UC-NRLF

B ^

SD3

■.,i' lift

Sfl7

BOOKKEEPING

;•

^fflW»1nmjtj^j!i|»i2.

' ^

lii ill

111!!!'

noPOLlTAN SERIES

THEORY

— OF

BOOKKEEPING

By
O. M. POWERS

Published by the
METROPOLITAN TEXT BOOK CO.

CHICAGO

METROPOLITAN TEXT BOOK CO.

INTRODUCTORY

Bookkeeping is the science of accounts and the systematic method of
keeping business records.

The system of bookkeeping now in use throughout the Western world originateJ
with the Venetians about the close of the fifteenth century, and was an outgrowth of
the extensive commerce carried on by Venice, Florence, and other Italian cities at that
time.

Single Entry is a method of bookkeeping in which a record is kept of
accounts with persons only.

The customers are charged with purchases or credited with payments, but no rec-
ord is kept of the merchandise or other property which enters into the transaction. This
method is open to the objection that the record is incomplete. Single entry is little used
except in very small concerns.

Double Entry, as its name implies, is a method of keeping accounts
in whicli every debit has a corresponding credit.

Under this method the commodities or things which enter into the business are
debited and credited the same as persons, thus furnishing a record of the cash, goods
or other property belonging to the business. Since every debit must have a credit of
equal amount, the books should always be in balance, and this equilibrium of debit and
credit is a test of their correctness.

Debtor and Creditor. A debtor is one who owes a debt. A creditor
is one to whom a debt is owing.

These two classes of persons embrace all with whom any house sustains business
relations. They are diametrically opposite in character. The one has cost the business
something and the other has produced or furnished the business something. One of
these classes we will chargfC; the other we will credit.

4 INTRODUCTORY

Debit signifies to charge, and hence we debit all persons who owe us,
or all things which have cost us something.

Thus we debit a customer for the goods sold him. We debit all things received,
because they cost us their equivalent in whatever we gave for them.

Credit si gnifies to trust, or give credit for, and hence we credit all
persons whom we owe, or all things which have produced us something.

For example, we credit one who pays us. We credit all things sold or disposed of,
because such things have produced us a value in that which we received for them.

Original Entry. An original entry is the first record made of a trans-
action. Any book in which first entries are made is called a Book of
Original Entry.

Only original entry books are admissible as evidence in courts of law. Books of
Subsequent Entry are those to which entries are transferred.

Item. An item is a distinct part of a transaction, either a debit or a
credit.

An item may consist of cash or any other property. It may consist of an obligation
owing to us, or by us to another. It is the unit of bookkeeping. ,

A Principal Book is one which contains an integral part of the chain
of record, or which cannot be dispensed with.
The Journal and Ledger are principal books.

An Auxiliary Book is one which is explanatory of some other book,
or is not absolutely essential to the complete record.
A memorandum book, or time book is an auxiliary book.

JOURNALIZING

LESSON I

DOUBLE ENTRY
JOURNALIZING

The Journal is a book in which is recorded the debits and credits of
each transaction in proper form, together with a full explanation of such
debits and credits, or a history of the transaction as it occurred.

The journal is usually a book of original entry and whenever it is, the history of
the transaction must be made with each entry, either preceding or following the debits
and credits. In some cases the journal is used only as a book of debits and credits, the
history being contained in another book called a Day Book, or on sheets of paper, called
"Order Blanks," "Sales Sheets," etc.

Journalizing consists in making a proper entry in the journal.

Every correct journal entry must balance, — the total of the debit items must
equal the total of the credit items.

From the explanation of debit and credit previously given, we de-
duce the following:

GENERAL RULE

1. Debit what you receive, or what costs value.

2. Credit what you dispose of, or what produces value.

This is a universal and all-important rule in bookkeeping and should be thoroughly
memorized.

EXAMPLES
Jan. 2, 191.. Sold John Davis for cash, 10 bu. apples @$2.00, $20.00

191.. FORM OF JOURNAL.

Jan.

Cash
{Br. Item)

for cash 10 bu.
( Explanation

Mdse.

(Cr. Item)

Sold to John Davis
apples @ $2.
or History.)

20
{Dr. Col)

{Cr.CoD

By inspection of the above we see that this journal entry consists of
four parts. First, the date, being the year, month and day; Second, the

6 THEORY OF BOOKKEEPING

debit item, being that which was received or cost value, (in this instance,
cash) together witli its amount in the Dr. column; Third, the credit item,
or that which was disposed of, or produced value, (in this example mer-
chandise), with its corresponding amount in the Cr. column; and Fourth,
the history or explanation of the transaction written beneath.

TO THE STUDENT

First write the date, then read the transaction carefully and ask
yourself the question, "What did I receive?" or "What has cost value?,"
and write such items as debits; then "What did I dispose of?" or "What
produced value?" and write such items as credits.

Unless otherwise directed by the teacher, you may omit the history
of the transaction for the present, in order to save time, and facilitate
learning the principles.

Cultivate a neat, plain and business-like style of writing and figures.

Leave a blank line between entries and three blank lines at the bot-
tom of each page.

JOURNAL TERMS

Merchandise, Mdse., is a term applied to goods and ,wares dealt in by
the concern as a business.

Cash is a term which includes money of every kind, such as coin,
currency, checks, money orders, etc.

Real Estate includes houses and lands.

Fixtures includes shelving, counters, show cases, office safe, etc.

Stocks and Bonds. These are certificates of stock or obligations is-
sued by corporations and are entered under the names which they bear;
as, Central Telephone Stock, Citizens Bank Stock, S. P. Railroad Bonds.

191..
Jan. 3. Bought of Henry Anderson for cash 10 brls. flour @ $5, $50„

Mdse. is debtor, because we received it, and Cash is credit because we
disposed of it. {See form, page 7.)

** 4. Sold William Dawson for cash, 20 brls. Greening apples @ $3,

Cash is deblor, because we received it, and Mdse. is credit because we
disposed of it. {See farm, page 7 )

5. Bought of Geo. P Fowler & Co., for cash, 2 brls. gasoline 50
gal. each @ lie, $11; 5 cans polarine, 5 gal. each @ 40c, $10.
Total $21.

Mdse, is debtor because we received it. Enter the total as one amount.
Cash is credit.

JOURNALIZING

■^iz-.

''/^l^tiLd-^-

C-'-Z^LSs^-^^^L"'^

'y?^t:iUty

(3tz,.^^^

^z^ka^t^O'CyL^.jy

(^z<^^C^

^^^z^k^

(2^,^^

//U6j^^

3a.^^A^

6c?

JOCO

//^

/^^'

/^^^

/f:2 ^-o

*' 6. Bought of Samuel Davidson for cash, our store building and

lot, $3000.

Real Estate is debtor.

** 8. Sold Amos Pettibone for cash 50 boxes Florida oranges @ $2.85
$142.50; 10 boxes grape fruit @ $4, $40. Total $182.50.

" 9. Bought of Diebold Safe and Lock Co., for cash, a safe for our

office, $75.

Debit fixtures.

" 10. Sold J. C. Watson for cash, 50 bu. Early Rose potatoes @ 60c,
$30; 10 cases eggs 12 doz. each @ 25c, $15; 32 gal. cider vinegar
@ 18c, $5.76. Total $50.76.

8 THEORY OF BOOKKEEPING

191..

Jan. 11. Bought of S. P. Brewster & Co., 10 shares Citizen's Bank Stock
@ $100, $1000. Paid cash for same.
Citizen's Bank Stock is debtor.

** 12. Bought of Union Show Case Co., for cash, a new 8 ft. show case
for our store $18.50.

" 13. Sold A. M. Duncan, 4 brls. lump rock salt @ $3, $12. Received
in payment 30 bu. oats @ 40c, $12.

** 15. Sold to Charles L. Henderson, 5 shares Citizens Bank Stock @
$110, $550. Received in payment cash.

" 16. Sold William C. Wood for cash, 2 brls. flour @ $5.50, $11.

" 17. Bought of Thomas & Smith for cash, 50 bu. seed corn @ $1.00,
$50; 200 lbs. lawn grass seed at 6c, $12. Total $62.

" 19. Sold to Henry Wilson, 5 shares Citizen's Bank Stock at $120,
$600. Received in payment 8 lots in Ardmore @ $200, $600.

** 20. Bought of Sprague, Warner & Co., for cash, 5 bales Rio coffee
100 lbs. each @ 22c $110; 10 drums Remo brand coffee 60 lbs.
each @ 14c, $84. Total $194.

" 22. Bought of Lawrence Nelson for cash, 20 shares Central Tele-
phone Stock @ $85, $1700.

** 23. Sold to Coyne Brothers for cash, 5 cases eggs, 12 doz. each, @
28c, $14.80; 10 boxes ginger snaps, 40 lbs. each @ 8c, $32.
Total $46.80.

** 25. Bought of Frank W. Wright & Co., 8 shares Southern Pacific
Railroad Stock @ $94.50, $756.00. Gave in payment 10 shares
Central Telephone Stock @ $75.60. Total $756.00

" 27. Sold to John Davis, 20 bu. seed corn @ $1.25, $25; 10 bu. oats
at 50c, $5; 4 brls. lump rock salt @ 4, $16. Total $46. Received
in payment cash $46.

'* 3i. John Davis has returned the 4 brls. lump rock salt which we
sold to liim on the 27th, same not being satisfactory, and we
have refunded him the amount which he paid, in cash $16.00
This is the same as buying the goods back from him.

To the Student. After journalizing the above transactions submit
your paper to the teacher for inspection. If correct, you may copy it
into your journal. Use care and neatness in your writing and figures.
Rule a red line between the entries.

JOURNALIZING

LESSON II

PERSONAL ACCOUNTS

Personal Accounts are those opened with persons, firms or corpo-
rations.

On Account. When a purchase or sale is made on account or on
credit, we must credit or debit the person's name. Likewise a payment
received or given on account, requires us to enter the item as a debit or
credit under the name of the person.

FORM OF BILL.

CHICAGO. Jan. 18. 191.

Bought of WELLS, BROWN & CO,

Temu: 30 days

A Bill is a written statement of goods sold or services rendered, {See
form above), showing the quantity and price of the articles sold with the
total, terms of sale, etc.

Invoice is almost synonymous with bill but is a term used chiefly
when goods are bought in considerable quantities.

THEORY OF BOOKKEEPING

Receipt A receipt is a written acknowledgment of a payment. It
may be a distinct and formal writing or only the words "Received Pay-
ment" with the date and sellers name written upon the bottom of the
bill. In this manner a bill is said to be "receipted. " Receipts should
always be preserved.

FORM OP RECEIPT

^^Aj

jiitfrrtf^Mr^lrtitftyffH^ffW

Rule II.
Rule III.

191..
Feb. 1.

((

When you owe a person, or a person pays you on account, credit
that person.

When a person owes you, or you pay a person on account, debit
that person.

Bought of Henry Duncan, 20brls. Minnesota flour @ $5, $100,
for which I owe him.
Henry Duncan is credited.

Sold A. L. Warner a bill of goods amounting to $200 for which
he owes me.

A. L. Warner is debited.

Bought of Herman Davidson, Mdse. on account as per bill,
$500.

Sold Haskell Bros, on account, due in 30 days, 50 brls. apples
@ $3, $150.

Paid Henry Duncan on account, $75 in cash.

Received of A. L. Warner, cash on account $150.

Sold C. W. Russell for cash, 200 crates pineapples @ $2.75,
$550; boxes 60 Florida oranges $4, $240. Total $790.

191.. JOURNALIZING 1 1

Feb. 8. Bought for cash of Chicago Pure Food Co., 25 cans peanut
butter @ 60c, $15.

8. Paid Herman Davidson on account, cash $250.

"9. A. L. Warner has paid me the balance which he owes, $50, in
cash.

*' 10. Bought of C. S. Hammond & Co. on account, a pair of counter
scales for the store

11. Sold William W. Barnard a bill of Mdse. amounting to $318 to
be paid for in 30 days.

13. Sold toChas. E. Mason 100 brls. flour @ $4.80, $480; 60 cases
eggs, 12 doz. each @ 30c, $216. Total $696. Received in
payment 8 shares Union Bank Stock @ $87, $696.

13. Paid Herman Davidson cash, balance due him $250.

14. Sold Watson & Newell a bill of goods amounting to $800 to be
paid for in 10 days.

15. Paid C. S. Hammond & Co. cash $16 for the counter scales
bought of them on the 10th.

16. Bought of Geo. Provine on 60 days credit, 30 brls. cider @ $7,
$210; 150 brls. Greening apples @ $2.40, $360. Total $570.

17. Received of Austin Parker, cash in settlement of our bill sold
him last month $126.40.

17. Watson & Newell have returned a part of the goods sold them
on the 14th, amounting to $86, for which we give them credit.
Debit Mdse.

20. Borrowed cash of A. M. Jones $500, to be repaid in two days.

21. Paid A. C. Baldwin cash for the balance which we owe him,
amounting to $380.

23. Received of William W. Barnard on account, cash $218.

26. Sold A. M. Bullard 50 shares Chicago Telephone Stock @
$110, $5500. Received in full payment, bouse and lot at No.
237 Greenwood Ave.

27. John Hunter has this day paid us the amount of his account
in cash, $63.25.

28. Loaned M. L. Walker, cash $75 as a favor, temporarily.

THEORY OF BOOKKEEPING

LESSON III

PROMISSORY NOTES

A Promissory Note is a written promise to pay a certain sum of
money to a person named therein, at a specified time.

Promissory notes are a species of "Commercial Paper," and are a great convenience
in business, as they are transferred from one person to another the same as other kinds
of property.

The Maker of a note is the person who signs it.

The Payee is the person to whom the note is payable.

A note is said to be *'in favor" of the payee, or person named therein.

An Endorser is one who signs his name on the back of the note.
Any writing upon the back of commercial paper, (usually a name) is called an in-
dorsement.

The Face of a note is the sum named in the note.

The amount of a note is the face plus any interest that may be due on the note.

The Maturity of a note is the day it falls due.

When the due date falls on Sunday or a legal holiday, the note matures on the fol-
lowing day.

FORM OP PROMISSORY NOTE

Bills Receivable, is a term applied to all notes and written promises
which we hold against other persons. Bills Payable, applies to all notes,
etc., which we will have to pay when due.

JOURNALIZING 13

Rule IV. When you receive another person's note, you should Dr. Bills Re-
ceivable; and when you dispose of that note, Cr. Bills Receivable.

191..

Mar. 1. Sold Robert Gardner 100 brls. apples @ $2.75, $275. Received
in payment his note.
Dr. Bills Rec.

" 2. Bought of C. J. Miller for cash, 250 gal. gasoline @ lie, $27.50.

•' 3. Sold to Henry Anderson for cash, Robert Gardner's note re-
received on the first instant, $275.

" 5. Sold to James H. Hainline on account, 200 brls. XX flour @
$4.50, §900.

' ' 7. Received of J. P. Shaw his note at 60 days to apply on ac-
count, $300.

" 7. Sold to Willis Benson 200 bu. potatoes @ 80c, $160; 5 bu.
clover seed @ $18, S90. Total $250. Received in payment
his note.

" 8. Bought of A. W. Dudley 80 bu. oats @ 60c, $18; 100 bu. rye @
80c, $80. Total $128. Gave in payment A. W. McBride's
note $128.

Rule V. When you issue your note, you should Cr. Bills Payable; and when
you pay or redeem your note. Dr. Bills Payable.

" 8. Bought of A. W. Winslow 100 yds. broadcloth at $6, $600.
Gave in payment my note.

" 9. Borrowed cash of Louis Swanson $200. Gave in payment my
note due in 30 days.

* ' 10. Received of J. P. Shaw cash in payment of his note, $300.

" 12. Sold William C. Russell 20 brls. sugar @ $9, 180; 10 boxes
Graham crackers $2, $20. Total $200. Received in payment
his note, due in 30 days.

" 12. Sold to First National Bank, Willis Benson's note, $250, for
which I have received the cash.

14. Bought on 30 days credit, of H. AV. Hinman Mdse. per bill,
$300.

'* 15. Bought of Wilson & Brown, 2 shares I. C. Railroad Stock @
$100, $200. Gave in payment William C. Russell's note.

15. Paid Union Bank, cash for my note given to C. A. Reed $230,
now due.

14 THEORY OF BOOKKEEPING

191..

Mar. 16. Borrowed cash of Daniel E. Fiske $500 on my note, due in 90
days, bearing 6% interest.
" 17. Sold W. L. Kellogg on account, due in 30 days, 60 bu. oats,
dc. 40c, $24; 20 bu. clover seed @ $20, $400; 30 bu. rye @ 85c,
$25.50. Total $449.50.

*' 17. Received of H. W. Hinman cash to apply on account, $150.

*' 19. Paid Merchant's National Bank cash for my note, in favor of
A. W. Winslow, given on M:ar. 8, $600.

" 22. Sold David Foss, 30 sacks G. sugar 275 lbs. each @ 3c, $247.50.
Received in payment Daniel Haskin's note in David Foss'
favor, and endorsed by Foss, $247.50.

" 23. As an accommodation to Andrew C. Allen, I have given him
my note due in 30 days bearing six per cent, interest for $400,
in exchange for his note due in like amount, time and rate.

** 25. Sold to Frank G. Wright, 2 shares Illinois Central Railroad
Stock at $1 lO, $220. Received in payment 100 brls. Greening
apples at $2.20, $220.

27. Received of W. L. Kellogg to apply on account, my note given
to A. C. Allen on the 23rd inst. , which he has endorsed over
to Kellogg, $400.

28. Redeemed my note for $600 given to Amos Pettibone by pay-
ing him for same in cash.

" 30. Bought of A. G. Haskins 100 brls. XXX flour @ $5, $500.
Gave in payment W. G. Clark's note, due in sixty days my
favor, $500.

** 31* Leroy Hamilton owes me $400 and is unable to pay. He offers
me his note due in 30 days bearing 6% interest, which I ac-
cept.

31. Redeemed my note for $100 favor J. C. Lewis by delivering to
him 50 bu. potatoes (^ 60c, $30; 80 bu. oats @ 40c, $32; 20
boxes Graham crackers @ $1.90, $38. Total $100.

Write the promissory note mentioned in the transaction of March
16th, similar to the form given.

Present your work to the teacher for approval. When correct,
copy in your journal.

JOURNALIZING

LESSON IV
SUNDRY ITEMS

An Item in bookkeeping, is a distinct and separate part of an entry.

Sundries is a term meaning several items.

It was Jormerly a custom, where an entry contained several debits or several credits,
to head such entry with the word Sundries. (Sunds.) The use of the word is now being
discarded by good bookkeepers, and will be omitted here.

Rule VI.

191..
Apr. 2.

" 3.

" 4.

" 5.

" 6.

When there are several debits or several credits in a transaction,
write first the debit items in the debit position, then the credit
items in the credit position, using a separate line for each item.

Sold Chas. G. Hunter, 5 shares Bank Stock @ $100, $500.
Received in payment, cash $250; his note at 30 days for $250.

J. €7 J...

Apr.

Cash
Bills Bee.

Bank Stock

250

500

Received of John Smith on account, cash $50; 10 brls. flour @
$4.50, $45; his note at 30 days $105. Total $200.

Bought of A. N. Davidson, 20 brls. sugar @ $12, $240; 5 shares
Peoples Gas Stock @ $100, $500. Gave in payment my note
at 60 days, $740.

Bought of Carroll Whitaker, a bill of merchandise amounting
to $320. Gave in payment, 20 brls. flour @ $5, $100; cash
$100, 1 share Peoples Gas Stock $120. Total $320.

Bought of Edgar A. Snow, 4 lots in Edgewater @ $1250,
$5000. Gave in payment, cash $2000; my notes at one, two
and three years for $1000 each.

Debit Edgewater Lots. Enter the notes separately.

191..
Apr. 7.

THEORY OF BOOKKEEPING

Paid John R. Dobbins on account, cash $180; my note due in
30 days $120. Total $300.

191..

Apr.

John R. Dobbins

Cash
Bills Pay.

300

180
120

9. Received cash from Thomas Kennedy for his note now due
$1(X); also to apply on his account $50. Total $150.

10. Sold Erwin & Welch 5 shares City Bank Stock, @ $100, $500;
10 shares Edison Light Stock @ $90, $900. Total $1400. Re-
ceived in payment, cash $1000, balance on account.

191..

Apr.

Cash

Erwin ^(; Welch

City Bank Stock
Edison Light Stock

iooo

JfOO

500
900

11. Bought of David McDonald, for cash, 300 bu. Belle Flower
apples @ $1.50, $450.

13. Sold John C. Hamilton 50 brls. N. O. Molasses @ $8, $400.
Received in payment, cash $200; his note at 30 days $100,
balance on account.

16. Bought of Peter Elston property adjoining our store known
as No. 364 Broadway, for $8000; store fixtures $500; goods on
the shelves $1500. Total $10000. Gave in payment, cash
$5000; 2 lots in Edgewater @ $1500, $3000; 10 Chicago City
Bonds @ $100, $1000; my note at 6 mos. for balance $1000.

17. Received cash of Erwin & Welch on account $400.

((

19.

• (

20.

((

24.

25.

JOURNALIZING 17

191..

Apr. 17. Paid T. W. Miller on account, John C. Hamilton's note re-
ceived on the 13th inst., $100.

18. Paid my note in favor Loring Provine now due, amounting to
$600, by giving him cash $200; J. L. Bailey's note $200; my
note at 30 days $200.

19. Bought of Henry Alston on account, 30 bags Rio coffee 80 lbs.
each @ 18c, $432.

Received of Geo. F. Douglas on account, cash $200; his note at
one month with six per cent, interest, $150. Total $350.

Paid cask to Wilson & Hayward on account, $135.

Sold Parker & Dunning 50 brls. C sugar @ $12, $600. Received
in payment cash $300; their note at 60 days for $300.

Borrowed cash of First National Bank on my note at 90 days,
$1000.

26. Sold A. J. Allison 2 lots in Edgewater @ $1500, $3000; 10
shares City Bank Stock @ $100, $1000. Total $4000. Re-
ceived in payment cash $2000; Walter C. Nelson's note, Alli-
son's favor, and by him endorsed, $1000; A. J. Allison's own
note due in one month $1000.

28. Paid cash to Thomas Hamer on account, $140.

29. Paid C. L. Newton on account, cash $60; my note due in 30
days, $140. Total $200.

30. Sold to Geo. E. Davis, 2 shares People's Gas Stock @ $110,
$220; 50 brls. XX flour @ $6, $300. Total $520. Received in
payment, cash $220; my note, Davis' favor $200; his note for
balance, $100.

30. Bought of Desmond & Co., 100 brls. N. Y. salt @ $1.60, $160.
Gave in payment, cash $100, balance- on account.

30. Gave Thomas Hamer in full of account, my note due in 30
days, $68.40.

((

18 THEORY OP BOOKKEEPING

LESSON V
DRAFTS AND BILLS OF EXCHANGE

A Draft is a written order drawn by one person, upon another, re-
questing that person to pay to a third, a specified sum of money.

A Bill of Exchange is similar to a draft. The name is commonly ap-
plied to drafts drawn on persons residing in a foreign country, and to
avoid loss in forwarding, they are usually issued in duplicate.

The Drawer of a draft is the person who signs it.

The Drawee is the person drawn on, or who is requested to pay.

The Payee is the person to whom payment is to be made.

Instead of collecting the draft himself the payee may endorse it, by writing his
name across the back, and then transfer it to some other person who would be author-
ized to present and collect. One to whom commercial paper is endorsed in this way is
called an endorsee.

To Honor a Draft is to pay it, or signify in writing your willingness
to pay it when it is presented.

A draft is said to be "dishonored" when payment is refused. The holder may then
return the draft to the person from whom he received it.

FORM OF DRAFT

The Face of a draft is the sum for which it is drawn.

JOURNALIZING 19

Rule VII. When you draw a draft or order on a person, credit that person.

191..

May 1. Bought of C. E. Mason, a bill of merchandise amounting to
$85. Gave in payment my draft on G. W. Long.

" 2. Sold Enos Barton for cash, my draft on T. G. Baker $100.

** 4 Bought of Sprague, Warner & Co., 6 half -chests Japan tea,
75 lbs. each @ 26c, $117. Gave in payment my draft on Fuller
& Fuller.

" 5. Sold for cash to John Russell, 60 cases eggs 12 doz. each @
18c, $129.60.

" 6. Bought of E. C. Wood on account, 150 bu. potatoes @ 60c, $90.

" 6. Sold to W. G. Ender, my draft on J. C. Kennedy for $300.
Received in payment J. E. Cornell's note for $200; cash for
balance $100.

" 7. Bought of J. C. Craft, 10 shares Continental Bank Stock @
$243, $2430. Gave in payment cash $1430; my order on E. B.
Hanson for $1000.

*' 8. Sold to F. C. Bell for cash, my draft on W. L. Hanson $350.

'* 9. Paid my note, favor A. G. Bonsall now due, amounting to $300,
by giving him an order on H. C. Olin for $200, cash for bal-
ance $100.

Rule VIII. When a person draws a bill of exchange or draft on you, which
you honor, debit that person.

* " 11. Paid cash cash for Louis Brandt's order on me, $100.

*' 11. Sold David Cameron 30 brls. Minnesota flour @ $5.50, $165.
Received in payment Frank Jones' order on me, drawn in fa-
vor of Cameron.

•' 13. Sold to William Foster 500 bu. yellow corn @ 60c, $300; 150
bu. spring wheat @ 80c, $120. Total $420. Received in pay-
ment J. H. Weston's order on me for $250; William Foster's
note at 30 days, $150; cash for balance.

** 15. Bought of Dwight Jackson 50 boxes California oranges @ $3,
$150; 100 boxes grapes $2, 200. Total $350. Gave in payment
cash $200; my draft on Henry Wilkins $150,

" 18. Received of A. W. Dudley on account his note, $200; cash $100.
Total $300.

20 THEORY OF BOOKKEEPING

191..

May 18. Paid cash for James Berry's draft on me, favor R. C. Wood-
worth, $50.

19. Received of Allen & Co. on account, William Drake's draft on
me, Allen & Go's favor, $100.

*' 20. Sold W. M. Bosworth on account, lObrls. Minnesota flour @
$5.25, $52.50; 5 half-chests Japan tea, 75 lbs. each @ 30c,
$112.50; 20 boxes California oranges @ $2.80, $56. Total $221.

** 22. Bought on my note at 60 days, of Adam Douglas 500 bu. No.
1. corn @ 60c, $300.

** 24. Paid E. C. Randall on account, my draft on Hamilton, Wilson
& Co., $250.

** 24. Received of C. J. Mitchell on account, cash $50; his note at 30
days $100. Total $150.

" 25. Sold William D. Barr 6 Chicago City Bonds @ $104.50, $627.
Received in payment cash $500; his note at 30 days for bal-
ance.

''26. I owe Donald Goodspeed $800. He has drawn at sight on me
for that amount, favor First National Bank, and I 1: ave this
day paid cash to the bank for same.

*• 27. Received cash of Henry Spencer for my draft on J. D. Wil-
liams, $140.

*' 29. Sold to J. L. Thomas 40 cases eggs, 12 doz. each @ 20c, $96;
50 bu. potatoes @ 60c, $30. Total $126. Received in payment
A. C. Becken's order on me, favor J. L. Thomas for $75. Bal-
ance on account, $51.

JOURNALIZING

LESSON VI

DRAFTS AND BILLS OF EXCHANGE (Continued)

A Sight Draft is one which is payable at sight, or on presentation.

A Time Draft is one which is payable a specified time "after date'*
or "after sight."

Acceptance. When a time draft is presented to the drawee, if he is
willing to pay it at maturity, he signifies that fact by writing the word
"accepted" together with the date and his signature across the face of
the draft. Thereafter the paper is called an "Acceptance."

An acceptance is the same as the acceptor's promissory note. The acceptance
sliould be written in red ink.

AN ACCEPTANCE

v^^

.A Q/^^

^ ^^^ii^C.<i^<&^^^2^^^^

Rule IX. Whenever you accept a draft or bill of exchange, credit Bills Pay-
able, and when you pay your acceptance, debit Bills Payable.

191..

June 1. Accepted James Duncan's draft on me due at 8 days sight for
$400, favor A. E. Banning.

*' 2. Bought of Pettibone & Co., on my acceptance, a bill of goods
amounting to $129.50.

22 THEORY OF BOOKKEEPING

191..

June 3. Sold to R. S. Peale 50 brls. St. Louis flour @ $5.60, $280. Re-
ceived inpayment cash $180; balance on account.

" 5. Bought of Brown & Gorham 30 brls. white fish @ $6, 180; 20
pails mackerel @ $2, $40. Total $220. Gave in payment cash
$100; order on Simon Wilson for $120.

" 6. Accepted John Parker's draft on me at 10 days sight, favor
Henry Armstrong for $245.

" 8. Paid cash for my acceptance given A. E. Banning on the first
Instant, $400.

" 9. Sold A. W. Perkins 25 brls. W. W. flour @ $4, $100; 80 bu.
oats @ 20c, $16; 27 bu. corn @ 50c, $13.50. Total $129.50.
Received in payment my acceptance given to Pettibone & Co.
on the 2nd inst.

" 10. Sold Henry S. Kirk on his note, my sight draft on F. W. Jen-
nings for $325.40.

Rule X. Whenever you receive or purchase a draft or order drawn on an-
other person, debit Bills Receivable, and when you dispose of it,
credit Bills Receivable.

" 12. Bought of A. J. Cole for cash, his draft on R. H. Warner for
$300.

•* 13. Bought of J. A. Stephens his draft at sight, on A. M. Root
for $250. Gave in payment cash $150; my note at 30 days $100.

" 15 Sold S. R. Wells 8 shares C. B. & Q. railroad stock @ $100,
$800. Received inpayment, cash $500; D. A. Nesbits' draft at
10 days sight on Chas. Monroe and by him accepted for $300.

" 17. Bought of C. A. Warren, 600 bu. yellow corn at 50c $300.
Gave in payment the draft we received of A. J. Cole on the
on the 12th inst. $300.

" 19. Received cash of A. M. Root for J. A. Stephens' draft on him
at sight, $250.

" 20. Received of D. R. Forgan on account, the draft which I ac-
cepted drawn by John Parker, in favor of Henry Armstrong,

$245.

*' 22. I owe H. W. Dixon $200 on account. In payment I have given
him my draft at 5 days sight on Arthur W. Burdick, $200.

( (

JOURNALIZING 23

191..

June 24. Sold Henry Nelson on his 30 days acceptance, 200 bu. yellow
corn @ 40c, $80.

25. Sold to F. W. Coleman on account, my draft at sight on E. C.
Winters, $100.

26. Received of Henry Anderson on account, his note $240; cash
$60. Total $300.

27. Sold to H. C. Skinner 200 bu. yellow corn @ 60c, $120; 250
bu. spring wheat @ 80c, $200. Total $320. Received in pay-
ment F. C. Duncan's order on me, $200; a note signed by Wells
Bros, and endorsed by F. C. Duncan due in 60 days for $120.

27. Sold H. P. Carroll, 5 shares Union Bank Stock @ $110, $550;
4 shares Commonwealth Edison Stock @ $112i, $450. Total
$1000. Received in payment cash $600; G. W. Thompson's
draft on me at sight, $400.

28. Boughtof Meyer & Co., 200 brls. E. R. potatoes @ $3.40,
$680. Gave in payment cash $500, balance on account.

29. Paid Thomas Kennedy on account, cash $125.

29. Sold J. C. Goven 5 shares I. C. Railroad Stock @ $105, $525.
Received in payment his note due in 30 days, bearing 6 per
cent, interest, $525.

30. Bought of Davis & Son, 100 brls. St. Louis flour @ $4, $400;
20 brls. G. sugar, $12, $240. 2 shares People's Gas Stock @
$100, $200. Total $840. Gave in payment my draft at sight
on C. V. Chandler, $200; cash $200; Henry Nelson's accep-
tance $80; accepted their draft on me at 30 days sight, favor
J. Reed for balance, $360.

30. Bought on my acceptance at 30 days, 4 shares Automatic
Telephone Stock @ $100, $400.

24 THEORY OF BOOKKEEPING

LESSON VII

INTEREST

Interest is that which represents the use of money.

When we say we paid interest on our note, we mean that we paid cash for the in-
terest.

Rule XI. Debit interest when it costs you, and credit it when it produces you
value.

191..

July 1. Paid cash to J. Jones for interest on my note, $8.40.
Debit Interest.

" 2. Received cash from William Jennings for interest on his note,

$18.

" 3. Sold A. F. Stacy on his note, 260 bu. corn @ 60c, $156, said
note to bear interest at 6% and fall due in 30 days.

** 4. Paid Edgar A. Snow & Co. cash for my note due today. Face
of note $1000, interest to date $30, Total $1030.

** 6. Paid cash to J. Wilson for interest on my note $10.20.

7. Paid cash to Union Bank for my note due, $300, and interest
thereon $7.50. Total $307.50.

** 8. Bought of C. D. Hamlin a bill of merchandise amounting to
$425. Gave in payment, Hiram Russell's note, $400; interest
accrued on the note, $25. Total $425.
Note. — Accrued interest is that which has been earned, but is not yet due.

" 9. Collected in cash the interest due on the note which I hold
against David Howell, $32.65.

*' 10. Received cash from A. S. Gordon as a part payment on his
note and interest now due: to apply on note $250; interest $8.30.
Total $258.30.

*' 10. The note which I gave to Wallace Harris amounting to $500 is
now due, with interest, $5. I have paid for same with a new
note at 60 days for $505.

191.

July 13,

( (

14.

( (

14.

((

16.

{(

17.

((

18.

((

( (

JOURNALIZING 25

Paid cash for interest on my note, due today, amounting to
$18.30.

Received of A. L. Fisher on account, his note at 30 days for
$300, cash $200.

Sold B. M. Wilson 10 brls. flour @ $6, $60; 5 brls. sugar %
$15, $75; 8 pockets Monsoon brand rice @ $6, $48. Total $183.
Received in payment his draft on James H. Walker for $183.

Sold Warren Leland for cash, Henry Ellis' note for $300, in-
terest accrued on same $4. Total $304,

Paid cash for my acceptance, favor Daniel E. Porter $235.

I have drawn at sight on George C. Hanson for $320, in favor
of J. P. Shaw, and delivered the draft to Shaw on account.

19. Bought of C. W. Hamilton 5 shares C. B. & Q. Railroad Stock
@ $108, $540; 10 shares Commonwealth Edison Stock @ $110,
$1100. Total $1640. Gave in payment cash, $1000; my draft
on William C. Lawson $500; my note for balance, $140.

20. Paid my note favor C. A. Wilson $800 and interest thereon $12,
by giving James Berry's note $400; interest accrued thereon
$4; my note for balance, $408.

21. Sold E. C. Reed 500 bu. winter wheat @ 80c, $400. Received
in payment my note in favor of Henry Otis, endorsed by E. C.
Reed, $400.

21. Received cash of A. D. Foster in payment of his note and in-
terest thereon to date. Face of note $250, interest at 6%, $1.25.
Total $251.25.

22. Sold Samuel Winslow on account, 200 bu. spring wheat @ 85c,
$170.

23. Brady & Co. have drawn on me at 30 days sight, favor J. C.
Kingsbury, and I have accepted the draft, $600.

24. Accepted Arthur Coultas' draft on me at 5 days sight, $80.

25. Received cash from E. B. Jennings for interest on his note,
$38.60.

27. Paid my note favor Brown & Hathway and interest thereon.
Face of note $350, interest $3.50. Gave in payment cash $200;
new note at 30 days for balance, $153.50.

26 THEORY OP BOOKKEEPING

LESSON VIII

SHIPMENTS OR CONSIGNMENTS

A Commission Merchant is an agent who sells goods for another,
charging a percentage on the sale for his compensation.

The object of shipping goods away on consignment, may be to take advantage of
better market conditions in the other locality, or find a wider market for the goods.
Live stock, grain, fruit and most kinds of produce are sold by commission merchants, or
on consignment.

A Shipment or Consignment is an invoice of goods sent to a com-
mission merchant for sale for account of the shipper.

"For account of the shipper" means for his profit or benefit, or at his risk or loss.
The property still belongs to the shipper.

Consignor. The shipper is called the consignor.

Consignee. The consignee is the person to whom the goods are
shipped.

Advances. The commission merchant will advance a reasonable
proportion of the value of the consignment in money to the shipper,
pending the sale of the consignment.

These advances are usually made by the consignor drawing a draft on the consignee
for the advance agreed upon.

Bill of Lading. This is in the nature of a receipt issued by the rail-
road or other transportation company, for goods shipped.

In the case of drafts drawn for advances against shipments, the Bills of Lading
usually are attached to the drafts.

Net Proceeds, is the balance left after deducting the agent's com-
mission and other expenses from the total sale.

The shipper does not usually prepay the freight on the shipment but allows the
commission merchant to pay it upon receipt of the shipment, this to be deducted along
with other expenses and charges in the final settlement.

Account Sales. An account sale is a statement rendered to the ship-
per by the commission merchant, showing amount of sale, charges and
expenses deducted, and the net proceeds.

When the shipment is sold, the commission merchant may remit cash to the con-
signor for the net proceeds — less advances if any, along with the account sales, or he
may place the net proceeds to the consignors credit, to be paid at some future time.

JOURNALIZING
FORM OF ACCOUNT SALES

Ho.^^^/^ CHICAGO,

ACCOUNT SALES BY

WILSON BROS.

123 S. WATER STREET

For Ace't and Risk of C^^Y ^ ........r-k:^^ ,

Car No (^J^.f^.

f^'y^y-

R9fiV€4

'^^

■ ^t>s^,.^i^ >^^^^^i^L^:z,^£.e/'-'ai€^ ^

/ ^o

CHARGES: Freight
.Cartage
Storage

c^/

Insurance

Commission
F. * O. E. Net Proceed,

ca^

''^

Rule XII. When you ship away goods for sale on your account and risk, make
Shipment to the Person and Place Dr.

Rule XIII. When you receive an Account Sales, credit Shipment to the
Person and Place, for the amount of the net proceeds and if the
commission merchant does not remit the net proceeds, Dr. him.

191..
Aug. 1.

Shipped to C. A. Watson & Co., Chicago, for sale on my ac-
count, 200 brls. apples @ $2, $400.
Shipment C. A, Watson & Co., Chicago., Dr.

28 THEORY OF BOOKKEEPING

191..

Aug. 3. Shipped by C. M. & St. Paul Ry. to F. F. Bosworth & Co.,
Milwaukee, for sale on my account, 130 sacks potatoes @
$1.50, $195.

*' 4. Shipped to Ledward, Bibby & Co., Liverpool, 1400 bags
sugar each 320 lbs. @ 2ic, $11200, to be sold for my account
and risk.

' ' 6. Received cash of First National Bank for my draft on Led-
ward Bibby & Co., with bill of lading attached, $6000.

** 7. Received of C. A. Watson & Co., Chicago, an account sales of
my consignment of apples, showing net proceeds $513.20,
which amount they have placed to my credit.

" 9. Bought on account of Carroll & Saunders 1000 bu. W. W.
wheat @ 72ic, $725.

" 10. Shipped to A. M. Stockwell& Co., Buffalo, N. Y., the 1000
bu. wheat purchased of Carroll & Saunders, to be sold on my
account, $800.

•' 11. Received of F. F. Bosworth & Co., Milwaukee, an account
sales of my consignment of potatoes, together with a check
for the net proceeds, amounting to $269.40.

" 14. Paid Carroll & Saunders on account, my draft at 10 days sight
on A. M. Stockwell &Co., Buffalo, for $500; cash for balance,

$225.

'• 14. Shipped to J. C. Welling & Co., Chicago, 2000 bu. yellow corn
@ 50c, $1000, to be sold for my account and risk. Prepaid
freight in cash to Chicago $45; also paid cash $12 for $750
policy in the Traders' Insurance Co., covering this shipment.
Total $1057.

'' 18. Shipped by C. M. & S. P. Ry. to F. F. Bosworth & Co., Mil-
waukee, for sale on my account, 500 sacks potatoes @ $1.55,
$775. Cartage paid in cash $25. Total $800.

20. Bought of A. M. Hootm-.n, 200 baskets peaches @ 40c,

50 crates Nutmeg melons @ $1.25, $62.50; 200 brls. Greening
apples @ $1.35, $270. Total $412.50. Gave in payment my
note at 30 days for $200; balance on account.

26. Received from A. M. Stockwell & Co., Buffalo, N. Y., an ac-
count sales of my shipment of 1000 bu. wheat showing net
proceeds amounting to $768.40, which they owe me on account.

JOURNALIZING 29

191..

*' 27. I am advised that owing to a strike on the C. M. & St. Paul
Ry. my shipment of potatoes consigned to F. F. Bosworth &
Co., Milwaukee, reached there badly damaged &nd practically
worthless. I have wired Bosworth & Co. to refuse to receive
the shipment. I will charge the railroad company with the
value of the shipment, $800 and endeavor to collect from it.

" 29. My shipment to J. C. Welling & Co., Chicago, has been de-
stroyed by fire in transit, and I have charged same to Trader's
Insurance Co. , to the extent of the policy $750.

LESSON IX
DISCOUNT AND EXCHANGE

Discount is a sum deducted from the face value of commercial paper
as a compensation for its payment or transfer.

Discount is a "species" of interest, since it is based upon the use of the money for
the time until it will be due.

Exchange is a charge usually made by banks for collecting checks
and drafts on banks or persons in other cities.

This does not refer to the "rate of exchange" between countries, whereby foreign
drafts sometimes sell above or below par. This "Foreign Exchange" usually relates to
transactions between banks only, and will not interest the student at this point.

Rule XIV. When you pay less for a draft or note, than its face, Cr. Discount
When you receive less for a draft or note than its face, Dr. Dis-
count.

Rule XV. When you pay a fee for collecting checks or drafts or remitting
money, Dr. Exchange. When you receive such a fee, Cr. Exchange.

191..

Sept. 1. Discounted at the bank Henry C. Allen's note for $500. Dis-
count $5, received cash $495.

30 THEORY OF BOOKKEEPING

191..

Sept. 2. Paid my note favor J. M. Brown before due. Face of note
$320, discount allowed $1.80. Paid cash $318.20.

" 3. Received of J. M. Pile, Omaha, Neb. , his personal check on
an Omaha bank in settlement of his account, $186.

"4. In depositing J. M. Piles check the bank charged me $1 ex-
change, which I have paid.

As a matter of right Pile should pay this exchange, but as he is a good
customer and a prompt payer, I will charge it to exchange.

" 6. The bank has this day collected my draft of $560 against
Marion Davenport, of Duluth, exchange $1.40, net proceeds
received in cash, $558.60

** 7. Deposited in bank today, various checks on out-of-town banks,
on which the bank charges me exchange (which I have paid)
$1.15.

** 10. Drew on J. W. Webster at 10 days sight for the balance due
me, $480, and discounted the draft at Traders' Bank. Dis-
count 80c; cash received $479.20.

** 10. Cashed a check for a friend, on an out-of-town bank, on
which he paid me 25c exchange.

** 15. Exchanged notes with A. C, Becken for our mutual accom-
modation, each drawn at 30 days for $900.

*' 16. Discounted at Merchants Bank, A. C. Becken 's note for $900.
Discount $4. 50. Cash received $895 . 50.

*' 17. Paid W. M. Hoyt & Co. cash for my note before maturity.
Face of note $650, discount allowed $8.40, cash paid $641.60.

** 18. Accepted F. C. Wilson's draft on me at 30 days sight for $265.

*' 20. The bank has collected my draft of $120 against Henry C.
Moore, Indianapolis.' Exchange 50c. Received cash $119.50.

" 21. Bought of J. E. Hamilton for cash, a note made by Louis
Sulzman in Hamilton's favor, and by him endorsed. Face of
note $600, discount allowed $10, cash paid $590.

" 24. Paid S. M. Manning on account, cash $135.

** 28. Sold to Geo. A. Wilmot 40 sacks sugar @ $6.25, $250. Re-
ceived in payment their draft at sight on Fuller & Co., Mil-
waukee, $100, balance on account.

** 31. The bank has collected the draft on Fuller & Co. , Milwaukee,
$100, deducting exchange 50c. Received cash $99.50.

JOURNALIZING 31

LESSON X

EXPENSE AND PROFIT AND LOSS

Expense is a term applied to all expenditures for carrying on the
business, such as rent, fuel, clerk hire, repairs, etc.

Profit and Loss. Under this title we include all direct or immediate
gains or losses to the business, such as goods stolen or destroyed by fire.

Rule XVI. Debit expense when it costs you and credit it when it produces
you.

Rule XVII. Debit Profit and Loss for all immediate losses and credit it
for all immediate gains.

If an article which has been charged to Expense or Profit and Loss is afterwards
sold, that account should then be credited for the amount of the sale.

191..

Oct. 1. Bought for cash, 5 tons of coal for store @ $7.50, $37.50.

3. Paid John Nelson, clerk, for his services past month, $60 in
cash.

5. Bought of Jackson & Co. a new set of books for the business,
for cash $38.75.

6. Paid cash for postage stamps, $3.

8. James W. Austin, who owes me a bill of $19.50, has failed and
this amount is considered a total loss.

9. Paid cash for rent of store for current month, $125.

10. Paid Peoples' Gas Co. cash for gas bill for past month, $9.30.

12. We find that in the course of business today we took in a $10
counterfeit bill. We do not know from whom it was received.

13. Paid Peter Weisman, drayman, for services to date, $40.

14. Our store was burglarized last night, and the thieves carried
away cash $50, and goods valued at $125.

*' 16. Paid an advertising bill in the Herald, in cash $34.60.

32 THEORY OF BOOKKEEPING

191..

Oct. 16. Sold my neighbor one ton of coal from my fuel supply for $7.50
cash.

17. The officers have caught the thieves who burglarized my store
and recovered goods amounting to $75, and cash $20.

19. James W. Austin whose account was entered as worthless on
on the 8th, instant, sends me $5 to apply on the debt.

" 19. Bought at auction a job lot of merchandise for $200, which I
have sold without removing for $250. Net profit received in
cash $50.

20. Lost my overcoat valued at $40, at the railroad station, and
found a $5 bill which I have put into the business.

*' 21. James Dudley's note for $20 which I hold is found to be worth-
less, and a total loss.

'' 22. A customer called today and claimed the $10 counterfeit bill,
saying he had since learned it was not genuine, and wij^hed to
recover it. He paid me $10 in good coin.

'* 23. I have a deposit of $500 in the Mutual Bank. The bank has
failed and the amount is lost.

' ' 24. Sublet a portion of our store to Henry Walker who has paid
one months rent, cash in advance, $35.

*" 26. Sold for cash, postage stamps 60c.

** 27. Sold to W. M. Harris on his note at 30 days, 200 bu. potatoes
@ 40c, $80; 50 bu. apples @ 60c, $30. Total $110.

" 27. Paid J. J. Fisher & Co., cash for calcimining and xjainting our
store room, $45.

" 28. The receiver of the Mutual Bank has paid a cash dividend of
25% of my claim. Cash received $125.

*' 29. Compromised my claim against Joseph Dreifuss of $30, by
accepting $15 in cash in full settlement.

" 29. Discounted W. M. Harris' note at First National Bank. Face
of note $110, discount off $1, cash received $109.

* ' 30. Paid Mendel Lithographing Co. , cash for letter paper, envel-
opes and other office supplies $46.30.

JOURNALIZING 33

LESSON XI
PROPRIETOR'S ACCOUNT

Proprietor's Account. It is necessary that an account should be
opened with the proprietor or owner of the business in order to show
his relation to the business, how much he has invested or withdrawn.

The term "Stock" is sometimes substituted for the proprietor's name.

Resources or Assets are the various kinds of property which belong
to the business, such as mdse., cash, bill receivable, etc.

Liabilities are the obligations which the business owes, consisting of
bills payable and personal accounts.

Net Capital is the excess of resources over liabilities.

Net Insolvency is the excess of liabilities over resources.

The proprietor is credited with whatever he invests in the business and debated
with whatever he draws out of the business. His account is very similar to any other
personal account.

The student must not conclude that the proprietor and the business are one and the
same. The proprietor is entirely distinct and separate from the business. He merely
conducts the business.

Before opening a set of books a statement of the resources to be invested must be
made out. These usually consist of cash, and in some cases, of merchandise or one or
two other kinds of property.

Since these resources are to be invested or received by the business, they must be
debited under proper titles, and the proprietor credited for their total.

If liabilities are to be assumed by the business, (which is rather unusual), these
must be credited under their proper titles and the proprietor charged for their total.

Rule XVIII. Debit the different kinds of property invested and credit the
proprietor for the amount of his investment.

Rule XIX. Debit the proprietor for amounts withdrawn from the business,
or obligations assumed by the business for him.

191..

Nov. 1. John Davis has this day begun business with the following

assets: Cash $2000; stock of goods worth $3000; O. N. Cord's

note $500. Total $5500.

34 THEORY OF BOOKKEEPING

191..

Nov. 5. William E. Mason has this day invested in business, cash
$3000.

7. John C. Phillips has begun business with the following assets
and liabilities: Cash on hand $3200; mdse^ in store $5000;
store building worth $5000; fixtures $250; a note against David
Wilcox $600; John M. Palmer owes on account $120. Total
$14170. He owes notes outstanding $1500. Field & Co., on
account, $800; H. B. Claflin & Co. on account $1000; mortgage
on storebuilding due in 2 years $2000. Total $5300.
Mortgage is a Bills Payable.

*' 12. Wm. E. Mason has withdrawn from the business for his per-
sonal use, cash $50.

13. John Davis having received a bequest from a deceased rel-
ative, has invested in the business, cash $5000.

17. John C. Phillips has taken from the cash drawer, cash $8.40,
with which to pay a private bill.

" 20. William E. Mason has loaned the business $500 cash.

25. George T. Williamson has this day commenced business with
a capital as follows: Cash $1000; note against Henry Hunt
$300; interest accrued on the note $10; an account against L.
M. Harvey $250. Total $1560.

25. Geo. T. Williamson owes on commencing business the follow-
ing: Note favor Frank Casper $240; interest accrued on the
note $4.50; N. Y. Hamilton on account $65. Total $309.50.

26. Henry Farnsworth has this day begun business in the retail
boot and shoe line, by investing cash $2500; store fixtures
$500; goods on the shelves $1500; an account against F. W.
Lawson, considered good, $500. Total $5000.

28. Geo. T. Williamson has this day made an additional invest-
ment in the business, of cash $1000.

29. John C. Phillips has this day paid Field & Co. in cash the
amount which he owes them on account, $800.

30. John Davis has withdrawn from the business for his personal
use, merchandise amounting to $65.

" 30. Geo. T. Williamson has this d&y paid his doctor's bill in cash
from the store, $125.

((

JOURNALIZING 35

LESSON XII
PARTNER'S ACCOUNTS

A Copartnership is an association of persons who combine their
labor, skill or capital in business for the purpose of profit.

Each partner must have an account opened with him, in order to
show his relation to the business and to the other partners.

It would be well to have written articles of copartnership, so that a thorough under-
standing would exist between the partners.

Each partner's account is treated exactly the same as the account of a single pro-
prietor, — credited with his investment and debited for amounts withdrawn, or for
obligations assumed by the firm for him.

Rule XX. Credit each partner for the amount of his investment, and charge
him for amounts withdrawn or for obligations assumed by the
firm for him.

When a partner g'Oes out of business, we make exactly the reverse entry from the
one made when he goes into business,— we debit him and credit the cash or other
assets which he takes with him,

191..

Dec. 1. Arthur Holmes and William Foster have this day formed a

partnership.

Arthur Holmes invests, cash $800; mdse. in store §600; notes

receivable $1000. Total $2400.

William Foster invests, cash $2000.

((

5. William Foster has this day made a- further investment in the
business of cash, $400.

5. J. D. Odell and L. V, Parker have this day formed a copartner-
ship for the purpose of conducting a grocery business, under
the firm name of Odell & Parker.

J. D. Odell invests, cash $2000; an account against Henry Al-
ston $100, which the firm considers good. Total $2100.
L. V. Parker invests, cash $1800; a note of $300 against Daw-
son Bros., which the firm is willing to acceptc Total $2100.

((

36 THEORY OF BOOKKEEPING

191..

Dec. 5. J. D. Odell owes a note of $250 in favor G. M. Wilson which
the firm assumes.

"7. L. V. Parker owes George Jackson on account $190; and Wal-
lace Duncan $60, to be assumed by the new firm.

10. J. D. Odell has this day withdrawn, for private use, cash $40.

12. The firm of Holmes & Poster has this day dissolved, Arthur
Holmes retiring from the business. William Foster continues
the business and pays the retiring partner the full amount of
his investment in cash $2400.

14. The firm of Odell & Parker has this day admitted their head
salesman, Louis Armstrong, as a third partner in the business,
he investing cash $2000.

18. L. V. Parker withdraws from the business, for private pur-
poses, cash $400.

20. Owing to ill health L. V. Parker finds it necessary to withdraw
from active business, and he has this day sold his interest in
the firm to the remaining partners for cash,' $1000; note di e in
one year, 6% interest, $500.

25. William Foster has this day entered into partnership with
Granville HowC; the firm name and style to be Foster & Howe.
Partners equal in gains and losses.

William Foster invests his present business consisting of
mdse. $2800; notes receivable $1600; store building and lot
worth $3500 on which he owes a mortgage of $1500 with in-
terest accrued $100; owes notes outstanding $850, and Newton
& Simmons on account $1320.

Granville Howe invests, cash $2000; 10 shares City Bank
Stock worth $112i, $1125; John D. Severn's note due in 30
days, for $2000, interest accrued thereon $246.
Granville Howe owes Dickens & Brown $280; First National
Bank on note $400.

27. Granville Howe has this day made an additional investment in
the business, cash $1000.

QUESTIONS FOR REVIEW 37

QUESTIONS FOR REVIEW

1. What is bookkeepino:?

2. Define Single Entry.

3. Define Double Entry.

4. Define debtor and creditor.

5. What is an original entry?
G. What is a Journal?

7. How many parts are there to every proper journal entry, and what are tliey?

8. Write the General Rule for journalizing.

9. Define a personal account.

10. What is a bill receivable? A bill payable?

11. What is meant by the word Sundries?

12. Define a draft.

13. What is the difference between a draft and a bill of exchange?

14. What is it to honor a draft?

15. Define a sight draft, also a time draft.

16. What is an acceptance?

17. Define interest. When do you debit interest and when credit it?

18. Define a commission merchant.

19. What is a shipment or consignment?

20. Define an account sales, also net proceeds.

21. What is discount?

22. Define exchange.

23. For what is expense debited? For what is profit and loss debited?

24. Define resources or assets and liabilities.

25. What is net capital? Net insolvency?

38 THEORY OF BOOKKEEPING

TO THE STUDENT

You have, in the preceding pages, learned the principles of debit
and credit, and how to apply them to business transactions. If you
have mastered these thoroughly, you have a solid foundation on which
to build your knowledge of bookkeeping. If you have not, it would be
well to review and perfect yourself before proceeding further in the
subject.

You are now to advance to new rules and problems, and you will
get a glimpse of the ways and methods of business. Endeavor to master
each step as you proceed. Be accurate in your figures, especially ad-
dition. Develop a plaia business handwriting, and withal, write up your
books and papers in a neat and careful manner. Neatness and accuracy
are prime qualities of a good bookkeeper

ACCOUNTS

LESSON XIII

ACCOUNTS

An Account is a group of items, either debits or credits, or both, so
arranged under a proper head, as to exhibit certain facts in regard to
the business.

Debits and Credits. An -account has two sides, — the debits on the
left, and the credits on the right.

The Ledger is tlie book of accounts. It consists of notliing but ac-
counts, and in double entry should include accounts with every person
or species of property which enters into business relations with the
concern. The following form will illustrate the ledger account of a
customer.

Jliy C^^^^.^^.^^^^^^^..^^.^^- (^'

-/^/-

;3^^^

"Tp^.^^^^^^^

^^^

~^^J^

cZO

erf

Posting. The purpose of the Ledger is to collect all of the debits and
credits contained in the Journal under proper heads. This process is
called posting.

When all of the debits and credits of a certain person or species of property are ar-
ranged under one head, the debits opposite the credits, it is a simple matter to ascertain
the diflference or net result.

40 THEORY OF BOOKKEEPING

DIRECTIONS

Journalize the following transactions, which are supposed to rep-
resent a brief months business preparatory to posting the entries as will
be explained in next lesson.

Write the proper explanation beneath each Journal entry. In case of purchases
(since you receive a bill) it will be sufficient to state in your journal from whom pur-
chased, terms of purchase and "Mdse. per bill" instead of itemizing. In case of sales,
state to whom sold, terms, and itemize the sale.

Jan. 2, 191.. John S. Spencer has this day commenced business by in-
vesting cash $3000.

191..

Jan. 2 Cash 3000

John S. Spencer 3000

Invested in
business this day

Jan. 2. Rented store No. 48 E. Huron St., paying cash for one
month's rent in advance $50.

" 3. Bought of Sprague, Warner & Co., for cash, 10 brls winter
wheat flour @ $4.75, $47.50; 5 cases rolled oats @ $2.85, $14.25;
3 brls. cut loaf sugar @ $7.50, $22.50, 6-100 lb drums cube
sugar @ 2ic lb, $15, 12 cases silver leaf lard @ $6.30, $75.60.
Total $174.85,
Explanation. Bought of Sprague, Warner &Co. for cash, Mdse, per bill.

** 4. Bought of J. C. Downing & Co. on 30 days credit, 6 tubs mack-
erel at $7, $42; 5 brls. Iceland herring @ $10.50, $52.50; 2 brls.
blood red salmon @ $16, $32; 10 doz. cove oysters @ 80c, $8.
Total $134.50.

*' 5. Sold to Lewis M. Wood, for c£«sh, 1 brl. winter wheat flour
$5.50; 20 lbs. cut loaf sugar @ 4c, 80c; 5 pkgs. rolled oats @
10c, 50c; 1 tub mackerel $9. Total $15.80

*' 8. Bought of Geo. E. Davis, Redlands, Cal., on 30 days, 75 boxes
fancy California prunes, 25 lbs each at 15c, $281.25,

*' 10. Sold to A. W. Daniels, LaHarpe, 111., on 60 days, 4 cases sil-
ver leaf lard at $7.50, $30; 10 boxes fancy California prunes
at $5, $50; 2-100 lb drums cube sugar at 3c lb. $6; 1 brl. blood
red salmon, $17.50. Total $103.50.

ACCOUNTS 41

191..

Jan. 11. Bought of C. M. Harding & Co., on 30 days note, 6 brls. Gra-
ham flour @ $4.60, $26.40; 5 cases Japan type rice @ $8.10,
$40.50; 15 sacks California lima beans @ $6, $90; 12 cases do-
mestic macaroni @ $1.80, $21.60; 12 cases Egg 0-C corn flakes
toasted @ $2.70, $32,40; 6 cases Saratoga chip potatoes (^ $2,
$12. Total $222.90.

" 12. Paid cash for advertising in "Society News" $5.

" 13. John S. Spencer has this day withdrawn for his private use,
cash $10 and goods as follows: 1 box fancy California prunes
$5, 2-3 lb. cartons Japan type rice @ 8c lb., 48c; 5 pkgs.
rolled oats at 10c, 50c. Total $5.98.

" 15. Sold to L.A. Parker on 30 days, 10 sacks California lima beans
@ $8, $80; 6 cases Saratoga chip potatoes @ $2.50, $15; 5 tubs
mackerel @ $9.50, $47.50; 2 brls. Graham flour @ $5.20, $10.40.
Total $152.90.

" 17. Bought of Sprague, Warner & Co., for cash, 2 brls. refiner's
syrup @ $8.75, $17.50; 5 brls. molasses Sugarland brand @
$6.60, $33.30. Total $50.80

" 17. Paid cash to C. & N. W. Ry. for freight on goods just received
from Sprague, Warner & Co., $4.60.

" 18. Received of A. W. Daniels, LaHarpe, 111., his check to ap-
apply on account, $50.

" 20. Sold Geo. P. Anderton, Mohne, 111., on 30 days, 4 cases rolled
oats @ $3, $12; 2 brls. cut loaf sugar @ $9.50, $19; 4-100 lb.
drums cube sugar @ 3c lb., $12; 1 brl. refiner's syrup @ $10;
2 brls. Sugarland brand molasses @ $8, $16. Total $69.

21. Received of Li. A. Parker his note at 60 days, bearing 6% in-
terest, to apply on account, $100.

Shipped to Horton Bros., Detroit, Mich., for sale on my ac-
count and risk, 50 boxes fancy California prunes @ $3.75;
$187.50. Paid cash for drayage $1.50.

((

" 9->

42 THEORY OF BOOKKEEPING

LESSON XIV

OPENING ACCOUNTS— POSTING— TRIAL BALANCE

Opening Ledger Accounts consists in writing the name of the account
directly across the centre of the page. An account should always begin
at the top of a page. Ledger accounts should be written in a plain, bold
hand. Never abbreviate ledger headings unless names of persons or
firms, when these should conform to the firm name and style.

Order of Precedence. The proprietor's or partners' accounts should
always come first and these are usually followed by Cash, Merchandise,
Bills Receivable, Bills Payable and Expense in the order named, leav-
ing personal accounts to the last, since these may be quite numerous.

DIRECTIONS

Proceed to open the following accounts in your ledger: John S.
Spencer, at top of first page; Cash, 10 lines below Spencer's account;
Merchandise 15 lines below cash; Bills Receivable, top of second page
extending 8 lines below: Bills Payable extending 8 lines below; Ex-
pense, 8 lines; J. C. Downing & Co., 8 lines; Geo. E. Davis, Redlands,
Cal., 8 lines; A. W. Daniels, LaHarpe, 111., 8 lines; L. A Parker, 8 lines;
Geo P. Anderton, Moline, 111., 8 lines; Shipt. Horton Bros., Detroit, 8
lines.

Posting. Having in the previous lesson journalized the transactions,
you will now proceed to post the items in your journal to their proper
ledger accounts as follows:

The first item in your journal is "Cash Dr. $3000." Transfer this
item to the left hand or Dr. side of the Cash account in your ledger, en-
tering the date Jan. 2, 191 and writing John S. Spencer in the wide
column. Write the amount $3000 in the money column. {See ledger form.)

In the narrow column at the left of the money column, which is the folio (page)
column, write the page of your journal from which the item was transferred, and in the
folio column in your journal write the page of the ledger to which the item was trans-
ferred.

This process of cross paging is called post-marking and is necessary for the sake of
reference.

ACCOUNTS

The next item in your journal is John S. Spencer, Cr. $3000. Trans-
fer this to the credit side of John S. Spencer's account, writing first in
the date, Jan. 2, 191.. and "Cash" with the amount $3000 in the money
column. {See ledger form.)

Postmark the entry by writing the page of the journal in the ledger and the page of
the ledger in the journal opposite the item transferred.

FORM OF LEDGER

2^<e<?'2'-e^<?r

(3ty

/'?'/-

//'

/■?/

\;/£^-inyyt^diz:^'^^^'-^^^^^t^^-*'

^<^^:tA^'A 'z.^^c

C^-^^L-.^d-^'AL.,^

fooo

^7-

C^z^^X-

^^t^:^^

^^c±e^

c.^uJ

v9oa9

si^

k^^

f'^

44 THEORY OF BOOKKEEPING

The next item in your journal is "Expense Dr. $50." Transfer
this item to the debit side of Expense account, writing date, "Cash" and
the amount, $50, in the money column.

Postmark the entry by writing the page of the journal (1) in the ledger and the page
of the ledger (2) in the journal.

The next item in your journal is "Cash Cr. $50." Transfer this to
the credit side of Cash account, writing date, "Expense" and the amount
in the money column.

Postmark the entry by cross-paging as before.

The next item in your journal is "Mdse. Dr. $174.85." Enter this
on the Dr. side of Merchandise account, with date and "Cash" (as an ex-
planation) and the amount in the money column.

Postmark the entry.

The next item in your journal is "Cash Cr. $174.85," hence this
must be carried to the Cr. side of Cash account with date and amount,
writing in the wide column as an explanation, the word "Mdse."

Postmark.

Next we have "Mdse Dr. $134.50." We enter this amount on the
Dr. side of Merchandise account with date and amount, writing in the
wide column as an explanation "J. C. Downing & Co." and postmark.

Now go to the credit side of J. C. Downing & Co's account and
credit them with "Mdse. $134.50" writing date and amount in proper
columns, and postmark the entry.

Thus continue to transfer every debit item and every credit item to
its proper account in the ledger, postmarking each entry as it is posted.

In posting an entry where there are several debits or credits we use the word
"Sundries" (Sunds) as an explanation in the ledger. Thus in debiting John S. Spencer
in the entry of the 13th, we enter date and "Sunds $15.98."

Checking. To make sure that the posting has been correctly done,
begin with the first item in the journal, trace the item to its proper place
in the ledger, and if it is correct, place a small pencil check-mark (•) op-
posite the figures. Thus proceed to trace every entry from the journal
and check all that are correct. This will prevent items from being
posted to the wrong account.

Footing. Take a sharp pencil of rather hard quality, go over the
accounts in your ledger and in all accounts where there are more than
one item on either side, add the items and write the total in small, clear
figures close up under the bottom figures of the column. This is called
"footing" the ledger.

ACCOUNTS

Trial Balance. Next take a sheet of journal paper and write across the
top "Trial Balance, Jan. 31, 191.." Write the names of all of the accounts
as they appear in the ledger, placing the total debits in the left hand money
column, and the total credits in the right hand money column. Place
the folio of the ledger at the left, opposite each account, to show where
it comes from. Your trial balance must then agree with the following:

^^ll:i>^-<2>^^-^S-^

a^^?-2^-c<^^Z,^ty cPA / f /-

^
^
^

JL
^

//C>:2^ cpr ^^:2o or

cyooo

Add the two columns of the Trial Balance and place the totals be-
low. These totals must agree since it is one condition of double entry
that the books must be in balance at all times.

The trial balance is not proof that the ledger is absolutely correct. It only proves
that the ledger is in balance. An item may have been posted to a wrong account, and
this the trial balance would not detect. Checking the items will detect any errors in
the postings.

Af?

THEORY OF BOOKKEEPING

LESSON XV
CLOSING THE LEDGER

Closing. Closing an account consists in putting it in such condition
that it will exhibit certain facts in regard to the business, other than
those which it exhibits ordinarily as an account.

To close an account we write the difference on the smaller side in red ink.

Classes of Accounts. Accounts are of two kind viz: Those which
show resources or liabilities, called Financial Accounts, such as Cash,
Bills receivable. Bills Payable and Personal accounts, and those which
show gains or losses, called Revenue Accounts, such as Merchandise,
Real Estate, Shipments and other property accounts, also Expense, In-
terest, etc. The following analysis will exhibit this classification:

Accounts

Financial

Revenue

Exhibit
Resources

or
Liabilities

Exhibit
Gains

or
Losses

Close
- To or By
[ Balance

f Close
To or By
Profit and Loss

Inventory. Before closing a set of books, if there is any property on
hand belonging to the busines it will be necessary to take an inventory
of such property, in order to ascertain what the gain or loss has been
upon the portion sold.

Taking an inventory is called "Taking an Account of Stock" and consists in going
over the stock or property carefully and estimating the value of each article. The value
is figured at cost price with freight or other charges added and deductions for damaged
or shop- worn conditions.

ACCOUNTS

Inventory of Property on Hand Jan. 31, 191.

280

178

brls.

Winter Wheat Flour ^. 75

Graham Flour Jf..50

pJcgs. Boiled Oats .08

lbs. Cut Loaf Sugar .02i

hxs. Fancy Cal. Prunes 25 lb. ea. .15

cases Silver Leaf Lard 6. 30

brls. Iceland Herring 10.50

Blood Red Salmon 16.00

doz. Cove Oysters .80

cartons Japan Type Bice, 3 lb. ea. .7i

sacks California Lima Beans .06

cases Domestic Macaroni 1.80

" Fgg 0-C Corn Flakes, Toasted. 2.70

brl. Bejiner^s Syrup 8.75

' ' Molasses, Sugar land Brand 6. 60

Shijjt. Horion Bros. Detroit Mich.

JfO

U20
200

DIRECTIONS

Cash. Begin with the first account in your ledger after the pro-
prietor's, which is Cash. This is a Financial account and hence will close
with Balance. The credit side being the smaller we enter in red ink on
the credit side "Jan. 31, Balance $2769.05."

Closing entries are made in red ink.

Merchandise. The next account is Merchandise. This is a Revenue
account but has an inventory and in order to ascertain the gain or loss
we must first enter the inventory on the credit side. Since unsold prop-
erty is a resource or financial item, we enter the inventory as a Balance
item, viz: "Jan. 31, Balance $420.55." Add the inventory to the credit
side, and we find the total to be larger than the debit side. We there-
fore enter the difference in red ink on the Dr. side "Jan. 31, Profit and
Loss $86.33."

We enter the inventory on the credit side because if the goods were sold they would
then be entered upon that side of the account, and also for the reason that every resource
is a credit red ink balance.

Bills Receivable. Your next account is Bills Receivable. This is a
Financial account and closes with Balance on the credit side in red ink.

Bills Payable is a Fmancial account and closes with Balance on the
debit side in red ink.

Expense is a Revenue account and hence will be closed by entering
the difference on the smaller side in red ink "Jan. 31. Profit and Loss $55."

THEORY OF BOOKKEEPING

Personal Accounts are closed with Balance since they are Financial
accounts.

Shipt. Horton Bros., Detroit, Mich., is a Revenue account with
an inventory. The inventory must be entered on the credit side as
Balance and then the difference between the two sides as Profit and Loss,
tlie same as previously exemplified in the Merchandise account.

PROFIT AND LOSS

Profit and Loss Account. Having closed all the accounts in your
ledger, except the proprietor's, you will next proceed to open a Profit
and Loss account. Into this account you will carry all red ink Profit and
Loss entries from the various Revenue accounts in the ledger, in order
to ascertain your net loss or gain.

From the debit side of Merchandise account we transfer the Profit
and Loss red ink entry to the credit side of Profit and Loss account,
"Jan. 31, Mdse. $86.33" in black ink, and postmark both entries by
cross paging.

From the credit side of Expense account we transfer the Profit and
Loss red ink entry to the debit side of Profit and Loss account "Jan. 31,
Expense $55" in black ink, and postmark both entries.

From the debit side of Shipt. Horton Bros., Detroit, account we
transfer the Profit and Loss red ink entry to the credit side of Profit
and Loss account "Jan. 31, Shipt. Horton Bros. $11" in black ink, and
postmark.

//-'

r^^/c^

......

J%z^

It will thus be readily seen that the Profit and Loss account is com-
posed of a collection of entries showing gains and losses from all of the
revenue accounts in the business. The credit side exhibits gains, while
the debit side shows losses. The difference between the two sides then
must show the net profit or net loss of the business.

ACCOUNTS

PROPRIETOR'S ACCOUNT

Proprietor's Account. The Profit and Loss account will now be closed
by entering the difference between the two sides on the smaller side.
John S. Spencer being the proprietor of the business, will receive the
profits, hence we make the entry "Jan. 31, John S. Spencer $42.33" in red
ink on the debit side. Transfer this entry to the opposite side (Cr.) of
John S. Spencer's account "Jan. 31, Profit & Loss $42.33" in black ink.

In transferring entries take notice that you change sides and change ink.

Close John S. Spencer's account by entering on the smaller side "Jan.
31, Balance $3026.35" in red ink.

Ruling and Footing. All accounts having more than one item on
either side should be ruled first with a single line directly beneath the
figures and across the money columns only, and then with a double rul-
ing on the next line below, across all columns except the wide, or ex-
planatory columns. (See Profit and Loss account.) Accounts having only
a single item on both sides may be ruled with double lines only, one
space below the figures. (See Bills ReceivaUe account.) Always rule up
personal accounts at any time when they balance.

Rulings on both sides of the account must be even. In case one side of an account
is much longer than the other, the space may be closed by a diagonal line.

^^^^^^

-^z^/ky"

/^0

/oo

All accounts having more than one item on a side must be "footed,
the totals being placed within the rulings below in black ink.

50 THEORY OF BOOKKEEPING

LESSON XVI

ANALYSIS OF ACCOUNTS

It is important that the student should understand the nature of each
account, and the meaning of the entries therein.

Cash. First entry is always made on the Dr. side. (Why?) Dr. side
shows cash received. Or. side shows cash paid out. Difference must
agree with cash on hand. Credit side can never exceed the debit.
(Why?) Casli on hand is a resource.

Bills Receivable. First entry is always made on Dr. side. Dr. side

shows notes received. (Why?) Cr. side notes disposed of. Difference

must agree with notes on hand. Cr. side can never exceed the debit.
(Why?) Notes on hand are a resource.

Bills Payable. First entry is always made on the credit side. (Why?)
Cr. side shows notes issued. Dr. side shows notes redeemed. Difference
shows notes outstanding. Dr. side can never exceed Cr. (Why?) Notes
outstanding are a liability.

Merchandise. First entry must be made on the Dr. side. (Why?)
Dr. side shows purchases. Cr. side shows sales. Difference between the
two sides, (after inventory is entered), shows gain or loss. Merchandise
on hand is always a resource.

Real Estate. First entry must be made on the debit side. (Why?)
Dr. side shows purchases. Cr, side shows sales, if any. Inventory
entered on credit side, then difference shows gain or loss. Real Estate
on hand is a resource.

Shipments or Consignments. First entry must be made on the debit
side. (Why?) Dr. side shows market value of the goods shipped away,
together with shipping charges, if such have been paid. Cr. side shows
net proceeds of sales, after expenses and commission have been de-
ducted. If the entire shipment is not sold the inventory should be en-
tered on the Cr. side as usual with property accounts. Difference be-
tween the two sides shows gain or loss. Shipment on hand is a resource.

ACCOUNTS 51

Personal Accounts. Dr. side of a personal account shows what the
person owes us. Cr. side shows what we owe him. The difference, if
the Dr. side is larger, shows a balance due us, — a resource. If the Cr.
side is larger the difference shows a balance against us, or a liability.

Expense. Dr. side shows outlays for running the business. Credit
side shows any returns received from items charged to this account.
Difference shows a loss or gain.

Thus if one should sublet a part of his store or office, he should debit expense for
the entire rent paid and credit expense for the amouno received. Expense may have an
inventory, as a supply of coal on hand. The account would then be closed the same as
a merchandise account.

Interest, Discount or Exchange. The Dr. sides of these accounts show
what we have paid out for such items. The credit sides show what we
have received for such items. The difference is a gain or loss.

Profit and Loss. The debit side shows our losses. The credit side
shows our gains. The difference shows a net gain or net loss.

Proprietor's Account, The credit side shows his investments, and
his net profit after the books are closed. The debit side shows his with-
drawals, and his net loss after the books are closed. The balance of
the account shows his capital or insolvency at the close of business.

The balance of the proprietor's account, like all other closing entries, is written in
red ink on the smaller side. If this balance occurs on the debit side of the account it
shows a net capital; if upon the credit, it shows a net insolvency.

WORKING BALANCE SHEET

The Working Balance Sheet is a concise statement showing the con-
dition of the business at the time of closing the books. It must exhibit
in compact form the resources and liabilities of the business; the gains
or losses for a preceding period, and the net capital or net insolvency
of the concern. It is made up from the Trial Balance and inventories,
by extending the differences into their proper columns. This Working
Balance Sheet, shows the ledger as it will apper after it is closed. As
its name indicates, it is usually made out by the bookkeeper before he
closes the ledger, as an aid in closing and as a safeguard against error.
The bookkeeper takes the differences as shown on his Working Balance
Sheet, direct to the various ledger accounts, as closing entries.

This form of balance sheet has been extensively used by bookkeepers as an exhibit
of the business to be submitted to the proprietors or officers after the books are closed.
The usage appears to be changing in favor of the financial statement, {shown later), as a
form better adapted to that purpose while the Working Balance Sheet is retained as a
convenience in closing the ledger.

THEORY OF BOOKKEEPING

"^^i^nyj"//^/-

Balances Brought Down. If the business is to be continued, it will be
necessary to bring the balances down in the ledger accounts beneath the
rulings, changing sides in black ink. Date the balances brought down
Feb. 1.

It is well to lake a trial of the balances brought down, so as to make sure that none
have been overlooked, and that your ledger is in balance before beginning the next
month's business.

ACCOUNTS 53

LESSON XVII
COPARTNERSHIP

The student will proceed to journalize the following transactions:

191..

Feb. 1. Charles H. Wilson and Henry Duncan have this day formed a
copartnership for the purpose of conducting a retail and whole-
sale grocery business, partners to share gains and losses
equally. The firm name and st^^le to be Wilson & Duncan.
Charles H. Wilson invests his present stock of goods valued at
$2500. Store fixtures and leasehold of store room $350. Horse
and wagon $150.
Henry Duncan invests cash $3000.

*' 1. Paid cash for postage and expenses of printing and mailing
circular letters to customers and others notifying them of the
new firm, $8.40.

** 2. Bought of Sprague, Warner & Co., for cash, 20 brls. winter
wheat flour @ $4.87i, $97.50; 10 brl&. Graham flour @ $4.62i
$46.25; 24 sacks Buckwheat flour, 65 lbs each @ 4c lb, $62.40
20 cases rolled oats @ $2.75, $55; 2 brls. cube sugar at $9, $18
Total $279.15.

*' 3, Paid cash for rent of store for current month, $35.

" 4. Sold to A. C. Nelson on 30 days, 100 cartons Japan type rice
3 lbs. each @ 8c, $24; 5 cases domestic macaroni @ $1.87i,
$9.36; 2 sacks California lima beans @ $6.25, $12.50. Total
$45,86.

" 5. Bought of W. M. Hoyt & Co., on 30 days, 10 cans Sorghum mo-
lasses 10 gal. ea.@ $4, $40; 12 cases MacLaren's Imperial cheese
$3.25, $39; 5 cases Edam cheese @ $9.50, $47. $50; 20 boxes Pre-
mium chocolate @ $3, $60. Total $186.50. Paid cash for
freight $6.30 and cartage $1.75.

" 7. Shipped to Davis & Moore, commission merchants, St. Louis,
for sale on our account and risk, 60 brls. winter apples @ $3,
$180. Cartage paid in cash $4.50. Total $184.50.

54 THEORY OF BOOKKEEPING

191..

Feb. 8. Sold to A. C. Nelson on 30 days, 4 boxes Premium chocolate
@ $3.60, $14.40; 5 cans Sorghum malasses @ $5, $25; 100 lbs.
cut loaf sugar @ 3c, $3; 5 cases silver leaf lard, @ $7.50,
$37.50; 1 brl. refiner's syrup $10. Total $89.90.

" 10. Henry Duncan has withdrawn for private use, cash $10.

** 11. Bought for cash, 3 tons of coal for heating the store, at $7.50,
$22.50.

11. Sold Henry M. Hudson on account, 5 cases Egg 0-C corn flakes
toasted @ $3, $15; 3 cases silver leaf lard @ $7, $21; 7 cases
Domestic macaroni @ $2, $14; 26 pkgs. rolled oats @ 8c, $2.08.

Total $52.08.

12. Sold to C. B. Mitchell, LaSalle, 111., on 30 days, 10 doz. cove
oysters @ $1, $10; 1 brl. blood red salmon @ $20; 3 brls. Ice-
land herring @ $12, $36; 1 brl. cube sugar @ 12; 180 lbs. cut
loaf sugar @ 3c, $5.40; 78 cartons Japan type rice 3 lb. ea. @
8c, $18.72; 20 sacks Buckwheat flour @ $3, $60. Total $162.12.

12. Received of C. B. Mitchell, LaSalle, 111., his note at 30 days
to apply on account for $81 06.

14. Received cash of Henry M. Hudson on account, $25.

" 14. Sold to the Palmer Hotel Co. on account, 10 cases rolled oats
$3, $30; 5 cases Egg 0-C corn flakes toasted @ $3, $15; 10 brls.
winter wheat flour @ $5, $50; 5 brls Graham flour @ $5, $25;
1 brl. cube sugar @ $12. Total $132.

*' 15. Bought of J. C. Bradford, Corona, Cal., on 30 days, 100 boxes
California cluster raisins @ $2, $200; 50 boxes oranges @ $3,
$150. Total $350.

" 15. Bought of A. W. Wheeler & Co., on 30 days, 30 cases Diamond
brand coffee @ $13.25, $397.50; 50 boxes imported Malaga
raisins @ $3.50, $175; 10 brls. white distilled vinegar @ $7.50,
$75. Total $647.50.

''' 16. Paid Santa Fe Railroad Co., cash for freight on invoice of
raisins and oranges received from J. C. Bradford, Corona, Cal.
$67.30.

" 16. Sold Siegel, Cooper & Co. for cash, 50 boxes oranges @ $4.30,

$215.

" 17. Accepted A. W. Wheeler & Co's. draft on us at 30 days sight,
favor Citizens Bank for $300.

( (

18,

((

19,

((

23.

((

24.

ACCOUNTS 55

191..

Feb. 17. Shipped to, Watson & Son, commission merchants, Minneap
olis, Minn., for sale on our account and risk, 100 boxes Cali-
fornia cluster raisins @ $3, $300. Cartage paid in cash $2.50.
Total $302.50.

Received of Davis & Moore, St. Louis, an account sales of our
shipment of Feb. 7j showing net proceeds $234.60.

Sold to Watson & Whitaker on account, 3 sacks California lima
beans @ $7.50, $22.50; 10 brls. winter wheat flour @ $5.25,
$52.50; 10 cases rolled oats @ $3, $30. Total $105.

Paid house rent of Chas. H. Wilson by check on flrm's bank
account, $25.

Sold J. W. Douglas, Macomb, 111., on 60 days, 2 cases Dia-
mond brand coffee @ $15, $30; 5 boxes Premium chocolate @
$4, $20; 3 cans Sorghum molasses, 10 gal. each @ $5.25, $15.75;
6 cases MacLaren's Imperial cheese @ $4.20, $25.20. Total
$90.95.

" 25. Sold H. E. Jackson, Rockford, 111., on 30 days, 5 brls. winter
wheat flour @ $5, $25; 3 brls. Graham flour @ $4.75. $14.25; 6
boxes fancy California prunes, 25 lbs. each @ 16c, $24; 1 brl.
molasses, Sugarland brand @ $8. Total $71.25.

' ' 26. Bought of Sprague, Warner & Co. , 5 cases silver leaf lard @
$6, $30; 10 cases Egg 0-C corn flakes toasted @ $2.75, $27.50;
20 cases rolled oats @ $2.85, $57; 10 cases Saratoga chip po-
tatoes @ $2, $20; 20 brls. winter wheat flour @ $4.75, $95; 10
100 lb sacks barley flour @ $4.75, $42.50; 8 half-chests Gun-
powder tea @ $14, $112; 5 half -chests Y. H. tea $12.50, $62.50.
Total $446.50. Gave in payment one half cash, balance our
note at 30 days with 6% interest.

" 27. Watson & Whitaker claim a shortage of one case of rolled oats
in our sale of the 19th, which we allow, at $3, and credit their
account.

" 27. Received of Palmer Hotel Co., on account, cash $50.

" 28. Sold A. E. Barker, Elkhart, Ind., on his 60 days note, 20 brls.
winter wheat flour @ $5, $100; 5 cases Diamond brand coffee
@ $17.50, $87.50. Total $187.50.

" 28. Paid cash for the following items: Postage stamps $2; adver-
tising in the News $15; repairs to window shades $1.60; print-
ing and stationery $13.25. Total $31.85.

THEORY OF BOOKKEEPING

DIRECTIONS

After journalizing the foregoing transactions proceed to post your
journal to the ledger. In opening ledger accounts, allow Chas. H. Wil-
son 8 lines; Henry Duncan 10 lines; Bills Receivable 10 lines; Bills Pay-
able 10 lines; Cash one page; Merchandise 30 lines; Expense 12 lines;
Fixtures 8 lines; Horse and Wagon 8 lines; A. C. Nelson 8 lines; W. M.
Hoyt&Co. 8 lines; Shipt. Davis & Moore, St. Louis, 8 lines; Henry M.
Hudson 8 Unes; C. B. Mitchell, LaSalle, 111., 8 lines; Palmer Hotel Co. 8
lires; J. C. Bradford, Corona, Cal., 8 lines; A. W. Wheeler & Co. 8 lines;
Shipt. Watson & Son, Minneapolis, 8 lines; Davis & Moore, St. Louis, 8
lines; Watson & Whitaker 8 lines; H. E. Jackson, Rockford, 111., 8 lines;
Profit & Loss 10 lines.

LESSON XVIII

CLOSING FEBRUARY

Footing. Add the debits and the credits of each account in the ledger,
and with a sharp pencil write the totals in small, distinct figures be-
neath the columns added.

Trial Balance. Proceed to take off a Trial Balance of all the accounts
in the ledger, which should correspond with the following:

Trial Bat.ance, Feb. 28, 191..

Chas. H. Wilson

2:> 1

3000

Henry Duncan

3000

Cash

32'.H)

716

Merchandise

44SS

1631

■ '

Bills Receivable

Bills Payable
Fixtures

Horse and Wagon
Expense
A C. Nelson
W M. Hoyi db Co.
Shipt. Davis dt Moore, St. Louis
Henry M. Hudson
C. B. Mitchell, LaSalle, Til.
Palmer Hotel Co.
J. C. Bradford, Corona, Cal.
A. W. Wheeler d- Co.
Shipt. Watson d: Son. Minneapolis, Minn.
Davis & Moore, St. Louis
Watson & Whitaker
J. W. Douglas, Macomb, HI
H. E. Jackson, Rockford, Lll.

lom

10U9

ACCOUNTS

Inventory. Having the Trial Balance correct, the next step will be
to take inventories of all property on hand, of every kind. These will
show the following: Merchandise $3318.43; Shipment to Watson & Son,
Minneapolis S310; Fixtures $345; Horse and Wagon $145; 2 tons Coal for
Store, @ S7.50, S15.00.

Working Balance Sheet. Our ledger is now in balance, as shown by
the trial balance, and we have inventories of all goods and property re-
maining on hand. The next step will be to make out a "Working Bal-
ance sheet" from which to close the ledger.

^s^^

,jif/9/-

58 THEORY OF BOOKKEEPING

LESSON XIX

CLOSING FEBRUARY— CONTINUED

Enter Inventories. With our Working Balance Sheet as a guide, we
will begin the process of closing the ledger by entering first the inven-
tories in their respective accounts. On the credit side of each account
having an inventory, enter the amount of such inventory in red ink,
under the date of the last day of the month "By Balance," as though
the goods were sold for that amount.

Close All Accounts Except Partners. Begin with the first account in
the ledger after those of the partners, and close each by entering the
difference between the two sides in red ink, on the smaller side. Finan-
cial accounts close "To" or "By Balance," while revenue accounts close
"To" or "By Profit and Loss." (see page 4.6) The Loss & Gain columns
in our Working Balance Sheet show the revenue accounts, and the Re-
source & Liability columns show the financial accounts. Transfer all
Profit & Loss red ink entries to the Profit & Loss account, changing
sides.

Close Profit & Loss Account. Find the difference between the two
sides of this account, which will show the net gain or net loss of the
business. In this case it is a net gain. Since Wilson & Duncaa are
equal partners, divide the net gain (or loss) into two equal parts and
enter each partner's share separately in the Profit & Loss account, in
red ink, "To" or "By" the partner's name, the same as shown by the
Working Balance Sheet, and transfer the accounts to the opposite side
of the partners' accounts respectively.

Close Partners' Accounts. Close each partner's account "To" or "By
Balance" the same as any financial account.

Ruling and Footing. Rule up all accounts in your ledger, place the
footings in the rulings, and bring the balances down beneath the rulings,
preparatory for a continuation of the business.

Financial Statement. In order to exhibit the condition of the business
to the members of the firm in clear and concise form we will now pre-
pare a statement of resources, or assets, and liabilities, for that purpose,
known as a Financial Statement

^.573

^^^^U'-yC^^U^^A-^.^d-

^Z^'-Z^^^

^ ~^^f-<L..<L-€.jJ^

J/O

<^^^^^'*^.^z:A'^^^^i^Jcl^^ ^00

y/3

^'■

^3fXfA^

U-

^^/

y/fr^/

60 i^CCOUNTS

LESSON XX
BUSINESS CONTINUED,— MARCH

191..

Mar. 1. Chas. H. Wilson has this day retired, having sold his interest
in the business to Henry Duncan who will continue under his
individual name.

Debit one partner and credit the other, for the amount of the retiring part-
ner's interest in the business, as shown by his ledger account.

" 1 The price agreed upon to be paid by Henry Duncan to Unas.
H. Wilson for his interest in the business is $2750, payable
cash $1250; note due in 6 mos. $750; note due in one year $750,
both notes to bear 6% interest. Henry Duncan therefore with-
draws the necessary cash and notes from the business.

^' 1. Paid cash for rent of store for month in advance, $35.

'" 2. Received cash of Henry M. Hudson in full of account, $xx.xx.

((

3. Bought of Sprague, Warner & Co., 5 brls. cut loaf sugar @
$11.50, $57.50; 8-100 lb. drums cube sugar @ 7c lb. $56; 10 brls.
XX powdered sugar @ $14.25, $142.50; 1 doz. cans refiner's
syrup 10 gal. ea., per can $3.25, $39. Total $295. Paid them
cash in full, less 2% cash discount, $5.90.
Credit "Cash Discount" for this item of $5.90.

*' 5. Received of Watson & Son, Minneapolis, Minn., an account
sales of our shipment of California raisins showing net pro-
ceeds, $374.80, which they have placed to our credit.

*• 6. Received of Palmer Hotel Co., their check in full of account,

$xx.

" 7. Discounted at First National Bank, A. E Barker's note dated
Feb. 28. Face of note $187.50, discount off $1.60. Proceeds
received in cash $185.90.

" 7. Paid cash to W. M. Hoyt & Co. in full for their bill of
$186.50.

THEORY OF BOOKKEEPING til

191..

Mar. 8. We have purchased the lot and store building which we oc-
cupy, No. 79 E. Main St., from the owner, Mrs. W. J. Law-
son on the following terms and conditions:
Consideration $4500. We assume the mortgage now on the
property amounting to S2000, bearing 5% interest due in 3
years. We pay cash $1000. We give three notes for $500
each, due in 3, 6 and 9 months with 6% interest, secured by
second mortgage on the property.

'' 8. We received a cash refund of $25 for rent paid beyond the
date of this purchase.

Credit Real Estate for this rebate, and not Expense account. When an
owner occupies a store he should charge up the rent to Expense account
every month, the same as though the building was owned by some other
person.

" 9. Received of A. C. Nelson his check for $89.90 in full of our bill
of Feb. 8.

Along with the check came the following order, which we im-
mediately fill: 8 boxes fancy California prunes, 25 lbs. ea. @
20c, $40; 12 cases Egg 0-C corn flakes toasted @ $3.20, $38.40;
2 cans Sorghum molasses 10 gal. ea. @ $4.50, $9; 1 brl. white
distilled vinegar @ $8.75; 5 cases silver leaf lard @ $8, $40.
Total $136.15.

" 10. Received of J. W. Douglas, Macomb, 111., his check to apply
on acconnt, $50. Exchange on this check 15c we lose.

" 10. Sold Lewis M. Wood, 4 brls. winter wheat flour @ $6, $24; 6
brls. Graham flour @ $6.30, $37.80; 4 sacks Buckwheat flour,
65 lbs. each @ 4c, $10.40; 10 cases rolled oats @ $3.50, $35; 10
cases Saratoga chip potatoes @ $2.40, $24. Total $131.20.
Received in payment cash, less 2% off as cash discount $2.62.
Debit "Cash Discount."

" 12. C. B. Mitchell, LaSalle, 111., having gone into bankruptcy, we
have compromised our claim at 35c on the dollar. He owes
us on note $81.06, and on open account $81.06. Received from
his assignee in full settlement, cash $xx.xx.

" 13. Sold J. W. Douglas, Macomb, 111., 5 brls. XX powdered sugar
@ $18, $90; 5 sacks barley flour, 100 lbs. ea. @ $4.80, $24; 2
brls. cut loaf sugar @ $15, $30; 4 brls. Iceland herring @
$12.50, $50. Total $194. Received in payment his note at 30
days, $100, balance on account.

62 THEORY OF BOOKKEEPING

191..

Mar. 14. Received cash of Watson & Son, Minneapolis, Mich., for net
proceeds of shipment of prunes, $374.80.

" 14. Paid cash to J. C. Bradford, Corona, Cal., in settlement for
our purchase of Feb. 15, $350.

" 15. Paid A. W. Wheeler & Co. cash for balance due them on
purchase of Feb. 15., $xxx. XX.

** 15. Received cash of Davis & Moore, St. Louis, in full of account
$xxx.xx.

*' 16. Paid cash to Walter Driscoll for repainting our store front,
labor and materials, $11.40.
Debit Real Estate.

16. Henry Duncan has withdrawn cash for private use, $2

17. Paid Citizens Bank cash for our acceptance due this day,
given for account of A. W. Wheeler & Co., $300.

19. Received of Watson & Whitaker to apply on account, cash

$75.

20. Sold H. E. Jackson, Rockford, 111., on 30 days, 10 cases rolled
oats @ $3.60, $36; 5 sacks barley flour, 100 lb. each @ $5, $25;
5 drums cube sugar, 1001b. each @ 9ic, $47.50; 6 cans refiner's
syrup, 10 gal. each @ $4.25, $25.50. Total $134.

22. Sold to Henry W. Fowler for cash, less 2% cash discount, 2
brls. molasses, Sugarland brand @ $10, $20; 6 cans refiner's
syrup, 10 gal. each @ $4.50, $27; 3 half -chests Y. H. tea @
$15, $45; 3 half-chests Gunpowder tea @ $16, $48; 25 boxes
imported Malaga raisins @ $4, $100. Total $240. 2% cash
discount $x.xx.

23. Paid A. W. Dickson county collector, cash for taxes on our
store building and lot amounting to $38.40, also taxes on our
stock of goods $16.50.

Debit Real Est-^te and Expense.

24. Received of H. E. Jackson, Rockford, IlL, casn to apply on
account $50, and a request for a few days further time on the
balance.

28. Paid cash for our note favor Sprague, Warner & Co., with in-
terest, due this day. Face of note $223.25, Interest $1.12.
Total $224.37.

ACCOUNTS 63

191..

Mar. 28. Sold to F., E. Hess on his 60 days note, 6%, 3-100 lb.

drums cube sugar @ 9c, $27; 3 brls. cut loaf sugar @ $15, $45;

5 brls. XX powdered sugar @ $18, $90. Total $162.

' ' 28. Have this day subscribed for 5 shares of stock, par value $100
per share, in the new bank being organized in this neighbor-
hood, to be called the Merchants and Farmers Bank. Paid
cash for the first installment amounting to $100.

" 29. Sold M. C. Butler, 10 cases Saratoga chip potatoes® $1.85,
$18.50; 50 boxes oranges @ $3, $150; 10 cans Sorghum mo-
lasses. 10 gal. each @ $4, 40. Total $208.50, net cash.

" 30. Paid adv. bill in The Record in cash, $6.30.

" 31. Paid cash for months salary to John Larson, clerk, $50.

31. Paid cash for Henry Duncan's subscription to the Benevolent
Society, $10.

((

DIRECTIONS

After journalizing the month of March, proceed to open new accounts
for any new names that may appear upon the books, allowing each 8
lines.

Post up your ledger. Check tlie accounts to see that your posting
is correct. Foot the accounts neatly with a sharp lead pencil. Take a
trial balance. You find that you have the following:

Inventory of Property on Hand, March 31, 191..

Merchandise '. $2725.00

Real Estate 4500. 00

Merchants and Farmers Bank Stock 100.00

Fixtures 340.00

Horse & Wagon 140.00

Make a Working Balance Sheet.

Close the ledger accounts from the Working Balance Sheet, make
out a Financial Statement, which should show Henry Duncan's net cap-
ital, at the close of businessto be $3422.79.

64 THEORY OF BOOKKEEPING

QUESTIONS FOR REVIEW

1. Define an account. On which side are the debits entered?

2. What is the ledger, and why is it useful or necessary in every set of books?

3. What is meant by "opening an account?"

4. Define "posting."

5. In what order of precedence are ledger accounts usually opened?

6. What is "post marking" and its object?

7. What is meant by "checking" and why is it necessary.

8. Define "footing" and explain how it is done.

9. What is a "Trial Balance?"

10. Does the trial balance prove the ledger to be correct? Why?

11. What is the object of "closing" a ledger and of what does it consist?

12. What two classes of accounts have we? Name them and define each.

13. How are Financial Accounts closed?

14. How are Revenue Accounts closed, if they have an inventory? How in case of no

inventory?

15. What is an Inventory, how taken, why necessary?

16. At what price are goods supposed to be inventoried?

17. Can you have an inventory of Expense? How?

18. Can you have an inventory of Interest? How?

19. What does the debit side of a personal account show? Credit side? Difference?

20. What is the object of a profit and loss account, how is it made up and how is it

closed?

21. What is a "Working Balance Sheet," and why is it useful?

22. What does the "Financial Statement" show?

23. Where do you look in order to determine whether a business is profitable, or is

"making money?"

24. If you saw the business was losing money where would you look to discover the

cause?

25. Where would you look to ascertain the capital or insolvency of a business?

CASH AND TRADE DISCOUNTS

A Trade Discount is a percentage reduction taken from a bill when
goods are sold. Frequently two or more discounts are taken from the
same bill, as, 5 or 40, 20 and 5.

In many lines of business, especially manufacturing, a "list price" or catalogue
price is published, and discounts are allowed according to conditions of the market or
cost of material. If the market fluctuates, the discounts are changed, while the list price
remains the same.

Suppose a manufacturing concern is selling an article 40 per cent, off from the
list price. If the buyer orders the goods for export to a foreign country, he may be
given an extra discount of perhaps 20 per cent. This is to encourage foreign trade.
For a specially large order he may be given an additional discount of 5 per cent,, making
40, 20 and 5 off.

In figuring discounts, take off the first discount, then compute the second discount
on the remainder. Compute the third after the second is deducted, etc.

Statement. A Statement of Account, commonly called a "statement"
consists of a list of
purchases together
with payments or

credits, if any, dur- O"^^^^- ^^^" -^^^^^^ /^ i^i _

ing a given time,
usually the previous
month.

MONTHLY STATEMENT

STATEMENT

If bills have been
furnished the buyer
at the time of the pur-
chases, only the totals of
the bills need be shown
in the statement, but if
the purchaser has not
had bills of the various
purchases, the statement
should contain a detailed
account of the goods
sold, prices, etc. In case
payments have been
made or credits allowed,
these should be shown
on the statement.

Statements should be
rendered promptly at
the close of the month.

In Account with.

Excelsior Manufacturing Co.

Manufacturers of Plumbers' Supplies

Tenni Net 30 dayi. 3% 10 days

J^Ln^^

<sr

■7

-2.^

.2.^

THEORY OF BOOKKEEPING

Cash Discount is an allowance in cash made for the payment of a bill
within a specified time.

Goods are sold on a definite term of credit, such as 30 days or 60 days, or 4 months,
etc. At the end of that time the bill is "net" and must be paid in full. But the buyer
may have the option of paying within the first ten days or other period, and receiving a
special "cash discount." The statement would then bear the following: * 'Terms 30
days; 2 per cent. 10 days'' or "Terms 4 mos; 3 percent. 30 days.

BANK DRAFT

c.^^^€^^C^^/m/.^^^ I^^ K^, /f / Ma.

\ ^.v <r

^ttfti i Utkmfi'4'.txi'*Zo Ztftt

■:^7/{i

Remittances. In payment of obligations through the mails it is im-
proper to send personal checks long distances. For payments at long
distances send either bank drafts, or if the amounts are small, postofiice
or express money orders. The draft or money order should be made
payable to the person sending the remittance, and by him endorsed in
full, tc the person or firm to whom the remittance is to be made. In
this method the draft shows that it has passed through the hands of the
remitter.

ENDORSEMENT

A personal check is only supposed to circulate in the immediate vicinity where it is
?iven, while bank drafts and money orders, being issued by institutions of known re-

CASH AND TRADE DISCOUNTS 67

sponsibility are acceptable anywhere. Personal checks on distant banks are also subject
to a small charge for collection, called exchange. Many western firms who purchase of
eastern manufacturers, and hence have occasion to make frequent payments in the East,
keep accounts in eastern banks so that they may make remittances by their own checks.
The check, draft or money order may be merely enclosed with the
statement, or a formal letter may accompany it.

FORM OF LETTER ENCLOSING REMITTANCE

A. M. ^VORTHlNGTO.V & BrO.
FLUMBrSG, GAS FITTING

SEWKRING /y y.

Chicago, ^|(4.ij<<<^:?^^ xj?^ loi

yez.<d^^

68 THEORY OF BOOKKEEPING

TO THE STUDENT

You have now learned how to open, post and close a ledger, the
meaning of the various accounts in their relation to the business, and
the facts shown by them. It is from the ledger that the proprietor or
manager of a business seeks the information which is to guide him in the
conduct of his affairs.

You have learned to take a trial balance and make out a balance
sheet and a financial statement. These show at a glance, the business
as it stands. Every word and figure conveys a meaning, and must be
thoroughly understood.

You have also learned something of trade and cash discounts so
generally used in business. You are now prepared to take up some of
the methods and forms emplified in every day business, as will be pre-
sented in the lessons which follow.

SINGLE ENTRY — RETAIL

LESSON XXI

SINGLE ENTRY— RETAIL
Changed to Double Entry. — Loose Leaf System

In Single Entry accounts are kept in the ledger with persons only,
the object being to show our relation to those with whom we transact
business.

Since in single entry every debit does not have a corresponding credit, a trial bal-
ance cannot be taken, and the gains and losses must be ascertained by relying upon in-
ventories and other information not contained in the books.

Retailers and small tradesmen find the simplicity of single entry well
adapts it to their purposes.

Agents, trustees, administrators of estates and all those who are charged with the
collection and disbursement of money, belonging to others, find single entry a satisfactory
method of keeping accounts.

Retail Grocery Business. To exemplify the keeping of accounts by
the single entry system, the retail grocery business is here selected.
An Order Book, Day Book, Cash Book, and Ledger will be kept.

Order Book. Formerly this was a small book of long and narrow
proportions, sometimes called a "counter book," and in it were entered
the orders as received. If the order was paid, the entry was so marked,
and no posting done to the ledger; but if not paid, the customer's ac-
count was charged.

At the present time retailers use small books or pads, provided with
duplicate order blanks and a carbon sheet for duplication. Upon these
are written with pencil, the name and address of the customer, articles
and extensions of prices. These pads are used by the clerks behind the
counter as well as the order takers who call on customers.

As the articles are put up for delivery they are checked off in the margin of the or-
der pad, extended and a total found.

The original order is retained by the dealer, while the duplicate is delivered to the
purchaser with the goods. The original blanks are kept on file according to date or in en-
velope* according to the name of the customers. If a ledger is kept, the accounts of the
customers are charged from the original order.

THEORY OF BOOKKEEPING

ORDER PAD

FISCHMANN'S
GROCERY AND MARKET HOUSE

PURVEYORS OF HIGH GRADE

MEATS AND GROCERIES

6226-0228 evanston avenue

Telephone Edgewater 2797-3981 Chicago, III 191..

Sold to

Schmaueh

AiJt.

Address

6305 May St.

Envelope System. If

the Envelope System is
used, an envelope is made
out for each customer
who buys on credit, and
these are filed in an up-
right position in a tray
in alphabetical order. As
the slips are handed to
the cashier or b o o k-
keeper by the clerk, the
total is entered on the
outside of the envelope
and the slip placed inside
as a detailed record of
the charge. Payments
are credited on the en-
velope as made.

Some firms notably those
operating department stores,
have order pads with a re-
capitulation in the cover.
Each day at the close of the
business the salesmen are re-
quired to add up their total
sales and turn in their books.

In small stores it is not customary to make out regular bills for cash sales, the clerks
being provided with small slips consecutively numbered, on which is noted simply the
amount of the purchase. The customer takes this slip to the cashier who files it on a
spindle. From these slips the cash sales for the day are ascertained and entered by total
in the Cash Book.

Day Book. The Day Book is a history of the operations of the busi-
ness, in narrative form. In a single entry system, the terms Dr. and
Cr. are used to indicate whether a person is to be charged or cred-
ited. Impersonal transactions may, or may not, be entered in the Day
Book. From the Day Book we post directly to the Ledger, thus do-
ing away with the Journal.

It was formerly customary to copy all bills sold to customers into the Day Book,
but present-day duplication methods have supplanted this practice and avoided the great
loss of time incident thereto.

Cash Book. The Cash Book when operated in a single entry system

differs from its use in double entry only in one respect; it is auxiliary, not

being posted from. Its purpose is merely to keep a convenient record of

the cash received and paid out, and a check upon the daily cash balance.

For more detailed explanation of the cash book see pages 76 and 77.

1 1

W. Butter

2 1

lb. Coffee

3 1

Bread

4 1-2

pk. Pot.

5 1

lb. Onions

6 1

H. C. Flour

7 3

bun. Carrots

8 1

bx. Berries

SINGLE ENTRY — RETAIL

Loose Leaf Ledger. A loose leaf ledger is one consisting of ledger
ruled sheets arranged in alphabetical or numerical order in a binder.
The loose leaf is particularly adapted to personal accounts.

The primary object of the loose leaf system of accounting is the elimination of all
surplus or inactive accounts, and to this end the accounts are divided into "Cnrrent Ac-
counts" and "Transferred Accounts," a separate binder or ledger being kept for each.

Current Accounts are kept in the current binder, which is so made up
that CLch account sheet is separate and independent, making it possible
to remove or transfer any account at pleasure. Index leaves are inter-
spersed throughout the book followed by the accounts in the same order
for easy reference.

Transferred Accounts are those which have been closed, and also in-
cludes the filled sheets of active accounts which have been forwarded.

These are placed in the transfer binder in the same position which they occupied in
the current binder. Where an account covers a number of sheets, these should be kept
together in the transfer, thus making all transactions of every customer accessible for
future reference.

The posting to a loose leaf ledger does not differ from posting to a book ledger, but
where the account sheets are not numbered, a check (V) mark is placed in the folio
column of the book

The Card Ledger. A card ledger has
been defined as a cabinet of accounts
kept on cards, standing on edge, and
arranged alphabetically or numerically.
The same principles which apply to the loose
leaf system govern the card system. Usually
only personal accounts are kept in these cabinets,
one card being devoted to each account. Thf
same classification of current and transfer is
made as in the loose leaf system.

DIRECTIONS

Proceed to write the following
transactions in the Day Book, using the form on page 73. If cash
has been received or paid out, this should be carried to the Cash Book,
as shown on pages 74 and 75. Study carefully the explanations given
beneath the Cash Book forms. Open accounts in the General Ledger,
allowing each account one third page: {your name), J. P. Shaw, Mer-
chandise, Furniture and Fixtures, Horse and Wagon, Auto Truck, Bills
Receivable, Reid, Murdock & Co., Steele, Wedeles & Co., W. M. Hoyt
& Co., American Cereal Co., Chicago Biscuit Co., Sexton & Co., C. Jevne
& Co. , Cuneo & Garabaldi, Aetna Insurance Co., Cash Discount, Ex-
pense and Loss & Gain. In the Card Ledger you will open accounts for
customers as the sales occur.

72 THEORY OF BOOKKEEPING

TRANSACTIONS

191..

Sept. 1. I have this day embarked in the Retail Grocery business at
2205 Adams Street, City, with an investment of $4000.00 in

cash.

Make two D. B. entries, one a memorandum entry, the other an entry cred-
iting yourself for the investment. {See form, page 73)
Also enter the investment in the 0. B. {See form, page 74)
Post from D. B. to your credit in the general ledger.

*' 1. Rented store at above address of George Brown, for 1 year
at $30 per month, payable in advance. Paid month's rent by

by check.

D. B. and C. B. {See form, page 75)

" 2. Made the following purchases today, to make up a full line of
goods for the store: Reid. Murdock & Co., City, 2%, 10 days,
$146.20; Steele, Wedeles& Co., City, 2%, 15 days, $392.45;
W. M. Hoyt & Co., City, $793.51, 3% cash. Paid last bill in
cash, less discount.
D. B., C. B. and L.

NOTE.— Make one D. B. entry for all the purchases, crediting each firm
and post, and another debiting W. M. H. & Co., for the payment and post
the cash and the discount as separate items to their account. Enter full
amount of W. M. H. & Go's., bill on credit side of C. B. and cash discount
on debit side, as though the entire amount had been paid out and the
discount received in return.

*' 3. Bought of Julius Bender & Co., City, store fixtures, for cash,
$50.
1). B. and C. B.

4. Made the following purchases for cash:

Bradner Smith & Co., paper and bags $8.00

Geo. E. Cole & Co., account books 9.80

Rogers & Co. , printing order blanks 7.50 $25.30

D. B. and C. B.

5. We opened our store to customers this morning. Cash sales
for today per cash drawer $26.45.
C. B.

Credit sales were made today as follows: Henry F. Dever,
1745 Madison St., 3 bars American Family soap @ 5c; 2 doz.
eggs ^ 26c; 1 lb. butter 38c. S. H. Green, 546 Kedzie Ave.,
5 lbs. sugar @ 6c; i doz. eggs @ 26c per doz; 2 pks. Uneeda
biscuit @ 5c; 1 can baking powder 10c. Mrs. Charles Ander-
son, 892 Sacramento Ave., 1 pkg. pepper 25c; 2 lbs. citron @
7c; 3 lbs. butter @ 38c; 1 pkg. figs 10c; 1 bar toilet soap 10c;
2 cans corn (^ 12c; 2 cans peaches @ 15c. Arthur Zander

SINGLE ENTRY— RETAIL

A^^-^

191..
Sept. 5.

^^^^^^^Cy.^^^^)^^

/6fyo

2307 Washington Boul., 2 sacks table salt @ 8c; 1 lb. raisins
15c; 5 lbs. dried apples @ lie; 3 lbs. granulated sugar @
6c; 2 lbs prunes @ 15c.

Make out Sales Slips in duplicate for the credit sales and have same checked
by your teacher. He will retain the duplicates on behalf of the purchasers
and you will post from originals directly to the card ledger. {See form,
page 76)

Bought for cash of D. S. Jaffray & Sons, one horse for $225;

and a delivery wagon of Studebaker & Co., for $165 cash;

also of R. E. Race, for cash, 1 ton of hay $15 and 10 bushel

oats, $4.

D. B. and C. B.

Close your cash book and bring down the balance ($2742.45).

Cash sales today, $43.

THEORY OF BOOKKEEPING

il^

2.3

Ld£l

-^J.^.^.^^

o o

*AoSo

Woso

\%7^^

z£

The left hand, or Dr. side of the cash book is for money received. Write first tlie
date, then the name of the account for which the cash is received, follow this with a
brief explanation, and then the amount, in the first money column. The column next to
the date column is for the ledger page. The explanations should be written in a smaller
hand than the name of the account, and begin at a uniform distance on the line.

191..
Sept. 8.

Paid Harless & Co., cash for premium on a policy of $1200 for
the year at li per C, also our clerk, Edward Holland, his
wages for the past week, $12. Bought vegetables of the
farmers today for cash; $19.50.
Make one D. B. entry and separate C. B. entries.

Cash sales for today per cash drawer, $123.75.

Credit sales today: Henry F. Dever, \ lb. Japan tea @ 80c
per lb; 2 lbs. Java coffee @ 35c; 1 cabbage 15c; 2 pks. pota-
toes @ 20c; 3 qts. beans @ 20c; 2 lbs. onions @ 5c; 1 broom
45c. S.G. Ort, 1162 Troy St., 5 lbs. C. butter @ 36c; 1 lemon
extract 10c; 2 doz. eggs @ 26c; 2 pks. apples @ 35c; 1 pkg.
shredded cocoanut 10c; 1 box berries 14c; 4 lbs. sugar @ 8c.
Sales slips, and C, L.

Purchased goods for the store as follows: American Cereal
Co., net 10 days, $34.75; Chicago Biscuit Co., 2% 10 days, net
15 days $15.50; Reid Murdock & Co., 2% 10 days, net 15 days,
$125.80. W. M. Hoyt& Co., 3% cash, $85.60.
D. B. and L.

Cash sales today per cash drawer, $78.50.

C. B.

Paid bill of W. M. Hoyt & Co., i:)urchased today, less cash
discount.

D. B., C. B. and L.

SINGLE ENTRY — RETAIL.

/f/-

^-1^a^,,c/y

(^^■-7C^^Z-^^^X>ii-i,^

•2-

-^Sioo
oo
oo

/30Y f/

:i-7V^

^o^o

^s-

2<^

The right hand or Cr. side is used for payments of cash. The entries, of date, ac-
count, explanation and a,mount are made exactly as they are upon the Dr. side. The
right hand column on both the Cr, and Dr. sides is used for totals. The difference be-
tween the two sides should be entered in red ink and represents the money on hand.
The cash book is ruled up when closed, the same as an account in the ledger. The bal-
ance is brought down in black ink on the Dr. side in the total column.

191..
Sept. 9.

10.

Also paid for drayage on goods received today, $3.

C. B.

Withdrew for private use, cash $25.

D. B , C. B. and L.

Credit sales today: S. H. Green, 1 pkg. bird seed @ 20c; 2
bunches asparagus % 22c; 1 pkg. matches 25c; 4 bars A. F.
soap @ 5c; 3 pks. potatoes @ 14c; 3 pkgs. Quaker oats @ 10c;
2 cans salmon @ 25c. A. E. Busse, 1827 Lake St., 2 doz.
eggs @ 26c; 5 lbs. G. sugar @ 5c; 1 wash board 35c; 2 lbs.
starch @ 5c; i pk. apples @ 30c per pk; 2 lbs. coffee @ 35c.
Sales Slips and L.

Paid Andrew Seng for putting in additional fixtures $303.75.

C. B.

Mrs. Chas. Anderson has returned 2 cans of peaches bought
by her on the 5th instant.

D. B. and C. L.

Credit sales: Henry F. Dever, 3 pkgs. soda crackers @ 10c;
2 lbs. starch @ 5c; 2 qts. oysters @ 37ic; 2 gals. K. oil @ 20c;
1 bu. potatoes 85c; 5 lbs. oatmeal @ 6c; 2 cabbages @ 18c.

Bought of Sexton & Co., invoice of goods amounting to
$175.60, gave cash for one-half; balance on account at 10 days.
Cash sales today $146.50.

THEORY OF BOOKKEEPING

^'Xl^yZe^T^^i^^^c/^l^^ ///^.^^«:^2^X^i^^^^^^>^^

DATe

ITEM

roLioi

DEBITS

CREDITS

BALANCE

/^—

M^:

3^*t^

d?^

/^.^

3^5-

•.

c:,^

^^./^

P7f

^--T-

^¥o

02.

7-3

/ o

191..
Sept. 10.

Received of S. H. Green cash in full, and of Henry F. Dever
$5 on account.

D. B., C. B. and C. L, Close Green's account. An account in the Card
Ledger is closed by ruling double lines across the entire account, directly
beneath the last entry. No footings are necessary.

Cash sales, $65.10.

Credit sales: John H. Huell, 2322 Van Buren St., 6 lbs. rais-
ins @ 13c; 1 broom 55c; 1 vanilla extract 25c; 2 lbs.
Santos coffee @ 33c; 2 cakes chocolate @ 30c. Mrs. Chas. An-
derson, 1 lb. Japan tea 50c; 2 pkgs. Uneeda biscuit @ 10c; 1
can peaches @ 28c; 2 boxes sardines @ 18c; 1 brl. Ceresota
flour $7. S. G. Ort, 3 lbs. honey @ 32c; 2 bu. potatoes @ 75c;
5 lbs. lard @ 17c; \ lb. cream cheese @ 24c; \ gal. vinegar @

42c per. gal; 1 brl. Pillsbury flour $6.

Note: The use of sales slips may here be discontinued, if thought advisable,

to save time.

((

11. Bought vegetables and produce of
$9.75.
C. B.

farmers today for cash,

Bought of C. Jevne & Co., City, an assortment of high class
goods for our special trade, 1% 5 days, $232.25.
D. B. and L.

SINGLE ENTRY — RETAIL 77

191..

Sept. 11. Credit sales: Mrs. Charles Anderson, 1 2 lb. can blueberries
19c; 1 2i lb. can raspberries 30c; 1 brl. Pillsbury flour $6.50;

2 cans French peas @ 25c; 1 jar orange marmalade 23c; 2
pkgs. Nabiscos @ 15c. A. E. Busse, 4 pkgs. Graham crack-
ers @ 10c; 1 pkg. Saratoga flakes 15c; 1 brl. Gold Medal flour
$7; 1 6 lb. pkg. Silver Gloss starch @ 9c per lb.; 2 cakes Ivory
soap @ 7c; 6 cakes Naptha soap @ 5c; 1 pkg. lemonade straws
85c. John H. Huell, 1 bunch onions 5c; 2 lbs. butter @ 38c; 1
box berries 14c; i pk. potatoes @ 80c per bu.; 2 lbs. Domino
sugar @ 7c; 3 doz. eggs @ 22c; 2 lbs. egg biscuits @ 20c; 1
lb. ginger wafers 19c. Arthur Zander, i doz. eggs @ 22c;

3 bars A.-F. soap @ 5c; 1 can tomatoes 15c; 1 bunch celery
6c; 2 lbs. Gunpowder tea @ 60c; 5 lbs. Arabian Mocha
coffee @ 39c; 1 bx. sardines 24c.

Cash sales today, $44.85.

*' 12. Withdrew for private use cash $12, and goods, $3.50.
D. B., C. B. and L.

Cash sales, per drawer, $51.60.

Bought of Julius Bender & Co. , for cash, 4 chairs for the
store at 90c each.
D. B. and C B.

On examining the goods received from C. Jevne & Co. yes-
terday, we find the same short one case maple syrup, billed
us at $3.25. We have charged the same to their account.
D. B. and L.

Paid in cash bill of Reid, Murdock & Co., of the 2nd inst., less
2% discount.

D. B., C. B. and L.

' ' 13. M.J. BUley has just opened a restaurant in the neighborhood,
2200 W.Adams St. and we expect to be favored with his trade.
He will settle his bills the first of each month. He has given
us the following order which we have filled and delivered
today: 1 carton Uneeda biscuit, 12 pkgs. @ 4c per pkg. ; 1 gal.
vinegar @ 50c; 6 cans peas @ 10c; 10 cans baked beans @ 9c;

4 cans corn @ 10c; 2 pkgs. Malta Vita @ 10c; 10 lbs.
Navy beans @ 7c; 5 lbs. split peas @ 8c; 5 lbs. barley @ 6c;
20 lbs. Aunt Jemima pancake flour @ 10c; 1 10 lb. bag table
salt 15c per bag; 2 pkgs. tooth picks @ 10c; 1 bunch bananas
$1.20; 6 pkgs. corn flakes @ 10c.

78 THEORY OF BOOKKEEPING

191..

Sept. 13. Paid cash for circulars to be distributed in the neighborhood,
$4.40.

C. B.

Cash sales per cash drawer, $47.17, in which we find a coun-
terfeit five dollar bill.
Enter full amount on Debit side C. B , and $5 on Credit side.

Paid clerk hire, $12 and withdrew for private use $25 cash.

D. B., C. B. and L.

Bought for cash produce from the farmers, $17.75.

Credit sales: A. E. Busse, 2 bu. potatoes @ 85c; 1 box soap
$3.85; 2 pkgs. soda crackers @ 5c; i gal. cider @ 40c per
gal.; 2 lbs. Java coffee @ 35c; 2 small brooms @ 20c; 2 bags
table salt @ 10c. S. G. Ort, 4 lbs. Premium lard @ 15c;
1 bottle Snider 's catsup 13c; 1 can olive oil 30c; 1 pkg.
peppermint wafers 5c; i lb. Y. H. tea @ 80c per lb.; 3 lbs.
Santos coffee @ 29c. Miss Helen E. Skinner, 2313 W. Adams
St., 4 doz.eggs @ 22c; 10 lbs. granulated sugar @ 6c; 2 pkgs.
raatches @ 5c; 1 bag Ceresota flour 25c; 1 basket peaches @ $1;
1 qt. cranberries 13c; i pk. apples @ 30c; 2 combs honey @
25c; 1 bottle horseradish 20c; 1 tin plum pudding 23c; 1 glass
current jelly 20c; 3 cans French peas @ 23c.

^' 15. You have decided to take in J. P. Shaw as a partner, he
to invest cash equal to your present net capital. Articles of
co-partnership have been signed and it is agreed that our
books will be kept by Double Entry and the new firm will do
business under the name of (Student) & Shaw.
Close the cash book and instead of bringing balance down, forward it to the
next page, placing the amount in the Total Column. Submit on journal
paper a list of accounts owing us entitled ("Schedule A") and another list
of those we owe entitled ("Schedule B").

EESULTS

Cash on hand per C. B $2'i72.00

Accounts Receivable per Schedule A 78.05

Accounts Payable per Schedule B 885.30

Proprietor's Net Investment 3934.50

Goods in Stock, per Inventory 1967.32

Furniture and Fixtures 357.35

Horse and Wagon 390.00

Rent, paid in advance, 15 days unexpired 15.00

Insurance Premiums, unexpired 17.25

DOUBLE ENTRY— RETAIL 79

CHANGING FROM SINGLE TO DOUBLE ENTRY

To change our books from single to double entry it will not be nec-
essary to disturb the accounts in the card ledger nor the accounts already
opened in the general ledger. It is only necessary to open such ad-
ditional accounts in the general ledger as are required to represent all
the resources and liabilities of the firm.

The steps in making this change are as follows:

1. Take an Inventory of all properties on hand belonging to the
business.

2. Make a statement of resources and liabilities, including the pro-
prietor's account as a liability.

3. The difference between the resources and liabilities in the state-
ment is the proprietor's net gain or loss. Post the net gain or loss to
the proprietor's account, closing the latter with a balance. The balance
will be his net capital or net insolvency.

4. In the general ledger open the additional accounts as shown
in the statement.

5. Take a trial balance, including both ledgers and the cash bal-
ance.

STATEMENT

Statement of condition of {your name), Retail Grocer at 2205 Adams
St., {your city), at the close of business, September 15, 191..

RESOURCES

Cash on hand per Cash Book $2271.80

Accounts Receivable per Schedule A 78.15

Merchandise per Inventory 1967.32

Furniture and Fixtures per Inventory 357.35

Horse and Wagon per inventory 390.00

Expense Inventories:

Rent paid in advance $15.00

Unexpired Insurance Premiums. . . . 17.25 32.25 $5096.87

LIABILITIES

Accounts Payable per Schedule B $ 885.30

{Student's) Net Investment $3934.50 $4819.80

Credit {Student) with Net Gain $277.07

THEORY OP BOOKKEEPING

CA/

/9/-

MDSi fiflLEt SvMO/^/£S

^£t^

/C
/C

///

7-0

^w^f^^^c^^

(^^U-a^^Lyjtd-t'.^^o^-^

■y<2//

/^^

-2 V/ /<?

•=^7

vlO'; >/<?

(>S'Z9 7^o

Items on the Dr. side of the cash book are posted to the credit side of their respec-
tive accounts in the ledger. In the "Mdse. Sales" column are entered all items of cash
sales. The total of this column is extepded into the Sundries column and posted to the
credit of Merchandise account. The items in the Sundries column must be posted sep-
arately.

In case a note is discounted, always enter the face of the note on one side of the cash
book and the discount upon the opposite side. Postmark each item as posted.

Where considerable cash is handled it is customary to close the cash book daily.
When the trial balance is taken the balance of the cash book must be entered in the
debit column.

Prepare a statement in the form given on page 79, copy into your
Statement Book, followed by Schedules A. and B., and open accounts
in the General Ledger with the impersonal resources and liabilities (for
which you have already written the headings) and post from the statement
all accounts not checked out. Post net gain to credit of your account
and take a trial balance which you will copy into your Statement Book.

The change is now complete and we will continue the business,
using the Order Book as a Sales Book, and we will retain the Cash Book.

An Explanatory Journal will take the place of the Day Book. The
Cash Book will be modified by adding a Mdse. Sales column on debit
side, and a Cash Discount column on the credit side. Cash items will
now be posted directly from the Cash Book. The Ledgers will be re-
tained and a Statement Book added.

DOUBLE ENTRY — RETAIL

--^cu^X^

^..

fffSH oiscou/i/r

1 %uKiDfnes

Tor^i,

J^.

^.^izZ^^as^^^c^y^o v4^ ^^.^^.^ ^s

J/^

•2.

>-f

^^C

iTc?

CftC^^-eA::2iL,^,'C.-?'i^

-^-.^eit-^uey

^^.^^^^-^^^.^.^^e^ -^^..^0.....^^^.^^.^

^^^..^..^..^^^^ V^^ foA^^o

■z

:r^

/2J

2:/

■^

Of^'^'^'iji./iy^.^A.y.^i-'Oy^ e> " " ^-^t-e-^

7-^

•

^..Acoa^/^.,£,c.ooi^^ff " ' //tf-

•

jX.;?^^^^. /^^V^^/.

•

^...^^^-..XZ^ >.fr^f/(.yfo

/(,

■>o

ca<?>i^:Cfc-»-..j*t.c^ j^i^^'i^l.^'^-L^ ji^u,£cc^

5-0

•yc

y> <5(7 1

-yo

^^^-^,_^

f^/

-yo

r^^t-Z^^^c^

-5-/'/'/ / ,^

Cf>9

T'O

Items on the Cr. side of the cash book are (ordinarily) posted to the debit side of
their respective accounts in the ledger. Since it is customary with most firms to dis-
count their bills, a "Cash Discount" column is desirable. The discount is entered in the
Cash Discount column and the net amount of the bill in the Sundries column. Post first
the cash discount to the debit of the creditor's account in the ledger, then post the actual
cash paid.

AVhen the cash book is closed the Cash Discount column should be footed, but the
total should not be added to the Sundries column, or carried into the Total column,
because it is not cash paid out. The total cash discount should be credited to the Cash
Discount account in the ledger.

191..
Sept. 15.

16.

Received Mr. Shaw's check for his investment equal to your
present net capital. The partnership agreement provides for
an equal sharing of gains and losses and a salary of $25 per
week to you as you are to devote all your time and attention
to the business. The firm is to endure for five years.
Memorandum entry in Journal and C. B. entry. Open an account with
Mr. Shaw and post from C. B.

Payments received from customers:
Mrs. Charles Anderson on account,
S. G. Ort on account,
M. J. Bailey in full of account,

C. B. and post to C. L.

$10.00
7.50

8.63

82 THEORY OF BOOKKEEPING

191..

Sept. 16. Paid Steele, Wedeles & Go's bill of the 2nd inst. less dis-
count offered; also discounted Jevne & Go's bill of the 11th
inst. less goods returned on the 12th inst., taking advan-
tage of their discount on the balance.

For the above transactions make only C. B. entries and post twice to each
personal account, — once for the discount, and once for the proceeds. In
recording disbursements put net amount in the Sunds. column and dis-
count in Cash Discount column on the same side of the C. B.

Receipts from customers will be entered on Dr. side of the C. B. in
Sunds. column.

Gash sales for today $89.65.

C. B., Mdse, Sales column and check the item in Folio column.

Received invoices of goods today as follows: Guneo & Gar-
abaldi, 2% 3 days, $16.50; G. Jevne & Go., 1% 5 days $44.50;
Steele, Wedeles & Go., 3% 10 days, $125.16; Sexton & Go.,
1% 10 days, $45.60.
Journalize and post.

" 17. Gredit sales: Lewis H.Smith, 3624 VanBuren St.,1 brl.Gere-
sota flour $7.50; i bu. peaches $1; 3 lbs. E. G. Butter @ 32c.
Henry F. Dever, 2 lbs. Santos coffee @ 30c; 4 doz. eggs @
26c; 1 doz. oranges 25c; 5 lbs. granulated sugar @ 6c; 1 can
maple syrup 30c. Arthur Zander, 3 doz. eggs @ 26c;- 1 lb.
citron 8c; 1 large can baking powder 25c; 1 box A. F. soap
$3.85; 2 lbs. loaf sugar @ 7c; 1 bu. potatoes 85c; 1 can Salmon
25c; 2 qts. oysters @ 37ic. Total sales $*.3t*..3f*.
Dr. the customers in the card ledger and journalize the total sales: "Sales
Ledger To Merchandise, Credit sales per duplicate bills on file " Check
the Debit and post the credit in the general ledger.

Gash sales per cash drawer $95.81.
C. B.

Paid out cash for electric light $4.50; advertising $3.60; pos-
tage $1.
C. B. entries and post. Debit Expense.

Bought produce of farmers $13.50.
C. B.
** 18. Mrs. Anderson settled her account to date, A. E. Busse has
paid $10 on account, and S. G. Ort $5.
C. B.

Discount invoices of Reid, Murdock & Go., and Ghicago Bis-
cuit Gompany, all of the 9th inst. ; also settle invoice of Amer-
ican Gereal Go., of that date.
Sales per cash drawer, $65.20.

DOUBLE ENTRY — RETAIL 83

191..

Sept. 19. Credit sales': Lewis H. Smith, 1 bottle catsup 22c; 2 cans
sardines @ 14c; 1 large bottle Queen olives 48c; 1 pkg. cream
of wheat 14c; 1 box Jap. toothpicks 5c; 2 bars toilet soap @
15c. Henry W. Bobbins, 848 N. Robey St., 1 brl. flour $7.50;
5 lbs. sugar @ 6c; 2 lbs. E. C. Butter @ 32c; 5 lbs. Java coffee
@ 30c; 2 bars Jap Rose soap @ 10c.
Dr. customers in ledger and journalize the total credit sales of the day.

Sales per cash drawer $44.65.

We have paid the balance due on Jas. Sexton & Go's., bill of
the 10th inst., of $***.*4&; also bill of Cuneo & Garibaldi of
the 16th irist., less discount.

Arthur Zander has given us his 30 day note at 6% in full of

account.

Journal and ledger.

*' 20. Our clerk has made out bills for the following credit sales:
Henry F. Dever $4.62; S. G. Ort $1.38; A. E. Busse $4.65; H.
W. Robbins $3.98; Charles W. Puller, 3600 Van Buren St.,
$3.65. Total sales $**.**.

Charge them in the Card Ledger. Journalize total sales for the day and
post credits to General Ledger.

John H. Huell, one of our customers, has gone into bank-
ruptcy. The receiver has this day paid a 20% dividend to
the creditors. The balance of the account is lost.
C. B. and journal.

Drew my salary for the week, $25., and paid the clerk his
wages, $12.

Close your C. B., post your work and submit your books with a trial bal-
ance to your instructor.

" 22. Discount the bill of C. Jevne & Co.. of the 16th inst., at 1%.
C. B.

We had a fire in our store last night and suffered a loss of
$398.00 on our stock, and $150.00 on fixtures. We have filed
the necessary proofs with the Aetna Insurance Company.

Journal and post.

Ordered and received of Steele, Wedeles & Co. , a new stock

of goods for $1342.20 on which we are offered a special cash

discount of 3%.

Discount the bill at once. Journal, C. B. and General Ledger.

NOTE: Even though this transaction is cash, it is best to journalize the

sale so as to show the transaction fully in the ledger.

84 THEORY OF BOOKKEEPING

191..

Sept. 22. Sales per cash drawer $39.85.

" 23. Bought new counters and shelves of Julius Bender & Co., for

cash, $285.

Traded our horse and wagon for an auto delivery truck, we
paying cash in addition, $410.
Journal C. B. and General Ledger.

Paid garage rent for the month, $5.

Credit sales per duplicate sales slips: Henry F. Dever $4.80;
S. G. Ort $6.75; Lewis H. Smith $3.89; Henry W. Robbins
$5.30; Miss Helen E. Skinner, 2313 W. Adams St., $4.65.
Total $**.**.
C. L. and Journal.

Sales per cash drawer, $47.28.

** 24. Cash receipts from customers: Henry F. Dever, on account,
$10; Lewis H. Smith $5; Chas. W. Fuller, in full, $*.**.
C, B. and C. L.

Sold postage to a customer, 10c.
C. B. and G. L.

Sales per cash drawer, $56.40.

The partners have agreed to reduce their investments and
each has withdrawn cash $1000.
C. B. and G. L.

*' 25. Arthur Zander has taken up his note. We waived the in-
terest.
C. B. and G. L.

Bought for cash, produce of farmers, $15.

*' 26. Discounted bills of Sexton & Co., and Steele, Wedeles & Co.,
both of the 16th instant.

Aetna Insurance Company has remitted check in full of our
fire loss, $**.**.

Cash sales for today, $41.65.

Receipts from customers: S. G. Ort, on account, $10; Henry
W. Robbins, on account, $15; Lewis H. Smith in full $**.**

Purchases: American Cereal Co., 1% 5 days, net 10 days,
$65.50; Chicago Biscuit Co., 2% 10 days, $18.20;Sexton &Co.,
1% 10 days, $226.80.
Journal and G. L.

DOUBLE ENTRY --RETAIL. 85

191..

Sept. 27. Withdrew my salary, $25. and paid $12 for clerk hire.

Close your cash book. Post, rule up all accounts which balance, and take

a trial balance.

Enter the following inventories below your trial balance.

Merchandise on hand, per inventory $3232.57

Furniture and Fixtures " " 475.00

Auto Truck .800.00

Expense Inventory

Unexpired Insurance 16.50

Close your books and make out financial statement, appending schedules
for Accounts Receivable and Payable. Student's net capital $3330.36; J. P.
Shaw's net capital $3330.35.
Submit all your books for approval.

QUESTIONS FOR REVIEW

1. Define a trade discount and state why it is used. When should it be deducted?

2. Explain how a discount of 50, 30 and 20% should be taken off. Will anything re-

main of a bill of $100.00?

3. Distinguish between a bill or invoice and a statement of account.

4. What is a cash discount? When should it be deducted?

5. When should a monthly statement be rendered and what should it show?

6. What is the best form of distant remittance?

7. In making a distant remittance for what two reasons is the bank draft to be pre-

ferred to the check?

8. In whose favor would you buy a bank draft if you were paying a bill of a distant

creditor?

9. What should be done with the draft in that case before sending it away?

10. What should accompany every check or draft when remitted?

11. What is single entry bookkeeping?

12. Wherein does single entry differ from double entry?

13. To what lines of business is single entry adaptable?

14. What is an order book and how is it used?

15. Explain the Envelope System.

16. Define the day book, and explain the form of its entries.

17. How is the cash book used in single entry?. Name the different columns and pur-

pose of each.

18. Explain how the cash book is balanced up and state what the final result represents.

19. Define the loose leaf ledger and state the primary object of the classification of ac-

counts into "Current" and "Transferred."

20. What is a card ledger?

21. What is the object of a special merchandise sales column on the debit side of the

cash book? How is it posted?

22. Explain the purpose of the cash discount column on the credit side of the cash book

and state how its items and totals are posted.

23. Why is no cash discount column used on the debit side of the cash book in this set?

24. How should cash discounts be entered when no special column is used in the cash

book?

25. What are the five steps in changing from single to double entry?

86 THEORY OF BOOKKEEPING

DUTIES OF A SHIPPING CLERK

A Shipping Clerk is one whose duty is to see that goods ordered by
customers are packed, classified and routed so as to secure the best
freight rates, and promptly forwarded.

In large houses the shipping clerk has under his direction, packers, checkers, truck-
men and other help that may facilitate in getting the goods under way. He may act as
stock clerk and have charge of the actual filling of the orders. He is then assisted by
others who select and assemble the goods.

Freight Classification. For the purpose of fixing the freight charges,
goods are assigned to certain classes, the rates varying according to the
class. In making these classifications, railroads take into account the
condition of the article, whether crude, rough, or finished, liquid or dry,
knocked down or set up; whether the article is perishable, the space it
occupies, its value, weight, etc.

The manner in which the goods are packed for shipment frequently affects the class,
resulting in a higher or lower rate. Thus, if boxed, the goods may cost less to ship than
if crated. The higher the class the more the rate. The classifications are made by com-
mittees of railroad men and schedules of rates are prepared by them, subject to revision
by the Interstate Commerce Commission, a department of the government which passes
on questions arising through commerce carried on between the states.

The freight tariffs are kept on file at each freight office, for the information of the public.

Filling the Orders is carried on in the stock department unless there
is no special department for this purpose.

Where the goods are in different parts of the establishment two copies of the order
may be provided the shipping clerk. One of these is cut into parts, the slips being sent
to the stockmen in the different parts of the house. Each stockman fills his part of the
order and sends the slip with the goods to the shipping room where the goods are assem-
bled and checked against the shipping clerk's copy of the order.

Back Orders result from shortages encountered in the stock when the
order is being filled. The orders are filled as far as possible and the cus-
tomer advised that the back order will follow as soon as the goods can
be obtained. The items which are short should be entered on a new or-
der, and are then called a Back Order.

Back orders are issued in duplicate, one for the shipping clerk, the other for the office.
The latter is to follow up the order. When the goods arrive the shipping clerk is noti-
fied at once, the order is filled, and his copy of the back order is turned in at the office.

Checking Shipments is a process for determining whether the goods
assembled in the shipping room correspond to the customer's order. The
items are called off by the packer and at the same time checked off the or-

DUTIES OF A SHIPPING CLERK 87

der by the checker. Initials of both should appear on the shipping order.
The goods should be checked at every stage of the filling of the order, and by every
one who takes a part in making it up, in order to reduce complaints of shortage to the
minimum. All orders are properly routed before going to the bill clerk or billing ma-
chine operator for entry.

Routing Shipments consists in determining the route or railroad over
which the goods can be shipped to best advantage. The rate between
two points is not the same regardless of route. One may be shorter
than the other.

Incases of interstate shipments the law provides that the rate shall not be higher for
the shorter of two hauls between the same point. In routing, the shipping clerk should
also take into account the location of his customer with reference to the freight houses
at destination, and ship by the road that will set the goods down at the most convenient
point. This will save the customer on his cartage charges. If the customer designates
what road he wants the goods shipped by, his wishes should be carried out. In routing
the shipment a bill of lading is made out by the shipping clerk.

A Bill of Lading is a document which serves a dual purpose: First,
it is a carrier's receipt for the goods; second, it is a contract to deliver
at destination, whether that point is on the carrier's line or not.

Considerable difficulty has arisen in the past between carriers and shippers because
of the varying forms of bills of lading in use. The Interstate Commerce Commii^ion cor-
rected this evil by prescribing a uniform bill for all railroads in the United States. Two
forms were prescribed; a "straight" bill of lading, and an "order" bill of lading.

The Straight Bill of Lading (non-negotiable) is used in the case of
ordinary sales where delivery to the consignee is not conditioned on pay-
ment of the purchase price. This form is prepared in triplicate: First,
the Original Bill of Lading, signed by both shipper and carrier, and which
the consignor mails to the consignee; second, the Shipping Order, or du-
plicate, which is signed by the shipper only and which constitutes the
railroad company's instructions and record; third, the Memorandum, or
triplicate, which is the shipper's record and is signed by the railroad
company.

The Order Bill of Lading (negotiable) is the second form prescribed
by the Interstate Commerce Commission. The '*order" bill of lading is
made out to the shipper's own order, not to-the consignee, but the bill
of lading provides for notice to the consignee of the arrival of the goods.
These bills of lading may be negotiated by endorsement to the consignee
or other persons designated by the shipper, or as is most common, are
usually endorsed by the shipper in blank. The goods will only be de-
livered by the transportation company only upon surrender of the bill of
lading properly endorsed. In C. O. D. freight transactions the "order"
bill of lading is always used, while in the ordinary credit sale, the
''straight" bill of lading is used.

THEORY OF BOOKKEEPING

Wi>H«rm Bill of Lading-Standard Form ol Straight Bill ot Lading approved by ll>e Interitat* Commlrc* Commission by Order No. 787 of June 27. t908.

Michigan ( Centr al T^ ailro ad C ompany

Shipper's No. ^6874
Agent's No ^^^^

STRAIGHT BILL OF LADING—ORIGINAL— NOT
NEGOTIABLE.

RECEIVED, subject to the classifications and tarriffs in effect on the date of issue of this Ordinal Bill of Lading,

at.

Chicago, 111. 12/27

.191.

from ..Jaine.S ..Sexton .& Co.. the property described below, in apparent good order, except as noted (contents and condi-
tion of contents of packages unknown), marked, consigned, destined as indicated tielow, which said Company agrees to carry to its usual place of
delivery at said destination, if on its road, otherwise to deliver to another carrier on the route to said destination. It is mutually agreed, as to each
carrier of all or any of said property over all or any portion of said route to destination, and as to each party at any time interested in all or anj' of
said property, that every service to be performed hereunder shall be subject to all the conditions, whether printed or written, herein contained
(including conditions oa back hereof) and which are agreed to by the shipper and accepted for himself and bis assigns.

The Rate of Freight frort

t.n 7

sr in Cents per 100 Lbs.

IF Special
Pet

IF Special

IF. Times Isl

IF tit Class

IF 2d Class

IF Rul« 28

IF 3d Class

IF Rule 26

IF Role 28

IF 4ili Class

IF Sih Class IF 6ib Class

Per

(Mail .\ddress— Not for purposes of Delivery )

Consigned to_
Destination —
Route.

J ames Sexton L Co .

St. Cloud

-State of Minn .

-Car Initial

-County of_

_Car No.

No.
Packages

DESCRIPTION OF ARTICLES
AND SPECIAL MARKS

Weight (Subject to
Correction)

Class or
Rate

Check
Column

If charges are to.be pre-
paid, write or stamp here,
"To be Prepaid."

1 "Rx. r.aTined Vec-lahl ps .

BX.

Groceries

p.9

Rx.

Soai)

6.^

to apply in prepayment of
the charges on the property
described hereon.

Aucnt or Casfiier.

Per

(The signature here acknowl-
edges only the amount prepaid.)

Charges advanced:

James Sexton F^ Co

-Shipper.

P»r V/.S.

A. H. Hill

Per-

-Agent.

(TbU BiU of lAviing u (o l»e eigaed by the ShVper •»<1 Agent of the Carrier isauuig same.).

WHOLESALE 89

LESSON XXII

WHOLESALE

A Jobber is one who buys and sells goods in large quantities.
The jobber usually buys direct from the manufacturer, and in turn, sells to the
wholesaler.

A Wholesaler is one who buys goods in large quantities from the
manufacturer or jobber, and sells in smaller quantities to retail mer-
chants only.

Since wholesale merchandising usually embraces a considerable volume of business,
it requires a system of records peculiar to itself; a system which, with slight modifica-
tions, is used in nearly all lines of that trade.

We have chosen the jewelry business as convenient to illustrate wholesale account-
ing in this lesson.

The Invoice Book. Invoices are entered in the Invoice Book, and the
amount posted to the credit of the person or firm from whom bought in
the Purchase Ledger. The total purchases for the month is charged to
a "Merchandise Purchase Account."

Some firms post directly from the original invoices, using a Recapitulation Sheet to
obtain the totals for the month. The invoices are held in a current file until statements
of account are received at the end of the month. They are then checked off on the state-
ments and filed alphabetically in a file provided for that purpose. The Recapitulation
Sheet consists of ruled columns for dates and amounts, to aid in totaling the business of
the month.

The usual terms of manufacturers, wholesalers and jobbers in the jewelry business,
are net 30 days. Special arrangements are sometimes made for 60 days or 90 days credit.
When a 5 per cent, cash discount is quoted, *'spot cash" is not meant, but the discount
may be taken advantage of in 30 days.

The Purchase Ledger contains only accounts of those from whom we buy.
The aggregate of the accounts in the Purchase Ledger is represented
by a"Purchase Ledger Controlling Account"- kept in the generalledger.

A loose leaf ledger, (one sheet for each account) is commonly used for the Purchase
Ledger, consisting of two binders, — one for current accounts, and one for transferred or
settled accounts. However, when the purchase accounts are not numerous they may be
kept in the General Ledger, and that you will do in this set.

Sales. The terms of credit and payment on which sales to retail
houses are made, vary somewhat, but 6% 10 days, 5% 30 days, 3% 90
days, net 4 months, is common, and may be considered "regular."

In working out this set, unless otherwise specified, you will make your sales on these
terms.

THEORY OF BOOKKEEPING

Credit Man. As orders are received and entered, unless accompanied
by the cash, they are referred to the ''credit man" whose duty it is to
pass upon the financial responsibility of customers. If he considers the
customer good, he OK's the order.

Order Register. All orders are entered in an Order Register and giv-
en a number.

By this record orders can be traced and each one is required to be accounted for. As
the orders are filled, that fact is noted in the register.

Order Sheet. Salesmen and customers are supplied with "Order
Blanks, " and should any order be in the form of a letter, it is transcribed
on an order blank for the sake of uniformity in filing.

Binder Folio

JUDSON, MOORE & CO.

1126

No. 856
Date Sold ^f^^
Town and State
Ship Via
Terms 10 days

CINCINNATI, OHIO Salesman ^ "W^- Schmauch

'ch 17, 19— Sold to Larson &
Brookrille, Ind p_ Q.

Son

Date Billed
3-18—

American Express When

At once

Ledger Filio

Amount Enclosed

Page

No.

Quality
Desired

NAME OF ARTICLE

Printed

Catalogue

Price

LEAVE

THIS COLUMN

BLANK

J^510

Elgin Movement 18 size 17 jewel Htg

1^520

IS " 17 " Htg

1777

Boss 18 size 25 yr Htg Case

178Ji.

Boss 18 " 25 yr Htg Case

168

k2SJ,

Signet Ring size 8\

160

Ji.250

" "9

ISJf.

538Jf

Brooch

185

5392

Brooch

190

6301

Bracelet

192

6305

Bracelet

302

8023

Traveling Set

209

Less 50 and 25%

130

When an order has been OK'd by the credit man, it is referred to the buyer of the

WHOLESALE

house, so that in case any of the goods are not in stock, they may be ordered from the
manufacturers at once. The order sheets are next sent to the different departments to be
filled. When filled they are returned to the office, amounts extended, and then are bound
together in numerical order and posted directly to the accounts of the customers without
journalizing the sales. For the purpose of obtaining the total sales recapitulation sheets
are used, the form of which would be as follows:

MONTH OF.
SHEET NO..

SALES RECAPITULATION SHEET.

L. F.-

L. P..

Date

Order No.

Amount

Date

Order No.

Amount

Date

Order No.

Amount

Date

)rderNo.

Amount

Fofd

For\l

For'd

Th^ Bill and Charge System, or duplicate billing system, is used ex-
tensively in wholesale houses. An original and duplicate of the bill are
made on the typewriter, the original being sent to the customer, while
the duplicate constitutes the itemized sales record, and is preserved in a
sales binder.

Unier this system the bills are numbered, and posting is frequently done directly
from the duplicates, and not from the order blanks.

INVOICE BOOK

Date 19

Inv.
No.

Name Address Terms

Amount

Jan.

2
6
10

2
3

S. 0. Bigney & Co.
Jos. E. Blake & Co.
B. F. Briggs & Co.

Attlehoro, Mass. Trade 20% 5/c
Providence, R. I. 5/c
Attlehoro, Mass. Trade 25% 4 / lOds

Total Purchases

370

437
483

1291

40
00

The date should be the date of the invoice and not the date of the entry. The
amount should be entered after all trade discounts are taken off, and before the deduc-
tion of cash discounts.

SALES BOOK

H» 1

SOLD TO I

T««n

Date 19

1 '•

Name Address

Terms |

Jan.

Larson & Son Brookville,Ind.

Trade 50 &25% n/lOds

i t

Birch Hardware Co. Earlmlle, Ind.

Trade 50% 6/30 ds

I i

Friest and Oeis Dwight, III.

Trade 50% 6 /nc

138

When this book is used, the order blank or duplicate bill binders are auxiliary, the
posting being done from the Sales Book. In working out this set, we will post from the
Sales Book instead of from the order blanks, or duplicate bills.

THEORY OF BOOKKEEPING

Dr.

CASH

Hata IQ

ACCOUNT

SALES LEDGER

Sundries

Name | Explanation

CashDisct.

Net

Jan.

Edwin B, North

Investment

15000

((

Walter C. Fisher

7663

((

Birch Hardware Co .

On ace' t. sale No. 2

((

Fries & Gets

Sale No. S—6%

ISO

When a customer pays a bill, or makes payment on account without taking advan-
tage of the discount, or at too late a date to take advantage thereof, the amount of his
payment will be entered in the "Net Sales Ledger" column and posted to the credit
of his account in the Sales Ledger. Should he take advantage of the discount the amount
of such discount will be entered in the Cash Discount column and the net amount on the
same line in the Net column. In posting he will be credited first for the discount and
then for the net amount. Receipts from all other sources will be entered in the Sundries
column, and posted separately to the proper accounts in the general ledger.

The total of the Cash Discount column will be posted to the debit side of the Cash
Discount Account and to the credit side of the Sales Ledger Controlling Account in the
general ledger, but will not be added to the total receipts as it does not represent receipts
of cash. The Net column will be footed and the total carried into the Sundries column,
from which it will be posted to the credit of the Sales Ledger Controlling Account.

BILLS

Date Rec'd
18

Our
No.

Maker or Acceptor

In Favor of

Where Payable

Received For

Jan.

Geo. F. Craig & Co.
MilUr, Walker & Co.

1 Walter G. Fisher \ First Nat Bank
" j Our Office

W. G. Fisher

The bill books may be either principal or auxiliary. When the Bills Receivable
book is a principal book its items are posted directly to the credit of the accounts pro-
ducing the notes, with the explanation "Bills Receivable No " The footing being

posted to the debit of Bills Receivable account in the ledger, the explanation being
"Sunds."

BILLS

Date Given
19

Our , _
No. LF

Maker or Acceptor

In Favor of

Where Payable

Given For

Oct.
Dec.

1
15

WaUer G. Fisher

First Nat Bank
J. A. Stephens

First Nat Bank
Our Office

W. G. Fisher

If the Bills Payable book is a principal book its items are posted directly to the

debit of the accounts incurring the obligations, explanation "Bills Payable No ," while

the total is credited to the Bills Payable account, explanation "Sunds."

WHOLESALE

BOOK

Or.

ACCOUNT !

Cash Discount

Name

Explanation

^■"""^ on Purchase *"""""

Jan 2
" .2
*' 3

Expense

S. 0. Bigney & Co.

8. 0, Bigney & Co.

Expense

January Rent
Express on Inv. i
Inv. No. 1—5%
Members/lip in Dunn's

150

1 50
350 38

Items of expense are generally frequent and for this reason a special column is pro-
vided for the account on the credit side of the cash book. All items of expense will be
checked in the ledger folio column and the total expense will be posted to the debit of
the Expense account in the general ledger.

When we pay for a bill of goods and do not take advantage of the discount, the
amount of the payment will be carried into the Sundries column. Should we take ad-
vantage of the discount, however, the deduction will be entered in the Cash Discount
column, and the net amount in the Sundries column. In the latter case, two postings
will be required to the creditors account in the general ledger, one for the discount and
one for the cash. The footing of the Expense column will be carried into the Sundries
column S3 as to be included in the total payments, but the footing of the cash discount
column will not be added to the payments.

RECEIVABLE

Date of Paper

Time

Int.

19 '^«RatB

Nov. m 4m 6
Bee. 13 90ds -

WHEN DUE

Year

Face

Am'tof
Int.

500
I ^50

7\50

50750

When

DISPOSED OF

How

1-i

I)i.sct at Bank

Sight drafts should not be entered in the bill books but acceptances are entered the
same as promissory notes. As the paper is paid that fact should be recorded under the
head of "Disposed Of" on the rijrht hand page. The unpaid notes should agree in total
with the Bills Receivable account.

PAYABLE

Uate of Paper

Time

Int.

Rate;

i "I

Oct. I 1 1-10;, 5

Dec. \i5\lm\ 6

WHEW DUE

Year i'llgl^fr^l

Face

2500
1000

Am't ofji
Int. II

35 07 2535m

When

ED
Ho*

1-10-

Paid in Cash

When the bill books are treated as auxiliary books, they are not posted from, the
Qotes and acceptances being journalized. Such will be our method in this set.

94 THEORY OF BOOKKEEPING

Explanatory Journal. Into this will be entered all transactions of an
exceptional nature, or such as cannot well be recorded in the other
books of account.

The General Ledger is a book in which the financial and revenue ac-
counts of the business are kept, not including, however, accounts receiv-
able and payable. It is usually a bound book in the ordinary ledger form.

The Purchase Ledger is a record of personal accounts payable. Where
the accounts are not numerous they may be kent in the general ledger,
otherwise, it is advisable to aggregate them in a purchase ledger, keep-
ing a *' Purchase Ledger Controlling Account" in the general ledger.
Whenever items are posted to the individual accounts in the purchase
ledger, their aggregate is posted to the controlling account in the gen-
eral ledger.

The difference between the two sides of the controlling account shows our aggre-
gate indebtedness on personal accounts and this difference should agree with the total of
the customers' accounts in the purchase ledger.

Inasmuch as the accounts payable in this set will not be numerous we will not use
the purchase ledger but keep such accounts in the general ledger.

A Sales Ledger is a book of personal accounts receivable. It is represent-
ed in the general ledger by a "Sales Ledger Controlling Account" which
is kept on the same principle as the Purchase Ledger Controlling Account.

In this set you will keep the accounts of your customers in a Sales Ledger and a
*'Sales Ledger Controlling Account" in the general ledger.

LEDGER HEADINGS

General: Edwin B. North, Walter C. Fisher, and Capital Stock, page 1.
Good Will, Organization Expense, and Goods in Stock, page 2. Furniture
and Fixtures, Catalogue, and Bills Receivable, page 3. Bills Payable,
Interest and Discount, and Collection and Exchange, page 4. Parcel's
Postage, Expense, and Traveling Expense, page 5. Freight and Dray-
age, Insurance, and Sales Ledger Controlling Account, page 6. Carl H.
Winter, Salesman; Bruce Mitchell, Salesman; Discounts on Purchases,
page 7. Discounts on Sales, Merchandise Purchase, and Merchandise
Sales, page 8. S. O. Bigney & Co., Attleboro, Mass., Martin-Copeland
Co., Providence, R. I., and Goldsmith, Stern & Co., New York, N. Y.,
page 9. S. & B. Lederer, Providence. R. I., Waltham Watch Co., Wal-
tham, Mass., and James E. Blake & Co., Providence, R. I., page 10. D.
F. Briggs & Co., Attleboro, Mass., Foley & Williams Mfg. Co., Cleve-
land, Ohio, and Koch Cut Glass Co., City, page 11. Trading Account,
Loss and Gain, and Undivided Profits, page 12.

Sales Ledger: To be opened as required during posting.

WHOLESALE 95

TRANSACTIONS

191..

Jan. 2. Edwin B. North and Walter C. Fisher, have entered into a co-
partnership agreement to engage in the wholesale jewelry
business at 37 South Wabash Ave., Chicago. 111., under the
firm name of "North & Fisher." The partners have agreed
to devote all their time and attention to the business and are
each to receive a salary of $35.00 per week as managers of
the business.

The firm has also engaged Carl H. Winter and Bruce Mitchell as traveling
salesmen at $100.00 per month each and traveling expenses. Make memoran-
dum entry in your Journal.

** 2. Mr. North invests $15000 in cash and checks. Mr. Fisher,
who has been conducting the business as a proprietor at the
above address, invests as follows: His stock of jewelry inven-
toried at $9780.50; furniture and fixtures valued at $1200; notes
as follows: One dated Nov. 25th last year, due four months
after its date, signed by George F. Craig & Co., Forestville,
Ohio, for $500, with interest at 6%; another dated Dec. 12th,
last year, drawn at 90 days, signed by Miller, Welker & Co.,
Wayneboro, Pa., for $250 without interest; both notes have
been endorsed over to the firm and are payable at our place
of business; also accounts receivable as follows: Larson & Son,
Brookville, Ind., $224.10; Seymour Bros., Hamburg, la., $89.50,
Crandall Lumber and Hardware Co., La Grange, Ky., $398.25;
Marseilles Co., Farmersville, La., $144.40; John Sedwick,
Brookston, Ind., $298.14; Salmon & Wilson, Newport, N. H.,
$85.65; Boe Bros., Findlay, Ohio, $414.45; J. G. Bromberg,
Schuyler, Neb., $125.64.

The new firm assumes liabilities of Mr. Fisher, as follows: Mr.
Fisher's note of $2500.00, dated Oct. 1, last year, due Jan. 10,
this year, interest 5%, favor of and payable at First National
Bank, this city; his note of $1000.00 dated Dec. 15, last year,
due one month after its date with 6%' interest, favor James A.
Stephens, payable at our present address; also the following
accounts payable: S. O. Bigney & Co., Attleboro, Mass.,
$865.42; Martin-Copeland Co., Providence, R. L, $95.80; Gold-
smith, Stern & Co., New York City, N. Y., $18.22; S. & B.
Lederer Co., Providence, R. I., $75.50; Waltham Watch Co.,
Waltham, Mass., $1622.60.
On the Craig & Co. note Mr. Fisher is to be allowed accrued in-.

96 THEORY OP BOOKKEEPING

191..

Jan. 2. terest, while the Miller, Welker & Co. note is invested at its face;
nor is any deduction to be made on the accounts receivable.
Mr. Fisher is to be credited for the assets of the old business
less the liabilities assumed, and he invests a cashier's check
to make his total investment equal that of Mr. North.
Gains and losses are to be shared equally.

Make memorandum entry in journal giving history of this transaction in
narrative form; also make journal entry for the debits and credits, including
the cash of both partners. Check the cash in L. P. column of the Journal.
Make Cash Book entries for the entire investment of Mr. North and for so
much of Mr. Pisher's investment as was cash and check these two items in
the L. P. column. Enter the notes in Bill Books.

((

2. Paid January rent in cash, $150.00.

Bought of S. O. Bigney & Company, Attleboro, Mass., subject
to trade discount of 20% and cash discount of 5%, the follow-
ing goods: 3 doz. Chains, No. 1425, @ $12.00 per doz.; 2
doz. Chains, No. 1427, @ $18.00 per doz.; 2 doz. Chains, No.
1465, @ $19.00 per doz.; 1 doz. Chains, No. 1439i-, @ $25.00
per doz.; 2 doz. Fobs, No. 1843, @ $14.00 per doz.; 2 doz. Fobs,
No. 1739, @ $16.00 per doz.; 2 doz. Fobs, No. 1743, @ $18.00
per doz.; 2 doz. Fobs, No. 1745, @ $20.00 per doz.; 1 doz. Fobs,
No. 1748, @ $25.00 per doz.; 2 doz. Charms, No. 2002, @ $15.00
per doz.; 3 doz. Lockets, No. 2004, @ $12.00 per doz.; li doz.
Lockets, No. 2006, @ $8.00 per doz.; 1 doz. Brooches, No. 2008,
@ 18.00 per doz.; 1 doz. Scarf Pins, No. 2010, @ $20.00 per
doz.; 2 doz. Scarf Pins, No. 2013, @ $12.00 per doz.; H doz.
Scarf Pins, No. 2018, @ $18.00 per doz.

The numbers given in the above purchase are the numbers by which the
goods are designated in the manufacturer's catalogue. Pigure out this bill
(taking off the trade discount only) for the purpose of ascertaining the amount
to be entered in the Sales Book, and then make your Sales Book entry. Bills
should always be entered in the Sales Book after the deduction of trade dis-
count, but before the deduction of the cash discount.
Paid express charges on above, $1.50. The shipper has agreed
to pay express charges on shipments made to us.
Charge them with the same on the credit side of your Cash Book. This is
called "charging back" the express charges.

3. Settled invoice of S. O. Bigney & Co., of yesterday, in cash
less discount and express charged back.

Take otf the discount first, then deduct express charges from net amount of bill,

4. We have taken a membership in the mercantile agencies, R. G.

WHOLESALE 97

191..

Jan. 4. Dunn & Company, and The Bradstreet Company, at $100 each;

also a membership in the Jewelers' Board of Trade, $75; paid

the membership fees in cash.

Make three cash book eiiiries, debiting Expense.

" 5. Purchased of A. H. Andrews & Company, for cash, additional
ofitice furniture and fixtures, $350; also of Hall Safe & Lock
Company for cash, four safes at $150 each.
C. B., two entries.

5. Advanced our salesmen $25.00 each on account of traveUng
expenses.
Debit each salesman, personally.

*' 6. Bought of James E. Blake & Co., Providence, R. I., the fol-
lowing, less 5% for cash: Two doz. Manicure Sets, No. 743, @
$12.00 per doz.; 2 doz. Desk Sets, No. 745, @ $10.00 per doz.;
3 doz. Manicure Sets, No. 748, @ $9.00 per doz.; 3 doz. Tooth
Brushes, No. 755, @ $4.00 per doz.; 4 doz. Nail Files, No. 756,
@ $6.00 per doz.; 4 doz. Letter Openers, No. 758, @ $12.00 per
doz.; 3 doz. Puff Jars, No. 842, @ $24.00 per doz.; 3 doz. Cork
Screws, No. 845, @ $9.00 per doz.; 3 doz. Bottle Openers, No.
846, @ $15.00 per doz. ; 2 doz. Nail Pohshers, No. 875*. @ $9.00
per doz.; 2 doz. Key Chains, No. 878, @ $15.00 per doz.; 3 doz.
Match Boxes, No. 880, @ $24.00 per doz.; 2 doz. Cigar Cutters,
No. 890, @ $9.00 per doz. Settled the bill in cash, less dis-
count; also paid freight charges in cash, $3.50.
Enter the purchase in invoice book, and the payment of same on credit side
of cash book, placing the discount in the cash discount column and the net
amount in the general column. Charge the freight to Freight avd Drayage
in C. B. The drayage we will make no entry for until we settle our month-
ly statement with the draying company.

8. Sold Larsen & Son, Brookville, Ind., less trade discount of 50
and 25%, net 10 days, 1 Elgin Movement No. 4510, 18 size 17
jewel Htg., $20.00; 1 Elgin Movement No. 452, 18 size 17 jewel
Htg., $24.00; 1 Boss No 1777, 18 size. 25 yr. Htg. Case, $28.00;
1 Boss No. 1784, 18 size 25 yr. Htg. Case, $28.00; 1 Signet Ring
No. 4234, size 8i, $19.00; 1 Signet Ring No. 4250, size 9, $15.00;
1 Brooch No. 5384, $17.50; 1 Brooch No. 5392, $15.00; 1 Brace-
let No. 6301, $20.00; 1 Bracelet No. 6305, $10.00; 1 TraveUng
Set No. 8023, $12.50.

The order blank will be extended by our entry clerk and you will enter only
the total of the bill less trade discount in the Sales Book.

** 8. The pay roll has been made up for the past week, including

98 THEORY OF BOOKKEEPING

191..

Jan. 8. the salaries of the partners and all the employees, (except
salesmen who will be paid by the month) in the time book.
The necessary currency and coin have been drawn at the
bank, and all the employees paid in cash. Total, $351.00.
Dr. Expense.

" 9. Received reports of traveling expenses from Carl H. Winter,
$13.50; and Bruce Mitchell, $18.60.
Dr. Traveling Expenses and credit the salesmen in the journal.

9. Sold Birch Hardware Co., Earlville, 111., subject to trade dis-
count of 50%, and 6% for cash 30 days, 1 Cut Glass Water Set,
No. 4032, $45.00; 1 Cut Glass Pitcher, No. 4040, $25.00; 1 Cut
Glass Mayonnaise Set, No. 4045, $12.50; 1 Bake Dish, No. 2509,
$9.95; 1 Percolator, No. 2610, $10.25; 1 Fern Dish, No. 2695,
$13.75. Cash $25.00 accompanied the order.
S. B. and C. B.

" 10. Took up for cash at First National Bank, note of Mr. Fisher
assumed by the firm, $2500.00 with 5% interest from Oct. 1,
last year.
C. B. and B. B. '

10. Bought of D. F. Briggs Co., Attleboro, Mass., the following
bill of goods subject to trade discount 25% and cash 4%: 2 doz.
Fobs No. 96 @ $12 per doz.; 3 doz. Fobs No. 98 @ $9 per doz.;
2 doz. Fobs No. 93i @ $15 per doz.; 2 doz. Chains No. 85 @
$12 per doz.; 3 doz. Chains No. 87i @ $18 per doz.; 2 doz.
Chains No. 891 @ $22 per doz. ; 2 doz. Dickens Vest Chains No.
97 @ $12 per doz. ; 3 doz. Carmen Bracelets No. 104 @ $24 per
doz.; 4 doz. Carmen Bracelets No. 106 @ $30 per doz.; 3 doz.
Carmen Bracelets No. 107 @ $28 per doz. ; 2 doz. Carmen Brace-
lets No. 109 @ $26 per doz. ; 3 doz. Chains No. 110 @ $30 per doz.
Paid express charges on above $2.25 and charged same back
to the shipper Settled invoice, less discount and express in
cash.

11. Bought of Howe Scale Co., for cash, one parcel post scale $64,
and map and book to accompany the same, $6.50.

" 11. Received an order from W. E. Dorman of East Dubuque, 111.,
for one 4 drawer Sewing Machine No. 43, hsted in our cata-
logue at $56.50, less trade discount of 70% and subject to 6%
for cash. As we do not carry the heavy goods of this charac-
ter in stock, we have ordered the same of the manufacturers,

WHOLESALE 99

191..

Jan. 11. Foley & Williams Manufacturing Co., Cleveland, O., as per
their catalogue No. 85, and have given them directions to ship
directly to Mr. Dorman.

As soon as the manufacturers ship the goods, we will be advised and will
receive a bill from them. We will then re-bill at our catalogue price less
discounts, to the purchaser. No entry at this time.

12. At the time this concern was organized the partners entered
into a contract with J. M.W. Jones Stationery & Printing Co.,
for the printing of our catalogue. The work is progressing
and we have this day paid the firm $300 on account of the
catalogue.
Debit Catalogue Account.

12. Received an order for goods from Farmersville Hardware Co.,
East Mohne, 111. Goods not in stock. We have placed the
order with Koch Cut Glass Co. , City, and ordered them to ship
via C. B. & Q. R. R., directly to our customer.

No entry.

12. Make the following payments of cash on account: S. O. Big-
ney & Co., Attleboro, Mass., $500.00; Waltham Watch Co.,
Waltham, Mass., $500.00. Settled the account of Goldsmith,
Stern & Co., New York, N. Y., in full by New York Exchange,
less 5% cash discount.
C. B.

" 13 Sold Fries & Geis, Dwight, 111., less 50% trade discount and
6% for cash, 1 Waltham Movement No. 4572, 18 size 17 jewel
Htg., $22.00; 1 Waltham Movement No. 4575, 18 size 15 jewel
Htg., $16.00; 1 Crescent Case No. 3570, 18 size Htg., 25 yr.,
$30.00; 1 Crescent Case No. 3572, 18 size Htg., 20 yr., $24.00;
1 Gold Vest Chain No. 6085, 14 K., $45.00; 1 Gold Vest Chain
No. 6088, 10 K., $29.00; 1 Emblem Charm No. 2803, $72.00; 1
Pr. Cuff Buttons No. 4032, $5.00; 1-Brooch No. 3045, $10.00;
i doz. Collar Buttons No. 2210 @ $4.50 per doz.; 1 Signet Ring
No. 1580, $10.60; 1 LaValliere No. 2200 @ $4.00; 1 LaValliere
No. 2210 @ $8.00. Cash enclosed with order, less discount.
S. B. and C. B.

Also sold Seymour Bros., Hamburg, Iowa, less trade 40 and
10%, and 6% for cash 15 days, 1 Pr. Side Combs No. 5310,
$4.00; 1 Pr. Side Combs No. 5315, $5.50; i doz. Collar Buttons
No. 4022 @ $3.95 per doz.; f doz. Collar Buttons No. 4028 @

100 THEORY OF BOOKKEEPING

191..

Jan. 13. $5.75 per doz.; 1 Hand Bag No. 5600, $18.00; 1 Hand Bag No.
5605, $20.00; 1 Umbrella No. 6200, 26 inch, $22.75; 1 Umbrella
No. 6205, 28 inch, $25.00; 1 Toilet Set No. 8033, 3-piece, $15.00; 1
Toilet Set No. 8045, 3-piece, $13.00; 1 Key Chain No. 9032, $4.00.
S. B.

13. Received cash on account from Crandall Lumber and Hard-
ware Co., $300.00, Boe Bros., $250.00; Salmon &Wilson, $25.00.
C. B.

13. Paid out cash for parcels postage $25.00; letter postage $5.00.
Dr. Parcels Postage for first item; Expense for the second.

14. Received a bill from Remington Typewriter Co., for 4 type-
writers and desks, $481.00. Settled the same in cash.

15. Paid James A. Stephens, cash in full of Mr. Fisher's note of
$1000.00, with interest at 6% to date. This note was assumed
by the firm, at the time of the partnership organization.

C. B. and B. B.

15. Sold D. Alberson, Dwight, 111., trade 50%, 6% cash 15 days, and
forwarded by parcels post, 1 Fob No. 2201, $7.75; 1 Fob No.
2210, $8.00; 1 Locket No. 2400, $7.25; i doz. Collar Buttons No.
2501 @ $6.75 per doz.-; 1 Ring No. 2603, $19.00; 1 Bar Pin No.
2610, $4.50. Added postage, 30 cents to the bill.

15. Made up pay roll. All employees paid in cash, $351.

15. Foot and rule up your invoice book. Post items to credit of
personal accounts in general ledger and footing the debit of
Merchandise Purchase Account.

Close sales book and post individual items to debit of custo-
mers in sales ledger. Post footing to debit of Sales Ledger Con-
trolling Account and to credit of Merchandise Sales Account,
both in general ledger. Close cash book and bring down the
balance. Post in accordance with instructions given under
illustrated form. Also post your Journal.
The bill books will not be posted from, as they are auxiliary.

Take a trial balance of your general ledger including the bal-
ance from the cash book as a debit; also take trial balance of
the sales ledger, the trial being brought to balance by includ-
ing the Sales Ledger Controlling Account from the general
ledger as a credit. Accounts which balance should be closed
and not shown in either trial balance.

WHOLESALE u^"""^/^^' ' T yy 101

191..

" 16. Bought of Goldsmith Stern & Co. , New York, N. Y. , the following
bill of goods subject to cash discount 5 % : 3 doz. Rings No. 1004
@ $15 per doz.; 2 doz. Rings No. 1006 @ $18 per doz.; 4 doz.
Rings No. 1007 @ $13 per doz.; 2 doz. Rings No. 1105 @ $20
per doz.; 2 doz. Scarf Pins No. 840 @ $10 per doz.; 2 doz. Scarf
Pins No. 843 @ $9 per doz. ; 3 doz. Scarf Pins No. 846 @ $12
per doz. ; 2 doz. Scarf Pins No. 850 @ $15 per doz. ; 1 doz. Lock-
ets No. 2005 @ $15 per doz.; 2 doz. Lockets No. 2005 @ $18 per
doz.; 1 doz. Bracelets No. 943 @ $25 per doz.; 2 doz. Bracelets
No. 647 @ $18 per doz. ; 1 doz. Bracelets No. 923 @ $30 per doz. ;
3 'doz. Cuff Buttons No. 433 @ $36 per doz.; 2 doz. Cuff Buttons
No. 475 @ $40 per doz.; 1 doz. Cuff Buttons No. 473 @ $20 per
doz.; 2 doz. Set Rings No. 1003 @ $45 per doz.; 2 doz. Signet
Rings No. 1009 @ $25 per doz.; 2 doz. Signet Rings No. 1008
@ $35 per doz. Paid express charges on above $1.25. Settled
invoice in cash, less discount.

Debit Freight and Dray age for the express as this is not to be charged back
to the shipper in this transaction. Also make entries in Invoice Book and
another entry in the Cash Boole for the payment.

16. Report received from salesmen for traveling expenses. Mr.
Mitchell $22.60; Mr. Winter $17.38.

Journal.

17. Bought of Martin-Copeland Co., Providence, R. I., the follow-
ing bill of goods subject to cash discount 2%; 3 Chains 90 / 45
@ $7 each; 3 Chains 90/47 @ $12 each; 4 Chains 90/49 @ $15
each; 2 Chains 80/50 @ $25 each; 2 Chains 80/64 @ $40 each;
3 Lorgnette Chains 104/2 @ $10 each; 4 Lorgnette Chains
104/5 @ $15 each; 3 Waldemar Chains 200/2 @ $8 each; 4
Waldemar Chains 200/4 @ $15 each; 3 Waldemar Chains 200/9
@ $20 each; 12 Neck Chains 40/3 @ $6 each; 9 Neck Chains
40/35 @ $8 each; 6 Neck Chains 40/37 @ $12 each. Paid ex-
press charges $1.75.

Dr. Freight and Drayage.

17. Settled invoice of Martin-Copeland Co., of this date at 2% dis-
count and included in our remittance $95.80 to cover old balance.

17. We are in receipt of an order from Dupee Bros., Concordia,
Kans., for 1 Empire Clock No. 5030, $75.00; 1 Bermuda Clock
No. 5035, $45.00; 1 Boss Case No. 325, $30.00; 1 Elgin Move-
ment No. 439, $15.00; 1 Fob No. 3025, $4.75; 1 Brooch No. 3105,

102 THEORY OF BOOKKEEPING

191..

Jan. 17. $8.95; 1 Scarf Pin No. 4309, $13.00, all subject to trade discounts
of 50 and 25%, net 30 days. At the purchaser's request we are
sending the clocks by freight via Santa Fe R. R. The watches
and jewelry we have shipped via Wells Fargo & Co. Express.

18. Received cash of Larson & Son., Brookville, Ind., in full of in-
voice sold them on the 8th inst., $**4t.*^ plus $100 on the old
account. Total $*** *^^.

18. Sold Crandall Lumber & Hardware Co., LaGrange, Ky., less
trade discounts of 50 and 25%, net 30 days, 1 Regulator No.
80, $105.00, and 1 Cuckoo Clock No. 20, $33.45.

" 19. Shipped Ballard Bros., East Alton, 111., C. O. D. via Adams
Express, 2 doz. Med. Knives No. 2210 @ $10.50 per doz.; 2 doz.
Med. Forks No. 2211 @ $10.50 per doz.; 1 French Briar Pipe
No. 8005, $6.50; 1 Meerschaum Pipe No. 8010, $15.00; 1 Mani-
cure Set, 3 Piece, No. 4002, $3.00; 1 Hand Bag No. 4512, $14.00.
Trade discount 70%; cash discount 6%. The purchasers re-
mitted $5.00 in cash with their order.

Enter this sale in your sales book for the full amount of the bill after de-
duction of the trade discount but post to the C. O. D, Account and not to
Ballard Bros. The payment and the cash discount on the whole bill will be
entered in the cash book and both posted to the credit of the C. O. D. Account.

20. Forwarded a check of $50.00 to each of our salesmen; also re-
mitted New York Exchange of $750.00 to Waltham Watch Co.,
Waltham, Mass., on account.

20. Received an order for goods from H. H. Buie, Edelstein, 111.
Goods not in stock. We have placed the order with James E.
Blake, Providence, R. I., and ordered them to ship via the C.
B. & Q. R. R., directly to our customer. No entry.

21. Received from Foley & Williams Mfg. Co., Cleveland, Ohio,
advice of shipment of sewing machine to our customer W. E.
Dorman, East Dubuque, Iowa. The manufacturers have billed
to us at $11.50 less 10% trade, and 2% cash 20 days. We re-
billed to customer at $56.50 less 70% trade and 6% cash.
Enter in invoice and sales book after deduction of trade discount.

21. Paid J. M. W. Jones Stationery & Printing Co., another in-
stallment on our catalogue contract, $250.00; (Dr. Catalogue)
also paid for stationery $17.80.

Dr. Expense.

22. Bought of S. O. Bigney & Co., Attleboro, Mass., the following

WHOLESALE 103

191..

Jan. 22. bill of goods subject to trade discount 20% and cash 2%: 2 doz.
Chains No. 3001 @ $12 per doz.; 3 doz. Chains No. 3002 @ $18
per doz.; 4 doz. Chains No. 3003 @ $16 per doz.; 2 doz. Chains
No. 3009 @ $20 per doz.; 2 doz. Chains No. 3010 @ $25 per
doz.; 1 doz. Chains No. 3018 @ $30 per doz.; 2 doz. Chains No.
3022 @ $24 per doz.; 3 doz. Chains No. 3029 @ $26 per doz.
Paid express charges on above $1.75 and charged same back
to the shipper; settled invoice in cash less discount and ex-
press charges.

22. Paid Commonwealth Edison Co., Hght bill, $4.50; Marshall-
Jackson Co., for office supplies, $9.80; Burroughs Adding Ma-
chine Co., for No. 9 Adding Machine, $415.

Distinguish between items of Expense and Furniture and Fixtures.

" 22. Settled pay roll in cash, $351.00.

23. Koch Cut Glass Co., City, advises that they have shipped via
C. B. & Q. R. R. direct to our customer, Farmersville Hard-
ware Co., East Moline, 111., the goods ordered by us on the
12th inst., and are billing the same to us less 5% for cash, as
follows: 1 No. 43 Pitcher, $15; 1 doz. Tumblers to match. No.
28, $26.50; 1 Sandwich Plate No. 96, $4.50; 1 Cheese Plate and
Cover No. 35, $8; 1 Candle Stick No. 43, $3.50. We have re-
billed to the customer, less 50% trade discount, cash discount
6% 10 days, as follows: 1 Pitcher No. 375, $42.00; 1 doz. Tum-
blers No. 376, $75.35; 1 Sandwich Plate No. 380, $12.35; 1
Cheese Plate and Cover No. 383, $23.45; 1 Candle Stick No.
392, $10.50.

23. Received cash of Henry Dorman in full of our invoice of the
21st, less 6% cash discount, $^^^4^.4^^; also, of Larson & Co,, the
balance due on their account, $**4fr.*4fr.

23. Salesmen report expenses: Mr. Winter $23.65; Mr. Mitchell
$22.60.

' 23. Bought of S. & B. Lederer Co., Providence, R. I., the follow-
ing bill of goods subject to trade discount 40% and cash 5% 15
days: 2 doz. Chains No. 345 @ $15 per doz.; 2 doz. Chains No.
348 @ $13.50 per doz. ; 2 doz. Chains No. 349 @ $12.75 per doz. ;
2i doz. Chains No. 350 @ $10 per doz. ; 3 doz. Collar Buttons
No, 425 @ $1.50 per doz. ; 4 doz. Collar Buttons No. 428 @ $2.75
per doz.; 5 doz. Collar Buttons No. 438 @ $2.00 per doz.; 2 doz.

104 THEORY OF BOOKKEEPING

191..

Jan. 23. Neck Chains No. 523 @ $18 per doz.; 3 doz. Neck Chains No.
535 @ $16 per doz.; 2 doz. Neck Chains No. 539 @ $16.95 per
doz.; 3 doz. Neck Chains No. 545 @ $20.75 per doz.
Paid express charges on above $1.25 and charged same back
to the shipper.

24. Seymour Bros., Hamburg, la., have dissolved partnership and
we have accepted the note of Henry Seymour, senior member
of the firm, dated today, drawn for the balance of their account
plus sale of the 13th inst., due in 10 days with 6% interest,
payable at our place of business, in full.

Dr. Bills ReceivaJAe and credit Sales Ledger Controlling Account in Journal.
Also post lo credit of customer.

24. Discounted note of Craig & Co., at the bank. Face of Note

$500; interest 90 days 6%, $^^4^4^.4^*; discount days, 7%,

$4^.3^.3^. .5^.3^; proceeds placed to our credit, $*4j4t.4f.5t (C. B. and B.
B.); the bank has also placed to our credit the proceeds of a
sight draft which we drew on Marseilles Co., Farmerville, La.,
for collection. Face of draft $144.40. Collection fees, $.85.
C, B., full amount on delut side, and Collection and Exchange on credit side.

25. Sold Boe Bros., Findlay, O., less 50% trade discount, cash 6%,
1 Bracelet No. 4010, $25; 1 Bracelet No. 4020, $18; 1 Signet
Ring, size 8, No. 4100, $6.50. The purchasers have ordered
the goods sent by Parcels Post, and enclosed us their check
for the amount of the bill, less trade and cash discounts, plus
35 cents for parcels postage.

This transaction may be entered directly in the cash book, and from there
posted to the Merchandise Sales Account, but the better practice is to open
an account with the customer, charging him for the sale from the sales book
and crediting him for the payment from the cash book. This you will do.

25. Bought of WalthamWatch Co. , Waltham, Mass. , and received by
city delivery the following bill of goods subject to trade dis-
count 10% and 2% for cash 30 days: 20 Movements No. 73 @
$4 each: 15 Movements No. 360 @ $6 each; 15 Movements No.
361 @ $7.50 each; 15 Movements No. 375 @ $8.25 each; 10
Movements No. 392 @ $10.50 each; 8 Movements No. 430 @
$15 each; 10 Movements No. 295 @ $18 each; 15 Movements No.
277 @ $20 each; 15 Movements No. 245 @ $22.25 each; 10 Move-
ments No. 200 @ $25 each; 5 Movements No. 204 @ $30 each;
3 Movements No. 202 @ $45 each.

26. Received an order for goods from Boe Bros., Findlay, Ohio.

WHOLESALE 105

191..

Jan. 26. Goods not in stock. We have placed the order with Koch Cut
Glass Co. , City, and ordered them to ship via the C. B. & Q.
R. R., directly to our customer. No entry.

26. Received of Adams Express Company, balance due us on C. O.
D. shipment made to Ballard Bros., on the 19th inst., $**4t.**.

" 27. Sold Birch Hardware Co., Earlville, 111., 70%, net 4 months: 6
Fountain Pens No. 732, @ $1.00; 2 Traveling Sets No. 235, 8
pieces, @ $17.00; 1 Traveling Set No. 243, 15 pieces, $32.00; 3
Jewel boxes No. 325, @ $4.75; 2 Glove boxes No. 342, @ $14.00; 2
Clothes brushes No. 275,@$5.00; 2 Military Sets, No. 299, $12.35.

27. Sold Salmon & Wilson, Newport, N. H., subject to trade dis-
count of 70% and cash discount 6% 30 days: 1 doz. Chains,
Asst., No. 7500, $20.50; 1 Coat Chain No. 7510, $3.00; 2 Fobs
No. 7512,® $6.75; i doz. Silk Guard Chains No. 7514, $.85 each;
2 Hair Chain Mtgs. No. 7620, @ $4.50; 2 Lockets No. 7640, @
$6.00; 2 Sohd Crosses, No. 7680, @ $19.75; 1 Emblem Button
No. 7700, $7.50; 1 Initial Ring No. 7765, $12.00; 3 Thimbles,
Asst. sizes, No, 8023, $3.75 each; 1 Bracelet No. 4023, $13.50;
1 Tie Clasp No. 4053, $28.50; 1 Scarf Pin No. 4070, $2.00; 1
Waist Pin Set No. 4100, $2.75; 1 Pr. Cuif Buttons No. 4200, $1.75.

28. James E. Blake & Co., Providence, R. I., manufacturers, ad-
vise that they have made shipment of our order of the 20th
inst., to H. H. Buie, Edelstein, 111., via C. B. & Q. R. R., and
have billed us the goods as follows: 1 Tea Set No. W105, 6
pieces complete, $35; 1 Percolator No. W210, 4 pints, $8.50; 1
Coffee Set No.W316, 4 pieces, $19.50; less discount of 5%. We
have rebilled to our customer as follows: 1 Tea Set No. 25, 6
pieces complete, $85; 1 Percolator No. 28, 4 pints, $19.50; 1
Coffee Set No. 545C, $45.75; less 50%, net 10 days.
Discounted invoice of James E. Blake & Co., in cash.

" 29. Bought of Waltham Watch Co., Waltham, Mass., and received
by city delivery the following bill of goods subject to trade
discount 10%, and 2% for cash 30 days: 10 Waltham Movements
No. 25 @ $4.75 each; 15 Waltham Movements No. 28 @ $5.25
each; 10 Waltham Movements No. 34 @ $8 each; 15 Waltham
Movements No. 39 @ $9.75 each; 10 Waltham Movements No.
40 @ $10.25 each; 8 Waltham Movements No. 42 @ $12.75 each;
6 Waltham Movements No. 43 @ $18 each; 5 Waltham Move-
ments No. 44 @ $22 each; 10 Waltham Movements No. 46 @

106 THEORY OF BOOKKEEPING

191..

Jan. 29. $28 each; 8 Waltham Movements No, 50 @ $30 each; 10 Wal-
tham Movements No. 51 @ $35 each; 4 Waltham Movements
No. 55 @ $48 each.

29. Made up pay roll and settled in cash, $351.00. Sent each sales
man a check of $100 for his monthly salary.

30. Received of D. Alberson, Dwight, 111., cash in full of invoice
sold him on the 15th inst., less 6% cash 15 days.

This bill included a charge for parcels postage. Discount is computed on
bill before postag-e is added.

30. One of the customers of the old firm, J. G. Bromberg, Schuy-
ler, Neb., has filed a, voluntary petition in bankruptcy and the
trustee has sent us dividend check for 25% of the account.
The balance is lost.

C. B., also make a Journal entry debiting Loss and Gain and crediting Sales
Ledger Controlling Account. Post credit to account in General Ledger as
well as to customer's account in Sales Ledger.

30. Received an order for goods from Boe Bros., Findlay, Ohio.
Goods not in stock. We have placed the order with Koch Cut
Glass Co., City, and ordered them to ship via the American
Express Co., directly to our customer. No entry.

30. Report received from salesmen, Mr. Winters, $18.60; Mr. Mit-
chell, $24.50.

31. Close your Invoice Book, Sales Book, and Cash Book, and post
these, and your Journal.

Take trial balances of your Sales Ledger and General Ledger,
and submit all your books to your teacher for approval; also
see that unpaid notes on hand, or outstanding, per bill books,
equal balance of corresponding ledger account.

WHOLESALE 107

INSTRUCTIONS FOR CLOSING LEDGER

(a) Sales Ledger: Close all accounts in this ledger which balance.

(b) General Ledger will be closed as follows:

1. Bills Receivable, Sales Ledger Controlling Account, the Sales-
men and accounts of creditors and any other financial accounts, with a
balance.

2. Close Goods in Stock into Trading account; Freight and Dray-
age, and Discounts on Purchases into Merchandise Purchase; Merchan-
dise Purchase into Trading Account; Parcels Postage (taking into ac-
count inventory of $23.50 for stamps on hand), and Discounts on Sales,
into Merchandise Sales; and the latter into the Trading Account; close
Trading Account into Loss and Gain after entering an Inventory of
Goods in Stock on January 31st, $18232.70. Bring the inventory down
again into the Goods in Stock Account.

3. Close Furniture and Fixtures into Loss and Gain for a deprecia-
tion of 1% on cost, treating the difference as an inventory.

4. Close Expense into Loss and Gain taking into account the fol-
lowing inventories:

Annual Membership in R. G. Dunn & Co.... $100.00

" BradstreetCo 100.00

" Jeweler's B. of T... 75.00

$275.00
One month expired(l/ 12) $ $

Postage on hand $ 2.50

Total $

5. Close Interest and Discount, Collection and Exchange and Tra-
veling Expense, into Loss and Gain. (No Invjentories.)

6. Catalogue Account will be closed with a balance as the cata-
logues are worth to us only what we have so far invested in the print-
ing, hence no profit or loss.

7. Close Loss and Gain into partners' accounts observing the divis-
ion of profits agreed upon, and close partners' accounts with a balance.

8. Prepare Financial Statement as per form on page 59. Submit
all your books for approval again.

108 THEORY OF BOOKKEEPING

191..

Feb. 1. It has been decided to incorporate the enterprise for $50,000.00.
Our attorney has prepared and forwarded the necessary apph-
cation for a charter and we have advanced him cash for fees
to be paid to the Secretary of State to whom the apphcation
was made, $45, and $50 attorney's fees. (Debit Organization
Expense.)

If this sum were charged into the Expense Account, the next month's busi-
ness would be burdened with the entire cost of organization. This expense
should be distributed over a longer period by gradually writing off Organiza-
tion Expense Account into Loss and Gain.

1. The capital stock of the company has been subscribed as fol-
follows: Edwin B. North, 160 shares; Walter C. Fisher, 160
shares; Henry Lorber, our credit man, 50 shares; Edwin H.
Johnson, Mgr. of Watch Dept., 50 shares; J. P. Shaw, 45
shares; C. W. Eeynolds, 35 shares.

The partners in full of their stock turn over all the partner-
ship assets to the corporation, the corporation assuming the
liabiUties. It is considered that the difference betw^een the
partnership's net capital and the $32,000.00 worth of stock
taken by the partners, is made up by the Good Will thus far
established by the business and their partnership interests are
therefore accepted in full of their stock.

We will continue using the old books. Make Journal entry
debiting each partner for his present worth or net capital.
Good Will for the difference between the stock taken by them
and their combined net capitals, and crediting capital stock
for the par value of the stock issued to them. Make cash book
entries for the payments by the other subscribers.
Credit Capital Slock.

" 2. Paid J. M. W. Jones Printing & Stationery Co., cash $5,000.00
on account of first installment of com]3leted catalogues de-
livered us today.
Dr. Catalogue.

Also paid U. S. Express Co., $55.00 for express charges on
catalogues forwarded to customers and prospects.
Dr. Expeiise.

Also mailed our Mr. Mitchell check for $45 to cover traveling
expenses.

2. Sold Dupee Bros., Concordia, Kan., one Cut Glass Vase No. 40,

WHOLESALE 109

191..

Feb. 2. 18 inches, $82; less 70% trade discount and 6% for cash in 10
days.

2. Sold Boe Bros., Findlay, O., subject to trade discount of 50%,
and cash discount of 6% 10 days: 1 Handbag No. 8042, $23; 1
Pocket Manicure Set No. 25, $4.50; 1 Fountain Pen No. 435,
$6.70; 1 Umbrella No. 4032, $12.45; 1 Military Brush Set No.
4502, $7.25; 1 Traveling Set No. 4720, 13 pieces, $3. The cus-
tomer enclosed check in full.

3. Paid cash to Recorder of Deeds for recording our charter
$11.25 (Dr. Organization Expense); also advanced our attorney
$10.00 on account of fees and court costs to bring suit against
John Sedgwick, whose account is long past due.

Dr. General Expense.

3. Received of Crandall Lumber & Hardware Co., on account, $50;
also Farmersville Hardware Co. for their invoice of the 23rd
ult., less 6% 10 days, $***.**•

4. Received an order from Salmon & Wilson, Newport, N, H., for
sewing machine which we do not carry in stock. We have
placed the order with Foley & Williams Mfg. Co., Cleveland,
O., and ordered them to ship via the N. W. R. R., directly to
our customer,

" 5. Bought of International Silver Co., Meridian, Conn., less trade
25% and cash 5% 30 days: 12 doz. Med. Knives @ $2 per doz.;
12 doz. Med. Forks @ $2 per doz.; 12 doz. Med. Knives @ $3
per doz.; 12 doz. Med. Forks @ $3 per doz.; 12 doz. Tea Spoons
@ $2.25 per doz.; 10 doz. Tea Spoons @ $2.75 per doz.; 12 doz.
Dessert Spoons @ $3.25 per doz.; 12 doz. Table Spoons @ $4
per doz. ; 5 doz. Berry Spoons @ $1.25 each; 6 doz. Berry Spoons
@ $1.50 each; 2 doz. Soup Ladles @ $1.85 each; 2 doz. Gravy
Ladles @ $1 each; 3 doz. Cream Ladles @ $.65 each; 3 doz.
Baby Spoons @ $.25 each; 3 doz. Bon Bon Tongs @ $.35 each;
2 doz. Sugar Sifters @ $.50 each.

Advanced in cash to our drayman $35.00 for freight which you
will charge back to the shipper.

Where the freight charges are large it is customary to advance the same to
the drayman. ^Vhere they are small the drayman pays the freight and charges
the same up on the monthly statement to us.

" 5. Settled bill of Hastings Express Co. , for dray age to date, $3.25.

110 THEORY OF BOOKKEEPING

191..

Feb. 6. Shipped Perry & Kiggins, Philadelphia, Miss., C. O. D. via
Southern Express: 1 pr. Cuff Buttons No. 1022, $13.75; 1 Scarf
Pin No. 1042, $6.50; 1 doz. Collar Buttons No. 1084, $3.50; 1
Bar Pin No. 1130, $9.00; 1 Brooch No. 1132, $7.50; 1 Lorgnette
Chain, 14K No. 1152, $22.00; 1 Lorgnette Chain, lOK No. 1156,
$15; 1 Festoon Neck Chain No. 1230, $14. This bill is subject
to trade discount of 70% and cash discount of 6%. The pur-
chaser has enclosed $2.00 in cash with his order, the express
company to collect the balance on delivery.
Use C. O. D. Account.

" 6. Sold Dupee Bros., Concordia, Kas., 70% off, 6% cash: 1 Chain
No. 842, $5.50; 1 Chain No. 843, $3.75; 1 Locket No. 932, $9.40;
1 Locket No, 938, $7.50; 1 Scarf Pin No. 1004, $10.25; 1 Waist
Set No. 1025, $4.25; 1 Waist Set No. 1028, $3.75; 1 Fob No. 325,
$8.00; 1 Cross No. 1084, $9.50; 1 Emblem Charm No. 1090, $35;
1 doz. Collar Buttons No. 1105, $4.50; 1 Signet Ring No. 1203,
$18.75; 1 Initial Ring No. 1280, $12.50; 1 Bracelet No. 1293,
$13.50; 1 Brooch No. 1302, $15.75. Cash enclosed with order.

" 7. Paid cash for pay roll, $351.00; S. O. Bigney & Co., in full of ac-
count per ledger, $4t*^.4fr4fr; S. &B. LedererCo., in full of account,
less 5% for cash on purchase of the 23rd ult., $4^**.**; Koch Cut
Glass Co., in full of purchase of 23rd ult., $*4t4t.*^.
We did nol pay last bill on time lo get benefit of discount. Consult your
ledger in settling an account.

8. Received cash of Henry Seymour in full of his note of the 24th
ultimo, plus interest 10 days, 6%.

9. Reports from Salesmen for traveling expenses: Mr. Winter,
$21.25; Mr. Mitchell, $19.80. Sent Mr. Winter check for $25.

9. Advice of shipment to our customer, Boe Bros., Findlay, Ohio,
received from Koch Cut Glass Co., per our order of the 26th
inst. The manufacturer bills to us, and we rebill as follows:

Our Cat. No. Mfg. No. Articles. Bill to us. Bill by us.

865 B. 345 1 Punch Bowl $19.00 $57.35

773 C. 230 1 Bread Tray 4.75 15.00

537 D. 873 1 Spoon Tray 2.75 8.75

235 C. 429 1 Bake Dish 5.50 16.00

Discounts to us 50% off; 5% for cash. Discounts to our custo-
mer, 70% off, 2% cash 10 days.
We settle our invoice in cash, less discount.

WHOLESALE HI

191..

Feb. 10. We have taken out fire insurance on our fixtures and goods in
stock. Paid premium in cash, $114.50. (Dr. Insurance.)

" 11. Bought of D. F. Briggs & Co., Attleboro, Mass., 15% off, cash
15 days 3%, and received by city deh very: 6 Clocks, Weston
No. 75, @ $19; 6 Clocks, Fayette No. 48, @ $11; 6 Clocks,
Bastrop No. 35, @ $10.50; 3 Clocks, Theron, @ $13.05; 3 Clocks,
Tycoon, @ $13.05; 3 Clocks, Thrace, @ $19; 3 Cuckoo Clocks
No. 25, @ $9.60; 6 Cuckoo Clocks No. 242, @ $19.00; 3 Regula-
tors No. 109, @ $24; 12 Alarm Clocks No. 82, lot $14.75.

" 11. Returns received in cash from Southern Express Company for
balance of C. O. D. shipment made to Perry & Kiggins on the
6th inst.

" 12. Sold D. Alberson, Dwight. 111., 50% and 25%, and forwarded
by Parcels Post: 1 Chain No. 8002, $8; 1 Fob No. 8030, $3.25;
1 Outing Chain No. 8032, $1.90; 1 Lorgnette No. 9020, $8.50.
They remitted their check with the order to cover the bill and
$.20 parcels postage.

" 13. Sold Crandall Lumber & Hardware Co., La Grange, Ky., 70%
off, 6% 10 days: 1 Travehng Set No. 365, $25; 1 Military Brush
Set No. 367, $6.50; 1 Smoking Set No. 925, $4; 2 Candle Sticks
No. 926, $8; 1 Shaving Set No. 940, $9; also 2 Watches at $9.35
each, net cash.

" 13. Received cash in full of bill sold to Dupee Bros, on 2nd inst.
less discount. Also cash from H. H. Buie in full of account.

" 13. We have returned one of the typewriters bought last month,
and received a refund of cash $100.

" 14. Made another cash payment of $5000.00 on account of cata-
logue deliveries; also disbursed cash for pay roll $**.*^f ; and to
Foley & Williams Mfg. Co., in full of invoice of 21st ult. , less 2%.

" 14. Report of traveling expenses: Mr. Winter, $30.55; Mr. Mit-
chell, $18.25.

" 15. Our attorney has succeeded in effecting a settlement with John
Sedgwick, a delinquent customer of ours, for $250.00, and has
remitted us cash for that amount. The difference is a loss.
C. B. and J.

** 15. Close your books and take a trial balance of both ledgers.
" 16. Bought of D. F. Briggs & Co., Attleboro, Mass., trade 25%,

112 THEORY OF BOOKKEEPING

191..

Feb.l6. cash 4% 10 days: 6 Opera Glasses No. 255, @ $4; 6 Opera
Glasses No. 256, @ $5; 6 Opera Glasses No. 257, @ $6.75; 6
Opera Glasses No. 259 @ $7; 4 Opera Glasses No. 263, @ $10;
3 Opera Glasses No. 269, @ $15; 2 Opera Glasses No. 275, @
$16.50; 1 Opera Glass No. 284, @ $20; 3 Opera Glasses No. 289,
@ $8.25; 3 Opera Glasses No. 293, @ $9; 3 Opera Glasses No.
294, @ $10.25.
Paid Express charges, $2.25.

17. Received cash in full of Boe Bros, account less discount on

last sale.
17. Received an order for goods from Birch Hardware Co., Dwight,

111. Goods not in stock. We have placed the order with Wal-

tham Watch Co., Waltham, Mass., and ordered them to ship

directly to our customer. No entry.

" 18. Bought of Goldsmith, Stern & Co., New York, N.Y., less trade
10% and cash 2%, and received by the city delivery: 6 Berry
Dishes No. W220, @ $3.50 each; 9 Berry Dishes No. W206, @
$2 each; 6 Cake Baskets No. W204, @ $3.25 each; 9 Cake Bas-
kets No. W201, @ $4 each; 5 Bread Trays No. W230, @ $4.75
each; 3 Bread Trays No. W603, @ $2.75 each; 1 Punch Bowl
No. W345, @ $19; 3 Salad Bowls No. W24, @ $2.75 each; 6
Fruit Bowls No. W15, @ $3.75 each; 5 Spoon Trays No. W873,
@ $2.75 each; 2 Gravy Boats and Trays No.W26, @ $3.50 each;
6 Whipped Cream Sets No.W17, @ $2.75 each; 6 Soup Tureens
No. W606, @ $4 each; 4 Bake Dishes No. W429, @ $5.50 each;
3 Bake Dishes No. W610, @ $2.75 each; 6 Sandwich Trays No.
W205, @ $1.75 each; 6 Cracker and Cheese Trays No, W207,
@ $2 each; 6 Crum Sets No. W190, @ $4 each; 6 Crum Sets
No. W191, @ $3.50 each; 6 Cracker Jars No. W94, @ $1 each;
6 Cracker Jars No.W93, $1.25 each; 6 Tooth Pick Holders No.
W340, @ $.50 each; 6 Tooth Pick Holders No. 342, @ $.35
each; 3 Tea Sets No. W105, @ $35 each; 6 Percolators No.
W210, @ $8.50 each; 4 Coffee Sets No. W316, @ $19.50 each.
1 otal, Jjh^^t^.**.
Discounted the bill in cash.

" 18. Sold Marseilles Co., Farmersville, La., subject to trade dis-
count 50%, and cash discount of 6%, 60 days: 1 Percolator No.
583, 4 pints, $18; 1 Crum Set No. 595, $6.50; 1 Cake Basket No.
603, $13.35; 1 Bread Tray No. 615, $9; 1 Gold Chain No. 2309,

WHOLESALE 113

191..

Feb. 18. lOK, $30; 1 Lorgnette Chain No. 2325, 14K, $22.50; 1 Scarf Pin
No. 2420, §9.

" 19. Sold Salmon & Wilson, Newport, N. H., 50 and 25% off, net 30
days: 1 Thimble No. 332, lOK, $8; 1 Hat Pin No. 338, $2.50; 1
Sash Pin No. 342, $5; 1 Tie Clasp No. 351, $3.50; 1 Pair Sus-
penders No. 1010, $5.50; 1 Pair Garters No. 1015, $4; 1 Leath-
er Hand Bag No. 1103, $26; 1 Bill Book No. 1201, $2.75; 1 Pock-
et Comb and Nail File No. 1230, $2.25; 1 Collar Bag No. 1272,
$2.95; 1 Fountain Pen No. 3575, $4.25.

20. Made final payments on our catalogue, as follows:

Cash $9450.00

Our note,6% 30 days payable 1st Nat '1. Bk. 5000.00

20. Paid out cash for express charges on catalogues sent out,
$95.80; WalthamWatch Co., on account, $372.60; for additional
insurance, $35.50.

21. Paid out cash for pay roll, $*4fr*.^*; also sent Mr. Mitchell a
check for $75.00, and Mr. Winter one for $50.00, on account of
traveling expenses.

2^ Received cash of Crandall Lumber & Hardware Co. for the
watches covered by our invoice of the 12th instant (terns net)
and for the balance of the invoice less 6% ; also of Dupee Bros,
in full of account $***.**.

23, Advice of shipment received from WalthamWatch Co. , of goods
ordered by Birch Hardware Co. on the 17th instant.
Our No. Their No, Article. Billed to us. Billad by us.

25 75 1 Clock (Weston).... $19.00 $55.00

340 48 1 " (Fayette)... 11.00 33.50

342 35 1 " (Bastrop)... 10.50 32.00

Discounts to us. Trade 50%, 6% 30 days.

Discounts quoted our customers, 70%, 2% 10 days.

" 25. Sold D. Alberson, Dwight, 111. , trade 50% and 25%, net 30 days:
1 Cut Glass Punch Bowl No. 2525, $85; 1 Cut Glass Bowl No.
2528, $33.75; 1 Cut Glass Sugar and Cream Set No. 2552, $25.65;
1 Boss Case No. 2510, 14K 18 size 20 yr., $16.40; 1 Waltham
Movement No. 2618, size 18, 19 jewel, $65. At the purchaser's
request we have shipped the cut glass by freight via North
Western R. R., and the watches by American Express.

114 THEORY OP BOOKKEEPING

191..

Feb. 26. Salmon & Wilson have discounted their invoice of the 27th
ult., less 6%, in cash.

" 26. Sold Marseilles Co., Farmersville, La., trade discount of 70%,
cash discount 6%, 30 days: 1 doz. Knives No. 820, $45; 1 doz.
Forks No. 842, $45; 1 Carving Set No. 25, $43.35; 1 Crescent
Case No. 2309, $32; 1 Elgin Movement No. 2510, $65.

" 27. Waltham Watch Co. has drawn on us at sight for amount of
their bill of the 25th ult. , and we have honored the drafts in
cash, with exchange $.75.

28. Close your books, post and take trial balance.

28. Close Sales Ledger, Close General Ledger, observing the fol-
lowing instructions:

CLOSING INSTRUCTIONS

1. Close Capital Stock, Bills Receivable, Catalogue, Sales Ledger
Controlling Account, the accounts of the salesmen and all personal ac-
counts payable, with a balance.

2. Close Goods in Stock account into the Trading Account; Parcels
Postage (Inventory $11.00) and Discounts on Sales, into Merchandise Sales;
Discounts on Purchases and Freight and Dray age into Merchandise
Purchase; Merchandise Purchase and Merchandise Sales into Trading
Account. Close Trading Account (after entering Inventory of Goods in
Stock, Feb. 28, $21,555.00 on the credit side) into Loss and Gain and carry
inventory over into Goods in Stock Account.

3. Close Furniture and Fixtures (Inventory $2500.00), Expense (un-
expired memberships $219.16; postage $120) Collection and Exchange,
Traveling Expense and Insurance (Inventory for unexpired premiums,
$137.50), and $2.60 of Organization Expense (bring down the balance),
into Loss and Gain.

It is customary to distribute Organization Expense over a period of about five
years so that the first year's business will bear only its proportionate share thereof. We
write off 1/60, being for one month, or $2.60.

4. Close Loss and Gain into Undivided Profits, and close Undivided
Profits with a balance.

5. Prepare a Financial Statement.

WHOLESALE 115

QUESTIONS FOR REVIEW

1. Define a shipping clerk and explain his duties.

2. Why is it important for him to be acquainted with freight classifications and rates?

3. What are the three principal territorial classifications in the United States?

4. How should orders be assembled and filled where the stock is divided into different

departments?

5. What is a back order?

6. What should be done in the shipping department before sending away the goods?

7. Define routing and state what effect it may have on the customer.

8. What is a bill of lading and what are the two forms?

9. .distinguish between a "Straight" bill of lading and an "Order" bill of lading.

10. Why are the original and duplicate of the "Order" bill of lading printed in different

colors ?

11. Define the invoice book and explain how it is posted from when purchase ledger is

used. When the accounts of the creditors are kept in the general ledger.

12. Give the different steps in filling a customer's order.

13. Explain the operation of the Duplicate Billing System.

14. Define the sales book and explain how its items and footings are posted when a sales

ledger is used.

15. Explain the purpose and use of a sales ledger controlling account.

16. Why are cash discount columns provided on both sides of the cash book in this set?

How are the items and totals of these columns posted?

17. What detailed record should be kept of our written obligations and of other's written

obligations to us? How are these records posted, when?

18. What is a private ledger and why is it kept?

19. In case goods are sold C. O. D. what account should be kept in the ledger? What

should the position of the debits and credits be therein?

20. Name the two leading mercantile agencies in the United States.

21. What is I*arcels Postage?

22. Explain how the various accounts which effect the gross profits are related to one

another and closed in this set.

23. What entry should be made when we advance traveling expenses to a salesman?

What entry when he reports his expenses for the week ?

24. In changing from a partnership to a corporation what account takes the place of the

accounts of the partners?

25. How should the Loss and Gain account be closed in a partnership? In a corporation?

116

THEORY OF BOOKKEEPING

ABBREVIATIONS IN COMMON USE

@ or a

Cwt. or cwt.

Hundredweight

A. B. . .

Bachelor of Arts

B.B.

Day Book

Acct.

Account

Bhk.

Drawback

Ad. .

. Advertisement

Dep. . .

Deposit

Agt. . .

Agent

Dept.

Department

Al. .

First Class

Dft. or dft.

Defendant; Draft

Ami.

Amount

Buct.

Discount

Anst.

Assistant

Bu.

Dividend

Ave.

Avenue

Bo. or do. .

. The same

Bal. .

Balance

Bols. or dols. .

Dollars

Bid. Bhls.

Barrel; Barrels

Doz. or doz.

Dozen

Bell. .

Bundle

Br.

Debtor; Doctor

B. L.

Bill of Lading

Br'ge.

Dray age

B. 0.

. Buyer's Option

Ea. . .

Each

Bot.

. Bought

E. E. .

Errors Excepted

B. Pay

Bills Payable

E. & 0. E. Errors anc

1 Omissions Excepted

B. Bee.

Bills Receivable

Etc. or etc. . ,

And so forth

Brot.

Brought

Excli.

. Exchange

Bro. Bros.

. Brother; Brothers

Ex. Cp. .

. Without Coupon

B. S. . .

Bill of Sale

Ex. Biv. .

Without Dividend

Bu. Bus.

Bushel; Bushels

Exp.

Expense

Bx. Bis.

Box; Boxes

F. . . .

Fahrenheit; French

100

F. or Vol.

. Folio; Page

C. B. , .

Cash Book

Fir. .

Firkin

Cligd.

Charged

F. O.B. . .

Free on Board

Ck. Cks.

Check; Checks

Ford.

Forward

a 0. D.

Collect on Delivery

Gal. or gal.

Gallon; Gallons

% . . .

Care of

Gr. .

Gross; Grain

Cat.

Catalogue

Ilf. cli. or i ch.

Half Chest

C. E.

. Civil Engineer

Ilhd.

Hogshead

C. F. I . Cos

L, Freight and Insurance

lit. or Jit.

. Height

CO. . .

. Consul General

LB. . .

Invoice Book

C U. . . Q

ourthouse; Customhouse

Ibid, or ibid. .

In the same place

Clk. .

Clerk

In. or in.

Inch; Inches

CoU.

Collection

Inc.

. Incorporated

Coml.

Commercial

Ins.

Insurance

Comm.

. Commission

Inst.

Instant; this month

Const.

Consignment

Int. or int.

Interest

C P. A. . Cer

Lified Public Accountant

In trans. . . On th

B passage (in transitu)

Cr. . ' .

Credit

/. 0. U.

I owe you

Cts. or cis.

Cents

Inn.

Invoice

Cur .

Currency

J.F. . .

Journal Folio

C. W. 0.

. Cash with order

Jour.

Journal

ABBREVIATIONS

117

Jr.

L. or Ledg.

L. F.

Lb. or lb. .

L.<& G.

Ltd. .

M. or m.

Mach.

Mdse.

Mem.

Wu-

Mfrs.

Misc.

Mo. or mo. mos.

NaVl. or Natl.

No. Nos.

02.

P. or ]).

Pay nit. or paymt

Pes.

Pd. .

Per an. or 2)er an. By

Per cent, or per cent.

Junior

Lady; Lord

Ledger

Ledger Folio

Pound

Loss and Gain

Limited

1000

Month; Mile

Machinery

Merchandise

Memorandum

. Manufacturing

Manufacturers

Miscellaneous

Month; Months

National

. Number; Numbers

Ounces

Page; Penny; Pint

Payment

Pieces

Paid

the year (per annum)

r By the hundred

\ (per centum)

Pk. or pk.

Pkcj. or pkg.

Pres.

Qt. or qt.

Recpt.

Reed.

Retd.

R. R.

Ry.

S. B.

Sec.

88. .

8q.

8. 0. or 8. o.

Sr.

Sunds.

Treas. .

Trans.

Vice Pres. or V. P.

W.B. . .

Wt. or wt.

Y. or yr.

Yd. or yd.

Preferred

. Peck

Package

President

Quart

Receipt

Received

Returned

Railroad

Railway

Sales Book

Secretary

Steamship

. Square

Seller's Option

Senior

Sundries

Treasurer

Transportation

Vice President

. Way Bill

Weight

Year

. Yard

118

THEORY OF BOOKKEEPING

GLOSSARY

Acceptance— A draft or bill of exchange
which the drawee has signified his will-
ingness to honor; also acquiescence of
one in the offer of another.

Accommodation Paper— Notes issued or
drafts accepted for the purpose of enab-
ling another to raise funds, it being un-
derstood that the person accommodated
will pay the obligation when due.

Accountant — One skilled in science of ac-
counts.

Account Current— An open or active ac-
count; a statement thereof rendered to
the debtor.

Account Sales — A statement of the sums
realized on the sale of a consignment and
showing the deductions made for the ex-
penses and commission incident thereto.

Actuary — One engaged in the compiling of
insurance statistics.

Agio — Premium or discount on the face
value, as on one sort of money when giv-
en in exchange for an inferior sort.

Annuity — Yearly payment.

Appraisement — Placing a valuation on
goods.

Arbitration — Decision of a dispute by a ref-
eree or a board of individuals appointed
for that purpose, generally by the parties
to the dispute.

Attorney — One authorized by law to give
legal advise to another, called the client,
and prosecute and defend law suits.

Auditor — One who examines into the ac-
curacy of accounts.

Balance of Trade— The difference between
imports and exports of merchandise.

Bank Draft — A draft drawn by one bank
on another, and generalh' used in mak-
ing remittances to distant places.

Bank of England— A banking institution
founded in London in 1694 as a result of
the financial embarrassment of the govern-
ment; now the greatest financial institu-
tion in the world.

Bank of North America— The oldest bank
in the United States, founded by Robert
Morris in 1782.

Bankrupt — A person who has been judici-
ally declared unable to meet his obli-
gations.

Barter — The exchange of commodities
without the use of money.

Bear — A broker who has sold more of a
commodity than he has on hand, expect-
ing to buy the same before being obliged
to make delivery under his contracts of
sale. He is interested in having the mar-
ket prices decline so that he may buy be-
low his selling price.

Beneficiary — One who receives a gift, bene-
fit or advantage, such as from, a trust
fund or a state or insurance policy.

Bill of Credit— Bills of credit were issues of
purefiat money made by order of Congress
during the Revolutionary period of our
history, upon no assets, having only the
faith of the people in the government to
support them.

Bill of Lading — A carrier's receipt for
goods received for shipment, and con-
taining a contract to deliver the goods at
destination; gwas* negotiable.

Bill of Sale— A formally written transfer
of the ownership of personal properly.

Bimetallism— The use of two metals (as
gold and silver) in the currency of a
country at the relative value fixed by
law.

Board of Underwriters— An association
composed of representatives, managers,
or agents of insurance companies doing
business within the state in which the
association has jurisdiction. Its princi-
pal function is rate making for the com-
panies included in its jurisdiction.

Bona Fide— In good faith.

Bonded Warehouse— One designed especi-
ally for the storage of imported goods
awaiting payment of duties by the im-
porter; so called because importers must
furnish bonds with sufficient surety for
the payment of the duties.

Boycott— To combine for the purpose of
abstaining from or preventing business
relations with.

Brokerage— The charge made by a broker
for his services.

GLOSSARY

119

Blldgfet — An annual financial statement
which the British chancellor of the ex-
chequer makes in the House of Com-
mons; in a general sense any annual fi-
nancial statement or scheme of taxation
and appropriation.

Bull— Term applied to a broker who has
more of a commodity, stocks or bonds on
hand than he requires to fill his contracts
of sale, he is therefore interested in rais-
ing prices so that he may sell at a profit.

By-Laws — Regulations and rules made by
the directors for the internal government
of a corporation.

By-Product— A secondary product, such as
shale in coal mining.

Call— A broker's right to demand or call
for a specified amount of stock at an
agreed price within a certain fixed time.

Call Loan— Money borrowed and repayable
when lender exercises his option to call
for it.

Capital Stock— An amount, as estimated
by the incorporators, required for the
purpose of the business of a corpora-
tion.

Charter — A document issued by the state,
by which a corporation is created, or
franchise conferred.

Chattel Mortg-ag-e — An incumbrance of
personal property as security for a debt.

Circulation— The notes issued by a nation-
al or state bank.

Clearing" House— An establishment or as-
sociation of banks to facilitate the set-
tling of balances between them by the
exchange of checks, drafts, etc., drawn
on one another.

Collaterals — Securities, generally stocks
and bonds, put up to insure the payment
of a debt.

Common Carrier— Any person, firm or cor-
poration which holds itself out to carry
goods or persons of the public generally,
without preference or discrimination.

Common Stock— The ordinary stock of a
corporation issued without any special
agreement as to the payment of divi-
dends.

Comptroller— A public officer whose duty
it is to examine and certify accounts.

Consignment — A shipment of goods, gener-
ally intended to be sold on commission.

Consolidation — A merger or uniting of two
or more interests. The consolidation of
corporations is generally provided for by
state laws.

Consul— A commercial agent of one
country stationed at a port in some other
country.

Contract — An agreement between two or
more persons to do or not to do some par-
ticular thing.

Cooperage— A charge for the manufacture
or mending of barrels, hogsheads, casks,
etc.

Copyrigfht— The right of an inventor or his
assignee, to print and publish his literary
or artistic work, exclusive of all other
persons.

Corporation — An association of individuals
existing under authority from the state,
and authorized by law to do business as a
single individual under a certain name.

Credit Association— A combination of a
number of firms and dealers for mutual
protection against losses, particularly to
prevent bad debts.

Debenture — An unsecured bond.

Defalcation — An abstraction of trust
money by an officer or agent.

Defaulter — One who appropriates the funds
of another to his own use.

Depreciation— Lessening of value through
wear and tear.

Devise — A bequest of real property by will.

Dividend — A portion of the profits set aside
for distribution among the shareholders.

Documentary Bill— When merchandise is
shipped, bills of exchange are drawn on
the consignee, the bill of lading being at-
tached to the draft — these papers being
designated a documentary bill.

Due Bill — A written acknowledgment of a
debt; an I. O, U,

Earnest Money— A sum paid to bind a
bargain.

Endorsement^-That which is written on
the back of a note or other paper, gener-
ally for the purpose of transferring the
title thereto or strengthening the credit
of the maker or acceptor.

Endowment Policy— Form of insurance
which provides that the face of the pol-
icy shall be payable to the insured at the
end of a certain period if he survives, or
to the beneficiary therein named if the
insured die within the period.

Equation — An averaging of the items of an
account in such a way that no interest
will be lost to either party.

Exchangee — The giving or taking of one
thing in return for another. A process
of settling accounts or debts between dis-

120

THEORY OF BOOKKEEPING

tant parties without the use of money,
by means of bills of exchange (often ab-
breviated exchange). The place of transact-
ing business (often contracled 10' Change).

Exemption Laws— Legislation which ex-
empts certain real property (called the
homestead) from liability of attachment
or execution by creditors. Certain per-
sonal property is also exempted, and in
most cases wages where the debtor is the
head of the family. In Illinois the home-
stead exemption is $1000; personal
property for married persons $400, for
single persons $100; wages $15.00 per week.

Facsimile — An exact reproduction.

Fail — To become bankrupt or insolvent.

Fiat — An authoritative command or a
decree.

Fiat Money — Irredeemable paper currency.

Finance — The science of handling money
and receiving and expending public
revenue.

Fiscal — Pertaining to the public treasury.

Foreclosure — A legal proceeding for the
sale of incumbered broperty for the
purpose of satisfying the incumbrance
out of the proceeds.

Full Stock — Stock with a face value of
$100 per share.

Gold Eeserve— A fund of $150,000,000 set
aside in the United States Treasury for
the redemption of greenbacks.

Good Will — The trade or reputation estab-
lished by a business for fair dealing, or
the probability that the customers will
return to the old stand.

Greenback — One of the legal tender notes
of the United States, the design on the
back being printed with green ink.

Gresham's Law— A law of values an-
nounced by Sir Thomas Gresham several
centuries ago, to the effect that the
cheaper money always drives the dearer
money out of circulation, people preferring
to pay their debts with the cheapest
money wliich their creditors can be in-
duced or legally compelled to accept.

Gross- Without deduction, such as gross
weight, gross cost. Twelve dozen.

Half Stock— Slock at a par value of $50.00
per share.

Hazardous — Exposed to hazard or danger;
attended with risk.

Honor— To acknowledge by payment or
acceptance.

Hypothecation — A pledge of securities
such as slocks and bonds.

Income — Revenue from labor, business,
property or capital.

Indenture — A mutual agreement in writing
between two or more parties whereof each
has usually a counterpart or duplicate.
They were originally notched or indented
so as to correspond to each other.

Industrial Insurance— A class of insur-
ance issued on persons of all ages from
one to seventy years and in small
amounts to persons of limited means.

Industrials— Stocks of manufacturing
companies.

Interstate Commerce Law — An act of
Congress passed in 1887 designed to
regulate commerce between the states.
It applies to common carriers by land or
water who do business in two or more
states or territories and provides against
discrimination between large or small, con-
stant or occasional shippers, and that no
charges should be unjust or unreasonable.

Intestate — One who dies without leaving
a will.

Interim Dividends— A division of profits
before the regular annual or semi-annual
dividend is declared.

Intrinsic Value — Real or inner worth as
distinguished from face or apparent
value.

Inventory— A list of goods on hand.

I. 0. U. — I owe you. The acknowledge-
ment of a debt.

Judg'ment Note— A note containing a
clause authorizing any attorney of record
to confess judgment against the maker
of the note if default is made in payment.

Jobber — One who buys from wholesalers
and sells to retailers.

Kiting — The incurring of a fresh obligation
to discharge an old one, as by exchanging
checks with a confederate.

Lease — A letting of lands or buildings to
another for a term of years, usually for a
specified rent or compensation.

Leasehold — Tenure by lease; land held as
personalty under a lease for years.

Leg'acy— A bequest of money or personal
property by will.

Level Premium— Uniform payments of
premium on a life insurance policy.

Liquidate — To determine by agreement or
by litigation the amount of an indebted-
ness; to pay off.

Liquid Assets— Assets in cash or readily
convertible into cash. Listed securities,
stocks or bonds included in the list of

GLOSSARY

121

those admitted to dealing at the exchange
Liquidation— To assign to a trustee one's

assets and accounts, so as to settle one's

liabilities.
Loading" — A term used to denote additions

to the basis rate of insurance on account

of location or other special conditions.
Long" — A term applied to a broker who has

more of a given commodity on hand than

he requires to fill his contracts.
Maceration— The grinding of old worn

paper money into pulp.
Mail Order — An order for goods received

by mail.
Manipulate — To control or manage; also,

to manage artfully or fraudulently.
Margin — Collateral security or money de-
posited with a broker to secure him from

loss on contracts entered into bj'^ him on

the behalf of his principal.
Mercantile — Pertaining to the business of

merchants.
Mileage— Distance travelled. The number

of miles in a railroad.
Mint — A place where money is coined.
Minutes — A record of the proceedings of a

meeting recorded in a book called a

minute book.
Monetary — Pertaining to money.
Monometallism— The legalized use of one

metal only in the standard currency of a

country, or as a standard of value.
Monopoly— Exclusive control.
Mortgage — A pledge of property, real or

personal, as security for a debt.
Mortgage— A formal transfer of property

as security for a debt.
Municipal — Pertaining to a city or corpo-
ration having the right of administering

local government.
Municipality — A city or incorporated town

or village.
Negotiate— To treat with another in a

matter of business. To sell or transfer

commercial paper.
Net — Clear of all expenses, as net earnings;

without discount or deduction, as a price.
Net Proceeds— Proceeds after making all

deductions.
New York Standard Policy— A form of

fire insurance policy prescribed oy the

legislature of New York and adopted by

a large number of states as the legal

policy.
Non Cumulative Stock— Stock on which

passed dividends must be made good.

Notary Public— An officer authorized to
take acknowledgments, administer oaths,
protest paper, etc.

Old Lady of Threadneedle Street-The
Bank of England.

Open Policy — An insurance policy covering
a fluctuating stock of goods.

Outlawed— Barred by the statutes of lim-
itations, as an outlawed debt.

Over Draft — A balance at the bank against
the depositor because his checks exceed
his funds on deposit there.

Par— Face value, 100%.

Parent Company — A company from which
other companies derive an authority or
upon which they are dependent.

Parol — Oral or written, but not under
seal; as parol contracts.

Pass Book — A book kept by one who has
money on deposit in the bank and show-
ing the deposits made by him, and in
case of a savings account also the with-
drawals and the balance.

Patent — The right granted by a govern-
ment to the exclusive control of an in-
vention or of the sale of certain articles.

Pecuniary— Relating to money.

Petty — Little or small, as Petty Cash, Petty
Expenses.

Pledge — Transfer of the possession of
personal property as security for the
payment of a debt.

Policy — Prudence or wisdom; as business
policy. An insurance contract to pay a
certain sum as an indemnity.

Post-dated — Bearing a future date.

Power of Attorney— A formal instrument
conferring authority upon an agent.

Preferred Stock— Shares which have a
definite rate of dividend guaranteed upon
them.

Proposition — An offer made by one person
to another, oral or written.

Pro-rata — At a proportionate rate.

Protest — A formal statement of a notary
of the non-payment of a note or draft at
maturity.

Proxy — ^A person authorized to represent
another, particularly at directors' and
stock holders' meetings. The authority
itself.

Put — The right a broker has under his
contract to make delivery to another of a
specified amount of stock at an agreed
price WMthin a certain time.

Quarter Stock— Stock at a par of $25 per
share.

122

THEORY OF BOOKKEEPING

Quick Assets — Property readily convertible
into cash.

Receiver — A trust appointed by the court
to receive and hold property in litigation,
pending the suit; a person appointed to
take charge of the property in the inter-
est of creditors.

Receiver's Certificates— Evidences of in-
debtedness issued by a receiver for the
purpose of raising money to operate the
property in his charge, the holders of
such certificates having a first lien on the
assets in his hands.

Redemption Fund— A sum set aside at
regular intervals in order to meet a
future liability.

Refunding: — The process of putting out a
new issue of bonds to replace an old one.

Regfistered Bond— A bond recorded in the
owner's name.

Reg-istered Coupon Bond— Bond with in-
terest coupons attached payable to bearer,
but itself payable only to the owner.

Registrar — A keeper of the records of
transfers of securities, verifying the
signatures of transfers,

Reimburse— To repay the amount of ex-
penditure made by one person in behalf
of another.

Release — To relinquish a claim.

Remittance— The act of sending. The
money sent.

Reorgfanization — Compulsory financial re-
construction.

Rest — A surplus or reserve. Tlie term is
also specifically applied to the surplus
fund of the bank of England.

Salary — Compensation for services general-
ly not of a manual character.

Sale — The transfer of a commodity for a
money consideration.

Salvagfe — The compensation allowed to a
person assisting in saving the ship or her
cargo from peril. That part of the prop-
erty that is saved from peril.

Scrip — A certificate for a fractional share
of stock, exchangeable for shares when
presented in sufficient quantities.

Securities — Stocks or bonds of corporations
either public or private; also real estate
mortgages.

Securities Company— A company owning
the securities of other companies and de-
pending for its income upon the income
derived from such securities.

Seigfnioragre— A charge or toll deducted
from bullion, brought to a mint to be

coined; the difference between the cost of
a mass of bullion and the value as money
of the pieces coined from it .

Sellers' Option— A put.

Serial Bonds — Bonds redeemable in speci-
fied installments.

Set Off — Counter claim.

Short — A term applied to a broker contract-
ed to sell more of a commodity than he
has on hand, expecting to purchase same
before delivery day.

Singfle-named Paper— Unendorsed paper.

Slow Assets — Property not to be quickly
turned into cash.

Specially — A written contract under seal.

Spot Cash — Cash remitted at once.

Statute of Frauds— A law enacted by Par-
liament in 1677requiring certain contracts
to be in writing and re-enacted by most of
the states of the Union.

Stock — Shares in a corporation; also mer-
chandise.

Subsidiary Company — A company the
stock of which is owned or controlled by
another company.

Subsidy— The gift of a sum of money eith-
er annual or otherwise, by the government
as an aid and encouragement to the ex-
tension and upbuilding of marine inter-
ests.

Surety — One who agrees to answer for the
debt or default of another.

Surplus — Profits reserved from distribution
in order to lend financial strength to tlie
company, or to enable it to declare uni-
form dividends from time to time.

Syndicate — A number of capitalists united
to finance and carry out some plan or
scheme.

Teller — One who counts money, especially
at a bank. The receiving teller receives
the money; the paying teller disburses it.

Ticker — A small telegraphic instrument
through which runs a narrow paper tape
on which the instrument prints automa-
tically the names and prices of stocks
and bonds in an abbreviated form.

Tickler — A record of notes and debts ac-
cording to maturity, so as to remind one
when they fall due.

Transfer Agfent — An officer authorized to
transfer a company's stock.

Treasury Stock— Shares reserved in the
hands of the treasurer of a corporation to
be sold or given away in the future as oc-
casion may require for the promotion of
the business.

GLOSSARY

123

Trust — To place confidence in or rely on,
or to give credit to; also applied to a com-
bination of the capitail of several corpora-
tions under one management for the pur-
pose of reducing the cost of production,
limiting the output, and controlling the
cost of the article to the consumer.

Underlying' Mortgage— A prior mortgage.

Underwriter — One who underwrites an in-
surance policy especially a marine policy;
also applied to banks and trust companies
who contract to sell stocks or bonds for
corporations, taking themselves such as
they do not dispose of by a given time.

Undivided Profits — Profits earned but not
set aside to stockholders in the form of
dividends.

Usury— An exaction of an illegal rate of in-
terest.

Voucher — A book, paper or document serv-
ing to vouch the truth of accounts, or to
confirm or establish any fact.

Wages— Compensation for labor.

War Chest— (Kriegskasse) a store or large
reserve of gold kept on hand by the Ger-
man government as an emergency fund
to be used in time of war.

Watered Stock — Shares issued in excess of
a corporation's assets but within the au-
thorized capital.

Will — A final disposition of a person's pro-
perty, not to take etfect till the time of
his death. An addition or supplement to
a will is called a codicil.

Window Dressing— The art of displaying
goods in the show windows of merchants
for the purpose of attracting trade.

Working Capital — Money necessary for
operating a business.

World's Clearing House— A name given
to London because it is practically the
center of exchanges of the world, the
Bank of England being the greatest fi-
nancial institution in the world.

124

THEORY OF BOOKKEEPING

GENERAL INDEX

Abbreviations

116

Footing

Acceptance

Freight Classification

. 86

Accounts

. 39

Gains and Losses

31,

48, 51

Account Sales

General Ledger .

. 94

Analysis of Accounts

. ' . 50

Glossary

118

Assets ....

Honoring Drafts

Auxiliary Book

. 4

Interest

24, 51

Balance Sheet

Inventory

Bank Draft

,. 66

Invoice Book

89, 91

Bill (Invoice) .

Item .

Bill of Exchange

. 18

Jobber

. 89

Bill of Lading

. 26, 87

Journal .

5, 7

Bills Payable

12, 47, 50, 92

Journalizing

. 5

Bills Receivable

12, 47, 50, 92

Ledger

Bookkeeping

. 3

Liabilities

. 33

Card Ledger . .

Loose Leaf Ledger

Cash

. 6, 47, 50

Loss and Gain

. 31,

48, 51

Cash Book

70, 74, 80, 92

Maker . '.

Cash Discount

06, 81

Maturity

. 12

Changing from S. E. to D. E.

Merchandise .

47, 50

Checking

. 44

Monthly Statements

. 65

Classification of Accounts

Net Capital

Closing the Ledger

. 46

Net Insolvency

. 33

Commission Merchant

Opening Accounts

Consignment Accounts

26, 50

Order Book

. 69

Credit

Order Register

Credit Man

. 90

Order Sheet or Blank

. 90

Current Accounts

Original Entry

Day Book

70, 73

Partnership

. 35

Debit ....

Payee

12, 18

Discount

29, 51

Personal Accounts

9, 10,

48, 51

Drafts

. 18, 21

Posting

Drawee

. 18

Principal Book

. 4

Drawer

Profit and Loss

31,

48, 51

Endorser

. 12

Promissory Notes

. 12

Envelope System

Proprietor

33,

49, 51

Exchange

29, 51

Purchase Ledger

89, 94

Expense

31, 47, 51

Real Estate .

6, 50

Explanatory Journal

. 94

Receipt

. 10

Filling Orders

Remittances .

Financial Accounts

. 46

Resources

. 33

Financial Statement

Retail Accounting

Fixtures

. 6

Revenue Accounts

. 46

GENERAL INDEX

125

Review Questions

37. G4, 85, 115

Sales Book

. 91

Sales Ledger

Sight Dralt

.21

Single Entry .

. 3, 69

Shipment Accounts

48, 50

Shipping Clerk

Shipments, Checking of

. 86

Shipments, Routing

Statement of Account
Stocks and Bonds
Sundries
Time Drafts .
Transferred Accounts
Trial Balance
Wholesale Accounting
Working Balance Sheet

65
6
15
21
71
45
89
51

INDEX TO FORMS

Acceptance

. 21

Journal

Account

Ledger

. 43

Bank Draft

. 66

Monthly Statement

Bill (Invoice)

Order Blanks

70, 90

Bill Book

. . 92

Perpetual Ledger

. 76

Bill of Lading

Profit and Loss Account

Bills Receivable .

. 49

Receipt

. 10

Cash Book

74,

75, 80, 81, 92

Remittance Letter

Day Book

. 73

Sales Book

. 91

Draft .

Financial Statement

. 59

Sales Recapitulation .

Inventory

Trial Balance

. 45

Invoice Book

. 91

Working Balance Sheet

THIS BOOK IS DTJE ON THB LAST DATE
STAMPED BELOW

AN INITIAL FINE OF 25 CENTS

OVERDUE.

r—«ftirirT9^

tjtfsR^r>9^"

t«*eircHIIAiH^^i3W^

YD 05863

UNIVERSITY OF CAIvlFORNIA LIBRARY

•

.miiiUiiiuh

lI'ijfltH'.t'jH

Jhl'iifiliHilJ.
- tllil UiHHi!

iii
iifi

iili

iiiii

ml!

(Hi!

llMiUiiiii iiitiii ii S

w M ii