WHIGAM AND FREDERICK D.C.HEATH &. CO BOSTON BOOK AND PRACTICE wo»«M»iii nmj i» mu i iJ » »iin i«iii»B miiiw iw o^ IN MEMORIAM FLORIAN CAJORI BOOKKEEPING AND BUSINESS PRACTICE BY WALLACE H. WHIGAM, M.S., LL.M. RICHARD T. CRANE TECHNICAL HIGH SCHOOL, CHICAGO, ILL. AND OLIVER D. FREDERICK, M.S. MURRAY F. TULEY HIGH SCHOOL, CHICAGO, ILL. oJyv or (Full) S^a-u to tk& aicl&v aj- h ^. c//ia/MA VMfv. 3^lio-'ynAi/^an (Part Payment) moiv . /O, /^ Re^eyiv-ecL an w-lZkLn nat& €.ne^ /i-u,'yuLv&cl ^attcix^ The first needs no further indorsement — the note is now payable to bearer. The second must be indorsed again if the note is sold by Mr. Shaw. Every note received should be indorsed, as each indorsement adds security to it. Indorse the notes written up in this lesson. For the first and second, use blank indorsements ; for the rest use full indorsements. NOTES 13 QUESTIONS 1. What is a promissory note ? 2. How many parties are there to a note ? 3. Name and define each. 4. What is discounting a note? 5. In what business is the buying of notes a very important feature ? 6. What name is given to the difference between the face value of a note and the amount the seller must accept for it if it is sold before it is due ? 7. What is an indorsement ? 8. What is a full indorsement ? 9. What is a blank indorsement ? 10. What is the meaning of the words " indorser " and " indorsee " ? 11. What are the purposes of an indorsement .'* DEFINITIONS A note is a written acknowledgment of a debt, coupled with a promise to pay. The maker of a note is the one who issues it ; he promises to pay it when due. The payee is the one to whom the note is issued; the payment is to be made to him or to the person to whom he orders it paid. An indorsement is a writing, usually upon the back, to show a transfer or to acknowledge a payment. LESSON V BILLS RECEIVABLE ACCOUNT Introduction. — In bookkeeping, notes are divided into two classes. This division is not due to any peculiarities in the notes themselves, but is entirely dependent upon the relation we bear to them. Those that are signed by some one else and that we first receive and later dispose of are called "bills receivable." Those that we first issue and dispose of and later redeem are called " bills payable." Some bookkeepers prefer to use the expressions "notes receivable" and "notes payable." It is immaterial which names are used, so long as there is uniformity. TRANSACTIONS WITH BILLS RECEIVABLE Required of the Student. — Copy Example 1 and write up Examples 2 and 3, close the accounts, and have them approved. Example 1. — Mar. 1, 19 — , received Smith's note for $860; Mar. 2 received Doe's note for $548.75; Mar. 4 received Johnson's note for $124.36; Mar. 7 bought two notes of Henry Marx, one signed by himself for $ 360, and one signed by Charles Brown for $423.75; Mar. 10 Smith paid us cash for his note of the 1st inst. ; Mar. 11 Marx paid cash on his note $ 200; Mar. 12 sold Doe's note for cash $543.75; Mar. 15 Johnson paid cash for his note of the 4th inst. ; Mar. 15 closed the account. J2^ {^-tZi^ 6^..&C£.-'C''2a;iJ-i^ C4y / 4/ r60 7S 36 Th^cu /o // r6o 7s 7 7 (yB--cz,£i:i^yiyC.ey 360 ¥.P.3 7r /s /J (^^^^^z-^ez^'-nxi.ey ^ / 7 :i r 3^ 7'^ 2. 3// V 6 ^ 3// r6 7?7^?yl. /& 1^ jrj y^ QUESTIONS 1. What is the total of the notes received } 2. What is the total of the notes disposed of 1 3. When cash or something else is received for a note, what is done with the note ? 4. Was Marx's note paid in full on the 11th } 5. Was the note in this case disposed of .-' 6. Why was the $ 200 entered on the Cr. side of " Bills Receivable " ? 14 BILLS RECEIVABLE ACCOUNT 15 7. What indorsement should have been made on Marx's note on Mar. 11 ? 8. What does the balance in the account show ? How could you verify it? 9. Can the credit side of this account ever become the greater ? Why ? 10. Why is the " Balance," when carried below the rulings, entered on the opposite side ? 11. By what means could Marx give us the title to the note signed by Brown ? 12. Will a business man take any one's note for what he sells .'' Will he take cash .-' 13. What things are considered when we think of taking a person's note ? Example'^. — Mar, 1, 19 — , had several notes on hand amounting to $2124.30; Mar. 2 sold mdse. to Coe & Co. for their note $750.60; Mar. 3 gave cash for James White's note $ 604 ; Mar. 5 received cash for one of the notes in our possession on the 1st $ 624.30 ; Mar. 6 Smith & Co. sent me their note at 30 days to apply on account $600; Mar. 7 sold a house and lot for note amounting to $1600; Mar. 9 James White paid cash for his note received on the 3d inst. $ 604 ; Mar. 11 sold a horse and wagon for note $ 240 ; Mar. 12' Smith & Co. paid cash for their note of the 6th inst. What is the balance of notes on hand Mar. 15 } Example 3. — Mar, 1, 19 — , had on hand other persons' notes amounting to $ 1824,60 ; Mar. 2 received Wm. K. Boyd's note payable in 3 days for mdse. $ 199.20 ; Mar, 3 Henry Brownback gave me on account a note signed by John Davis for $88.25 j Mar. 5 Wm. K. Boyd paid cash on his note of the 2d inst. $ 99,20, and gave me a new note for the remainder; Mar. 6 sold mdse. to Wm. Craft amounting to $872.64, and received in payment John Staufer's note due in 5 days $ 300, Roy Langher's note due in 10 days for $400, and Craft's note at 5 days for the balance; Mar. 7 Elias Detweiler paid cash for his note of Feb. 10 $960.75; Mar, 8 Wilson Benson paid cash for his note of Feb, 20 $85.75; Mar. 11 Wm. Craft paid cash for his note due to-day. BUSINESS PAPERS TO BE WRITTEN You are the person doing business in these examples. 1. Write the note received from Wm. K, Boyd on the 2d inst. Use your town for heading (Ex. 3). 2, Boyd's note is paid on the 5th, and is returned to Boyd on that date. Write the following crosswise on the face of the note in red ink : " Paid March 5, 19 — ." The name of the one receiving the payment may follow, but it is not necessary. 3, Write the note received on the 3d inst. ; use your town for heading, date Mar, 1, 19 — , John Davis maker, Henry Brownback payee. Indorse in full to yourself (Ex. 3). 4. Write the note received from Marx on Mar. 7 signed by Charles Brown, Use a full indorsement by which the note is transferred to you (Ex, 1). LESSON VI BILLS PAYABLE ACCOUNT Required of the Student. — Copy Example 1, tracing transactions from the text, and write up the following examples. Example \. — Mar. 1, 19 — , gave my note for mdse. ^650; Mar. 2 bought horse and wagon for note at 10 days $125; Mar. 9 paid cash for my note of the 1st inst. $ G.50 ; Mar. 10 bought for note mdse. of Brown & Co. $ 750.60 ; Mar. 11 gave my note for insurance on mdse. $21.75; Mar. 12 paid cash for my note of 2d inst. due to-day ; Mar. 15 paid cash in part payment of my note of the 10th inst. $ 150.60. Mar. 20 what is the balance of bills payable .-' ^yU (^ ^7- 0^-tx^t^<::zyyiyc.-^^ ^ 6 JO /SO SSjO. bO 6 O 215 Ll 'f - 77ZCZ4, / /o // ^/ 6§<^c ■c^Zyo-TXisy 6 JO /^J 7JO J^ 6^^ 7J QUESTIONS 1. What is the total of notes issued .-* 2. What is the total of notes redeemed } 3. Why, if there is a balance, must it always be entered on the Dr. side of this account .-* 4. Could you verify the balance as in bills receivable .'' 5. Under what condition are the two sides equal.'' Example 2. — Mar. 1, 19 — , notes signed by me in possession of others are as follow: Favor of Nicholas Murray due in 5 days $196.30; favor of Geo. Allen due in 8 days $248.12; favor of S. D. Schoefield, dated Feb. 20 at 30 days $569.18. Total, $1013.60. Mar. 2 bought mdse. from Theo. Tyson $128.30, and gave my note at 3 days in payment ; Mar. 3 gave my note favor Isaac Jones due in one year in part payment of house and lot $ 1000 ; Mar. 4 I owed Oscar Bauer $ 132 on account and gave him my note at 10 days in payment; Mar. 5 sold mdse. amounting to $200; received cash $71.70 and my note favor Theo. Tyson of the 2d inst. for balance; Mar. G paid cash for my note favor of Nicholas Murray due to-day $ 196.30 ; Mar. 7 gave my 5-day note in payment for mdse. purchased this day $938.40; Mar. 9 paid cash for my note favor Geo. Allen $ 148.12, and gave my 3-day note for the balance. Close the account as of Mar. 10. 16 BILLS PAYABLE ACCOUNT 17 In the examples of Lesson V, as well as in the preceding examples of this lesson, all the notes in any one example belong to the same class. In Examples 3 and 4 of this lesson, both kinds — "bills receivable" and "bills payable" — occur. Be sure that you understand clearly what determines to which class a note belongs. In Example 3 write up both the bills receivable and bills payable accounts and close them. Example 3. — Mar. 1, 19 — , bought mdse. amounting to ^796.80 and gave my note in payment; Mar. 2 bought from Geo. Klein, Wm. White's note at 10 days, Klein's favor, for $ 624.75 and gave in payment my note due in 30 days $ 200 and cash for the balance ; Mar. 3 bought mdse. $ 986.90, gave in payment my note due in 10 days $362.15 and White's note bought on the 2d inst. for the balance; Mar. 4 sold mdse to Frank Hendricks $166.30 and received his note in payment; Mar. 6 paid cash fo'^ my note of the 1st inst. due to-day $796.80; Mar. 8 sold mdse. to Jas. Smith for $300, received in payment a note signed by Walter Brown, Smith's favor ; Mar. 10 borrowed $ 500 cash on my note, favor LeRoy Watson ; Mar. 31 close accounts. In Example 4, record cash, merchandise, bills receivable, and bills payable received and disposed of. Example 4. — Mar. 1, 19 — , bought mdse. on my 5-day note amounting to $864.90; Mar. 2 bought mdse. amounting to $ 388.66 and paid for it with my 10-day note ; Mar. 4 sold mdse. to Alfred Rowe $248.60, received cash $148.60 and his note at 3 days for the balance ; Mar. 5 sold mdse. for cash $ 266.90 ; Mar. 6 paid note of the 1st inst. due to-day by giving cash $ 64.90 and a new note due in 10 days for the balance $ 800 ; Mar. 7 Alfred Rowe paid me cash for his note of the 4th due to-day; Mar. 9 sold mdse. to Silas Hooper $466.22, receiving cash $166.22 and his note at 10 days for the balance ; Mar. 10 bought mdse. on my note at 20 days, favor Louis Slocum $ 972.86 ; Mar. 12 sold mdse. for cash $28.19; Mar. 14 received Septimus Down's 2-day note for mdse. sold him to-day $ 649.20 ; Mar. 16 paid my note due to-day, dated the 6th inst., by giving cash $ 150.80 and Down's note of the 14th for the balance ; Mar. 18 sold for cash all mdse. remaining on hand $ 872.50. Follow instructions contained in Ques- tion 9, QUESTIONS ON EXAMPLE 4 1. What is the rule for debiting an account.'' 2. What is the rule for crediting an account .'' 3. What did you debit on Mar. 1 } What did you credit.-' 4. Were these debits and credits equal .'' 5. What did you debit on Mar. 2 .? What did you credit .-' 6. Were these debits and credits equal .'' 7. Will the total debits for the first and second transactions equal the total credits for the same dates .'' 8. In this example how many accounts are kept .-' Was a record kept of every- thing received or disposed of .'' 9. Write the names of these four accounts in a vertical column, following each 18 BOOKKEEPING account by its total debit and total credit in columns, and add these two columns. How do they compare ? Why ? 10. You may now close the accounts in Example 4, using as a closing date Mar. 31, 19—. DEFINITIONS Bills Receivable are other people's notes — notes signed by others — the value of which we are to receive. Bills Payable are our own notes — notes signed by us — the value of which we must pay. ^. V LESSON VII COMBINATION OF ACCOUNTS Required of the Student. — The following exercises contain transactions involving the receipt and disposal of notes, in addition to cash and merchandise. In the first exercise the pupil will open accounts for bills payable, bills receivable, and merchandise; in the remaining exercises an account is also to be kept with cash. Example 1. — Mar. 1 gave my note payable in 10 days for mdse. ^1000; Mar. 2 bought mdse. from Raymond & Co. for $ 620 and gave my note at 5 days in payment ; Mar. 4 gave my 30-day note favor S. K. Wolff & Co. for mdse. purchased this day ;^ 318.50; Mar. 6 sold mdse. amounting to $66.20 to John Lyman and received his 5- day note in payment ; Mar. 7 my note dated the 2d inst. is due to-day, I paid cash for it $620 (what does the business receive.?); Mar. 8 sold mdse. to K. H. Wampole & Co. $ 138.60 and received their note at 10 days in payment ; Mar. 11 received cash from John Lyman for his note due to-day $66.20; Mar. 12 sold mdse. for cash $411.50; mdse. unsold is valued at $ 1300. Close the accounts as of Mar. 15. QUESTIONS 1. Can you determine from your work the value of the notes receivable on hand ? 2. The value of the notes payable outstanding } 3. Are these accounts in this respect like cash, or merchandise } 4. Would you explain the closing entry as "Balance" or " Loss and Gain " .-' Why? Example 2. — Mar. 1 commenced business with cash $ 1750 ; Mar. 2 bought mdse. on my note $412.50; Mar. 3 bought mdse. for cash $366.18; Mar. 4 sold mdse. to Samuel Reynolds on his 5-day note $ 136.20 ; Mar. 5 sold mdse. to L. K. Parker $81.60 and received his 10-day note in payment ; Mar. 6 bought mdse. from Wilson Meyers $517.50, gave in payment Samuel Reynolds's note received on the 4th inst. and my note at 3 days for balance $ 381.30 ; Mar. 8 sold mdse. for cash $ 12.72 ; Mar. 9 paid cash for my note of the 6th inst. $381.30; Mar. 10 sold entire stock of mdse. to M. S. Way on 10-day note $ 1250. Mar. 10 close all the accounts. Example 3. — Mar. 1 commenced business with mdse. on hand $2000, cash $2200; Mar. 2 bought mdse. for cash $ 600 ; Mar. 5 bought mdse. on my 10-day note $ 800 ; Mar. 7 sold mdse. on 15-day note $112.60; Mar. 9 sold mdse. for cash $72.21; Mar. 11 gave my 30-day note for mdse. bought to-day $ 700 ; Mar. 13 sold mdse. on 20-day note $ 124.86 ; Mar. 14 sold mdse. for cash $ 34.19 ; Mar. 15 paid cash for my note of 5th inst. $800; Mar. 17 paid cash for insurance on mdse. $37.50; Mar. 19 bought mdse. for cash $450; Mar. 20 sold mdse. for cash $91.27; Mar. 21 exchanged notes with Silas Sharpless each for $ 500 at 30 days ; Mar. 22 received cash for note, my favor, dated Mar. 7 $ 112.60 ; Mar. 23 received cash from insurance company for mdse. damaged by fire $ 721.50 ; Mar. 25 sold remaining stock of goods for cash $ 2750. Mar. 31 close all accounts. 19 20 BOOKKEEPING QUESTIONS 1. In how many of the accounts of Examples 2 and 3 did you use "Balance" for the closing entry ? " Loss and Gain " ? 2. In Example 2 how many of the balances were carried below on the debit side ? On the credit side ? 3. Which of these balances show values the business had on hand ? Which amounts is the business under obligations to pay ? 4. How much is the business worth on Mar. 10 ? 5. With how much cash was the business commenced ? 6. How much was gained ? 7. How does this compare with the amount of the closing entry in merchandise ? 8. Find the gain or loss in Example 3 by considering cash, bills receivable, and bills payable, and compare your result with the amount of the closing entry in merchandise. LESSON VIII PERSONAL ACCOUNTS Introduction. — All the transactions of the foregoing lessons are exchanges of values represented by someth^g tangible — cash or notes are given in exchange for mdse., etc. But goods are frequently sold and delivered, it being understood, if not specifically stated, that the buyer will pay for them at some future time. Such sales are said to be made on account or on credit. Such transactions make it necessary to keep a record of dealings with persons. In the transactions of former lessons no attention was given to the names in making the records. The following examples contain illustrations of transactions on account. Required of the Student. — Copy the first form and write up Examples 2 and 3. Example 1. — Business transacted with A. B. Campbell, Ada, O. Apr. 1 sold him mdse. on account $36.84; Apr. 3 sold him on account mdse. ;$ 41.14; Apr. 6 received from him cash on account $ 30 ; Apr. 8 he has worked for me five days at $ 4 per day and asks to be credited on account; Apr. 9 he returns part of goods purchased as unsatisfactory $ 11.14; Apr. 10 sold him bill of goods for which he is to pay in 2 days ;^ 29.37 ; Apr. 12 he pays for bill of goods of the 10th inst. $29.37. The form below shows how these transactions will appear under Mr. Campbell's account. Always include the address with personal accounts. The pupil should not consider his study of this example and the accompanying form complete until he has a clear idea of the meaning of the phrase " on account." da^, (^ ^2/iA^ dZ^. / 3 /J ^A,.M^^J 6S-^t.<££>^ The Journal Record C^^id^A^ ^S ^s In the third transaction the business purchases wheat. The business receives wheat and pays out cash. The Journal Record C^.-<£Ay In these transactions debit and credit the names of commodities bought and sold instead of the general name " Merchandise." In the fourth transaction the business buys corn. The business receives corn and pays out cash. /^l/ /^^ The Journal Record ^ (J^^-U:^^ ^f^ Vf^ The following form shows how these journal entries will appear in your journal ; also two other entries are made as models of journal entries that may have several debits or several credits. 30 BOOKKEEPING ^ J /5 fM:>/L£.^6yU (3zZAA- (ZczAJiy CoAAy -r4/j ^O SR ^ ooo yj ///v 4/^=5 6^^ rv.f so S/l As the journal footings appear when carried forward to a new page /S J rvj so J r^j so Required of the Student. — You will now, beginning with the first, journalize the following transactions, observing the form just given. After they are completed and corrected, copy in your journal, forwarding the totals for each page. It is not necessary to foot up the columns of the journal, but you will do so in these exercises. If the two sides do not foot up equally, there is an error in your work. The footings will be found valuable in testing results you will obtain later. TRANSACTIONS — SET I May 1, 19 — , E. L. Coe commenced business as a grain dealer with a cash capital of $ 2000. " 1 Paid for rent of office for one month in advance $ 45. " 2 Bought of J. F. Stacey for cash, 180 bu. wheat at ^.80 $144. " 2 Bought of J. S. Gridley for cash, 1200 bu. corn at .41 492. ENTERING TRANSACTIONS IN THE JOURNAL 31 May 4 Sold Smith Elevator Company for cash, 180 bu. wheat at $ .861 $ 155.70 " 5 Bought of W. J. Durand for cash, 300 bu. corn at .45 135. 450 bu. wheat at .75 337.50 $ 472.50 " 6 Paid cash for clerk hire to date $ 16. " 8 Bought of Daniel Borg for cash, 500 bu. corn at .45 225. 250 bu. wheat at .79 197.50 1000 bu. oats at .20 200. $ 622.50 " 9 Paid cash for weighing and measuring grain $ 12. " 12 Sold Smith Elevator Company for cash, the balance of wheat on hand, 700 bu., at " 13 Bought of J. A. Stephens for cash, 900 bu. barley at " 15 Sold B. J. Knauss Storage Company for cash, 1000 bu. oats at 500 bu. corn at .62 260. $ 540. " 15 Paid cash for office help to date $ 24.50. " 17 Bought of George Bauman for cash, 500 bu. oats at 600 bu. corn at .43 258. $ 363. " 19 Paid cash for storage on grain to date $ 30.50. " 20 Bought of Fred Holtkamp for cash, 646 bu. wheat at 324 bu. barley at .271 89.10 $ 592.98 " 20 Sold Brown Bros. & Co. for cash, 600 bu. corn bo't on 17th inst. .40 240. " 22 Paid cash for set of blank books $ 6.75. " 23 Sold B. J. Knauss Storage Company for cash, 600 bu. wheat at .861 517.50 300 bu. barley at .35 105. $ 622.50 " 25 Bought of J. F. Stacey for cash, 750 bu. corn at .461 348.75 " 27 Sold for cash, 46 bu. wheat at .50 23. 2250 bu. corn at .52 1170. ^1193. " 29 Sold for cash, 500 bu. oats at .271 137.50 924 bu. barley at .35^ 323.40 $ 460.90 " 30 Paid each for storage and inspection on grain for bal- ance of month ending to-day $ 30.50. " 31 Paid cash for office help to date $ 30.50. All property has been sold. .871 612.50 .28 252. .28 280. .62 260. .21 105. .43 258. .78 503.88 .271 89.10 LESSON XI TRANSACTIONS — SET II Required of the Student. — 1. Find the* amount of all sales and have the results approved. 2. Journalize the following transactions, following the instructions given in the previous lesson, except that the goods bought and sold will be included under one title, i.e. "Merchandise." Freight and cartage on goods bought will be charged to merchandise in this set. June 1, 19 — , E. E. Gaylord has to-day commenced the boot and shoe business with a cash capital of $ 2500. " 1 Bought of Phelps, Dodge & Co. an invoice of boots, for cash $ 760.25. " 2 Rented fully equipped store for one year at $ 75 per month, payable monthly in advance. Store located 25 E. Madison St. Paid first month's rent in cash $ 75. " 2 Paid cash for a safe for use in the office $60. (Debit Fixtures.) " 2 Paid cash for freight and drayage on the bill of goods $12.75; also paid cash for advertisement in Daily Times $25. (Debit expense for the latter.) " 3 Bought of Holden & Co. an invoice of boots and shoes on my note at 10 days, $965.80. " 5 Sold James Wright for cash, 9 pr. Ladies' vici kid at $2.30 9 pr. Ladies' patent colt at 2.45 9 pr. Ladies' patent colt button at 2.45 " 6 Insured goods in store for $1000 and paid cash for premium at 1 %, $10. (Exp.) " 7 Paid clerk hire to date $ 16.25. " 7 Sold D. E. Borg, for his note due in 12 days, 24 pr. Ladies' patent oxfords at 2.10 12 pr. Men's oxfords at 2.371 12 pr. Boys' vici kid button at 1.30 " 10 Sold M. E. Brown & Co., for note due in 15 days, 6 pr. Ladies' vici kid at 2.35 12 pr. Ladies' vici kid oxfords at 2.10 18 pr. Ladies' patent colt lace at 2.60 24 pr. Ladies' patent colt button at 2.65 24 pr. Men's vici oxfords at 2.40 12 pr. Men's patent colt at 2.65 12 pr. Men's patent kid congress at 2.85 24 pr. Boys' school lace at 1.25 " 10 Sold E. F. Scofield for cash, 6 pr. Boys' school at 1.20 6 pr. Boys' school button at 1.25 9 pr. Misses' school at 1.25 32 TRANSACTIONS — SET II 33 June 12 Sold B. Cerveny & Bros., for their note at 15 days, 4 pr. Ladies' satin slippers at $ 2,87^ 3 pr. Ladies' patent kid at 2.50 24 pr. Ladies' French kid at 2.371 18 pr. Men's patent colt at 2.62i- " 13 Paid cash for my note of the 3d inst. due to-day. " 14 Sold A. A. Brewer, on his note at 10 days, 12 pr. Men's English enamel at 2.90 12 pr. Men's English enamel button at 2.95 18 pr. Men's patent kid at 2.60 " 14 Paid clerk hire and bookkeeper for services to date $ 24. " 16 Sold W. L. Mayer for his note at 10 days, 15 pr. Men's tan oxfords at 2.85 18 pr. Ladies' tan oxfords at 1.95 " 17 Sold Pulver & Tobias for cash, 3 pr. Men's patent kid oxfords at 2.85 2 pr. Men's vici kid congress at 2.90 3 pr. Men's patent colt oxfords at 2.50 4 pr. Men's vici kid lace at 2.70 " 17 Sold H. E. Ives for cash, 12 pr. Men's working shoes at 1.30 " 19 Received from D. E. Borg, cash for his note of the 7th inst. due to-day. " 19 Bought of Schoch & Foberg lot of shoes and slippers, giving in payment my note due in 30 days $ 324.60. " 21 Sold Edward Taylor for cash, 3 pr. French kid shoes at 2.65 " 21 B. Cerveny & Bros, returned the following goods purchased on the 12th inst., 24 pr.- French kid shoes. They asked that the amount be indorsed on their note given same day. (This is part payment of diV/s receivable.) " 22 Sold Pulver & Tobias for note at 30 days, 8 pr. Ladies' patent kid button at 2.35 8 pr. Ladies' patent kid lace at 2.30 12 pr. Ladies' patent kid congress at 2.20 8 pr. Ladies' patent oxfords at 2.25 9 pr. Boys' school at 1.22 18 pr. Misses' school at 1.30 " 24 Received from A. A. Brewer in payment of his note of the 14th inst. cash $ 50 and a new note at 10 days for the balance. " 24 Bought of The Galloway Company a job lot of boots and shoes for our note due in 30 days, ^225.10. 34 BOOKKEEPING June 24 Sold D. E. Borg for cash, 2 doz. Combination polish at $ .62|- 2 doz. IXL polish at .70 2 gr. Laces at .85 24 Received from M. E. Brown & Co., in part payment of note of 10th inst., $20 in cash. They asked an extension of 10 days on the balance. 26 Edward Taylor returned one pair men's French kid shoes purchased on the 21st., as not being of the desired size. Refunded him cash for the goods. 26 Sold James Wright for cash, 6 pr. Men's extra patent colt at 3-12-2- 27 B. Cerveny & Bros, paid cash for balance on their note due to-day. (See June 21.) 28 Sold M. K. Knudson for his note at 10 days, 36 pr. Children's at 24 pr. Men's working at 12 pr. Men's box calf at 12 pr. Men's vici kid at Inventory of unsold property : Office safe valued at Merchandise valued at .621 1.20 2.15 2.30 58. 1525.67 LESSON XII FIRST PART — INTEREST ACCOUNT Introduction. — When goods are bought on credit, the buyer gets the benefit of the use of the seller's credit until the goods are paid for. If the purchase is not paid when due, it is legal to add an extra amount for the use of this credit. This is called interest. If a note is written with interest, it draws interest from the time it is dated ; if no inter- est is mentioned and the note is not paid when due, it draws interest from the due date until paid. The interest items in the accompanying transactions are entered in the following form : Example 1. — May 1, paid cash ^3.25 for interest on note; May 2 received cash $\.\^ for interest on money loaned; May 5 paid James Smith $103.21 for note and interest due to-day, the interest being $3.21; May 6 H. G. Clark paid cash for his note due to-day, face of note $1000, and interest $10.21. The account is closed as of May 10. ^:^^-n-i^^yL^^z^ / ^ "Z 7^ /30 32 /6 60 SO ^0 SO 7-5 736 /7 7 7^^ 6o 6^ ^3 ^2^elli(^^i-i^ 'V^^^ ^tJ'^d' jTc-l I 2 3 4 5 6 7 8 9 lO II 12 Beds, Folding 30 30 30 30 30 30 30 30 30 30 3250 3250 Beds, Sofa 2250 2250 2250 2250 2250 20 20 20 20 20 25 25 Bedsteads, Brass .... g250 S250 g250 3250 3250 S250 S250 3250 3250 3250 35 35 Bedsteads, Iron .... 050 Q50 050 050 650 6 6 6 6 6 5 5 Bedsteads, Oak .... 18 19 20 21 22 23 24 25 26 27 18 19 Bookcases, Combination 35 36 37 38 39 40 30 31 32 33 34 35 Bookcases, -Mahogany 35 35 35 35 35 35 35 35 35 35 37 37 Bookcases, Oak . . . n 25 26 27 28 24 25 26 27 28 24 25 Cabinets, Music .... 10 10 10 10 10 10 10 10 10 10 10 10 Cabinets, Parlor .... 20 22 24 26 28 30 32 34 36 38 40 38 Chairs, Cane-seat Dining . 2^0 2 2S0 2 2^^o- 2 2^0 2 220 2 220 2 Chairs, Leather-seat Dining SS5 SS5 SS5 gss S25 SS5 S25 SS5 S25 S35 S25 SS5 Chairs, Office Q50 Q50 gso gso g5o 10 10 10 10 10 gso gso FURNITURE BUSINESS 69 Aug. 7 Bought from Central Furniture Co. on account, bill of goods amounting to $ 312.60. Sold H. W. Erving on account : 3 Oak writing desks at $ 8.60 $ 25.80 2 Oak bookcases " 24. 2 Library tables " 20. XX. XX XX. XX 5 and 5 % P XXX. XX XX. XX $ XXX. XX Aug. 8 Gave Student, bookkeeper, and Frank Andrews, salesman, credit for week's wages. Charge " Salary " account. Hired Emil Hauck at $ 10 per week to pack and deliver goods. Paid Central Furniture Co. for invoice of the 8d $ 462.18, less 2 % cash discount. Review Lesson XXIV for cash discount. When a bill is paid on which a cash discount is allowed, the net amount will be entered in the cash book and the discount allowance will be entered in the journal. The payment to the Central Furniture Co. will be entered in the cash book on the credit side as follows : Aug. 8 Central Furniture Co. Inv. of 3d inst. less 2 % 452 89 (Z^td-i^i^d^ tz-'^t^ ^2/c^^e^}9^■a'el 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 g2&o 3250 S250 S250 3250 3250 3250 3250 35 35 35 35 35 35 35 35 35 35 25 25 25 25 25 25 25 25 20 20 20 20 20 2250 2250 2250 2250 2250 35 35 35 35 35 35 35 35 30 30 30 30 30 30 30 30 30 30 5 5 5 050 Q50 650 650 650 6 6 6 6 6 5 5 5 5 5 20 21 22 23 H 25 26 27 18 19 20 21 22 23 24 25 26 27 36 37 38 39 40 30 31 32 33 S4 35 36 37 38 39 40 30 31 37 37 37 37 37 37 37 37 33 33 33 33 33 33 33 33 33 33 26 27 28 24 25 26 27 28 24 25 26 27 28 24 25 26 27 28 10 10 10 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 36 ■ SJf 32 30 28 26 24 22 20 20 22 24 26 28 30 32 34 36 2W 2 2^0 2 220 2 2S0 2 220 2 220 2 220 2 220 2 220 2 3^5 S25 g25 325 325 325 325 325 325 325 3-5 325 325 325 325 325 325 325 goo gso Q50 10 10 10 10 10 Q50 Q50 g5o gso gso 10 10 10 10 10 70 BOOKKEEPING Enter in the day-book journal Aug. 8 Central Furniture Co. Cash discount u H Allowance on Inv. of 3d ins t. 2'fo' There are three well-known ways of entering cash discount, viz. : 1. By entering in the cash book the net amount of the bill and making a journal entry for the amount of the discount. 2. By entering the full amount of the bill on one side of the cash book and the amount of the discount on the opposite side. 3. By entering the discount in a special column in the cash book and the net of the bill in the regular cash column. Aug. 9 Received from H. W. Erving cash on account $ 100. Sold for cash 1 china closet $ 27.50. Received goods ordered from Michigan Furniture Co., Grand Rapids, Mich., terms 2 % 5 days, 1 % 10 days : 6 Oak bedsteads at $ 22 $ 132. 4 Cane-seat rocking chairs at $ 6.50 26, 4 Oak bookcases at $16.25 65. 6 Toilet tables at $13.50 81. 4 China closets at $18.25 73. 8 Oak sideboards at $ 26.50 212. $589. Less 20 and 5 % 141.36 $447.64 In business it is customary to prove the cash account as found in the cash book each day.; that is, to find the cash book balance and compare it with the amount of cash on hand. You will determine the balance as shown by your cash book and have it approved. Do not enter the balance or rule up the book. You may enter the footings in small pencil figures. Received from Wilson, Demming & Co., cash for invoice of the 5th. Received from Imperial Hotel Company, on account, cash $ 100. Received mdse. ordered from Williamson Chair Co. on the 3d inst. as follows : 48 Leather-seat dining chairs at $ 3 36 Cane-seat dining chairs at $1.40 6 Fancy oak rockers at $4.25 2 Turkish rockers at $ 16.25 Terms 2 %, 5 days Less 10 % $144. 50.40 25.50 32.50 $ 252.40 25.24 $ 227.16 FURNITURE BUSINESS 71 Ai^g. 11 Bought bill of mdse. on account from L. M. Merrill & Co., Erie, Pa., $238.90. 5old H. W. Erving, on account : 18 Cane-seat dining chairs at $ x.xx $ xx.xx 12 Leather-seat dining chairs at $ 3.25 39. 2 Parlor cabinets at $23 • 46. 1 Ornamental table 5.25 3 Oak bookcases at $24 72. $xxx.xx Returned to Williamson Chair Company : 6 Fancy rockers at $4.25 $25.50 Less 10 % 2.55 $22.95 Note. — This is not a sale, but part of a purchase returned. It cannot of course properly be entered among the sales. If the number of such transactions is large enough to justify their use, it is customary to use a separate book for recording returned purchases, and another for returned sales. You may enter this transaction and similar ones in the day-book journal. See form, page 66. Ai/g. 13 Paid Frank Andrews, salesman, cash on account $ 10. Mr. Cummings, proprietor, took from the store for use in his home : 1 Complete bedroom set $90.00 Less 10 and 15 % xx.xx $ xx.xx Sold for cash mdse. amounting to $ 106.40. Sold Wm. J. Wagner, 2630 West St., on account: 1 Roll-top desk $35. 1 Oak bookcase xx.xx 1 Office chair 11.25 $ xx.xx Aug. 14 Paid Williamson Chair Co. for invoice of the 9th, $227.16, less $22.95, goods returned, cash discount 2%. Received from Imperial Hotel Company cash for balance due on bill of the 4th inst. (See Aug. 9 for part payment.) Aiig. 15 Paid Emil Hauck wages to date $10. Credited bookkeeper and salesman for 1 week's wages. Sold Imperial Hotel Company, on account: 10 Iron bedsteads at $ x.xx $ xx.xx 10 Wool mattresses at $4.65 46.50 5 Oak wardrobes at $28.50 142.50 10 Cane-seat dining chairs at $ 2.20 xx.xx $XXX.XX Sold mdse. for cash $46.80, 72 BOOKKEEPING Aug. 16 Chas. Moore paid his note of the 1st by giving a new note at 60 days for ^800, interest 6%, and cash for balance due on note and interest. Balance due on note $200, interest for 15 days, at 5%. Credit "Interest and Discount" account for the interest. Edward Alleston paid cash for his note of the 0th with interest; face of note $60, interest for 10 days. Imperial Hotel Company returned 1 wardrobe bought on the 15th at $28.50. Credit through journal. Aug. 17 Received from Eastman, Fish & Co., Rochester, N. Y., by express : 1 Mahogany music cabinet $28. Less 20% 5.60 $ 22.40 Paid express charges on above $1.25. Charge "Freight and Expressage " account. Received mdse. ordered from Blair, Jackson & Co., Indianapolis, Ind.: 6 Parlor cabinets at $28, terms on acct. $168. Aug 18 Paid Michigan Furniture Company for invoice of 9th inst., less 1 %. Paid cash for horse feed $6.80. Charge "Expense" account. Paid bookkeeper and salesman, on account, $7.50 each. Sold Robert Whittaker, 344 Madison St., on account : 1 Oak dining table $ 25. ' 6 Leather-seat dining chairs at $ x.xx xx.xx Have your cash balance approved, as on Aug. 9. $ xx.xx Aug. 20 Mr. Cummings withdrew from business for personal use $50. Sold Elmer T. Childs, 1160 Park Av., on account: 1 Complete bedroom set $90. Sold Robert Whittaker, 344 Madison St., on account : 1 Brass bedstead $ xx.xx Aug 21 Sold H. W. Erving, on account : 2 Brass bedsteads at $32.50 $ xx.xx 2 Oak hall stands at $ 23.50 47. 8 Leather-seat dining chairs at $ 3.25 26. $xxx.xx Less 12.^ and 5% xx.xx ^xxx.xx Took two office chairs from stock for use in office at $12.50 $25. Less 20 % 5. $20. FURNITURE BUSINESS 73 Aug. 22 Paid Emil Hauck salary to date ^10, and credited bookkeeper and salesman for salaries to date. Sold to Theodore Tyson, 405 Columbia Av., on account: 6 Leather-seat dining chairs at $x.xx $xx.xx Bought from Williamson Chair Company for cash : 36 Cane-seat chairs at $1.12|- ;^40.50 Aug. 23 Received on account from H. W. Erving, cash j^lOO. Sold mdse. for cash ;^ 165.25. Aug. 24 Received from Robert Whittaker note at 10 days for $40, no interest, to apply on bill of the 18th inst. Bought on account from Williamson Chair Company : 10 Leather rockers at $15.50 $lbb. Aug. 25 Paid bill for repairing roof of store (charge to expense) $23.90. Note. — If improvements or repairs on real estate are of such character as to add permanently to the value of the property, it is proper to charge such expenditure to the real estate account, otherwise it should be regarded as an item of expense. Not infrequently two real estate accounts are kept, one designated as the investment and the other as the revenue account. If both accounts are kept, repairs are charged to the latter account and additions and permanent improvements to the former. Received invoice from Tomlinson Mfg. Co., Toledo, Ohio, terms net cash, for 4 Brass bedsteads at $29.60 $118.40 Sent check in payment of above. Aug. 27 Received cash on account from H. W. Erving $200. Sold Edward Allerton on account: 1 Sofa bed $35. 1 Parlor cabinet 36.50 1 China closet 19.50 $91. Less 5 and l^% 15.36 $75.64 Aug. 28 Received from Elmer T. Childs cash on account $55. Sold mdse. for cash $163.70. Aug. 29 Paid Emil Hauck cash for week ended to-day, and credited bookkeeper and salesman for salaries to date. Paid taxes on store building $47.63. 74 BOOKKEEPING Sold £. S. Madsen, 2240 Washington St., on account: 1 Oak sideboard 1 Oak dining table G Leather-seat dining chairs at $4.10 Atig. 30 Paid electric light bill to date $6.35. Paid Rand Teaming Co. for hauUng during month ^31.50. Paid freight bills for month $ 81.72. Less 10% $50.00 25.00 24.60 $ XX. XX x.xx $ xxx.xx Have your cash balance approved, and then close the cash book. Also have your sales book approved and then rule it up. Inventory, Aug. 31 8 Bedsteads, brass 20 Bedsteads, iron 6 Bedsteads, oak 7 Folding beds 4 Bookcases, oak 3 Bookcases, mahogany 6 Bookcases, combination 4 Cabinets, parlor 3 Cabinets, music 8 China closets 60 Chairs, cane-seat dining 40 Chairs, leather-seat dining 6 Chairs, oak, office 10 Chairs, fancy rockers 3 Chairs, Turkish rockers 6 Chairs, reclining 6 Davenports 6 Desks, roll top 10 Desks, writing, oak 6 Desks, writing, mahogany 2 Hall stands 6 Lounges, leather 20 Mattresses, wool 10 Mattresses, hair 8 Tables, oak, dining 6 Tables, oak, parlor 4 Tables, mahogany, parlor at $23.50 $188. al : 4.10 82. at : 15. 90. at . 15. 105. ■ at 20. 80. at ; 26.50 79.50 at 27.50 165. at 25. 100. at 8.50 25.50 at 16.50 132. at 1.50 90. at 2.60 104. at 7.50 45. at 4.25 42.50 at 16.25 48.75 at 10.50 63. at 40. 240. at 24.25 145.50 at 8. 80. at 12.50 75. at . 15. 30. at 30. 180. at : 3.50 70. al t 12.50 125. a t 20. 160. a t 15. 90. a1 t 25. 100. FURNITURE BUSINESS 75 Carried forward, 5 Tables, oak, library 6 Tables, oak, toilet 5 Sets, dining-room 6 Sets, bedroom 5 Sets, parlor 4 Ornamental tables 3 Sideboards 4 Sofa beds 10 Wardrobes, oak 5 Wardrobes, combination Less 25% at $ 14. 70. at 22.50 135. at 80. 400. at 75. 450. at 105. 525. at 13. 52. at 42.50 127.50 at 35. 140. at 22. 220. at 30. 150. $5005.25 1251.31 $3753.94 The 25% deducted from gross total of inventory is an allowance for deterioration in value of certain goods in stock, and for trade discounts allowed from list prices when goods were purchased. Real estate $5000. Expense 25. Office fixtures 155. Insurance 22. Horses and wagons 350. LESSON XXVII POSTING SET IV Required of the Student. — 1. Enter the following ledger headings, giving each account the number of lines indicated : Daniel G. Cummings, Proprietor, 12 ; Cash 8 ; Real Estate 8; Mdse. 1 page; Expense 1 page; Fixture 10; Insurance 10; Horse and Wagon 10 ; Freight and Expressage 8 ; Cash Discount 10 ; Interest and Discount 15; Salary 15; Bills Receivable 20; Bills Payable 10 ; Pupil, Bookkeeper, 15; Frank Andrews, Salesman, 15 ; Central Furniture Co. 10 ; Williamson Chair Co. 10 ; L. M. Mer- rill & Co. 8 ; Eastman, Fish & Co. 8 ; Blair, Jackson & Co. 8 ; Michigan Furniture Co. 8 ; H. W. Erving 15 ; Edward Alleston 12 ; Wilson, Demming & Co. 12 ; Imperial Hotel Co. 12; H. K. Simpson 8; W. J. Wagner 8; Robert Whittaker 8 ; Elmer T. Childs 8 ; Theodore Tyson 8 ; E. S. Madsen 8 ; Tomlinson Mfg. Co. 8 ; Loss and Gain 20. Use addresses given in the transactions as part of the ledger headings of personal accounts. 2. Post all items from the journal, cash book, and sales book to the ledger. Post- mark all postings in each book. By means of the abbreviations J., C.B., S.B., designate from which book each item is transferred to the ledger. Place the abbreviations in the explanation space to the left of the page numbers. In posting the journal entries, follow instructions given in previous sets. HOW TO POST THE CASH BOOK If each transaction recorded on left side of the cash book was put into the ordinary journal form, the result would be a series of journal entries each having cash for the name of the debit item and the name in the account space of the cash book for the credit item. It is suggested that the pupil make these journal entries. Since the final results in the ledger for a given set of transactions must be the same whatever the form of the original entries, it follows that the individual items on the credit side of the cash book must be posted to the credit side of the ledger accounts. (Read explanations and suggestions given in Lesson XXV.) QUESTIONS 1. What amount in the cash book equals the sum of all the items posted to the credit side of the ledger according to the directions given above .-' 2. What saving of labor is accomplished by posting this amount to the debit side of the cash account instead of the individual items as shown by the journal entries .-' 3. Will the result in the cash account be the same by the two methods of posting ? How about the amount of space required .'' By a process of reasoning similar to the above you should be able to determine how to post the credit side of the cash book. Journalizing each transaction will be of assist- ance in determining how to proceed. 76 POSTING 77 QUESTIONS 1. How would you state a general rule for posting the cash book? 2. Would the balance of the ledger be preserved if only the balance of the cash book were carried to the cash account ? Explain fully. HOW TO POST THE SALES BOOK If all the entries in the sales book were journalized, the result would be a scries of journal entries, each having the name of a personal account on the debit side and mer- chandise on the credit side. The sum of the amounts on either side of these entries would obviously be the total of the sales. Therefore in posting the sales book the accounts of the several purchasers must be debited, and the merchandise account must be credited for the total sales. After having posted the transactions as instructed, check over your postings to insure accuracy. Use small check marks in each book, placing them at the edge of the ruled line at the left of the amount. This may seem like useless work, but if errors have been made in posting, it is better to discover them before attempting to make a trial balance. You may now enter pencil footings in the ledger and take a trial balance. HOW TO FIND ERRORS IN TRIAL BALANCES If every part of your work is free from errors, the two sides of your trial balance will foot up equally. In a previous lesson your attention was directed to certain classes of errors that the trial balance will not reveal. But the existence of any error that destroys the equilibrium of the ledger is sure to be discovered when an attempt is made to obtain a trial balance. Remember that the possibihty of a trial balance depends upon strict observance of the principle of equality of debits and credits. The one infallible method of discovering errors is the rechecking of all postings and the verifying of all computations. Check marks must be entered in the ledger as well as in the books from which the posting is done. A little reflection will convince you of the foolishness of checking items in one place only. Bookkeepers and accountants make use of numerous devices to aid them in deter- mining the character of errors or in locating them, but frequently in the end it is found necessary to check the work item by item. Since you have the footings of all the books from which you posted and have not ruled up any of the accounts in the ledger, you may test the footings of your trial balance by the method illustrated below. The Journal Total Debits Total Credits Cash Book Total Receipts and Payments Total Receipts and Payments c 1 vi ]r I Total of items posted to [ Dr. of personal accounts Total Sales Trial Balance Footings ^xxxxx.xx $xxxxx.xx 78 BOOKKEEPING QUESTIONS 1. When you had posted the day-book journal items of this set, could you have secured a trial balance ? 2. When the debit side of the cash book had been posted, could a trial balance have been secured ? Why ? 3. When the credit side of the cash book had been posted, could a trial balance have been secured ? Why ? 4. How does the cash account in the ledger compare with the cash book ? How do the balances compare? 5. What items make up the accounts receivable ? 6. What items make up the accounts payable ? 7. How does the total of the unpaid notes in the bills receivable book agree with the balance shown in the ledger account of bills receivable ? 8. Test the bills payable in a similar way. 9. When you had posted the debits from the sales book, could you have made a trial balance ? Why ? 10. Could you have made the trial balance after posting the total sales ? Why ? 11. In the form for testing the trial balance footings, why must the sum of the three items on the left equal the sum of the three on the right ? 12. Why must these footings equal the trial balance footings ? 13. What conclusion would you draw from each of the following conditions : (a) If both of the trial balance footings differed from the results given by the test ? (d) If one of the footings was the same as those given by the test, the other differ- ent.? 14. What modification of the test would be necessary under the following conditions : (a) If one or more accounts whose footings are equal had been omitted from the trial balance ? (d) If only the balances had been entered in one or more of the accounts ? LESSON XXVIII MAKING THE BALANCE SHEET AND CLOSING THE LEDGER Required of the Student. — 1. Make out a balance sheet. 2. Open an account with Loss and Gain, if you have not already done so. 3. Enter inventories. 4. Close accounts to Loss and Gain. 5. Close loss and gain account to the proprietor's account. 6. Close proprietor's account, bringing down the balance. 7. Close bills receivable and bills payable accounts and bring down the balances. 8. Take a second trial balance. 79 LESSON XXIX SET IV. — Continued Required of the Student. — Write up the transactions for September. Use the same books and enter the transactions as in August. Post the journal, cash book, and sales book entries under the headings already in the ledger. Open additional accounts if necessary. At the end of the month make a statement or balance sheet and close the books. TRANSACTIONS FOR SEPTEMBER Sept. 1 Sold Theodore Tyson on account: 1 Brass bedstead $ xx.xx 1 Sideboard 50.00 $ xx.xx Paid cash for shoeing horses $4.50. Rented 3d floor of our store building to James Egan at $20 per month. Received his check for one month's rent in advance. Cr. Expense. Sept. 3 Sold for cash : 12 Cane-seat dining chairs at $x.xx ^ $ xx.xx 1 Dining-room table, oak 25.00 $ xx.xx Sold I. C. Swain, 965 East Av. : 1 Oak writing desk 1 Toilet table 1 Combination bookcase Robert Whittaker paid cash for his note of the 24th ult. Sept. 4 Sold Wilson, Demming & Co. 10 days net: 24 Cane-seat chairs at $ x.xx $ xx.xx 12 Leather-seat chairs at $x.xx xx.xx 3 Fancy rockers, oak, at $b. xx.xx 2 Wardrobes at $ 24.50 xx.xx 2 Parlor sets at $ 124. xxx.xx 10% and 5% disc. Paid Frank Andrews, salesman, on account, $15. 80 $ xxx.xx $ xxx.xx FURNITURE BUSINESS 81 Sept. 5 Paid Emil Hauck one week's wages, ;^10. Credited bookkeeper and salesman each with week's wages. Sold for cash : 1 Iron bedstead $ 5.50 1 Wool mattress 4.50 1 Toilet table 26.25 1 Combination bookcase 35.50 $71.75 Bought for cash 2 brass bedsteads at $ 23.50 $ 17. Sep/. 6 Received from H. K. Simpson a note signed by John Coleman, dated July 15, at 60 days, face $120, interest 6 %, and cash to balance his account. Interest accrued and allowed $ 1.06. Sold Imperial Hotel Company, 10 days net: 2 Brass bedsteads at $ xx.xx $ xx.xx 2 Hair mattresses at $13.50 27. 2 Fancy rockers at $4.50 9. 2 Wardrobes, oak, at $ 27. 54. ^ XXX. XX Sep/. 7 Bought from Williamson Chair Company, 5 days net : 48 Leather-seat dining chairs at $ 2.90 $ 139.20 8 Fancy rockers, oak, at $4.10 32.80 4 Turkish rockers at $ 16. 64. $ 236.00 Less 10 % 23.60 $212.40 Received from the Imperial Hotel Company cash for our bill of Aug. 15, less $28.50 for returned goods. Sep/. 8 Gave Williamson Chair Co. 10-day note, interest 6 %, for invoice of Aug, 24, $ 155. Theo. Tyson paid cash for purchase of Aug. 22. Sep/. 10 Elmer T. Childs paid cash to balance his account. Gave Blair, Jackson & Co. 10-day note, interest 6%, for invoice of Aug. 17. Frank Andrews drew cash $25. Have your cash balance approved and then balance the cash book. Since the cash book has been balanced, it is necessary to post the total receipts and payments just as you did at the close of August. 82 BOOKKEEPING Sept. 11 Sold French Furniture Co., Kansas City, Mo., 2 % 5 days : 6 Brass bedsteads at $ XX. XX ^xxx.xx 6 Hair mattresses at $ 18. 108. 2 Bedroom sets at $ 90. 180. 30 Leather-seat dining chairs at $ 3.25 97.50 % XXX. XX Less 10 and 10 % xx.xx $ xxx.xx Sept. 12 Emil Hauck's salary has been increased $1 per week. Paid him cash $11 for week ended to-day. Credited bookkeeper and salesman for salaries for week ended to-day. Paid repairs on wagon ;^3.75. Paid Williamson Chair Co. for invoice of the 7th. Sept. 13 John Coleman paid his note due to-day with interest, face $120, interest for GO days at 6 %. Sold to Walter Rogers, 1972 Lincoln St., 1 parlor set $124. Received in payment John Fischer's note, Rogers' favor, at 30 days, dated Aug. 20, interest 5%, for $100; interest accrued and allowed $.33, cash for balance. Sept 14 Received from Wilson, Demming & Co. their note at 30 days, % interest, for in- voice of 4th inst., due to-day. Sold for cash : 4 Folding beds at $19.20 $ 76.80 Sept. 15 Imperial Hotel Company paid for invoice of the 6th inst. French Furniture Company paid for invoice of the 11th inst., less cash discount. Edward Alleston paid cash for invoice of Aug. 27th. Sold him on account 5 days: 3 Folding beds at $ 19.20 $ 57.60 1 Brass bedstead xx.xx 10 Iron bedsteads at $ 5.25 52.50 2 Bookcases, oak, at $ 24. 48. 1 Mahogany bookcase 32.50 $ xxx.xx Sept. 17 E. S. Madsen has failed in business and we have accepted cash, 70}^ on the dollar, for his invoice of Aug. 29 ; the balance is lost. Make a journal entry for the loss. Paid cash for horse feed $ 26.18. FURNITURE BUSINESS 83 Sept. 18 Paid cash for note dated Sept. 8, favor Williamson Chair Company, with interest, face of note, $155, interest for 10 days (J %. Sold for cash, 2 Oak bedsteads at $ 21.50 $ xx.xx 2 Mahogany bookcases at $ 32.25 64.50 2 Parlor cabinets at $ 28.40 56.80 3 Music cabinets at $ xx, xx.xx $ XXX. XX Sept 19 Paid Emil Hauck, and credited bookkeeper and salesman with wages for week. John Fischer paid cash for his note received on the 13th, with interest. Sold D. E. Casselberry, 459 N. 20th St., on account: 1 Combination bookcase $ 35. 1 Sideboard, oak 50. 6 Leather-seat dining chairs at $x.xx xx.xx f, XXX. XX Sept 20 Pupil drew cash on account, $ 100. Theo. Tyson paid cash for invoice of the 1st. Paid Blair, Jackson & Co. for note dated the 10th inst. and interest. Bought from Central Furniture Co. invoice of mdse. $ 1684.76, terms 3 % 5 days. Balance the cash book again, following directions at close of transactions of Sept. 10. Sept 21 Received H. W, Erving's note for 30 days, interest 5 %, to balance account. Allowed D. E. Casselberry a claim of $ 4.50 for defect in wardrobe sold him on the 19th inst. Sept 22 Sold H. W. Erving on account : 1 Dining room set $ 92.50 1 Parlor set 124. 1^216.50 Discounted at bank Wilson, Demming & Co.'s note, dated the 14th, at 30 days. Face $ . Discount off, 22 days at 7 %. Sept 24 Sold Imperial Hotel Company on account: 4 Oak bedsteads at $ 19.15 $ 76.60 1 Sideboard, oak 50. 3 Combination bookcases at $ 37.50 112.50 $ 239.10 Daniel G. Cummings discounted at the bank his 30-day note indorsed by H. W. Erving. Face $2000; discount at 7 %. Proceeds placed to Mr. Cummings' credit. 84 BOOKKEEPING Sept. 25 Frank Andrews drew cash $ 25, Sold H. W. Erving on account : 3 Oak writing desks at $ 10. $ 30. 1 Parlor set 124. 2 Parlor cabinets at $ 32.50 65. 3 Fancy rockers at $ 5.25 15.75 $ 234.75 Discounted at the bank H. W. Erving's note of the 21st inst., face $ ; discount off, 26 days, at 7 %. Paid Central Furniture Co. for invoice of Sept. 20, less 3 % cash discount. Sept. 26 Paid for advertising and printing $ 28.30. Sold K. G. Tucker & Sons, St. Paul, Minn., 2% 3 days; 2 Oak bookcases at $ xx.xx $ xx.xx 2 Oak office chairs at $ 9. 18. 3 China closets at $ 21.25 63.75 2 Roll-top desks at $ 27.50 • 55. 4 Oak writing desks at $ 10. 40. $ XXX. XX Less 5 % XX.XX $ XXX. XX Credited bookkeeper and salesman and paid Emil Hauck wages to date. Sept. 27 Bought from Michigan Furniture Co., cash 2 % '- 5 Oak dining tables at $16.50 3 Oak parlor tables at $ 12.50 4 Bedroom sets at $ 15. 5 Dining-room sets at $ 80. 4 Oak sideboards at $ 32.50 6 Oak bedsteads at $ 16. Less 5 % & 121 (f^ $ 82.50 37.50 300. 400. 130. 96. $ 1046.00 176.51 $ 869.49 Paid above bill less cash discount. Discount off $ 17.39. Sold for cash, 6 cane-seat chairs at $ x.xx FURNITURE BUSINESS 85 Sept. 28 Sold H. K. Simpson: 2 Hall stands at $17.50 $ 35. 1 Davenport 50. 1 Mahogany parlor table 32.75 1 Dining room set 95. $212.75 Received his 10-day note without interest in payment. Sept. 29 Discounted at the bank H. K. Simpson's note dated the 28th inst., discount off, 9 days 7 %. Paid freight and express for this month $43.75. Paid electric light bill $ 12.80. Paid small expense bills for this month $ 18.72. Bought for cash 10 tons coal at $ 7.25, for use in our store, and paid cash for 6 tons delivered to Mr. Cummings' home at $ 7.50 per ton. Paid pupil in full of account. Paid Frank Andrews in full of account. Paid Merrill & Co. in full of account. 9 Bedsteads, iron 6 Bedsteads, oak 5 China closets 18 Chairs, C. S. dining 40 Chairs, L. S. dining 4 Chairs, oak office 10 Chairs, fancy rockers 7 Chairs, Turkish rockers 6 Chairs, reclining 5 Davenports 4 Desks, roll-top 2 Desks, oak writing 6 Desks, mahogany writing 6 Lounges, leather 19 Mattresses, wool 2 Mattresses, hair 12 Tables, oak dining 9 Tables, oak parlor 3 Tables, mahogany parlor 5 Tables, oak library Inventory, Sept. 29, 19— @ $ 4.10 $ 36.90 @ 15. 90. @ 16.50 82.50 @ 1.50 27. @ 2.60 104. @ 7.50 30. @ 4.25 42.50 @ 16.25 113.75 @ 10.50 63. @ 40. 200. @ 24.25 97. @ 8. 16. @ 12.50 75. @ 30. 180. @ 3.50 66.50 @ 12.50 25. @ 20. 240. @ 15. 135. @ 25. 75. @ 14. 70. Forward $ xxxx.xx 86 BOOKKEEPING Forward ^xxxx.xx @ $ 22.50 90. @ 80. 640. @ 75. 600. @ 13. 52. @ 42.50 170. @ 35. 140. @ 22. 182. @ 30. 150. 4 Tables, toilet 8 Dining-room sets 8 Bedroom sets 4 Ornamental tables 4 Sideboards 4 Sofa beds 6 Wardrobes, oak 5 Wardrobes, combination ^3743.15 Less 25 % 935.79 ;g 2807.36 Plus entire purchase from Central Furniture Co., Sept. 20. 1684.76 15 4492.12 Real Estate $ 5000. Office Fixtures 140. Insurance 20. Horses and Wagons 335. Expense — coal, blankbooks, etc. 100, LESSON XXX SHIPMENTS AND CONSIGNMENTS Introduction. — In certain lines of business — the produce business, for example — a merchant frequently finds that he has goods on hand for which there is little demand in his home market. He learns, however, that there is a good demand for the commodities in other markets. He therefore ships these goods to a merchant in the more favored locality to be sold. Firms who sell goods for others are known as commission merchants, or commission houses. They usually charge a certain percent- age of the selUng price for their services. It is to be observed that the goods received by a commission firm remain the property of the sender until they are sold. The party sending the goods is called the " consignor," the one receiving them the "consignee." The consignor calls the goods sent to another for sale a "shipment." The commission merchant calls them a "consignment." When a shipment is made, an account is usually opened by a journal entry like the following : Jan. 1. Shipment Jones & Co., Buffalo $ 300. . Mdse. $300. The new title shows the disposition of the goods, both to whom and where. When the sale is reported and cash remitted, it is recorded as follows : Jan. 20. Cash ;^ 325. Shipment Jones & Co., Buffalo $325. If the account sale was not accompanied by a cash remittance, the merchant would be debited thus : Jones & Co., $325. Shipment Jones & Co., Buffalo $ 325. When the commission merchant receives the goods, no entry of a debit or credit nature is made by him unless he pays the freight or some other charge, as the goods do not belong to him. If freight is paid, the record will be: (Sender's Name) Consignment $5.50 Cash $5.50 As sales are made, the consignment account will be credited instead of merchan- dise. When all the goods are sold, the consignment account will be charged with commission, etc. The difference will then show the balance due, and when paid, this will be charged to the consignment, thus closing the account. The commission is the commission merchant's gain, or pay for his services. The valuation placed on merchandise when shipped to be sold on commission is generally the amount at which it would be inventoried if retained in stock. Any expenses incurred in sending a shipment should be charged to it. 87 88 BOOKKEEPING LEDGER ACCOUNT WITH A SHIPMENT ^dl/ii^e'M.I^ Gai^cd^ S^ (^., ^M^MiA, c/k Jan. Loss and Gain 300 25 19— Jan. 20 325 325 325 Required of the Student. — Journalize the following transactions, open accounts with the shipments, post the debit and credit items affecting shipments, and close the accounts. July 1, 19 — . Shipped to Cerveny & Anderson, Philadelphia, Pa., to be sold on our account and risk, 500 bushels of barley, invoiced at 50 ^ per bushel. July 3. Shipped to Mann & Co., Boston, Mass., to be sold on our account and risk, 1 car potatoes, 200 bushels, at 75 ^ per bushel. July 5. Shipped to E. Earl & Sons, Erie, Pa., 1 car sweet potatoes, 225 bushels, at ;^1.25 per bushel. Prepaid freight in cash $29.60. July 9. Received on account sales from Cerveny & Anderson together with check for proceeds, $290.76. July 14. Received notice of destruction of shipment made on the 3d inst. The shipment is a total loss. July 20. Received on account sales of shipment made on the 5th inst. The pro- ceeds, amounting to $ 360.50, have been credited to our account. LESSON XXXI DRAFTS In the course of business it frequently becomes necessary to make payments at dis- tant places. It is obvious that this might be done by carrying the money from one place to another. But this would involve the risk of loss, prevent the use of the' money while in transit, and be expensive. For example, if A of Chicago buys merchandise amounting to ;^1000 from B of New York, and B of New York buys produce from D of Chicago for the same amount, it is clear that all obligations might be canceled by transferring the money in both directions between the cities. But after all the time, risk, and expense involved, there would be just as much money in each city as at the start. Early in the history of commerce, methods were adopted to avoid, as far as possible, the actual transfer of money. This was accomplished by the use of drafts, or bills of exchange. These were orders by which one party directed a second party to pay a specified amount to a third party or to his order. To illustrate the use of such papers, return to the transactions above. B, who is in New York, has $1000 due him from A, in Chicago. Suppose that at the same time B owes D, also in Chicago, $ 1000. Instead of actually transmitting the money, B writes an order directing A to pay the $1000, due B, to D. This order, which is a draft, is sent to D, who takes it to A and receives the $1000, or the assurance that he will receive it after a certain time. No money has been carried between the cities and yet the two debts have been canceled. B, who signs it, is called the drawer of the draft; D, to whom it is made payable, the payee ; and A, who is directed to pay it, the drawee. The use of drafts is based on the supposition that the drawee has in his possession funds belonging to the drawer, or that he is in some manner under obligation to pay the drawer. The obligation may be an agreement between the parties to honor each other's drafts. When the payee of a draft presents it to the drawee for payment, the latter may either express his willingness to pay or refuse to do so. If the draft is payable after sight, as in the form below, the drawee gives his written promise to pay when it becomes due. He does this by writing the word "Accepted," with his name and date, across the face of the draft. If the draft is payable at sight, it must be paid when presented. In either case the draft is said to have been honored. If the parties to a draft are individuals or firms, the paper is called an individual or personal draft. If the drawer and drawee are banks, or banking houses, the draft is called a bank draft. Although the theory on which is based the use of personal drafts as described above, is correct, in practice personal drafts are at the present time rarely, if ever, used. Bank drafts are used extensively in making payments in distant places. Banks furnish these drafts to depositors generally without charge for exchange. 90 BOOKKEEPING COLLECTIONS BY MEANS OF DRAFTS The form below is a three-party personal draft. Although this particular type is now very rarely used, it will serve to illustrate the general idea of drafts. FORM OF DRAFT tmmmmmmtmmmm mmm)^,- ^ ^y /^ . m^(2^ f9y7y'^ Q4^.^^.if^^^~^ 1 EXCHANGE mm^f^'Q^ ^^a^S2JKSMl^>^^£9C£E3iSSSJ;^©^J^ijm32gS' ^2) (JrT;-t^j~g^^.,-n/^ -^y^^^^/^^^ Cl^^l/r^^y^^y(?^v^^^ O^A -v ,^^^ ^gz>?- ? .-Vp ( ,- ^^^^- 7 1^ ^ . gimfuwninfiitwfimiiH In theory Mr. Carter sends the above draft to Mr. Frederick and he in turn presents it to Mr. Taylor. Since the draft is not to be paid immediately, Mr. Taylor may refuse to honor it or may accept it. The latter, as noted above, means that he gives his promise to pay at maturity the amount named in the draft. The manner of accepting a draft has been explained. If Mr. Frederick wishes to make a payment with the draft, he may, by means of an indorsement, transfer his title to the proper party. The form of draft used for the purpose of making collections is like the form in this lesson, except that it is customary to make a bank the payee. This bank will forward the draft to the bank with which the drawee transacts business, and the latter bank will request the payment. If the draft is honored, — that is, paid, — the drawer will receive credit for the face less a small charge that is usually deducted for expense of collect- ing. The uses and forms of bank drafts and of drafts used for making collections will be more fully explained and illustrated in another lesson. Required of the Student. — Write the drafts used in the following exercises : 1. J. Allison & Sons, Philadelphia, Pa., on Jan. 4, 19 — , drew on Benjamin Hood & Co., Cleveland, Ohio, at 10 days' sight for $ 600, favor P. M. Newmark. 2. Henry Townsend & Co., Duluth, Minn., owed me $ 260, and I drew on them for the amount through the First National Bank. Use the date of writing and the name of your town or city in the heading. 3. Draw at 30 days' sight on Raymond Rogers, Baltimore, Md., favor Eugene Buck, for $ 183.40. Use the date of writing and the name of your city. On the supposition that the draft is accepted 4 days later, write the acceptance. DRAFTS 91 4. Elmer Rixon & Co., Altoona, Pa., drew on you at sight through the Central National Bank, of that city, on Jan. 2, 19—, for $04.20. QUESTIONS 1. In each of the drafts written, who is the drawer .-• Payee .-' Drawee .'' 2. In each, what entry should the drawee make when he honors the draft .'' 3. What entry should the payee make in each case when the draft is honored .-' 4. What entry should the drawer make ? 5. How many uses of drafts are illustrated in the exercises .-' LESSON XXXII BUSINESS LETTER WRITING Introduction. — The three ordinary means used by the business man to communicate with dealers and customers are the letter, the telephone, and the telegraph. It is not the purpose of this lesson to discuss these means of communication in detail, but to give a few hints relating principally to the correct form of a business letter. The student will find a fuller discussion of business correspondence in special works on this subject. Every business letter should possess the following qualities : 1. It should be well written. 2. It should be neat. 3. Its meaning should be clear. 4. It should be as brief as possible, consistent with clearness. 5. It should be courteous. 6. It should be mechanically correct. When answering a letter, give the date of the letter answered. When paying a bill, give the full amount of the bill and discount, if deducted. Required of the Student. — In preparing the following exercises use regular com- mercial letter paper, which measures usually S^ x 11 inches. Rule two parallel lines at the left, one three quarters and the other one and one half inches from the left edge of the paper. There will be no writing to the left of the first line ; all paragraphs will begin at the second line. If you find that you need additional information in writing the letters required by the exercises, apply to your teacher or refer to some work on letter writing. 92 BUSINESS LETTER WRITING 93 LETTER ORDERING GOODS OFFICE OF JAMES BROWN & SONS MERCHANTS V yf- c^O t>€Z'd'ed^ S ='V'C^. ^^it^d-^a^l ^^z/a-m-t-^^o i3^^g^/. [^OM' 'Tyit^I^^J. ■C^i'^Z'^i- O-'M^ t^d' tXt d-li^-H-l^ /^^ €A^€' €^'n'^i>t4/^^J 94 BOOKKEEPING Required of the Student. — Prepare the following letters, supplying dates and using your home address : Example 1. — Order from D. C. Heath & Co., Boston, Mass., a number of books; ask them to send the goods cash on delivery. Example 2. — Order from Claflflin & Co., New York City, five items, dry goods, ask- ing for best terms, and giving your banker as a reference. Example 3. — You owe Brown & Brown $125 for a horse, for which you are to give your note at 30 days, bearing 6 % interest. Write a letter mclosing the note. Example 4. — You received the goods ordered in Example 2, amounting to $125.60, less 2 % for cash. Write a letter stating that you are inclosing a bank draft for the bill, less the discount. Use the following form in the body of the letter : Bill of goods. Mar. 1, 19— $125.60. 2 % Cash Discount 2.51. Bank draft inclosed for $123.09. Example 5. — Order from Crane Manufacturing Company, Philadelphia, Pa., dealers in stoves, etc., five items ; give reference. Example 6. — Write to the Crane Manufacturing Company, dating your letter ten days after the date used in Example 5. Make your letter include all the essential facts contained in the following data : (1) Acknowledge receipt of the goods ordered in Example 5 together with invoice. (2) Explain that they have billed and shipped you a No. 7 family range that was not included in your order. (3) State that you are inclosing a bank draft for the amount of the invoice, $ 265.75, less the invoice price of the article not ordered, $41.50, and less the 4% discount allowed by the terms of the invoice for payment within ten days. (4) Ask what disposition they desire you to make of the article that was not ordered. LESSON XXXIII OPENING AND CLOSING ACCOUNTS The following examples afford practice in opening and closing sets of transactions. Each presents in complete form the results of one or more years' business. The most difThcult part of bookkeeping is found in the opening and closing of sets of books. These exercises omit the details of the business that are but a varied repetition, and bring the important parts close enough together to illustrate clearly the relation each bears to the other. The student will journalize, post, take a trial balance, make balance sheet, and close the ledger according to the provisions of each exercise. When no dates are given, use the first business day of the year for the opening entries and the last business day of the year for the closing entries. Exa7)iple 1 Losses and Gains shared equally. Salary Adjustment 1. VV. F. Barnes and R. A. Smith commenced business with the following resources : Barnes invested cash $3000. Smith invested merchandise 4000. Losses and gains are to be shared equally. It is agreed that salaries shall be allowed as follows: Barnes $90 per month and Smith $100 per month. 2. Total purchases of merchandise on account for the year amounted to $15,000. 3. Total sales for the year amounted to $18,000, one half on account, the remainder for cash. 4. Total expenses for the year paid in cash, not including salaries of partners, amounted to $2500. 5. All the accounts receivable were paid in cash less an average cash discount of 2 per cent. 6. One half of the accounts payable were paid in cash less an average cash discount of Ig- per cent. 7. Credit each partner with salary for one year. 8. One half of each partner's salary was paid. Barnes took merchandise from the store and Smith was paid in cash. 9. The inventories are as follows : Merchandise $6500. Expense 175. 95 9(J BOOKKEEPING Example 2 Losses atid Gains shared in Proportion to Capital 1. R. W. Miller and H. B. Brown commenced business with the following resources and liabilities : 2. R. W. Miller invested as follows : Cash • 1^2100. A note signed by O. B. Grow, due in 60 days 800. An account against Fair & Co. for 475. A balance due A. B. James on account 375, 3. H. B. Brown invested as follows: A store building and lot valued at $6000. There was a mortgage against the above which was assumed by the firm amounting to 2500. 4. According to the articles of copartnership the losses and gains were to be shared in proportion to the net investments of the partners. 5. The total purchases of merchandise for the year on account amounted to $12,000. 6. The total sales of merchandise for the year on account amounted to $17,500. 7. The total expenses for the year, all paid in cash, amounted to $1350. 8. Three fourths of the accounts receivable were paid in cash less an average cash discount of 2^ per cent. 9. One half of the accounts payable were paid in cash less an average cash dis- count of 1| per cent. 10. Paid cash for new elevator in building $ 200. 11. Inventories at end of year : Real Estate $6200. Merchandise 3000: No allowances were made for discount on the note invested by Mr. Miller or for interest accrued on the mortgage assumed by the firm. Close the accounts and distribute the net loss or the net gain. Example 3 Interest Adjj/st?nents on Investments 1. E. L. Coe and M. F. Scofield commenced the retail grocery business Jan. 1, 19 — . Their investments and withdrawals were as follows : E. L. Coe : On Jan. 1 invested $ 1500. On Mar. 1 withdrew 500. On July 1 invested 2000. On Nov. 1 withdrew 300. OPENING AND CLOSING ACCOUNTS 97 M. F. Scofield : On Jan. 1 invested ;^3000. On Apr. 1 withdrew 800. On Aug. 1 withdrew 200. The above were all cash items. 2. Each partner was credited with interest on all investments at the rate of 5 %, and was charged with interest at the rate of 6 % on all withdrawals. 3. Total purchases for the year, one half on account and one half for cash, amounted to $ 14,000. 4. Total freight charges paid in cash amounted to $ 320. 5. Total sales for the year amounted to $21,000, one quarter being on account and the balance for cash. 6. Each partner was credited with a salary of $ 100 per month. This was promptly drawn out on the date of credit, i.e. the end of the month. (No interest.) 7. Total expenses for the year paid in cash $ IGOO. 8. Inventories at the end of the year : Merchandise $ 3250. Expense 250. 9. Losses and gains were to be shared equally. 10. Find each partner's present worth as of Dec. 31, 19 — , the business having been in operation for one year. Example 4 Admitting a Partner 1. A. A. Brewer started in business Jan. 1, 19 — with an investment of $ 7500 in cash. 2. The total purchases for the year amounted to $ 17,500, one half for notes and one half on account. 3. The total sales for the year amounted to $ 16,750, one half for cash and one half on account. 4. The total expenses for the year, amounting to $ 1350, were paid in cash. 5. Three fourths of the accounts receivable were paid in cash less an average cash discount of 2^ %. 6. One half of the accounts payable were paid in cash less an average cash dis- count of 2 %. 7. Dec. 31, 19 — , Mr. Brewer offered a half interest in the business to H. B. White, for a cash investment equal to the present worth of the business. It will be necessary for you to close the books to determine this amount. It was agreed that the accounts receivable pass at their face values and that no account should be taken of any interest. The inventories were : Merchandise $ 5250. Expense 250. 98 BOOKKEEPING 8. H. B. White invested cash as agreed. Summary of business for the following year : 9. Paid all notes payable in cash and also interest due on the same, $ 25.60. 10. The total purchases for the year amounted to $ 23,000, one half paid in cash and the balance on account. 11. The total sales for the year amounted to $ 23,125, one half for cash, and notes for the balance. 12. The total expenses for the year, paid in cash, amounted to $ 1900. 13. The old balances of accounts receivable were paid in cash. 14. The inventories were : Merchandise $ 9150. Expense 315. 15. An expense item of ;^120 purchased on account had not been entered on the books. 16. Partners shared losses or gains equally. Exatnple 5 Buying out a Partner 1. Jan. 1, 19 — , B. Cerveny and W. A. Wheeler engaged in business with the following resources and liabilities : Cerveny's investment : Cash $ 2500. Merchandise 3000. Real Estate 4000. There was mortgage on the real estate amounting to $ 2500, which was assumed by the firm. Wheeler's investment : Bills receivable $ 3000. Furniture and Fixtures 1000. The notes were guaranteed by Mr. Wheeler. Losses and gains were to be shared in proportion to investments. 2. The total purchases on account for the year amounted to $19,500. 3. The total sales for the year amounted to $ 21,000, one half on account and the balance for cash. 4. The total expenses for the year paid in cash amounted to $ 1500. 5. One of the notes invested by Mr. Wheeler amounting to $1400 was found to be worthless and it was charged to him. 6. The balance of the bills receivable account and interest due on notes amounting to $ 24.50 were paid in cash. OPENING AND CLOSING ACCOUNTS 99 7. Dec. 31, 19 — , Mr. Wheeler, desiring to sell out, offered his interest to Mr. Cerveny for cash. The accounts receivable were to be taken at their book values, but in determining the amount to be paid to Mr. Wheeler, it was proposed to deduct 2 % from the present worth of his interest. Mr. Cerveny accepted the proposition. The inventories were : Merchandise $ 7650. Expense 320. Real Estate ;^4000. Less Mortgage 2500. 1500. Furniture and Fixtures 1000. 8. Paid cash to Mr. Wheeler according to the agreement. This cash was taken out of the' business. Summary of the business for the following year : 9. The total purchases for the year amounted to $ 18,500, one half on account and the balance for notes. 10. The total sales for the year amounted to $ 31,000, one half for cash and the balance on account. 11. The total expenses for the year paid in cash amounted to $ 1850. 12. Withdrawals of cash by the proprietor amounted to $ 2150. 13. One half of the old balance of accounts receivable and three fourths of the sales on account were paid in cash. 14. The old balance of accounts payable was paid in cash. 15. Inventories at the close of the year were : Merchandise $ 3600. Expense 220. Real Estate $ 3900. Less Mortgage 2500. 1400. Furniture and Fixtures 950. LESSON XXXIV SINGLE ENTRY BOOKKEEPING Single Entry Bookkeeping is a method of recording business transactions in such a manner as to determine the condition of the personal accounts. This purpose it accom- plishes as satisfactorily as double entry, if we disregard the advantages of the latter in the detection of errors. It is evident from the purpose of the method that the law of equality of debits and credits, as found in double entry, can have no place in single entry, and that the checks upon the work provided by this law are lacking. It is obvious that the resources and liabilities of a business whose records are kept by the methods of single entry can be determined, and from these facts it is possible to find the net capital or present worth. Also it is clear that the difference between the net capitals at two dates in the history of the business is the net gain or net loss for the intervening period, provided allowances are made for additional investments and for with- drawals of capital from the business. It should, however, be explained that all information required for determining the resources is not necessarily found in the records of the business and may have to be obtained from other sources. For example, if the day book alone is used for original records, and no cash account is kept, the amount of cash on hand can be found only by actually counting it ; and the total of the notes on hand can be found only by adding the values of those in possession of the business. Since the notes outstanding cannot readily be determined in any other way, it is customary to keep a record of them in a notes payable book. The value of merchandise and other property must, of course, be determined as in double entry. The great weakness of the single entry method appears when it is desired to find where the gains and losses of a business occur. One department of a business may be pleasingly profitable, while another may be a source of loss, but the single entry method is inadequate to discover either of these facts. Among other defects of the single entry method are the following : Trial balances in the double entry sense are impossible. The accounts giving rise to the losses and gains of the business are not found in the ledger. The discovery of an omission of a debit or a credit item from the ledger is accidental and not due to any merit of the method. BOOKS USED IN SINGLE ENTRY As in double entry, the number of books used and the nature of records made in them depend upon the requirements of the business. It should, however, be remembered that the books selected in single entry are those that most readily lend themselves to 100 SINGLE ENTRY BOOKKEEPING 101 determining the condition of the personal accounts. Below are a few of the combinations found in common use. I. But one book of record may be used. This is a form of ledger with sufficient space on both sides for explanations. For particular lines of business this form of record is admirably adapted. Although the history of accounting fails to give positive infor- mation upon this point, it is generally believed that the first systematic records of trans- actions were of this form. II. A very common form of single entry is that in which the day book and ledger are used. The original records are made in the day book. Generally, only those trans- actions that affect personal accounts are recorded. But the day book may contain a full record of all transactions. It is necessary in posting to discriminate between those affecting personal accounts and others. III. Frequently the cash book is added to those just described. It may contain a record of receipts and payments, none of which are carried to the ledger; in this case it is an auxiliary book. It may be used in such manner that cash items affecting personal accounts are transferred from it to the ledger. In the former case, the day book would necessarily contain a record of all cash items to be carried to the ledger ; in the latter case, all cash items may be omitted from the day book. Other Books. — All the books used in double entry except the journal may be used in single entry. The cash book, the sales book, and the invoice book are subdivisions of the day book in either case. Notes receivable and notes payable books are frequently used. It should be kept in mind that single entry concerns itself with personal accounts, and that the introduction of additional books is not for the purpose of more readily obtaining detailed information concerning any impersonal account. They are used either for refer- ence or as a matter of convenience in keeping records of one kind of transactions in a separate book. Sometimes purely impersonal accounts are kept in single entry, but to this extent the system encroaches upon the methods of double entry bookkeeping. SINGLE ENTRY. SET I In recording the transactions of this set you will use a day book, a cash book, and a ledger. The day book will contain a complete record of all transactions that affect personal accounts. The cash book will contain a record of all receipts and payments of cash. These are the books of original entry, and they should contain records so complete and clear that a full history of the business is revealed by them. The cash book here has the same rulings as in the double entry sets, but the receipts and the payments will be entered on the same page. Since no book corresponding to the journal of double entry is used, it is convenient to indicate in the day book entry whether a personal account is to be credited or debited. The forms of the day book and the cash book as given illus- trate how entries are made. The rules for determining when a personal account must be credited and when debited apply to single as well as to double entry. 102 BOOKKEEPING The ledger used here has the same ruhngs as the day book. The left amount col- umn contains the charges, and the right amount column the credits, of personal accounts. 19— d/tj^i'-t/- (cfo-aS Oct. 10 11 11 12 13 15 SO John Phillips commenced the business of repairing and dealing in automobile tires at 1620 Park St. He invested cash $ 1500. John Phillips Cr. Union Mfg. Co. Vulcanizing outfit Union Mfg. Co. Cash in part payment of above J. Ames ^ Son Fabric as per invoice W. M. Davis, 1785 Park St. 2 sections in casing @ $ ^.25 Harold Steiner, Jf20 Green St. Rebuilding casing, 32 X 4 T. M. Fischer &= Co. Lathe ajut motor J. P. Sand Automobile J. P. Sand Cash ill part payment of above Central Garage, 16j^5 York Ave., Repairing 8 inner tubes (a) $ .75 Repairing 6 casings @ $4-50 Less 15 % y. Ames 6^ Son Cash for invoice of the 3d inst. John Gray, 562 Elm Ave. Retreading 2 36 X 4\ casitigs @ $18.25 R. J. Raymond, 1524 East Ave. Allowance for defect in casing Cash for balance of account Cr. Df Cr. Dr. Dr. Cr. Cr. Dr. Dr. D> Dr. Cr. 6 27 33 4 10 43 95 1500 620 120 113 8 24 125 450 300 28 113 36 53 55 50 50 05 55 50 SINGLE ENTRY BOOKKEEPING 103 19— Oct. 1 John Phillips i?ivestment 1500 1 a 1 Rent of store 1 jno. in advance 40 ii 2 Sheet rubber, 60 lb. @ $1.12^^ 76 50 n 2 Benzine, 5 gal. @ $ .22 1 10 til 2 Union Mfg. Co. o?i acct. 120 ■(( 3 Tools as per bill 28 70 4 6 Repairs, 4 tubes @,$1.25 Bala /ice (To be ejitered in red ink) Balance 5 150 5 1247 30 70 1505 1505 Oct. 8 1247 70 Required of the Student. — Write up the transactions of Set I in the day book and the cash book. Then post the day book entries. The posting here is so similar to the posting in double entry, ^o far as the personal accounts are concerned, that you should have no difficulty. Postmark postings as in double entry. Several items have been posted to show the form of the accounts. Balance and rule up the cash book on the 6th, 13th, 20th, 27th, and 31st of the month. TRANSACTIONS •Oct. 1, 19 — , John Phillips commenced the business of repairing and dealing in automobile tires at 1620 Park St. He invested cash $ 1500. 19— Ji^j o-H.iny:^, /^ ^ ^ ■Ji^-'n-z< /^t^yL< i7?z//<%,z2^ 7- File the check and the bill. 5 Jan. 2. Purchase a set of office furniture according to bill No. 5. (The large num- bers at the top of the incoming papers correspond with the numbers of the transactions.) Practice. — You will find the bill for the above on Pad No. 2 of incoming papers. It has been O.K.'d by the proprietor. What does this indicate.'' It is also receipted. It should not be removed from the pad until a check to meet it has been written. Write out a check for the amount called for in the bill. Refer to Transaction 4 for the correct method of filling out the check and for get- ting the bank balance. You should show the bank balance after the drawing of each check ; you will thus never make the mistake of overdrawing your bank account. Carry this second balance to the top of page 2. Pile the bill received in the envelope marked " Paid Bills and Receipts." Bookkeeping. — Enter on the credit side of the cash book, charging the expenditure to Fixtures. • 6 Jan. 2. As help is needed in conducting the business, the proprietor hires Allen Brown as salesman at $ 12 per week and James Rooney as driver and helper at $ 13 per week. Bookkeeping. — No debit or credit entry is required, but it is an excellent plan to have a record for reference. You may therefore make a memorandum entry in your journal, that is, simply a statement of the substance of the agreement. Do not extend amounts into the money column ; except for the date, use the wide space only. Include in this entry a record of your agreement with the proprietor. (See introduction.) Note. — Write up this memorandum explanation on trial paper and submit it to the teacher for approval. 7 Jan. 2. The proprietor rented the store building you occupy previous to Jan. 1, but the lease was not delivered until to-day. You will find the lease in your outfit. Practice. — It is customary to make two copies of a lease, one for the lessor and one for the lessee. The copy you receive has been signed by both parties, and you may assume that the other also has been signed. Read the conditions of the lease carefully. BUSINESS PRACTICE 113 Draw a check for the first month's rent, making it payable to the agents by whom the accompanying receipt is signed. Although you here have a separate receipt (see Pad No. 1), you will fill out the voucher on the back of the check. Bring down the bank balance in the check book. Bookkeeping. — Charge this payment to Expense. File the lease, the check, and the receipt. Jan. 3. Order from the Union Milling Company, Minneapolis, Minn., the follow- ing items, asking for prompt shipment : 10 bbl. Fancy family flour 10 bbl. ^'s Fancy family flour 15 bbl. ^'s Union medal flour 20 bbl. 4's Union medal flour. Practice. — Write the letter for the above order, as previously instructed. See Transaction 3. No debit or credit entry is required. Copy the letter and dispose of it Jan. 4. You will receive to-day by delivery the goods ordered the 2d inst., together with bill, which is in Pad No. 2. The goods are according to bill and are checked on it. Practice. — When goods are received they are checked against the items called for on the invoice. This is done by a receiving clerk, after which the goods are placed in the general stock. The invoice as you take it from the pad shows these check marks, and the O.K. and initials of the proprietor. It will be your duty to verify the extensions on all invoices. The terms are C.O.D. Write a check for the purchase, making it in favor of the seller. Bring down bank balance. In filling out the voucher say "For Inv. No. 9, Jan. 3." Bookkeeping. — Since it is desirable that the ledger accounts show all of the dealings with creditors and customers, you will make a record in the journal as follows: Jan. Mdse. For Inv. No. 9 Gray &" Farwell 181 05 Also make the following entry on the credit side of the cash book ISl 05 Jan. 3 Gray <5^ Farwell For Inv. No. 9 181 05 114 BOOKKEEPING The record of this purchase might be made by the following entry in the cash book on the credit side : Jan. Mdse. For Inv. No. 9 181 05 This record does not show the personal account. The first entry shows a complete record, the second does not. Follow the first method in this set in recording the purchases and sales of merchandise only. File the invoice and the check. Where .'' Note. — It is customary to file invoices of purchases in some systematic manner so that reference may be made to them easily and promptly. There are several methods in general use. One is to paste them in a specially prepared book, numbering the invoices consecutively as they are entered. The record in the book of entry contains this number, thus making reference easy. Another common way is to file the invoices in a specially prepared binder, numbering as before. Each method has its advantages and disadvantages. 10 Jan. 4. The proprietor ordered from W. P. Rend & Co. coal for use in the store. The coal has been delivered and you will find the invoice in Pad. No. 2. Practice. — Treat the bill according to its terms. Bookkeeping. — Record in the cash book on the credit side, charging to Expense. File the papers. 11 Jan. 4. Order from F. M. Ailing & Son, New York, the following goods: 5 H/C Y. H. tea. 3 H/C English breakfast tea. 5 H/C Formosa Oolong tea. See Transaction 3 for instructions. 12 Jan. 4. Order from Antonio Valdez & Co., Philadelphia, Pa., the following goods: 5 bags O. G. Java Coffee. 10 bags Golden Rio Coffee. See Transaction 3 for instructions. 13 Jan. T). Sale according to ticket No. 13. Practice. — You will find the sales ticket bearing the number of this transaction in Pad No. 3. The sales tickets are made out by sales or order clerks, who see to the filling of the orders. They are then sent to the bookkeeping department ; first, for a guide in making out the bill ; second, for making the bookkeeping record. They are then filed for future reference. Make out an invoice for the sale in this transaction. For a model refer to invoice received in transaction No. 9. Use selling prices as shown on the ticket. BUSINESS PRACTICE 115 Bookkeeping. — Enter the sale in your sales book. File the sales ticket and dispose of the bill as directed in the general instructions given at the beginning of the set. 14 Jan. 6. Received from the Union Milling Company flour ordered on the 3d inst., also invoice and bill for freight charges. Practice. — The invoice and freight bill will be found in Pad No. 2, Write a check in favor of the railroad company for the freight. Bookkeeping. — Enter the invoice in the day-book journal thus: Debit mdse. and credit the Union Milling Company for the amount of the purchase. Give the entry the date of the invoice and explain it thus: " Invoice No. 14." Enter the payment in the cash book on the credit side. Charge the item to Freight, using for an explanation " On invoice No. 14." File the invoice, the check, and the freight bill in proper envelopes. 15 Jan. 8. Sale according to ticket. See Transaction lo for instructions relating to practice and bookkeeping. 16 Jan. 8. Sale according to ticket. See Transaction 13 for instructions. 17 Jan. 8. Received goods from New York in accordance with accompanying invoice, also freight bill from the railroad company. QUESTIONS 1. What bookkeeping record of the purchase will you make .-* Of the check in pay- ment of the freight .'' 2. What is the object of the check marks that you notice on the left margin of the invoice .'' 3. Where will you file the invoice .-* The freight bill .-* The check .'' 4. What is your check book balance after completing this transaction ? To verify what you have decided to do, refer to Transaction 14, since the transac- tions are similar. 18 Jan. 8. Sale according to ticket. Practice. — This sale is for cash. You will find the check for the payment in Pad No. 1. Make out the bill according to previous instructions. As this is a cash sale, write beneath the items thus : Received Payment, B. J. Knoiiss By (^Your Name). 116 BOOKKEEPING Bookkeeping. — Make the cash book and sales book entries. Although this is a sale for cash, the buyer is debited for the merchandise and credited with the payment. Hereafter you will follow this form of entry whenever the name of the purchaser is given. File the ticket and the invoice. 19 Jan. 10. Received goods from Philadelphia according to invoice, also freight bill. See Transaction 14 for information relating to practice and bookkeeping. Jan. 10. Sale according to ticket. See Transaction 18 for instructions. 20 21 Jan. 10. Balance your cash book. Find the balance in the usual manner, but do not enter it until you have tested its correctness. This is done by adding to the check book balance the sum of currency and checks on hand. If your work is correct, this amount will equal the cash book balance. If the two results agree, enter the balance as below and rule up the book as usual. Date the balance Jan. 11 in bringing it down. Show the amount of cash in the bank and in the drawer as in the form below. (Credit side of cash book showing the last entry and the form of closing.) 10 10 Freight On Invoice No. 19 Tola! Payments In Bank $xxxx.xx Bal. \ In Drawer xxx.xx X XX X XXX XXX XX x'x X XXX XX 1 What errors might exist in the cash book not revealed by the above test .-' Deposit checks and currency in the bank, keeping out ;^25 in currency of the smallest denominations. Practice. — Indorse all checks, using full indorsements. List checks on the deposit slip in the column at the left, then carry the total to the right-hand column following " Total checks and drafts." Bookkeeping. — No debit or credit entry will be made. The teller will enter the amount of the deposit in your pass book, and you will add the total deposit to the balance on the stub of your check book. Before disposing of the deposit ticket, copy an itemized statement of the deposit on the back of the last-used stub in your check book. This statement may be of great assistance in detecting errors. Some business houses make duplicate deposit tickets and file one of them for reference. Posting. — Open accounts as needed, allowing space as follows : B. J. Knouss. 1 page ; Merchandise, 1 page; all other accounts, one half page each. The address should be a part of the heading of personal accounts. Post day-book journal, cash book, and sales book as previously instructed in Set 4. BUSINESS PRACTICE 117 Be sure that all items are postmarked. Check all posting to insure accuracy. Rule up all accounts that balance, and do not include them in the trial balance. Enter footings in small pencil figures in all ledger accounts. Take a trial balance and, when approved, copy it on the special ruled pages for trial balances. This form is known as a continued trial balance ruling. Use the first debit and credit money columns. Enter the date of the trial balance in the space at the top of the columns. Do not erase the small pencil footings in the ledger. 22 Jan. 11. Sale according to ticket. QUESTIONS 1, What papers will you make out .'' 2. What bookkeeping record will you make.? Jan. 12. Sale according to ticket. 23 24 Jan. 12. Petty cash sales according to ticket. Practice. — Petty cash sales, sometimes called sundry cash sales, represent cash sales in various amounts to customers with whom no accounts are kept. To buy on account one must have credit or standing with the merchant. A large number of buyers, how- ever, pay cash. Generally tickets are made out in dupHcate by the clerk, one going with the sale to the purchaser and the other with the money to the cashier. The cus- tomer's name is usually not taken. At the end of the day the total of these tickets must equal the petty sales receipts. Total the sales on the sales ticket for this trans- action. The amount should equal the amount of currency you will find in Pad No. 1, Bookkeeping. — Enter in the cash book on the debit side, thus : Jan. 12 Mdse. Petty Sales No. 2^ 45 50 Jan. 12. Sale according to ticket. 25 26 Jan. 12. Send Union Milling Company a check for invoice of the 4th inst., less the discount allowed on the invoice. Practice. — The terms on the invoice show the rate of discount to be deducted if paid within the discount time. Write a check for the net amount of the invoice. Show the amount of discount on the stub of the check, but subtract from your bank balance only the net amount. Fill out the voucher on the back of the check, showing the amount of the bill, the discount, and the net amount. Write a letter explaining the transaction, inclosing the check. Refer to Lesson XXXII for the correct form of letter. 118 BOOKKEEPING Bookkeeping. — The ledger account shows the full amount of the bill. If you post only the amount of the check, the account will not balance, but will show that you still owe the difference, which is the discount. But this you should not pay, as you are entitled to deduct this amount for prompt payment. The instructions following are the same as those in Set 4 for similar transactions : Record the payment by check in the cash book on the credit side, debiting the Union Milling Company. For explanation say "For Invoice No. 14 less 1%." In the day-book journal debit the Union Milling Company and credit Cash Discount, For explanation say "1% on Invoice No. 14." 27 Jan. 18. Pay employees' wages to date, each for two weeks. Practice. — Refer to Transaction 5 for names and amounts. Write a check in favor of each party. Bookkeeping. — An expenditure of this character may be charged to Expense, Salary, or any special account desired. You may enter the payment as a charge to Expense. Make an entry in the cash book for each check. 28 Jan. 15. Order from Central Canning Company, Cincinnati, Ohio, the following goods : 100 cases Royal brand tomatoes 100 cases Royal brand peas 200 cases Royal brand corn 25 cases Royal brand cherries 25 cases Royal brand raspberries. Practice. — See Transaction 3 for instructions. 29 Jan. 15. Send F. M. Ailing & Son, New York, check in payment of goods bought, less discount as per invoice. See Transaction 26 for instructions relating to practice and bookkeeping. 30 Jan. 17. Pay currency for cleaning store room, $5.25. Practice. — You will find a receipt for this amount in Pad No. 1. Bookkeeping. — Enter in cash book. Charge to Expense. 31 Jan. 17. Send Antonio Valdez & Co. check in payment of invoice, less cash discount. See Transaction 26 for instructions relating to practice and bookkeeping. BUSINESS PRACTICE 119 32 Jan. 17. Sale according to ticket. 33 Jan. 17. Sale according to ticket. QUESTIONS 1. What are the terms of the sale ? 2. What record will you make in the sales book ? 3. What record will you make in the cash book .-' 4. What is the object of carrying the transaction to the personal account.' See Transaction 18 to verify your answers and records. 34 Jan. 17. Pay to the Tribune for advertising to date, $12.50. Practice. — Pay currency. Bookkeeping. — Record in the cash book, charging to Expense. 35 Jan. 18. Receive a bill for goods ordered from Central Canning Company, also freight bill. QUESTIONS 1. What paper must you write .'' 2. Does the invoice have the proper O.K. .-' 3. Are the extensions correct? 4. What entries must be made } 5. Where must each paper be filed } 36 Jan. 20. Deposit checks and currency in the bank, keeping about $25 in currency of smallest denominations. Practice. — Follow instructions under Transaction No. 21. 37 Jan. 20. Petty cash sales according to ticket. See Transaction 24 for instructions relating to a similar transaction. 38 Jan. 20. Buy from John Roller, 312 Main St. : 20 bu. oats at 45^ $9. 1 ton Upland hay 9. $18. Practice. — Pay by check. You will receive no bill for this purchase. The voucher on the back of the check will be sufficient. Bookkeeping. — As these articles were bought as feed for the horse, the purchase will be charged to Expense. 120 BOOKKEEPING 39 Jan. 20. Prove and close your cash book. Bring down the balance as of Jan. 22. Post and take a trial balance. Copy it in the trial balance book, using the second set of columns and placing the date in the space at the top. Write the names of the new accounts under those occurring in the first trial balance. Jan. 22. Sale according to ticket. Jan. 22. Sale according to ticket. 40 41 42 Jan. 23. — Received check from the Travelers Hotel to balance account. Practice. — Find check in Pad No. 1. Compare the amount of the check with the ledger account. Give the Travelers Hotel a receipt " In full of account." Bookkeeping. — Record the check as a cash receipt, crediting the Travelers Hotel and using as an explanation " In full of account." 43 Jan. 24. Sale according to ticket. 44 Jan, 24. Received a check from the Cleveland Hotel to balance account. See Transaction 42 for information relating to practice and bookkeeping. 45 Jan. 25. Pay lighting bill to Jan. 15, by check $ 5.25. Practice. — Write a check for the amount, filling out the voucher on the back. Make the check in favor of the Consumers' Gas Company. Bookkeeping. — Record in the cash book on the credit side, charging the item to Expense. 46 Jan. 26. Send the Central Canning Company a check in payment of their last bill, less the discount they quote. 47 Jan. 27. Sale according to ticket. 48 Jan. 27. Petty cash sales according to ticket. QUESTIONS 1. What is meant by petty sales ? 2. Is a record kept of the individual sales .■* 3. With what must the total of such sales agree at the end of the day.? 49 Jan. 27. Sale according to ticket. The purchaser pays $ 20 to apply on account. BUSINESS PRACTICE 121 Practice. — Make out a bill as usual, terms, account. Following the last item on the bill, write " Credit by cash $20," deduct this amount from the total of the sale, show- ing the balance due, but do not sign the proprietor's name. Bookkeeping. — Enter the sale in the sales book, charging the purchaser as if no payment had been made. Enter the payment of $ 20 in the cash book, crediting the purchaser. When all items are posted, how will the purchaser's account stand in the ledger ? 50 Jan 27. Sale according to ticket. 51 Jan 29. Pay employees' wages for the past two weeks by checks. See Transactions 6 and 27. 52 Jan. 29. Sale according to ticket. 53 Jan. 30. Test your cash balance. 54 Jan. 30. Received a check from the Reynolds Catering Co. for bill dated Jan. 8. QUESTIONS 1. What bookkeeping record will you make .'' 2. What will you do with the check .-* 3. You may give a receipt. Is it necessary ? 55 Jan. 30. Sale according to ticket. 56 Jan 31. Give John Swanson a check for $ 5 for rent of space used in his barn for month of January. Practice. — You will find a receipt in the proper pad. Bookkeeping. — Record the payment in the cash book. 57 Jan. 31. Deposit all checks and currency of denominations greater than five-dollar bills. Follow previous instructions. 58 Jan. 31. The following are instructions for closing your books to determine the present worth of the business : 1. Prove your cash book and close it. 2. You will receive a statement from your bank, with all checks that have been presented for payment to date. These checks are stamped " Paid " and are valuable to you as evidence of payments that you have made. 122 BOOKKEEPING BANKERS SCHOOL BANK In Acc't J9 — Jan. 1 10 20 31 Deposit JfiO 155 60 128 416 06 24 The following form shows the first page of the pass book after the deposits for January are entered : The Bank Statement. — Although the statements used by banks vary some- what in form, they all embody the es- sential features of the one you receive. The amounts for which the bank has credited your account are shown in one column; these should agree with the en- tries in the pass book. The charges against your account appearing in another column should agree with the vouchers returned to you. At the close of February and of March you will be provided with blank statement forms ; either these will be filled out for you, or you will perform the work according to the instructions of your teacher. Arrange the returned checks consecu- tively and compare each check with its stub as to amount. As each check is compared, check-mark the stub. When you have compared all the returned checks, the stubs unchecked will repre- sent those that have not been presented to your bank for payment. Make a list of these unpaid checks and find the total. This amount will be equal to the difference between the balance shown by your check book and that shown by your statement. The statement balance should equal the check book balance if all checks drawn have been presented for payment. If all have not been presented, the statement balance should be the greater by the amount of these unpaid checks. The form below is one of several ways in which the work may be arranged to show the agreement of the check book and CHECK PROOF, JAN. 31, 19—. statement balances. Check Book Balance XXX XX Checks out: No. XX XX li XX i( XX t( XX 11 X Statement Balance 770 76 QUESTIONS 1. Can the statement balance ever be less than the check book balance "! Why .'' 2. If all the checks issued are returned, why must the check book balance and the statement balance be equal .-* BUSINESS PRACTICE 123 3. Post the day-book journal, sales book, and cash book. 4. Check your posting. 5. Take a trial balance, and after it has been approved, copy it in the trial balance book. 6. Credit the following inventories : Mdse. $2826. Horse and wagon 343. Insurance 68.75 Expense 20. Fixtures 183.40 7. Close the ledger and take a second trial balance. When correct, copy it in the trial balance book. 8. Make a balance sheet. 59 Jan. 31. Send statements to all persons or firms owing you on account, 60 Feb. 1. Mr. Knouss some time ago placed a proposition before you by which you might secure a one-third interest in the business. You have decided to accept his pro- posal. You consider the present worth of the business as shown by the balance sheet correct, and you are to pay Mr. Knouss on the basis of your interest. The capital of the business remains unchanged. The payment you make to Mr. Knouss is a private matter and does not appear on the books of the business. The articles of copartnership, of which each partner will have a copy, give detailed information to guide you in conducting the business. You will find your copy of these articles in your outfit. Mr. Knouss has signed it and you will do the same. If the business has on hand any notes, checks, etc., you will indorse them in full in favor of the new firm. The name of the new firm will be B. J. Knouss & Co. Mr. Knouss's interest in the insurance policy and lease must be assigned ; you may assume that the insurance company and the owner of the building have consented to these assignments, and that Mr. Knouss has made the transfers. It will also be necessary to notify the bank of the change in the firm and leave the new signature there. You will write a check in favor of the new firm for the balance in the bank according to your check stub and immediately deposit it in the bank. All firms with whom Mr. Knouss has had dealings should be notified of the change that has occurred in the firm. Bookkeeping. — Debit B. J. Knouss's account with one third of his present worth and credit your account with the same amount. A short explanation of the agreement, new name qf the firm, sharing of gains and losses, etc., should follow this entry. Hereafter few explanations will be given. New transactions will be explained, but it is believed that you will be able successfully to carry out transactions similar to pre- vious ones without constant reminders and injunctions. Give each transaction careful consideration. Consider whether everything has been done. Make a record of every- thing that you do, so that if an error is made, it may be traced and corrected. 124 BOOKKEEPING THE USE OF PRICE LISTS In some transactions that follow you will receive orders for merchandise from out-of- town customers. As these orders come to you they do not, as a rule, contain the prices Selling Price Lists for February and March Lists 1-15 I 2 3 4 5 6 7 8 9 lO II 12 13 14 a 15 Apples P2 202 202 203 202 202 202 202 202 202 202 202 202 202 20^ Asparagus . 260 260 260 260 260 260 260 260 260 260 260 260 260 260 260 Beets . . . .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 Cherries . . 235 235 2S5 235 235 235 235 235 235 235 235 235 235 235 235 Corn . . . .85 .86 .87 .88 .89 .85 .86 .87 .88 .89 .90 .90 .90 .90 .90 Peaches . . 265 265 265 265 265 265 265 265 265 265 265 265 265 265 265 Peas . .93 .95 .97 .99 201 203 205 207 209 Pl .90 .91 .92 .93 .94 Plums 260 260 260 260 260 260 260 260 260 260 260 260 260 260 260 Raspberries . 275 275 275 275 275 275 275 275 275 275 275 275 275 275 275 Tomatoes . . .90 .90 .90 .90 .90 .90 .90 .90 .90 .90 .85 .85 .85 .85 .85 Lists 16- ■30 16 17 18 19 20 21 22 23 24 25 26 27 28 202 29 202 30 Apples 202 202 202 202 202 202 202 202 202 202 202 202 220 Asparagus 260 260 260 260 260 260 260 260 260 260 260 260 260 260 260 Beets . . .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 Cherries . 235 235 235 235 235 235 235 235 235 235 235 235 235 235 235 Corn . .90 .90 .90 .90 .90 .80 .80 .80 .80 .80 .80 .80 .80 .80 .80 Peaches . 265 265 265 265 265 265 265 265 265 265 265 265 265 265 265 Peas . . .95 .96 .97 .98 .99 .95 .95 .95 .95 .95 .95 .95 .95 .95 .95 Plufns 260 260 260 260 260 260 260 260 260 260 260 260 260 260 260 Raspberries 275 275 275 275 275 275 275 275 275 275 275 275 275 275 275 Tomatoes .85 .85 .85 .85 .85 .80 .81 .82 .83 .84 .85 .86 .87 .88 .89 Lists 31- 45 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Apples 202 202 202 202 202 202 202 202 202 202 202 202 202 202 202 Asparagus 260 260 260 260 260 260 260 260 260 260 260 260 260 260 260 Beets . . .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 .83 Cherries . 235 235 235 235 235 235 235 235 235 235 235 235 235 235 235 Corn . . .85 .85 .85 .85 .85 .80 .80 .80 .80 .80 .89 .89 .90 .90 .80 Peaches . 265 265 265 265 265 265 265 265 265 265 265 265 265 265 265 Peas . . .80 .85 .90 .95 200 200 200 200 200 200 201 P^ .94 .99 .95 Plums 260 260 260 260 260 260 260 200 260 260 260 260 260 260 260 Raspberries 275 275 275 275 275 275 275 275 275 275 275 275 275 275 275 Tofnatoes .90 .90 .90 .90 .90 .70 .75 .80 .85 .90 .90 .90 .85 .85 .84 BUSINESS PRACTICE 125 of the commodities, and you will be required to supply the omissions from the price list assigned to you by your teacher. Enter the prices on the original order, and then make out the customer's bill from it, and file the order. If prices of commodities are not given in the Ust, they will be found in the text. 61 Feb. 1. Order from Union Milling Company as follows : 20 bbl. F. flour 10 bbl. 10 sacks F. flour 10 bbl. 80 sacks F. flour 10 bbl. Union Medal flour 5 bbl. 20 sacks Union Medal flour 5 bbl. 40 sacks Union Medal flour. 62 Feb. 1. Pay rent for the present month by check. 63 Feb. 1. Order from the Central Canning Company as follows : 100 cases R. B. peas 50 cases R. B. corn 100 cases R. B. tomatoes 30 cases R. B. asparagus 10 cases R. B. pumpkins 5 cases R. B. beets 20 cases R. B. cherries 10 cases R. B. apples 50 cases R. B. peaches 20 cases R. B. plums. 64 Feb. 1. Sale according to order. Practice. — You will find this order in Pad No. 2. The terms are C.O.D. Make out an invoice, billing 135 lb. at $ .18. Receipt the bill. In your supphes you will find express envelopes. Fill one out except the line for charges. Fold the bill lengthwise once and inclose in the envelope, but do not seal. Write on the lower end of the envelope, " Collect return charges." When the express company calls for the goods, they will be given the envelope, which is their notice to collect the amount of the sale before they deliver the goods. The company will make a delivery of the goods, collect the amount due you, and return' the envelope containing the company's money order. In practice when a representative of an express company receives goods to be forwarded, he issues a receipt for them or he receipts for them in a book furnished by the company for this purpose. File the envelope with outgoing papers. 126 BOOKKEEPING Bookkeeping. — Two methods are in general use, one charging to " C.O.D. Ac- count," using the name of the buyer as an explanation in the ledger, and the other charging the express company. As the latter is considered more practical, use it. This account will be used for all C.O.D. sales handled for you by the same express company. Make the sales book entry accordingly. 65 Feb. 2. Order from F. M. Ailing & Son, New York : 10 H/C Y. H. tea 5 H/C Extra Oolong tea 2 H/C Ceylon tea 5 H/C Best English Breakfast tea. 66 Feb. 2. Pay $8 in currency for postage stamps. Practice. — Various methods are used to keep track of this expense item. It is gen- erally necessary to pay currency for stamps, as the postal authorities will not, as a rule, take checks on account of the personal liability. Large firms generally make some one responsible for the purchasing of the stamps and their use. The letters and packages sent are sometimes counted and a record made of stamps used. The cash book record will be your voucher. Bookkeeping. — Charge the item to Expense. 67 Feb. 2. Sale as per order. Bill 80 lb. at $ .32. See Transaction 64 for instructions. 68 Feb. 2. Sale according to order. Practice. — Make out the bill in accordance with the order. Bookkeeping. — Charge the purchaser with the sale. 69 Feb. 3. Sale according to order. See Transaction <)8 for instructions relating to practice and bookkeeping. 70 Feb. 3. Received check from the Continental Hotel Co. on account. Practice. — What bills does this check pay .-* Compare with the ledger. Send a spe- cial receipt stating bills paid. 71 Feb. 3, Petty sales according to ticket. Do not fail to test footings. 72 Feb. 5. Received invoice of flour. Enter in purchase book. See next page. Pay freight. BUSINESS PRACTICE 127 THE PURCHASE BOOK Hereafter, instead of recording purchases in the journal, you will enter such transac- tions in a separate book. The first page of the sales book has been reserved for this pur- pose. Purchase book is the title by which this book will be designated. The name fully explains its use. It is unnecessary to itemize purchases. The form below illustrates the method of recording a purchase. Qtii^^At^d^e. ^^^a