of his own in addition to that re- ceived on consignment, as is usually the case, he must keep the different lots of consignment merchandise entirely distinct, and must keep separate records of the sales of each lot, and of the expense items relating to each. Various methods of accomplishing this are employed by bookkeepers, but the plan pre- sented here has the merit of simplicity and practicality, and is well adapted to the conditions of an average business. The student is recommended to study carefully the description of the Commission Sales Book, page 61, and Commission Sales Ledger below, and to keep his own books strictly in accord with the forms given. COMMISSION SALES Consignment No. 1 C. P. THURMAN 19— Fol. Jan. 2 Received per C. R. I. & Pac. R. R. 100 cs. Eggs 50 tubs Butter CHARGES 2 V . Cash, Freight 26 75 V Cash, Dray age 1 25 7 62 Storage 4 60 inmen 71 V t No. 2 Commission at 5 per cent Cash, Remitted ck. for proceeds T. L. MANFORD 6 CO. 48 35 80 885 95 95 966 90 Consii Jan. \ 12 Received per C. & N. W. R. R. 1 car Apples, 175 brls. CHARGES 13 V Cash, Freight 43 50 14 V Cash, Dray age 3 75 20 62 Storage 2 50 71 94 Commission T. L. M. & Co., proceeds on acct. 13 85 63 213 60 40 277 BUSINESS FORMS 63 THE COMMISSION SALES LEDGER This is a book for keeping an itemized account of the different consignments received. These are designated by number, and in the order in which the goods are received as "Con. 1," "Con. 2," "Con. 3," etc. When the goods arrive, they are compared with the invoice of shipment, and a memo- randum entry is made on the debit side of the account. If freight charges are paid, an entry is made in the cash book debiting the consignment. When sales are made, they are entered in the commission sales book, as explained on page 61. Debits from the cash book and credits from the commission sales book are posted to the commission sales ledger like other posting, except that all entries are itemized. When all the goods belonging to a consignment have been sold, the commission and other charges, if any, are entered and the net proceeds, or the difference between the total charges and total sales, is entered on the debit side, as shown in the form, and the consign- ment is closed. All debit entries in a consignment account should have corresponding credit entries in the cash book or ledger. In "Con. No. 1," as here presented, the proceeds are remitted in cash. In "Con. No. 2," the proceeds are credited to the account of the consignor. When this is done, an account with the consignor should be opened in the ledger, and the net proceeds posted to the credit of this account. When a trial balance is taken, the unbalanced consignments should be in- cluded, the same as regular ledger accounts. LEDGER ROCK ISLAND, ILL. 19_ Jan. S. B. 4 27 5 29 6 31 40 cs. Eggs 20 tubs Butter, 990 lb. 60 cs. Eggs 30 tubs Butter, 1490 lb. 4.50 .20 4.60 .21 FRUITVILLE, WIS. 19_ Jan. 15 42 17 44 19 49 1 80 brl. Apples 50 " 20 " 25 " 1.60 1.50 1.70 1.60 64 ADVANCED ACCOUNTING CONSIGNMENT ACCOUNTS IN LEDGER In a business having but few consignments for sale on commission, consignment accounts can be kept in the ledger with all debits and credits itemized, a memorandum entry being made when the consignment is received giving the items and the terms of the consignment. In such case the debits for commission and other charges can be entered in the journal and posted to the consignment account later. CONS'T OF CRESCENT MILLS, FALLS CITY 200 Sks. Flour 19.. 3 Rate of Com. 10 cts. sk. 3 20 19.. Nov. 3 20 sacks Flour 1.40 s 2 28 Nov. Cash Freight C 4 Cash on acct. C 3 75 25 " 1.40 s 2 35 5 Commission J 3 20 35 " 1.40 s 2 49 6 Check, net proceeds J 5 160 75 4 5 10 " 25 " 20 " 15 " 50 " 1.40 s 1.40 s 1.35 s 1.35 s 1.35 s 3 2 3 3 4 14 35 27 20 67 25 50 275 75 275 75 ACCOUNT SALES This is an itemized account, rendered by the consignee, or Commission Merchant, to the shipper or owner of the goods, at the time when all or part of the goods in a given shipment have been sold. It shows all sales and charges and the net proceeds, or difference between the total sales and total charges. See the accompanying form. Form of Account Sales. BUSINESS FORMS 65 COMMISSION HOUSE CHARGES In rendering account sales of consignments in this set the commission firm will make the following charges : Freight as they are required to pay it. Drayage, 2 cts. per cwt. (gross weight) ; Stor- age, iy 2 cts. per cwt. (gross weight) ; Insurance, Vg of one per cent of the amount of the sale; and Commission, 2]/ 2 per cent of the amount of the sale. JOURNAL MEMORANDA It is frequently necessary to make a record, or memorandum, of certain matters per- taining to the business, that do not involve book entries. These memoranda are made in the journal, and may include agreements relating to rent, advertising, the employment of help, etc. Orders by mail for merchandise, when a copy of the letter is not retained, should be thus recorded in the Journal. The accompanying form illustrates the manner of making journal memoranda. MODEL MEMORANDUM ENTRIES IN JOURNAL JL~. V ^a. 7 7 J.O _-t5?— 66 ADVANCED ACCOUNTING TELEGRAPHING Telegrams of ten words or less are charged for at certain rates which vary with the number of times the message must be "repeated," or retelegraphed, during the course of transmission. For messages of more than ten words there is an additional charge for each extra word. It therefore becomes important for those who do business by telegraph to learn to write their messages in the fewest words possible. In telegraphing it is customary to omit all words not absolutely necessary to the understanding of the message. Notice how this is accomplished in the following examples : Message The "Acme" brand of starch is out of stock. Shall we ship our "Nonpariel," which is about the same grade? Please telegraph us. (24 words.) Condensed Out of "Acme" starch. Can ship pariel" same grade. Wire. (10 words.) 'Non- I have succeeded in effecting a satisfactory settlement with the Consolidated Coal & Iron Co. and shall start for Chicago tonight. Will see you at Palmer -House Saturday. (28 words.) Satisfactory settlement with Consolidated. Leave tonight. At Palmer House Saturday. (10 words.) Please ship by express as soon as possible, forty copies Brown's Arithmetic. Will re- mit cash on receipt of goods. (19 words.) Express C. O. D. Forty Brown's Arith- metic. Rush. (6 words.) EXAMPLES SHOWING CONDENSATION OF PHRASES, CLAUSES, ETC. 1. If the sale is to be made today, tele- 1. If sale today, wire. graph me at once. 2. Please ship at once by Express. 2. Express. 3. The attorneys for the parties who be- 3. Plaintiff's attorneys. gan suit. 4. It is generally believed that the fire is 4. Incendiarism suspected. the work of an incendiary. 5. The Warriner Manufacturing Co. 5. Warriner people want forty thousand. will not sell for less than forty thousand dollars. 6. Telegraph me at once. 6. Wire. RULES RELATING TO TELEGRAPH MESSAGES 1. Figures are never telegraphed, but if written in a message are estimated according to the number of words required to write them out. Thus, "$1974" would be telegraphed "nineteen seventy-four dollars" — four words. Hyphenated words, as half -morocco, twenty-five, eight-pound, letter-heads, etc., are counted as two words. In names, each given name or initial counts as a separate word. Thus the name J. M. Jones, would be charged for as three words, should it occur in the body of a message. The initials C. O. D. (Collect on Delivery), F. O. B. (Free on Board), A. M., and a few other abbreviations go as one word. 3. • Telegrams may be prepaid, or sent "collect," that is to be paid for by the person to whom the message is sent. As a rule telegrams should be sent prepaid, but they may be sent "collect" when they relate to business in which the person to whom they are sent is interested. BUSINESS FORMS 67 ACCOUNTS WITH STOCKS The term stocks, or stocks and bonds, includes shares in joint stock companies or cor- porations, and bonds issued by government, state, county, township, or city, and by trans- portation and manufacturing companies. Stocks, being a variety of property account, is debited and credited the same as other property titles. The accountant will keep a separate ledger account with each variety of stocks that comes into the business, naming them after the corporation to which they belong. Stocks should be debited for their cost and for any assessments we may have to pay while a stockholder ; and credited for values received from them either in sales or dividends. A certificate of stock may include any number of shares and the par value of a share may be any amount, subject to statutory legislation, that may be agreed upon by the parties forming the corporation. The usual par value of a share is one hundred dollars. The amount paid for the shares of stock represented in a certificate may be less or more than the par or face value. The amount paid or received for stock will be the amount recorded in case of a purchase or sale, regardless of the par value. Stock is transferred by indorsement on the back of the certificate, surrendering the own- ership and directing transfer to the person named in the indorsement. REAL ESTATE TRANSFERS The ownership of Real Estate is usually transferred by means of a written agreement called a Deed, and. in the ordinary form called a Warranty Deed. The party signing the deed is called the Grantor and the party receiving the deed is called the Grantee. A Warranty Deed names the consideration or money value, the party granting and the party receiving the land, with a description of the exact location of the premises, and the grantor agrees to warrant and defend the grantee in the possession of the property described. 68 ADVANCED ACCOUNTING The party receiving the deed should file it for record at the Recorder's office for the county in which it is located, and this record protects him in the ownership of the land, un- less other claims have been recorded against the land before his deed is placed on record. The form below represents the standard form of warranty deed, and the usual method of describing city property, unless the property belongs to an irregular platting or survey. WARRANTY DEED IN CONSIDERATION OF Eight Thousand DOLLARS, 100 /, Charles H. Hunter _______ of Linn County, State of Iowa hereby SELL AND CONVEY unto David Collins of the County of Linn and State of Iowa the following described premises in the County of Linn State of Iowa to-wit: Lot Three (3), Block Twenty-nine (29), further known as Nos. 194. 196. and 198 Fourth Avenue, College City, Iowa: And { do hereby covenant for m y heirs and personal representatives with the said David Collins, his heirs and assigns that l am lawfully seized of the said premises, that the same are free from incumbrance that. [ will make such other and further assurance of said premises as shall be lawfully and reasonably advised, devised or required, and that [ will forever WARRANT AND DEFEND the same against lawful claims and demands of all persons. And I, Katherine E. Hunter w jf e f the said Charles H . Hunter f or ^ e foregoing consideration do hereby relinquish all my right of dower and homestead in the above described premises. Signed this Fifth dav of September A . D-> 19 Charles H. Hunter Katherine E. Hunter State of Iowa Linn County. ss. On this Fifth dav of September A D 19 in and for said County, personally came Charles H . Hunter and Katherine E. Hunter, his wife to me personally known to be the identical person s whose name s naannnnn □ uuuuuuu are a ffi xe d to the above Deed as Grantor s , and acknowledged the same to be their voluntary act and deed. WITNESS my hand and ^ss~*s*^~>.seal~x^^r*^. the day and year last above written. Henrv C. Stanton, o n □□□□□nan Notary Public. BUSINESS FORMS 69 REAL ESTATE MORTGAGE 100 DOLLARS, IN CONSIDERATION OF Six Thousand I, ( David Collins), not married, of Linn County, State of Iowa hereby SELL AND CONVEY unto Charles H. Hunter ■of the County of Linn State of Iowa the following described premises in the County of Linn State of Iowa to-wit: Lot Three (.?) , Block Twenty-nine (29^, otherwise known as Nos. 194, 196 and 198 Fourth Avenue, College City, Iowa. ' And ^ do hereby covenant for m V heirs and personal representatives with the said Charles H. Hunter, his heirs and assigns that l am lawfully seized of the said premises, that the same are free from incumbrance and that l will forever WARRANT AND DEFEND the same against lawful claims of al hereby relinquish all my right of dower in the above described premises. To be void upon condition tnat tne following promissory notes with accruing interest are fully paid . Note for $1500 dated Sept 5. 19 , due in 30 days, with interest at 6 per cent. (i 1500 tt 5, 19 , '• 60 " " 6 ti 1500 < < 5, 19 " 90 " " 6 (< 1500 •i 5, 19 " 120 " " 6 " BSTAnd it is further agreed that if suit for the foreclosure hereof is commenced, $_JJ?£_ attorney fee shall by the said David Collins be paid to the holder hereof, and in the event of foreclosure hereof, $ 1 00*s\s>^s*x^- &ttorTiev fee shall by the Court be included in the decree of foreclosure and included in the judgment that may be entered in said suit, and this mortgage shall stand as security for the same, equally as security for said notes. Signed this Fifth day of September A , D-> 19 David Collins David Collins's signature should be acknowledged before a Notary Public, the same as the signatures on the deed, this acknowledgement appearing on the back of the mortgage. 70 ADVANCED ACCOUNTING A Real Estate Mortgage is a transfer of ownership of the property described, given as security for the payment of certain written obligations, usually promissory notes. If the notes are fully paid, the transfer is void. If the notes are not fully paid, the party to whom the mortgage has been given has the right to demand the possession of the property. In order that a mortgage may precede other claims against the property, it should be filed for record, the same as a deed. Release of Mortgage. If a recorded mortgage secures the payment of notes and the notes are afterward fully paid, a paper stating that fact, called a Release of Mortgage, should be signed and acknowledged by the grantee of the mortgage. The release of mort- gage should be recorded the same as a deed or a mortgage. By examining the books in the Recorder's Office, we can ascertain the exact ownership of a piece of land or a town lot, and we can also determine whether there are any claims against the property. The form of mortgage on page 69 represents the standard form of mortgage given by the grantee of a piece of real estate to secure payment of part of the original consideration named in the deed. The form below represents the standard form of a release of mortgage : RELEASE OF MORTGAGE 1,. Charles H. Hunter, .of the County of_ Linn State of Iowa do hereby acknowledge that ^ ul1 payment has been made of a certain bearing date September 5, 1fl _ made and executed by David Collins to_ Charles H. Hunter and recorded in the records of Linn Sixth .Mortgage County. Iowa Book L -Page, 214 on the day of September 19- ( and hereby discharge the same from record Signed this Fifteenth day of November 19- Charles H. Hunter STATE OF_ County of Iowa Linn ss. On this Fifteenth day of_ November 1 9— , before me, a Notary Public in and for said county, personally appeared the above named to me personally known to be the identical person who executed the above release, and acknowledged the execution of the same to be *" s voluntary act Charles H. Hunter and deed. □□□nnnDn □ □ g SEAL g □ □ nnnnnnnn Witness my hand and. last above written. .seal. .the day and year Henry C. Stanton Notary Public BUSINESS FORMS 71 BILL OF SALE A bill of sale is a paper describing movable or personal property, and transferring the ownership of the same from seller to buyer. The bill of sale usually gives the consideration or price received for the property, the name of the purchaser, the description and location of the property, the date of the sale, and the name of the person who sells or transfers the prop- erty. Only one copy of the bill of sale is necessary, which is given to the buyer as proof to other parties that he is the owner of the property described. FORM OF BILL OF SALE Twelve Hundred DOLLARS In Consideration of Student & Co. f t he County of Linn State of lo ^>< 1 do hereby sell and Simmons & Co. f the County of Linn state of Iowa the following described personal property, now in the possession of Student & Co. j n convey unto_ College City Linn County Iowa to-wit: The scales, measures, trucks and ot her store appliances, now situated in the warehouse. No. 29 Elm Street. And we do hereby covenant and agree to warrant and defend the said described personal property against the lawful claims of all persons. Signed this Twentieth Iowa ] vss. County, j Twentieth Tl day of November A. D.. Student & Co. 19 per Student 1 ■ 19 STATE OF Linn On this dav of November A . D. a Notary Public j n an d f or said County. xe Student, one of the firm of Student & Co. i before me personally came to me personally nnnnnnnn □ □ ° seal ° a □ nnnnnnnn known to be the identical person whose name is affixed to the above Bill of Sale as graitor , and acknowledged the same to be the voluntary act and deed of said firm by him duly authorized to execute the same. Witness my hand and. written. seal the day and year last above C. N. Hedges, Notary Public. 72 ADVANCED ACCOUNTING DISSOLUTION OF PARTNERSHIP When a firm dissolves partnership, a notice of the dissolution should be published in the newspapers of the town where the firm has been located, and if the firm has unsettled ac- counts with other persons, each of these persons should receive a notice of the dissolution, stating the conditions on which the accounts are to be settled. FORM OF NOTICE OF DISSOLUTION The partnership heretofore existing between (The Student) and A. H. Norton, under the firm name of (Student) & Co., is this day dissolved by mutual consent. Accounts due the firm are to be paid to A. H. Norton, and all claims against the firm should be presented to him for settlement. THE STUDENT. A. H. NORTON. College City, Dec. 1, 19 — SET SIX. Business Practice in Jobbing and Commission. In the following business practice the student will engage in business for himself, carry- ing out the business transactions, writing the proper business forms, and keeping books as far as is practicable, exactly as he would do in real business. He is to buy and sell, and engage in other business dealings, strictly in accordance with the instructions accompanying the Routine of Transactions. If the student uses bound blanks, he will require a journal, purchase book, cash book, bill book, and ledger ruled like those used in Set Five. His sales book will have three amount columns, and he will require an extra blank book for consignment accounts. If he uses the loose leaf blanks, he will require paper in the several binders as scheduled in the next paragraph. Use one sheet journal ruling for Journal, two sheets journal ruling for Purchase Book, three sheets three-column journal ruling for Sales Book, one sheet bills receivable and bills payable ruling for Bill Book, three sheets journal ruling for Cash Book, two sheets special ruling for Trial Balances, six sheets two-account ledger ruling with index sheet for Ledger, and two sheets of half-page journal ruling for Commission Sales Ledger. The bal- ance sheets required at the close of Sections Five and Eleven can be written on a sheet of six-column balance sheet paper. 1. The student will form a partnership with A. H. Norton to engage in the jobbing and commission business at No. , street, under the firm name of Student (your name) & Norton. You are each to devote your time to the business, each receiving a salary of $100 per month, and sharing equally in the gain or loss. The student invests cash $3000, which you will find in your cash envelope. Norton invests a stock of coal and wood inventoried at $2695.40, warehouse fixtures, inventoried at $404.60, and accounts receivable from responsible firms — A. R. Preston, Houston (the student will supply the state when it is not given), $129.16; G. E. Anderson, Norton, $212.50; Carter Bros., Dover, $156.75; R. C. Smith & Co., Logan, $92.50. The firm assumes pavment of Norton's accounts payable — Western Fuel Co., Central City, $244.43; Union Coal Co., Central City, $212.89; Dows & Clark, City, $233.59. (See Agreement of Copartnership, page 58.) Write two copies of Agreement of Copartnership, signing both. Leave one copy with the teacher and ask him to represent Norton in signing the other copy, which you will keep. Make the required entries in your cash book and journal. All business transactions in this course are adapted to either the office or the tablet method of business practice. In the office course the student will carry out the given trans- actions at one of the office departments, and in the tablet course all transactions will be car- ried out by means of booklet forms and papers in his equipment. Instructions pertaining especially to the office method will, be given in short lines on the left half of the page, and instructions for the tablet method will be given on the right half of the page. All lines extending across the page are intended for both courses. If you are using the office method, the necessary papers, with a few exceptions, will be filled out for you by the office department. If you are using the tablet method, the incoming papers (that is, those you are supposed to receive from those with whom you do business) are furnished in the pads or booklets in your business practice equipment. —73— 74 ADVANCED ACCOUNTING In the incoming papers from the tablet, the place of business and date are left blank, and there is a blank space for the student's name. These blank spaces should be properly filled as the papers are removed from the tablet. In business, the papers would, of course, be complete, but in this work the space for the date and the receiver's name are left blank, in order that the student may use the name of his own town, the current date, and his own name in carrying out the transactions. 2. Rent a warehouse for three months, at the monthly rate named in your price list, payable as instructed in your routine. Fill out and sign two leases in duplicate, using the firm name below for the first party named in the lease. ( See page 43. ) Office Course. Carry out your renting trans- Tablet Course. The warehouse you are rent- actions at the Real Estate Office or the Commercial ing belongs to the Coleman Real Estate Co., who will Exchange, as the teacher may direct, using the firm be the first named party in your lease. Take both name designated by the office as the property owner lease copies to your teacher who will sign one for or first party in your lease. The given office will sign the above firm and return it to you, and will keep and return to you one lease copy and will keep the the other, other. Fold and indorse your lease copy and file it in your office file in "Letters and Documents" envelope. 3. Pay cash for your first month's rent, taking a receipt. Office Course. Make this payment at the office Tablet Course. Place the currency you are to where you left the lease. If you cannot make the pay in the envelope marked "Community Cash," tak- exact change, the office will make change for you, or ing the required change from this envelope. The rent if they are very busy you can get change at bank and receipt will be found in your Commercial Exchange make the exact payment. The office will give you a Pad. receipt. Disposal of Receipts. A receipt, a receipted bill, or any similar evidence of payment, is called a voucher. Such vouchers are always kept on file. In this course they should be placed in the envelope marked "Receipts and Vouchers." 4. Open a bank account and deposit $2900. Leave your signature at bank, the same as you will write it on your checks and other commercial papers. (See pages 33 and 34.) Office Course. Carry out this and all other Tablet Course. You will find a signature card banking transactions at the College Bank. Leave in your equipment. Write your signature on this your signature on a card or in a signature book, as card and leave it with the outgoing papers with your the bank may require. The banker will make the deposit ticket. Place all outgoing currency in corn- deposit entry in your pass book. munity cash. Make the proper deposit entry in your pass book. 5. Sell to T. Jacobs, 252 Second Ave. (C. E. Jones, teamster) receiving his check in payment : 2 cords Stove Wood @ $3.00 1 ton No. 3 Hard Coal @ 8.25 Office Course. Deliver a receipted bill with- Tablet Course. Deliver the receipted bill with out merchandise at the Commercial Exchange and the outgoing papers and remove the check from the receive the check. Commercial Exchange Pad. In the instructions for a local sale, the name of the teamster who is to deliver the fuel is given in parenthesis. The student will use the same style of bill heads for billing all sales, local and out-of-town. In local bills give the name of the teamster who delivers the items in space "How Shipped," and in out-of-town bills give the name of the railway company and the number of the car or cars if in carload shipments. The team- ster's name should be written in the sales book entry, preferably on the left margin. See form of receipting a bill on page 46. See Commission Sales Book page 61. The student will have many sales of commission goods in this set, and for this reason he will carry items of merchandise into Merchandise column. 6. Gve your check to the Victor Scale Co. for $125 for a set of Platform Scales. (See Bank Checks, pages 34 and 35.) Office Course. Deliver the check to the Com- Tablet Course. Leave the check with the out- mercial Exchange clerk, and take a receipted bill. going papers and take the receipted bill from the Commercial Exchange Pad. Keep this bill in your office file in envelope marked "Invoices for Filing," until you are directed to paste your invoices in the Invoice File. BUSINESS PRACTICE IN JOBBING AND COMMISSION 75 7. Make an estimate of the amount of Coal and Coke that will be required to fill the orders in Letters No. 1, 2, and 3, and order the required amount from your wholesale firm. Use an order sheet from your duplicate order book, sending the original and keeping the carbon duplicate in your order book. Request them to ship by the Business College Railway, (abbreviated B. C. Ry.) and to bill the merchandise on account at fifteen days. Write a letter enclosing the order blank, and inform the above firm that you have just commenced business with Bills Receivable, Merchandise, and Cash, amounting to $ (total of invested resources), and accounts payable amounting to $ (total of in- vested liabilities.) Give your bank and your commercial teacher as references. Place the letter and order in an envelope properly addressed and stamped, using college postage. (See page 56.) Office Course. In your dealings with the Tablet Course. The Union Coal Co. will rep- Wholesale Office use the firm name assigned to that resent your Wholesale firm, and your letter should office. be addressed to them. Deliver the letter unsealed to the teacher, who will examine and "O. K." it before delivering it to the firm addressed. 8. Pay cash $10 to the Coleman Real Estate Co. for one month's rent of coal yard from this date. Proceed as in Transaction 3, without giving a lease. 9. Sell to J. B. Ellis, R. F. D. No. 29, who takes the coal in his own wagons, giving his note in payment : 4 tons No. 2 Hard Coal @ $7.50 Leave the receipted bill at the Commercial Exchange and receive his note in payment. In the blank space on left margin of bill head "How Shipped." write "Delivered." Receipt the bill in the following manner : "Received Payment by note at five days," signing your firm name. 10. Buy grain from E. M. Powers, R. F. D. No. 19, per Grain Ticket No. 1, at your buying prices, giving your check in payment. Make this payment at the Commercial Exchange where, you will receive the grain ticket. Keep the grain ticket in your Merchandise envelope until you are directed to dispose of the grain it represents. 11. Sell to E. G. Andrews, 613 Fourth Avenue (A. R. Stone, teamster) receiving his check and note in payment : 5 tons No. 1 Hard Coal @ $8.75 2 tons No. 2 Soft Coal @ 6.35 Proceed as in Transaction 5. 12. Buy grain from C. C. Barton, R. F. D. No. 21, per Grain Ticket No. 2, at your buying prices, giving your check for one-half of the amount and your note at ten days for the balance. Proceed as in Transaction 10. , 13. Sell to A. A. Lester, 319 Third Street (E. C. Henry, teamster) receiving cash in payment : 2 cords Cord Wood @ $6.50 2 tons No. 1 Coke @ 6.50 3 tons No. 3 Hard Coal @ 8.25 Office Course. Carry out this transaction at Tablet Course. Leave the receipted bill with the Commercial Exchange. outgoing papers, and receive the cash from "Com- munity Cash" envelope. 14. Give your check for $150 to Lockwood & Gardiner for an office safe, taking a re- ceipted bill. Leave the check at the Commercial Exchange. Leave check with outgoing papers. 15. Buy grain from H. C. Preston, R. F. D. No. 4, per Grain Ticket No. 3, at your buying prices, on account. 76 ADVANCED ACCOUNTING 16. Sell to R. E. Sherwood, 227 Fourth Avenue (C. W. Jones, teamster) on account: 2 cords Stove Wood @ $3.00 2 tons No. 2 Coke @ 8.50 3 tons No. 3 Soft Coal @ 6.25 17. Buy grain from Charles Lambert, R. F. D. No. 17, Per Grain Ticket No. 4, at your buying prices, on account. Grain Ticket No. 4 is left blank for the student to fill in the total weights as given in his directory card. 18. Make an estimate of all grain you have on hand of the variety purchased in trans- action 17, represented by Grain Ticket No. 5, which you will ^complete, writing the total number of bushels bought less a shrinkage of 190 lbs. for screening. File away the grain tickets from which you have transferred amounts to No. 5, to your envelope in Office File, marked "Invoices for Filing." Make a shipment of the grain represented on ticket No. 5 to your commission firm to sell for you on commission, prepaying the freight by check and taking a consignor's expense bill. Send an invoice of shipment and the bill of lading in envelope, addressed and stamped, delivering the same unsealed to the teacher. Office Course. Maks this consignment to the Tablet Course. Maks this consignment to the firm represented at your Commission Office. Leave Central Commission Co., Central City. Leave the the Elevator Ticket (representing the grain) and the Elevator Ticket (representing the grain) and the shipping bills at the Freight Office, taking the freight original shipping order with outgoing papers, assum- agent's signature on the shipping memorandum and ing that the agent has signed the shipping memo- bill of lading. Hand your check for freight to the randum and bill of lading. Also leave your check freight agent and receive a consignor's expense bill. for freight and take your consignor's expense bill from the Freight Office pad. In connection with Transaction 18, read Invoices of Shipment page 57, Shipping Order and Bill of Lading page 44, Consignor's Expense Bill page 60, and Memorandum Entry of a Shipment page 60. 19. Sell M. I. Martin, 318 Second Street (A. R. Stone, teamster) receiving cash in payment : 4 tons No. 3 Hard Coal @ $8.25 1 ton No. 3 Soft Coal @ 6.25 1 cord Stove Wood @ 2.75 Proceed as in Transaction 13. 20. Indorse the two checks you have received and deposit them in bank together with currency as given on your price list. (See Indorsing Checks, page 36, and Deposit Ticket with Checks, page 34.) Proceed as in Transaction 2. Prove your cash, using one of your cash proof blanks, and balance your cash book. (See The Daily Cash Proof, page 59.) After proving and balancing cash, file your cash proof in Letters and Documents en- velope. Post your ledger and take a trial balance. As Expense is one of the most important accounts in the business and one that is likely to be studied carefully by the proprietor, it will be well in posting expense entries, to write in the explanation column of this account the item for which Expense has been debited or credited. A study of these items may enable the proprietor to make plans that will reduce his expenses if they are too large in comparison with his profits. For your ledger use six sheets of two-account ledger ruling with a two-page index at- tached to outside sheet for indexing the accounts. Page your ledger before you make any posting entries. Index each account-title as soon as you enter it in the ledger. Place the partner's accounts on page 1, and other general accounts on successive pages in the order of their first appearance, allowing one-half page to each account. Begin purchase accounts on page 11, giving each account one-half page. Begin sales accounts on page 16, giving each account one-half page. Post from the original books in the order given on page 20. BUSINESS PRACTICE IN JOBBING AND COMMISSION 77 SECTION TWO 21. The merchandise ordered in Transaction 7 should now be ready for delivery. Office Course. The invoice from the Whole- Tablet Course. You will find the invoice in sale Office will be delivered to you. Call at the your pad of Invoices and the expense bill and freight Freight Office, or the place designated by the teacher receipt in the pad in Freight Office. Sign the freight for the merchandise, giving your check for the freight receipt without removing it from the pad. Leave at the rates named in your price list, and taking an your check for freight with outgoing papers, and re- expense bill for a receipt and signing a freight receipt. move the expense bill from the pad. If the Wholesale Office is not open, the teacher will hand you the merchandise cards and you can estimate the amount of the invoice, using your buy- ing prices. Merchandise cards will be used in the Office Course only in case of carload shipments, and they will be omitted entirely in the Tablet Course. See Receiving Shipments, page 45. Prove and enter the invoice for this merchandise. Mark this Invoice No. 1, and dis- pose of it as instructed on page 46. File your invoice in Papers for Filing, and your ex- pense bill in Receipts and Vouchers envelope in your Office File. 22. Make an estimate of the amount of Coal and Coke that will be required to fill the orders in Letters No. 6, 8, and 9, and order the required amount on account from your wholesale firm. Proceed as in Transaction 7. 23. Buy grain of C. C. Carter, R. F. D. No. 16, per Grain Ticket No. 6, on account. 24. Fill the order received in Letter No. 1, shipping the coal by B. C. Railway, freight unpaid, and billing at the selling prices in your price list, giving the terms 2/10 n/30. (See Terms of Sale, page 47.) Office Course. Leave the merchandise cards Tablet Course. Leave the original shipping and the shipping bills at the Freight Office, taking the order with outgoing papers, assuming that the freight freight agent's signature on the bill of lading and agent has signed the bill of lading and shipping shipping memorandum. memorandum. See Shipping Order and Bill of Lading, page 44. Hand the invoice and bill of lading in envelope properly addressed, to the teacher for mailing. 25. Buy grain from H. C. Preston, R. F. D. No. 4, per Grain Ticket No. 7, on your account. 26. Fill the order received in Letter No. 2, shipping freight unpaid and billing on ac- count, 2/10 n/30. Proceed as in Transaction 24. 27. Sell to D. W. Wells, 392 Eighth Street (E. C. Henry, teamster) on account, re- ceiving his check for $100 to apply in part payment : 10 tons No. 1 Hard Coal @ $8.75 5 tons No. 3 Hard Coal @ 8.25 28. Fill the order received in Letter No. 3, shipping freight unpaid, and billing on ac- count, 2/10 n/30. 29. Reply to Letter No. 4 from Grant & Co., asking them to send you a consignment of Cranberries which you will sell for them on commission, charging 5 per cent of the gross sales. Request them also to send some Sweet Potatoes if they have a supply of good quality. Hand your letter, properly addressed, to the teacher for mailing. 30. Buy grain from E. M. Powers, R. F. D. No. 19, per Grain Ticket No. 8, giving your note at 10 days in payment with interest at the rate of 6 per cent per annum. Grain Ticket No. 8 is left blank for the student to fill in the total weights as given on his price list. 31. Make an estimate of all grain you have on hand of the variety purchased in Trans- action 30, transferring the amount to Grain Ticket No. 9, after deducting 325 lbs. for screening. 78 ADVANCED ACCOUNTING Ship the grain represented by ticket No. 9 to your commission firm for sale on commis- sion, prepaying the freight by check. Proceed as in Transaction 18. 32. Sell to R. A. Jones, 116 First Street (C. W. Jones, teamster) receiving cash in payment : 3 tons No. 2 Coke @ $8.50 2 cords Cord Wood @ 6.50 2 tons No. 3 Soft Coal @ 6.25 33. Receive a consignment of fruit from the Chalmers Fruit Co., Pensacola, Fla., to sell for them on commission, paying freight by check. Receive the invoice through your Letter Pad (No 5) and the expense bill at the Commercial Exchange. Deliver your check favor the Commercial Railway with outgoing papers for $54.75, in payment of the freight charges, without signing a freight receipt. Read Consignments and Consignment Accounts on page 62, and Commission Sales Ledger, page 63, and open an account with Consignment No. 1. 34. Sell to G. C. Denton, 217 Second Street (A. R. Stone, teamster) receiving his note at 10 days for $46.20, and cash for the balance : 6 tons No. 2 Hard Coal @ $8.50 2 cords Stove Wood @ 2.60 35. Sell to Simmons & Co., 122 Second Street, on account: 10 bunches Bananas (Const. 1) @ $1.25 6 boxes Oranges (Const. 1) @ 3.00 Be careful to extend this sale in the proper columns in the Sales Book. (See page 61.) 36. Sell to Hart Bros., 216 First Avenue, for cash : 12 bunches Bananas (Const. 1) @ $1.25 10 boxes Oranges (Const. 1) @ 3.00 37. Buy a draft at Bank favor the Union Coal Co., for $133.52, to apply on their ac- count. Give your check to the bank to pay for the draft and for exchange, 20 cents. Write a letter enclosing this draft and place all in an envelope properly addressed and stamped. Fland the envelope unsealed to the teacher. Office Course. Leave the check at bank and Tablet Course. Leave the check with out- receive the draft. going papers, and take the draft from the Banking Pad. See Bank Drafts, page 38. 38. Pay cash to your teamsters for delivering wood and coal, sold to city customers in Sections One and Two, at the following rates : Coal and Coke, 25 cents per ton, Stove Wood, 25 cents per cord, Cord Wood, 50 cents per cord. Office Course. Pay this cash to the Com- Tablet Course. Place the required amount of mercial Exchange without receipt. currency in Community Cash, taking back change if necessary. No receipt. 39. Employ Walter Davis as shipping clerk at a salary of $8 per week, beginning to- day. Make a memorandum entry in your journal, but make no payments until directed to do so. See Journal Memoranda, page 65. 40. Indorse and deposit the check you have on hand together with currency as per price list. Prove your cash as you were directed to do at the close of Section One, and balance your cash book. Post your ledger and take a trial balance. The consignment accounts in the Commission Sales Ledger are ledger accounts, and if any of these ac- counts are unbalanced, they should appear in the trial balance. In posting Bills Receivable and Bills Payable, if the maker's name is written in the explanation column, it will assist in checking these accounts with the bill book entries. BUSINESS PRACTICE IN JOBBING AND COMMISSION 79 SECTION THREE 41. Enter the account sales of your first shipment to your commission firm, Trans- action 18. Net proceeds will be on account until you are directed to draw draft. See Account Sales, page 64, and Memorandum Entry of a Shipment, and Entry of the Net Proceeds of a Shipment, page 60. Office Course. You will receive the account Tablet Course. Remove the account sales from sales from the Commission Office. your Commission Pad. The student should verify the account sales, estimating the grain as sold at his quoted selling price. The commission house charges are given on page 65. 42. Estimate the amount of Coal and Coke that will be required to fill the orders in Letters 11, 12, and 13, and order the required amount from your wholesale firm, asking them to draw on you at sight for the amount after allowing their cash discount. 43. Buy grain from E. M. Powers, R. F. D. No. 19, per Grain Ticket No. 10, on ac- count. 44. The merchandise ordered in Transaction 22 should now be ready for delivery. Give your check to pay the freight charges. Proceed as in Transaction 21. 45. Fill the order received in Letter No. 6, shipping freight unpaid and billing at a discount of two per cent, subject to sight draft. Proceed as in Transaction 24. See sale to C. S. Peters with discount in Commission Sales Book, page 61. 46. Draw at sight on the firm to whom you made shipment in Transaction 45, for the net amount of the invoice and leave the draft at bank for collection. (See Drafts and Ac- ceptances, page 40.) Make the proper stub entry in your draft book. No other entry is required until you are advised of the payment of the draft. Office Course. Leave this draft at your Bank. Tablet Course. Leave this draft with out- going papers. 47. Receive a consignment of Cranberries and Sweet Potatoes from Grant & Co., Grantville, Wis., to sell for them on commission, giving your check for $35 favor the Com- mercial Railway for the freight charges. Proceed as in Transaction 33 (Letter Pad No. 7), Consignment Account No. 2 in your Commission Sales Ledger. 48. Sell to Bartley & Brown, 108 Second Street, on account: 5 bunches Bananas (Const. 1) @ $1.25 5 boxes Oranges (Const. 1) @ 3.00 5 brl. Cranberries (Const. 2) @ 6.75 4 brl. Sweet Potatoes (Const. 2) @ 3.50 Proceed as in Transaction 35. 49. Fill the order received in Letter No. 8, shipping freight unpaid and billing at 2/10 n/30. 50. Sell to E. A. Pelton, 219 Second Avenue (E. C. Henry, teamster) receiving his note in payment : 2 tons No. 3 Hard Coal @ $8.25 2y 2 tons No. 1 Hard Coal @ 8.75 1 cord Cord Wood @ 5.20 51. Buy grain from G. C. Barton, R. F. D. No. 21, per Grain Ticket No. 11, giving your check in payment. 80 ADVANCED ACCOUNTING 52. Sell to Hart Bros., 216 First Avenue, on account: 4 brl. Cranberries (Const. 2) @ $6.75 5 brl. Sweet Potatoes (Const. 2) @ 3.50 6 bunches Bananas (Const. 1) @ 1.25 53. Fill the order received in Letter No. 9, shipping freight unpaid and billing at a discount of two per cent, subject to sight draft. 54. Draw at sight on the firm to whom you made shipment in Transaction 53, for the net amount of the invoice,, and leave the draft at bank for collection. Proceed as in Transaction 46. 55. Buy grain from G. E. Kingman, Edgewood, per Grain Ticket No. 12, giving in payment your note for 20 days, with interest at six per cent. Grain Ticket No. 12 is left blank for the student to fill in the total weights as given on his price list. 56. Make an estimate of all grain you have on hand of the variety purchased in Trans- action 55, transferring the amount to Grain Ticket No. 13, after deducting 294 lbs. for screening. Ship the grain represented by ticket No. 13 to your commission firm for sale on commis- sion, prepaying the freight by check. Proceed as in Transaction 18. 57. Sell to Post Milling Co., 1229 Seventh Avenue (C. W. Jones, teamster) receiving their check in payment: 50 tons No. 3 Soft Coal @ $5.00 58. Pay cash to the Central Stationery Co. (Commercial Exchange) $4 for books and stationery for office, taking a receipt. 59. Pay cash to your teamsters for delivering wood and coal sold to city customers in Section Three at the rates named in Transaction 38. Proceed as in Transaction 38. 60. Indorse and deposit the check you have on hand and currency as per price list. Prove and balance cash. Post your ledger and take a trial balance. SECTION FOUR 61. Enter the account sales of the shipment to your commission firm in Transaction 31. Proceed as in Transaction 41. 62. Buy a draft at bank favor the Union Coal Co. for $79.37, giving your check for the draft and for exchange 10 cents. Send the draft to the Union Coal Co. to pay balance of old account. Proceed as in Transaction 37. 63. Sell to C. P. Manderson, 333 Fourth Street (A. R. Stone, teamster) receiving his note for $58.25, and cash for balance : 5 tons No. 3 Hard Coal @ $8.25 4 tons No. 1 Soft Coal @ 6.75 Deliver a receipted bill, receiving note for $58.25, and cash for balance. 64. Receive a consignment of Grapes and Apples from H. T. Davis, Batavia, N. Y., to sell for him on commission, giving your check for $52.50, favor the Commercial Railway for the freight charges. Proceed as in Transaction 33, opening consignment account No. 3. (Letter No. 10.) BUSINESS PRACTICE IN JOBBING AND COMMISSION 81 65. Sell to J. R. Stone, 210 Third Street, on account, receiving his check for $75 to apply in part payment : 5 bunches Bananas (Const. 1) @ $1.25 8 boxes Oranges (Const. 1) @ 3.00 2 brl. Cranberries (Const. 2) @ 6.75 3 brl. Sweet Potatoes (Const. 2) @ 3.50 10 boxes Grapes (Const. 3) @ .25 10 brl. Apples (Const. 3) @ 2.75 66. Estimate the amount of Coal and Coke that will be required to fill the orders in Letters 15, 16, and 17, and order the same from your wholesale firm on account. 67. Buy grain from Charles Lambert, R. F. D. No. 17, on account, per Grain Ticket No. 14. 68. The merchandise ordered in Transaction 42 should now be ready for delivery. Give your check to pay the freight charges. Proceed as in Transaction 21. 69. Fill the order received in Letter No. 11, shipping freight unpaid and billing at 2/10 n/30. 70. Draw on your commission firm at sight for the net proceeds reported in Trans- action 41. Deposit the proceeds of this draft in bank after deducting a discount of one-half of one per cent from the face of the draft. (Cash Book entries — Interest and Discount.) A discount ticket will not be required in this transaction, as full explanation can be given on the de- posit ticket. In filling your deposit ticket, follow the model form below, changing the amounts: St. Draft Com. Co. $360.20 y 2 % Dis. 1.80 Proceeds Deposited $358.40 71. Buy grain from C. C. Carter, R. F. D. No. 16, per Grain Ticket No. 15, on ac- count. 72. Fill the order received in Letter No. 12, shipping freight unpaid and billing at a discount of two per cent subject to sight draft. 73. Draw at sight on the firm to whom you made shipment in Transaction 72, for the amount of the invoice and leave the draft at bank for collection. 74. Fill the order received in Letter No. 13, shipping freight unpaid and billing 2/10 n/30. 75. Accept the discount offer in Letter No. 14 from the- Western Fuel Co., and send them your check in full less the discount. Mail the check, with letter acknowledging the receipt of their letter. (Cash Book entries — Merchandise Discount Cr.) 76. Your bank reports that they have collected the draft which you drew in Transac- tion 46. The bank deducts for collection charges, 10 cents for every hundred dollars or part of a hundred collected. As an illustration, the collection charges on $916.79 would be $1, 10 cents per $100 on $900 and 10 cents for the $16.79. Receive credit on your pass book for the proceeds of the draft. Make the required entries in the cash book, crediting the firm that paid the draft in full, and debiting Expense for the collection- Write across the stub entry in the draft book "Paid and credited" with the cur- rent date. 77. Receive cash from the Commercial Railway (Commercial Exchange) $10 for over-charge on freight on Consignment No. 3, Transaction 64, giving your receipt for same. 78. Sell to D. W. Wells, 392 Eighth Street (E. C. Henry, teamster) on account: 3 tons No. 2 Hard Coal @ $8.50 2 tons No. 2 Coke @ 7.25 79. Pay cash to your teamsters for delivering wood and coal sold to city customers ifi Section Four at the rates named in Transaction 38. No receipt. 82 ADVANCED ACCOUNTING 80. Indorse and deposit the check you have on hand and currency as per price list. Prove and balance cash. Post your ledger, rule up the personal accounts that are in balance, and take a trial balance. SECTION FIVE 81. Enter the account sales of the shipment to your commission firm in Transaction 56. Proceed as in Transaction 41. 82. Pay cash for shipping clerk's salary, $8. Office Course. Make payment at Commercial Tablet Course. Place the currency in Com- Exchange. munity Cash. 83. Sell to the Central Coal Co., 210 First Street (delivered to their own teamster) receiving their check in payment: 2 tons No. 2 Coke @ $7.00 1 cord Stove Wood @ 2.00 84. Draw on your commission firm at sight for the net proceeds reported in Transac- tion 61. Deposit the proceeds of this draft in bank after deducting a discount of one-half of one per cent from the face of the draft. Proceed as in Transaction 70. 85. Draw a check in your own favor for $50, also a check in favor of A. H. Norton for $50 in payment of estimated salaries to date. Have these checks certified at bank, deliv- ering Norton's check to the teacher and holding your own check until instructed to dispose of it. (See Certified Checks, page 38.) Office Course. The bank teller will certify Tablet Course. The student will write "Certi- these checks and return them to you. fied," and the current date across these checks, and pass them to the teacher for his signature as teller. 86. The merchandise ordered in Transaction 66 should now be ready for delivery. Give your check to pay the freight charges. Proceed as in Transaction 21. 87. Your bank reports that they have collected the draft you drew in Transaction 54. The bank deducts collection charges estimated at the same rate as in Transaction 76. Re- ceive credit on your pass book for the proceeds of the draft. 88. Receive check from E. A. Pelton in payment of his note received in Transaction 50. Cancel the note, marking across the face of it "Paid" and the date. Deliver the cancelled note and receive the check. 89. Give your check to C. C. Barton to pay your note given in Transaction 12. Office Course. Receive the cancelled note at Tablet Course. Take the note from the out- the Commercial Exchange. going papers and hand it to the teacher, who will write across the note "Paid" with the date. File the cancelled note in Receipts and Vouchers. 90. Indorse and deposit the checks you have on hand. Prove and balance your cash. Post your ledger, rule up all personal accounts that are in balance, and take a trial balance. Pass your Outgoing Papers File to the teacher for inspection. Make a six-column balance sheet, using the following inventories : Merchandise in Coal Yard not represented by tickets $2027.59 All car loads of Coal and Coke on hand at invoice cost and Freight. All grain on hand represented by grain tickets at cost Warehouse Fixtures 675.00 Prepaid Expense Items (paid for but not used) 3.50 Prepaid Rent 8.75 Interest Payable, 6 days on note favor G. E. Kingman, at the given rate, and 12 days on note favor E. M. Powers, at the given rate N 0TE . — In estimating interest inventories, follow the rule for fractional amounts, the same as if you were computing interest for payment on each note individually. BUSINESS PRACTICE IN JOBBING AND COMMISSION 83 Divide the net gain according to the partnership agreement. Close the general ledger accounts, except the partners, Bills Receivable, and Bills Pay- able, using the data in your balance sheet, and bring down balances and inventories for a continuation of the business. Make a trial balance of the ledger after closing. Prove your Bills Receivable and Bills Payable accounts by comparing them with notes on hand and outstanding. The grain tickets in the filing envelope can be placed in a letter envelope marked "Grain Tickets Filed." They should be kept for reference in case of a disputed entry. Call for your bank statement and your paid checks, and compare the latter with the en- tries of same in your check-stubs. If any checks are unpaid, their sum added to your bank balance shown on your last check-stub will equal the balance as given in the bank statement. Office Course. You will receive the statement Tablet Course. The teacher will return your and the paid checks, cancelled, at your Bank. file for outgoing papers, together with the checks issued, and you will find the bank statement among See the Depositor's Statement, page 36. the incoming documents. Cancel all returned checks. Fold your cancelled checks in the bank statement sheet, marking across the top of the package, "Can- celled checks (Student) & Norton ■, 19 — ," (date of first check) "to , 19 — ," (date of last check.) File the package in your Receipts and Vouchers envelope. SECTION SIX 91. Buy grain from E. M. Powers, R. F. D. No. 19, per Grain Ticket No. 16, on ac- count. The student will complete this ticket by filling in the weights as given on his price list. 92. Ship all grain you have on hand of the variety purchased in Transaction 91 to your commission firm for sale on commission, prepaying the freight by check. Complete grain ticket No. 17, writing the total bushels of Barley you have purchased, less 128 lb. for screening. Proceed as in Transaction 18. 93. Take out an insurance policy for three months in the Commercial Insurance Co. for $500, covering merchandise you may own or may hold as selling agent in the warehouse you are now renting. Pay the premium in cash, $4. The student will find the insurance policy in Incoming Documents. He should fill in the date and location, the latter to correspond with the location given in his lease. Open an account with Insurance, as a part of this insurance will be credited back from your consign- ments. 94. Deduct the discount offered in the invoice received in Transaction 21, and send the wholesale firm a check for the proceeds of the invoice after discount. Enclose the check in a letter properly directed and stamped for mailing. Hand the letter to the teacher, as usual. 95. Fill the order received in Letter No. 15, shipping freight unpaid and billing at 2/10 n/30. 96. Sell to Bartley & Brown, 108 Second Street, on account: 30 bunches Bananas (C-l) @ $1.25 20 boxes Oranges (C-l) @ 3.00 5 brl. Cranberries (C-2) @ 6.75 25 boxes Grapes (C-3) @ .25 97. Dows & Clark offer you a special discount of 5 per cent for early payment of their account. Accept their offer and give them your check in full of their account, less the dis- count offered, taking a receipt. (Commercial Exchange.) 84 ADVANCED ACCOUNTING 98. Allow A. R. Preston a discount credit of 2 per cent on the bill sent him in Trans- action 24. Make a statement of his account including the discount credit and write on the lower part of the statement that you will draw at sight for the net amount and request him to honor the draft when presented. Mail this statement in the usual manner. See Statements of Account, page 51. Make this credit in the journal. 99. Draw on A. R. Preston in favor of your bank for the amount due from him as per statement rendered in preceding transaction and leave the draft at bank for collection. 100. Fill the order received in Letter No. 16, shipping freight unpaid and billing at a discount of two per cent, subject to sight draft. 101. Draw at sight on the firm to whom you made shipment in Transaction 100, for the net amount of the invoice and leave the draft at bank for collection. 102. Receive cash from J. B. Ellis in payment of his note, received in Transaction 9, with 20 days' interest at 6 per cent per annum, because the note is estimated that long past due. Leave the note marked "Paid" at the Commercial Exchange. 103. Buy grain from H. C. Preston, R. F. D. No. 4, per Grain Ticket No. 18, on ac- count. 104. Fill the order received in Letter No. 17, shipping freight unpaid and billing at a discount of two per cent, subject to sight draft. 105. Draw at sight on the firm to whom you made shipment in Transaction 104, for the net amount of the invoice and leave the draft at bank for collection. 106. Receive a consignment of Lemons and Oranges from Jones & Pratt, Riverside, California, to sell for them on commission, giving your check for $145.31 for the freight charges. Proceed as in Transaction 33, opening consignment account No. 4. (Letter No. 18.) 107. Give H. C. Preston your check to apply on account, $200. 108. Sell to R. E. Sherwood, 227 Fourth Avenue, on account : 27 bunches Bananas (C-l) @ $1.25 • 16 boxes Oranges (C-l) @ 3.00 109. Your bank reports the collection of the draft left with them in Transaction 73. The bank deducts collection charges estimated as in Transaction 76. Receive credit on your pass book for the proceeds of the draft. 110. Receive cash from E. G. Andrews to pay the note received in Transaction 11 with interest at 6 per cent per annum, for ,21 days, the period past due. Prove and balance cash. Post your ledger, rule up all personal accounts that are in balance, and take a trial bal- ance. SECTION SEVEN 111. Sell to Simmons & Co., 122 Se.cond Street, on account: 30 bunches Bananas (C-l) @ $1.25 10 boxes Oranges (C-l) @ 3.00 8 brl. Cranberries (C-2) @ 6.75 8 brl. Sweet Potatoes (C-2) @ 3.50 5 boxes Lemons (C-4) @ 4.25 112. Pay cash to C. W. Jones for drayage of Bananas and Oranges belonging to Con- signment No. 1, $2.25. 113. Estimate the amount of Coal and Coke that will be required to fill the orders in Letters 19 and 20, and order the same from your wholesale firm on account. 114. Debit Consignment No. 1 for insurance 75 cents and for commission 5 per cent of the total amount of the sales. Close the consignment, sending an account sales to the Chalmers Fruit Co., and giving them credit for the net proceeds, subject to their sight draft. Enclose the account sales in an envelope properly addressed for mailing. BUSINESS PRACTICE IN JOBBING AND COMMISSION 85 115. Allow G. E. Anderson a discount credit of 2 per cent on the bill sent him in Transaction 26. Render a statement of his account, including the discount credit and give notice of your sight draft for the amount due. Proceed as in Transaction 98. 116. Draw on G. E. Anderson at sight as per notice in preceding transaction and leave the draft at bank for collection. 117. Buy grain from C. C. Carter, R. F. D. No. 16, per Grain Ticket No. 19, on ac- count. The student will complete this ticket by filling in the weights as given on his price list. 118. Ship all grain you have on hand of the variety purchased in Transaction 117 to your commission firm for sale on commission, prepaying the freight by check. Complete Grain Ticket No. 20, writing the total bushels of Rye you have purchased, less 104 lb. for screening. Proceed as in Transaction 18. 119. Sell your entire stock of wood, coal, and coke kept for sale at retail in your coal yard, to the Central Coal Co., for $2250, taking in payment fifteen shares of Central Com- mercial Railway stock at 90, and three notes for $300 each signed by the Central Coal Co. and clue in 5, 10, and 15 days, respectively, each note drawing interest at 6 per cent. Deliver a bill of sale to the teacher and receive the notes and stock certificates from the Central Coal Co. in your Incoming Documents envelope. Enter in Sales Book. See Accounts with Stocks, page 67, and Bill of Sale, page 71. 120. Deduct the discount offered in the invoice received in Transaction 44, and send the wholesale firm a check for the proceeds of the invoice after discount. Proceed as in Transaction 94. 121. Draw on your commission firm at sight for the net proceeds debited in Trans- action 81. Deposit the proceeds of this draft after deducting a discount of one-half of one per cent from the face of the draft. Proceed as in Transaction 70. 122. Receive cash from G. C. Denton in payment of the note received in Transaction 34. The note is estimated 18 days overdue and you will accordingly collect interest on the note at 6 per cent for that period. 123. Give your check to E. M. Powers to pay the note given in Transaction 30, with interest for 20 days at the given rate. Proceed as in Transaction 89. 124. Allow Carter Bros, a discount credit of 2 per cent on the bill sent them in Trans- action 49. Render a statement of their account including the discount credit, and notify them that you will draw at sight for the net amount due. Proceed as in Transaction 98. 125. Draw on Carter Bros, at sight as per notice in Transaction 124 and leave the draft at bank for collection. 126. Sell 5 shares of your Central Commercial Railway stock to R. W. Thomas at 95, receiving his check for same at the Commercial Exchange. Make the proper indorsement on the back of the certificate which you deliver. (See Accounts with Stocks, page 67.) 127. Your bank reports the collection of the draft you drew in Transaction 99. The bank deducts collection charges estimated at the same rate as in Transaction 76. Receive credit on your pass book for the proceeds of the draft. 128. Settle in full with C. Lambert, giving him a check for $100 and a note at 15 days with interest at six per cent for the balance. Make these payments at the Commercial Ex- change, without taking a receipt. Compound journal entry. 86 • ADVANCED ACCOUNTING 129. Sell to J. R. Stone, 210 Third Street, for cash : 5 brl. Sweet Potatoes (C-2) @ $3.50 10 boxes Lemons (C-4) @ 4.25 10 boxes Oranges (C-4) @ 3.75 130. Indorse and deposit all checks on hand together with currency as per price list. Prove and balance cash. Post your ledger, rule up all personal accounts that are in balance, and take a trial balance. Do not forget to post the proper credits from the commission sales ledger. SECTION EIGHT 131. Buy the lot and warehouse building you rented in Transaction 2, from the firm there named, at the valuation given in your price list, giving your check for one-fourth of the price, and your three notes in equal amounts for the balance, making the notes payable in 10, 20, and 30 days, with interest at the rate of 6 per cent per annum, and securing the notes by giving a mortgage on the property you have just bought. See "Real Estate Transfers," page 67, "Warranty Deed," page 68, and "Real Estate Mortgage," page 69. Office Course. Carry out this transaction at Tablet Coukse. Take the deed from your the Real Estate and Insurance Office, or at the Com- envelope of Incoming Documents, filling in the con- mercial Exchange if the first named office is closed. sideration and location. Deliver the check, notes, and mortgage through Outgoing Papers. 132. Collect cash from U. C. Black for desk rent in your warehouse, $10, of which amount $5 is to pay for rent before you purchased the property and the balance is to pay in advance from the date of your purchase. Give a receipt and collect cash in the usual manner. 133. Estimate the amount of Coal and Coke that will be required to fill the orders in Letters 21 and 22, and order the same from your wholesale firm on the usual terms. 134. Your bank reports the collection of the draft you drew on G. E. Anderson in Transaction 116. The bank deducts collection charges estimated at same rate as in Trans- action 76. Receive credit on your pass book for the proceeds. 135. Sell to D. W. Wells, 392 Eighth Street, on account : 7 brl. Cranberries (C-2) @ $6.75 8 brl. Sweet Potatoes (C-2) @ 3.50 .30 baskets Grapes (C-3) @ .25 15 brl. Apples (C-3) @ 2.75 136. Give your check to the bank to pay the draft drawn on you by your wholesale firm for the invoice recorded in Transaction 68. 137. Receive credit on your pass book for the proceeds of the draft on Carter Bros, you left for collection in Transaction 125. The bank deducts collection charges estimated as in Transaction 76. 138. The merchandise ordered in Transaction 113 should now be ready for entry. Give your check to pay the freight charges. Proceed as in Transaction 21. If any jerror is found in the invoice, report to the wholesale firm and ask for a memorandum of credit. 139. Enter the account sales of the shipment to your commission firm in Transaction 92. 140. Fill the order received in Letter No. 19, shipping freight unpaid and billing at 2/10 n/30. 141. Receive cash from C. P. Manderson in payment of his note received in Trans- action 63. 142. Sell to H. P. Trenton a desk belonging to your warehouse fixtures, receiving cash for same, $15, and giving a receipt. 143. Fill the order received in Letter No. 20, shipping freight unpaid and billine at 2/10 n/30. * BUSINESS PRACTICE IN JOBBING AND COMMISSION 87 144. Receive at the Commercial Exchange a check for $52.50, from the Treasurer of the Central Commercial Railway Co., for a semi-annual dividend on your stock in that com- pany. The dividend was declared before the sale of your stock in Transaction 126. See "Accounts with Stocks," page 67. 145. Give your check to G. E. Kingman to pay the note you gave in Transaction 55, with interest for 20 days at the given rate. 146. Receive credit on your pass book for the proceeds of the draft on Harper & Son you drew in Transaction 101. The bank deducts collection charges estimated as in Transac- tion 76. 147. Sell to Bartley & Brown, 108 Second Street, on account : 9 brl. Cranberries (C-2) @ $6.75 7 brl. Sweet Potatoes (C-2) @ 3.50 15 boxes Oranges (C-4) @ 3.75 148. Pay A. R. Stone cash for drayage on Consignment No. 2, $3.25. 149. Debit Consignment No. 2 for insurance $1 and for commission 5 per cent of the total amount of their sales. Close the consignment, sending an account sales to Grant & Co., with your check certified at bank for the net proceeds. Mail the account sales and check. If there is no banker to certify the check, make the proper record of certification across the face of the check and take it to the teacher for the teller's signature. (See Certified Checks, page 38.) 150. Deposit the check received in Transaction 144 with currency as per price list. Prove and balance cash. Post your ledger, rule up all personal accounts that are iri balance, and take a trial balance. SECTION NINE 151. Give your check to the bank to pay the draft drawn on you by the Chalmers Fruit Co., for the proceeds of their consignment reported in Transaction 114. 152. The merchandise ordered in Transaction 133 should now be ready for entry. Give your check to pay the freight charges. Proceed as in Transaction 21. 153. Enter the account sales of the shipment you made to the commission firm in Transaction 118. 154. Insure your warehouse purchased in Transaction 131 for one-half of purchase price of the property, making the policy for one year and giving your check for the premium estimated at $1.20 per hundred dollars. (Debit Insurance.) Office Course. Carry out this transaction at Tablet Course. You will find the insurance the Real Estate and Insurance Office, or at the Com- policy in Incoming Documents, and you will be re- mercial Exchange, if the former is closed. quired to fill in the consideration, the amount of insurance, and the .location. Make payment in the usual manner. 155. Fill the order received in Letter No. 21, shipping freight unpaid and billing at a discount of two per cent, subject to sight draft. 156. Draw at sight for the invoice in Transaction 155 and leave the draft at bank for collection. 157. Buy grain from C. C. Carter, R. F. D. No. 16, on account, per Grain Ticket No. 21. 158. Sell to R. E. Sherwood, 227 Fourth Avenue, on account : 20 brl. Apples (C-3) @ $2.75 50 baskets Grapes (C-3) @ .25 15 boxes Lemons (C-4) @ 4.25 159. Receive cash from the Central Coal Co., in payment of their first note for $300 with interest for 6 days at the given rate. 160. Fill the order received in Letter No. 22, shipping freight unpaid and billing at a discount of two per cent, subject to sight draft. 161. Draw at sight for the invoice in Transaction 160 and leave the draft at bank for collection. ADVANCED ACCOUNTING 162. Enter memorandum of credit received from your wholesale firm to correct over- charge in invoice received in Transaction 138. Enter in the journal, as this does not represent a sale of merchandise. 163. Telegraph to your wholesale office for the Coal or Coke ordered in telegram (Letter No. 23). Instruct the wholesale office to ship to the address of the firm ordering from you, freight unpaid, and bill to you on the usual terms. Pay cash 75 cents to the Com- mercial Exchange for sending the message, and deliver the message to the teacher. Read Telegraphing, page 66, and use as few words as possible in writing your message. 164. Sell to Bartley & Brown, 108 Second Street, on account : 30 brl. Apples (C-3) @ $2.75 60 baskets Grapes (C-3) @ .25 165. Deduct the discount offered in the invoice received in Transaction 86, and send the wholesale firm your certified check for the net proceeds of the invoice. Proceed as in Transaction 94. Have the check certified as in Transaction 149. 166. Buy grain from E. M. Powers, R. F. D. No. 19, per Grain Ticket No. 22, on ac- count. 167. Receive credit on your pass book for the proceeds of the draft on J. C. Daniels you drew in Transaction 105. The bank deducts collection charges estimated as in Trans- action 76. 168. Buy grain from H. C. Preston, R. F. D. No. 4, per Grain Ticket No. 23, giving your check in payment. The student will complete this ticket by filling in the weights as given on his price list. 169. Ship all grain you have on hand, of the variety purchased in Transaction 168, to your commission firm for sale on commission, prepaying the freight by check. Complete Grain Ticket No. 24, writing the total purchases on Grain Tickets 21, 22, and 23, less 75 lb. for screening. Proceed as in Transaction 18. 170. Deposit cash in bank as per price list. Prove and balance cash. Post your ledger, rule up all personal accounts that are in balance, and take a trial bal- ance. SECTION TEN 171. Collect cash from the B. C. Railway for overcharge on freight in Transaction 138, giving a receipt. Office Course. Receive the cash from the Tablet Course. Receive the cash from Corn- freight agent. munity Cash envelope. 172. Pay cash to A. R. Stone for drayage on Consignment No. 3, $3.50. No receipt. 173. Enter the invoice from your wholesale firm in response to your telegram order in Transaction 163. 174. Send invoice to the firm that ordered by telegraph in Letter No. 23, billing at 2/10 n/30. As this merchandise was sent direct from Central City, freight unpaid, estimate the freight charges from Central City to your city, which you would have paid if the mer- chandise had been shipped to you, and deduct this amount from your invoice. 175. Make a statement of account for R. E. Sherwood and collect cash from him for the amount due, receipting the statement. See Statements of Account, Form No. 4, page 52. 176. Give your check to H. C. Preston to pay his account in full. Write on the lower margin of the check to the left of your signature, "In full of account," and no re- ceipt will be required. 177. Receive credit on your pass book for the proceeds of your draft on Carter Bros., drawn in Transaction 161. The bank deducts collection charges as in Transaction 76. BUSINESS PRACTICE IN JOBBING AND COMMISSION 89 178. Allow E. L. Jackson & Co. a discount credit of 2 per cent on their entire account, including the invoice sent in Transaction 174 which should be posted at once. Mail a state- ment of their account, which should include the discount credit, giving notice of draft that you will draw for the net amount. Proceed as in Transaction 98. 179. Draw on E. L. Jackson & Co. at sight as per notice in Transaction 178, and leave the draft at bank for collection. 180. Receive cash from the Central Coal Co. in payment of their second note for $300 with interest for 10 days at the given rate. 181. Draw on your commission firm at sight for the net proceeds debited in Transac- tion 139. Deposit the proceeds of this draft after deducting a discount of one-half of one per cent. Proceed as in Transaction 70. 182. Debit Consignment No. 3 for insurance 60 cents, and for commission 5 per cent of the amount of the sales (not including freight refund.) Close the consignment, sending an account sales and a certified check for the net proceeds. Proceed as in Transaction 149. 183. Allow J. C. Daniels a discount credit of 2 per cent on the bill sent him in, Trans- action 69. Mail a statement of his account, which should include the discount credit, giving notice of draft that you will draw for collection. Proceed as in Transaction 98. 184. Draw on J. C. Daniels at sight as per notice in Transaction 183, and leave the draft at bank for collection. 185. Give your check to C. Lambert to pay the note you gave in Transaction 128, with interest for 15 days at the given rate. 186. Sell to R. E. Sumner 5 shares of your Central Commercial Railway stock at 105, receiving cash for same. Proceed as in Transaction 126. 187. Render statement of account to Bartley & Brown and collect cash for balance due, receipting the statement. 188. Receive credit on your pass book for the proceeds of your draft on E. C. Harper & Son in Transaction 156. The bank deducts collection charges as in Transaction 76. 189. Sell to Simmons & Co., 122 Second Street, on account: 20 boxes Lemons (C-4) @ $4.25 30 boxes Oranges (C-4) @ 3.75 190. Deduct the discount offered in the invoice received in Transaction 138 less the memorandum of credit for overcharge on this invoice and send the wholesale firm a check for the proceeds of the invoice after discount. 191. Mail statement of account to R. C. Smith & Co., giving notice that you will draw on them at sight for collection. 192. Draw on R. C. Smith & Co. at sight as per notice in Transaction 191, and leave the draft at bank for collection. 193. Render statement of account to J. R. Stone, collecting cash for balance due and receipting the statement. 194. Give your check to pay the first note you gave for real estate in Transaction 131 with interest for 10 days at the given rate. This check overdraws your bank account, but you have cash to deposit that will make your account good before all checks reach your bank. 195. Allow C. I. Emerson a discount credit of 2 per cent on his entire account. Mail a statement of his account including the discount credit and giving notice of draft that you will draw for collection. Proceed as in Transaction 98. 90 ADVANCED ACCOUNTING 196. Draw on C. I. Emerson at sight as per notice in Transaction 195, and leave the draft at bank for collection. 197. Sell to Hart Bros./ 216 First Avenue, on account: 25 boxes Lemons (C-4) @ $4.25 20 boxes Oranges (C-4) @ 3.75 198. Render statement of account to D. W. Wells, and collect cash in full of account, receipting the statement. 199. Deposit cash in bank, as per price list. 200. Give your check to C. C. Carter to pay his account in full. Proceed as in Transaction 176. Prove and balance cash. Post your ledger, rule up all personal accounts that are in balance, and take a trial bal- ance. SECTION ELEVEN 201. Enter the account sales of the shipment you made to the commission firm in Transaction 169. 202. Sell the balance of your Central Commercial Railway stock to A. T. Cooper at 109 for cash. Proceed as in Transaction 126. 203. Give E. M. Powers your check in full of account. 204. Receive credit on your pass book for the proceeds of your draft on R. C. Smith & Co. in Transaction 192. The bank deducts collection charges as in Transaction 76. 205. Render statement of account to Simmons & Co., and collect cash in full of ac- count, receipting the statement. 206. Pay cash to A. R. Stone for drayage on Consignment No. 4, $6. No receipt. 207. Draw on your commission firm at sight for the net proceeds credited in Trans- action 153. Deposit the proceeds of this draft after deducting a discount of one-half of one per cent. Proceed as in Transaction 70. 208. Deduct the discount offered in the invoice received in Transaction 152, and send your wholesale firm a check for the net proceeds of the invoice. Proceed as in Transaction 94. 209. Receive credit on your pass book for the proceeds of your draft on E. L. Jackson & Co. in Transaction 179. The bank deducts collection charges as in Transaction 76. 210. Debit Consignment No. 4 for insurance $1.20, and for commission 5 per cent of the amount of the sales. Close the consignment and send an account sales and a certified check for the net proceeds. Proceed as in Transaction 149. 211. Render statement of account to Hart Bros, and collect cash for balance due, re- ceipting the statement. 212. Receive cash from the Central Coal Co. in payment of their third note for $300 with interest for 15 days at the given rate. 213. Allow M. V. Barlow a discount credit of 2 per cent on his entire account. Render a statement of his account including the discount credit and notify him that you will draw at sight for the net amount due. Proceed as in Transaction 98. 214. Draw on M. V. Barlow at sight as per notice in Transaction 213, and discount the draft at bank at the rate of one-half of one per cent, depositing the proceeds. Proceed as in Transaction 70. 215. Deduct the discount offered in the invoice received in Transaction 173, and send your wholesale firm a check for the net proceeds of the invoice. Proceed as in Transaction 94. 216. Receive credit on your pass book for the proceeds of your draft on J. C. Daniels in Transaction 184. The bank deducts collection charges as in Transaction 76. BUSINESS PRACTICE IN JOBBING AND COMMISSION 91 217. Sell your lot and warehouse building to the firm and at the price named in your price list, receiving cash $1000 and his note at six months with interest at 5 per cent for the balance. Deliver a warranty deed and draw up a mortgage for the purchasing firm to sign, securing the payment of the note. Office Course. Carry out this transaction at Tablet Course. Receive the cash from Com- the Real Estate and Insurance Office, where the note munity Cash. Deliver the deed to the teacher and and mortgage will be signed. request him to sign the note and mortgage for the purchasing firm. 218. Sell your warehouse fixtures to the firm that purchased the warehouse at the price named in your price list. Deliver a bill of sale at the Commercial Exchange and collect cash. See Bill of Sale, page 71. 219. Receive credit on your pass book for the proceeds of your draft on C. I. Emerson in Transaction 196. The bank deducts collection charges as in Transaction 76. 220. Give your check to pay the remaining two notes you gave for real estate in Trans- action 131, with interest for 20 days at the given rate. One of these notes is not due, but the firm consents to payment with interest to date. Office Course. Call for a Release of Mort- Tablet Course. Receive a Release of Mort- gage at the Real Estate and Insurance Office. gage through Incoming Letters and Documents. See Release of Mortgage, page 70. 221. Draw on your commission firm at sight for the net proceeds entered in Trans- action 201. Deposit the proceeds of this draft after deducting a discount of one-half of one per cent. Proceed as in Transaction 70. 222. Credit Real Estate for the use of the warehouse, three-fifths of a month at the rate paid for rent in Transaction 3. 223. Discount at bank the note you received in Transaction 217, estimating interest to maturity at the given rate. Discount the amount, face and interest, for the same period at the rate of 6 per cent per annum, and deposit the proceeds. Assign the mortgage to the bank which you received with above note in Transaction 217. See Discount Tickets, page 40. 224. Pay cash for bookkeeper's salary, $25. 225. Draw a check in your own favor for $100, also a check favor A. H. Norton for $100 in payment of estimated salaries to date. Proceed as in Transaction 85, having these checks certified. 226. Pay cash for shipping clerk's salary, $12. 227. Assign your insurance policy received in Transaction 154, to the firm that pur- chased the warehouse and collect cash for three-fourths of the premium, giving a receipt for same. 228. As you are about to dissolve partnership, prepare a Notice of Dissolution of Partnership for publication in the "School News," and hand the same to your teacher. Pay cash in the usual manner for the publication, $2.50, and for previous advertising, $5, mak- ing a total of $7.50, taking a receipt. See Dissolution of Partnership, page 72. 229. Deposit all cash on hand. Prove and balance cash. Post your ledger, rule up all personal accounts that are in balance, and take a trial bal- ance. 230. Make a balance sheet, without inventories, and close your ledger, giving each partner credit for his share of the net gain. 231. Write a check to each partner for his present investment, and dispose of the checks as in Transaction 85, having them certified. Indorse and pass to the teacher your three certified checks. Call for your bank statement and paid checks and verify the same. Follow the direc- tions given at the close of Section Five regarding the verification and filing of cancelled checks. 92 ADVANCED ACCOUNTING QUESTIONS FOR REVIEW 1. What is a receipt? When should it be required? 2. What is the purpose of the signature card in banking? 3. What is the purpose of the deposit ticket? 4. How is the bank pass book used ? 5. What is the purpose of the bank check? 6. What three parties are related to a bank check? 7. How is the bank balance kept in the check book ? 8. What are indorsements on business papers? 9. How and when should bank checks be indorsed? 10. What is the purpose of a depositor's statement? 11. What is the process of certifying a bank check, and what is its value? 12. What three parties are related to a bank draft? 13. What is the purpose of a bank draft? 14. What is the purpose of a certificate of deposit? 15. What is the difference between sight drafts and time drafts? 16. What is the process of accepting a draft, and what is its purpose ? 17. What is the purpose of a lease? 18. What bills are usually written in connection with property that is delivered to a transportation company for shipment? 19. What papers are usually prepared at the transportation office in connection with property to be delivered? 20. What steps should be taken in verifying an invoice? 21. What is understood by trade discounts? 22. How are the terms of a sale usually expressed? 23. What is a memorandum of credit ? 24. What is a statement of account, and to what extent is it used? 25. What is an invoice of shipment? 26. What is a conignor's expense bill? 27. What is an account sales? 28. What special columns will be required in the sales book, if a part of the goods are sold on commission? 29. What two forms are used for keeping accounts with consignments? 30. In what book may we record memoranda of our contracts and agreements ? 31. What are included in the term Stocks? 32. How are the ownership and title of real estate shown? 33. When should a release of mortgage be used ? 34. What is a bill of sale? 35. What papers should be drawn in case of the formation of a partnership? 36. What notices should be sent, in case of a dissolution of partnership? SET SEVEN. Special Column Books. The following set has been prepared to present in a practical manner the general rou- tine of a wholesale dealer, and to illustrate the use of each book as a book of original entry, from which debits and credits are posted to the side ledgers and the general ledger. We will briefly describe the books used, and the process of posting from each one to the ledgers. If loose leaf blanks are used, the student should place sheets in binders as follows : In Journal Notes and Cash Book, one sheet special printed Journal, one sheet Bills Payable and Receivable, three sheets special printed Cash Book. In Purchase and Sales Book, one sheet special printed Purchase Journal, two sheets special printed Sales Journal. In Ledgers and Trial Balances, two sheets two account General Ledger with index sheet, one sheet two account Purchase Ledger with index sheet, two sheets two account Sales Ledger with index sheet, two sheets Journal ruling for trial balance on same card with one sheet six-column ruling for Balance Sheets. THE SPECIAL COLUMN JOURNAL The Journal is used for the opening entries and for such other entries as cannot be fully recorded in the other books. Besides the regular debit and credit columns, two special col- umns are arranged for occasional entries that relate to the purchase ledger and sales ledger. If a customer belonging to our sales ledger gives us a note or any other thing of value except cash to apply on his account, we would enter the transaction in the journal, debiting the proper title and extending the credit amount to "Sales Ledger Cr." column. If we give a note or any other thing of value except cash for credit to a firm belonging to our pur- chase ledger, we would journalize the transaction, extending the debit amount to "Purchase Ledger Dr." column, and crediting the proper title. Merchandise returned to us by any of our customers or allowances made by us to them on account, would be journalized, debiting "Mdse." and extending the credit to "Sales Ledger Cr." column. Credits to us for merchandise returned or other allowances to us by firms belonging to our purchase ledger, should be extended to the "Purchase Ledger Dr." column, and credited to "Mdse." Before posting from the journal, the special columns should be added and their totals should be carried to the general columns, as in the model page of the journal under date of Nov. 3. THE SPECIAL COLUMN CASH BOOK The cash book may have any number of special columns, in order to group entries of the same kind and avoid so many postings to the ledger. In this set we have arranged for four money columns on the debit side, and five on the credit side. Cash received from a firm belonging to the sales ledger, will be extended to "Sales Led- ger Cr." column. If the firm deducts a cash discount, as in the case of James Lee (sixth entry), the amount of discount is extended to "Mdse. Dis. Dr." column, and the full amount of his invoice to "Sales Ledger Cr.'' column. In a business where frequent discounts are al- lowed on merchandise purchases and sales, the title "Merchandise Discount" should be used for such discounts. Interest paid or received on notes or discounts allowed on notes and drafts, should be classed as "Interest and Discount." Cash received for sundry small sales not entered in the sales journal, will be extended to "Mdse. Cr." column. Cash received from other sources than sales of merchandise and sales ledger accounts, should be extended to "General" column. Cash paid to a firm belonging to the purchase ledger, should be extended to "Purchase Ledger Dr." column, the amount of the bill before discount being used. If any discount is deducted, it should be extended to "Mdse. Dis. Cr." column. Cash paid for expense items —93- 94 ADVANCED ACCOUNTING should be extended to "Expense Dr." column. Cash paid for merchandise not entered in the purchase book, such as freight and drayage charges, should be extended to "Mdse. Dr." col- umn. Other cash payments should be extended to "General" column. Before balancing cash and posting, the totals of the special columns should be carried into the general columns. The total of "Mdse. Dis. Dr." should be carried to the credit side of Cash in the general column, with the explanation "Contra total.'' The total of "Mdse. Dis. Cr." should be carried to the debit side of Cash in the general column, with the ex- planation "Contra total." The cash balance will then appear in the general column. (The cash book is illustrated on pages 98 and 99.) THE PURCHASE JOURNAL In a business where there are many purchases of merchandise, it saves work to record them in a separate book, called a "Purchase Journal" (also called an "Invoice Book"). If an invoice or bill accompanies tke goods, the purchase is not itemized in the purchase book : as the filing of the itemized invoice will be a sufficient record of the items and prices. A purchase journal may be kept with regular journal rulings; but business men who watch discount offers and maturities of their bills, require special columns in the purchase journal, showing when bills must be paid in order to claim the cash discount offered, and how much must be paid after deducting the discount. The total of the face amount of the bills is carried to the general ledger to the debit of "Merchandise" and the credit of "Pur- chase Ledger." The amounts in the other columns of the purchase journal are merely mem- orandum entries for reference, and are not posted. If a purchase is not accompanied by an invoice and requires itemizing in the purchase journal, the items and prices can be entered in "Remarks" column. THE SALES JOURNAL Bills or invoices for sales at wholesale should be copied in the Sales Book. The copies may be written, or, if copying ink is used, may be taken in an impression book. Duplicate bills may also be secured by taking carbon copies. In the present set, it is assumed that the entries in the Sales Journal are taken from carbon duplicates which need not be prepared by the student. His entries should be made as illustrated on page 97. If a cash sale of sundry small items is made without billing, it will not appear in the duplicate sales book, and hence will not be recorded in the sales journal. In such case it will be entered only in the cash book, the amount being extended to "Mdse. Cr." column. If a discount is given on the sale at the time the sale is made, the discount should be de- ducted before the amount of the sale is extended to the amount column in the bill. If a discount is offered, conditional" upon payment being made at a specified time, a memorandum of the discount offer will be made in the space for "Terms," but no discount should be de- ducted from the bill when it is delivered to the buyer. The total of the Sales Ledger column in the sales journal for each posting period is posted to the general ledger to the debit of "Sales Ledger," and the credit of "Merchandise." The sales journal is illustrated on page 97, the entry in the "Remarks'' column of the first sale, 2/10 n/30, means a discount of two per cent is offered if the bill is paid in ten days, the bill being due without discount in thirty days. THE BILL BOOK The bill book in this set will be kept merely as an auxiliary book for itemizing bills re- ceivable and payable, the debits and credits being carried through the journal. SIDE LEDGERS In a business of any considerable magnitude it is convenient to divide the ledger into departments, instead of having all accounts in one book. This plan is well illustrated in the present business by having two side ledgers for special classes of accounts, and a general ledger that exhibits the general condition and success of the business. If there are many ac- counts with customers, it is convenient to group such accounts in one ledger called a "Sales Ledger." If we have a considerable number of creditors whom we owe for purchases on ac- count, it is convenient to have a "Purchase Le 'leer" for such accounts. SPECIAL COLUMN BOOKS 95 One account may be kept in the general ledger, showing the total debits and credits that are carried monthly to the sales ledger, and another account showing the total debits and credits that are carried to the purchase ledger, and thus the proprietor may ascertain the general condition of his business by a glance at the limited number of accounts in his general ledger, even when there may be hundreds of open accounts in his side ledgers. THE SALES LEDGER In posting to the sales ledger, each customer will be debited with the amount of his purchases, as recorded in the sales journal, and credited with cash or notes received from him and other allowances, as recorded in the cash book and journal. According to the best usage of wholesale merchants, every regular customer is given an account in the sales ledger, even if he buys for cash. He will be debited with the net amount of each sale and credited with the cash received, in order to show the merchant the volume of sales to each customer during the year. Such information is worth far more to the merchant than the cost of the extra labor of posting the debits and credits of cash cus- tomers. If the firm buying for cash is a transient customer, he would not have an account in the sales ledger. His entry, if in the sales journal, would be checked ( V ) and the corres- ponding entry in the cash book would also be checked, indicating that neither entry should be posted to the sales ledger. If frequent sales are made to firms who do not have regular ledger accounts, and the goods are sent out C. O. D., it is advisable to group such entries in the sales ledger under the title "C. O. D. Accounts." A line is reserved for each sale, the date, the name of the firm to whom the sale is made, the folio of the sales book, and the net amount of the sale being recorded on the debit side, the same line on the credit side being reserved for re- cording the payment of the bill. If payment is made in two or more installments, they will be entered in one line as illustrated in the following account, the initial of the book and the pages being given over the date and amount of each posted payment. C. O. D. ACCOUNTS 190- Nov. C. E. Horton, Galesburg J. A. Strong, Monmouth 190- 2 126 72 Nov. 3 3 154 69 C-12 C— 12 ! 2 ' $40-^ $86.72 C-12 ^ $45 12 126 72 THE PURCHASE LEDGER In posting to the purchase ledger, each firm is credited with the face amount of the purchases from him, as recorded in the purchase journal, and debited with cash, notes, and other allowances given him, as recorded in the cash book and journal. THE GENERAL LEDGER The accounts in the general ledger are posted from the journal, cash book, sales book, and purchase book. From the journal and cash book, all debits and credits are posted that are extended to the general columns. From the sales journal, the total of the sales for the given period are posted to the debit of "Sales Ledger," and the credit of "Merchandise." From the purchase journal the total of the purchases for the given period are posted to the debit of "Merchandise," and the credit of "Purchase Ledger." TRIAL BALANCES A trial balance of the general ledger and cash balance can be taken at any time with- out referring to the side ledgers. The accounts in the sales ledger are proven correct by making a trial balance or a list of the balances. The sales ledger will not be in balance un- less all accounts are closed, but the excess of the debit balances of the sales ledger will equal the debit excess of "Sales Ledger" account in the general ledger. The accounts in the pur- chase ledger may be tested in the same manner ; the excess of the credit balances of the pur- chase ledger will equal the credit excess of "Purchase Ledger" account in the general ledger. 96 ADVANCED ACCOUNTING A PAGE OF THE JOURNAL "ZS Z^y /9 - % ~~& ^.-^uA^t^^J^y- c^y^e^y^A^^ _^tA«^t»d/ c^^U^Cc^A^ ^T J / 12- %Cd^. s • JOOL^JL- ty J /Ye-Ce^ ay/' \f cYay^- sl, ~-/a^i-^ tfm/nnr+'-i. ^ / 2 i/ ^3a*£<^ /Yo-is- 'fO - t3f /£T0O 7* '3/ SO 2$ i< "t5 j^/'/^t^cn^ ¥0 f'« 2 2 sv J fa J / -6. aJy^ Q2a^ /fo-v J /fO~ J0 ft Si £5 'tf- SO ^5 SY 7* 2 7 '7 SO / / 7/ 6s~ ;*t 7 2 7¥i 72 so 5- SP 50 —r T WfrnU* J&j* 7 £2 3/S3 |M fy* ¥ i-/vy ?2 LEFT FOLIO OF THE PURCHASE JOURNAL J&r 2l Cfs^aty&r' ~rVO/, SPECIAL COLUMN BOOKS 99 RIGHT FOLIO OF THE CASH BOOK ?sU /? Si £^.J&&*iasi**l i £ <£ gr fa J JZ^%*CUrzy. 250 s-o/ SO 3 5V so 3/ SO/ / 7 £ s 7* 50 fo 7° 52 2&> s ££L £& 2f7 so 'jA ,? /.*- j & 30 7 s 35 2S so IS & 7 sz <* £& RIGHT FOLIO OF THE PURCHASE JOURNAL *&&&. of 0-0-. 2 7 if 2? tSCesi^y^T-**^ /'/?. f /SoLa.. S% /O t&4 / hest'.30oLl- oOLjsC^S 7 // /3 7 7 If 7 23 52 f £2/ fr 33 7* ?3 Oc£rrL*asi>rz4S 6£ut^ fy4, brokerage %. Note. — Charge account with "Cedar Valley Bonds." "Brokerage %," means that T /i oi 1 per cent, or 25 cents per $100, is charged for purchasing. 3. We have presented to the Company treasurer, coupons for quarterly interest, at 6 per cent on $3000 of Parkville Water Works Bonds, held by us, and received his check in payment of same. 4. We have paid with our check, an assessment of 5 per cent on 20 shares of Oakdale Creamery stock, held by us. 5. The Secretary of the Ridgeway Coal Co. has handed us a check for our dividend of 6 per cent on 15 shares of that stock held by us. 6. We have subscribed for 25 shares of stock in the Lake Park Improvement Co., and have given our check, for the first in- stallment of 20 per cent. 7. Haynes & Welch have sold for us to John H. Rice, on his note at 60 days, 12 shares of Consolidated Gas Co. stock at 85, brokerage %■ 8. We have deposited coupons for quar- terly interest on $8000 of Illinois Five Per Cents, held by us. Note. — "Illinois Five Per Cents" implies State bonds of 111. bearing interest at 5 per cent. Banks receive coupons on standard bonds of this class as cash, making no charge for collection. The bank is here charged with the deposit of "111. Five Per Cents" credited. 9. The Globe Printing Co., in which we hold 20 shares, has declared a dividend of 8 per cent, and we have received the Secre- tary's check for the amount. 10. We have transferred to Fenton & Davis, to apply on our account, 5 shares of "Ridgeway Coal'' at 85. 11. Our bank reports the collection of A. D. Bennett's acceptance of $176.14, hav- ing placed the amount, less collection charges, 50 cents, to Qur credit. 12. Settled our account with S. A. Ellis & Co. by handing them a check for $150 and our acceptance at 30 days for $85.60. 13. The Farmer's Bank presents for col- lection our note, favor of Farnham & Co., for $240, with accrued interest, $7.50. We give our check for the amount. 14. Harper & Co., our brokers, have sold for us 40 shares "Union Copper" at 81, and have remitted bank draft for pro- ceeds, less brokerage, %. 108 ADVANCED ACCOUNTING Drill No. 14. STOCK AND BOND ACCOUNTS— Continued TRANSACTIONS FOR JOURNALIZING, OCTOBER, 19- 1. Chas. S. Miller & Co. have sold for us, 40 shares of Hocking Valley at 46j4, brokerage }4 > an d remitted proceeds in cash. 2. We have paid with our check an ad- ditional installment of 25 per cent on our 25 shares of Lake Park Improvement Stock. 3. T. W. Scott has transferred to us to be applied on his account, 5 shares of paid up stock in the Suburban Transit Co. at 58. 4. Haynes & Welch have sold for us, $2500 in C, R. I. & P. R. R. Bonds, at 95, brokerage Ys, applying proceeds to our ac- count. 5. We have received a check for quar- terly interest at 6 per cent on the $5000 Cedar Valley Bonds held by us. 6. We have sold our real estate property at 76 Walnut Ave. to Harmer & Co. for $2500, receiving in payment 20 shares of stock in the Union Copper Mining Co. at 45* and their check for the balance. 7. B. F. Nelson, partner, has increased his investment by transferring to the firm, $2000 of Suburban Transit First Mortgage Bonds at 9Sy 2 . 8. We have bought through Yates & Walsh, brokers, 500 shares in the Bonaven- ture Oil Co., of Beaumont, Texas, at 75 cents per share, and have drawn our check in payment for the same, including their brokerage of 5 per cent on cost. Note.— In the case of mining and other stocks sold at a very low percentage of their par value, brokers charge brokerage or "Commission" on the cost instead of the par value of the shares. 9. We have sold to J. W. Moore, 10 shares of stock in the Hall Manufacturing Co. at 75 taking his note at 60 days for one- half the amount, and his check for the bal- ance. 10. We have purchased the residence property at No. 56 Poplar St. for $3500. We have given in payment $2000 in Subur- ban Transit Co. Bonds at par, 10 shares of Merchants Bank Stock at 105, and our check for balance. 11. An assessment of 15 cents per share has been levied on the stock of the Bona ven- ture Oil Co., Beaumont, Texas. We remit Postal Money Order for the required amount on our 500 Shares, paying cash for money order and also for fee, 25 cents. 12. We have given our check for $41.20 for taxes on our property at No. 56 Poplar St. 13. J. S. Enfield has transferred to us 5 shares of stock in the Drover's Bank at 110, to apply as a payment on his note of Jan. 1, in our favor. 14. We hold $1500 in Ray Co., Iowa, 6 per cent bonds, which have matured, and the County Treasurer has forwarded us a N. Y. draft for their face, plus the last quarter's interest. 15. Our bank reports the collection of George Dean's note, $146.50, with accrued interest, $7.20. Collection charges 50 cts. ; proceeds credited to us. 16. Haynes & Welch have purchased on our account 250 shares of "Diamond Match Preferred" at 71 #, brokerage Ys- 17. We have received from the Secre- tary of the Union Copper Mining Co., Den- ver, Colorado, a check for a five per cent dividend on the 20 shares held by us. 18. Our bank reports collection of C. H. Milton's acceptance in our favor for $135.20, placing proceeds to our credit, less 50 cents for collection. 19. "Diamond Match Preferred' has advanced, and we have directed Haynes & Welch to close out the shares purchased for us on account in Transaction 16, at the market quotation, 79^. They report sale of stock with brokerage charge y%, pro- ceeds to our credit. 20. We have given our check for $29.15 for advertising bill to date . JOURNALIZING DRILLS i 109 Drill No. 15. COMMISSION AND SHIPPING BUSINESS A general account with "Shipments" will be kept in this drill, which account will be deb- ited for the local market value of goods included in the shipments and for all expenses in- curred for crating, drayage, prepaid transportation, etc. ; and this account will be credited for receipts as shown by the several account sales. A separate account is kept with each consignment debiting it for all charges and cred- iting it for all sales pertaining to it. The consignments are designated by numbers in con- secutive order. An account will be kept with "Consignment Commissions" for all commissions received on the sale of consignment goods, and a separate account will be kept with "Produce Com- missions" for all commissions paid by us for the purchase of produce. TRANSACTIONS FOR JOURNALIZING, NOVEMBER, 19— 1. Shipped to the Producer's Commis- sion Co., Chicago, 1000 lbs. butter, local price 22c, to be sold as instructed. Paid cash for drayage on this shipment, 75c. (Charge "Shipment" for local value of but- ter and drayage, and credit "Mdse." and Cash.) 2. Seymour & Sons, St. Louis, remit account sales with cash for commission shipment of Oct. 25, $165.90. 3. We have paid cash for freight and drayage on a consignment of bananas (Con. No. 12) from L. Colenzo & Co., Chicago, $41.25. 4. Sold to H. H. Cole & Co., on account, a bill of goods amounting to $182.90, of which $134.30 is our merchandise, and the remainder belonging to Con. No. 9. 5. We render an account sales to C. B. Stuart & Co., Milwaukee, for Con. No. 6, $245.60, less storage charges $3.50 and commission $12.10, remitting our local check for the proceeds. (Charge Con. No. 6 and credit Storage, Commission, and Cash. ) 6. Shipped to S. F. Baker & Co., St. Louis, produce as per Shipment Register, $321.15, paying cash for drayage, $1.25. 7. Sold to N. Smith, on account, goods from Con. No. 12, as billed, $59.20. 8. We have received from the American Fruit Co., Cleveland, Ohio, a carload com- mission consignment of cranberries (Con. No. 13.) We pay cash for freight, dray- age, and insurance, $72.25. 9. The goods of Con. No. 11 have been closed out, and we send account sales to the consignors for $291.60, deducting charges for commission at 5 per cent and storage $3.75, and sending our note at 30 days for the net proceeds. 10. J. R. Joyce & Co. send account sales of a shipment of butter recently sent them, with their note at 60 days for the net pro- ceeds, $214.60. 11. We have shipped to the Union Com- mission Co., Chicago, a consignment of 3000 lbs. of live poultry; local market price 5^4 cents, and paying drayage in cash $1.75. 12. We send an account sales of Con. No. 10, $429.50, deducting com. 5 per cent, storage $2.15, and remitting our check on First National Bank, Chicago, for the pro- ceeds. 13. Paid bill of St. Louis Paper Co., for wrapping paper for store use, $29.60. 14. Sold to Baker & Scott goods per bill rendered, as follows : Merchandise $217.30, and goods of Con. 13 $24.50. They hand us their check for $200; balance on account at 30 days. 15. We shipped a commission consign- ment of 1500 doz. eggs to the Blair Pro- duce Co., Cincinnati, market price 17c. 16. We have bought on our own ac- count, 25 boxes of oranges belonging to Con. 14, at $3.15. 17. Rec'd of Chicago Fruit Co. a com- mission consignment of Florida oranges (Con. No. 14), paying cash for freight and drayage on same, $31.50. 18. Sold to H. Loretto & Co. goods of Con. No. 12, $58.60, and Con. No. 13, $21.60, and Con. No. 14, $25. They hand us their check for $75, balance on account. no ADVANCED ACCOUNTING Drill No. 16. COMMISSION AND SHIPPING BUSINESS— Continued TRANSACTIONS FOR JOURNALIZING, DECEMBER, 19- 1. A fire recently occurred in our pro- duce warehouse, damage as adjusted $169.50, of which $75 was for our own pro- duce and the remainder for goods of Con. No. 8. We receive from the Continental Insurance Co., a check for the full amount. 2. We send to the consignors our ac- count sales for Con. No. 8, and our check on First Nat. Bank, Chicago, for $135.80, for net proceeds. Our commission on this consignment is $7, and our charge for stor- age is $1.75. 3. We have sent A. W. Cook & Co., to be applied on our account, a sight draft on the Union Com. Co. for $125. 4. We have shipped to the Union Com. Co., Chicago, a commission consignment of 50 brls. potatoes @ $1.60, and 15 tons baled hay @ $12.50, paying cash for dray- age, $2.25. 5. Barnes & Dobson, of Chicago, render account sales for shipment of produce re- cently sent them, reporting proceeds, $92.60. They send us a 30 day draft on L. Robinson & Co. for the amount, which the latter accept. 6. We have sold to the Central Pro- vision Co. a bill of flour and produce amounting to $159.75. They remit to us our acceptance in favor of L. Day & Co. for $125, assigned to them, and their check for balance. 7. The Acme Printing and Binding Co. present bill of $42.50 for specially manufac- tured blank books, to be used in our office. We hand them our check for a sum sufficient to cover this bill, and a previous balance in their favor of $61.20. 8. A. W. Snyder & Co. render an ac- count sales and remit their check for $125.70 and their acceptance in our favor for $235.40, to cover the net proceeds of our shipment to them. 9. J. W. Nelson, owner of the ware- house rented by us, presents a bill for one month's rent, $65. We hand him our check for the amount less the balance due on his personal account to date, $21.40, which is passed to his credit. 10. We have purchased of H. B. Brown 12 shares of "Union Insurance Co." stock at $68. He takes up his note for $360, favor of Chas. Walker and assigned to us, with ac- crued interest, $28.40, and we give our check on First Nat. Bank, Chicago, for balance. 11. We have handed to L. Mason, City Treasurer, our check for City Taxes on our stock and fixtures, $291.75. 12. We have sold to A. M. Smith & Co. on their note at 30 days, goods per bill ren- dered as follows: Mdse. $309.45, fruit (Con. 13) $25.60, fruit (Con. 14) $31.50. 13. A. W. Nellis & Co. present bill for stationery and supplies, etc., for office and store as follows: Wrapping twine $2.70, ink stand 75c, stencil outfit (Shipping De- partment) $2.50, copying press $7.90, ink $2.25, mucilage 75c, pen racks 50c, paper binders 25c, rubber bands 50c, waste paper baskets $1.75, paper bags $3.75. The bill is paid by check. Note. — Let the student use his careful judgment as to the distribution of this bill among the several accounts carried. 14. A. T. Johnson & Co. send account sales for recent shipment to them with their note at 30 days for proceeds, $81.60. 15. We have shipped a commission con- signment to A. L. Van Ness & Co., Omaha, Neb., consisting of 50 brls. apples at $2.75 (Mdse.) and 40 boxes oranges (Con. No. 14) at $3.25, paying cash for drayage, $1.75. 16. R. M. Day & Co. report account sales of our recent shipment, proceeds $247.20. They send us our note previously given in their favor for $150, with accrued interest $14.20, and their check for balance. 17. Paid S. Peters cash for storage of produce in his warehouse to Jan. 1, $17.60. 18. We have bought on account of A. L. Sanderson a safe for use in our Ship- ping Department, $45. 19. We have received from the Secre- tary of the Consolidated Gas Co. a check for dividend at 8 per cent on 15 shares of that stock held by us. 20. A. N. Miller settles his account to date, $126.90, by delivering merchandise billed at $80, and his note at 30 days for balance. JOURNALIZING DRILLS 111 Drill No. 17. CORRECTION ENTRIES The accountant should understand most clearly, that nothing in the way of erasures, crossing out, or otherwise obliterating entries is to be tolerated under any circumstances. In the case of an error in computation, the nature of which is evident by the data given in the entry, the figure or figures in error may be cancelled by a light stroke of the pen and the cor- rect figures written immediately above, the correction being made in red ink and in such a manner as not to render illegible the corrected figures. To a thinking student the reasons for this rule, rigid though it may appear, hardly need pointing out. It should be evident that no reliability can be placed in any set of books, wherein the accountant has indulged in the practice of altering and erasing the records at his pleasure. Furthermore, such a set of books will not stand for a moment in any court of law. Cross Entries. The general method of correcting a wrong entry, or of re-adjusting an entry to a new state of facts, is (with the exception of the mere clerical errors already alluded to) by means of an entirely new entry, usually known to the bookkeeper as a "cross entry.'' The explanation in the cross entry should always refer, by page or date to the orig- inal entry which it is intended to correct, and some kind of a marginal note, as "Void, Corrected on page — ," preferably in red ink, should be made in the original entry, referring to the latter entry by which it is corrected. This will render the correction traceable and in- telligible to an auditor, or other person why may have to check up the books. Offsetting or Adjusting Entries are those required by errors in billing, failure in the delivery of goods, dishonor of business papers, etc. As those are not the result of errors in bookkeeping, the cross references in red ink are unnecessary. A general rule for making these corrections and adjustment entries, may be stated thus : Make such debits and credits in the adjustment entry as will correct the inequality caused by the original entry. Thus, if A, through any cause, as shortage, defect in goods, etc., has been overcharged in the original entry for merchandise to the amount of $20, the adjusting entry must credit him and debit Mdse. for that amount. Or, supposing that C. Miller is charged for $25 worth of goods that should have been charged to R. Smith, the adjusting entry would be "R. Smith to C. Miller, 25." Reverse Entry. It may happen that the bookkeeper may journalize a transaction in- correctly, and in such a way that (if the entry has been posted) the error cannot be cor- rected by a mere cross entry. Thus, suppose a transaction which should have been journal- ized "Mdse to Bills Payable $75.60," had been journalized "Bills Receivable to Mdse. $75.60" and that the wrong entry had been posted to the ledger. A single cross entry which would set the books right is not feasible here. What we should do is to make a reverse entry, that is, an entry which reverses or neutralizes the incorrect entry, thus : "Mdse. to Bills Receivable $75.60." This entry when posted leaves the books as they were before the error was made, and it now only remains to make the correct entry and post it. The compound reverse entry is not a difficult matter. For instance, suppose a customer had delivered us produce in payment of his note for $50 with accrued interest $3.75, and that instead of the correct entry, the bookkeeper has journalized the transaction as follows : Produce 50. Interest 3.75 Bills Payable. 53.75 Several errors are evident in this entry, but the cross entry: Bills Payable 53.75 Produce ..... 50. Interest 3.75 neutralizes the original entry, and we now journalize the transaction correctly and post both entries to the ledger. We should write the word "Void, corrected page — " in red ink across the original entry, and after the reverse entry, the explanation "To neutralize void entry page—." The reverse entry merely debits the account or accounts that were credited in the incor- rect entry and corrects those that were debited and for the same amount. 112 ADVANCED ACCOUNTING TRANSACTIONS FOR JOURNALIZING, OCTOBER, 19— 1. C. H. Stone & Co. have called atten- tion to an error in our bill of Aug. 21, in which we charge them 24 cents per pound for 250 lbs. butter instead of 22^4 cents, the agreed price. We send memorandum of credit for the amount. Note. — In cases of this kind, if the bill has not been paid, it is customary to send the customer a "Memorandum of Credit" or itemized statement, as "250 lb. butter, at V/z cts. (overcharge), $3.75," and credit the customer's account, at the same time debiting the property account. If the bill has been paid, the cash may be remitted, the cash account, of course, being credited. 2. We have received from A. W. Nel- son & Sons, memo, of credit for 15 cases canned corn at $2.50, which we found un- salable and returned. 3. The Consumers' Coal Co. hand us a check for $25 as a rebate on a lot of coal re- cently purchased from them for cash, and which proved of inferior quality. The coal had been charged to Expense. 4. Through our error, C. W. Miller & Co. were charged iy 2 c per lb. on 275 lbs. N. Y. Cheese recently sold them, instead of 17>^c, the market price. We have called their attention to the error and have sent them a corrected bill. 5. Stacey & Dean call our attention to an error in their favor on a bill of flour re- cently purchased of them for cash. The bill was for 20 brls. XX at $4.50, and 30 brls. XXX at $5.25 ; whereas the goods de- livered consisted of "20 brls. XXX" and "30 brls. XX." We remit our check for the amount of the overcharge. 6. On Sept. 30 we gave our check to S. Hill for $79.50, rent to date for the storage warehouse at No. 15 Main St., which we charged to Expense. It has been found that an error was made in the rent computation, and that the amount due was $86.25. We hand him a check for the discrepancy. 7. We have reported an error of $17.60 in our favor in an account sales recently sent us with cash remittance by the Union Com. Co. They send us check for the amount. 8. Belden & Stowe call our attention to an error in our account sales of Con. 19, in which we charged them $26.50 for commis- sion, instead of $23.40, the correct amount. As the proceeds were credited to their ac- count we send them mem. of credit for the error. Query. — Is the balance of the account with Con. 19 affected by the error? 9. Ames & Allen report shortage and breakage amounting to $11.20 in a bill of crockery recently sold them on account. We send them mem. of credit for amount. 10. We recently gave our check in pay- ment of our note, favor of H. C. Bowen, for $75 and accrued interest $14.20. It is now found that the computation of interest was wrong, and that we should have paid but $11.15. Mr. Bowen directs us to charge the amount of the error to his account. 11. George Dubois recently paid his note in our favor for $45, with accrued in- terest $7.20, by delivering to us 5 tons of hay for our delivery team. It is now found that there was an excess of $2.15 in the interest charge, which amount we credit to his account. 12. In remitting on Sept. 29 for a bill of Mdse. purchased of Armstrong & Co., on account, we sent them a check for $79.10 instead of $71.90. They notify us of the error and that they have passed the amount to our credit. The correct entry was made on our books at the time, the error being merely a clerical one in making out the check. Note. — Had the error been discovered by Arm- strong & Co. before the check was deposited in bank it would have been returned to us for correction. Otherwise, a check for the discrepancy might be sent, or, in the case of an open account, a mem. of credit or a mere notification by letter. 13. George Stillwell settled his account with us by note at 30 days in accordance with our statement rendered for $72.50, and we deposited the note in bank, receiving credit thereon. It is now discovered that our statement of his account was wrong and that he owed us but $64.25. It is arranged that he is to pay the note at maturity and receive credit for the discrepancy. 14. A bill of flour amounting to $29.50 which we sold on account to Chas. A. Smith, was erroneously charged to the ac- count of C. M. Smith. C. M. Smith after- wards settled his account in cash, but later discovered the error, upon which we hand him our check for the amount. Note. — Chas. A. Smith must be charged with an itemized bill of the goods, as they were delivered to him. But what account should be credited in the adjustment entry, and why? JOURNALIZING DRILLS 113 15. On Aug. 21, C. Halliday settled his account by giving- us his 30 day acceptance for $74.60. The transaction was journal- ized, "Bills Pay. to C. Haliiday $74.60," and the entry was afterwards posted. What adjustment entry is now necessary. 16. C. S. Walker returns a statement of account recently sent him, calling our atten- tion to the fact that a charge for 3 dozen cans tomatoes @ $1.10 and a sack of flour @ $1.65 is erroneous, and that these items were not purchased by him. On investiga- tion, it is found that these goods should have been billed and charged to C. A. Walters. 17. On July 3, we sold to N. S. Hill, on his note at 30 days, 5 shares of "Union Copper" at 82. An entry was made "Stocks to Bills Payable $410" and this entry was posted. 18. A. P. Harper, our produce pur- chasing agent, recently rendered an account for goods purchased and delivered, "$790 with commission at 5 per cent, $26.50." We handed him our check for the commis- sion as charged, but Mr. Harper has discov- ered the error and asks for an additional check to adjust the account, which is now given him. 19. We owed Carter, French & Co., for goods purchased amounting to $240.60 sub- ject to a discount of 6 per cent. Through a misapprehension of the rate, we deducted 10 per cent, remitted our check for the net amount, and closed the account. Our atten- tion being called to the error, we send them our che^k to cover the excess of discount deducted. 20. On Aug. 10, we settled our account to date with Hall & Davis by remitting our acceptance at 30 days for $173.65. An error has been found in H. & D.'s statement, the balance at that time being but $161.15. They return the acceptance for correction, and we send them another for the correct amount. Note. — The accounts could be adjusted by an entry debiting Hall & Davis and crediting Bills Payable for the amount of the error ; but as this would make entries difficult to trace in adjusting the books, it is better to reverse the original entry and then make the proper entry when the new acceptance is issued. Drill No. 18. CORRECTION ENTRIES, ETC.— Continued TRANSACTIONS FOR JOURNALIZING, NOVEMBER, 19— 1. The Merchants Bank notifies us that a personal check in our favor for $62.75, given us by H. C. Green, Evanston, 111., and afterwards deposited with the bank, has been returned unpaid on account of "no funds" in the bank on which it was drawn. The protest fees are $1.75. We hand the bank our check for the amount of check and fees. (Use the title "Dishonored Paper.'') Note. — Checks are usually protested when the payee and drawer live in different states. 2. On Oct. 21, we discounted at the Merchants Bank, J. P. Harper's acceptance for $175, the proceeds less discount, $3.50, being placed to our credit. The transaction was erroneously entered as follows : Cash 171.50 Interest 3.50 Bills Pay. . . . 175.00 This entry was posted and passed through the books. The necessary cross entry and corrections should now be made. 3. A. C. Kennedy & Co.'s note for $245 with interest, $17.20, due Nov. 1, which we deposited for discount at the First Nat. Bank, Chicago, on Sept. 22, .has been dis- honored and returned to us. We send the bank our check for the amount plus protest fees, $1.50. Note. — The accounts with Bills Rec. and Interest are not affected, we merely charge "Dishonored Paper," and credit the bank. 4. On Aug. 28, we credited Con. 17 with a sale of goods amounting to $21.60, which should have been credited to Con. 19. 5. H. C. Green has sent us a Chicago draft for $64.50 for his check (with protest fees) returned to us dishonored, on the 1st inst. Mr. G. Explains that he was out of the city at the time the check was presented for payment, and was not aware that his bank balance was so low. 6. . On October 21, R. Wilson settled his account per our statement rendered for $176.20 by giving his acceptance at 60 days. An error has been found in the statement, the true balance of the account being but $147.15. We remit our check for the dis- crepancy. 114 ADVANCED ACCOUNTING 7. H. C. Wells & Co., to whom we rend- ered an account sales of Con. 18, call our attention to an error in computing the sales bv which we credited the consignment with $242.60 instead of $342.60. We had sent them our check for proceeds. Our commis- sion charge is 5 per cent. The original entry by which this consignment was closed was as follows : Con. 18 242.60 Con. Com 12.13 Storage 6.40 Cash 224.07 We make the necessary adjustment entry and remit our check to the consignors for the discrepancy. Note. — As the errors in this original entry are merely the result of a wrong computation, a reverse entry is unnecessary. The proper adjustment is ef- fected by simply debiting "Con. 18" for the error in sales and crediting "Cash" for the amount of the re- mittance, and "Con. Commissions" for the increased commission. 8. A. P. Jones recently paid his note in our favor for $76.50 and accrued interest $18.90. The interest computation was er- roneous and should have been $12.40. We remit our check on First Nat. Bank, Chi- cago, for the overcharge. 9. A. C. Porter & Co. recently sent us an account sales for a shipment of potatoes, the net proceeds of which amount to $340.60. We have found an error in their extensions, which shows that the net pro- ceeds should have been $410.30. They send us a mem. of credit for the amount of the error. 10. An invoice .of crockery amounting to $372.90 which we recently purchased of Falkner Bros., on our acceptance at 30 days, proved to be not up to sample, and we have demanded a rebate of $25 which they have allowed, sending us a mem. of credit for that amount. 11. On October 23, C. H. Hopper sent us a check for $75.60 to pay for a bill of Mdse. purchased of us Sept. 26, for that amount. Mr. Hopper now puts in a claim for our regular 30 day discount of 6 per cent, which we allow, sending a mem. of credit for the amount. 12. On Sept. 24, we purchased an -office chair for cash, $16.50, which was charged to Expense, instead of to Office Fixtures, and the entry was posted. It is now cor- rected by a cross entry. 13. W T e recently sent a check on the First Nat. Bank, Chicago, to settle our bal- ance in favor of H. C. Moore & Co. for $146.75. By a mistake of the cashier, our check was drawn for $175.46 and so entered on our books. H. C. Moore & Co. have re- mitted us their check for the excess. 14. In sending a commission shipment of eggs to Hall & Co., we charge the "Ship- ments" account with 70 cases of eggs at $3.20, instead of 90 cases, the quantity shipped. 15. We have reported a shortage of 3 cases of canned corn billed at $1.95 per case, in a recent invoice of Mdse. purchased of Hanna & Co. on account, and they send us a mem. of credit for the amount. 16. We recently paid with our check our note, favor Day & Co. for $450 with in- terest $25, and the bookkeeper made the entry : Bills Receivable 425 Interest 50 Cash 475 and the entry in this form was passed through the books. We make necessary cor- rection entries. 17. On Oct. 26, we discounted our note at the Merchants Bank for $250, and re- ceived credit for the proceeds less 60 days bank discount at 6 per cent. It was after- ward discovered that the discount was charged to "Discount" instead of to "In- terest." The correction entry is now made. 18. On Oct. 31, A. P. Crane settled his account with his acceptance at 60 days for $224.60. The transaction was inadvertently journalized "A. P. Crane to Bills Payable $224.60." Make necessary entries for cor- rection. 19. C. B. Hale & Co. recently rendered us a statement for balance of account, $273.80, and we settled Oct. 29, by giving them our note at 30 days. An error has since been discovered in the statement which should have been for a balance of $259.40. They return the note and we issue another for the correct amount. 20. A bill of produce amounting to $7.90, which was sold and delivered to N. P. Wilson on Oct. 28, was charged to the account of S. P. Williams. Mr. Williams paid his bill without noticing the incorrect charge, but discovered it later, and we gave him our check for the amount. flercantile Terms. We have not attempted to give a dictionary of all the terms in use, but have selected a list of the more common words and phrases, and such as would seem of special utility to those preparing for business; nor have we given all the definitions that belong to these words. It has been our study to select only those definitions that apply particularly to the commercial use of each term or phrase. It would be well to use these lists as lessons for oral and written spelling and definition, until the scholar can write correctly and use correctly each word in the list. A CCEPT. — To agree to pay a draft at maturity. Acceptance. — An agreement by signature to pay a draft or bill according to its terms. Also the term ap- plied to the bill after being accepted. Accommodation. — The loan of money or of one's name merely as a favor. Accommodation Paper. — Notes or bills given without actual indebtedness or consideration, to be used for the accommodation of some other person. Account. — The arrangement of debits and credits un- der the name of a person or some appropriate title. Accountant. — One skilled in the art of keeping ac- counts. Account Current. — A running account. A detailed statement of the transactions between two persons or firms, usually expressed in the form of debtor and creditor Account Sales. — An itemized statement of sales and ex- penses, sent by a commission merchant to his prin- cipal. Accrued— Interest accumulated and unpaid. Acknowledgement. — A formal admission made before an officer, that the act described was voluntarily done. The officer's certificate of the admission is also called an acknowledgement. Actuary. — An officer of life insurance companies, skilled in computing annuities. Adjustment. — A general settlement; usually of a loss, or of a disputed account. Administrator. — One that is legally appointed to settle an estate. Adulteration. — The act of mixing spurious articles with a genuine commodity. Ad Valorem. — According to value. A custom house term, relating to the estimating of duties upon the value of imported goods. Advance. — Increase in prices. Money paid on goods before their delivery. Adventure. — A shipment of goods to be sold on the shipper's risk. Advice. — Information or counsel given, usually relative to the sale or purchase of goods. Affidavit. — A written declaration under oath. Agent.— One who acts for another, usually in the tran- saction of business. Allowance. — A deduction made for various reasons. A * stipulated sum granted to a person. Annuity. — A sum of money payable at stated periods. Ante-date. — To date before the present time. Appraisal. — The act of placing a value on goods. Appraiser. — One who makes the appraisal. Appurtenance. — A minor improvement, a right or a privilege belonging to any property and passing with it from one owner to another. Arbitration. — The adjustment of a disputed point by a person or persons chosen by the parties in dispute. Arrears. — Dues not paid at maturity. Assess. — To value property for the purpose of taxation. To levy a tax. Assessor. — One who values the property. Assets. — Property values or resources of any kind. Assignee. — A person to whom the property of a bank- rupt or an insolvent debtor is transferred for the benefit of the insolvent's creditors. Assignment. — The act of transfering property to the as- signee. Assignor. — One who makes an assignment. Assortment. — A variety of sorts or kinds. Assume. — To become liable for the promises of another. Assure. — The same as insure, which is written more frequently. Attachment. — A warrant for the purpose of seizing a man's person or property. Attorney. — A lawyer. An agent usually appointed by written authority under seal, and called an attorney in fact. Auction. — A sale to the highest bidder. Auctioneer. — One who sells at auction. Audit. — To examine and prove accounts. Auditor. — An officer appointed by government, state ot county, or by any corporation, to examine claims upon the treasury, and to investigate the treasurer's accounts. Auxiliary, • — Applied to various account books that are kept as aids to the principal books. Avails. — The proceeds of property sold. Average. — An apportionment of a loss at sea amonj those interested in ship and cargo. The mean time of payment for several debts due at differen' times. Avoirdupois. — The common standard of weight for all articles except the precious metals and medicines. BAIL. — Surety for another; especially, surety for his presence on trial at a stated time. Bailment. — A delivery of goods to be held in trust. Balance. — A term used to denote the difference be- tween the sides of an account. Balance of Trade. — The difference between the value of the imports and exports of any country. Bank-book. — A pass-book carried by a depositor, n which the teller of a bank records deposits, and in which the book-keeper enters the paid checks at stated intervals, usually at the end of each month. -115— 116 ADVANCED ACCOUNTING Bank-Bills or Notes. — Promissory notes issued by banks, payable on demand, and used as money. Bankrupt.— One who is unable to pay his debts, and who fails in business. Bears. — Dealers in stocks and other commodities, who endeavor to bear down or diminish the prices. Bill. — A statement in writing, as a list of items bought or sold, or of services rendered. The common term applied to a note or draft. Bill of Exchange. — An order for the payment of money, usually drawn on a person or firm located in a foreign country, the term draft being used to designate bills that are payable in the same country in which they are drawn. Bill of Lading. — A written account of goods shipped and the conditions of shipment, having the signa- ture of the carrier's agent, and given to the shipper as a receipt. Bill of Sale. — A writing given by the seller to the buyer, transferring the ownership of personal prop- erty. Bills Rkceiyable. — Other people's notes and drafts due us. Bills Payable. — Our notes and acceptances due to other people. Board of Trade. — An association of business men for the regulation and advancement of commercial in- terests. Bona Fide. — In good faith. Bond. — A written instrument under seal, by which the party executing the bond binds himself and his heirs to the fulfillment of certain stipulations. Bonded Cars. — Cars containing imported goods under seal, on which the duty has not been paid. Bonded Goods. — Those which are stored in a bonded warehouse, or in bonded cars, the owner having given bonds securing the payment of import duties or of internal revenues, upon their removal or their arrival at some inland city of entry, and before a specified time. Bonded Warehouses. — Warehouses where goods are stored under bonds securing payment of duties or revenues. Bonus. — A premium given on a loan, or for any favor shown. Broker. — An agent who effects sales or purchases, or who makes loans and contracts for another. Also a term applied to one who deals in stocks. A broker does not usually have possession of the prop- erty which he sells or buys as agent. Brokerage.— A percentage charged by a broker for transacting business for another person. Bullion. — Uncoined gold or silver. Bulls.— Dealers who operate to raise the price of stocks or other commodities. Business. — Exchange of commodities and of commer- cial values. Also a term representing one's occupa- tion. /^APITAL. — The investment in business. Cargo. — The freight of a vessel. Cashier. — The officer who has charge of the finances of any business. The executive officer of a bank. Carrier. — One who conveys goods for others. Certificate. — A written voucher attesting to some fact; as a certificate of deposit, a certificate of stock. Certified Check. — One which has been certified or ac- cepted by the bank on which it is drawn, making the bank responsible for its payment. Charter. — A paper from government defining the rights and privileges of corporations. To hire or let an instrument of transportation; as a ship, a railway car. Chattel. — Any kind of property except real estate. Examples: merchandise, notes and accounts, ani- mals, leases of real estate, etc. Check. — An order on a bank drawn by a depositor. Clearance. — A custom house officer's certificate, show- ing that a vessel has been cleared, and has permit to sail. Clearing House. — The place where banks make ex- change of drafts and checks, and settle balances. Codicil. — A supplement to a will. Coin. — A piece of metal impressed with the government stamp, and used as money. Collaterals. — Pledges of stocks, notes or chattels, for security on loans and other indebtedness. Commerce. — Exchange of commodities Commercial Paper. — Bills of exchange, drafts and notes given in the course of trade. Commission. — A percentage given for the sale or pur- chase of goods, or the transaction of other business. Commodity. — A term relating to everything movable that is bought and sold. Examples: goods,, wares, merchandise, the products of lands and manufact- ures. Common Carrier. — One who for pay engages to trans- port goods for any person who chooses to employ him. Common Law. — Law based upon the precedent of usage, and not contained in the statutes enacted by legisla- tive bodies. Compact. — An agreement or contract between parties. Company. — A corporation. A term used in a firm name to designate other partners whose names are not given. Compromise. — To settle a claim by paying or receiving only a part of the amount. To agree upon a settle- ment based upon mutual concessions. Consideration. — The material cause of a contract. The thing promised, cr the reason for the promise. Consignee. — One to whom goods are sent. Consignment. — Merchandise consigned to an agent to be sold. Consignor. — One who sends or consigns the merchan dise. Consols. — The chief public stock of England, bearing 3 per cent interest. Consul. — An agent for a government, residing at a sea- port in a foreign country, and guarding the com- mercial interests of his own country. Contra. — On the opposite side. Contraband. — Unlawful. Articles prohibited from be- ing bought or sold. Contract. — An agreement based on a consideration, to do or not to do a certain thing. Copartnership. — The joining of two or more persons into one firm for the purpose of carrying on any enterprise. It has the same meaning as partner- ship. Copyright. — The right granted by government to an author to control the publication of any book or work. Corporation. — A number of persons associated togeth- er, composing a firm for conducting any enterprise specified in their charter. Correspondence. — An interchange'of letters. Correspondents. — Banking firms and collection agen- cies with whom a bank has accounts, are called its correspondents. Counterfeit. — A spurious bank bill; a forgery. Countersign. — To sign as a subordinate officer. Coupon. — An interest note or a certificate attached to a bond, which is cut off from the bond and collected when due. Coupon Bonds. — Bonds with interest coupons attached. Covenant. — A mutual agreement under seal. Credentials. — Testimonials giving authority. Credit.- — Trust given to a debtor. Mercantile reputa- tation entitling one to be trusted. The side of an account on which we enter all values received from the party represented by the title. Creditor. — One giving credit; one whom we owe. MERCANTILE TERMS 117 Currency. — Paper money as distinguished from coin. In a broader sense, the entire volume of money in circulation. Custom House. — A place where government duties are collected. Customs. — Taxes or duties levied by government upon goods imported or exported. DAYS OF GRACE.— An extension of time, usually three days, after a written obligation becomes 'Vie. Debit. — An entry on the debtor side of an account. Debt. — An amount due from one to another. Debtor. — One owing a debt. Decimal. — That which increases and decreases by tens. Deed. — A written contract under seal, usually transfer- ring the ownership of real estate. Defalcation. — Deduction or discount. Embezzlement of money by an officer having it in charge. Defaulter. — One who fails to account for money and property entrusted to him. Delivery. — The passing of money or goods to another. Deposit. — To commit to the care of another; especially to place money in bank subject to our order. Depositary. — One to whom something is entrusted. Deputy. — A person appointed to act for another. Diplomacy. — The art of conducting negotiations with foreign governments. Discount. — An allowance for payment of a debt before it is due. A sum prepaid as interest for the advance of money. To buy a note or account for less than its full amount. Dishonor. — A failure to pay an obligation when due. A failure to accept a draft when presented for accept- ance. Dividend. — The portion alloted to each stockholder in the division of profits. Donor. — One who gives or bestows a gift. Dormant. — Referring to a partner who takes no share in the public management of a business, hence not named in the firm, but who shares in the gains and losses. Dower. — The right of a widow to a life interest in one- third of all the real estate owned by her husband at any time after their marriage. Draft. — An order on an individual or a firm for the pay- ment of money. Drawee. — One to whom the draft is directed. Drawer. — The party drawing the draft and ordering payment. Due-Bil^. — A brief, written acknowledgement of a debt, having the effect of a promissory note. Duplicate. — An exact copy of anything. Duress. — Personal restraint, or fear of personal injury. Duties. — Taxes levied by the government on imports, and sometimes on exports. EARNEST. — Part of purchase money paid, or part of goods delivered to bind a verbal contract. Effects. — Property of any kind. Embargo. — A government order prohibiting ships from sailing from any port. Embarrassment. — Financial difficulty. Embezzlement. — A fraudulent appropriation of money entrusted to one's care. Emporium. — A commercial center. Endorse, or Indorse. — To write one's name on the back of a commercial paper. To receipt a partial payment on the back of a note or bill. Endorser, or Indorser. — The person who writes his name on the back of a commercial paper. Endorsement. — See Indorsement. Engross. — To copy in manuscript. Entry. — The record of a business transaction in an ac- count book. Equation. — The process of equalizing or averaging. Equity. — The science of right and justice, which often corrects the application of law in a particular case. Exchange. — The giving of one value for another. Tha process of remitting money values by means of bills and drafts. The discount or premium arising from the purchase or sale of different classes of paper. Execution. — A written direction given to an officer, au- thorizing him to enforce a judgment. The act of signing and sealing a legal iustrument. Executor. — One appointed by will to settle the estate of a person deceased. Exports — Articles sent out of the country. Extension. — An agreement between debtor and creditor, postponing the time of payment of a debt. FABRIC. — Any manufactured cloth; as, cotton or woolen fabrics. Face. — The amount expressed on a bill or note. Factor. — An agent to whom goods are consigned for sale. Fac Simile. — An exact copy. Failure. — The act of becoming insolvent. Favor. — A complimentary term applied to a letter re- ceived. A note or bill is said to be in favor of the payee. Fee Simple. — The absolute ownership of real estate. Finance. — The revenue of a state. Public money. Financier. — One having charge^of the public revenues. One skilled in money matters. Firm. — A general title of partnership, or of a business house. Fiscal. — Pertaining to the public treasury or revenue. As, the fiscal year, meaning the financial year as reckoned by the department of finance. Fixtures. — The furnishings of a store or office that are not movable. Flat. — A term applied to stocks that are dull of sale. F. O. B. — Free on Board. A term used on invoices and price lists, indicating that the merchandise is delivered to the carrier for shipment, without charges for cartage or boxing. Folio. — The page of an account book. Footing. — The amount of a column of figures. Forced Sales. — Sales of goods under price because of business necessity. Foreclosure. — A process by which mortgaged property is sold by the mortgagee in order to pay the debt secured. Forgery. — The act of fraudulently writing or altering a written document. Fraud. — Deception practiced for the purpose of gaining an unfair advantage. Free Goods. — Goods admitted to a country free of duty Free Trade. — Commerce between nations unrestricted by duties or tariff regulations. Freight. — Merchandise being transported. The price paid for transportation. Fund. — A sum of money set aside for a special purpose. Funded. — Turned into a permanent debt or loan. Funds. — Ready money. GAUGING. — The process of measuring the contents of casks. Goods. — A term synonomous with'merchandise, chattels, commodities. Good Will. — The reputation and patronage that per- tains to an established business. Grace. — Favor. See Days of Grace. Gratuity. — A free gift. Greenbacks. — United States notes, as distinct from na- tional bank notes. Gross Weight. — Weight of merchandise including the case or wrapping. Guarantee, or Guaranty. — A surety for the perform- ance of a contract, in case the party making the contract fails to keep it. A >ec"':ity against loss. 118 ADVANCED ACCOUNTING HIGHWAY. — A road which every one has the right to use. Honor. — To accept a draft, or to pay it when due. House. — Another word for firm. IMPORT. — To bring from a foreign country. The ar- ticle brought. Indemnify. — To make good for injury or loss. Indemnity. — A guarantee against loss or damage. Indenture. — A mutual agreement in writing between two or more parties. Indorse. — See Endorse. Indorsement. — A writing on the back of any commercial paper. Infringement. — To trespass upon the rights of another, especially when granted some special right by law, such as a copyright, a patent, or a trade mark. Injunction. — A writ or process by which a party is re- quired to do or to refrain from doing a special act. Insolvency. — Being unable to pay all debts; usually, synonomous with bankruptcy. Installment. — Part of a sum of money paid or to be paid. Instant. — Referring to the present month; as, the sixth instant means the sixth day of the present or cur- rent month. Insurance. — A contract to indemnify one in case of loss. Internal Revenue. — That part of our government rev- enue which is collected as internal duties or taxes. Interest. — A certain percentage paid by the debtor to the creditor for the use of money. A share in any business. Intestate. — Dying without having made a will. Inventory. — An itemized list of goods with their prices and amount. Investment. — The laying out of money in the purchase of property. Invoice. — An itemized bill of merchandise bought, sold or shipped. JOBBER. — One who buys from importers and manu- facturers, and sells to retailers. Jobi Lots. — Remnants and broken assortments of mer- chandise sold in lots under regular prices. Joint Stock. — Property held in common by a company of men, each of whom is called a stockholder. Journal. — A book used to prepare entries for the ledger. Journalizing. — Entering records in the journal. Judgment. — The decree of a court enforcing a contract or redressing a wrong. Junior Partner. — The youngest member of a firm. LANDLORD. — One who owns real estate and leases it to another. Larceny. — The taking of personal property unlawfully. Theft. Lease. — The letting of land and other property for hire. The contract for such letting, usually written, but sometimes verbal. Ledger. — The book of accounts to which all of the records are finally carried Legacy. — A gift of property by will. Legal Tender. — That kind of money which legally can be offered in payment of a debt. Letter of Credit. — A letter, usually addressed to bank- ing houses in foreign cities, authorizing the holder to receive credit for a stated amount. Liability. — Any debt owed by a person. License. — A legal permit to do a certain thing. Lien. — A legal claim on any class of property to secure payment of a debt. Liquidate. — To pay or settle a claim. Loan. — To lend to another for temporary use. The ar- ticle lent MAKER. -The signer of a note. Manifest. — A list of the articles in a vessel's cargo. Manufacture. — The process of changing raw materials into forms suitable for use. Marine. — Pertaining to the ocean; hence, to navigation. Maturity. — The date when commercial' paper becomes payable. Merchandise. — Wares, goods, commodities bought and sold in trade. Mercantile Agency. — An agency established to collect and disseminate information relative to the financial standing of business men. Mercantile Paper. — Notes and drafts of business men. Mint. — A place established by the government for the purpose of coining money. Monetary. — Pertaining to money. Money. — Any coin or currency lawfully employed as a representative of value in buying and selling. Monopoly. — The sole right to make or sell a certain ar- ticle. The exclusive control of anything. Mortgage. —The written pledge of real estate or chattels to secure payment of a debt. Mortgagee. — One to whom a mortgage is given. Mortgager, or Mortgageor. — One who gives the mort- gage. NEGOTIABLE. — A term applying to commercial pa- per, that may.be transferred by endorsement, or simply by delivery. Negotiate. — To transact business, or treat with another. Net. — Clear of all charges. The exact weight or amount after all deductions are counted out. Net Proceeds. — The proceeds of a sale after all ex- penses are deducted. Notary, or Notary Public. — An officer who acknowl- edges deeds and other commercial papers; but whose chief business is to protest paper for non-ac- ceptance and non-payment. Note. — A written or printed promise to pay, without seal. OPEN ACCOUNT. — An unsettled account with a per- son or a firm. Open Policy. — One intended to cover all goods shipped by a person within a specified time; each special ship- ment and the amounts of insurance to be indorsed upon the policy, as the shipments are made. Option. — The privilege of taking or delivering, that is, buying or selling a certain amount of any specified property at a given price. Outlawed. — A term applied to a debt which has run be- yond the time when the law will enforce its pay- ment. Outstanding. — Referring to debts or liabilities unpaid Overdraw. — To draw a greater sum than one has to his credit. Overdue. — A term referring to a note or other obligation that remains unpaid after it is due. Owe. — To be indebted. PAR. — Equal in value. Any paper is at par when it is worth its face value, without premium or discount. Parol. — Oral, not written. Also applied to written con- tracts not under seal. Partner. — An associate in any business or occupation. Partnership. — The association together of two or mora persons for the purpose of conducting any business. Par Value.— The nominal value; usually the printed or written value of any paper. Pass-Book. — A book in which a trader enters articles bought on credit. It is usually carried by the pur- chaser, and is presented for record when the pur- chases are made. Patent. — An'official'document securing to a person for a term of years, the exclusive right to an invention. MERCANTILE TERMS 119 Pawn — A deposit or pledge, given as security for a loan. Tie term only applies to chattels or money, and not to real estate. Pawnbroker. — One who lends money on pawns or pledges. Pay. — To discharge a debtor obligation. An equivalent for goods, salary, or wages. Payee. — The one to whom payment is to be made; especially in whose favor a paper is drawn. Payer. — The one who pays, or is under obligations to pay. Personal Property. — All property except real estate; chattels. Plaintiff. — One who brings a personal action in law against another party, who is called the defendant. Pledge. — The delivery of personal property as security for a debt. Policy. — A written contract of insurance. Politic. — Prudent, sagacious. In a broader sense, for the public good. Posting. — Transferring debits and credits to the ledger. Power of Attorney. — A' written instrument giving an agent authority to act for his principal. An agent thus empowered is called an Attorney in Fact. Preferred Stock. — Stock taking preference over the or- dinary stock of c corporation. A dividend is de- clared and paid on preferred stock before any can be declared on com on stock. Premises. — A term applied to any piece of real estate, or to a building and its appurtenanees. Premium. — The amount paid for insurance. The excess of any value above par. Price. — The v due >f an article. The amount paid or demanded for any commodity in trade. Price Current. — A table of the market values of various commodities. Prima Facie. — At first view. Prima facie evidence is that evidence which is sufficient unless rebutted. Principal. — The one e ploying an agent to act for him. The sum loaned upon which Interest is computed. Promissory, Note. — A written promise to pay a certain sum of money unconditionally, at a specified time. Pro Rata. — A proportional distribution. Protective Tariff. — Rates of duty fixed on certain im- ported commodities, for the protection of home manufacturers. Protest, — A formal declaration made by a notary pub- lic, of the non-payment of a note, or non-accept- ance and non-payment of a draft. QUARANTINE.— Restraint of intercourse to which a ship, dwelling or town is subjected, on account "of being infected with some contagious disease. Quotations. — The published prices of merchandise, rates of freight, rates of exchange, etc. DATE.— The price or value. Ratify. — To sanction or approve; usually applied to a principal's approval of an agent's transactions. Real Estate. — Land, and everything that legally passes with it in a conveyance or sale. Rebate. — Deduction from the price. Discount. Receipt. — A written acknowledgment of having re- ceived money or other property. Receiver. — A person appointed to take charge of the af- fairs of a corporation on its dissolution, and to dis- tribute its property according to law. Refund. — To repay or to pay back. Remittance. — The act of transmitting money values from one place tp another. The value sent is called a remittance. Renewal. — As applied to commercial paper, to give a new note or bill on which the time of payment is extended, for a papei now due. Rent. — Money or goods given by a tenant to his land- lord, to pay for the usff of property. Responsible.— Liable. Having sufficient property to meet all ordinary obligations. Resources. — Money, property, or that which can be converted into property; as, claims against other people, either on written or verbal promises. Retail. — To sell in small quantities. Revenue. — The income of individual or nation. As ap- plied to a nation, its receipts into the treasury, de- rived from taxes, duties, customs, etc. Revocation. — The recall of authority conferred on an- other; as, the revocation of an agency. Right of Way. — The right of an individual or corpora- tion to pass over the land belonging to another per- son. SALE. — The transfer of property from one person to another, for a price. Salvage. — An allowance made by law to those who save a ship's cargo from a wreck or fire. Sample. — A specimen of any commodity. Schedule. — A paper containing a list or inventory of items. Security. — An evidence of debt; as, a government bond. , A pledge given or something deposited to make good a contract. A person who becomes surety for another. Set-off. — A counter claim. A claim which the debtoi or defendant brings to reduce the claim of a creditor or plaintiff. Settle. — To adjust or close up an account. Shareholder. — The same as stockholder. Shipment. — Merchandise shipped. The act of trans- porting merchandise. Shipper. — One who leaves merchandise with another for transportation. Sight. — The time of presenting a draft or bill to the drawee. Sight Draft. — A draft made payable at sight. Signature. — The name of a person written with his owp hand. Silent Partner. — A partner investing in the business, but not publicly named in the firm. Sinking Fund. — A fund set aside for sinking or paying the debts of the government, or of a corporation. Solvent. — Being able to pay one's liabilities. Staples. — Articles commonly used; as, staple dry goods and groceries. Statement. — A list of resources and liabilities. A re- port of an agent's transactions sent to his principal. An itemized list of ths debits and credits of any personal account; as, monthly statements sent by wholesale dealers to their customers. Statistics. — A collection of facts pertaining to any one subject. Statute. — A law enacted by a legislature. Stipulation. —A contract or an agreement. Stock Exchange. — A place where bankers and broker* meet to buy and sell stocks, bonds, etc. Stockholder. — One who owns shares of the capital stock of a corporation. Stock. — Shares in the stock of any corporation; also, railroad or government securities. Sub-Agent. — An agent appointed by an agent. Sue. — To bring an action against one in law. Surety. — A person who has made himself responsible for the contract of another. Suspend. — To stop payment. Syndicate. — A number of capitalists who unite together to dispose of a large loan, or to conduct some great financial enterprise. T ACIT. — That which is understood or implied. Tare. — An allowance madeifor the weight of boxes, bar- rels, or wrappings of merchandise. The remainder after deducting the tare is called net weight. 120 ADVANCED ACCOUNTING Tariff. — A list of prices; as, a freight tariff . A list of duties or customs on imports or exports. Teller. — One who receives or counts. A bank officer who receives or pays out money . Tender. — The offer of payment or satisfaction of a de- mand, usually the offer of legal money, called a legal tender, for the payment of a debt. Tenement. — Any real estate leased to a tenant. Applied especially to houses built for rent. Testator. — A person who has made a will. Tickler. — A book containing a memorandum of notes and debts, arranged in the order of their maturity. Time Draft. — A draft made payable at a specified time; usually a certain period after dat^, or after sight. Trade Discount. — A discount from certain list prices, or from the amount of purchases, made to a dealer on account of a change in the prices, o> on account of cash payments. Trade Mark. — A device placed upon manufactured goods to distinguish them from i. itations. Transfer. — A conveyance of property. Trust. — The holding of property by one for the benefit of another. To give credit to one. Trustee. — A person to whom property is legally en- trusted. ULTIMO. — The last month preceding the present; as, on the twentieth ultimo, meaning the twentieth of last month. Uncurrent. — A term applied to money that does ncfc pass in common payment. Foreign coins are un« current in the United States. Underwiters. — Companies who insure against loss. Usuance. — The time usually allowed in a particular country or city, for the payment of a bill of ex- change. Usury. — Interest in excess of the highest rate allowed by law. VALID. — A term applied to a contract thai is properly executed; that is, legal or binding. Void. — Having no legal or binding force. Voidable. — Capable of being avoided or confirmed, as the party chooses. Voucher. — A document or paper proving that some transaction occurred; as, a receipt or a cancelled note is a voucher for the payment of money. WARRANT. — To insure against defects. Authority given to an officer to arrest a person. A writing authorizing the holder to receive money. Warranty. — An agreement to become responsible, if certain facts do not turn out as represented. Way-Bill. — A paper containing a list and description ol goods sent by railroad. i Wholesale. — To sell goods in quantity; usually, in un- broken or whole packages. ABBREVIATIONS. A 1 First Quality @ At Acct Account Adv Adventure Agt Agent Amt Amount Ans Answer Apr April Art Article Asstd Assorted Aug August Bal Balance Bbl. or Brl Barrel B. B Bill Book Bdls Bundles Bds Boards Bgs Bags Bk Bank Blk Black Bis Bales Bot Bought B. Pay Bills Payable B.Rec. Bills Receivable Bro Brown Brot Brought Bu Bushel C. Hundred Cap Capital C. B Cash Book Chgd Charged Ck Check co {c°™ty ny C.O.D Collect on Delivery Col Collection Com Commission Const Consignment Cr Creditor Cts Cents Cs. Cciscs C wt .V.Vh undVed Weight D. B Day Book Dec December Dep Deposit Dft Draft Dis Discount Do.... (Ditto) The Same Doz Dozen Dr ,.__Debtor Ds Days Ea Each E.E Errors Excepted Em bd Embroidered Eng English Ex Example Exch Exchange Exp Expense Fav Favor Feb February Figd Figured F. orFol Folio Ford Forward Frt Freight Ft .Foot or Feet Gal Gallon Gdn Guardian Gro. Gross Hdkf Handkerchief Hhd Hogshead Hund Hundred I. B Invoice Book i. e {id est) That is In Inches Ins Insurance Inst --^{Instant) Present Month Int Interest Inv Invoice Invt Inventory Jan January J Journal J. F Journal Folio lb Pound or Pounds Iy. F.__ Ledger Folio M Thousand Mar March Mdse Merchandise Mem Memorandum Messrs Gentlemen or Sirs Mf tg Manufacturing Mo Month Mr Mister Mrs Mistress Nat National N. B Take Notice No Number Nov November Oct October oz. Ounce P Page Payt Payment Pd Paid Per By Pkg. Package P. O PostOffice Pr Pair Prem Premium Prox. {Proximo) Next Month Pc Piece Ps Pieces Pt Pint Qr Quarter Qt Quart Reed Received R. R Rail Road S. B Sales Book Sec Secretary Sept __ September Shipt '...Shipment St Street Sunds Sundries Super Superfine T , Ton Trati « / Transportation lrans -i Transaction Ult {Ultimo) Last Month Via By way of Viz Namely Vs. {versus) Against W. B Way Bill Wk Week Wt .....Weight Yds Yards Yr . Year YE 06&59 4C2229 UNIVERSITY OF CALIFORNIA LIBRARY