UC-NRLF ^B 2flD bMfl Complete ':1SJSSU 11'^ Mayhew ■NEW-YORKvCINClNNATI-V^UlCAGO- •AMERICAN-BOOK-C0:VIPANY' ALVMNVS BOOK FVND i Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/eclecticcompleteOOmayhrich THE ECLECTIC COMPLETE BOOK-KEEPING Author of "Mnyhew's University Book-keepinp," "Mayhev>'s Practical Book- keeping," and "Means and Ends of Universal Education," and formerly Superintendent of Public Instruction in Michigan. " Deliver all things in number and weight, and pnt all in writing that thou givest out or receivest in."— Ecclksiasticus xlii • 7. NEW-YORK ..-. CINCINNATI .;. CHKJAGO AMERICAN BOOK COMPANY FKOM TUK PKESS OF VAN ANTWEKP, BRAGG, A.Y BOOK, let Set. We commence business this day with the following Assets: — Merchandise in Store per Inventory A Note against J. Brown for Cash in Safe (Art. 67) Sell H. Smith Merchandise Receive Cash Balance on acct. (Art. 69) Currency $100 Check 150 Buy Merchandise, Give our Note for Pay balance in Cash Invoice No. 1 Pay Cash for freight on Mdse. (Art. 38) Sell Jno. Cook Merchandise Receive Cash His Order on F. Brown for 600 200 100 250 160 3601 1401 180 120 900 400 500 40 300 Receive Cash For J. Brown's Note Interest on same Sell F. Brown Mdse. on acct. 8 80 Take up our Note for Interest on same Pay Cash 865 FIRST ILLUSTRATIVE SET. 41 1st Set. JOTIRN^Xj. Merchandise Dr. Bills Receivable Cash Expense Cash To Stock Cash Dr. H. Smith To Merchandise Merchandise Dr. To Bills Payable " Cash Dr. To Cash Cash Dr. F. Brown To Merchandise Dr. To Bills Receivable Interest F. Brown Dr. To Merchandise Bills Payable Dr. Interest To Cash 600 200 100 250 150 500 40 180 120 208 80 360 6 900 400 140 40 300 200 8 80 42 COMPLETE BOOK-KEEPING. IDAY BOOK. let Set. 9 Pay Cash for Stationery 10 Receive Cash of F. Brown, in full of acct. Interest on same 11 i Buy Merchandise Invoice No. 2 ! Give in payment our Note i Our Draft on H. Smith 12 Sell Merchandise for Cash 200 2 300 100 202 400 850 Inventory. — We have on hand Mdse. worth, per Inventory, $220. This is treated as directed in Art. 62, which see. 13 This is not a business transaction, but simply transfers the meas- ures of gain from the speculative accounts to the Cr. of Profit and Loss. 14 This transfers the measure of loss from the only account indicating loss, to the Dr. side of Profit and Loss. 16 Having brought the measures of gain and loss from all speculative accounts into Profit and Loss, this transfers the net gain to Stock. One Journal entry, as shown opposite, would have accomplished the same result as the three Journal entries, 13 14, and 15, and here without a Profit and Loss account (none having been opened), as ex- plained in Art. 65. FIRST ILLUSTRATIVE SET. 43 1st Set. JOURNA.L. Expense Cash Cash Dr. To Cash 10 Dr. To F. Brown " Interest 11 Merchandise Dr. To Bills Payable " H. Smith 12 Dr. To Merchandise 13 Merchandise Dr. Interest To Profit and Loss 14 Profit and Loss Dr. To Expense 15 Profit and Loss Dr. To Stock Merchandise Interest Dr. To Expense " Stock I ' I \ 5 202 [ i I 400 I ! I 850 1 350 5 200 2 300 100 850 45 310 350 5 355 45 310 45 310 44 COMPLETE BOOK-KEEPING. Dr. LEDGrE3R. Stock 1st Set. Or. To Balance 1210 ] \ I2IU - ! 1 15 By Sunds. " Profit & Loss 900 310 ;i2ro "~ By Balance ji210 Dr. Mbkchandisk Or. II To Stock 3' " Sunds. 11 " do. 13 " Profit & To Balance eOOi 500 400 350! 1850 220 2 1 By Sunds. 5 " do. F. Brown Cash Inventory 1 400 300 80 850 220 1850 Dr. Cash Or. 1 2 6 6 10 12 To Stock " Mdse. " do. " Sunds. " do. " Mdse. 1 100 260 180 208 202 850 1 4 8 9 By Mdse. " Expense " Sunds. " Expense ~ Il40 40 365 6 1240 1790 1750 To Balance 1240 Dr. To Mdse. To Balance H. Smith 160 m "so & By Draft Or. 100 SO 130 FIRST ILLUSTRATIVE SET. 45 1st Set. Dr. 1 To Stock LKDGtER. Bills Receivable m 6 By Cash O. 200 Dr. Bills Payable Or. To Cash " Balance 360 3 300 11 660 1 1 By Mdse. " do. By Balance 300 660. 300 Dr. Expense Or. To Cash " do. 14 By Profit & lioss 45 45 Dr. F. Beown Or. To Mdse. " do. 120 xJ 80 200 By Cash 200 "200 Dr. Interest Or. To Cash " Profit & Loss By Cash " do. 46 COMPLETE BOOK-KEEPING. LEID GrER. Is t Set. Dr. Profit and Loss O. • 1 14 To Expense ""!'. 13 By Sunds. ' !|355 15 " Stock 1 310 _355 =z ^ J55 -- Dr. Trial Balance. Or. }. Amounts. Balances. Sto Accounts. Ii.F. Balances. 900' Amounti 1 ck 44 900 1500 Merchandise 44 130 1630 1790 1240; Cash 44 550 150 1 601 H. Smith i 44 ! 100 360 i Bills Payable 45 1 300 660 45 45' Expense i 45 | 1 5 ' 1 Interest 45 s! ! 10 3850 13351 1 1 i 1330 3850 — ' Dr. Ledger Balances. O. Accounts. L.P. Amounts. Accounts. V Amounts. Merchandise 44 220i Stock I 44 1210 Cash 44 1240 Bills Payable 145 300 H. Smith 44 50 mo ^^^^ i -"" "' _JL51Q COMMERCIAL PAPERS. 76. Commercial Papers are papers employed among business men in eonducting commercial transactions, and include, particularly, all written evidences of debt; as. Notes, Drafts, Accei)tances, Bills of Exchange, Cer- tificates of Deposit, Bank Checks, etc. COMMERCIAL PAPERS. 47 Note. — We give definitions of tliose in common use, exhibit forms of papers employed in the business transactions herein written up, indicate the relations and obligations of the several parties thereto, the manner and effect of indorsements, and acceptances, etc. 77. A Note is a written promise to pay a certain sum of money, at a certain time, to a person named, to the order of a person named, or to the bearer, signed by the person promising. Note 1. — A Note may be wholly printed, or partly written and partly printed. It may be written with ink of any color, or with pencil, and on paper or other material, as the maker prefers or finds convenient. Good paper and ink and a plain signature are desirable. Note 2. — A Note is not complete without the signature of the promisor, who is hence known as its maker. The person named in a note, to whom, or to whose order the promise of payment is made, is the payee. The payee of a note by a written order across its back may direct its payment to another person, who becomes the indorsee, and possesses the rights of the original payee. Note 3. — A Negotiable note is one that may be bought and sold, and thus have different owners at different times, who shall possess the right of enforcing collection at maturity in their own name. This requires that they be drawn payable to order or bearer. Notes drawn with order \n them, as in Forms Nos. 1, 3, and 5 following, are nego- tiable; that is, they admit of being sold but require indorsement, as illustrated in Forms Nos. 3 and 4, where Henry Cook was the payee, but by indorsement John Clarkson becomes the indorsee, and rightful owner. Notes with bearer written in them, instead of order, are nego- tiable without indorsement. 78. The Note in Form No. 1, although negotiable, was held by the payee until due and paid, when it was properly indorsed, as shown in Form No. 2, the payees acknowledging payment over their signature ; while the Note in Form No. 3 was conveyed to John Clarkson, as indorsee, who, when it became due and was paid, re- ceipted it as shown in Form No. 4. Note. — The Notes in Forms Nos. 3 and 5, although having the same maker, have different payees ; but by sale and indorsement they have the same indorsee, to wliom payment is made when they become due, as shown in Tr. 8, of the Second Set, following. No. 3 was on Inter- 48 COMPLETE BOOK-KEEPING. est, and its wording properly so shows; but No. 5 says nothing of Interest, and of course bears none. 79. Where payable. Notes ought generally to show where they are payable. When this is not stated, they are understood to be payable where made, at the maker's place of business or at his residence. Note 1. — A proper presentation of notes, drafts, and acceptances, at their maturity, to their makers or acceptors, is necessary to secure the holder's claim upon subsequent parties, in case they are not paid when due. Note 2. — The Note in Form No. 1 is payable at the office of the payee, while those of Forms Nos. 3 and 5 are payable at the office of the makers. But notes are very commonly made payable at the Banks where their makers keep their Bank Accounts, as in Form No. 7. This Note, although given to Wm. Clark & Co., has been by them indorsed to the Bank where it is made payable. In this case it was given for a valuable consideration, as appears from Tr. 6, of Second Set, and may have been discounted for Clark & Co. by the Bank where it is made payable. At all events, it is paid at maturity, as shown by Tr. 25, of Second Set, and is returned to the makers, properly re- ceipted, as shown in Form No. 8 following. 80. A Check is an order addressed to a bank by a de- positor, requesting the payment of money to the bearer, to a person named in the check, or to his order. Note 1.— Checks should be drawn only by persons having money to their credit in account in the bank, and when so drawn they are payab'e on presentation. This being the case, they are generally given, received, and held, as money. Note 2. — Benefits often result from the use of checks made payable to the order of the payee, for he is required to indorse them before the bank pays them. As the bank returns all checks it pays to their makers, those made payable to the order of a payee named, and in- dorsed by him, when returned by the bank to their maker become in his hands receipts of payment. Note 3. — Persons presenting checks for payment, or for their credit in account at bank, are generally required to indorse them, even when made payable to bearer. 81. A Draft is a written order addressed by one person, firm, or corporation to another, requesting the payment COMMERCIAL PAPERS. 40 of a specified sum of money to a party named in the draft, or to his order; but sometimes to the bearer. Note. — The person who makes and signs a Draft is known as its maker, or drawer. The party to whom the Draft is addressed is the drawee. The one to whom it is made payable is the payee. An in- dorsement by a payee to another party, constitutes the latter indorsee. 82. An Acceptance is a time Draft accepted. Drafts made payable at a certain time after date or sight, are known as tiTne Drafts, and should be presented by the payee to the drawee for acceptance, which is indicated by the drawee's writing the word "Accepted" across their back or face (usually the latter and in red ink), and sign- ing his name, when they are known as Acceptances, and with the drawee and acceptor are Bills Payable, the maker virtually becoming indorser. With the payee and holder they are Bills Receivable, while with the maker they are neither, but simply give him occasion to make the payee Dr. and the drawee Cr. Note 1. — In case a Draft is made payable a certain number of days "after sight," the acceptance should be dated. When drawn payable on presentation or at sight, payment renders a formal acceptance un- necessary. Form No. 11 presents a time draft, indorsed by its maker, as required by its wording, and, when paid at maturity, receipted by the holder, as shown at No. 12. Note 2. — The maker of a Draft sometimes procures its acceptance by the drawee before offering it to the payee. This is especially true of accommodation paper, described in Art. 88. 83. A Bank Draft is a draft drawn by one banking house upon another, and usually upon one in some other city or part of the country, requesting the payment of a specified sum of money to a person named in the draft, or to his order. Note. — Bank Drafts are much employed in the payment of debts owing to persons in other places, without the actual transmission of money. To illustrate: We hold A. H. Hinman's Note, shown in Form No. 1 (Bills Receivable No. 3), which comes due Dec. 3d, with Interest, together amounting to $281.40, and payable at our office. Anticipating its maturity, Hinman on the 1st day of Dec. procures B. K.— 4. 50 COMPLETE BOOK-KEEPING. the Draft shown in Form No. 9, and sends it to us with his indorse- ment upon it, shown at No. 10, as stated in Tr. 29. When it reaches us we receipt his Note, as shown in Form 2, and return it to him, retaining the Draft, which we use as money. 84. Deposit Checks are slips for the use of depositors in describing the funds offered by them to banks for deposit. Note 1. — The deposit we make in the National Bank Dec. 8th is here shown, including the draft described in Tr. 35. We therefore now indorse the draft as shown in Form No. 10. As the draft had to pass through the mail in reaching us, Hinman's indorsement to us was properly /mW, while our indorsement for deposit in the bank may be open, as shown in Form 10. THE 1T^TI01T-A.Ij BjA.2^3C. Deposited by I., i^e^-C'. 8 J 1884. Detroit, Mich. /eoo Bes B8I BI5000 eo Note 2.— Deposit Checks are retained by tlie bank for itt protec- tion as to both the kinds and amount of funds deposited. 86. The Deposit Book is a small book furnished by the bank to the depositor,* in which his deposits are entered by the bank. ♦The subject of banks and banking is fully discussed in the author's *• University Book-keeping," in v/hich deposit books, check books, and yarious other forms are shown. COMMERCIAL PAPERS. 61 Note 1. — The Deposit Book is held by the depositor, and consti- tutes receipts for his deposits from time to time made. Note 2. — At the end of each month the Deposit Book should be returned to the bank for its entry in it of the Checks which it has paid, which are then returned with the book to the depositor. 86. A Bill of Exchange is another name for a Draft. Such Bills are usually somewhat more formal than drafts, and are generally drawn in duplicate, two together con- stituting a Set, so that, in case one of a Set is lost the other may be used. The first one of a Set presented is generally paid, when the other becomes void, and is valuable only as a voucher. Note. — Bills of Exchange payable in the same country where drawn are known as Domestic Exchange, while such Bills payable in another country are known as Foreign Exchange. 87. An Indorsement is the writing of one's name on the back of a note, draft, or other written instrument, with or without other words, and is an implied agreement to pay the same in case the principal debtor fails to do so. Note 1. — An open indorsement, by writing one''s name only, as in the second indorsement on Forms 10 and 14, conveys the property of the paper, or the right to it, to any rightful owner having it in pos- session, as though the paper had been drawn payable to the bearer. Notes and drafts with open indorsements should therefore be guarded with care, and ought never to be intrusted to the mails. Note 2. — The payee may sell a note or draft to any one by indors- ing it to the order of that person, as done in Forms 4, 6, 8, and 10, fol- lowing. Such indorsements are called full, and convey the property of the paper to the person named in the indorsement. Note 3. — Any holder of a note or draft with an open indorsement may convert it into a full or special one by writing the usual limiting words over the indorser's name. Note 4.— The person to whose order a note or draft is made pay- able, on receiving payment from the maker, should receipt it by writing on it "Paid," or "Received payment," and signing his name, when it has no further value except as a receipt. 88. Accommodation Paper is a term applied to notes and drafts for which one of the parties thereto has 52 COMPLETE BOOK-KEEPING. received no consideration, but has lent his name as maker, indorser, or acceptor, to accommodate the other, by in- creasing the security of payment in the hands of a third party. Such paper is made for the purpose of enabling another to borrow money, or for the security of a debt. Note 1. — As between the original parties there has been no con- sideration, there can be no obligation of payment by the party lend- ing his name. But in the hands of a third party both are bound alike. Note 2. — There is no peculiarity in the form of accommodation paper. The Note in Form No. 7, following, was given for a valuable consideration (Tr. 6), and the makers are therefore bound to pay it at maturity. Should they fail to do so, the holder will look to the in- dorsers. But the same form might be used as an accommodation Note in case either the makers or the indorsers wanted to raise money for their own use. And so of the Draft, Form No. 11. Note 3. — The drawer might arrange with the drawees and accept- ors for the use of their name for the drawer's benefit, with the under- standing that he would pay the draft at maturity. In all such cases the party accommodated should take care of such paper at maturity. But in case of his failure to do so, the other party is bound, for his name was lent to make the paper good. 89. Days of Grace are three additional days allowed under the common law for the payment of commer- cial paper after the time named in the paper for its maturity. Note 1. — By special enactment in some of the states, days of grace are not allowed. In other states, grace is not allowed on notes, drafts, or bills, payable at sight, on demand, or without time. The tendency of the times seems to favor their disallowance altogether. It is con- sidered equitable and just to expect men to meet their promises of payment when and as they agree. Note 2. — Legal liolidays are uniformly excepted in the maturity of comnfercial paper. Where grace is not allowed, paper falling due on a holiday becomes legally due the day following; but where grace w allowed, on the preceding day. In this work, notes and drafts are considered as becoming due and payable at the time named in them for maturity. Note 3. — The word irumth means a calendar month, which varies in length from 28 to 31 days. When reckoned from any day of any INTRODUCTION TO SECOND SET. 63 month it extends to the same day of the month next following, provid- ing the latter month has the requisite number of days; otherwise it terminates with the last day of the month. Note 4. — Except in special connection, as just shown, a month is considered as thirtj'^ days, and interest is computed on any given number of months as so many twelfths of a year, and on any given number of days as so many thirtieths of a month. INTRODUCTION TO SECOND SET. 90. Having given the general form of the Day Book in the First Illustrative Set, we present the Transactions of the Second Set in common language for the student to write up in Day Book, Journal, and Ledger form, taking a Trial Balance at the end of the first month (Art. 59), and again at the end of the second month, before closing the books for ascertaining the net result of the business. And that the learner may enter upon his work more satisfactorily, and more readily compre- hend its details, we write up the first month's Day Book, Journal, and Ledger for him, and exhibit the principal papers used, that the relations of the several parties to these papers may be better understood. 91. Although the first month's work is here written up and explained, and thus made illustrative, the learner will more thoroughly comprehend it by writing it up himself, as though not here done, thus making it for himself an example for practice. He may, however, first properly study this work in connection with the ex- planations here offered ; but when he undertakes writing it up himself, he should do so as independently as pos- sible, consulting these explanations only as he would a teacher. When he has thus written up the first month's work in the Day Book and Journal, posted it to the Ledger, taken his Trial Balance, and brought forward his 54 COMPLETE BOOK-KEEPING. balances in the Ledger, he may proceed in like manner with the second month's work, and, at its close, again take a Trial Balance, before closing the Ledger (Art. 61) for determining the profits and losses of the business, and its net result as a whole. 92. By examining the Assets and Liabilities at the beginning of the Second Set (pp. 60-61), and referring to Art. 57, relating to opening books, the learner will readily see how our Assets give rise to the first opening entry of the Journal, and our Liabilities to the second. The Bills Receivable on hand, and others that may be received, are entered in the Bill Book, to which the learner is referred for the manner of keeping it. The Bill Payable out against us, and others that may be issued, are likewise recorded in this book. The jour- nalizing of the transactions that follow will generally be readily understood by comparing the Transactions with the entries of the Day Book based upon them, and referring to the principles stated in Art. 54, and to the Arts, therein referred to. In several of the Transactions reference is made to a Sales Book, which ought gener- ally to be kept. But as in this Set the amounts are given, they may be accepted, and the Day Book writ- ten up accordingly. The other important references and illustrations being so numerous, the presentation of a Sales Book is deferred until the Third Set. 93. It may seem, from Tr. 6 (Nov. 4), that Real Estate should at once be made Dr. for the improvements made upon it. But the work here done is by contract. We therefore debit the contractor for payments made until the work is completed and accepted, Tr. 43 (Dec. 20), when we debit Real Estate for the contract price and credit the contractor. In Tr. 7 (Nov. 4), and other sim- ilar ones, it was not necessary to say our Check was on the National Bank, for we had credit in no other, and COMMERCIAL FORMS. 65 a Check without a deposit for its payment would be fraudulent. In Tr. 8 (Nov. 5), it will be seen that John Clarkson, to whom we sell Merchandise, holds two of our Notes (Bills Payable Nos. 1 and 2), shown at Forms Nos. 3 and 5, both indorsed to him and now due, and pre- sented by him for payment. The Notes and Interest therefore cost us the Merchandise we sell and our Check for the balance, hence the Journal entry of this date. In Tr. 12 (Nov. 10), had there been any interval between receiving this Draft and depositing it, there would neces- sarily have been two entries, first to cover the sale, and then to cover the deposit, but by making the deposit at once, one entry may cover the entire transaction. The Draft received by us Tr. 20 (Nov. 18), is indorsed to us^ as shown in Forms Nos. 13 and 14, and by us in open indorsement when deposited in bank. In making our Draft on Frank Goodman, Tr. 23 (Nov. 22), we examine his account and ascertain the amount our due. We draw on him to the order of the National Bank in which we deposit the Draft for our credit in account, Form No. 15. COMMERCIAL FORMS. No. 1. — A Note on Interest and Neqotiablk f ^80.00 Detroit, Mich., ylo-^v-^cyyM-^eA^ 3cL, 1884. uIl/LAJou^ J-ycuj^^ after date„..ty.... promise to pay c/t^cw Wijci'^^^eyuj^ j^ .or order, Uvj-o^ jA^<^^^'t^6t'£^ CLAt^ &i^uAyu^. Dollars, with interest at 6 per cent, at their office in Detroit. Value received, 56 COMPLETE BOOK-KEEPING. No. 2. — Reverse of No. 1, Paid and Receipted. No. 3. — A Note on Interest and Negotiable. f^JJ.JS Detroit, Mich., J(a^ 5t>L, 1884, __ 0ty)O vi^yo-^yiJCu^^. after date, for value received, lo^'C^. promise to pay to the order of Di-'C^i.A.^ '\Oo-<^iL',. at our office in Detroit, %Ju)-<}- J^pcc-K^c^t^e^ ^CA>--^yKA^=^c^^j.-cy%i^.J.^^ Dollars, with interest at 6 per cent. No. 4. — Reverse of No. 3, with Full Indorsement. COMMERCIAL FORMS. 57 No. 5. — A Negotiable Note without Interest. f if 5 5. 00 Detroit, Mich., y[c.^u^. 3cL, 1884. sjv^'-o-^ cLcuu^^ .after date, for value received,..._ ...tcj-e- _ promise to pay to the order of _y[^yuj^c>o--'niJk^ , &i^cLl^<>oAA^ r\o^. ,....at our office in Detroit, C/'c-^u^i^ J^luy^i^^Vc^ o^^i^cL c^iXC^^^c-iv-s^. Dollars. No. 6. — Reverse of No. 5, Indorsed and Receipted. No. 7. — A Negotiable Note Payable at Bank. f BOO. 00 Detroit, Mich., 9{o-^. ^tL, 1884>. _sJ'uj-'^'i^jt4A^ cLa^'U^. ......after date, for value received, toi-e^ .promise to pay to the order of nm^. ^LclaJz^ Y^', -at the National Bank, ^vj'^o-' Dtu^K.^iJ./L'^,^ Dollars, with interest at six per cent. 58 COMPLETE BOOK-KEEPING. No. 8. — Reverse of No. 7, Indorsed to Bank and Paid. No. 9. — A Bank Draft in Payment of Note and Interest. /J-^ J^l^^.yvi.^'L,'^^ Dollars. COMPLETE BOOK-KEEPING. No. 14. — Reverse of No. 13, Indorsed to Us and bt Us. No. 15.— A Personal Draft Payable at Bank. pU.^S Detroit, Mich., i^c^^. ^^, 1884. „„ _ i./lV fiAyoJijt. ^ay to the order of. Yl^vJCoo-^yuaZ' li^o^yuiO _. sJ'Uf-<^ ji'VL/yvd/L^^^ v^^i^./cL Kyo--\jtu^^Lo-^^yL^ ^^ Dollars and charge the same to the account of TRANSACTIONS OP SECOND SET. November Ist^ 1884. Resources. — Ira Mayhew & Co.* commence business with $2500 to their credit in account in the National Bank; Cash in safe $240; Merchandise in store, worth ♦The learner may consider this work his, even though he uses the name Ira Mayhew AY BOOK. November 4, 1884. Pay Wni. Clark & Co. on contract Cash Our Note, No. 3 Buy Mdse. Give Village Lot No. 10 Check on Nat. Bank Nov. 5. Pay Bills Pay. Nos. 1 and 2 Interest on No. 1 Give Merchandise S. B. Check on Nat. Bank Pay Rent of Stone Mill 2 mos. By Check on Nat. Bank Nov. 8. Buy for Stone Mill 2600 Bu. White Wheat Give Check on Nat. Bank Our Note, B. P. No. 4 ^7o^ 10. Buy of Wni. Brown 1100 Bu. White Wheat Pay Merchandise S. B. Balance on acct. Sell Jno. Brown & Co. 540 Bbls. Ex. Flour Receive and deposit Draft Balance in Cash Nov. 12. Inv. 2 @$1 @$1 @$6 Pay Wm. Clark & Co.'s Order in Mdse. B. K.-6. 80 200 650 1210 732 75 8 255 485 400 2200 850 250 3000 240 280 1860 741 08 150 2600 1100 3240 275 82 COMPLETE BOOK-KEEPING. X)^Y BOOK. November 12. 1884. 3d Set. Sell Frank Goodman, acct. 10 days 30 Bbls. Ex. Flour Merchandise S. B. Nov. 14.- Buy 1920 Bu. White Wheat Pay Merchandise S. B. Check on Nat. Bank Sell Wm. Brown, acct. 10 days Merchandise S. B. 170 Bbls. Flour Nov. 17.- Pay Wra. Clark & Co.'s Orders Merchandise S. B. Flour and Feed S. B. Sell Brown & Smith Merchandise S. B. 15 Bbls. Extra Flour Nov. 18. Buy 1400 Bu. Wheat Pay Merchandise S. B. Check on Nat. Bank Sell M. Coataworth for Cash 260 Bbls. Ex. Flour Nov. 20.- Deposit in Nat. Bank Cash @$6 @$1 @$5 ®|6 ®$1 ®|6 18) 24) 160) 42) 87 > 85) 24) 27) 86) 46) ILLUSTRATIVE WORK. 83 Sd Set. D^Y BOOK. November 20, 1884. Buy 500 Bu. Wheat Merchandise Give Ck. on Nat. Bank : Nov. 22, Deposit in Nat. Bank Our Dft. on Frank Goodman Cash Pay Brown & Smith's Order By 16 Bbls. Flour Merchandise S. B. Nov. 24r Pay Bill Pay. No. 3 Interest on same By Ck. on Nat. Bank Receive from Wm. Brown Ck. Nov. 26^ Sell Jno. C. Johnson, Cincinnati Merchandise S. B. 320 Bbls. Flour Receive Ck. $1000 and Cash $825 Nov. 28. Pay Fill Pay. No. 4 Interest on same By Ck. on Nat. Bank @90c Inv. 31 @$d 80 715 45) 49) 24125 20) 209 225 16C0 67 782 91) 444 25 155 2C067 1745 18S5 22(7 33 84 COMPLETE BOOK-KEEPING, November 1, 1884. 2d Set. 88 I National Bank Dr. 89 ; Cash 88 Merchandise 89 Bills Receivable 88 r>rowii oc oiuiiu 88 89 89 Stock Dr. 89 90 88 Cash Wm. Brown Dr. 89 88 89 Frank Goodman Dr. 89 89 88 Cash Bills Receivable Nov Dr. 88 89 90 89 Merchandise Dr. 90 89 88 90 Real Estate Dr. To Stock To Bills Payable " Frank Goodman To Merchandise To Merchandise " Cash To Merchandise To Bills Receivable " Interest *' Bills Payable To Cash " Merchandise " Brown A Smith 2600 240 3440 50 360 210 40 693 50 150 270 240 6750 90 277 75 415 75 280 840 1650 420 175 65 540 900 25 455 100 300 1250 ILLUSTRATIVE WORK 85 Sd Set. JOTJRlSrAL. November 4, 1884. 91 89 89 Wm. Clark & Co. Dr. 88 Merchandise 90 89 Bills Payable 90 Interest 88 88 91 91 Stone Mill Stone Mill 91 Stone Mill 88 90 ; To Cash " Bills Payable Dr. To Real Estate " Nat. Bank Nov. 5. Dr. To Merchandise " Nat. Bank Dr. To Nat. Bank . Nov. 8. Dr. To Nat. Bank " Bills Payable Nov. 10. Dr. To Merchandise " Wm. Brown 88 National Bank Dr. 89 Cash 91 91 To Stone Mill Nov. 12. Wm. Clark & Co. Dr. To Merchandise 18601 80 200 650 1210 732 8 150 2600 1100 3000 275 255 485 150 400 2200 850 250 3240 275 86 COMPLETE BOOK-KEEPING, JOURNAL. November 12, 1884. Sd Set. 89 91 88 91 88 88 90 88 91 90 91 91 91 JFrank Goodman Dr. 3tone Mill Dr. Wm. Brown Dr. Wm. Clark & Co. Dr. To Stone Mill " Merchandise JVcw. 14. To Merchandise " Nat. Bank To Merchandise Stone Mill Nov. 17. To Merchandise " Stone Mill Brown & Suiith Dr. To Merchandise " Stone Mill JViw. 18. Intone Mill Dr. To Merchandise " Nat. Bank Cash Dr. To Stone Mill Nov. 20. : National Bank Dr. To Cash 420 1920 1725 510 165 100 300 : wo 180 240 1500 420 875 850 240 270 76 90 »50 450 500 :i)00 ILLUSTRATIVE WORK, 87 2d Set. JOXJRlSrAL. November 20, 1884. 91 fetone Mill 91 Merchandise 88 88 iNat. Bank 89 99 91 91 Dr. To Nat. Bank Nov. 22. Dr. To Frank Goodman " Cash Brown & Smith Dr. 89 Bills Payable 90 Interest 88 89 90 91 91 90 88 Cash Cash Bills Payable Interest To Stone Mill " Merchandise Nov. 24. Dr. To Nat. Bank Dr. To Wm. Brown Nov. 26. Dr. To Merchandise " Stone Mill Nov. 28. Dr. To Nat. Bank 450 490 444 25 155 200 6|7 .745 .825 $200 7$3 940 244^ 200 80 75 200(7 .745 L600 J207 33 88 COMPLETE BOOK-KEEPING, Dr. LEJDGtER. Stock Sd Set. Or, Nov. j l| To Sunds. Balance ^30 84 693150 6or)7 40 675q9G 18M.{ > { II I Nov. 1 By Sunds. 84!675d90 18M. Dec. 1 By Balance 6750190 6057^40 Dr. National Bank l^M. 11 18M. I I 1 1 Nov. 1 To stock 84 2500 Nov. 4 By Mdse. 85 1210 u 10 •' Draft 85 3000 it 5 " Sunds. 85 485 58 « 20 " Cash 8G 2000 (i 5 " Stone Mill 85 150 « 22 " Sunds. 87 444 25 tt 8 *• do. 85 400 t( 14 " do. 86 420 «( 18 " do. 86 450 / « 20 " Sunds. 87 940 / (1 24 28 " do. ♦' do. 87 87 200 2207 67 33 / " m '• /.'-./ ■-■ ;./.Sr.' 67 '' 7044 20 7944 25 1884. Dec 1 To Balance 1480 1 1 67 Dr. Nov. 1! To Stock % " Sunds. 4j " do. Mbbchandisb .<^l< '84'344O'50| 84 840 851860 6140 60 Nov. Or. l' By Sunds. '84' 1 " F. Goodman 84 3 ♦• Sunds. 84 3 " Real Estate 84 5 •• Sunds. '85 '• Stone Mill 185, 2 " Clark & Co. 85 2 " F. Goodman, 86 1 14 " Stone Mill 86 W. Brown Clark dt Co. 8^ Jinhtiicr p. !)l ILLUSTRATIVE WORK. 89 Sd Set. Dr. LEjDGrlCR. Gash Or. 18M. 1 1 1 1884. J — Nov. 1 To Stock 84 240 Nov. 1 By F.Goodman 65 1 " Mdse. 84 150 " 3 " Real Estate 84 100 3 " do. 84 260 " 4 " Clark & Co. H5 80 10 " Stone Mill 85 240 " 20 " Nat. Bank m 2000 1§ " do. 86 15(X1 « 22 " do. 87 2001 24 " W. Brown 87 1745 m •' liulunce 35 IS 26 " Sunds. 87 1825 59601 i G960 - 1884. Dec. 1 To Balance i351^ Dr. Bills Receivable 1884. I Nov. i l' To Stock " I 3 " Mdse. 1884. Dec. i li To Balance |84: 36(^ 84 28(^ 640 1884. Nov.! 3| By Mdse. j84l \30 " Balance Or. 360 2sn m Dr. 1881. Nov. 5 ti 24; (( 28 Bills Payable To Sunds. " Nat. Bank do. 85 732i75 87 200 ,87, 2200 3132|75 1884. Nov. Or. By Stock 84 " Mdse. 84 " Clark & Co. 85 " Stone Mill 85 277175 455 200 2200 ,3132,76 Dr. Nov. 12 To Sunds. " do. Frank Goodman Or. m — \ 84 240 86 420 I i 660100 Nov I 1; By Stock l84' 41575 " |22, " Nat. Bank 187 244 25 66000 90 COMPLETE BOOK-KEEPING. Dr. BsowN & Smith J3d Set. Or, 1884. I ' Nov. tl I'D Stock 8(4 " 1^ " Sunds. " 22 " do. 8(7 " 50 " Balance ' ! I 210 iio 165 L55 719 :250C[) eo l^ov. 3 By Real Estate ^ L884. 250 1884. I J pec. {l By Balance ; 250 00 7196} Dr. Interest 1884. Nov. 5 ITo Sunds " 24 I" Nat. Bank " 2<8 ;" do. 8)7 " 30 " Balance L884. ^ov. 3 By Mdse. 1884. :)ec. 1 ^y Balance Cr. £4 25 25C0 867 Dr, Wm. Beowic 814 |E70 86 1725 1905 0-. "~- L L !Jov. 1 To 14 Mdse. Sands. L884. Kov. By Stone Mill " Cash 1745_ ll|995 Dr, Rbal Estatb Not. 18 ToSands. H 850 Dec. 1 To Balance m. 000 Kov. 4 iBy Mdse. 30\ ^* Balance 1660 7000 KO ILLUSTRATIVE WORK, 91 2d Set. Dr. LKIDGJ-ER. Wm. Clark & Co. Or, 1884. Nov. 1884. Dec. 12 17 iTo Sunds. Mdse. Sunds. I ' To Balance ;,)65 g80 275 510 J65 ^884. iVbi'. 50: ^i/ Balance jm 1065 Dr. Stone Mill Or. 1884. Nov. 50, fo Nat. Bank " Sunds " do. " do. " do. !" Nat. Bank Balance 8b 1150 85 ^0 8b iilOO 8jB 1920 8B 1400 87 1450 190 tfeio" 1884. I Ijiov. 10 J? Dec. I % Sunds. 85 $^40 F.Goodman W. Brown Clark & Co. Brown & S. Cash Brown & S. Cash By Balance 86 8^^ 87 8f7 "310 180 850 270 90 11500 80 1J600 190 Dr. Mebchandisb Or. 1884. Nov. 1|7 tToBal. " 20 " 30 88 Nat. 'Bank Balanrx 1325 470 490 365 L884. II I || ^ov. ihr By Brown & S. 86 75 lis " Stone Mill 86 ^50 1884. Dec. 22 2fo Brown &S. 87 Cash m 1 By Balance I 75 225 365 92 COMPLETE BOOK-KEEPING, INSTRUCTIONS— THIRD SET. 107. This is an individual Set, and is opened with a Stock Account, with the Student (using his own name) as proprietor. This set employs a Day Book, Journal, Ledger, and Bill Book. A Sales Book and an Invoice Book — samples of which are given — are employed as auxiliaries to the Day Book. When the Transactions do not give the details, reference is made in them to one of these books, which furnishes the amounts required for use in writing up the Day Book. 108. The Bank Account of this Set is kept with the State Bank, in which all deposits are made, and upon which all checks are drawn. Store rent and Clerk hire are debited to Expense. Receipts for Desk room are credited to this account. The Transactions furnish all information needed in relation to Bills Receivable and Bills Payable. When bills are paid or disposed of, the fact is entered in the Bill Book. TRANSACTIONS OP THIRD SET. January Ist, 1885. Resources. — I commence business this day with $240 Cash in safe ; $570 on deposit in State Bank ; Merchan- dise in store, worth $1460; and a Note against Amos Dean for $412, dated Nov. 3, 1884, on interest at 6 per cent, and due Jan. 3, 1885. (See Note, page 66.) Liabilities, — I owe my Note of Dec. 15, 1884, at 1 mo., for $85; and John Jones on acct. $70. Jan. 2d. Tram. J. Sell Henry Brownell, for Cash, Merchandise per Sales Book. (Sec page 98.) TRANSACTIONS OF THIRD SET, 93 Jan. 3d. Tr. 2. Sell John Owen, at 20 days, Merchandise per Sales Book. Tr. S. The Note of Amos Dean, this day due, with In- terest, is paid in Cash. Jan. 5th. Tr. Jf. Sell Otis Collins, of Greencastle, 0., Merchandise per Sales Book. Receive his Note at 20 days, drawing Interest at 7 per cent. Jan. 7th. Tr. 5. Sell J. W. Sharp, of Delaware, at 10 days, Mer- chandise per Sales Book. Jan. 8th. Tr. 6. Buy of Van Antwerp, Bragg & Co. Merchan- dise per Invoice Book. Pay by Ck. $500 and Cash. Tr. 7. Deposit $600 in State Bank. Jan. 9th. Tr. 8. Sell E. N. Hartshorn, on his Note at 10 days, Merchandise per Sales Book. Tr. 9. Sell John Smithson, for Cash, Merchandise per Sales Book, amount $570. Jan. 10th. Tr. 10, Sell J. L. Wallace, for Cash, Merchandise per Sales Book, amount $214. Jan. 12th. Tr. 11. Deposit $675 in State Bank. 94 COMPLETE BOOK-KEEPING. Jan. 13th. Tr. 12. Buy of Van Antwerp, Bragg & Co., Invoice of Merchandise, amount $480. Pay by Check. » Jan. 15th. Tr. 18. Give Jno. Jones my Check in payment of my Note of Dec. 15, and in settlement of account with him. Jan. 16th. Tr. U. SeU Mdse. for Cash, amount $327. Jan. 17 th. Tr. 15. J. W. Sharp pays the amount due from him on account in Cash. Tr. 16. Pay in Cash rent for Store for Jan., %^. Tr. 17. Sell Merchandise to J. W. Sharp, per S. B. Amount $204. Receive $80 in Cash : balance on account. Jan. 19th. Tr. 18, Buy for Cash Invoice of Merchandise. Amount $465.80. Tr. 19. Receive from E. N. Hartshorn Draft on N. Y. to take up his Note of Jan. 9th. Jan. 20th. Tr. 20. Sell John Owen on acct. Merchandise, S. B. $140. Tr. 21. J. A. Roys buys for Cash Merchandise per S. B. Amount $246. TRANSACTIONS OF THIRD SET. 95 Jan. 21st. Tr. 22. H. C. Spencer buys an Invoice of Mdse., which he pays for by N. Y. Draft for $312. Tr. 23. Hiram Stilwell pays $8.50 for Desk Room in office one month. Jan. 22d. Tr. 24. Deposit 1500 in State Bank. Tr. 25. Pay $175.50 for Mdse. per Invoice. Jan. 23d. Tr. 26. Sell Press Printing Co. Mdse. per S. B., $240. Settle the Company's Printing Bill, amount $32.50, and receive the balance in Cash. Jan. 24th. Tr. 27. John Owen settles his account, allowing 75c. for Interest on same. Pays in Cash. Jan. 26th. Tr. 28. Otis Collins takes up his Note of Jan. 5th, with 20 days' Interest at 7 per cent, by Check. Tr. 29. Deposit $550.75 in State Bank. Jan. 27th. Tr. 30. Buy Merchandise per Invoice Book. Amount $875.40. Pay by Check. Jan. 28th. Tr. 31. Receive from J. W. Sharp, N. Y. Draft for $230 for his credit in account. 96 COMPLETE BOOK-KEEPING. Tr. 32. Fill J. W. Sharp's order for Merchandise per Sales Book, amount $86.50. Jan. Slst. Tr. 33. Pay clerk and porter for 1 mo. $90 in Cash. Abstract of Inventory. January 31^ 1885. 109. On taking an Inventory, we find on hand Mer- chandise worth $1600.03. Required to determine: 1st. The Trial Balance of January 31, 1885. 2d. The Ledger Balances of January 31, brought for- ward under date of February 1, 1885. Sd. The Net Stock on commencing business. 4th. The Net Gain in trade for January. 5th. The Net Stock, including gain, February 1, 1885. 6th. The Items of Resources and their value. 7th. The Items of Liabilities and their amount. Proof. — The Resources^ less the Liabilities, should ex- actly equal the Net Stock, February 1, 1885. Remark.— Unless very familiar with the principles involved in clos- ing the Ledger, with a view to determining the gains and losses of a business and its net result as a whole, the student should here care- fully review Arts. Gl to 65, relating to this subject, in wliicli the prin- ciples involved are carefully explained, and Arts. 07 to 104, in which they are particularly applied in closing the Second Set. The applica- tion of these same principles will enable the student readily to close this Third Set, or any other Set under like circumstances, for the principles referred to are of universal application. ANSWERS OF THIRD SET. 97 Arts. 1st. Dr. Trial Balance. January 31st, 1885. Or. Amounts. Balances. Accounts. L.F. Balances. Amounts. 155' 2895 75 274 50 207 50 2140 91 1667 37 , 885 199 1116 351 35 41 12 Stock State Bank Interest J. W. Sharp Expense Merchandise Cash 2627 6 19 38 50 2082 2010 40 5 38 2941 8 50 1024,50 1316 25 7341 03 2551 88 2551 88 7341 03 Ans. 2d. Dr. Ledger Balances. February 1, 1885. Or. Accounts. L.F. Amounts. Accounts. WE. Amounts. State Bank Merchandise Cash 885 1600 351 35 03 12 50 Stock J. W. Sharp - 2817 19 2836 50 2836 50 Ans. 3d. The l^et Stock, January 1, was $2527. Ans. 4th. The Net Gain for January is 290. Ans. 5th. The Net Stock, February 1, is 2817. Ans. 6th. The Dr. Ledger Balances amount to 2836.50 Ans. 7th. The Cr. Ledger Balances^ except Stock 19.50 Proof. B. K.-7. Resources Liabilities Net Stock, as above $2836.50 19.50 $2817.00 98 COMPLETE BOOK-KEEPING. SALES BOOK. Janimry 2, 1885. Henry Brownell, Cash, Columbus. 84 Rav's Prac. Arithmetic @ $ .50 6-t — ^ Higher Arithmetic " .85 25 Eclectic Comp. Geography " 1.20 28 Revised 2d Reader " .30 12 -It h Reader " .50 Jan. 3. John Owen, acct. 20 days, 132 Eclectic Comp. Geography 30 Ray's Prac. Arithmetic 54 White's Comp. Arithmetic Jan. 5. . City. Otis Collins, Note, 33 Revised 2d Reader 56 8d Reader * 56 5th Reader 48 Eclectic Comp. Geography Jan. 7. . J. W. Sharp, acct. 10 days, % $1.20 " .50 " .65 Greencastle. @ .30 " .42 1.20 Delaware. 20 Mayhew'.s Univ. Book-keep'g @ $1.60 20 Sets Blanks do. " 1.60 Jan. 9. , B. N. Hartshorn, Note, Mt. Union. 24 University Book-keeping @ $1.60 24 Sets IJhmks do. " 1.60 18 Eclectic Comp. Geographv " 1.20 20 Ray's Test Problems in Alg. " .50 42 54,40 30) il 8 40 6 14080 158,40 15' 3510 9,90 2352 40,32 57 60 208 50 13134 64 38 40 ^ 3S40 2160 1 10 i 1 1 1 108 40 Note. — The above sufficiently illustrates the forni and use of the Sales Book described in Art. 49. When this l)Ook is used the Day Book entries may be brief, not repeating details. The amounts are given in the Transactions in the remainder of this Set, and in Sets where the Sales Book is not sliown. ILLUSTRATIVE WORK. 99 Ira Mayhew, II^VOICIC BOOK. CiN'CiNNATi, Ohio, Jan. 8, 18&5 Bought of Van Antwerp, Bragg & Co. Publishers Eclectic Educational Series. 144 192 96 40 87 144 72 48 48 24 48 24 48 72 84 72 12 Revised 2d Reader 3d Reader 5th Ketuler Cole's Institute Reader Ray's Primary Arithmetic Practical Arithmetic Higher Arithmetic White's Comp. Arithmetic Ray's Higher Algebra Test Problems in Alg. Elements of Astronomy Eclectic Comp. Geography School Geog. No. 3 Harvey's Language Lessons Rev. Pract. Grammar Pinneo's Guide to Composition Smith's Eng. Literature @ $ .30 .42 .72 .80 .15 .50 .85 .65 1.00 .50 1.20 1.20 1.30 .20 .65 .60 1.20 10^0 Icfc Cash 2 Boxes and Drayage Received payment, Van Antwerp, Bragg & Co. 43|20 80; 64 6912 32 05 13 72 6120 31|20 48' 12i 57 60 28 80 62 40 14 40 54 60 43 20 1440 81 737 73 664 _13 28^ 650 75 150 652 25 Note 1. — The above sufficiently illustrates the form of Invoices and of the Invoice Book. (See Art. 107, Instructions, 3d Set.) Note 2. — See the Note, Art. 51, for the manner of making an Invoice Book from Invoices received. 100 COMPLETE BOOK-KEEPING. third set rewritten, With Cash Book and Journal Day Book. 110. The Cash Book, as stated in Art. 50, properly contains a record of all Cash received and paid in con- ducting a business. When the Cash transactions are few, the account may be kept like other accounts, as has hitherto been done in this work. But when they become numerous, a separate Cash Book is of advantage. The benefits resulting from the use of this book will be apparent from rewriting the Third Set from the Transac- tions, using a Cash Book and Journal Day Book, instead of a Day Book and Journal, as directed in Art. 107. 111. The form of the Cash Book is shown on the next folio, with some of the extensions made, as derived from the Transactions. The Cash Book, as here shown, is essentially a Journal, though of special form. The first entry for Resources, January 1, is " Cash Dr. To Stock," and should be posted to the Cr. side of Stock in the Ledger. It here stands on the Dr. side of Cash, this book serving as a Ledger for Cash. The word "Invest- ment " is explanatory, thus making this book a Journal Day Book for Cash. The "J," at the right, indicates that the remainder of the Resources belongs in the Journal Day Book, in which the balance of the entry is written (Art. 53) thus : State Bank Dr. On Deposit $570. Merchandise Inventory 14G0. Bills Receivable No. 1, B. B. 412. To Stock Investment $2442. With this entry posted, the Ledger is opened for Stock and all accounts representing Resources, except Cash, which appears in the Cash Book, 112. The entry for Liabilities "belongs entirely in the THIRD SET REWRITTEN. 101 Journal Day Book. Entries for Trans. 1, 3, and 7 are shown in the Cash Book. Entries for Trans. 2, 4, and 5 belong entirely in the Journal Day Book. Trans. G requires an entry to each of these books. With these aids, the learner may proceed to rewrite this Set from the Transactions, using the Cash Book, Journal Day Book, and Ledger. The Bill Book, being unchanged, need not be rewritten. 113. The Cash Book and the Journal Day Book should be posted in the order of dates. The Ledger Accounts, as written up by these two methods, will substantially agree. In some cases, what was in one sum by the first method will appear in two items by the second, coming as they do from two different books ; but the results will be the same in both cases. 114. Brevity. — The use of the Cash Book, as here em- ployed, saves work in posting and space in the Ledger. Every entry in the Cash Book belongs equally to two accounts. This book being a Ledger for Cash, half of the posting is saved. The titles of account for which Cash is Dr. are severally Cr., and each item is posted to the Cr. side of its account in the Ledger. In like manner, the titles for which Cash is Cr. are themselves Dr., and the items are posted to the Ledger accordingly. Then, by the use of double money columns for " Sundries " and "Merchandise," we can enter the several debits and credits to Merchandise in the special Merchandise columns, and post the sum of each such column to the Merchandise Ac- count of the Ledger, and thus save a large part of the work of posting to this account. Note. — Only the items entered in "Sundries" column are posted. Merchandise entered in the special column is not posted till its sum is brought into "Sundries;" and this is uniformly done only at the foot of a page, unless the Cash Account is balanced midway in a page, when the last thing before balancing ie to enter the sums of the Mer- chandise items in "Sundries" columns and post them. 102 COMPLETE BOOK-KEEPING. Dr. cash: book. Cash 3d Set. 1880. 1 2 3 3 9 10 16 17 17 19 20 21 21 23 24 24 26 26 28 31 1 To Stock " Merchandise " Bills Receivable " Interest " Merchandise " Merchandise " Merchandise " J. W. Sharp " Merchandise " Bills Rec. '• Merchandise " Merchandise " Expense " Merchandise " John Owen " Interest " Bills Rec. " Interest " J. W. Sharp " Merchandise Investment (see J.) S. B. No. 1, B. B. do. J. Smithson S. B. J. L. Wallace S. B. S. B. Bal. acct. J. W. Sharp S. B. No. 3, B. B. J. A. Roys S. B. H. C. Spencer S. B. Desk room 1 mo. S. B. (see .1.) Bal. aoct. on above No. 2, B. B. do. on acct. Total Crs. Sunds. Mdse. Jan. 240 412 4 12 140 - » « m - -- 2097 " -- 2097' 3645 30 42 12 W 1880. Feb. To Balance 351 115. Proof. — By writing up this Set as here indicated, and taking the Trial Balance from the Ledger, with the Cash balance from the Cash Book, the learner will ob- tain the same results as before. By comparing his work in the two cases, he will see he has secured the advan- tages claimed in Art. 114 by the use of the Cash Book with special Merchandise columns. 116. Special Columns. — The special columns for Mer- chandise, introduc(Ml into the Cash Book, enable us to post the eight credits to Mcrcliandise in one sum, as shown where this sum is brought into tlic "Sundries" Dr. col- umn, and the three debits to Merchandise in (me sum^ as THIRD SET REWRITTEJS. 103 3d Set. CASH BOOK. Cash Cr. 1885. Jan. Bv Merchandise "' State Bank " State Bank •' Expense " Merchandise " State Bank '' Merchandise " State Bank *' Expense " Merchandise " Balance Bal. Invoice Deposit do. Store rent I. B. Deposit I. B. Deposit Clerk hire Total Drs. Bunds. 600 3645 42 55 55 shown where this sum is brought into the "Sundries" Cr. column. Note 1. — Special columns may in like manner be introduced into the Journal, or Journal Day Book, when found desirable for any par- ticular business. For a retail merchandising business, a special column may be added for Merchandise Crs., making a three-colnxnn Journal. Instead of a separate Cash Book, Dr. and Cr. columns might be added for Cash, making a ^re-column Journal. Other special columns may be added as found desirable, making a six-, seven-, or eight-column Journal. Note 2. — In the Cash Book here presented, the extensions are en- tered to January 8. After this date, the positions the entries will occupy are indicated, leaving the sums to be determined and entered by the student in his Cash Book and Journal Day Book, as he pro- ceeds in writing up his work from the Transactions. 104 COMPLETE BOOK-KEEPING INSTRUCTIONS— FOURTH SET. 117. The student associates with him Horace Hooker, and they engage in business under the firm name of "The Student & Co." The books are opened with a Stock Account. The partners each devote their time to the business, and agree to share in the gains and losses that may arise from it in proportion to their net invest- ments. The Firm keep an account with the City Bank. 118. A Cash Book, Journal Day Book, Ledger, and Bill Book are used in writing up this Set. A Sales Book and an Invoice Book (understood to be kept like the sample shown in the Third Set) would furnish the amounts named in the Transactions referring to them, though these books are not here shown. Consignments and Shipments, introduced into this Set, are kept as directed in Arts. 36 and 37. An "account-sales" is an account of a Shipment, rendered by the consignee to the consignor. It should show the receipts from sales, the charges of the consignee, and the proceeds to which the consignor is entitled. When received, the consignor should close his Shipment account for gain or loss into Profit and Loss. TRANSACTIONS OF FOURTH SET. February 1st, 1885. Resources. — The Student invests in the business of this Set the Merchandise on hand at the close of the Third Set, and 8819.47 in Cash. Horace Hooker invests $776 in Cash ; the Note of H. Adams, indorsed ))y Ben Brooks, dated August 1, 1884, for $800, due February 15th; and the Interest on this Note to this date. Interest at 6 per cent. TRANSACTIONS OF FOURTH SET. 105 Liabilities. — The indebtedness of the Student at the close of Third Set is assumed by the Firm. Feb. U, Trans. 1. We fill the order of J. W. Sharp for Merchan- dise per S. B., amount ^145.75. Tr. 2. Sell A. H. Steadman Merchandise per S. B., amount $240. Receive $80 in Cash, and his Note at 10 days, payable at store, for the balance. Feb, 3d. Tr. 3. Receive from John W. Brown an Invoice of Mer- chandise, to be sold on his account and risk. We pay $17.50 in Cash for freight and drayage. Tr. Jf. We buy for Cash of Harper Bros., Merchandise per Invoice Book, amount $240.70. Feb. 4th. Tr. 5. We deposit $975 to our credit in account in the City Bank, Tr. 6. We buy of Wm. Allen $2400 worth of Mdse. per I. B. Give in payment our Note at 10 days for $2000, payable at City Bank, and Cash for the balance. Tr. 7. We ship Invoice of Merchandise, worth $1141.40, to Smith & Wood, of St. Louis, to be sold on our ac- count and risk. We pay $8.60 shipping charges in Cash. Feb. 5th. Tr. 8. Sell for Cash from Brown's Consignment per S. B., amount $214.60. Tr. 9. Sell to C. H. & D. R. R. for Cash, Merchandise per Sales Book, amount $894.50. 106 COMPLETE BOOK-KEEPING. Feb. 6th. Tr. 10. Pay in Cash, bill of $27 for advertising. Tr. 11. Sell to Homer Warren for Cash, Merchandise per Sales Book, amount S2 17.30. Tr. 12. Deposit 81000 in City Bank. Feh. 7th. Tr. 13. Sell for Cash from Brown's Consignment per Sales Book, amount $665.40. Tr. 14. Isaac Smith buys of us for Cash an Invoice of Merchandise, amount $340.15. Fd). 9th. Tr. 15. Render J. W. Brown an account-sales of his Consignment, received the 3d inst., charging 5 per cent commission on sales, and remitting his net proceeds by our Check on the City Bank. Feh. 10th. Tr. 16. Sell Merchandise to Daughters College, Har- rodsburg, for Cash, amount $250. Tr. 17. Sell to St. John's College, Fordham, for Cash, Merchandise, amount $590. Tr. 18. Deposit $1640 in City Bank. Feh. nth. Tr. 19. Buy of Butler (k Co., on our Note at 10 days, Merchandise per Invoice Book, amount $1980.75. TRANSACTIONS OF FOURTH SET. 107 Feb. imh. Tr. 20. Bill Receivable No. 2 is paid in Cash. Tr. 21. Sell for Cash, Merchandise per Sales Book, $280. Feb. IJfth. Tr. 22. Receive from Jno. W. Brown an Invoice of Mdse. to be sold on his account and risk. We pay $14.75 in Cash for freight and drayage. Tr, 28. Pay Bill Payable No. 1 by Check. Feb. 16th, Tr. 2Jf. Bill Receivable No. 1 is paid in Cash, with 6J months' interest, at 6 per cent. Tr, 25. We receive from Smith & Wood, of St. Louis, an account-sales of our Shipment to them of Feb. 4th. Our net proceeds are $1230, covered by a sight Draft on New York. Tr, 26: Deposit $950 in Cash in City Bank. Tr. 27, Buy for Cash, Invoice of Merchandise, $975. Feb. 17th. Tr, 28, Ship to Smith & Wood, of St. Louis, Invoice of Merchandise worth $1240, to be sold on our account and risk. Pay $9.20 shipping charges in Cash. Tr. 29. Buy for Cash, of Van Antwerp, Bragg & Co., Invoice of Merchandise, amount $870.75. Feb. 18th. Tr. SO. Sell Thos. Walker, on his Note at 10 days, Mer- chandise per Sales Book, amount $764. 108 COMPLETE BOOK-KEEPING. Tr. 31. J. W. Sharp pays in Cash the balance our due on account. Feb. 19th. Tr. 32. Sell to High School for Cash, Merchandise per Sales Book, amount $1245.25. Tr. 33. Sell to City Bank for Cash, Merchandise per Sales Book, amount $820.50. Tr. 34, Deposit in City Bank $2000 in Cash. Feb. 21st. Tr. 35. Pay Bill Payable No. 2 by Check on City Bank. Tr. 36. Sell J. W. Brown's Consignment No. 2 for $915. Tr. 37. Render J. W. Brown an account-sales of his Consignment (# 2), charging him 5 per cent commis- sion on sales, and remitting his net proceeds by our Check. Feb. 23d. Tr. 38. Pay Cash for Merchandise I. B. $480. Tr. 39. Buy Merchandise of N. E. Publishing Co. per Invoice Book, amount $2475, on our Note at 3 days. Feb. 24th. Tr. 40. Sell for Cash, Merchandise per S. B. $437.40. Feb. 25th. Tr. 41. Cash Sales of Merchandise this day have been $348.80 per S. B. Tr, 42. Pay Clerk's wages for the mo. $76. TRANS A CTIONS OF FO UR TH SET. 109 Feb. 26th. Tr. 4^3. Receive from Smith & Wood an account-sales of our Shipment to St. Louis of Feb. 17th. Our net pro- ceeds $1225 covered by sight Draft on N. Y. Tr. U' Sell E. N. Hartshorn on his Note at 10 days, Mdse. per Sales Book, amount $210. Tr. JfO. Take up our Note No. 3 this day due. Feh. 27th. Tr. Jfi. Deposit to our credit in account, in the City Bank, at its face, Bill Receivable No. 3, due on the 28th. Tr. 47, Pay bills for advertising and fuel and lights for the month, amount $135.e50. Feb. 28th. Tr. 48. Cash Sales of Mdse. for the day amount to $737.40, per Sales Book. Tr. 49. Pay $85 for store rent for the month. Tr. 50. Receive $10 for desk room in office. Abstkact of Inventory. February 28th, 1885. 119. On taking an Inventory of goods remaining un- sold, we find Merchandise worth $2249.23. The partners are credited in account for their respective shares of the Tiet gain of the business, as provided for in Art. 117. The Student's share of gain is then taken in a Check on the City Bank, and one half of Horace Hooker's share is taken in Cash, the other half remaining tem- porarily to his credit in account. 110 COMPLETE BOOK-KEEPING. Required to determine : f 1st. The Trial Balance of February 28, 1885. 2d. The Ledger Balances of March 1, after having ad- justed the partners' accounts as provided for in Art. 119. 3d. The items of Resources and their value. 4th. The items of Liabilities and their amount. Note. — The Resources and Liabilities of the business have changed in it€ms, but the net Stock remains the same. The net gain of the business has been paid over to the partners, according to agreement, one of whom, for a time, leaves half of his share with the Firm to his credit in account. Ans. 1st. Dr, Trial Balance. February 28th, 1885. Amounts. Balances. L. Fj I Balances. €fr. Amounts. 1«60 11002123 1934| 24! 73291 32250 24|20 13209102 33864 45 1099 78 210 1675 25 312 50 850,02 4147I55 I I Stock Merchandise Bills Rec. Interest City Bank Expense Commission Profit & Loss Cash 4000 2 .89|75 65,80 4147|55_ I 4019 50 9902 45 1724 26 6653 75 lOi 8975 8« I2359I 33864 45 Atis. 2d. Dr. Merchandise Bills Rec. City Bank Cash Ledger Balances. March 1, 1885. Or. A Amounts. 2249 23 210 1084 55 653112 4190 90 Aooounts. Stock H. Hofjker L.pJ| Ar Amounts. OPENING AND CLOSING BOOKS. HI Ans. Sd. The Dr. Ledger Balances; amount $4196.90. Am. 4th. The Or. Ledger Balances, except Stock ; amount $196.90. OPENING AND CLOSING BOOKS. 120. The opening of a set of books, as required for a particular business, so as to make the accounts arising conform to the facts in the case, is the first difficulty encountered by the inexperienced book-keeper, and pre- sents a problem that often perplexes accountants of years of experience. This done, the current entries for recording ordinary business transactions are compara- tively easy. 121. The closing of a set of books by eliminating the gains and losses that have arisen in a business, and de- termining its net result as a whole, is a more difficult problem, and one requiring greater skill for its solution. But book-keepers and business men ought to be able readily to solve such questions. And, determining the net result of a business and the value of Stock at its close, they should be able to prove the accuracy of their work by showing that the Resources of the business are enough to meet its Liabilities and leave the value called for by the Stock Account. EXAMPLES FOR PRACTICE. 122. The following examples for practice will give the learner additional drill in both opening and closing sets of books, as taught in Arts. 57 to 66, and as required under varying circumstances, thus increasing his famil- iarity with these more difficult processes, and enabling him to enter upon the work of recording actual business transactions with better assurance of success. 112 COMPLETE BOOK-KEEPING. Example I. Opening. Let the Student commence business with the follow- ing Resources and Liabilities, and open his books with a Stock Account: Resources. — $260 of Cash in hand ; on deposit in the State Bank, $2500; Merchandise, per Inventory, worth S1200; a Note of $200, made by Thos. Brown; Real Estate worth $4500; and a balance of $140 due from Hiram King on account. Liabilities. — There is outstanding the accepted Draft of H. Boomer for $260, due in ten days; and a credit balance to Homer Warren of $40 on book account. Required to determine: Id. The Journal entry for Resources. 2d. The Journal entry for Liabilities. 3d. The net value of Stock in trade. Example II. Closing. 123. The business introduced in the last example (Art. 122) is carried on for the period of one year, during which time Merchandise is bought and sold, and Real Estate dealt in. Personal accounts are opened and closed. Notes are given to others, and received from others, a portion of which are paid. These facts are stated to indicate how the accounts became in the con- dition here shown. It is evident the amount of work done during this period can have no effect on the process of closing. At the end of the year a Trial Balance is taken, and an Inventory of Merchandise, Real Estate, and Expense on hand, with the following results: OPENING AND CLOSING BOOKS. 118 i?r. Trial Balance. Or. Cash State Bank Real Estate Expense Profit & Loss Bills Receivable 410 3560 2880 970 180 1920 Stock Merchandise Bills Payable Interest 0. Powers 8500 380 560 240 240 9920 9920 Inventory. — The Inventory shows Merchandise on hand worth S2340; Real Estate worth $3120; and vari- ous articles charged to Expense worth $250. Required to determine: 1st. The Journal entries for closing. 2d. The Ledger Balances, after eliminating from the speculative accounts of the Ledger, as shown by the Trial Balance and Inventory, all measures of gain and loss. 3d. Name the titles of accounts representing Resources j the value belonging to each particular title, and the amount of the whole. 4th. Name the titles representing Liabilities^ with the amount of each and of the whole. 5th. From the amount of Resources take the amount of Liabilities, and show that the remainder equals the Stock invested plus the gain during the year. Example III. Opening. Partnership without Stock Account. 124. The Student enters into copartnership with E. N. Hartshorn, and they continue the business of the last B. K.-8. 113 114 COMPLETE BOOK-KEEPING. example under the firm name of The Student & Co. The Student invests the Resources of the business just closed, the firm assuming its Liabilities. E. N. Harts- horn invests $5000 worth of Merchandise and $2500 in Cash, and the Firm assumes a $300 Note outstanding against him. The partners are to share in gains and losses in proportion to their net investments. Required to determine: 1st. The Journal entries for The Student's Resources and Liabilities. 2d. The Journal entries for E. N. Hartshorn's Resources and Liabilities. 3d. The Tiet investment of each partner. 4th. The net value of Capital in the business. Example IV. Closing. Partnership without Stock Account. 125. The business of the last example (Art. 124) is conducted one year. During this time the Firm have bought and sold over $40,000 worth of Merchandise, and nearly $60,000 worth of Real Estate. A Trial Balance and Inventory are taken at the close of the year, with the following results: J>r, Tbial Balanob. Or, Cash 860 The Stadent 10800 Slate Bank 14500: E. N. Hartshorn 7200 EXIK'USC 7a5 Merchandise 250 Bills Receivable 1668 Keal Estate 315 Personal Accounts 1260 Profit & Loss 508 19073 19073 EQUATION OF PAYMENTS. 116 Inventory. — The Inventory now taken shows on hand Merchandise worth $5140, and Real Estate worth $4692. Required to determine: 1st. The Journal entries for closing. ^d. The Ledger Balances, after eliminating from the speculative accounts of the Ledger, as shown by the Trial Balance and Inventory, all measures of gain and loss, and entering the net result to the partners' accounts, as provided in Art. 124. 3d. Name the titles of accounts representing Resources, the value of each, and the amount of the whole. 4th. Name the titles representing Liabilities^ with the amount of each and of the whole. 5th. From the amount of the Resources take the amount of the Liabilities, and show that the remainder equals the net Stock standing in the names of the partners. EQUATION OF PAYMENTS. 126. Equation of Payments is finding the average time for the payment of a whole debt, where several sums become due at different times, so that neither party shall sustain loss. Note 1.— This average time is intermediate among the several times, or dates, for partial payments, and so fixed that the gain to the debtor from retaining one or more sums after they become due, shall exactly equal the loss by him from paying one or more other sums before they become due. Note 2. — The method of ascertaining this average time recognizes that the product of any sum of money into the time it is used is a measure of its worth. Thus, the use of $12 for 2 months is equal to that of $8 for 3 months, or $6 for 4 months ; for the product of each sum into its time is 24, the measure of its worth. Example 1. — John Doe owes me ^560, of which $320 becomes due in 1 month, $160 in 3 months, and $80 in Operation. Amt. Mos, , Prod. 320 X 1 = 320 160 X 3 = 480 80 X 4 = 320 560 1120 1120 -560 = -2Ans. 116 COMPLETE BOOK-KEEPING. 4 months. He proposes to pay the whole at one time, to which I consent. How long before payment of the whole should be made, so that neither party shall sus- tain loss? Arts. 2 months. t Explanation.— The use of $320 for 1 month is equal to that of $1 for 320 months. The use of $1G0 for 3 months is equal to that of $1 for 480 months. And the use of $80 for 4 months is equal to that of $1 for 320 months. The entire interest or use of these several sums when due will hence be equal to that of $1 for 1120 months, or of $560 for as many months as 560 is contained times in 1120, which is 2 months. Hence, 127. To find the average time for payment of a whole debt, where several payments become due at different times, Multiply each partial payment by the time before it becomes due. Divide the sum of the products thus obtained by the whole debt, and the quotient will be the average time of pay- ment Note.— When one of the payments is due at once, the time to elapse before payment being 0, the product becomes nothing; but, in finding the sum of the payments for a divisor, this payment must be added with the others. Example 2. I buy a farm for $6000, upon the follow- ing terms : one third of the purchase to be paid in cash, one half of the remainder in 12 months, and the balance of the purchase in 18 months, without interest. What would be the equated time for the payment of the whole at once? Ans. 10 months. Example 3. In case the first payment had been made in cash, in the last example, what would be tho equated time for the two remaining payments? Ans. lo months. Example 4. A merchant buys an invoice of goods amounting to $1800, to be paid for as follows : $490 in AVERAGE DATE OF BILLS. 117 cash at the time, $300 in 30 days, $510 in 60 days, and the remainder in 90 days. What would be the equated time for the payment of the whole at once? A71S. 47 days. 128. The Average Date of several bills of varying amounts and bearing different dates, may be determined on the principle of Equation of Payments, just explained. Note. — In case several bills are made under different dates, and it becomes desirable to cover the amount of them all by an interest- bearing note, the average date of these bills will be the proper date of the note, or the time from which interest should be reckoned. 129. The Term of Credit is the time allowed for the payment of merchandise bought on account, and varies, depending upon local usage and the line of goods dealt in. Note. — Some business houses do a strictly cash business, and give no credit. Others allow a uniform term of credit for 30, 60, or 90 days; while still others allow varying terms of credit for different kinds of merchandise. 130. A Poeal Date is a date to reckon from, adopted for convenience in computing averages. It is chiefly used in determining the average date of bills, or their average term of credit. The earliest or the latest date of the several bills averaged is usually employed. The result is the same whatever focal date is taken. 131. To find the average date of several bills of various amounts and bearing different dates, Consider the date of the earliest bill a focal date. Reckon the time between this focal date and the date of each of the several bills. Multiply each bill by its time, and divide the sum of the products by the amount of the several bills; the quotient, added to the focal date, will give the average date required. Note 1. — In case tlie latest date of a bill is employed as a focal date, the quotient must be subtracted from it to obtain the average date of the several bills. 118 COMPLETE BOOK-KEEPING. Note 2. — When an example of this kind has been worked, using the earliest date of a bill as the focal date, it may be proved by using the latest date for a focal date. 132. To find the average term of credit of several bills of various amounts and different terms of credit, Multiply the amount of each bill by its term of credit^ expressed in mx)nths or days. Divide the sum of the products by the amount of the bills, and the quotient will be their average term of credit. Note. — The same principle enables us to determine when several bills having different terms of credit, average due. First, note when the bills severally become due, when the process becomes the same as given in Art. 127. Examples for Practice. Example 1. A merchant sells a bill of goods, amount S1800, of which $900 is payable in 4 months, $450 in 6 months, and the remainder in 8 months. What is the average term of credit? Ans. 5 J months. Example 2. Bought of John Thompson 4 Invoices of Merchandise, as follows : No. 1. Jan. 4, Amount $172.50 No. 2. Jan. 8, Amount 361.50 No. 3. Jan. 12, Amount 420. No. 4. Jan. 20, Amount 540. What is the amount of the whole purchase? and what its average date ? Ans, Amount $1494. Average date, Jan. 13. Example 3. Several Bills have been bought on terms of credit as noted below, to wit : No. 1. $145, Term of Credit 7 days. No. 2. 723, do. do. 15 do. No. 3. 820, do. do. 24 do. No. 4. 1080, do. do. 40 do. EQUATION OF ACCOUNTS. 119 What is the average term of credit of the whole pur- chase? Ans. 27 days. Example 4. Sold Wm. Williams 5 Invoices of Mdse., under dates and on terms of credit noted below, to wit : No. 1. Jan. 2, $395, with credit of 5 days. Jan. 4, 500, do. 10 do. Jan. 7, 305, do. 20 do. No. 2. No. 3. No. 4. No. 5. Jan. 10, 200, Jan. 15, 100, do. do. 10 5 do. do. He wishes to cover the amount of these several In- voices by his Note, bearing interest, under the date when these several purchases average due. What should be the date of his Note? Ans. Jan. 16. EQUATION OF ACCOUNTS. 133. Equation of Accounts is finding the equitable time for the payment of the balance of an account hav- ing both debits and credits. Its consideration properly follows that of Equation of Payments. Note 1. — The debit and credit sides of every account may each be brought to an average date, by equation, as explained in Arts. 126 and 127. Should these dates be the same, the balance will be then due. Note 2. — The average date of the larger side of every account re- quiring equation must then be either later or earlier than the average date of the smaller side, as here shown : Dr. William Brooks Cr. July 26 2000 20001 July 1 By Mdse. 19 Balance 1375! 625 2000 120 COMPLETE BOOK-KEEPING. Dr. William Bbooks Cr. I July I To Mdse. 1 2000 July 26 By Mdse. May 7 '• Bahuirc 1 1 1375 625 r i 1 Note 3. — In the first of these accounts, on July 26th, we have had from Brooks the use of $1375 for 25 days. (From July 1st to July 26th.) He is therefore entitled to retain the balance of $625 for 55 days ; for 1375 X 25 -^ 625 = 55 ; and 55 days after July 26th is Sept. 19th, when the balance of account becomes due by equation. Note 4. — In the second account, of the $2000 Brooks had from us July 1st, he pays $1375 in 25 days. He therefore ought to allow us use on the balance ($625) not only since July 1st, when he received it, but for 55 additional days, or from May 7th, to compensate for the use of $1375 for 25 days. And so generally. Hence, 134. To find when the balance of an account is due by Equation, let. Find the average date of each side of the account. 2d. Then multiply the smaller side of the account by the number of days between its date and the daie of the larger side^ and divide the product by the balance of the account; the quotient will indicate the time when the balance is due^ reckoning from the date of the larger side of the account. When the larger side has the later date, the time must be ADDED, or counted forward; but when it has the earlier date, the time must be subtracted, or counted backward. Note.— In finding the exact time between two dates, as required in working these examples, the Time Table on page 126, and Art. 140, explaining its use, may be consulted. Example 1. When do the debits and when the credits of the following account average due? And when docs the balance of the account become due by Equation ? AnJi. Debits Feb. 28; Credits March 22; Bal. Jan. 28. EQ UA TION OF A CCO UNT8. 121 Dr. John Bbown & Sons O. Jan. — 3 To Mdse. 320 Feb. 2 By Cash Uv. — Feb. 17 " do. 850 Mar. 4 " Mdse. , 378 Mar. 11 " do. j 200 Apr. May 24 " Cash 400 Apr. 6 " do. 1 300 6 •' do. 125 May 17 " do. 180 ■ Example 2. From what date, in equity, should in- terest be computed on settlement of the following ac- count with A. H. Steadman? Ans. Sept. 5. Dr. A. H. Steadman O. May 5 To Mdse. 200 May 14 By Cash !l50 — June 16l " do. 300 June 16 " Mdse. 500 July 8 " do. 428 July 10 " Cash 300 Aug. 15 " do. 474 Aug. 17 " do. 400 Sept. 10. " do. 353 Note. — The same result will be obtained whether this example is worked as directed in Art. 134, or by the following Short Method, which will now be readily understood. 135. Short Method for finding when the balance of an account is due by Equation : Take the date of the latest item of the account for a focal date. Multiply each item of the account, both debit and credit, by the number of days between its date and the focal date. Add the debit and credit products separately, and sub- tract the less amount from the greater. Divide their differ- ence by the balance of the account, and the quotient will indi- cate the time ichen the balance of the account is due, reckoning BACKWARD from the focal date when the balance of 'Htems^^ and the balance of ^^ products" are on the same side, and FORWARD when on opposite sides. Note. — ^The earliest date ot an account might be taken as a focal date, when the quotient indicating when the balance of account is 122 COMPLETE BOOK-KEEPING. due would be reckoned forward from the focal date, in case the bal- ance of "items" and of "products" appear on the same side, and backward when on opposite sides. Example 1 under Art. 134, worked by the Short Method, will be as follows, May 17th being the Focal Date : DeUts. Operation. Credits. Items. Days. Products. Items. Days. Products. 320 X 134 = 42880 250 X 104 = 26000 850 X 89 = 75650 378 X 74 = 27972 200 X 67 = 13400 400 X 23 = 9200 300 X 41 = 12300 125 X 11 = 1375 180 X 1153 64547 1850 144230 Dr. Items 1850 Cr. Products 64547 Cr. Items 1153 Difference 79683 Difference 697 79683 ^ 697 = 114 days. And 114 days backward from May 17th is Jan. 23d, when the balance of the account is due ; the same as before. Explanation. — Reckoning from the latest date as a focal date, the Browns have had the use of the first item, $320, 1.34 days, which is the equivalent of $1 for 42880 days ; and so for the other Dr. items, making the whole equivalent to the use of $1 for 144230 days. Their Cr. items are together equivalent to the use of $1 for 64547 days, leaving a Dr. excess equivalent to the use of $1 for 79683 days, or of $697 for 114 days. The balance of account is therefore due 114 days backward from the focal date, or January 2.3d, as before. Example 1. When would the balance of the following account average due? Ans. April 26. Dr. John M. Sutton Or. Mar. 14 To Md»e. 375 May 18 By Cash 376! June 6 " do. 250 June 8 " Mdse. 700! July 5 *♦ do. j 600 July 6 " Cash 160 •t 10 ! 175 Example 2. What should be the date of a Note, bear- ing interest, to be given in the settlement of the follow- ing account? Ans. Jan. 6, CASH BALANCE. 123 Dr. J. Geo. Cross Or. Jan. 15 To Mdse. 150 Jan. 25 By Cash 300 (( 25 " do. 180 Feb. 4 " Mdse. 200 Feb. 7 " do. 210 n 25 " Cash 150 {( 18 " do. 164 50 Mar. 7 " Mdse. 200 Mar. 3 " do. 300 " 10 " Cash 275 (( 10 " do. 205 50 Example 3. What is the average date for the payment of the balance of this account ? Ans. May 6. Dr. J. C. Weldon (V. Jan. 15 To Mdse. 300 Jan. 9 By Mdse. 400 (( 27 " do. 250 a 28 " do. 350 ** 29 " do. 642 Feb. 20 " do. 618 Feb. 11 " do. 400 (( 28 •' do. 720 a 16 •' do. 320 Mar. 16 " do. 562 " 27 " do. 150 Mar. 19 " do. 310 CASH BALANCE. 136. The Cash Balance of an account is the balance due in Cash at any required date, including both debits and credits, and the interest arising on them severally, to the time when the balance is required. 137. To find the Cash Balance of an account at any required date. Compute interest on the several debit and credit items of the account, from the date of each to the time of settlement. Enter the balance of the interest to the proper side of the ac- count. The balance then taken will be the balance of account, including both principal and interest. 124 COMPLETE BOOK-KEEPING. Note 1. — This method of ascertaining the Cash Balance of an ac- count is based upon the principle that in settlement each party to the account is entitled to credit for the payments he has made, and for interest on them to the time of settlement. Note 2. — When the balance of interest is on the same side with the balance of account, add the balance of interest to obtain the correct Cash Balance ; when on the opposite side from the balance of account, subtract to obtain the correct balance. Example 1. In case the account with John Brown & Sons, in Example 1, Art. 134, was settled July 1st, what would be its Cash Balance at that date, with Interest at 6 per cent? Ans. $715.26. Dr. John Brown & Sons Or. Date. Items. Time. Int. Date. Items. Time. Int. Jan. 3 $320 179 9 42 Feb. 2 $250 149 •6 12 Feb. 17 850 134 18 72 Mar. 4 378 119 7 39 Mar. 11 200 112 3 68, Apr. 24 400 68 4 47 ^? 6 300 86 4 24 May 6i 125 66 1 15 17 180 45 1 33 Jnhj lBal.715.26\Bal.Int. 11 26 1 18.26 1868.26 Cash I 37 al. 39 87 38 1868.26 July 715.26 138. The foregoing is submitted as a convenient form for writing up this and like examples. The time of set- tlement, July 1st, is taken as a Focal Date, and columns are provided for Time and Interest, in order to keep the work compact. Interest for any number of days is ob- tained by multiplying one year's interest by the required number of days, and dividing the product by 365, the number of days in a year. 139. Short Method for obtaining the Cash Balance of an account current : SHORT METHOD. 125 Multiply 1 per cent of each debit and credit item of the account by the number of days from its date to the day of settlement. Add the d^bit and credit products separately, and take the less amount from the greater. Multiply the re- mainder by the number denoting the rate per cent, and divide the product by 365. The quotient will be the balance of in- terest required. This balance of interest entered to the proper side of the account will give the Cash Balance required. Example 1, Art. 137, worked by the Short Method: Dr. Products. Cr. Products. 3.2 X 179 = 572.8 2.5 X 149 = 372.5 8.5 X 134 = 1139. 3.78 X 119 = 449.82 2. X 112 = 224. 4. X 68 = 272. 3. X 86 = 258. 1.25 X 56 = 70. 1.8 X 45 = 81. Cr. Products 1164.32 Dr. Products 2274.8 Cr. Products 1164.32 1110.48 X 6 ^ 365 = 18.25, the Dr. Remainder 1110.48 balance of Interest. Note. — This process is essentially the same as that in Art. 137, but shortened, by first taking 1 per cent of each item on which interest is computed (done by removing the decimal point two places to the left), and then again by multiplying the difference between the Dr. and Cr. products by the rate per cent and dividing by 365, thus sav- ing several multiplications and divisions, and reaching a more exact result. Example 2. With Interest at 6 per cent, what is the balance of interest, and what the Cash Balance, July 1, of the following account with E. N. Hartshorn ? Ans. Dr. Bal. of Int. $1.91 ; Cash Bal. $101.91. Dr. E. N. Hartshorn Or. Mar. 4 To Mdse. 240 Apr. May 6 By Cash 400 Apr. 6 " do. 180 8 " do. 250 May 8 " do. 320 June 1 " do. 200 June Xi " do. 210 126 COMPLETE BOOK-KEEPING. Time Table : Exhibiting the time in months or days from any day in one month to the corresponding day in any other month. To «#■ Jan. Feb. lar. Apr. May Jane July Aag. Sep. Oct Nov. Dec. From January Months Days 12 365 1 31 2 59 3 90 4 120 5 151 6 181 7 212 8 243 9 273 10 304 11 334 From February Months Days 11 334 12 365 1 28 2 59 3 89 4 120 5 150 6 181 7 212 8 242 9 273 10 303 From Marcli Months Days 10 306 11 337 12 365 1 31 2 61 3 92 4 122 6 153 6 184 7 214 8 245 9 275 From April Months Days 9 275 10 306 11 334 12 365 1 30 2 61 3 91 4 122 5 153 6 183 7 214 8 244 From May Months Days 8 245 9 276 10 304 11 335 12 365 1 31 2 61 3 92 4 123 5 153 6 184 7 214 From June Months Days 7 214 8 245 9 273 10 304 11 334 12 365 11 335 1 30 12 365 2 61 1 31 3 92 2 62 4- 122 3 92 5 153 4 123 6 183 5 153 From July Months Days 6 184 7 215 8 243 9 274 10 304 From August Months Days 5 153 6 184 7 212 8 243 9 273 10 304 11 334 12 365 1 31 2 61 3 92 4 122 From September Months Days 4 122 5 153 6 181 7 212 8 242 9 273 10 303 11 334 12 365 1 30 2 61 3 91 From October Months Days 3 92 4 123 5 151 6 182 7 212 8 243 9 273 10 304 11 335 12 3&'> 1 31 2 61 From November Months Days 2 61 3 92 4 120 5 151 6 181 7 212 8 242 9 273 10 304 11 334 12 365 1 30 From December Months Days 1 31 2 62 3 90 4 121 5 151 6 182 212 8 243 9 274 10 304 11 335 12 365 140. To find the time between two dates in months, or days, look for the month from which you reckon, at the left of the table, opposite which, and under the name of the month to which you reckon, will be the number of months between the two dates; and under this, in the same space, the number of days. Thus : From April 1 to August 1 is 4 months, or 122 days ; from November 10 to September 10 is 10 months, or 304 days. When the day of the month to which you reckon is greater or less than that from which you reckon, find the time from the earlier date to the same day in the month of the later PRACTICAL PROBLEMS. 127 date, and add or subtract the difference between the days of the month, as the day of the month to which you reckon is later or earlier than the day from which you reckon. Thus: From May 4 to August 10 is 98 days; while from June 10 to September 8 is 90 days. In case the dates between which you reckon time embrace the end of February, in leap year, another day must be added. PRACTICAL PROBLEMS FOR SOLUTION. 141. The author has many times been called upon for assistance by business men who would give detailed statements of their affairs but were unable to determine whether they had gained or lost in business, and how much; in case of partnerships, where the partners agree in all material facts in the case, but can not tell whether they have gained or lost in the business, or the value of their individual or joint resources therein; where one or more members of a firrn wish to sell their in- terest in the business to one or more other members, on a basis agreed upon ; but are unable to determine the value to be conveyed, etc. Some of these difficul- ties presenting problems arising in business where as- sistance has been called for, are here presented for solu- tion. 142. Various obstacles arise in the solution of such problems. Often the facts presented are not stated in the order of sequence which should be observed in their solution. In cases where a cash account seems desira- ble, items are wanting which renders it necessary to dispense with it, and employ some other title of account instead, either of person or property, in order to reach the result sought. To meet such obstacles satisfactorily, and to overcome them are often the chief troubles in the solution of problems otherwise simple. 128 COMPLETE BOOK-KEEPING, First Problem. Submitted by a Commission House. John Blake & Co., of Detroit, and C. K. Dunham, of Toledo, agree to ship butter to New York to be sold on their joint account, and to share equally in gains or losses that may arise. Blake & Co. furnish an invoice of butter worth $965.39, which they ship to Dunham, who pays $5.79 railroad charges, and expends $100 in repacking. He then ships the butter to McBride & Co., of New York, who sell it and return the proceeds to him, amount $1264.51. Dunham sells the barrels con- taining the butter received from Blake & Co. for $6.25, collects from the money in his hands a balance of $87.69 due him from them on general account, and remits to them drafts amounting to $777.23. Required to determine: ht. Whether there was gain or loss in this specula- tion, and how much. 2d. What further sum (if any) Blake & Co. are en- titled to receive from Dunham to close the account. Sd. What amount of Cash (if any) Dunham now holds. 4th. What further payment and entry are necessary to settle the business. Second Problem. Adams and Brooks. — Principal and Agent. John Adams purchases a stock of goods for which he pays $491.90, and engages Ben Brooks to conduct the business for him, for which Brooks is to receive one third of the profits for. one year. During the year Brooks PRACTICAL PROBLEMS. 129 receives from sales $5127.79, and pays for goods bought by him and for business expenses, S1886.72. Brooks pays to Adams of receipts from sales $2430.30. Adams further pays for goods furnished Brooks S1143.48. The goods on hand at the end of the year are inventoried at $147.25, and delivered to Adams. Required to determine: 1st. Whether they have made or lost during the year, and how much. ^d. What amount of Cash (if any) Brooks now holds, and to whom it belongs. Sd. What payment and entry will close the books. Third Problem. Brown and Smith. — Lumber Business. Brown and Smith engage as equal partners in a lumber business, one managing the business and the other fur- nishing the capital. Smith furnishes Brown $1012.50 for use in business. With the money thus furnished, and Cash receipts from sales, Brown buys logs, pays for saw- ing, piling lumber, cutting lath, hauling, etc., from time to time, the sum of $7962.24, and receives in like manner from sales the sum of $6871.69. For sums so received and paid, Brown renders a bill of items. Smith at one time collects $75.25 of lumber money, which he appro- priates to his own use. In addition to these receipts, cer- tain sums are deposited in Bank. During the progress of the business, a check is drawn against the Lumber account in Bank, in favor of Smith, for $1500, and an- other, in favor of Brown, for $858.54, which sums they use in their private business. These transactions cover- ing the business, the books are closed. B. K.-9. 130 COMPLETE BOOK-KEEPING. Required to determine: Ist. Whether they have made or lost, and how much. £d. Whether Brown owes Smith, or Smith Brown, and how much. Sd. What payment and entry will settle the business. Fourth Problem. An Association employ a Druggist. A co-operative association employ a druggist at a salary of $650 per annum. He is furnished with Drugs in- voiced at $1240.14, and $27.14 in Cash. He is to collect his pay quarterly from the receipts from sales. During the year he paid at different times for Drugs bought for the association $1749.25, and received from sales $4460.65. At the end of the year he turned over to the association the Drugs remaining on hand, invoiced at $1409.60, and delivered to the association the key to the Cash drawer, with its contents. Required to determine: 1st. Whether the association gain or lose by employ- ing this druggist, and how much. 2d. Whether the gain or loss is in Cash or Drugs. 3d. If in both, how much in each. Fifth Problem. A buySf on account ^ B^s and C« interest in a Note. A, B, and C are equal partners in business. During the absence of B and C from tlie store, A makes a sale of Mdse. for $1500, and receives a Note in payment. The proper entry is made in the books of the firm. PRACTICAL PROBLEMS. 131 When B and C return, B remarks to C in A's hearing : ''That's a bad sale; I'd sell my interest in that Note at a discount of 25 per cent," to which C replies : " I'd sell my interest in it at a discount of 30 per cent." A hear- ing these criticisms, remarks : "If that's the way you feel, gentlemen, I'll take the Note on the terms you propose." They both reply: "We mean business." The book- keeper is directed to deliver the Note to A and make the proper entry to the several accounts affected by the transaction. Required to determine: The Journal entry for this transaction. Sixth Problem. ^ fecial Partnership settlement. — Brown, Brooks & Co. Brown, Brooks, and Chamberlain engage in business, with a capital of $14000. Brown and Brooks each invest S4000, and devote their time to the business. Brown receives a salary of $1000 per annum. On account of special duties. Brooks receives a salary of $1200 per annum. Chamberlain invests $6000, but, performing no special duties, receives no salary. The capital invested first pays to the partners 4 per cent for its use, after which, gains and losses are shared in proportion to in- vestments. Each partner is at liberty to withhold or withdraw, if need be, not to exceed SIOOO of his invest- ment. But on any sum so withheld or withdrawn, he shall allow the firm interest at the rate of 5 per cent per annum. Chamberlain leaves the arrangement of the firm name to Brown and Brooks, each of whom desires his name to stand first. It is agreed between them that he who will allow the other the greatest sum for this privilege shall enjoy it. The choice comes to Brown by 132 COMPLETE BOOK-KEEPING. the allowance of $200 therefor, and the firm name be- comes Brown, Brooks & Co. Brown actually pays in only $3000, and Brooks, at the expiration of six months, withdraws $1000. The gross gain of the business for first year, exclusive of interest on investments and the salaries* allowed the partners, is $5192.84, and the ex- penses not above specified are $1163.35. Required to determine: Ist The net gain of the business. 2d, The Balances to the several partners' accounts. Seventh Problem. Closing a Set of Books. — Trial Balance and Inventory only given. John Young engages in business with assets amount- ing to $60,500, and consisting of Cash, Merchandise, and Bills Receivable. His liabilities on opening his books amount to $4500, and consist of Personal accounts and Bills Payable. During a year's business, he has bought Merchandise from time to time, in the aggregate amount- ino' to over $40,000. He has also invested in Real Estate. Some of his Invoices of Mdse. were paid in Cash, and others were paid by Note, while still others were bought on account. Sales of Mdse. amounting to over $50,000 have been made from time to time, and many accounts of the Ledger have been closed. On taking an account of stock at the end of the year, the Merchandise on hand per Inventory amounts to $18,420, and the following is a summary of the Trial Balance. Note. — Simple int'estment In property, often dealt in for gain, does not constitute tl)c account speculative. Tlic Real Estate investment in this problem may be considered as worth its cost. PRACTICAL PROBLEMS. 133 Dr. Trial Balance. Or. Personal Accounts Bills Rec. National Bank Real Estate Cash Expense 660 12160 6190 3400g 1450 4460 58920 Stock Interest Personal Accounts Bills Payable Profit & Loss Merchandise 56000 300 500 1020 •640 460 58920 " Required to determine: 1st. Whether there has been gain or loss in the busi- ness, and how much. 2d. The amount of Young's Assets on closing, and in what they consist. Sd. The amount of his Liabilities, and in what they consist. Eighth Problem. Partnership. — The Capital of Young managed by his partner. On closing the business of the Seventh Problem as above, John Young enters into a co-partnership with Hiram Smith, and they conduct a Dry Goods and Real Estate business under the firm name of "Young and Smith." Young furnishes the capital, consisting of the Merchandise and Real Estate on hand at the close of the last problem and $7580 of Cash, for the use of which he is to receive 4J per cent. Smith furnishes no capital, but devotes his time to the business, for which he is to receive a salary of $1600 a year. After paying for the use of the capital invested, the salary of the active part- ner, and all expenses incurred in conducting the busi- ness, four sevenths of the net gain is to go to Young and three sevenths to Smith. At the close of the year's 134 COMPLETE BOOK-KEEPING. business, and before making entries for the use of capital and for salary, they have on hand Merchandise worth $25,600, and Real Estate worth $45,000, per Inventory, with the following Trial Balance. Dr. Trial Balance. Or. Merchandise Bills Rec. National Bank Cash Profit & Loss Expense 22500 26260 5750 750 2440 4000 ytock Interest Real Estate 60000 450 1250 61700 61700 1 Required to determine: 1st. The 7iet gain of this business for the year. 2d. The balance to Young's account. Sd. The balance to Smith's account. 4th. The amount of Resources, and in what they consist. 5th. The amt. of Liabilities, and in what they consist. 6th. The value of net Stock and to whom it belongs. JOINT STOCK COMPANIES. 143. A partnership is an association of two or more persons for the purpose of transacting business, with their united ability and means, as one party, with an agreement to share the profits arising therefrom on some established basis. Note 1.— Such a partnership, called also a firm or company, can be changed only by the agreement of all the persons composing it, and is terminated by the expiration of tbe time for which it was made, or by the death of any one of its members. Note 2.— A partner may sell his interest in the common property of a firm, but the person buying can become a partner in his place only by the consent of the other partners. JOINT STOCK COMPANIES. 135 144. A Joint Stock Company is a species of partner- ship, consisting generally of a large number of persons, with a capital made up of shares whose owners may- transfer the stock to others without consulting the co- partners. Note. — The stockholders of such companies may make assignment, buy more stock, or sell what they have. The interests of members may tlius change, and the members themselves, but the company con- tinues, and may be perpetual, unless limited by its charter or termi- nated for cause. 145. It many times seems desirable to conduct a busi- ness requiring more means than any one person, or any small number of persons interested, have at their dis- posal. In such cases, enterprises of importance to a whMe community can be wisely inaugurated and suc- cessfully carried on only by combining the capital and the practical skill of a considerable number of persons. It is under such circumstances that Joint Stock Com- panies become a necessity, and meet the emergency by providing the means requisite to success. 146. Persons organizing a Joint Stock Company, or purchasing shares of its stock after organization, do so with the knowledge that their investments are devoted to the purpose for which the company is organized. Stockholders have equal rights in the election of offi- cers in proportion to the number of shares ot stock they severally own, and a right to their share of the profits of the company derived from the prosecution of its business; but they have no claim on the company for a return to them of their investments. 147. With the company organized, and at their annual meetings thereafter, the stockholders of a Joint Stock Company choose trustees or directors, who are intrusted with the management of the company's affairs, and who appoint persons to conduct its business under their di- rection. 136 COMPLETE BOOK-KEEPING. Note 1. — The transactions of Joint Stock Companies and the books required for their current business are the same as in the case of indi- viduals and firms. Note 2. — The chief difference between them consists in the organi- zation of such companies, the purchase and sale of certificates of stock by which its actual owners are changed, and the manner of conducting their annual elections. These distinctive features will now be briefly considered. 148. At a meeting called for that purpose, let us sup- pose it is decided to organize a manufacturing company, with a capital of S60,000, that a paper is presented for subscriptions to capital stock in $100 shares, and that the requisite six hundred shares are subscribed by ten persons, at a meeting held November 10th, as follows : Subscriptions to the Home Manufactueing Company. Number of Shares Subscribed. Amount Siffnatures and Seals. Ninety 90 9000 John King L. s.; Ninety 90 9000 Henry Brown L. s/ Seventy-five 75 7500 George Curtis L. S.| Sixty 60 6000 Jay Howard L. s.; Forty-five 45 4500 Mary Brooks L. S. Sixty 60 6000 Otis Wood L. 8.; L. s/ Sixty 60 6000 Hiram Evans Forty-five 45 4500 Eliza Smith L. 8.; Forty-five 45 4500 Isaac Sands L. S. Thirty 30 600 3000 60000 " John Sutton L. S.' 149. After these subscriptions have been made, John King is chosen President ; George Curtis, Secretary ; and Hiram Evans, Treasurer. These officers are instructed to provide such books and stationery as will be required in perfecting thoir organization. The Treasurer is in- structed to collect 10 per cent of the Stock subscribed, as here shown, and to issue Installment Scrip therefor, to be signed by himself and the President, when they adjourn to meet again in one week. m JOINT STOCK COMPANIES. 137 Note. — These proceedings should be recorded in a Book of Minutes kept by the Secretary, and attested by his signature. 150. At the meeting of November 17th, the officers report that they have procured the following books for the use of the company : Book of Minutes, Installment Book, Capital Stock Journal and Ledger, and Certificate Book. Sample pages of most of these are here intro- duced, showing their form and use. The Treasurer has collected from the subscribers to Capital Stock the first Installment of 10 per cent. Nos. 2 and 6 of Installment Scrip issued are shown on the following pages. Note 1. — The Capital Stock Ledger shows the credits to which sub- scribers become entitled from time to time, based upon their payments of assessments, as shown by the Installment Scrip Book. Note 2. — Enough of both of these books is shown to illustrate their use. The same is true of the Certificate Book, used also as a Transfer Book. 151. A second Installment of 40 per cent is collected Nov. 26th, for which Installment Scrip is issued similar to that shown on next page, and credit is given to the subscribers, as shown in the Stock Ledger. A third Installment of 50 per cent is collected Dec. 20th, for which credit is given in the Stock Ledger. The Stock being now all paid in. Certificates of Stock are issued to subscribers, samples of which appear in the Certificate Book. The proper entries are also made in the Stock Ledger, as shown. Note 1. — When subscriptions to Joint Stock Companies are paid at the time they are made, or all at once, the Installment Book may be dispensed with. Note 2. — These Stock Certificates are transferable only on the sur- render of certificates held by sellers, at the office of the Company for cancellation, and the issue of new certificates to parties entitled to them. Sales of stock can not be considered as completed until new certificates are issued and entered upon the books of the Company. The Stock Ledger thus at all times shows the owners of Stock, and the number of shares held by each stockholder. 138 COMPLETE BOOK-KEEPING. INSTALLMIEJNX SCRIF BOOK. I I Co i CO •2 CO CO Cii < "^ o c CO «35 ^;*- o: io ^ ^ «c « (b 1 ^' «o 5^ c! o :§ i^ *>i .^ CO ^ ^ g CO C5 ! rO jg ! a J^ 't^;^ 4 1 ^ TRANSFER BOOK. . V ! o o <« 5 ^^ © cc ^ 3 ^ 5" « i : i to B o UJ 3 1 ^ I Si 1 ^ 1 ^ Q 1 »^ fe; fe; ^5 i 1 JOINT STOCK COMPANIES. 141 CERTIFICATE AND TR AI^ SFER HOOK. 2 i 1 ^ oe h i J| -40 •S ci u. QQ QJ ^ i ^^ ^ 'iO ^ oc 5 •^ ^ ^ i i 1 O ^ 1 ^ ^ B o ■ Si 1— 1 ^ ® d s § ^ s ►^ Jl ^ 3 "A, 142 COMPLETE BOOK-KEEPING. Dr. CAMTAIL. STOCK LEIDGrER. John King 1884. I Nov. j 15 90 Shares, istinstrt '♦ 26 90 Shares, 2d insfit I Dec. 90 Shares, 3d inst'i't Certificate No. 1 Cr. 900 3600 4500 9000 Dr. Heney Brown 1881. |» ! Nov. 1 15 1 90 Shares, i«tinsfrt i " 26 90 Shares, 2d instTt : Dec. 20 90 Shares. 3d InstTt I " 20 Certificate No. 2 1886. Jan. 8 do. " 11 Or. 1 9001 3600 4500l ] 9000 2000 Dr. Otis Wood Jan. $ Certificate No. 6 ,16000 188«. I Nov. 1 17 60 Shares, istinstTt " 26 60 Shares, 2d InstTt Dec. 1 20 1 60 Shares . 3d inst ri 20 Certificate No. 6 Jan. do. O. h 600 2400 30001 4000 152. The Transfer Book is a book for registering trans- fers of Stock Certificates in case of the sale of Stock, and may be combined with a Certificate Book. As only stockholders can have occasion to ask for a transfer, a blank form may be printed on the back of certificates for use as required, in the following words, or others of like import: For value received / hereby assign and transfer to Henry Brown, Twenty shares of the within Stock, and JOINT STOCK COMPANIES. 143 authorize and request the Secretary to make the neces- sary transfer on the books of the company. Witness my hand and seal this eighth day of January , 1885. (Signed) Otis Wood. [l. s.] Note 1.— Here Otis Wood sells to Henry Brown twenty of the Shares of Stock standing in his name, as shown in Certificate No. 6, fills the blank on the back of said Certificate, as above shown, and for- wards the same to the Secretary, when the lower part of the stub is filled as shown in Certificate Book, and an entry made in the Transfer Journal, for convenience of reference and posting, as follows : No. 6, Otis Wood, Dr. 60 shares. To No. 11, Henry Brown, 20 shares. " No. 12, Otis Wood, 40 shares. Note 2. — This entry shows one certificate canceled, and two issued in its stead, together making the same amount. No. 6 is posted to the Dr. and No. 12 to the Cr. of Wood's account, and No. 11 to the Cr. of Brown's account, as shown in the Stock Ledger. Note .3. — Entering all transfers in like manner, the Cr. side of the Stock Ledger will at all times show the No. and amount of Certificates issued; and the Dr. side,the No. and amount of Certificates canceled, and the Cr. balance to any stockholder's account will show the amount standing in his name. 153. The foregoing, from Art. 143, relates exclusively to the Stock Books, which are entirely separate from the books recording the transaction of the business of the company. As money or property are realized from the payment of installments on subscriptions, or from the sale of Certificates, the Operating Books of the business may be opened as in other cases, making Cash and prop- erty held, Dr. to Capital Stock, employing such number and variety of books for recording transactions as the business shall require, as in general book-keeping. 154. When a Joint Stock Company would make a dividend to stockholders, all speculative accounts are properly closed into Profit and Loss, as in other cases, in order to ascertain what has been made in the busi- ness. It may then be thought best to set aside a por- 144 COMPLETE BOOK-KEEPING. tion of tlie earnings of the business to meet possible reverses, or for improvements that may seem desirable, and to divide among stockholders what remains of the net gain to a given date. Note 1. — Suppose the Profit and Loss account shows that our Com- pany has made $4500, and the directors decide to make a dividend of 5 per cent to stockholders, setting aside a reserve of $1500. The proper entry in the books to show this action is: and Loss Dr. $4500 To Reserve $1500 " Dividend 3000 Note 2. — With a Bank account exceeding the Dividend account provided for, the dividend may be made thus: Make an alphabetical list of stockholders from the Stock Ledger, showing the amount of Stock standing to the Cr. of each. In a special Check Book, " for the payment of Stock dividends," fill Checks to the order of the several stockholders, for the amount of dividend due them, when this Journal entry may be made : Dividend Dr. $3000 To Bank $3000 The posting of this entry, and the delivery of the Checks to the parties entitled to them, completes the payment of the dividend. Note 3.— Printed notices may be sent to the Stockholders, inform- ing each of the dividend made, and of the amount due him, which will be paid on application, or held subject to his order; or checks may be sent with the notification that a dividend has been so made. Note 4. — When Checks showing on their face that they are used "for the payment of Stock dividends" (Note 2) are on their return from the bank filed together and preserved, they become vouchers for the payment of such dividends. Note 6. — Some prefer opening an account with each stockholder to the method shown in Note 2. After the entry in Note 1 has been made they would say : Dividend Dr. $3000 To Stockholders (severally), giving each credit for the amount due him, and then make the Stock- holders Dr. (.severally) to the Bank as Checks are paid them. Where the dividends of Stockholders are for any cause left with the Com- pany, this method enables the secretary (or book-keeper) at any time more reatlily to determine the condition of any stockholder's account. JOINT STOCK COMPANIES. 145 Note 6. — In case of the transfer of Stock, the Certificates bearing the request and returned for cancellation, authorize the entry in the Transfer Journal shown in Art. 152, Note 1. But these Certificates should be preserved for reference, when necessary, to show authority for the transfer. This may be done by placing them 'on file, or by pasting them to the stubs of the Certificate Book from which they were taken. 155. In elections stockholders are entitled to cast one vote for every share of stock they hold, whether in their own right or by proxy. There may be as many votes cast at an election as the Company has shares of stock, and no more. Note. — In case a company of four hundred stockholders should together hold one thousand shares, three of them holding one hun- dred and seventy-five shares each, could by united action control an election ; for their three votes represent 525 shares of stock, while the votes of the other three hundred and ninety-seven stockholders would represent only 475 shares ; and so in other cases. 156. Suppose this Company conducts the business one year (more or less), and the Board of Directors declare a dividend to the stockholders of a portion of the Com- pany's earnings to date. On closing their books in the usual way, the Profit and Loss account shows a net gain of $4950, and the Company has $3500 to its credit in Bank. The Directors decide to make a dividend of 4 per cent upon their Capital Stock, and enter the excess of profits to the Reserve account. Each of the original stockholders retains the Stock taken on the organization of the company, except the changes shown in the Stock Ledger. Required to determine: 1st. An alphabetical list of stockholders, with the num- ber of shares standing to the credit of each. 2d. The dividend to which each stockholder is entitled, and the amount of the whole. 3d. The condition of the Profit and Loss account after the dividend declared is made. B. K.-IO. 146 COMPLETE BOOK-KEEPING. 4th. The condition of the Reserve account. 5th. The balance remaining in Bank after checks in payment of dividends have been made and delivered to stockholders. SPECIAL COLUMNS AND BOOKS. 157. Special Columns are columns additional to those usually employed in keeping accounts, introduced for convenience in particular cases, and generally for saving time, space, or work. Their number and use will depend upon the nature of one's business ah4 the particulars he wishes to record. Note 1. — In tlie Cash Book, at pages 102 and 103, special colunnis are introduced for Merchandise, both Dr. and Cr. Their use saves time and space in posting, as shown in Art. 116 and Notes. Note 2. — In a Journal for a Retail Business, a special column for Mdse. Or. may be introduced to advantage, thus constituting a three- column Journal, which is a favorite form with many merchants and accountants. Note 3. — In case items of Expense often occur, a special column for Expense Dr. may be added, making a four-cobimn Journal. In like manner columns may be added for any purpose, Dr. or Cr., or both. Note 4.— By introducing additional Dr. and Cr. columns for Cash, a six-column Journal is provided. Then by posting the footings of the Cash columns the Ledger i« made to contain a condensed Cash Ac- count, which some prefer. 158. The Purpose in employing special columns in Journalizing is to save work in posting, and to accom- modate Ledger Accounts in less space. The use of spe- cial columns involves no new principle; and they can be properly employed only when they may be made to serve one or both of the purposes named. 159. Special Books may be employed to advantage in many (;ascs, as books of original entry, and auxiliary to the Day Book or Journal. The consideration of some of SPECIAL COLUMNS AND BOOKS. 147 these, in connection with tlieir particular uses, may aid the learner in originating others, as he may have occa- sion for their employment in business. 160. A Time Book is especially useful in large mechan- ical and manufacturing establishments in which many persons are employed. In it are entered the names of workmen, their department of work, time employed, rate of daily wages, the amount of wages for the month, and the total amount of Pay Roll for this time. The form on the next folio is convenient for a daily register. Note 1. — With a Time Book kept as there indicated, one entry per month in the Cash Book is sufficient fot the paj^ment of all the work- men, whether only 4, as there, or 400. The entry for this Pay Roll, on the Cr, side of the Cash Book, would be, under date of payment: By Pay Roll $159.56 Note 2. — In case of checking from Bank the sum required for the payment of a month's wages, one Journal entry would suffice for the record, as follows : Pay Roll Dr. $159.56 To Bank $159.56 The entries here shown contemplate monthly payments. In case payments are not so made, personal accounts with employes become necessary. Note 3. — Although receipts should generally be taken when mon- eys are paid, in case of employing a large number of hands this is not now generally done, and is in many cases impracticable. But entries like the above, agreeing in amount with the footings of the Pay Roll, are evidence of payment. Note 4. — With many hands employed in different branches of labor, as supervision, molding, finishing, etc., if desirable to keep an account of the cost of each separate branch or department of the business, it can readily be done by classifying the Pay Roll, entering the names of persons engaged in each separate department together, and full ex- tending each class by itself. In either case, however, the Pay Roll would really be but a branch of the Expense Account. Note 5. — The Time Book, kept as here indicated, is at once a Pay Roll and a book of original entry, and, as such, should be preserved as an essential part of the records of one's business. 148 COMPLETE BOOK-KEEPING. Pay Boll of Bkown, Smith & Co., Names. Work. 1 16 2 17 3 18 4 19 5 20 6 21 7 22 8 23 Jas. Smith Foreman / / 0. Brown Fireman / / / M. Hall Porter K / Wm. Fox Laborer :^ / / / 161. A Physician's Diary, of sufficient size for record- ing daily visits to his patients, may be so arranged as to be convenient for the pocket, a reliable book of original entry, and an important auxiliary to a complete set of account books for his entire business. The following form admits of entering the names of the parties with whom accounts are kept, the amount of charge and of payment, and any remarks that may be deemed desira- ble, and shows the member of family visited, with the number of visits and the days of making them, for one week, without rewriting names : Daily Record For Week Ending Dec. 20th, 1884. Accounts. Amt. Paid. Remarks. 8a. M. Tu. w. Th. P. Sat. H. Brown 1