re I I The Progressive Series Questions in Advanced Bookkeeping for DRILL, TEST AND REVIEW By ISAAC PRICE, A.M. w Washington Irving High School. Ne-iv York Evening High School for Men. Author: 'Direct Method of Teaching English to Foreigners," "Compre hensive Question and Answer Book," "Outlines in American History." HINDS, HAYDEN & ELDREDGE, Inc. NEW YORK CHICAGO PHILADELPHIA / 5 ^ (> , • > ■ > • • • • The theory and practice of Advanced Bookkeeping and Office Practice is presented in this book. The first section is devoted to the theory and the descriptive features, while the Regents Questions for the past several years are found in the latter half. The latest texts and authorities, as well as a number of teachers in the New York City High Schools, have been con- sulted by the author, who desires to express his indebtedness to them for their kindly aid and assistance. To My Son LEONARD whose questions come from the mind and the heart this series is affectionately DEDICATED BOOKKEEPING TERMS AND THEIR EQUIVALENTS IN ACCOUNTING. PRACTICE Open an account Make an entry Resources Gains Loss & Gain Account Business Statement Loss & Gain Statement Financial Statement; Statement of Resources and Liabilities Set up an account Frame an entry- Assets Profits Profit & Loss Account ' Statement of Income, Profit & Loss ; Trading Statement Balance Sheet ; Statement of Assets and Liabilities. Questions in Advanced Bookkeeping 1. What is bookkeeping? 2. Why is a proper set of books, or a proper system of bookkeeping, essential to the proper conduct of a busi- ness? 3. What is meant by a business transaction? 4. In how many ways does any business transaction affect the business? 5. Define and explain: (a) Debit, (b) credit, (c) debtor (Dr.), (d) creditor (Cr.). 6. What is an account? 7. What is meant by (a) opening an account, (b) closing an account ? 8. What are (a) real accounts, (b) nominal ac- counts? 9. W'hat is a personal account? 10. Name (a) the real accounts, (b) the nominal ac- counts. 11. What are trading accounts? 12. How are trading accounts closed? 13. Name the trading accounts. 14. What is a controlling account? 15. What is the use of a suspense account? 16. What is meant by (a) an original entry, (b) an adjustment entry? 17. What is the difference between (a) a simple en- try and (b) a compound entry? 18. What is a book of original entry? 19. Name (a) the principal, (b) the auxiliary, (c) the subsidiary books, and tell why they are so called. 20. Describe the Daybook and tell what it is used for. 7 8 Questions in Advanced Bookkeeping 21. What is a Journal? What is it used for? 22. What is the use of the Journal-Daybook? 23. Describe the Cashbook and its use. 24. What is the Sales Book ? 25. Describe the Ledger and its use. 26. Tell what the Invoice or Purchase Book is used for. 27. Describe the use of the Bill or Notes Book. 28. What is meant by journalizing? 29. Give the rule for journalizing. 30. What is meant by posting? 31. What is meant by (a) charging, (b) crediting? 32. What is a Customer's Ledger? 33. What is meant by cash? What does it generally include ? 34. What is an imprest fund? What is its use? 35. What is meant by merchandise ? 36. What is expense ? Give a rule to determine what items should be charged to the expense account. 37. When is Cash (a) debited, (b) credited? (c) Why must the debit side of the Cash Account or Book always be the larger? 38. When are Personal Accounts (a) debited, (b) credited ? 39. Tell when Expense is (a) debited, (b) credited? 40. When is Merchandise (a) debited, (b) credited? 41. Where no separate account for cartage, drayage and freight is kept in the Ledger or the items are not charged to expense, it is usual to debit the Merchandise Account for these items. Why is this the proper pro- cedure ? 42. When is the Notes Receivable Account (a) deb- ited, (b) credited? Questions in Advanced Bookkeeping 9 43. (a) What is meant by Accounts Receivable Ac- count? Tell when it is (b) debited, (c) credited. 44. (a) What is the Reserve for Bad Debts Account? (b) Tell how this account should be treated. 45. Give an explanation of the Prepaid Insurance Ac- count. 46. Give an explanation of the Accrued Interest Re- ceivable Account. 47. Give an explanation of the Store (Factory, Office) Property Account. 48. Give an explanation of the Warehouse Property Account. 49. Give an explanation of the Store (Office, Fac- tory) Equipment Account. 50. Give an explanation of the Delivery Equipment Account. 51. When is the Xotes Payable Account (a) cred- ited, (b) debited. 52. What is the object of the Notes Payable Account? 53. (a) What is meant by Accounts Payable Ac- count? Tell when Accounts Payable is (b) debited, (c) credited. 54. Give an explanation of the Accrued Interest Pay- able Account. 55. Give an explanation of (a) the Accrued Salaries and (b) Accrued Taxes Accounts. 56. What is the Proprietor's (Drawing) Account? Tell how it is handled. 57. Tell how the Mortgages Payable^ Account is han- dled. 58. Discuss the Proprietor's Capital Account. 59. Discuss the Sales Account io Questions in Advanced Bookkeeping 60. Tell how the Sales Allowances Account is han- dled. 61. Discuss the Merchandise Purchases Account. 62. Tell how each of the following accounts is han- dled : (a) Management and Office (Factory, Warehouse, etc.) Salaries, (b) Salaries and Wages of Buying Force, and (c) Salaries and Wages of Sales Force, (d) Sal- aries and Wages of Delivery Force. 63. Tell how (a) the Miscellaneous Buying Expense, (b) the Miscellaneous Selling Expense, and (c) the Mis- cellaneous Delivery Expense Accounts are handled. 64. Tell how the Advertising Account is handled. 65. Discuss the Office Supplies and Expense Ac- count. 66. Give an explanation of the Insurance on Stock and Store Equipment Account. 67. Tell how the Account for Losses from Bad Debts is treated. 68. Discuss the Miscellaneous General Expense Ac- count. 69. Tell how the Rent and the Rent Income Accounts are handled. 70. Discuss the Trading Account. 71. Discuss the Profit and Loss Account (From Trading Operations). 72. Discuss the handling of the Interest and Dis- count Accounts. 73. Tell how (a) the Discount on Merchandise Pur- chases, and (b) the Discount on Merchandise Sales Ac- counts are handled. 74. Tell how the Miscellaneous Outside Income Ac- count is handled. Questions in Advanced Bookkeeping ii 75. What are (a) Accounts Receivable, (b) Ac- counts Payable ? 76. What are (a) Notes (Bills) Receivable, (b) Notes (Bills) Payable, (e) Accommodation Note? 77. What is meant by (a) net investment, (b) aver- age investment? 7S. What is (a) an inventory, (b) a merchandise in- ventory ? 79. What disposition is made of the inventories? Why ? 80. Explain the necessity for taking an inventory of merchandise before making out the statements. 81. Explain how a merchandise inventory is taken. 82. Where does the merchandise inventory appear after the Ledger is closed? 83. What is a Trial Balance? What does it show? What is its object or purpose? 84. What accounts appear in the Trial Balance? 85. Explain why the debit and the credit columns of a Trial Balance by either totals or differences should be equal. 86. If an error occurs in a Trial Balance tell what procedure is to be followed. 87. The total of a Trial Balance are equal. Does this show that the work on the Ledger is absolutely cor- rect? 88. Illustrate a Trial Balance. 89. What is a Balance Sheet ? What does it show ? 90. Define (a) Resource or Asset, and (b) Liability. 91. What are each of the following: (a) Liquid or floating asset, (b) deferred assets, (c) trade assets, (d) fixed assets? 92. Define each of the following: (a) Liquid liabil- 12 Questions in Advanced Bookkeeping ity, (b) deferred liability, (c) fixed liability, (d) con- tingent liability. 93. What is a Trading or Business Statement? What is its object and purpose and its importance? 94. Illustrate a Trading or Business Statement. 95. What is a Financial Statement? What does it show ? 96. Illustrate a Financial Statement. 97. Define each of the following: (a) Profit (gain), (b) loss, (c) gross profit, (d) net profit, (e) gross loss, (f) net loss. 98. What is meant by (a) Present Worth, (b) cap- ital, (c) solvency, (d) insolvency? 99. Explain the method of proving a Financial State- ment. 100. What class of accounts should be closed first? 101. How are the Profit and Loss Accounts distin- guished from the Resource and Liabilities Accounts? 102. What accounts are included in both the Trad- ing and the Financial Statements ? 103. Illustrate a Profit and Loss Statement? 104. What does the Profit and Loss Statement show? 105. How can you tell whether the Profit and Loss Account shows a gain or a loss ? 106. Tell what the Resources and Liabilities State- ment shows. 107. (a) What disposition is made of the Loss and Gain (Profit and Loss) Account difference? (b) Why should a Loss and Gain Account be opened in the Led- ger? 108. When are loss and gain (profit and loss) ac- counts closed in business ? Questions in Advanced Bookkeeping 13 109. When are resource and liabilities accounts- closed in business? 110. When does a personal account (account payable and account receivable) show (a) a resource, (b) a lia- bility ? 111. Are the net resources of a firm any less after it has paid its own (a) non-interest-bearing, (b) interest- bearing notes? Why? 112. On what side is the resource inventory entered in order to determine the profit or loss on the account? 113. Under what circumstance is a loss or gain likely to occur in the Real Estate Account ? 114. How is the Proprietor's Account closed when, there is (a) a net profit, (b) a net loss? 115. How is the Proprietor's Net Investment deter- mined? 116. Where does the Proprietor's Present Worth ap- pear after the Ledger is balanced and closed? 117. On which side of the Ledger are the following found: (a) Profits, (b) losses, (c) resources, and (d) liabilities? 118. Name the accounts in which there should always appear (a) a debit, (b) a credit difference. Why? 119. To what does the sum of the Present Worth and the Liabilities equal? 120. What is a note or promissory note? 121. In a note who is (a) the maker, and (b) the payee ? 122. Distinguish between (a) a negotiable note, and (b) a non-negotiable note, (c) an accommodation note, (d) a collateral note. 123. W r hatisa draft? 14 Questions in Advanced Bookkeeping 124. In a draft who are (a) the drawer, (b) the drawee, and (c) the payee? 125. What is meant by (a) a sight draft, (b) a time draft? 126. What is the difference between (a) a two-party draft and (b) a three-party draft? 127. What is a bill of exchange? 128. Define acceptance. 129. What is meant by an indorsement (endorse- ment) ? What is the importance and value of an in- dorsement ? 130. Illustrate the various forms and kinds of in- dorsement. 131. Illustrate the difference between interest and dis- count in a note or a draft. 132. Define and illustrate each of the following: (a) Check, (b) certified check, (c) cashier's check, (d) cer- tificate of deposit, and (e) bank draft. 133. What is a voucher? 134. Define and illustrate (a) bill, (b) invoice, (c) order. 135. Define and illustrate each of the following terms : (a) On Account; (b) Net; (c) Net 30 days; (dj Cash 3%; (e) 7,o, 60 days; (f) 7,o, Vio. net 70 da y s ' (g) »/,o, 60 x. 136. Define and illustrate what is meant by a monthly statement. 137. Define and illustrate each of the following: (a) Account Sales, (b) consignment, (c) consignor, (d) con- signee, (e) commission. 138. What is a bill of lading (B/L) ? Illustrate, and show the difference between the various forms. Questions in Advanced Bookkeeping 15 139. Write ten (10) abbreviations or conventions in common use in bookkeeping, and give the meaning of each. 140. Give the meanings of the following abbrevia- tions and conventions: (a) Ck. (b) D. B. (c) Inv. (d) Frt. (e) Str. (f) Payt (g) No. (h) 5 (i) P (j) %. 141. (a) What is meant by commercial paper? (b) Give three illustrations. 142. " Walters & Co., Inc., have this day made an assignment. Their insolvency is due to the defalcation of a consignee. W r e shall realize in full on their promis- sory note indorsed by J. P. and further secured by col- laterals." Define each of the italicized words or phrases in the preceding. 143. Explain each of the italicized words or expres- sions in the following excerpt: "A. & H. have drazvn on us, at 10 days sight, for the net proceeds of their con- signment. We must honor their draft by our acceptance and raise the money on our note secured by collateral or an indorscr. 144. The following are from the books of James Thornton : (a) November 1, 1917. Cash (investment) $4200. James Thornton $4200. (b) November 2, 1917. Expenses ( rent) 50. Edwin Brooks (on acct.) 300. Lawton & Co. (per check) 250. (c) Milwaukee Stores 1500. Merchandise IdOO. Cash 500. Notes Receivable 700. M il waukee Stores 1-00. 16 Questions in Advanced Bookkeeping State from which book each of the above entries is taken and explain the transaction each records. Tell where each account should appear again in your system of books. 145. When the debit side of a personal account is greater than the credit side, what does the balance ex- press? 146. Classify, as a resource or a liability, each of the following: (a) Bills (Notes) Payable, (b) Real Estate, (c) Cash, (d) Merchandise, (e) Balances of Accounts Payable. 147. Write the abbreviations or conventions in com- mon use for (a) Cash Book, (b) Debit, (c) Amount for- ward, (d) pieces, (e) collect on delivery. 148. Give the meaning of each of the following con- ventions and abbreviations: (a) C. O. D., (b) 40 off, (c) per, (d) f. o. b. 149. Write a joint and several, negotiable, interest- bearing, promissory note, payable at the Exchange Na- tional Bank of Brooklyn. 150. Define each of the following: (a) Letter of Credit, (b) Certificate of Deposit, (c) Voucher, (d) Protest, (e) Lease, (f) Lien. Journalize each of the following transactions : 151. Bought invoice of merchandise, amounting to $175, from James Lorimer for cash. 152. Sold R. H. Macy & Co. merchandise amounting to $244 for cash. 153. Bought of Corbett & Co. goods amounting to $126.45, terms 3%, 10 days. 154. Paid Corbett & Co. the invoice in the preceding transaction. Questions in Advanced Bookkeeping 17 155. Sold Franklin Simon & Co. goods to the amount of $475, terms 2 / G0 . 156. Received check from Franklin Simon & Co. in payment of the preceding transaction. 157. Sold R. II. Montgomery & Co. a bill of goods amounting to $1250, terms, half cash; balance, 3%, 10 days. 158. Received check for $625 on account of preced- ing, on date of shipment. 159. Received check for balance due from R. H. Montgomery & Co. 160. Bought of Marshall Field & Co. an invoice of goods amounting to $744, terms $250 cash ; balance, terms, 4%, 10 days. 161. Paid .Marshall Field & Co. check for $250 on account. 162. Paid Marshall Field & Co. in full of balance of account. 163. Bought of Shipman & Sons, stationery and office supplies amounting to $76. Paid bill. 164. Paid $200 for two months' rental for store. 165. Received $100 as rent for part of store. 166. Sold merchandise to Vernon & Conners, amount- ing to $137.25, terms, 30-day note. 167. Vernon & Conners paid their note in full. 168. Bought goods for $298 from James A. Hearn & Son and gave a 30-day note in payment. 169. Paid note in preceding transaction. 170. Samuel Johnson invested $5000 cash in a print- ing and publishing business. 171. Samuel Johnson drew $125 for private use. 172. Samuel Johnson donated to a bazaar a set of books valued at $75. 18 Questions in Advanced Bookkeeping 173. Samuel Johnson made an additional investment of $1750 in cash. 174. Walter Lippman began business with an invest- ment of $1500 Cash, Merchandise amounting to $1500, and Notes Receivable amounting to $500. He owed $700 on accounts payable and $250 on a note in favor of John Martin. 175. Henry Farnsworth discounted his own 60-day note at the Park National Bank, the principal being $1500 and the discount, $15. 176. Henry Farnsworth discounted Thomas Shields' 30-day note for $2000 at the Park National Bank for the full period of the note. 177. James Lawson sold his 3-month note for $3000 to Thomas Hollingwood. 178. Walter Emmerich & Co. returned to Thomas Talcott & Co. a bill of merchandise which they found de- fective and unsalable. Amount, $3287; terms on bill of sale, 3 / 30 days. 179. James Lowden borrows $500 from his bank, giv- ing his two-month note. On the date of maturity he pays the note. Show all the Journal entries in connection with the complete transaction. 180. On Jan. 7, William Wallace (A) receives a 60- day interest (6%)-bearing note from Henry Norr (B) amounting to $500. A keeps the note until the date of maturity, when it is paid by B. Make the Journal en- tries. 181. On Feb. 6, A discounts this note at the bank and receives credit for the net proceeds, rate of discount, 6%. 182. On Feb. 6, A transfers this note to James Thorn- Questions in Advanced Bookkeeping 19 ton (C) on account and receives credit for principal plus accrued interest. Make entries. 183. A draws a sight draft on B in favor of C. 184. A in New York draws a sight draft for $100 on B in Chicago, presenting the draft through the bank. The draft is accepted and paid. 185. On Jan. 7 A draws a draft for $400 payable 60 days after date (after sight) on B in favor of C. 186. On Jan. 9 C presents the draft to B who ac- cepts it. 187. On Jan. 14, C discounts this acceptance at his bank, rate of discount being 6%, and receives credit for the net proceeds. 188. On the date of maturity B pays his acceptance. 189. A in Albany, X. Y., consigns 100 bbl. apples valued at $200 to B in Xew York City. 190. A prepays freight, $40. 191. B pays cartage, $10, on receipt of consignment. 192. B sells 50 bbl. to C on account at $2.50 per bbl. 193. B sells 50 bbl. to D for cash, at $3 per bbl. 194. (a) B sends $100 as advance to A (or accepts a sight draft), (b) B accepts a time draft drawn on him by A. 195. Charges incurred by B amount to $7. 196. B pays 1% insurance on consignment. 197. Commission is 5%. 198. (a) B remits the net proceeds to A by check, (b) B remits by Xew York draft, exchange 25c. (c) B places the net proceeds to the credit of A. (d) B ac- cepts a sight draft (or time draft) drawn on him by A. 199. Figure gain or loss to the consignor. 200. Martin Holman has this day invested Cash $3000 and Merchandise valued at $2000. 20 Questions in Advanced Bookkeeping 201. The Expense Account shows a balance of $276. Make the Journal entry to close the account into the Loss & Gain Account. 202. The Discount on Purchases Account shows a balance of $427. Make the Journal entry to close the account. 203. The Discount on Sales Account shows a balance of $298. Frame the Journal entry to close the account. 204. The Interest & Discount Account shows a bal- ance of $18 on the debit side. Journalize the entry to transfer balance and to close the account. 205. The Merchandise Account shows a profit (a loss) of $2350. Journalize the entry to close the ac- count. 206. The Loss & Gain Account shows a net gain (a loss) of $750. Show the journalized entry to transfer the gain to the Proprietor's Account. 207. The inventory of expense items (original amount $200) shows an unexpended balance of $60. Make the necessary Journal entries to show this amount in the Loss & Gain Account. 208. Show by Journal entry the transfer of the old Merchandise Inventory to the Purchases (Merchandise) Account. 209. Journalize the transfer of the new Merchandise Inventory to the Purchases (Merchandise) Account. 210. Show by Journal entry the determination of gain (or loss) by a comparison of the Purchases and Sales (Merchandise) Accounts. 211. The Sales Account shows a gain (loss) of $1350. Show the Journal entry to transfer the balance to the Loss & Gain Account. Questions in Advanced Bookkeeping 21 212. State the advantages of the card system of keep- ing records over the book system. 213. Discuss the advantages of books containing spe- cial columns. 214. What advantages are gained from the employ- ment of special columns in the Sales and in the Pur- chases Books? 215. What is a partnership or copartnership? 216. \\ hat are the articles of copartnership? 217. Xame the items that should appear in every co- partnership agreement or contract. 218. How may a partnership be dissolved? 219. Define each of the following: (a) Corpora- tion; (b) charter; (c) franchise. 220. Explain each of the following: (a) Capital stock, (b) capital; (c) surplus; (dj reserve; (e) sink- ing fund. 221. Explain each of the following: (a) Issued stock; (b) unissued stock; (c) treasury stock; (d) com- mon stock; (e) preferred stock; (f) watered stock; (g) stock certificate. 222. What are (a) dividend, (b) cumulative pre- ferred stock, (c) non-cumulative preferred stock? 223. What are the advantages and the disadvantages of incorporation ? 224. How may a corporation be dissolved? 225. What are (a) raw materials, (b) goods in process, (c) finished goods? 226. Define fa) prime cost, (b) net cost, (c) gross cost, (d) burden or overhead. 227. What are (a) selling expenses, (b) administra- tive expenses ? 22 Questions in Advanced Bookkeeping 228. What is the difference between an account sales and an account purchase? 229. Define each of the following terms: (a) Good will; (b) depreciation; (c) reserves; (d) turnover. 230. What is the difference between single entry and double entry bookkeeping? 231. State the differences between single and double entry bookkeeping. 232. Tell in detail how to change a set of books from the single entry system to the double entry system. Make the journal entries for the following transac- tions : 233. John Brooks and Henry Lang commenced busi- ness under the firm name of Brooks & Lang, each invest- ing $2500, in cash. 234. John Brooks and Henry Lang have formed a co- partnership. Brooks invested $2000 in cash; $1000 in merchandise ; and $2000 in accounts receivable. Lang invested $2000 in cash; $2500 in merchandise; $1500 in accounts receivable. 235. John Brooks and Henry Lang have formed a co- partnership. Brooks's investment consists of $2000 in cash; $1000 in merchandise; and $2000 in accounts re- ceivable. Lang invested $2000 in cash; $1500 in mer- chandise; $1500 in accounts receivable. The firm as- sumes the liabilities of each partner; Brooks, accounts payable, $750; Lang, accounts payable, $1000. 236. John Brooks and Henry Lang have this day formed a copartnership, each partner's investment to amount to $4500. Brooks contributed $2000 in cash; $1000 in merchandise; $2000 in accounts receivable. Lang contributed $2000 in cash; $1500 in merchandise; $1500 in accounts receivable. Questions in Advanced Bookkeeping 23 237. Brooks and Lang have this day formed a co- partnership, each investing $4000. Brooks contributes $2000 in cash; $1500 in merchandise; $1500 in notes receivable 90 days (45 days yet to run); accounts payable, $750. Lang contributes $2000 cash, $1000 in merchandise; $3000 in 60-day note receivable (30 days yet to run) ; accounts payable, $800.00. 238. The Manhattan Chemical Company is incorpo- rated under the laws of the State of New Jersey with an authorized capital of $25,000, divided into 250 shares, each of a par value of $100. Walter Lawlor and Peter Walsh each subscribe for 100 shares, the remainder being held in the treasury. 239. Walter Lawlor and Peter Walsh pay in full for the stock subscribed by them. 240. James Martin subscribes for 20 shares of stock at par value. 241. Lawlor & Walsh incorporate, each one subscrib- ing for 10 shares Preferred Stock, par value of each $100, paying one-half cash. 242. The corporation of The Universal Supply Com- pany has been formed and organized to take over the patent rights of the inventor, James Foster. The author- ized capital is to consist of $30,000, divided into 300 shares of a par value of $100 each, of which Foster re- ceives 180 shares. The other stock is subscribed for by the other directors. Frame the opening entry. 243. (a) Foster later donates 20 shares to be sold at par to raise additional working capital, (b) These shares are sold at a premium of 20 points, or dollars. 244. James W. Reid, Henry Light, Thomas Manton and Walter Walker, forming the partnership of Reid, Walker & Co. have decided to reorganize and incorpo- 24 Questions in Advanced Bookkeeping rate. Their investments are respectively, $5600, $7200, $4900 and $8300. The authorized capital is $50,000 to be divided into 500 shares, each of a par value of $100, each partner to receive share equal to the amount of his investment, the remainder being held in the treasury. Frame the closing Journal entry. 245. Bernard Frank has paid $2000 on account of the shares subscribed for by him. Show the entry. 246. The Manhattan Chemical decides to set aside at the end of its first year 1918, a reserve for Bad Debts equal to 1% of the net sales ($55,000) $550.00. 247. During the year 1919 its actual losses from bad debts amounted to $350.00. 248. At the end of the fiscal year 1919, the company decided to set aside $260, for Reserve for Bad Debts. 249. Suppose it had been decided to set aside at the end of the fiscal year 1919 a reserve for bad debts equal to $230. 250. Suppose it had decided to set aside on Dec. 31, 1919, an additional reserve of $145. 251. Suppose it had decided to set up a new reserve equal to the old reserve. 252. On Dec. 31, 1917, the Profit and Loss account of a corporation, capitalized for $20,000, showed a net profit of $2400. (a) It was decided to set aside $400 as a reserve for bad debts; (b) to declare a dividend of 5% ; (c) to set aside the remainder as a surplus; (d) to pay the dividend in cash. Make the necessary Journal entries of the above. Questions in Advanced Bookkeeping 25 January 1912 For questions 1-7 use journal, cashbook, purchase book and sale.-, book. Two ledgers are to be used : main ledger, sales ledger. The columns required in the journal are Accounts Payable Dr., General Dr., Accounts Receivable Cr. and General Cr. The columns required in the cashbook are as follows : On the debit side, Merchandise Discount Dr., Accounts Receivable Cr. and General ; on the credit side, Merchandise Discount Cr., Ac- counts Payable. Dr., Expense Dr. and General. In the opening entry assume that the sales ledger balances are entered directly from the schedules. All original entries must contain sufficient explanation to make transactions clear. 1-7. Make the necessary entries for recording by double entry bookkeeping the following transactions : May 1, 1911, C. W. Harkins, wholesale grocer, has this day formed a partnership with T. J. Burke to carry on the same business in Buffalo, X. Y., under the firm name of Harkins & Burke. Each partner is to invest an equal amount in the busi- ness. The new firm is to assume all existing liabilities for C. W. Harkins. Losses and gains are to be shared equally. C. W. Harkins brings into the business the following resources and liabilities of his former business: Cash SI 2,960, merchandise $9,540.50, furniture and fixtures $925, expense (insurance prepaid) $175, accounts receivable (per schedule A below) $2,376, bills payable (note in favor of S. Barker, dated March 1, at three months, with interest at 6%) $1,300, accrued interest to date on S. Barker's note $13, accounts payable (per schedule B below) $1,966.50. 26 Questions in Advanced Bookkeeping Schedule A Accounts receivable Gorham & Co., Albany, N. Y $ 500. Richard White, Oswego, N. Y 1876. $2376. Schedule B Accounts payable A. Hoffman, Troy, N. Y $1297. Arthur Kelley, Oswego, N. Y 669.50 $1966.50 T. J. Burke invests W. Griffin's note for $4,500 (dated March 25, drawn at 60 days, with interest at 6%), ac- crued interest to date on Griffin's note $27.75 and cash necessary to equalize his partner's interest in the business. May 1. Bought of Sales Bros. Rochester, N. Y., in- voice dated May 1, terms 5 / 10 , n / 60 : 15 bbl., 4,500 lb. B. sugar @ 3^ ; 25 bags, 3,125 lb. R coffee @ 25^. May 2. Paid cash for advertising $85. May 3. Sold Thomas Fleming, city, terms 2 / 5 , n /so : 15 bx., 600 lb. codfish @ 9tf ; 20 bbl., 1,000 gal., N. O. molasses @ 30^. May 4. Discounted at 6% W. Griffin's note invested by T. J. Burke, and received credit for the proceeds at the Marine National Bank. May 5. Drew sight draft for $669.50 on Richard White as per agreement and remitted it to Arthur Kelley in full of account. May 6. Received of Harmon & Brown, Buffalo, N. Y., invoice of this date, terms 2 / 5 , n / 30 : 500 bbl. T. & C. flour @ $4.50. May 8. Sold to D. J. Manning, Albany, N. Y., terms 2 A> %o : 25 bbl. oatmeal @ $6. Questions in Advanced Bookkeeping 27 , May 8. Received of Thomas Fleming a certified check for invoice of May 3, less 2%. May 9. Sent Sales Bros, a New York draft drawn on the First National Bank of X. V., for invoice of May 1, less 5%. Bought by check the draft at Marine National Bank, exchange 75{. May 10. Bought of William Anderson, Utica, X. Y., terms, note at 60 days with interest : 32 bbl. sweet pota- toes @ $2.25. May 11. Sold David Nelson, Rochester, N. Y., terms, on account : 70 bx. wool soap @ $3. May 11. Paid sight draft drawn on us by Harmon & Brown for invoice of May 6, less 2%. May 12. Received New York draft from D. J. Man- ning in payment of invoice of May 8, less 2%. May 13. Gorham & Co., having failed in business, settle with their creditors for 50 cents on the dollar. Their check for $250 is received and accepted in full set- tlement of their account. May 15. Paid two weeks' salaries to date $350. Prepare the cashbook, sales book, purchase book and journal for posting, and balance the cashbook. 8. Post the items that belong to the sales ledger and rule the accounts that balance. 9. Open the Accounts Receivable account in main ledger, make the necessary postings and prove the bal- ance of the account by an abstract of the sales ledger. 10. From the following ledger footings and inven- tories make a statement of losses and gains as of May 31, 1911: 28 Questions in Advanced Bookkeeping S. Johnson $22,400. Cash $ 4,920. Real estate 9,000. Merchandise purchases 30,000. Merchandise sales 35,000. Interest and discount 40. Merchandise discount 50. Insurance 225. General expense 3,235. Bills receivable 9,550. Accounts receivable 2,050. Accounts payable 1,570. $59,020. $59,020. Inventories: real estate $9,500; merchandise $5,000. 11. Write the check and the draft mentioned in the transaction of May 9, supplying any necessary facts. 12. John Blake began business on Jan. 2, 1911, with resources $9,000 and liabilities $4,000. On Dec. 30, 1911, he finds that his resources are $6,000 and his liabilities $8,000. Open his account in accordance with the facts as stated and show his net loss. Close the account and show his net insolvency Jan. 1, 1912. Find at what per cent on the dollar Blake can pay his liabilities. 13. A draft for $975 was drawn Sept. 1, 1910, at two months' sight by Ryan & Myers on James Vincent, in favor of Charles Tracey, and was accepted on the same date. Charles Tracey transferred it in payment of a debt to S. Stafford, Oct. 4, less discount at 6%, for unexpired time. (a) Write the draft showing the acceptance and in- dorsement at time of transfer, (b) Make the journal entry for S. Stafford. Questions in Advanced Bookkeeping 29 June 1912 For questions 1-7 use journal, cashbook, purchase book and sales book. The columns required in the journal are Accounts Payable Dr., General Dr., Accounts Receivable Cr. and General Cr. The columns required in the cashbook are as follows : On the debit side, Discount on Sales Dr., Accounts Receivable Cr. and General ; on the credit side, Discount on Purchases Cr., Accounts Payable Dr. and General. All original entries must contain sufficient explanation to make transactions clear. 1-7. On Jan. 1, 1912, Henry Fairley and Francis King trading as Henry Fairley & Co., wholesale dry goods merchants, New York city, dissolve partnership by mu- tual agreement. By the terms of the agreement Mr. Fairley, who will continue the business in his own name, takes over all the assets of the firm and assumes the liabilities. Mr. King agrees to take a six-months note for his share of the partnership settlement. The balance of the general ledger accounts are accepted as the basis for the settlement. They are as follows : Cash $4,- 410.90, merchandise $14,928.62, furniture and fixtures $1,682, accounts receivable (per schedule A below) $5,897.56, bills receivable (per schedule B below) $3,842, accounts payable (per schedule C below) $3,671.40, bills payable (per schedule D below) $12,000, accrued interest on bills payable $22.22, Henry Fairley $7,533.73, Francis King $7,333.73. Schedule A Accounts receivable William A. White, Toledo. Ohio $ 2.486.50 Scranton Dry Goods Co., Scranton, Pa 1,540.26 James Young, Ithaca, X. V 1.870.80 $ 5.897.56 30 Questions in Advanced Bookkeeping Schedule B Bills receivable William A. White's note at 60 days, dated Nov. 4, 1911 $1,800. The Allison Co.'s draft at 90 days' sight, ac- cepted Dec. 4, 1911 2,042. $ 3,842. Schedule C Accounts payable G. B. Anderson & Son, New York $ 2,500. The Tipton Manufacturing Co., Manchester, Eng 1,171.40 $ 3,671.40 Schedule D Bills payable Note in favor of Colonial National Bank, dated Dec. 15, 1911, on demand, with interest at 5% $10,000. Note in favor of G. B. Anderson & Son, dated Nov. 13, 1911, at two months 2,000. $12,000. Jan. 2. Mr. Fairley received a bill of sale for Mr. King's share and executed a note in Mr. King's favor according to the agreement. As bookkeeper for Mr. Fairley, make the journal entry necessary to show the assets and liabilities, including the note issued to Mr. King, with which he begins business. (A new set of books is used.) Jan. 3. Received from William A. White check for $1,800 in payment of his note due to-day. Jan. 4. Received an invoice of goods from Eaton, Marsh & Co., Boston, Mass., terms 8 / 5 , n / 30 : 35 pc, Questions in Advanced Bookkeeping 31 1,610 yd. Scotch cheviot @ 45^ ; 28 pc, 816]^ yd. fancy cashmere @ $1.35. Jan. 6. Sold E. H. Peterson, Johnstown, X. Y., terms, sight draft in 10 days: 5 pc, 181 yd. X velvet @ $1.85. 25 gross C buttons @ $3.25. Jan. 8. Received James Young's check for balance of account due. Jan. 9. Remitted to Eaton, Marsh & Co. a check in payment of invoice of Jan. 4, less discount. Jan. 11. Mr. Fairley makes an additional investment of $6,000 cash. Jan. 13. Remitted to G. B. Anderson & Son a check in payment of note due to-day. Jan. 13. Bought of Smith & Mason, New York, and issued a 30-day note in payment: 150 pc. black ribbon @ $3.65. Jan. 16. Drew sight draft on E. H. Peterson for bill of Jan. 6 and received credit for the same at the bank. Jan. 18. Discounted the Allison Co.'s draft at Colonial National Bank and received credit for the proceeds. Jan. 19. Paid Mr. King $2,533.73 by check in part payment of note in his favor. Jan. 22. Sold Scranton Dry Goods Co. on account : 5 pc, 186 yd. Scotch cheviot @ 62 y 2 c. Jan. 25. William A. White settled for balance due on account $2,486.50, less 2%, by his 60-day note for $1,000 and his check for the balance. Jan. 29. Returned to G. B. Anderson & Son a small lot of damaged goods invoiced at $38.72. Jan. 31. Paid by check interest to date on note in favor of Colonial Xational Bank. Jan. 31. Paid miscellaneous expense items, total $296.50. 32 Questions in Advanced Bookkeeping Prepare the cashbook, sales book, purchase book and journal for posting and balance the cashbook. (The mere footing of columns is not sufficient.) 8. Henry Garland began a retail business on March 1, 1912, with a capital consisting of merchandise $4,500, cash on hand $570 and accounts receivable $3,200. On May 31, 1912, his assets and liabilities consisted of cash $1,610.75, bills receivable $945, accounts receivable $2,291.60, merchandise $6,847.50, accounts payable $2,- 400. During the three months he had withdrawn $500. Prepare a statement showing the profit or loss for the three months ending May 31, 1912. 9. Write the check and the note referred to under date of Jan. 25, supplying any necessary facts. 10. Explain the purpose for which each of the follow- ing ledger accounts is used: (a) capital stock, (b) de- preciation, (c) suspense, (d) goodwill. 11. The American Machinery Co. is incorporated with a capital stock of $200,000. William Conway, Isaac Marshall and Henry Fielding each subscribe for $50,000 worth of stock at par and paid cash. The unsubscribed stock is to be offered for sale when additional capital is needed. Make the necessary opening entries on the books of the corporation. 12. (a) Explain the use of a controlling account, (b) Mention tzvo important advantages gained from the use of controlling accounts. January 1913 Charles Williams and Henry Groves, as equal partners, have been conducting a wholesale dry goods busine-s at 286 Shepard St., Utica, N. Y. They have decided to in- Questions in Advanced Bookkeeping 33 corporate and to secure additional capital by the sale of stock. The necessary legal steps have been taken and a charter has been granted. The capital stock of the new firm, which is to be known as the Utica Wholesale Dry Goods Company, is $60,000, divided into 600 shares of the par value of $100 each. Each partner is to receive $25,000 of the capital stock for his share of the old business. The condition of the business on Dec. 31, 1912, is shown by the following schedule of assets and liabilities : ASSETS Cash on hand $ 6,000. Merchandise per inventory 22,500. Accounts receivable 5,298.22 James Rogers, Amsterdam $ 2,460. Henry Paine, Olean 1,456.60 George Rice, Cortland 954.87 J. D. Carson, Oswego • 42675 Bills receivable 2,810. 3-months' note signed by J. B. Miller & Co., due Mar. 1, 1913. .$ 1,250. 90-day note, F. B. Wolfe, maker, due Feb. 10, 1913 1,560. Expense (unused coal, etc. ) 239. Furniture 1,800. Real estate 7,500. Delivery Equipment 800. Insurance (unearned premium) 225. LIABILITIES Accounts payable $ 1,792.50 United States Woolen Co $ 742.50 Excelsior Mills Co 1,050. Bills payable 60-day note in favor of II. C. Morris due Mar. 15, 1913 2,400. 34 Questions in Advanced Bookkeeping 1. Make journal entry necessary to close the old books on Dec. 31, 1912, assuming that the partners' accounts stand credited with their present worth. All notes are to be considered at face value. A general ledger, sales ledger and purchase ledger were kept but only the general ledger accounts are to be closed. 2. Make journal entries necessary to open the new books on Jan. 1, 1913, assuming that no new stock has yet been sold. The entire capital stock is to appear on the books. 3. (a) On Jan. 10, 1913, S. C. Jamieson subscribed for 50 shares of the treasury stock at par. Make proper entry, (b) On Jan. 15, 1913, S. C. Jamieson paid for his stock in cash. Make journal entry. 4. (a) At the end of the first year of business the Profit and Loss account shows a net profit of $9,000. The directors decide to pay a dividend of 10%, set apart $1,000 as a reserve for doubtful accounts and let the bal- ance stand as a surplus. Make the proper journal entry, (b) The treasurer has been directed to pay the dividend in cash. Make the proper journal entry. 5. (a) The General Commission Co., Rochester, N. Y., has received from George Wilson & Co., Medina, N. Y., 500 baskets of peaches to sell on 10% commission. The following charges were paid in cash by the Commis- sion Co. : Freight, $14.60; cartage, $5 ; insurance, $2.50. Make the proper journal entry for the Commission Co. (b) The peaches have been sold for cash at 50^ a basket. Make an account sales and the proper entry for the Com- mission Co., assuming that settlement has been made by check. 6. (a) The Southern Produce Co. of Jacksonville, Fla., has shipped a carload of melons to The General Questions in Advanced Bookkeeping 35 Commission Co. of Rochester, N. Y., to be sold on 12>4% commission. The melons cost the Southern Produce Co., $350 ; freight from growers, $89.50 ; insurance and stor- age, $24.30 ; cartage, $4.20. All of these payments were made in cash on the day of shipment. Make the proper journal entry for the Produce Co. (b) An account sales has been received by the Southern Produce Co. showing the following results from the shipment: Total sales, $790 ; payments for freight, $62 ; for insurance and stor- age, $20: for cartage, $5.50; and a charge for commis- sion at the rate given. Assuming that a check in full settlement is received with account sales, make the proper journal entry. 7. At the close of business Dec. 31, 1912, the inven- tories and single entry records of the Jones Manufactur- ing Co. revealed the following condition : ASSETS Cash $ 2,380. Unfinished goods 12,570. Finished goods 4,600. Bills receivable 1,500. Accounts receivable 15,420. George Roe $ 5,220. Henry Smith 4,640. Charles May 5,560. Plant 50,000. Machinery and tools 12,680. Office fixtures 1,200. Materials and supplies 10,382. Expense (items unused) 560. LIABILITIES Accounts payable $15,645. Hill & Co $ 9,840. Gray Manufacturing Co 5,805. Bills payable 1,120. 36 Questions in Advanced Bookkeeping The firm desires to open new double entry books. Make the necessary journal entry. 8. Henry Taylor sold to James Wilson merchandise amounting to $6,842.00, and received in payment his own acceptance due to-day, in favor of Richard Wallace, $3,840, cash $1,000 and a sight draft on Henry Mills for the balance. Taylor handed the sight draft to Henry Mills and received credit. Make the proper journal entry. 9. The debit side of your columnar cashbook shows the following footings : Merchandise Discount $ 136.18 Accounts Receivable 2,734.20 Merchandise 937.21 General 18,945.10 The credit side of your cashbook shows the following footings : Merchandise Discount $ 147.19 Accounts Payable 4,387.62 Expense 261.17 General 3,620.13 Only iterfis for which there were no special columns were entered in the general columns. Transfer the above data to your paper and close the cashbook, indicating the postings that must be made. 10. In a set of books the general, sales and purchase ledgers were kept. Explain fully the posting from (a) the sales book, (b) the purchase book. 11. What is an abstract of the sales ledger? What does it prove? 12. (a) Henry Pitkin who owes you $1,000 has been discharged in bankruptcy and you receive a check for $400 Questions IN Advanced Bookkeeping 37 in full settlement of your account. Make the journal entry, (b) A year later Henry Pitkin writes you that he expects to pay in time all his old debts and incloses a check for $300 in part payment of the balance due you. Make the journal entry. June 1913 All original entries must contain sufficient explanation to make transactions clear. Such entries as are required in questions 8, 10 and 11 may be made more conveniently in journal form. For questions 1-4 use a cashbook with columns provided as follows : On the debit side, Discount on Sales Dr., Sales Ledger Cr., Bills Receivable Cr., Interest and Discount Dr., and General; on the credit side, Discount on Purchases Cr., Purchase Ledger Dr. and General. The General columns may be used as Net Cash columns and a Balance column may also be provided. 1_4. On May 1, 1913, the cashbook of William Har- mer, dealer in electric supplies, Elmira, N. Y., showed a balance of $1,512.60. Enter this balance in the cashbook and record with explanations the following transactions: May 2. Received John King's check for $400 balance of account due May 1. May 3. Paid freight bill for month of April $46.40. •May 5. Discounted Henry Dake's 60-day note at City National Bank and received credit for the proceeds ; date of note April 15, face, $1,450. May 6. Paid Western Supply Co.'s invoice of April 21 for $1,620, less 2% discount. May 7. Received George Walsh's check for bill of April 30, $362.10, less 3% discount. May 8. James Larson paid by check his acceptance for $750 due to-day. 38 Questions in Advanced Bookkeeping May 10. Miscellaneous cash sales were made amount- ing to $18.50. May 12. Drew on Charles Larkin at sight for $246.25, balance due on account, and received credit for the draft at City National Bank. May 13. Demanded payment of Johnson & Armstrong for their interest-bearing note due to-day and received a check in full settlement, face and interest ; face of note $550, date of note Feb. 13, 1913. May 14. Remitted to Western Supply Co. a New York draft for $600 to apply on account. The draft was pur- chased at City National Bank, exchange at par. Close the cashbook properly and bring down the bal- ance. Indicate clearly the postings necessary for the totals of the special columns. 5-6. For the month ending May 31, 1913, the ledger of John L. Marcy, wholesale merchant, shows the follow- ing balances for the trading and profit and loss accounts : Sales $8,746.40 Returned sales $ 83.25 Discount on sales 174.18 Purchases 2,876.43 Returned purchases 100.12 Freight on goods purchased 46.25 Discounts on purchases 113.82 Merchandise inventory, April 30, 1913 9,467.18 Sales expense account 267.50 Administrative expense account. . 273.50 General expense account 76.42 Interest and discount 8.95 Insurance 12.00 On May 31, 1913, the merchandise on hand is inven- toried at $5,827.63. Questions in Advanced Bookkeeping 39 Using the above accounts and merchandise inventory, prepare a trading and profit and loss statement that will show (a) net sales, (b) cost of merchandise sold. Cc) gross trading profit, (d) net profit of the business for the month. 7. On January 7 you received from J. R. Milton & Co., Lockport, X. Y., 100 bbl. apples to be sold on their account at 5% commission. The apples were sold as fol- lows : 20 bbl. at $3.50 a bbl ; 35 bbl. at $3.7? ; 30 bbl. at $4; 15 bbl. at $3.80. Payments were made for freight $16.25, for storage $15.50, for cartage $11.50. On Janu- ary 31 proceeds were remitted by 10-day sight draft on William Harvey, Rochester, X. Y. Prepare an account sales and write the draft to accompany same. 8. The Royal Furniture Co. is incorporated with a capital stock of $50,000, shares $100 each, for the pur- pose of taking over the business of W. M. Thompson, furniture manufacturer at Buffalo. On April 1, 1913, Thompson transfers his business to the company for 300 shares of stock at par, his balance sheet of March 31 with total resources $36,782.25 and total liabilities $9,- 675.75 being taken as the basis for the transfer. J. K. Peters, George Clark and Henry Coates have each sub- scribed for 30 shares and pay cash on April 1 for the stock subscribed. Assuming that the corporation is to continue the use of Thompson's books, make the neces- sary entries. 9. (a) Explain the advantage of depositing in the bank all cash receipts and making payments entirely by check, (b) With such a plan in force, explain the pro- vision that should be made for the payment of the petty expenses of a business. 4 o Questions in Advanced Bookkeeping 10. Record in journal form, with sufficient explana- tion, the entries for the following : (a) Ten days ago an invoice of goods amounting to $1,532.80 was bought, on terms 1% discount in 10 days, from the Naples Manufacturing Co. and was regularly entered at the time of pui chase. Settlement is made to- day for the amount of the invoice with allowance for damaged goods $10.45 and for the discount. James Warren's note for $563.50, on which 32 days' interest has accrued, is transferred in part payment and a check is given for the balance, (b) A note for $237.50, due June 5, in favor of Johnson & Gray, was paid at maturity. The bookkeeper charged Johnson & Gray at the time and the entry was so posted. The error is discovered to-day. Make the correction entry, assuming that a purchase ledger is used in the business, (c) Office salaries, $160, and office expenses, $40, were charged to General Ex- penses, contrary to instructions that separate accounts were to be used. Make the adjusting entry. 11. Make the proper entries for your part of the transaction referred to in question 7. 12. In the sales department of a manufacturing con- cern a system is in use whereby bills are made in tripli- cate and a record is kept of the sales in a sales journal or register. Explain (a) the advantages of such a sys- tem, (b) the method of posting. 13. How does a merchant whose books are kept by single entry ascertain at the end of the year the net gain on merchandise, the total expenses for the year and the net gain of his business? 14. Explain (a) current assets, (b) fixed assets, (c) voucher, (d) administrative expense, (e) accommoda- tion note. Questions in Advanced Bookkeeping 41 January 1914 For questions 1-6 use journal, cashbook, sales book and pur- chase book. The special columns required in the journal are Accounts Payable Dr. and Accounts Receivable Cr. The special columns required in the cashbook are as follows : On the debit side, Discount on Sales, Accounts Receivable and Sales ; on the credit side, Discounts on Purchases, Accounts Payable and Expense. All original entries must contain sufficient ex- planation to make transactions clear. 1-6. On Dec. 1, 1913, the cashbook of The Wilson Furniture Co., Brooklyn X. Y., showed a balance of $11,675.25. Enter this balance in the cashbook and make, with proper explanation, the necessary entries for the following transactions : Dec. 2. Received from John Williams, Grand Rapids, Mich., invoice of furniture amounting to $1,200; date of invoice, Nov. 29; terms of invoice, 5 / 10 , 2 / :{0 > n /oo- Dec. 3. Sold Brown & Potter, City, terms y 2 cash, balance 90-day note: 10 three piece parlor sets @ $40; 10 dining tables @ $18. Received their check and note, both dated to-day, in payment of bill rendered. Paid freight on invoice from John Williams in cash, $45. Cash sales for the day, $240. Dec. 4. E. A. Dorman dishonored his two months' note for $600, dated Oct. 4, which we had discounted at our bank. Our bank notified us that the note and protest fees $1.50 were charged to our account. Dec. 5. Received from E. A. Dorman a new interest- bearing 60-day note for the amount of the dishonored note and protest fees. Dec. 6. Returned to John Williams, Grand Rapids, 42 Questions in Advanced Bookkeeping Mich., two sideboards @ $15 and one dresser $16 from invoice of Nov. 29. These pieces were not the style ordered. Dec. 8. Sold Riley & Cohen, Trenton, N. J., terms, bill of lading with sight draft attached: one parlor set $85 ; one dining room set $45 ; three bedroom sets @ $40. The prices were subject to a trade discount of 5%. Dec. 9. Remitted to John Williams a draft on Ninth National Bank, Chicago, 111., purchased by check at School National Bank, Brooklyn, N. Y., in payment of invoice of Nov. 29, less the discount. (Note that some of the goods were returned on Dec. 6.) Dec. 12. Received notice from our bank that the sight draft drawn on Riley & Cohen in payment of bill of Dec. 8 has been collected and placed to our credit ; collection charges %%. Dec. 15. Received from S. L. Boyd & Co., City, check in payment of bill of furniture purchased Nov. 24; amount of bill, $540, terms, 3 / 10 , 2 / 30 , Veo- Dec. 18. Discounted Brown & Potter's 90-day note of Dec. 3 and received credit for the proceeds. Dec. 19. Paid cash for the following items: Insur- ance on stock, $240; office salaries, $36; office supplies, $15; janitor service, $5. Dec. 24. Cash sales for the day, $190. Dec. 27. Bought of O. D. Feldman for $18,000 the store and lot we now occupy and made settlement as follows: paid cash $5,000 and gave a mortgage for the balance. Dec. 31. Cash sales for the day, $210. Prepare the cashbook, sales book, purchase book and journal <"or posting and balance the cashbook. Do not post but indicate clearly the postings necessary. Questions in Advanced Bookkeeping 43 7-8. On Dec. 31, 1913, the general ledger of Henry Watkins, wholesale merchant, shows the following trial balance : Henry Watkins. proprietor $ 50,000. Cash $ 9,165.20 Notes receivable 12,450.40 Accounts receivable 36,678.12 Merchandise inventory, Jan. 1, 1913 18,572.50 Notes payable 11.480.96 Accounts payable 10.930.80 Purchases 95,349.23 Discounts on purchases 2.084.o0 Sales 115,136. Discounts on sales 3,560. Insurance 560. Rent 6,000. Interest and discount 561.80 Collection and exchange 116.40 General expense 5,636.61 Furniture and fixtures 982. $189,632.26 $189,632.26 The inventories on Dec. 31, 1913, are as follows: mer- chandise $21,650; furniture and fixtures 10fc less than ledger value ; interest accrued on notes receivable $126.50. Prepare a statement of losses and gains for the year ending Dec. 31, 1913. that will show (a) the gain on mer- chandise, (b) the net gain for the year. 9. Tohn Allen and George Bacon formed a partner- ship on Jan. 2, 1913. The agreement provided that Allen was to receive three-fourth of the net profits and Bacon one-fourth of the net profits. Allen invested $4,287.46 and Bacon invested $1,050. 44 Questions in Advanced Bookkeeping During the year Allen withdrew $1,500, and Bacon with- drew $700. At the close of the year the total assets of the firm were $7,564, and the total liabilities were $3,- 452.50. Find the interest of each partner in the firm at the close of the year. No particular form of statement is required but all work must be shown. 10. On Jan. 10, 1914, John Lyman and Davis Norman became partners to carry on the retail hardware business. Lyman invested cash, $1,000; merchandise, $4,000; notes receivable, $1,200; store and' lot valued at $11,000 and mortgaged for $9,000. The new firm assumed the mort- gage on the store and lot invested by Lyman and also a 60-day note for $800, dated Dec. 15, 1913, which Aaron Dolan held against Norman. Norman invested cash to make his net investment equal to Lyman's. Make the opening entries for the new firm. x 11. Explain four of the following terms: (a) good- will, (b) current liability, (c) fixed asset, (d) capital stock, (e) surplus account, (f) shipment account, (g) account purchase. 12. (a) What is a voucher check and how is it used? (b) What records should a petty cashbook contain? What advantage results from the use of the petty cash- book? 13. On Oct. 10, 1913, William Johns, a commission merchant, 16 Washington street, New York City, re- ceived from Fred Mott, Watertown, N. Y., 4,000 bu. potatoes to be sold on commission. On the same date Johns paid freight $230, cartage $42 and advanced to Mott cash $500. On Oct. 28 Johns sold for cash the potatoes at 5Sff a bushel, and rendered an account sales, inclosing a check for the amount due, charges being Questions in Advanced Bookkeeping 45 made for storage $40 and for commission 3%. (a) As bookkeeper for William Johns, make the necessary entries for the transactions given above, (b) Prepare the ac- count sales rendered by Johns. June 1914 For questions 1—6 use journal, cashbook, sales book and pur- chase book. The special columns required in the journal are Accounts Payable, Dr. and Accounts Received, Cr. The spe- cial columns required in the cash book are as follows : on the debit side, Discount on Sales, Accounts Received and Sales; on the credit side, Discount on Purchases, Accounts Payable, and Expense. All original entries must contain sufficient explana- tion to make transactions clear. 1-6. The Crawford Heating Co., incorporated, is en- gaged in business at Syracuse, N. Y. On April 1, 1914, the cashbook showed a balance of $4,682.50. Enter this balance in the cashbook and make, with proper explanations, the necessary entries for the follow- ing transactions. (The transactions do not constitute a complete series) : April 6. Received from the Acorn Stove Co., Canton, Ohio, invoice of stoves amounting to $485; date of in- voice April 3 ; terms 3 / 10 , l / 30 , D / fi0 . April 8. Paid invoices by check as follows : books and stationery, Case Office Supply Co., $27.60; coal for ware- house and office use, Economy Coal Co., ^325 ; freight bills on incoming merchandise, Xew York Rapid Freight Co., $65.30. April 13. Paid by check invoice of April 3. April 15. Sold Farmers' Cooperative Association of 46 Questions in Advanced Bookkeeping Monroe, N. Y., 10 heating stoves at $32 each, taking in part payment 5 secondhand stoves at $10 each and the balance in cash. April 18. Petty cash sales to transient buyers to date, $164.20. April 20. Received a letter from Henry Watson of Goshen, N. Y., stating that three stoves recently sold him on terms, 3 / 10 , 1 / 30 were received in a damaged condi- tion ; he offers to return them or to keep them at a reduc- tion of 20% from the invoice price which was $138. Ac- cepted his 20% proposition. (Entry had been made for the sale when goods were shipped.) April 24. Received from H. B. Stevens his 60-day note, dated April 20, in full settlement of his account of $650. Discounted this note at Third National Bank and received credit for the proceeds. April 28. Received a letter from Brown Bros. & Co., of Schenectady, N. Y., stating that their bookkeeper over- charged us $21.50 on our invoice and inclosing a credit memorandum for that amount. Our entry for the pur- chase had already been made. April 30. Received check of Henry Watson for bal- ance of invoice referred to in transaction of April 20, less 3% discount. May 1. Purchased from J. B. Bates & Co., Geneva, N. Y., terms, y i0 , n / 30 , invoice of goods amounting to $286.50. May 2. Drew at 30-days sight in our own favor on Milford Manufacturing Co., Troy, N. Y., for $636, the amount of an invoice shipped them March 27. Mailed draft to them for acceptance. May 4. Received a notice from Lincoln National Bank that our 60-day note for $520, in favor of the Sterling Questions in Advanced Bookkeeping 47 Heater Co., Buffalo, N. Y., which had been left with the bank for collection, is due today. Sent a check by mes- senger to take up the note. May 6. Received draft drawn on May 2, with accep- tance dated May 4. Discounted this draft at our bank. May 10. Paid invoice of May 1 received from J. B. Bates & Co., less the discount, by giving our interest- bearing note at 60 days. Make a journal entry showing just how the various columns in your books of original entry should be posted ; or, foot all columns and prepare the books for posting in the usual manner. 7-8. The following accounts and balances appear in the ledger of The Eastern Produce Co., at the end of the fiscal year May 31, 1914: Henry Bryson, investment. $20,000; Charles Hawley, investment, $10,000; Smith R. Canfield, investment, $10,- 000 ; Henry Bryson, withdrawals for personal use, $2,200 Charles Hawley, withdrawals for personal use, $1,500 Smith R. Canfield, withdrawals for personal use, $1,250 real estate, $20,000; cash, $9,286.22; notes payable, $3,- 420; accounts receivable, $8,682.50; sales, $13,842.19; general expense, $462.30; doubtful accounts, $610; furni- ture and fixtures, $360; salaries and wages, $3,068.10; insurance, $360; discounts on purchases, $120.30; pur- chases, $8,984.95; interest and discount (debit), $40.16; accounts payable, $5,424.36; merchandise inventory May 31, 1913, $4,120.14; notes receivable, $1,560.18; discounts on sales, $127.50; freight on purchases, $194.80. Inventories: Merchandise on hand May 31, 1914, $8,496.12; furniture and fixtures 10% less than ledger valuation; insurance paid in advance, $240; wages due and unpaid, $380.50. (a) Prepare a trial balance from 4 8 Questions in Advanced Bookkeeping the foregoing accounts, (b) Using the trial balance and the inventories, prepare a profit and loss statement for the year ending May 31, 1914. 9. Wallis & Irwin, Columbus, Ohio, owe your em- ployer, Henry Waters, $1,023.64. They have ignored his repeated requests for payment and you are told to draw on them at sight and " put the draft through." (a) Draw the draft, (b) tell what steps are necessary from the time the draft is drawn to the time of its payment by Wallis & Irwin and, (c) make the proper entry for your employer. 10. E. B. Arnold, B. H. Berry and R. O. Clark are partners, their respective accounts showing balance as follows: Arnold, $1,000; Berry, $1,400; Clark, $1,200. Arnold sells his interest to F. C. Doud who then forms a new partnership with Berry and Clark. Doud invests an additional $200 in cash and Berry takes the firm's note for $200 to reduce his share and to equalize capital Give all the necessary entries. 11. Explain Ave of the following terms: (a) treas- ury stock, (b) capital stock, (c) water stock, (d) re- serve for bad debts, (e) surplus, (f) undivided profits, (g) dividend. 12. In a certain business concern the invoices of in- coming merchandise are filed separately after they are entered in a purchase journal or accounts payable reg- ister. What columns should be provided in the entry book named and what are the advantages of this method of handling invoices of purchases? 13. (a) Suggest a method of making the entries in a special column cashbook so that the cash balance may be found without taking into account the amounts entered in the special columns, (b) Show by illustration how Questions in Advanced Bookkeeping 49 the cashbook balance and the check book balance are reconciled with the bank balance when the bank lias rendered a statement of your account. January 1915 For questions 1-7 use journal, cashbook, sales book and pur- chase book The special columns required in the journal are Accounts Payable, Dr. and Accounts Received, Cr. The special columns required in the cashbook are as follows: on the debit side, Accounts Received and Discount on Sales; on the credit side. Accounts Payable, and Discount on Purchases. All original entries must contain sufficient explanation to make transactions clear. 1-7. O. P. Henderson, Schenectady, X. Y., wholesale dealer in men's and women's shoes, closes his books and finds that his present worth is $10,000. In order to se- cure more capital and to extend his business he decides to incorporate. Accordingly a corporation to be known as the Schenectady Shoe Co., with a capital stock of $20,- 000, is organized. Henderson is allowed 100 shares, par value $100 each, for which he transfers to the new firm all of the assets and liabilities of his former business. The remaining 100 shares are subscribed for by outside parties and paid for in cash. The company decides to continue the use of the books of the old business, (a) Under date of Oct. 1, 1914, enter in the cashbook the cash balance from the former business amounting to $2,541.80 and make such entries as are necessary to change the books from those of a single proprietorship to those of a corporation, (b) Make, with sufficient ex- planations, the necessary entries in the proper books for the following additional transactions of the new company . 50 Questions in Advanced Bookkeeping Oct. 2. Issued checks in payment of the following bills. (All of the banking business of the company will be transacted at Merchants' National Bank) : B. M. Grayson's bill for October rent, $250; Modern Office Supply Co.'s bill for additional typewriters and other office furniture just received, $500; A. G. Wright's bill for attorney's fees for advice in effecting new or- ganization, $15. A check for $50 is also issued in favor of the petty cashier to be used in making petty cash payments. Oct. 5. Received from Howard & Bell, Amsterdam, N. Y., an invoice of shoes amounting to $1,594.75, dated Oct. 2, terms, 2 / 10 , n / 30 . Oct. 7. Received notice from Merchants National Bank that a check in our favor for $75 given to us by A. B. Pruitt of Buffalo, N. Y., and afterward deposited by us in Merchants National Bank has been returned unpaid by the bank on which it was drawn, with the statement that Pruitt had no funds in the bank. The Merchants National Bank has charged the check back to our account. Oct. 8. Sold A. C. Long, Ilion, N. Y., terms, sight draft, bill of lading attached, an invoice of shoes amount- ing to $215.85. Left sight draft and bill of lading at Merchants National Bank for collection. Oct. 10. Received a letter from L. M. Brewster, Oneida, N. Y., one of our customers, stating that he has sold his business and that his successor, F. G. Bills, has assumed his liabilities. Brewster owed us $87.50. The transfer of the debt being satisfactory to us, we made an entry to adjust the accounts on our books. Oct. 12. Sent Howard & Bell a New York draft for the amount of their invoice of Oct. 5, less the discount. Oct. 13. Received from Robert Sullivan, one of our Questions in Advanced Bookkeeping 51 traveling salesmen, the following statement : Commis- sion on sales to date, $150; traveling expenses, $87.50. Make the proper entry. Oct. 14. Received from Case & Hart, Lynn, Mass., an invoice of shoes amounting to $254.75, dated Oct. 10, terms, 10-days sight draft. Accepted the draft and re- turned it to them ; date of acceptance Oct. 14. Oct. 15. Received notice from Merchants National Bank that the draft on A. C. Long, left for collection on Oct. 8, has been collected and proceeds placed to our credit. Oct. 16. Sold Hardy & Piatt, Albany, X. Y., terms z / 15 , n / 30 , an invoice of shoes amounting to $425.35. Oct. 17. Received from Grady & Son, Watertown, X. Y.. a 30-day note for $145, dated Oct. 15, in settlement of their account. Discounted the note at Merchants Xa- tional Bank and received credit for the proceeds. Oct. 21. Received from Hardy & Piatt a New York draft in payment of their invoice of Oct. 16, less the dis- count. ( >ct. 22. Received notice from Merchants Collection Agency that a note for ^>237 which we held against T. D. Sawyer and which we had placed in the hands of the agency for collection has been collected. They charged 10% for collecting and remitted proceeds by check. Oct. 24. Paid our acceptance of Oct. 14 by check. Oct. 31. The petty cashier hands in vouchers for the following petty cash payments and receives a check for the total amount : Cleaning office $2.50 Postage stamps 5. Subscription to Shoe & Leather Gazette 3. Office supplies and stationery 7.85 Donation to city mission 5. 52 Questions in Advanced Bookkeeping Prepare the books of original entry for posting, assum- ing that controlling accounts for sales and purchase ledgers are to be used. 8-9. On Dec. 31, 1914, the ledger of Summers & Barrett showed the following : P. D. Summers, investment, $4,500; D. B. Barrett, in- vestment, $4,500; P. D. Summers, withdrawals, $250; D. B. Barrett, withdrawals, $300; cash, $1,075; merchandise inventory, Jan. 1, 1914, $3,845.87; purchases, $6,397.43; sales, $7,453.18; discounts on purchases, $386.19; dis- counts on sales, $483.74 ; collection and exchange, $43.25 ; general expense, $843.98; interest and discount (credit), $27.52; rent, $1,125; freight inward, $328; furniture and fixtures, $890; salaries, $675; accounts receivable, $1,- 684.62; accounts payable, $1,500; notes receivable, $925; notes payable, $500. The inventories were as follows : Merchandise $6,974.25 Interest due on notes receivable 11.25 Interest due on notes payable 4.75 Rent due and unpaid 125. Furniture and fixtures have depreciated 10% on ledger valuation. (a) Prepare a trial balance from the foregoing ac- counts, (b) Using the trial balance and the inventories, prepare a profit and loss statement for the year ending Dec. 31, 1914. 10. In the general ledger of W. O. Coster & Co. the Accounts Receivable account shows a debit footing of $12,895.37 and a credit footing of $5,468.93; the Ac^ counts Payable account shows a debit footing of $2,« 128.43 and a credit footing of $5,195.47. Questions in Advanced Bookkeeping 53 The sales ledger shows the following accounts with debit balances : A. H. Burtis, $419.29 ; C. E. Snyder, $1,- 543.27; M. V. Hughes, Sl.12S.19; J. E. Baker, $1,324.52; M. A. Hurst. $1,196.45; F. M. Andrews. S1.S14.72. The purchase ledger shows the following accounts with credit balances: \\ . K. Landers, $346.19; E. M. Griffin, $819.26; H. B. Cook, $1,324.75 ; A. R. Kempton, $576.84. Prepare abstracts of the purchase and sales ledgers, showing their agreement with their respective controlling accounts in the general ledger. 11. Define the following: (a) rebates and allow- ances, (b) royalty, (c) commission, (d) trading account, (e) bank reconcilement, (f) freight out, (g) treasury stock, (h) nominal accounts. 12. INVOICE OF SHIPMENT Geneva, X. Y.. Nov. 16, 1914. Shipped to Saunders & Co. Albany. X. Y. By Benj. Richmond to be sold on account and risk of himself the following goods : 100 bbl. apples. On Nov. 30 Saunders & Co. received the above apples and paid freight $16.75. On Dec. 1, the apples were sold for cash at $2.50 per bbl. After a commission of 2% had been deducted, a check on the Traders Bank of Al- bany for the net proceeds was remitted to Richmond, (a) Write the account sales that Saunders & Co. send to Richmond, (b) Write the check to accompany the ac- count sales. 54 Questions in Advanced Bookkeeping June 1915 For questions 1-4 use a journal with special columns provided as follows : Accounts Payable Dr., Notes Receivable Dr., Ac- counts Receivable Cr., Notes Payable Cr. 1-4. On May 1, 1915, the firm of Ford & Wright, Troy, N. Y., decide to replace the old books of account with a new set. (a) Under date of May 1, 1915, make the necessary journal entry to open the new books, using the following data from the balance sheet of April 30 : Assets : Cash, $3,000 ; merchandise inventory, $6,000 ; accounts receivable, $17,350; notes receivable, $2,000; furniture and fixtures, $1,500; horses, wagons and har- ness, $950; real estate, $12,000; accrued interest on notes receivable, $150; insurance prepaid, $95. Liabilities: Notes payable, $1,500; accounts payable, $5,500; mortgage payable, $6,000; interest accrued on notes payable, $45. Capital accounts: S. R. Ford, $15,000; A. B. Wright, $15,000. (b) Record, with sufficient explanations, the following selected transactions : May 1. Henry W T eir renews his note for $1,500 with interest amounting to $45 by giving us a 30-day note to cover the face of the old note and the interest due. May 3. Brown & Clark have accepted our draft at 30- days sight for balance of account $329. May 3. Returned to Mason & Co. goods invoiced at $50. May 5. Accepted T. K. Barton's draft at 10-days sight for $400 to apply on account. May 6. Drew at 30-days sight on Charles Eaton, a Questions in Advanced Bookkeeping 55 customer, in favor of G. B. Race to apply on our ac- count; face of draft, $500. May 7. Received from Myers & Co. their 60-day note for $350 in payment of invoice of April 29. We indorsed the note to Mason & Co. and received credit at its face value. May 10. Lost by hre a wagon valued at §275. May 11. Allowed John Silver, a customer, $20 for goods he received in damaged condition. May 12. Received from John Baker, to apply on his account, William Cogan's note for $200, which Baker has indorsed to us. The note has 30 days to run and we have agreed to take it less the discount for that time. May 14. Received from Gatley & Co. account sales for shipment Xo. 5, showing net proceeds $695. for which no remittance has been made. May 15. Received from John Silver, to apply on his account, our acceptance due today in favor of T. k. Bar- ton for $400. (c) Prepare the journal for posting. 5-6. From the following trial balance and inventories, prepare a trading and profit and loss statement for the six months ended May 31, 1915: Cash $10,000. Notes receivable 10.500. Accounts receivable 35,000. Merchandise inventory, Dec. 1, 1914 6,000. Furniture and fixtures 2,000. Delivery automobiles 5.000. Real estate 25.000. Notes payable $ 23.000. Accounts payable 1 1.000. Purchases 95.000. 56 Questions in Advanced Bookkeeping Returned purchases $ 3,250. Discount on purchases 1,440. Sales 140,000. Returned sales $2,500. Discount on sales 2,800. Freight inward 1,650. Advertising 2,500. General expense 8.500. Salaries and wages 6,300. Commissions 4,700. Traveling expenses 6,000. Interest and discount 520. Insurance (one year) 420. Reserve for bad debts 5,500. A. M. Trainor, drawing account . . 2,100. G. H. Warner, drawing account . . 1,700. A. M. Trainor, capital account 22,000. G. H. Warner, capital account 22,000. $228,190. $228,190. Inventories : Merchandise $9,000. Furniture and fixtures 1,800. Delivery automobiles 4,500. Real estate 25,000. Insurance (unexpired) 210. 7. (a) Explain concisely the difference between single entry and double entry bookkeeping, (b) In changing from single entry to double entry, what is the difference in procedure when the old ledger is used instead of a new ledger? 8. On June 1, 1915, The Home Manufacturing Com- pany is incorporated under the laws of the State of New York to acquire and conduct 'he business of the firm of Questions in Advanced Bookkeeping 57 R. O. Browning and H. E. Johnson. The authorized capital stock of the company is $250,000, par value $100 a share. The company has agreed to take over the net assets of the partnership at the following valuation and to issue in payment 1,000 shares of stock to each of the two partners: real estate, S120.000; tools and equipment, $60,000; raw materials, $20,000. A bill of sale is exe- cuted and the stock duly issued. O. E. Kitchell and R. K. Taylor subscribe for 100 shares each. On June 10 the stock subscribed for by Kitchell and Taylor is paid for and issued. On June 14 Browning and Johnson each donate 100 shares of stock to the company to be sold for the purpose of securing additional working capital. From the foregoing data make the entries necessary to open the books of the company. 9. Define the following: (a) depreciation, (b) voucher, (c) register, (d) asset, (e) liability (f) ledger account, (g) posting, (h) goodwill, (i) drawing account. 10. On May 1, 1915, the cashbook of a certain busi- ness showed a balance of $18,625.75. On May 31 the cash transactions for the month were represented by the following footings of the special col- umns : Debit side : Accounts Receivable, $5,372.10. Discounts on Sales, $352.70. Cash Sales, $1,250.40. Sundries, $3,479.20. Credit side : Accounts Payable. $3,948.27. Discount on Purchases, $249.61. Expense, $217.34. Sundries, $5,120.10. 58 Questions in Advanced Bookkeeping Transfer the above data to your paper, balance the cashbook and indicate the postings required. 11. (a) How should goods sent out on consignment be treated on the books of a company? (b) When the account sales has been received from the consignee, what entry or entries should be made ? 12. (a) What is a bill book? (b) Explain how the bill book may be used as a book of original entry. January 1916 For question 1 use journal, cashbook, sales journal or sales book and purchase journal or purchase book. The special columns required in the journal are Accounts Payable Dr., Notes Receivable Dr., Accounts Receivable Cr., and Notes Payable Cr. The special columns required in the cashbook are as follows: On the debit side, Discount on Sales, Accounts Receivable and Sales ; on the credit side, Discount on Purchases, Accounts Pay- able, and Expense. All original entries must contain sufficient explanation to make transactions clear. 1. A. B. Carter and E. F. Gordon have been engaged in business in Syracuse, N. Y., Carter in the carpet and rug business, Gordon in the furniture business. On No- vember 1, 1915, they form a partnership, under the firm name of Carter and Gordon, for the purpose of conduct- ing a wholesale and retail carpet and furniture business. The new firm is to take over all the assets of the partners and to assume all the existing liabilities. The partner whose statement of assets and liabilities shows the smaller net worth is to make an additional cash contribution to equalize the investments. The following statements of assets and liabilities pre- pared by the partners form the basis of their respective investments : Questions in Advanced Bookkeeping 59 A. B. Carter Cash, $5,000; merchandise inventory, $12,200; office and store fixtures, $2,500 ; horses, wagons and harnesses, $900; notes receivable (schedule A), $1,560; accounts receivable (schedule B), $8,800.10; insurance prepaid, $240; notes payable (schedule C), $1,500; accounts pay- able (schedule D), $5,410.30. Schedule A Notes reeeivable 3-months' note dated Oct. 9. 1915. Henry Mason, maker, $ 300. 4-months' note dated Aug. 23, 1915, John White, maker, $1,260. Schedule B Accounts receivable John White $ 3.250.97 Henry Mason $ 2.980.63 William Dengate ... 1,655.40 D. E. Sayles 913.10 Schedule C Xotes payable 2-months' interest-bearing note dated Sept. 16, 1915, in favor of Taylor & Co. $1,000. 3-months' note dated Oct. 19, 1915, in favor of Detroit Chair Co. $500. Schedule D Accounts payable Tavlor & Co $2,760. Michigan Furniture Detroit Chair Co 1,409.60 Co $ 1.240.70 E. F. Gordon Cash, $6,000; merchandise inventory, $17,520: office and store fixtures, $1,675; auto delivery truck. $960; notes receivable (schedule A), $1,250; accounts receiv- able (schedule B), $9,723.50; accounts payable (schedule C), $3,231.25. Schedule A Xotes receivable 3-months' note dated Aug. 31, 1915, Donald Morgan, maker, $1,250. 60 Questions in Advanced Bookkeeping Schedule B Accounts receivable Donald Morgan ....$1,975.30 Howard Gibson ....$3,522.60 James Blake 2,363.90 Harvey Bullis 1,861.70 Schedule C Accounts payable Smith Bros $ 1,495.75 Sanford & Co $ 1.735.50 (a) Under date of November 1, 1915, make the open- ing entries for the investments of the two partners. (Carter contributed his check for his additional invest- ment.) (b) Record, with sufficient explanations, the fol- lowing selected transactions : Nov. 3. Bought of Smith Bros., Amsterdam, N. Y., a lot of carpets amounting to $1,540; terms, 5 / 10 , 2 / 30 , n / 90 . Nov. 4. Sold John White, City, furniture amounting to $680 and received his check for $300, balance on ac- count. Paid rent for month in advance, $150. Paid freight on invoice from Smith Bros., $23.45. Received New York draft from Donald Morgan to apply on his account, $875.20. Nov. 6. Cash sales for day, $367.35. Paid for clean- ing windows, $2. Discounted at First National Bank John White's note, dated Aug. 23, and received credit for the proceeds. Nov. 9. Bought of Sanford & Co., Philadelphia, Pa., carpets and rugs amounting to $1,290; terms, 5 / 10 , 2 / 30 , / 90' Nov. 12. Bought of Michigan Furniture Co., Grand Rapids, Mich., furniture amounting to $953; terms, 4- months note. Nov. 15. D. E. Sayles having failed in business settles with his creditors for 50 cents on the dollar. His check for $456.55 has been received and accepted in full settle- ment of his account. Sent our check to Smith Bros, in Questions in Advanced Bookkeeping 6i payment of invoice of Oct. 12, 1915; amount, $670.50, less 2%. Nov. 16. Received from Howard Gibson, to apply on his account, our interest-bearing note in favor of Taylor & Co., for $1,000, due to-day. Nov. 19. Sold Donald Morgan furniture amounting to $760; terms : ' l0> 2 / :{ft , %o- Nov. 24. The First National Bank notified us that Charles Moore's note for $265, which was left for collec- tion and which matured yesterday, was protested for non- payment ; the protest fees, $2.50, were charged to our account. Nov. 27. Received check from Donald Morgan in pay- ment of bill of Nov. 19, less the discount. Nov. 29. Sold Henry Lamb carpets and rugs amount- ing to $975 and received his 60-day note in payment. We indorsed this note to San ford & Co. and sent it to them to apply on our account. Returned to Sanford & Co. 2 rolls of carpet amounting to $143.35; this carpet was re- ceived with last invoice but was not the pattern ordered. Nov. 29. A 30-day draft in our favor drawn on the 26th on James Blake for $1,200 has been accepted and returned. Nov. 30. Received check from Donald Morgan in pay- ment of note due to-day (See schedule A of Gordon's invested assets). Paid by check the following: salaries of bookkeeper and clerks for month $250 ; invoice of sta- tionery, ^27; bill for gas and electric light for month. $22.75. (c) Foot and rule the books of original entry and in- dicate how footings should be posted. (Do not post.) 2. Define the following: (a) sinking fund, ( b) way- bill, (c) certified check, (d) account sales, (e) account 62 Questions in Advanced Bookkeeping current, (f) preferred stock, (g) fixed asset, (h) accom- modation note. 3. During the year ended Dec. 31, 1915, George But- ler's books have been kept by single entry. Explain fully how to ascertain his net gain for the year. 4. H. M. Kerr and O. E. Weir are partners in a man- ufacturing concern under the firm name of Kerr & Weir. Their investments are as follows: H. M. Kerr, $30,000; O. E. Weir, $20,000. They decide to incorporate their business with a capital stock of $75,000, consisting of 750 shares at $100 a share. The partners are to receive paid up stock for their respective interests and goodwill as follows: H. M. Kerr, 350 shares; O. E. Weir, 250 shares; A. S. Miller, W. G. Burton and J. M. Roman each subscribe for 10 shares. The rest of the capital stock, 120 shares, is not to be sold till later. The follow- ing list of assets and liabilities of the old firm has been accepted by the corporation: Assets Liabilities Accounts jeceivable $12,000. Accounts payable $ 4,800. Raw materials 9,000. Notes payable 1,500. Plant 9,000. Real estate 10,000. Cash 7,600. Finished goods 8,700. Make the necessary journal entries (a) to close the books of the old firm, (b) to open the books of the cor- poration. (A new set of books is to be used by the cor- poration.) 5-6. From the following trial balance and inventories, prepare a trading and profit and loss statement for the year ended Dec. 31, 1915: Questions in Advanced Bookkeeping 63 Paul Wilson, investment $15,000. Carl Young, investment 15,000. Paul Wilson, withdrawals $1,200. Carl Young, withdrawals 1,500. Cash 7,269.50 Merchandise inventory, Jan. 1, 1915 8,471.20 Purchases 64,396.75 Returned purchases 1,167.82 Discount on purchases 961.30 Sales 94,392.40 Returned sales 1,762.50 Discount on sales 1.975.80 General expense 6,332.45 Rent 2,200. Insurance 135. Freight inward 1,246.75 Interest and discount 210.42 Furniture and Fixtures 1,600. Delivery equipment 1,200. Xotes receivable 9,600. Accounts receivable 34,354.73 Xotes payable 10,500. Accounts payable 4,362.74 Reserve for bad debts 1,650. $143,244.68 $143,244.68 Inventories, Dec. 31, 1915: Merchandise $9,700. Accrued interest on notes receivable 112.50 Interest accrued on notes payable 61.25 Rents due for December and unpaid 200. Furniture and fixtures, book value less 10% depreciation. Delivery equipment, book value less 10% depreciation. 64 Questions in Advanced Bookkeeping June 1916 For question 1 use journal, cashbook, sales journal or sales book and purchase journal or purchase book. The special col- umns required in the journal are Accounts Payable Dr., Notes Receivable Dr., Accounts Receivable Cr. and Notes Payable Cr. The special columns required in the cashbook are as follows : on the debit side, Accounts Receivable, Discount on Sales, Cash Sales and Net Receipts; on the credit side, Accounts Payable, Dis- count on Purchases, Expense and Net Payments. All original entries must contain sufficient explanation to make transactions clear. 1. On May 1, 1916, R. M. Knowles and A. F. Hooper join as equal partners in the purchase of the wholesale dry goods business formerly conducted by Brown & Steele of Kingston, N. Y. Brown & Steele execute a bill of sale in which appears the following list of assets and liabilities: Merchandise, $11,314.57; furniture and fixtures, $1215 ; notes receivable (schedule A), $975; accounts receivable, $5570; accounts payable, $3495.90. Schedule A Notes receivable '30-day interest-bearing note dated April 4, 1916, William G. Bar- ton, maker, $525 90-day note dated April 1*5, 1916, Robert Scott & Co., maker, $450 In addition the bill of sale provides that Brown & Steele are to receive $2000 for the goodwill of the busi- ness. Knowles & Hooper make settlement by a cash payment of $12,578.77 and a six months' note, dated May 1 and bearing interest at 6%, for the remainder of the purchase price. (a) As bookkeeper for the firm, make the opening Questions in Advanced Bookkeeping 65 journal entry required in the above transaction, (b) Record, with sufficient explanations, the following se- lected transactions : May 1. Knowles and Hooper each make an additional cash investment of $2000. This cash has been deposited in the First National Bank at which all banking business will be done. All cash received will be deposited on the day received and all payments, unless otherwise specified, will be made by check. May 1. Paid Elmer Truitt for repainting signs, §25. May 2. Gave check for $50 to petty cashier to be used in making petty cash payments during the month. May 2. Received from Crawford & Son, Ilion, X. Y., a check in payment of bill of April 15 for $550, less a dis- count of 2%. • May 3. Received from Boyd & Snyder, Albany, X. Y., terms 15-day acceptance, an invoice of merchandise amounting to $1257.36. Their draft dated May 2 and payable at First X'ational Bank has been accepted and re- turned to them. May 4. Made payments by bank draft as follows : William Brady for invoice of Aprfl%5, $840.27, less 3% ; West & Co. for invoice of April 30, $940.25, less 5%. Paid exchange on drafts 55^. May 4. Sold to Quirk & Olney, Amsterdam, X. Y., terms one-half cash, balance 15-day note, an invoice of merchandise amounting to $950. Their check and note dated to-day have been received. May 4. Received a check from William G. Barton in payment of his note and interest due to-day. May 4. Paid insurance premium, $30.50. May 5. Received from H. G. Klenncrt, terms 2 / 10 , D / 80 , an invoice of merchandise amounting to $218.95. 66 Questions in Advanced Bookkeeping .May 6. Paid freight on goods purchased to date, $25.90. May 10. Received a letter from Quirk & Olney, stating that in our invoice of May 4 they have found a few articles not up to the standard and asking us to make them an allowance of $50. Agreeing to this, we indorse $50 as part payment on the note of May 4. May 13. Sold L. M. Plunkett, Oswego, N. Y., terms, 2 /io> %o> an invoice of merchandise amounting to $1147.30. May 13. Sent check to H. G. Klennert in payment of his invoice of May 5, less the discount. May 13. Discounted Robert Scott & Co.'s note of April 15 at First National Bank, and received credit for the proceed?. May 15. Made cash sales amounting to $345.90. May 15. Paid office salaries, $75. May 18. Received notice from First National Bank that our acceptance in favor of Boyd & Snyder has been paid and charged to our account. May 19. Received from Quirk & Olney a check in pay- ment of the balance due on their note of May 4. May 20. Robert Lear, one of our regular customers, recently remitted to us a check in payment of a bill amounting to $358.90. He neglected at the time to de- duct from his remittance the 2% discount to which he was entitled and he now calls our attention to the over- sight. We credit him for the amount of the discount and send him a credit memorandum. May 20. Made cash sales amounting to $215.40. May 22. Hill & Warren, dealers in office supplies, send in the following bill for goods furnished to date : 1 type- writer, $75 ; 1 office desk and chair, $45 ; paper baskets, Questions in Advanced Bookkeeping 67 ink stands, etc., $15. We credit their account for the amount of the bill. May 31. The petty cashier presents vouchers for the following cash payments made by him : Postage, stationery, etc $19.50 Cleaning offices 5. Messenger boy 2.50 Telegrams 7.95 Issued a check to restore the petty cash fund to its original amount. (c) Foot and rule the books of original entry and in- dicate how footings should be posted. (Do not post.) 2. From the following trial balance taken from the books of Klein & Jones, construct a trading and profit and loss statement for the three months ended April 30, 1916: Trial Balance, April 30, 1916 A. R. Klein, capital account $ 5,250. A. R. Klein, drawing account.. $ 250. W. P. Jones, capital account 6,750. W. P. Jones, drawing account. 300. Merchandise inventory, Jan. 1, 1916 12,087.13 Purchases 8,540.27 Returned purchases 240.60 Sales 15,027.90 Returned sales 90.56 Freight inward 325.90 Advertising 495. Sales discount 323.64 Purchase discount 259.40 Wages 1,500. Rent 850. General expense 780.97 Interest and discount 85.33 68 Questions in Advanced Bookkeeping Office equipment $ 950. Notes receivable 540. Accounts receivable 1,096.40 Accounts payable $ 1,349.50 Notes payable 750. Cash 1,412.20 $29,627.40 $29,627.40 Inventories, April 30, 1916: Merchandise $12,153.30 Rent prepaid 50. Wages due and not paid 85. Office equipment, book value less 3% depreciation 3. (a) Two ledgers are before you. One is the ledger of a partnership concern just before the partner- ship is converted into a corporation ; the other is the new ledger of the corporation. What differences should you find in the accounts in the two ledgers? (b) In what way does the disposition of the net profit differ with re<- spect to partnerships and corporations ? Hale & Elkins 1916 1916 Jan. 5 Goods returned. .$50 Jan. 1 Invoice 3 / 10 n / 30 $510.50 Jan. 1 Freight prepaid on above in- voice 17.20 The above represents Howard Thompson's account with Hale & Elkins. Mr. Thompson resides in Elmira, N. Y., and transacts all of his business at the Commercial National Bank of that city, Henry Simmons, cashier. On January 10 he gives his check to this bank in payment for a bank draft Questions in Advanced Bookkeeping 69 drawn on the Traders Bank of Chicago and payable to Hale & Elkins for an amount sufficient to settle the above account. Write the check and the bank draft called for in the above transaction. January 1917 For question 1 use journal, cashbook, sales journal or sales book and purchase journal or purchase book. The special col- umns required in the journal are Accounts Payable Dr., Notes Receivable Dr., Accounts Receivable Cr. and Notes Payable Cr. The special columns required in the cashbook are as follows: On the debit side, Accounts Receivable, Discount on Sales and Sales; on the credit side, Accounts Payable, Discount on Pur- chases and Expense. All original entries must contain sufficient explanation to make transactions clear. 1. M. J. Phelps of Albany, N. Y., wholesale dealer in dry goods, closes his books at the end of November, 1916, and finds that his assets and liabilities are as follows : Assets: Cash on deposit in Bank of Commerce, $1298.16; merchandise as per inventory, $12,906.18; notes receivable, $2496.24; accounts receivable, $4875.50; furniture and fixtures, $895; accrued interest on notes receivable, $4.83. Liabilities: Notes payable, $1500; accounts payable, $3687.43; interest accrued on notes payable, $1.28. Among the assets are the following: Notes Receizable An interest-bearing note dated Nov. 20, payable in one month, Samuel Barker, maker, $1000 60-day note dated Nov. 15, R. M. Peters, maker, $525 70 Questions in Advanced Bookkeeping Accounts Receivable L. M. Lester, Schenectady, N. Y., $840 (invoice dated Nov. 21, terms, y i0 , D / 30 ). A. K. Dunning, Buffalo, N. Y., $945.16 (invoice dated May 1, terms, 3 / 10 , n / 30 ). Among the liabilities are the following: Notes Payable 30-day interest-bearing note dated Nov. 20, in favor of Ward & Howe, Syracuse, N. Y., $700 Three-months note dated Nov. 1, in favor of the Bank of Com- merce, Albany, N. Y., $800. Accounts Payable Francis Bros., New York, N. Y., $1525 (invoice dated Oct. 15, terms, 7 30 , %o> Howard & Jones, Rochester, N. Y., $1422.23 (invoice dated Nov. 25, terms y 20 , n/ 60 ) Edwards & Hemming, Watertown, N. Y., $740.20 (invoice dated Nov. 30, terms, n / 30 ) On Dec. 1 Phelps admits William Harrison as an equal partner, the new firm to be known as Phelps & Harrison. Harrison invests an amount equal to Phelps's net invest- ment, paying one-half in cash and giving his two-months note, dated Dec. 1, for the balance. (a) Assuming that a new set of books is opened, make the entries for the foregoing facts, (b) Record the fol- lowing selected transactions for the month of December: Dec. 2. Received from L. M. Lester a New York draft in payment of his invoice of Nov. 21, less the discount. Dec. 4. Received from E. C. Roberts, Newburg, N. Y., terms one-half cash, balance 15-day interest-bearing note, an invoice of goods amounting to $2195.48. A check and a note have been forwarded by mail to Roberts. Dec. 6. Paid by check the following bills : Rent, $125 ; Questions in Advanced Bookkeeping 71 office supplies, $36.40 ; typewriter and desks, $250 ; insur- ance, $30 ; telephone, $5. Dec. 6. Cash sales for the day, $225.80. Dec. 8. Sold R. D. Langley, Rome, X. Y., terms one- half cash, balance on account, a bill of goods amounting to $840.50. Dec. 11. A. K. Dunning failed in business and compro- mised with his creditors on a basis of 75$ on the dollar. In accordance with this agreement we received his check in payment of his invoice of May 1. Dec. 12. Sent a check to Howard & Jones in payment of their invoice of Nov. 25, less the discount. Dec. 13. Received Langley's check for the cash pay- ment required in sale of Dec. 8. Dec. 15. We accepted and returned to Francis Bros, their draft at 10 days sight in payment of their invoice of Oct. 15, less the discount. Dec. 19. Sent E. C. Roberts a check in payment of our note and interest due to-day. Dec. 20. Received from Ames & Wallace, Rochester, N. Y., terms, 10 days net, an invoice amounting to $1254.16. Dec. 20. Received from Samuel Barker a letter inclos- ing our note of Xov. 20, in favor of Ward & Howe and indorsed by them to Barker. He asks us to apply this note and interest on his note of Nov. 20 and to allow him a few days in which to pay the balance of the note. We comply with his request. Dec. 21. Prepaid by check our note of Nov. 1, in favor of the Bank of Commerce, less the discount for the unexpired time. Dec. 22. Cash sales for the day, $164.28. Dec. 26. Sold Alexander Purdy, Herkimer, N. Y., on 72 Questions in Advanced Bookkeeping his 90-day note, a bill of merchandise amounting to $45075. Dec. 26. Received from Ames & Wallace a letter stat- ing that they prepaid the freight amounting to $16.98 on their invoice of Dec. 20 but neglected to add the freight to the invoice. We credit them for the amount of the freight. Dec. 26. Sent check to Edwards & Hemming in pay- ment of their invoice of Nov. 30. Dec. 30. Sent check to Ames & Wallace in payment of their invoice of Dec. 20, including the freight that they prepaid. (c) Foot and rule the books of original entry and indi- cate how footings should be posted. (Do not post.) 2. From the following trial balance and inventories taken from the ledger of Dickinson & Gray, construct a trading and profit and loss statement 'for the year ending Dec. 31, 1916: C. E. Dickinson, capital account $15,893.40 C. E. Dickinson, drawing ac- count $ 1,200. E. L. Gray, capital account 10,296.50 E. L. Gray, drawing account. .. 750. Merchandise inventory Jan. 1, 1916 12,393.45 Purchases 13,516.80 Sales 22,816.55 Returned purchases 895.40 Returned sales 1,258.75 Freight inward 750.95 Discount on sales 1,528.38 Discount on purchases 1,240.64 Traveling expenses 1,185.25 Rent 800. General expense 3,772.61 Questions in Advanced Bookkeeping 73 Wages $ 1.390. Interest and discount $ 19.73 Furniture and fixtures 975. Motor trucks 3,150. Accounts receivable 11,216.80 Notes receivable 1,530. Accounts payable 5,280.45 Notes payable 1,000. Cash 2,024.68 $57,442.67 $57,442.67 Inventories, Dec. 31, 1916: Merchandise on hand $15,325.48 Accrued interest on notes receivable 26.14 Interest accrued on notes payable 12.81 Wages due and not paid 275. Motor trucks, less \2y 2 % depreciation Furniture and fixtures, less 8% depreciation 3. The following is an outline of the balance sheet of two partners. Copy the outline on your paper and on the blank lines write the titles of accounts that might prop- erly appear in such a balance sheet. Do not supply the amounts. Use any names you choose for the partners. CURRENT ASSETS CURRENT LIABILITIES Sxxxx.xx $xxxx.xx xxxx.xx XXXX.XX .pXXXX.XX xxxx.xx xxxx.xx $xxxx.xx FIXED LIABILITIES xxxx.xx - 4 Questions in Advanced Bookkeeping FIXED ASSETS PROPRIETORSHIP $xxxx.xx $xxxx.xx xxxx.xx $xxxx.xx xxx.xx $xxxx.xx. xxx.xx $xxxx.xx $xxxx.xx xxx.xx $xxxx.xx xxx.xx xxxx.xx $xxxx.xx . $xxxx.xx 4. Explain the advantages of controlling accounts and special columns in books of original entry. 5. Define five of the following: (a) royalty, (b) bonus, (c) unsubscribed stock, (d) bonds, (e) surplus, (f) stock certificate, (g) goodwill. June 1917 1. The Morgan Mitchell Company manufacture doors, sash and interior woodwork. They operate three ledgers ; namely, customers', creditors' and general. Their main cashbook has the following rulings : left page, Net Cash, Accounts Receivable, Interest and Discount, General Ledger; right page, Net Cash, x\ccounts Payable, Pur- chase Discount, General Ledger. All cash receipts are deposited in the bank. A petty cash fund of $100 is maintained from which all currency payments are made. These payments are recorded and distributed in a petty cashbook with special columns. At the end of each week Questions in Advanced Bookkeeping 75 the petty cashbook is footed and closed and the footings are brought into the main cashbook. On June 1, 1917, the amount on deposit in the Bank of the Republic is $7643.28 and the petty cash fund is $100. (a) Under date of June 1, 1917, enter the cash balance in a cashbook with rulings as described above, (b) Make, with proper explanations, the necessary entries for the following cash transactions : June 1. Paid the West Virginia Lumber Co. for invoice of May 18, car 243,867, $456.85, less 2% discount and less freight $145.22. June 2. Discounted at the Bank of the Republic Brown Brothers' two-months note of May 29 for $500 and re- ceived credit for the proceeds. June 2. Received of the Lawson Contracting Co., $450 to apply on account. June 2. Drew a check to cover the weekly pay roll, $1864.95. June 2. Drew a check for petty cash vouchers $86.57, distributed as follows : delivery expense, $34.25 ; shop ex- pense, $29.18; office expense, $12.75; selling expense, $4.29; accounts receivable (J. & M. Parks), $6.10. June 4. Paid the Central Railroad Co. their weekly freight account $463.82. This payment was charged as follows : West Virginia Lumber Co., car 243,867, $145.22; Pacific Lumber Co., car 197,658, $254.80; Car- ter & Williams, car 251,897, $63.80. June 6. Paid the Bank of the Republic $1000 to take up the Hudson Contracting Co.'s two-months note of April 6 which we had previously discounted and which the maker is unable to pay. June 6. Received of the Hudson Contracting Co. their -6 Questions in Advanced Bookkeeping two-months note for $1000, dated to-day, and their check for two months' interest on that amount. June 6. Discounted at the Bank of the Republic the Hudson Contracting Co.'s note of June 6 for $1000 and received credit for the proceeds. June 7. Sold James Whitcomb for cash an invoice ot lumber, $35.46. June 7. Gave the Richmond Lumber Co. our check for invoice of May 18, car 293,416, $484.12, less 3% discount. June 9. Drew a check for the weekly pay roll, $1871.40. June 9. Drew a check for petty cash vouchers $93.17, distributed as follows : Delivery expense, $19.80 ; shop expense, $28.10; office expense, $18.42; selling expense, $26.85. (c) Summarize and close the cashbook and journalize the summary for posting. (Do not post.) 2. On May 17, 1917, C. E. Burns, Binghamton, N. Y., owned $1500 in cash. On the same day he ordered of the Western Grain Co., Chicago, 111., 1 car fancy clipped white oats. The oats were shipped May 23 and arrived in Binghamton June 4. The invoice weight was 51,200 lb. net. The price was 67^ a bushel (1 bu.= 32 lb.), f. o. b. Binghamton, and the terms were " seller's draft on buyer at sight with documents attached." The freight, at 15^ a hundred, was paid by the buyer and charged to the seller. When the draft was presented to Burns May 28, he drew his check on the Third National Bank of Binghamton for the amount and all of the docu- ments were delivered to him. Sales were made by Burns from the carload of oats as follows: June 7, 500 bu. @ 85^; June 10, 400 bu. @ 86^ ; June 12, 800 lb. @ $2.40 a hundred, all for cash. Expenses were paid in cash as follows : June 4, $5.65 ; Questions in Advanced Bookkeeping 77 June 10, $6.40. The oats unsold June 13 were inven- toried at cost. Set up and close the following ledger accounts : Stock of oats, Sales, Expense, Profit and Loss, C. E. Burns and Cash. 3. Show the entries required in the following: (a) The net profit of a corporation is $18,765.20. The directors have declared a dividend of 6% on a capital stock of $100,000 and have agreed to carry $10,000 to the surplus account, (b) Your sales for the period just ► ended amount to $47,568.12 and you wish to set up a reserve for bad debts of 1^2% of sales. 4. Discuss the method of financing the transaction de- scribed in question 2, describe the documents that would accompany the seller's draft and state briefly the purpose of each. • 5. (a) Write the draft mentioned in question 2. (b) Write the check mentioned in question 2. 6. Reconcile the following bank account : Balance per check book, $972.13 ; balance per pass book, $1986.24; checks outstanding, $324.89, $63.14, $263.84, $73.28, $276.88 ; items not entered in the check book, interest on bank balance, $14.23, and exchange on out of town $2.15. 7. P. O. Judson's balance sheet Jan. 2, 1917, showed the following assets and liabilities: Cash, $3465.40; sal- aries and wages due employees, $1869.50; accounts re- ceivable, $4375.20; notes payable, $7200; accounts pay- able, $1234.75; merchandise inventory, $8145: motor trucks, $1265 ; interest accrued on notes payable, $56.40. On March 31, 1917, Judson's assets and liabilities were as follows : Cash, $958.60 ; accounts payable, $3978.84 : notes payable, $9675 ; salaries and w r ages due employees, j8 Questions in Advanced Bookkeeping $345.50; merchandise inventory, $9615; accounts receiv- able, $4314.25. Prepare a statement to show Judson's profit or loss. January 1918 For question 1 use Journal and Cashbook. The columns re- quired in the Journal are Accounts Payable, Dr., General, Dr., Accounts Receivable, Cr., and General, Cr. The columns required in the Cashbook are as follows : left side, Net Cash, Accounts Receivable, Sales Discount, General; right side, Net Cash, Accounts Payable, Purchases Discount, General. All original entries must contain sufficient explanation to make transactions clear. 1. Make the necessary entries for the following se- lected transactions of the business of Hartley Brothers, Inc., Yonkers, N. Y. July 1, 1917. The cash account in the general ledger shows a balance of $1465.80. July 2. Received from the Cortland Cement Co. 1 car plaster, invoice dated June 7, terms 2 / 30 , %<» $365.75. July 2. Paid the New York Central Railroad Co. freight on the Cortland Cement Co.'s shipment of June 7, $60, which, according to the terms of this purchase, is to be charged to the Cortland Cement Co. July 3. Paid the Virginia Lumber Co. their three months' note of April 3, $425, with interest at 6%. Tuly 5. Paid the Louisiana Cypress Co. invoice of June 26', $212.56, less 2%. July 5. Paid bill of June 15 for stationery $45.78. July 6. Issued check for weekly pay roll $478.65. July 8. Received checks in settlement of the following : Oliver Davidson, invoice of June 8, $235, less 2% ; the Questions in Advan«^d ,b:-OKK , --E n iNG 79 New York Construction Co.,. invoice of June 29, $342.60, less 3% ; Robert W. Manley on account $250. July 8. Paid the Cortland Cement Co.'s invoice of June 7. July 9. Received from H. Barber & Co. their 60-day note, dated June 29, for invoice of that date $275. July 10. Made the following sales: J. H. Case & Son, 50 M red cedar shingles at $4.45 ; 10,000 feet N. C. pine at $48 a thousand, terms 2 / 10 , n / 30 ,' the Fairchild Lumber Co., 20 tons marble cement at $22.50, terms cash, less 3%. July 11. Received from the Fairchild Lumber Co. their check for invoice of July 10. July 12. Received from the Sullivan Building Co. their 60 : day interest-bearing note of June 20, for invoice of that date $245.50. July 13. Gave the Tonawanda Lumber Co. our two months' note, dated June 28, for invoice of that date $454.50. July 13. Issued check for weekly pay roll $465.25. Paid postage, car fares and petty expenses $18.74. July 13. Discounted the Sullivan Building Co.'s note of June 20 at the Bank of New York and received credit for the proceeds. July 15. Received through the First National Bank the Louisiana Cypress Co.'s invoice of July 1 for $814.40, with their 90-day draft of the same date and amount, which we accepted. Rule and foot the cashbook and show the totals in the form of a journal entry. Close the journal. 2. On June 30, 1917, the ledger accounts of Hill & Hale show the following balances: A. W. Hill (capital) $6000: A. W. Hill (private) $250: E. E. Hale (capital) $4000; E. E. Hale (private) $175.35; cash $672.40; ac- 80 Questions riN. Advanced Bookkeeping counts receivable $2 165.84.; -merchandise inventory (Dec. 31, 1916) $7787.11; purchases $8400; sales $12,560.50; returned sales $250; traffic equipment $1400; notes pay- able $500 ; rent $600 ; inward freight and express $312.60 ; advertising $200; purchase discount $168.40; expenses $1015.60. The merchandise inventory on June 30, 1917, is valued at $8373.67 ; the unused expense items amount to $38.20. It is estimated that traffic equipment has depreciated 5% and that 60% of the advertising cost should be charged to the period under consideration. Freight bills unpaid amount to $18.75 and $5 interest has accrued on notes payable. (a) Make a trial balance June 30, 1917. (b) Set up and close all accounts involved in finding the profit or loss for the six months ending June 30, 1917. (c) Prepare a Profit and Loss Statement for the six months ending June 30, 1917. 3. (a) Write the Sullivan Building Co.'s note which was received on July 12 (question 1). Make it payable at the Bank of the Republic. Show the necessary in- dorsement on this note when it was discounted on July 13. (b) Write the draft mentioned in the transaction of July 15 (question 1), and show Hartley Brothers' ac- ceptance. 4. Describe some plan with which you are familiar for handling petty cash and keeping a record of petty cash transactions. The Progressive Series Answers in Advanced Bookkeeping for DRILL, TEST AND REVIEW By ISAAC PRICE, A.M. Washington Irving High School. New York Evening High School for Men Author: "Direct Method of Teaching English to Foreigners," "Compre hensive Question and Answer Book," "Outlines in American History." HINDS, HAYDEN & ELDREDGE, Inc. NEW YORK CHICAGO PHILADELPHIA Copyright, 191 8, by HINDS, HAYDEN & ELDREDGE, INC. International Copyright Secured PREFACE. A practical Question and Answer Book should be com- prehensive in scope without having too many and too de- tailed questions. It should furnish abundant material for drill, test, and review of the subject by means of well arranged and well graded questions, and should aim to cultivate in the student those qualities brought out in a good recitation by a skilled teacher. With these objects in mind this series of books has been written. The separate books are intended, not only for beginners, but also for students pursuing advanced and review work. Care has been taken to make each book complete. The papers given at civil service, college en- trance, and Regents examinations have been carefully culled for suitable questions, and the material arranged topically and logically to emphasize principles as well as essential facts. The answers are supported by the latest authorities and in consonance with the accepted texts for the best elementary and secondary schools. To make the work more helpful, diagrams, illustrations, maps, topical outlines, and glossaries have been included. Acknowledgment is due to the many experienced teach- ers who have freely offered suggestions and criticisms de- signed to make this a most helpful "text -book." The theory and practice of Advanced Bookkeeping and Office Practice is presented in this book. The first section is devoted to the theory and the descriptive features, while the Regents Questions for the past several years are found in the latter half. The latest texts and authorities, as well as a number of teachers in the New York City High Schools, have been con- sulted by the author, who desires to express his indebtedness to them for their kindly aid and assistance. To My Son LEONARD whose questions come from the mind and the heart this series is affectionately DEDICATED BOOKKEEPING TERMS AND THEIR EQUIVALENTS IN ACCOUNTING PRACTICE Open an account Make an entry Resources Gains Loss & Gain Account Business Statement Loss & Gain Statement Financial Statement; Statement of Resources and Liabilities Set up an account Frame an entry- Assets Profits Profit & Loss Account f Statement of Income, Profit & Loss; Trading Statement Balance Sheet ; Statement of Assets and Liabilities. Answers in Advanced Bookkeeping 1. Bookkeeping is the proper classifying and recording of the facts and transactions of a business. 2. The business man or firm should be able to know, within a reasonably short time, his exact and accurate financial condition. He should be able to ascertain whether he is gaining or losing money, whether he is overbuying, whether he is selling his stock at the right price, whether he is making a reasonable profit, he should be able to make comparisons and tell differences, etc. So many firms, even in times of greatest prosperity, are unable to determine, until too late, their exact financial condition. His books should also show the probable outcome of future opera- tions based on similar operations of the past. 3. A business transaction is an exchange of values, the val- ues not necessarily being money, but they may be in terms of money — that is, upon a common basis. One person (or firm) receives something of value from another for which he gives something of value in exchange. 4. In two ways; the business receives and it gives. See An- swer 3. There are one or more debits and one or more credits involved in each transaction. 5. (a) A debit is a representation of value received by the account under which the debit is placed. It is generally an amount due the business, or the value or amount of. a thing or service received, (b) A credit is a representation of a value given away or disposed of. It is an amount owed to others by the business or the amount or value of a thing or service given. (c) A debtor (Dr.) is any person owing value to others, while (d) a creditor (Cr.) is one to whom value is owing. Debit and credit can be used only in connection with accounts, while debtor and creditor are used to refer to persons or their representatives. 6. An account is a systematic collection of debit and credit items of the same nature and class under one heading in a book of accounts, making easier the arithmetical determination of the value of the account. Custom has arranged that all debit items are placed on the left-hand side and the credit items on the right- 107 io8 Answers in Advanced Bookkeeping hand side of the ledger accounts. These items are thus ar- ranged in the most convenient form for solution. 7. (a) Opening an account consists, first, in writing the name or title at the top of the page or space for the account. The initial entry is to be made according to circumstances, (b) Clos- ing an account is making it show at a glance its relation to the business, whether a gain or a loss, or whether a resource or a liability. See Answers 90 and 97. 8. (a) Real accounts are those accounts which show financial condition, while (b) nominal accounts reflect the changes in financial condition, and close out periodically into profit and loss ; that is, they contribute more directly to the profit or loss of an enterprise. They may be subdivided according to the nature of the business into (1) Trading, (2) Manufacturing, and (3) Profit and Loss (Loss and Gain) accounts. 9. A personal account is an account standing in the name of a person or group of persons or representatives of persons. 10. REAL ACCOUNTS Assets Cash in Bank, Cash (Petty), Securities (Stocks, Bonds, etc.), Notes Receivable, Accounts Receivable (Con- trol), Inventory, Merchandise, Inventory, Furniture and Fix- tures, Real Estate, Good Will. NOMINAL ACCOUNTS Liabilities Notes Payable, Accounts Payable (Control), Capital (or Proprietors' Ac- counts). Manufacturing Account: Material Used, Supplies Used, Factory Wages, Factory Expense. Trading Accounts: Merchandise Sales, Sales Allowances, Sales Discount, Freight Outward, Manufacturing Cost, Merchandise Inventory and Purchases, Purchase Returns, Purchase Discount, Freight Inward, Advertising Expense, Selling Expense, » Delivery Expense, Office Expense, General Expense. Profit and Loss-' Bank Interest and Discount Bad Debts. Answers in Advanced Bookkeeping 109 11. See Answer 10, Nominal Accounts. The trading accounts are those in which are recorded the various items entering into the cost of the merchandise and those concerned with the re- turns from the merchandise sold. From these accounts the trad- ing statement is made up. See Answers 93 and 94. 12. Loss and Gain, or Profit and Loss. 13. See Answer 10, Nominal Accounts. 14. A controlling account is an account in the general ledger that summarizes the total of a class of accounts in another or subsidiary ledger. 15. A suspense account is an account into which all items of a doubtful nature are placed until their final disposition is de- termined upon. It is not the account for losses from bad debts, etc. 16. (a) An original entry is the first written record made of any transaction. It should be made at the time of the trans- action or with the least possible delay, (b) An adjustment entry is one which corrects an improper entry previously made, and, at the same time, makes the proper entry. 17. (a) Cash $150. Merchandise » $150. (b) Cash 250. Notes Receivable 750. Merchandise 1000. See Answers to Regents Questions for numerous other illus- trations. 18. Books of original entry are those in which the first writ- ten records of a business transaction are made. They are im- portant because they are the only ones generally allowed as evi- dence in court, and supply the items from which the other books are made up. so that in case of loss or fire the secondary books could be written up from these books. Errors in original books of entry, or in any bookkeeping books, should be indicated by the word " void " written in red ink and a red line drawn through the entry. Under no circumstances should erasures be made in any book of record. 19. (a) The Principal Books of account are those from which or to which posting is done. They are the Journal, the Cash Book, the Sales Book, the Invoice or Purchase Book, and the no Answers in Advanced Bookkeeping Ledger. Where other books are kept from which posting is done they are also principal books, (b) An Auxiliary Book is one in which neither a debit nor a credit is recorded, but which contains and supplies the details to make clearer certain postings. They are the Check Book, the Bill Books, the Stock Books, the Time Books, etc. 20. The Daybook is a complete record of the daily transac- tions of a business. The Daybook, per se, is seldom kept in any business house. See Answer 22. NEW YORK, DECEMBER 23, 1917 Mo. Day History of the transactions Items Totals 21. The Journal is the book in which the debits and the cred- its are originally and properly classified with a view to their being transferred to the ultimate books of record. Many firms do not use the Journal except for the classification of the debits and credits in involved transactions, the simpler transactions be- ing immediately and directly posted under their proper accounts from the original books of record. It may include special col- umns for different purposes (the six-column journal) and its use depends entirely upon the business itself. CHICAGO, SEPTEMBER 19, 1918 Mo. Day Name of Name of Thing L R Value Value Thing ,-. or Service % SerV ' CG , Received Given Out ^ . , Given Out Received Cash 4. 91. Mdse. • 7. 91. 22. The Daybook-Journal, or Journal-Daybook, is a combina- tion of the Daybook and the Journal (for all those transactions which are journalized, the transactions not journalized being found in the other original books of entry which are really day- books) and is used to record all those transactions. This book is used wherever journalizing is required in the questions throughout this book, unless otherwise stated. See Answers and Regents Questions. Answers in Advanced Bookkeeping hi MARCH 1. 1917 I, Martin Simon, began business, in- vesting cash, $5000.00. 1 Cash Investment 5000. 1 Martin Simon 5000. 1 Expense Rent for March 100. Cash 100. Mdse. Cash L. Whitman & Co. 1650.56 1650.56 Cash Mdse. R. C. Wilson Invoice 114.76 114.76 Martin & Ray Mdse. Sold on acct. 509.24 509.24 23. The Cashbook is used instead of the Cash Account in the Ledger for the entry of all details regarding the receipt and disbursement of cash. It contains a complete record of all the cash receipts and disbursements, showing the respective accounts to be credited or debited, with a brief explanatory statement. The balance shows the difference between the receipts and the expenditures shows the amount of cash on hand (in safe, drawer and bank). The book should be balanced daily, or at least weekly or monthly. CASH ACCOUNT Mo. Day Cash 365. Mo. Dav Cash 250. Received 450. Paid Out 300. Difference or Cash on hand, a Resource H2 Answers in Advanced Bookkeeping debit side, cash book CASH RECEIPTS Balance Cash on hand 3567.23 May 1 Henry Smith On account 189.15 2 W. B. Imlay Bill Feb. 20, 250. Bway. Dept. Store Bills, Jan. 1543.89 4 Notes Receiv. Jameson & Co. note 150. Interest 3-mo. J. & Co. note 2.25 5 Sales Cash Sales 350.76 21 Notes Receiv. Wilkins Brothers 98. Interest 60-day W. B. note .98 24 Notes Pay. Borrowed on 6-mo. note 1000. 7152.26 June 1 Balance Cash on hand 1546.75 CASH DISBURSEMENTS credit side, cash book May 3 Saml. Eisen Bills April 1256. Expenses Advertising 11.45 6 Williams Co. Bill, March 4, 87.50 7 Notes Payable Favor. Hull & Griooen 1250. Interest Note, H. & G.-3-mo. 10 Expenses Stationery, etc. Fixtures Showcases Sales Expenses Salesmen's expenses 25 Purchases 26 Murray & Co. Bills March 27 Salaries May 31 Balance 3.75 25.50 '110. 150. 25.67 550. 2135.38 1546.75 7152.26 24. The Sales Book is the record book for all sales made, whether on account or for cash. Cash sales or sales for small amounts for which no bills are rendered, are generally lumped together as one entry. The record shows the name and address of the buyer or purchaser, the terms of sale, the detailed items, the prices and the total amount of goods sold sale. The book is closed at least monthly, the total amount of sales posted to the Sales Account in the Ledger. The goods are said to be charged when they are entered in the Sales Book. answers in Advanced Bookkeeping 113 • MODEL SALES BOOK NOVEMBER 12, 1919. Broadway Dept. Store 8/10, 7/10-oOx 165 20 doz. collars 98 10 M scarfs 198x 6 yd. pleatings 1. 6. 96. Oakland, Cal. 2. 40. 5. 50. 1. 6. Boston, Mass. 2. 150. 3. 300. -13- Jordan. Marsh & Co. reg. 195 75 doz. collars, spec, job 100 " " 3. 300. 450. 25. In the Ledger are found the accounts under which the various charges and credits are systematized. From it the Trial Balance is taken, and from it the various Trading and Financial statements are prepared. The accounts in the Ledger should be arranged in the following order, if only one book is used: (a) General Accounts, (b) Accounts with trade creditors, and (c) Accounts with trade debtors, allotting to each class such space in the book as may be found necessary. The general accounts should be arranged in logical order, while the other accounts should be arranged alphabetically, using preferably a loose-leaf ledger. Where the volume of business permits, it is advisable to use three ledgers, a General Ledger, a Purchase Ledger, and a Sales Ledger, keeping Controlling Accounts of the purchase and the sales ledger in the general ledger. The balances of the Pur- chase Ledger and the Sales Ledger, or of these sections in the one-book Ledger, must agree with the balances of the Accounts Payable Account and the Accounts Receivable Account. Post- ing to the Ledger therefore must come from one of the follow- ing sources — the Cash Book, the Journal, the Invoice or Pur- chase Book, or the Sales Book and such other books as are used from which it is intended to post directly without the in- termediate use of the Journal. 26. The Invoice or Purchase Book varies with the business, and is usually footed at the end of each Trial Balance period. It may be merely a book with columns in which all the essential data in connection with the invoice may be entered, or it may be a book in which the invoices are pasted and the total extended to ii4 Answers in Advanced Bookkeeping the proper columns. The first form is to be preferred. When this is followed the invoices should be filed after the items have been entered in the proper columns. The following are the headings in a model book: Date, Firm from whom goods are purchased, Address, Terms, Amount, Ledger Folio or LF, and Remarks. 27. The Bill or Notes Book contains rulings for the entry of the details of all notes issued and received, as well as all acceptances. This book may be used as a principal book, in which case the posting is done directly to the Ledger. 28. By journalizing is meant the proper systematic classifica- tion of debits and credits of business transactions. When the Cashbook and the Purchase and Sales Books are used, only those transactions that do not affect these books are journalized. 29. The general principle for journalising is: Debit, under correct and appropriate names, all values or their equivalents received by the business; Credit all values that are given out by the business and that which returns value to the business. 30. By posting is meant the transfer of the debits and cred- its to their proper accounts in the Ledger. Posting to the Ledger must therefore come from a principal book. 31. (a) By charging is generally meant the entering of sales in the proper debit columns of the Ledger accounts; it also in general means to debit an account, (b) Crediting is the oppo- site of charging and means the entering of the item on the credit side of the account. 32. A Customer s Ledger is a subsidiary ledger in which the accounts of the customers of the business are kept, that is, the accounts to which all sales are posted; this book contains the Accounts Receivable. 33. Cash includes specie, checks, bank drafts, cashier's checks or drafts, money order, sight or demand drafts and whatever else is given or received as money. The Cash Account shows the amount of cash on hand. It is seldom kept in the Ledger except as a controlling account, but is generally kept in the Cashbook. See Answer 23. 34. (a) Petty cash disbursements, such as car tickets, tele- grams and other minor items for which it is not expedient or advisable to draw checks, should be handled as follows: A check should be drawn for an amount sufficient to cover these Answers in Advanced Bookkeeping 115 disbursements for a definite period. At the end of the period or when the amount is exhausted the total of the expenditures should be entered in the Imprest Fund Account, (b) The im- prest fund or account is the amount drawn to meet the petty cash disbursements mentioned in (a). PETTY CASH (IMPREST FUND) Mar. 1 Balance Check No. 348 100. 3 Expense Postage 10. 6 Expense Telegrams 4. 7 Expense Carfares .50 11 Expense Stationery 16.50 26 Expense Postage 10. 28 Expense Carfares 1. 31 Balance Balance In Drawer Forwarded 58. LOO. 58. 100. Apr. 1 35. (a) Merchandise is the name given to all goods, wares, commodities that a merchant buys and sells, that he handles in his business dealings and transactions, and on which he expects to make a profit, (b) The Merchandise Account or Trading Account is generally used as a controlling account. The object of this account is to show the loss or gain on the commodities with which the merchant deals ; it shows the cost of the goods and the value of the goods sold. 36. Expense is the general name given to all those things or services necessary to the proper conduct and running of the business and which are not sold for profit. It includes such items as rent, fuel and lighting, postage, telephone and telegraph disbursements, etc. The values received in exchange for the disbursements for these items are entered under the general name of expense. Where the expenditures form an appreciable amount, or where it is desired to know exactly how much is expended for each thing or service in order to figure burden or overhead, or costs, it is customary to open separate accounts for those. This plan has generally been followed in this book. 37. (a) Cash is debited for its receipts: for the amount of cash invested in the business and for all cash received from n6 Answers in Advanced Bookkeeping all sources, (b) Credit the Cash Account for all cash paid out, no matter for what purpose: loans, checks, etc. (c) The busi- ness cannot give more cash than it has received. Over- drafts in the bank account are not honored by the bank and cannot, therefore, be regarded as bona fide cash disbursements. 38. (a) Personal Accounts are debited or charged whenever the person in whose name they stand receive some value: as, (1) For all merchandise sold to them on account: (2) For all moneys received by them, as loans, as receipts, as payments, from us or through us; (3) For all debts owing to us at the begin- ning of business; (4) For all merchandise returned to them or sold to them ; (5) For all notes payable in their favor ; (6) For notes and acceptances of others transferred by us to them on ac- count; (7) For all allowances made to us: rebates, shortages, damages, overcharges, etc.; (8) For allowances made in settle- ment of an account due them by us. (b) Personal Accounts are credited whenever they give values: as, (1) For all merchandise sold by them to us on account; (2) For all moneys lent by them to us, or paid by them to us; (3) For all debts owing to them by us at the beginning of business ; (4) For all merchandise re- turned by them to us or sold by them to us, on account; (5) For all notes receivable in our favor; (6) For all notes and acceptances of others transferred to us by them on account; (7) For all allowances made to them: rebates, shortages, damages, overcharges, etc. ; (8) For allowances made by us in settlement of their account in full. PERSONAL ACCOUNTS JAMES LANGER HENRY FRANKLIN Paid him Bought from on account him on acct. or or Sold to him Paid cash or on account Received from him on account. Bt. from him on acct. Sold him on account Paid him Paid by hiin on acct. Difference, a Difference, a Liability — you owe to him Resource — owing to you Answers in Advanced Bookkeeping 117 39. (a) Expense is debited for all expenditures or disburse- ments necessary for the running of and incurred by the business. See Answer 36. (b) The account is credited for all moneys or values received from others for expenses. The difference is a Loss. EXPENSE Expense incurred Expenses reed. by you from others Expenses incurred by you Expenses received by you Difference, a Loss 40. (a) Merchandise is debited for all goods invested at the beginning of the business (inventory), goods bought and goods returned (unless a separate account is kept for this purpose). (b) The account is credited for all goods sold. The difference is a Gain or Profit. MERCHANDISE Mo. Day Value of 750. Mo. Day goods 85. bought Difference, GAIN 41. Since the main object of the Merchandise Account or Trading Account is to show the loss or the gain on the goods with which the merchant deals, it is necessary to know the cost of these goods. The cost thus includes the cartage, drayage, or freightage. See Answer 61. 42. (a) This account is debited or charged with all notes, time drafts, and acceptances held against others; i.e., when issued by others and accepted by us. (b) It is credited when the notes are paid or otherwise disposed of. The balance will show the uncollected notes issued by others, and is a Resource. Value of 365. goods 450. sold 500, n8 Answers in Advanced Bookkeeping NOTES (BILLS) RECEIVABLE Vv ntten promises 01 others reed. Value of Notes received Value of Notes settled Difference, owing to you, a Resource or Asset Written promises of others paid or settled. NOTES RECEIVABLE Mar. 16 Apr. 10 July 6 Nov. 24 Jan. 1 43. (a: Balance 500. Apr. 16 1050. Sep. 7 987. Nov. 14 2114.87 Dec. 31 4651.8/ Balance 500. 987. 1050. 2114.87 4651.87 2114.87 The Accounts Receivable Account (Personal Ac- counts, or Personal Accounts Receivable) is the controlling ac- count in the Ledger for all the Accounts Receivable or Personal Accounts in the subsidiary or Customer's Ledger. Accounts Re- ceivable, the individual accounts, are the accounts with individ- uals, firms, or corporations to whom we sell goods, (b) Charge this account with the total of the charges of the month. The individual accounts are debited for all goods sold by us to them, (c) The account is credited with the cash payments by custom- ers, taken from the Cash Book at the end of the month, and with notes receivable, returns, discounts, allowances, rebates. The individual accounts are likewise credited for the various items in the preceding. The balance of the account must agree with the sum of the balances of the individual accounts of the trade customers. The balance is an Asset or Resource. ACCOUNTS RECEIVABLE Dec. 1 Balance 1/90.65 Dec. 15 Mdse. rtd.18 271.16 31 Sales S 65 13315.07 31 All'n'c's 19 Cash C 87 100.15 11419.34 Balance 3315.07 15105.72 15105.72 Jan. 1 Balance 3315.07 Answers in Advanced Bookkeeping 119 44. (a) This account is to provide a means for offsetting in the bookkeeping work the differences that remain when balances of personal accounts are uncollectable. (b) The account is deb- ited with the amounts of the balances of the personal accounts when hope of collection is abandoned, and it is credited with an estimated amount, based on the amount of the charge sales, suffi- cient to provide for losses. 45. Charge the account with all insurance — fire, burglary, plate glass, fidelity, liability, bad debts, etc. At the end of each month charge the proper accounts (Insurance on Stock and Equipment, etc.) with their proportion, the balance being an asset as " Prepaid Insurance." 46. Charge this account at the end of the period with all accrued interest (not yet paid) on notes, etc., due from others, crediting " In terest Acc ount." When the interest is received it is credited to " Accrued Interest Receivable." 47. Charge this account (Store Property Account. Factory Property Account, Office Property Accowrt, etc.) with the pur- chase price of the property. Repairs, unless in the nature of permanent improvements, are not to be charged to this account. A reasonable amount should be periodically credited to " Reserve for Depreciation." 48. This account is to be charged with the value of all equipment such as counters, shelving, scales, measures, etc., used in the conduct of the business. A fair amount should be writ- ten off periodically for depreciation. 49. This account (Store Equipment, Factory Equipment, Of- fice Equipment, etc.) is to be charged with the value of the equipment and appliances, determined from the invoices. Pe- riodically, a fair amount should be written off for depreciation. 50. Charge this account with the cost of the automobiles, wagons, other vehicles, horses and harness. When this equip- ment is sold, the account is to be credited with the amount of the sale. Do not charge this account with the repairs to auto- mobiles and wagons, etc., horseshoeing, or anything of this na- ture. These expenditures are to be charged to the Expense Ac- count. A fair amount is to be written off periodically for de- preciation. 51. (a) Xotes Payable Account is to be credited with all notes given by us to trade creditors, to banks, or to others, or 120 Answers in Advanced Bookkeeping for time drafts made out in their favor, (b) It is debited with the amounts paid in settlement of the notes or drafts. The bal- ance shows the amount of our notes or time drafts outstanding and should correspond with the balance in the Notes Payable section in the Bill Book. The balance, if any, is a Liability. NOTES (BILLS) PAYABLE Our written Our written promises to promises to pay redeemed pay issued Value of Notes issued Value of Notes redeemed Difference, owing to others, a Liability NOTES PAYABLE Nov. 30 C 197. Dec. 31 C 3459. Balance 120. Nov. 30 Dec. 31 NB 1378. NB 2398. 3776. 3776. Jan. 1 Balance 120. 52. The object of the Notes Payable Account is to show the amount owed by the business as evidenced by its written obliga- tions in the form of notes or accepted drafts. The account is the opposite of the Notes Receivable Account. 53. (a) Accounts Payable {Personal Accounts, or Personal Accounts Payable), see Answer 43. This account is credited with the value of the merchandise bought on account, the amount being carried to this account monthly from the total of the In- voice or Purchase Book, (b) It is debited with all merchan- dise returned, reductions (Journal), cash payments, discounts (Discounts on Purchases), (Cash Book), rebates, allowances, reductions (Journal or Ca^h Book). The separate or individ- ual accounts are debited and credited for in like manner. The balance of the account must agree with the sum of the balances of the trade creditors' and others' accounts. Answers in Advanced Bookkeeping 121 ACCOUNTS PAYABLE Dec. 1 Mdse. retd. 508.19 Dec. 1 Balance 1961.76 21 Allowances 116.66 Purchases 6585.24 31 Cash 692572 31 Balance 996.43 8547.00 8547.00 Jan. 1 Balance 996.43 54. The Accrued Interest Payable account is to be credited at the end of the period with the interest accrued (not yet paid) on notes, etc., due others, charging " Interest Account." When the interest is paid it is charged to Accrued Interest Payable. 55. (a) Credit the Accrued Salaries Account with the sal- aries and wages earned and unpaid at the end of each month, and charge the proper expense accounts. When payment is made this account is charged and closed out, and the balance of the pay roll is charged in the regular way. (b) The Accrued Taxes Account is credited with the taxes due up to the end of the month, charging the proportionate amounts to the accounts in which they belong. When the taxes are paid this account will be charged. 56. This account contains the record of the withdrawals of cash not including salary, such as withdrawals for home ex- penses, for clothing, donations, etc. At the end of the period the amount of this account is closed into the Proprietor's Cap- ital Account. ROSWELL R. FLOWER. PERSONAL ACCOUNT Mar. 31 Capital a/c 1000. Jan. 13 Cash 100. 24 H 250. Feb. 15 Household 458. Mar. 1 Life Ins. 111. Gifts 81. 1000. 1000. Mar. 31 Roswell R. Flower. Capital a/c 1000. Roswell R. Flower, Personal a/c 1000. 122 Answers in Advanced Bookkeeping 57. When a mortgage is placed upon real estate, or assumed at the time of purchase, this account is credited. When it is paid, it is charged when the mortgage is paid. 58. This account represents the proprietor's net capital. At the end of the period the net profit is credited to this account. The amount of his withdrawals (Answer 56) is then closed into this account. The balance of the account is his net capital at the time of closing. In the event of a partnership each partner's net capital would be shown in his respective account and the net profit (or loss) carried to the credit (or debit) of their accounts in agreed proportions. In the event of a corporation this ac- count represents the amount of the issued capital stock and the profit or loss is carried to " Surplus " account. CAPITAL-PROPRIETOR-INVESTMENT Money withdrawn or received from the Money invested in the Business Business Investment plus Net Gain Money withdrawn (Loss) Difference, Present Worth or Net Insol- vency. ROSWELL R. FLOWER , CAPITAL ACCOUNT Apr. 1 May 23 Dec. 31 31 Owed others 500. Withdrawn C 980. Net Loss J 425. Net capital 6000. 7905. Apr. 1 July 11 Nov. 7 Investment H M Net Capital Net Profit Net Capital C 5000. C 2345. 560. 7905. Mar. 17 31 31 Withdrawn 850. Personal a/c 1000. Net Capital 8650. 10500. Jan. 1 Mar. 31 Apr. 1 6000. 4500. 10500. 8650. 59. The Sales Account is credited with the total sales of all merchandise, the charged sales being taken from the Sales Book, Answers in Advanced Bookkeeping 123 as well as the cash sales. Returns should be debited at selling price for all goods returned by customers. The difference in this account will be the net sales which is transferred to the credit of Trading Account. SALES Mar. 31 Goods retd. 458.04 Damaged goods 56.24 Overcharges Shortage Sales Disct. Trading a/c 9.12 11.45 159.35 5980.65 6674.85 Mar. 31 Sales 6674.85 6674.85 60. This account is charged with all allowances and rebates given a customer not contemplated or agreed upon at the time of the sale. Allowances and rebates, reductions, etc., should not be charged to Sales, but closed at the end of the period into Trading Account. 61. Merchandise Purchases Account is charged with the face of the invoices of merchandise before deducting cash discounts. The account is also charged with the freight, expressage, dray- age on merchandise purchased when no separate account is utilized for this purpose. (See Answer 41.) Credit the ac- count with any returns of merchandise made to seller and with any allowances for defects in goods received from manufacturer or wholesaler. The balance of the account is transferred to the debit of the Trading Account. PURCHASES Mar. 31 Commissions 115. Mar. 31 Damaged Freight 55.76 goods 245. Purchases 4375.24 Shortage Retd. goods Overcharges Trading a/c 56.87 98.11 7.02 4139. 4546. 4546. 124 Answers in Advanced Bookkeeping 62. (a) Charge this account with the salaries of the man- agers, bookkeepers, office staff, and other general office help not otherwise charged, (b) Charge this account with part of the salary of the proprietor, active partner, and manager or buyer and the wages of the office staff proportionate to the time of buying, (c) Charge this account with the wages and other remunerations of sales persons, order takers, and all others en- gaged in selling, both as regular and as extra force, (d) Charge this account with the regular and part time employees engaged in delivering, and with the part of the wages of other employees, whether on sales force or office force, proportionate to the time given to the delivery work. 63. (a) Charge this account with the traveling expense of buying trips and other expense incurred in buying (not covered by any other account), (b) Charge this account with the cost of the wrapping paper, cartons, twine, salesmen's order books, and all other items of direct selling expense not covered by "Salaries and Wages of Sales Force" and "Advertising." (c) Charge this account with all stable and garage expense, includ- ing all repairs, taxes, licenses, upkeep, and with the depreciation charged on the delivery equipment ; also charge this account with the payments for express, parcel post, and contract delivery serv- ice. 64. Charge this account with all the expenditures for adver- tising purposes, such as space in newspapers and periodicals, space on street cars, etc., circulars and postage thereon, adver- tising novelties, trading stamps, charitable donations, window display, electric signs, etc. 65. Charge this account with purchases of stationery of all sorts, account books, and forms (except selling and stock forms), typewriter supplies, printing and postage (except advertising), and depreciation on office equipment. 66. Charge this account with all expense of insurance, fire, burglary, fidelity, plate glass, employers' liability, and other. This account is not to be charged with insurance on store or business property. 67. Charge this account with the amount that has been re- served for bad debts. See Answer 44. 68. Charge this account with heat, light, repairs, depreciation Ansv^ers in Advanced Bookkeeping 125 on store equipment, and with any items that cannot be charged directly to any of the above particular accounts. 69. (a) Charge this account with all rents paid. If the store is owned, rent should be charged equivalent to the amount it could be rented for to others, crediting " Income from Other Sources'"; in the latter event, "Income from Other Sources" should be charged with the taxes, insurance, repairs, and depre- ciation on the store, (b) If the store is owned, the rent 'which has been charged to the previous (Rent) account should be credited to this account and it should be charged with insur- ance, taxes, depreciation, and repairs on store. The account is closed into " Profit and Loss." 70. This account shows the inventory of merchandise at open- ing and is not touched again until the books are closed. It is then charged with Merchandise Purchases (see Answer 61), and Sales Allowances (see Answer 60), and credited with Sales (see Answer 59). The inventory at closing is then credited and the balance will show the gross profit on trading. The gross profit is transferred to the credit of the " Profit and Loss Account." The inventory is then brought down as a new balance. 71. Charge this account with the balances of all the expense accounts, and credit it with the gross profit from trading; the difference will be the net profit or loss, which is closed into the proprietor's capital account ; if a partnership, to the partners' accounts, according to their several interests, and, if a corpora- • tion, to the surplus account. 72. Charge this account with the interest paid, and credit it with all the interest received and close it into the " Profit and Loss Account." INTEREST Use of money L'se of money received by you — received by L'se of money received by you others — L T se of money received by others Difference (generally), a Loss 126 Answers in Advanced Bookkeeping DISCOUNT Discount Paid Discount Paid by you (Cost) by others Discount paid by you (Produced) Discount paid by others Difference (generally), a Loss 73. (a) Credit this account with all cash discount taken on purchases of merchandise. The account is closed into the " Profit and Loss Account." (b) Credit this account with all cash discount taken on sales by customers. This account is closed into the " Profit and Loss Account." 74. Credit this account with incidental receipts such as tolls from telephone pay stations in store, etc. 75. For convenience in the bookkeeping and accounting work, the personal accounts are divided into the two classes, (a) Ac- counts Receivable are the accounts with persons to whom we sell, and usually show debit balances, which are resources or assets. The balances from the individual accounts are transferred to the Accounts Receivable Account in the Ledger, (b) Accounts Pay- able are those personal accounts with those to whom we sell or who buy from us. They show credit balances and are therefore liabilities of the business. See Answers 43 and 53. 76. (a) Notes (Bills) Receivable are the written promises of others to pay us a certain amount of money at a certain date, (b) Notes (Bills) Payable are our written promises to pay other persons a certain amount of money at a certain time, (c) An accommodation note is a note drawn or endorsed for the benefit of another person without any equivalent consideration. 77. (a) Net Investment is the original investment less the withdrawals, plus additional investments, (b) Average Invest- ment is the average amount of money invested considering the investments, the withdrawals, and the time factor. 78. (a) An inventory is a detailed and itemized statement or schedule showing the assets or liabilities of certain accounts. It is a resource or a liability not shown, or not correctly and exactly shown, from the items in the ledger, (b) The merchan- dise inventory is found by taking the value of the stock on hand, Answers in Advanced Bookkeeping 127 determined by ascertaining the quality of goods on hand, fig- ured at its cost price, adding for appreciation in value since pur- chase, or deducting for depreciation or decline in value. 79. The Merchandise Inventory is entered on the credit side of the Merchandise Account when that account is to be closed; after closing it therefore appears on the debit side. Other in- ventories appear in their respective accounts and in the Trad- ing Statement. 80. See Answer 78. 81. See Answer 78. 82. On the Debit Side of the Merchandise Account. 83. A Trial Balance is a summary or analysis of the Ledger Accounts for the purpose of testing the correctness and accuracy of the posting. The two forms of Trial Balance are shown in Answer 88. 84. If the Trial Balance by Totals is used, then all accounts are taken; if the Trial Balance by Difference is taken, then only those accounts in which there appears a difference are consid- ered ; accounts which balance are not considered. 85. In double-entry bookkeeping each amount appears twice, once on the debit side of an account and once on the credit side of an account. In a compound entry, the sum of the two or more entries equals the sum of the entry or entries on the other side. Therefore, the total of all the debits should equal the total of all the credits. 86. First — Add again the figures in the Trial Balance. Sec- ond — Go over the Ledger to make sure that each account is properly added and the correct balance struck. Third — Deter- mine the accuracy of the additions of the books of original entry, and check the totals as posted to the Ledger. Fourth — See that each item in the books of original entry is checked as having been posted. Fifth — If any item in the books of original entry is the same as the difference, trace it to the Ledger and see that it has been properly posted. Sixth — Check the Ledger to prove posting, observing (1) that the amount posted is correct, (2) that it is posted to the proper side of the account; (3) that it is posted to the right account. Seventh — If the amount of the discrepancy is divisible by two, the error may be caused by a posting to the wrong side of the account. Eighth — If divisible by nine, the error may be a transposition of figures. Ninth — I2 8 Answers in Advanced Bookkeeping If the difference is ten cents, one dollar, one hundred dollars or a like amount, the error is apt to be in the addition or sub- traction. Tenth — If Cash Account is not carried in Ledger, see that balance has been brought from the Cash Book. Eleventh — Bear in mind that the previous balance may have " balanced " because of an error and the present difficulty may result from such a condition. 87. No. A merchandise credit may have been posted to the cash (or any other account) credit. See Answer 86 (11). 88. TRIAL BALANCE BY TOTALS Martin Simon & Sons, Inc., Invest. 3000. Cash 4500.56 1765.76 Merchandise 2457.44 2875.24 Expense 186.65 Harry B. Maxwell, Inc. 560.35 560.35 Edw. C. Falk 976.65 C. W. Morse Sons 1473. Notes Receivable 750. 250. Notes Payable 450. 950. 10378. 10378. See Trial Balance by Differences TRIAL BALANCE BY DIFFERENCES Martin Simon & Sons, Inc., Invest. 3000. Cash 2734.80 Merchandise 417.80 Expense 186.65 Edw. C. Falk 976.65 C. W. Morse Sons 1473. Notes Receivable 500. Notes Payable 503. 4894.45 4894.45 See Trial Balance by Totals Answers in Advanced Bookkeeping 129 89. A balance sheet is a statement of the assets, liabilities and net worth of the business at a given stated or definite time. See Answer 96. 90. (a) An asset or resource shows the property of the busi- ness or an amount due to the business, (b) A liability is a debt of the business, an amount owed to another by the business. 91. (a) Liquid, floating, or current assets are those which the business intends to convert into cash at the earliest practical moment, (b) Deferred assets are assets not yet consumed or used up; expense inventories, (c) Trade assets include items such as merchandise in raw or manufactured condition, ready or about ready for sale, (d) Fixed assets are the permanent stable assets necessary for the conducting of the business which are not converted directly into any other form or kind of asset; the plant, including the machinery, furnishings, fixtures, etc. 92. (a) A liquid liability is a debt owed by the firm that will have to be paid within a short time, (b) A deferred liability is a liability incurred, an expense liability, not yet paid because not due at the time; liability inventory, (c) A fixed liability is not due for a long time, (d) A contingent liability is a liabil- ity that may arise in the event of another event; the happening of another of a certain thing; one that arises in a certain con- tingency. 93. The Trading or Business Statement is derived from the principal and subsidiary trading accounts shown in the final Trial Balance taken before the Ledger is closed, which contains all the items and facts that indicate a profit or a loss to the busi- ness. These facts are arranged in systematic order in the state- ment with full explanations. Its purpose or object is to show the gross trading profit (or loss) from sales during the period represented. The accounts included are Merchandise. Expense, Interest, Discount, Real Estate, Furniture, Equipment. Fixtures and all other accounts which affect the gross trading profit (or loss) resulting from the sale of merchandise. The statement shows the total cost of purchases and of sales merchandise, the cost of merchandise sold, the total sales and the net returns from sales. 130 Answers in Advanced Bookkeeping 94. TRADING OR BUSINESS STATEMENT STATEMENT OF INCOME, PROFIT AND LOSS FOR THE YEAR ENDING DECEMBER 1917 Sales t XXX Less Return Sales XX Freight Outward XX Allowances on Sales XX Total Deductions from Sales XXX Net Sales XXX Cost of Goods Sold : Inventory, Jan. 1, 1917.... XXX Purchases XXX Less Return Purchases XX Net purchases XXX Add Freight Inward XX Total Cost of Pur- chases XXX Deduct: Allowances on Purchases XX Net Cost of Purchases XXX Total Cost of Goods XXX Less Inventory, Dec. 31, 1917 XXX Cost of Goods Actually Sold XXX GROSS PROFIT ON TRADING I XXX Selling Expenses : Traveling Expense XX Shipping Dep't Salaries XX Delivery Expense XX Shipping Supplies XX Advertising XX Depreciation on Horses & Wagons XX Total Selling Expense XXX Selling Profit XXX General & Administrative Expenses: Office Salaries XX Office Supplies XX Rent XX Insurance XX Answers in Advanced Bookkeeping 131 Depreciation on Furniture & Fixtures XX Total General & Administrative Exp. XXX Income from Operations TXa Additions to Income : XX Interest XX Discount on Purchases XX Real Estate Appreciation XX Total Additions to Income XXX Total Income for Period XXX Deductions from Income : XX Discount XX Discount on Sales XX Reserve for Bad Debts XX Total Deduction from Income XXXX net profit XXXX Net Profit to be Disposed : J. Brown's Share XXX H. Smith's Share XXX XXX XXXX PROFIT AND LOSS STATEMENT, JAN. 31, 1916 Sales $4659.96 Less Sales Allowances 2.00 Net sales 4657.96 Inventory of merchandise at beginning $3451.09 Merchandise Purchases (cost delivered at store) 2759.67 OZ10.76 Deduct inventory of merchandise at closing $3062.17 Less Stock Depreciation 153.11 2909.06 Net cost of goods sold 3301.70 Gross profit from trading 1356.26 132 Answers in Advanced Bookkeeping buying expense Salaries and Wages of Buying Force. . 25.00 Miscellaneous Buying Expense 14.00 Total buying expense 39.00 SELLING EXPENSE Salaries and Wages of Sales Force.... 177. 33 Advertising 30.00 Miscellaneous Selling Expense 3.75 Total selling expense 211.08 DELIVERY EXPENSE Salaries and Wages of Delivery Force. 102.67 Miscellaneous Delivery Expense 8.08 Total delivery expense . 110.75 GENERAL EXPENSE Management and Office Salaries 269.00 Office Supplies and Expense 22.03 Insurance on Stock and Store Equip- ment 1.61 Taxes on Stock and Store Equipment. 2.50 Losses from Bad Debts 33.56 Miscellaneous General Expense 26.79 Rent 71.25 Total general expense 426.74 787.57 Net profit from trading 568.69 INCOME FROM OTHER SOURCES Interest i7-<>9 Cash Discounts on Merchandise Pur- chases 6.55 Rent income (net) 16.52 Miscellaneous Outside Income 2.00 7.98 Total net profit 576.67 95. The Financial Statement, or Statement of Resources and Liabilities, is derived from the resources and liabilities shown on the Trial Balance and the inventories of resources and liabili- ties, because they represent the money value or money indebted- ness. It includes the Cash Accounts, Accounts Receivable, Ac- counts Payable, Notes Receivable and Notes Payable. The Answers in Advanced Bookkeeping 133 difference between the Resources or Assets and the Liabilities will show the Present Worth or Net Insolvency of the business. 96. BALANCE SHEET, JAN. 31, 1918 ASSETS CURRENT ASSETS Cash on hand and in bank $1611.67 Notes Receivable — Trade Customers 191.84 Accounts Receivable — Trade Custom- ers $3518.81 Less Reserve for Bad Debts 33.56 3485.25 Inventory of merchandise (at cost) 2909.06 Prepaid Insurance 100.14 Accrued Interest Receivable .71 Total current assets $8298.67 FIXED ASSETS Store Property 4500.00 Warehouse Property 1975.00 6475.00 Less Reserve for Depreciation on Store and Warehouse 26.98 6448.02 Store Equipment 272.71 Office Equipment 74.37 Delivery Equipment 396.67 Total fixed assets 7191.77 Total assets 15490.44 LIABILITIES AND CAPITAL CURRENT LIABILITIES Notes Payable — Trade Creditors 1210.50 Notes Payable — Banks 900.00 Accounts Payable — Trade Creditors.. 3685.72 Accounts Payable — Others 485.00 Accrued Interest Payable 19.23 Accrued Salaries and Wages 82.00 Accrued Taxes 7.7? Total current liabilities 6390.20 134 Answers in Advanced Bookkeeping Mortgages Payable (warehouse) 1250.00 Total liabilities 7640.20 Proprietor's Capital Account 7850.24 Total liabilities and capital 15490.44 97. (a) Profit, or Gain, is an increase in the capital or invest- ment of the business due to the operations of the business, while (b) the Loss is a decrease in the capital, (c) The gross profits are the total profits, and (d) the net profits are the gross profits less the losses, (e) The gross loss is the total amount of the losses, and the (f) net loss is the gross loss less the profits, or any offsetting amount. 98. (a) The Present Worth is the difference between the As- sets or Resources and the Liabilities, (b) The Capital is the amount of money or value invested in the business, (c) Sol- vency is the excess amount of assets over liabilities, while (d) Insolvency is the excess of liabilities over assets. Solvency is equal to the Net Capital, the Present Worth. Insolvency is equal to the Net Liabilities after the Resources have been deducted. 99. The Financial Statement is proved by subtracting the Pro- prietor's withdrawals from the Investment, giving him the Net Investment. To this add the Net Gain (Trading Statement). The sum should equal the Present Worth found from the Finan- cial Statement. Martin Vogel's Investment Martin Vogel's Withdrawals Net Gain per Statement Present Worth, per Statement 14500. 6500. 3600. 11600. l8loa 18100. 100. The business or trading accounts should be closed first. 101. Loss and Gain accounts are those accounts that show a loss or a gain of the business. Resource and Liability accounts show the resources or the liabilities of the business. The test between a Loss and Gain Account and a Resource and Liability Answers in Advanced Bookkeeping 135 Account is the answer to the question, " Does the difference be- tween the debit and the credit side of this account show the value of something on hand, or what I owe others, or what others owe you? me?' If the answer is "yes," then it is an R & L account. If the answer is "no," then it is an L & G account. The closing of an L & G account will show the amount of gain or of loss sustained by that account in its relation to the entire business. The closing of an R & L account will show the re- source or the liability of that particular account in its relation to the business. 102. See Model Trading and Financial Statements, Answers 94 and 96. 103. See Answer 94. 104. See Answer 94. 105. From the balance of the account. If the debit side of the account is larger than the credit side, then the excess is a loss ; if the credit side is larger than the debit side, then the excess is a gain or profit. 106. See Answers 89, 90, 95 and 96. 107. (a) To the Credit side of the Proprietor's Capital Ac- count if the balance is a profit; to the debit side, if a loss, (b) To equalize the entries made in balancing the various Loss and Gain accounts ; that is, to restore the equilibrium of the balance of the ledger accounts, the disturbance being caused by the en- tering of the Loss and Gain balances in the various accounts. Also, to determine at a glance the amount of the gain or loss from all the transactions in the various trading accounts. 108. They are the first accounts to be closed when the ledger is closed for the purpose of making the various statements in order to find out the profits or losses and the financial condition at the end of the period. 109. After the Loss and Gain accounts have been closed, and for the purpose of determining the Present Worth. 110. An Account Receivable shows a resource when the debit side is the larger; an Account Payable shows a liability when the credit side is the larger. Cf. Notes Receivable and Notes Payable Accounts. 111. (a) No. (b) Yes, by the amount of the interest. Be- cause the principal or face of the note is a liability, and the net resources result from the subtraction of the liabilities from the 136 Answers in Advanced Bookkeeping gross resources. In the case of (b), however, the interest has not been considered in the finding of the gross liabilities. 112. On the debit side. 113. In the Real Estate Investment Account in which are en- tered a\\ items relating to the purchase and sale and the per- manent improvement of the property, the difference is a re- source or a liability according as the debit or the credit side is larger. The rule is to debit for the cost of property, and to credit for the returns from the property. In the R. E. Income and Expense Account, the difference is a loss when the debit side — containing all the items involving an expense to the prop- erty — is larger than the credit side — containing all items which bring income to the property; if the credit side is larger, there is a gain. 114. (a) The net profit is entered on the credit side of the Proprietor's Capital Account, making the Present Worth larger than the amount of the Net Investment, (b) The net loss is entered on the debit side, making the Present Worth less than the Net Investment. 115. See Answers 58 and 114, and Answers to Regents Ques- tions. 116. See Answer 58 and Answers to Regents Questions. 117. DEBIT CREDIT Loss and Gain Resource and Liability 118. Debit: All Asset or Loss Accounts. Credit: All Lia- bility or Gain Accounts. 119. Total amount of Resources. 120. A promissory note is an unconditional written promise to pay a specified sum of money to a particular person or persons at a certain place on a certain date, or on demand. See An- swers following. 121. The two principal parties to a note are (a) the maker, or person signing the note, and (b) the payee, in whose favor the note is made out, the person or persons to whom the money is to be paid. Answers in Advanced Bookkeeping 137 $500— 00 / 100 New York, October 4, 1917. On demand Thirty (30) Days after date we promise to pay to the order of Morgan & Wright ( Payees ) Five Hundred (500) Dollars at Garfield National Bank. Value received (with interest). No. 876. Due (Nov. 3, 1917). (Maturity) Sherman & Maxwell (Makers). 122. (a) A negotiable note is one the title of which can be transferred by indorsement, thereby making the specified sum payable to the transferee of the note. $500— oo/ ioo Chicago, 111., September 8, 1917. Ten (10) days after date I promise to pay to the order of James Lansing Five Hundred (500) Dollars at 234 State Street (The Corn National Bank), Chicago, 111. Value received (with interest). Due Lawrence Roberts. (b) A non-negotiable note cannot be transferred for payment to another party. $235— 45 / 100 New York, N. Y., Oct. 1, 1918. Three months after date we promise to pay to Sam uel Roebuck & Company Two Hundred Thirty-five (235) 45 /ioo Dollars at The Park National Bank of New York Value received, with interest (at 49c). Due Manhattan Transit Company, James L. Manning, Treasurer. (c) An accommodation note is one given without consideration, for the purpose of lending the credit of the maker or indorser. (d) A collateral note is a note secured by collateral, a description of which is tilled in spaces for that specific purpose, (e) A note 138 Answers in Advanced Bookkeeping "with interest at maturity" is a form that merchants sometimes use to secure payment of an invoice of goods or an account. $4500 San Francisco, Cal., April 4, 1919. On demand (Sixty days) after date, we promise to pay to the order of The Hamilton Grange Company Four Thousand Five Hundred Dollars, Value received, with interest at the rate of 8% per annum from maturity until paid. Negotiable and payable at Fed- eral National Bank without offset. Due Broadway Trading Corporation, Henry Blank, President. 123. A draft is a written order made by one person, firm, or corporation (the drawer) on a second person, firm, or corpora- tion (the drawee) to pay unconditionally to a third person, firm Or corporation (the payee) a specified sum of money at a certain place, on a certain date, or on demand. This written order must be accepted by the drawee in order to constitute it a draft or ac- ceptance. If it is not accepted, then it is valueless and void. $ Amount City, State, Date. Time Pay to the order of Payee Amount Dollars Value received and charge the same to account of To Drawee. No. No. City, State. Drawer. $250.00 ■ Sandusky, O., May 12, 1917. At sight (on demand) Pay to the order of James Browne & Co., Two Hundred Fifty Dollars Value received and charge to the account of To Grant & Green, Buffalo, N. Y. Everett B. Macy Company, James Longworth, President. Answers in Advanced Bookkeeping 139 No. 567 Detroit, Mich., June 25, 1918. Sixty days after sight Pay to the order of The Mercantile Corporation of New York $15,000.00. Fifteen Thousand Dollars Value received and charge to the account of To R. G. Bayer, New York, N. Y. Taylor, Browne & Murray, James Maxwell, Cashier. Sixty days after sight Thirty days after date Pay to the order of 124. See Answer 123. 125. (a) A sight draft is one that is payable at sight, that is, on presentation and acceptance, while (b) a time draft is payable a certain time after acceptance. A time draft begins only from the date of acceptance, and its maturity (and the date of ma- turity of any business document) is the date when it becomes due and payable. If the draft is an after date draft it begins to mature after the date on the draft, regardless of the date of acceptance. A note is an after date promise. 126. For the three-party draft see Answers 123 and 125. A two-party draft makes the drawer, or " ourselves," or a bank (for collection purposes) the payee. 127. A bill of exchange is an unconditional order, in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on de- mand, or at a fixed future time, to order or to bearer, a sum certain in money. 128. A bill of exchange becomes an acceptance when the drawee writes across the face of it, for example : " Accepted, February 15, 1915, payable May 15, 1915, John Doe." There are two kinds of acceptances: (a) Those made by private parties, such as individuals, firms or corporations, and known as trade acceptances, drawn by the seller on the purchaser of goods sold, and accepted by such purchaser, (b) Those made by banks for their customers by means of which the credit of the bank is ex- tended to the customer and known as a bank acceptance, consist- ing of the extension of the bank's credit to a customer by which the bank permits the use of its own credit by its client for a consideration, such credit being either secured or unsecured. 140 Answers in Advanced Bookkeeping depending entirely upon the business character and financial re- sponsibility of the applicant. 129. (a) An indorsement (endorsement) is the writing on the back of negotiable papers, such as checks, notes, drafts, etc., for the purpose of transferring the title in the document or to as- sume legal responsibility in the paper or to guarantee payment or assume legal responsibility, (b) A blank indorsement names no indorsee. It bears merely the name of the person in whom the title to the money is vested, (c) A full or special indorsement names the indorsee, or person or firm to whom the title is trans- ferred, and the name of the indorser. The paper cannot be transferred to any other party without the indorsement of the special indorsee, and thereby renders it the safest kind of in- dorsement, (d) A qualified indorsement and a restrictive in- dorsement, as well as an indorsement without recourse all limit the responsibility of the indorser, the last form having the eft'ect of relieving the indorser of all legal responsibility. Many com- mercial houses use the For collection or deposit indorsement. 130. Blank James C. Briggs Full Pay to the order of Harold A. Content James C. Briggs Qualified Without recourse James C. Briggs Restrictive Pay to Harold A. Content only James C. Briggs For Deposit Pay to the National City Bank for deposit James C. Briggs 131. (a) Interest is the name given to money paid for the use of money, and is paid at the time of maturity of the loan or at the time of payment of the loan. Discount is the interest de- ducted in advance at the time the loan is made. Thus, the mer- chant borrowing money, $500, from a bank for six months will receive only $485, the $15 difference between the principal loan and the proceeds being the discount taken by the bank in ad- vance. If a merchant borrows $500 at 6% from a friend for a period of six months he will pay the lender $515 at the date of maturity, the $15 being the interest. Answers in Advanced Bookkeeping 141 132. (a) A check is a written order, similar to a draft, on a bank (which is really the drawee) to pay a specified sum of money to the order of the person named therein, (b) A certified check is a check which is certified to by the bank that the person drawing the check has funds sufficient to meet the pay- ment of the check. The bank becomes responsible for its pay- ment, and immediately charges it to the account of the drawer, (c) A cashier's check is a check, usually signed by the cashier of a bank, and made payable to one who is not a depositor, (d) A certificate of deposit is a written statement issued by a bank certifying to the fact that the sum specified has been deposited in the bank. It is payable on demand, and if allowed to remain a certain time in the bank, it may draw interest, (e) A bank draft is a sight draft drawn by one bank on another bank and made payable to a third party, thereby providing a safe and convenient mode of remitting money between distant cities. No. 7629 New York, March 24, 1918. NATIONAL COMMERCIAL BANK Pay to the order of James Manning & Company Seventy-nine ST / 100 Dollars. $79_87/ ^ 100 Franklin Pierce. 133. A voucher is a statement applied to a document that vouches for the account or some business transaction. 134. A bill is a statement detailed of the amount of a debt, for goods or for services rendered, giving the date, the names of the parties, items, prices, terms, and total, (b) When re- ceived from others it is usually called an invoice, though the terms are now frequently used interchangeaby. (c) An order is a written request on a person or firm to deliver goods or pay money to a person or firm, usually named, or to bearer. 135. (a) Terms on account, abbreviated ale, usually means that the invoice is due between the 1st and 10th of the following month, (b) Terms net, no discount is to be allowed for payment on payment, (c) Terms 30 days, or Net 30 days, that the bill, due at the end of 30 days from the date of the invoice, is not sub- ject to a discount, (d) Cash 3%, that the invoice is subject to a discount of 3% if paid on date of maturity, (e) Terms 60 142 Answers in Advanced Bookkeeping days, 3/10 days, means that the invoice is due at the end of 60 days and is then subject to no discount; if the bill is paid at the end of 10 days, a discount of 3% may be deducted, (f) Terms 3/10, 2/30, net 70, that 3% may be deducted if the bill is paid within 10 days, 2%, if paid within 30 days, and that the bill is net at 70 days payment, (g) Terms 3/10 days. 60 x, that 3% may be deducted if the bill is paid within 70 days, the 60 days extra being the " dating." 136. A monthly statement, or statement of account is a writ- ten copy of the account showing its condition ; it generally has a detailed statement of the debits with offsetting credits. 137. (a) An account sales is a detailed itemized statement of sales and charges rendered by a commission merchant or con- signee to the consignor, (b) The goods or merchandise re- ceived to be sold is called the consignment, (c) the person or firm sending the goods is the consignor, and (d) the person or firms receiving goods is called the consignee. The consignee is also called the commission merchant. He is the agent of the consignor, (e) The commission is the fixed per cent of the gross sales deducted by the commission merchant. 138. A bill of lading is a receipt for merchandise delivered to a transportation company or common carrier, for shipment, con- taining a statement of the conditions under which the goods are received by the common carrier and the rules affecting the care and delivery of the goods. The Interstate Commerce Commis- sion, by order of June 27, 1908, approved a uniform bill of lad- ing for general use, and now current throughout the United States, (b) The straight bill of lading is non-negotiable and is drawn up in a set of three papers, the straight bill of lading, original; the carbon copy memorandum, an acknowledgment that the original has been issued; and the second carbon copy, the shipping order. The first two are signed by both the shipper and the common carriers agent, while the shipping order is signed by the shipper only. The three papers are printed on white paper. The transportation company retains the shipping order, the shipper, the memorandum, and the original bill of lading is sent to the consignee or buyer of the goods, (c) The order bill of lading is negotiable by endorsement. The original is printed on yellow paper, the duplicate and the memorandum and the shipping order on blue paper, (d) A shipper's order is the Answers in Advanced Bookkeeping 143 name given to the shipment or consignment when the order bill of lading is used. It is also customary to draw a sight draft, attach it to the B/L, and have payment or collection made through a bank. The consignee cannot get the goods until after he has paid the draft, because the carrier will not deliver the goods until the bill of lading is surrendered. For this reason, this is frequently called a C. O. D. transaction. 139. (a) (a, at, (b) pd., paid, (c) reed., received, (d) ult, last month, (e) E. O. E., errors and omissions excepted, (f) do., ditto, the same, (g) shpt, shipment, (h) B/L, bill of lad- ing, (i) f. o. b., (j) on memo., on memorandum. 140. (a) Check, (b) Day Book, (c) Inventory, (d) Freight, (e) Steamer, (f) Payment, (g) Number, (h) Check mark, (i) One and three-fourths, (j ) Account. 141. All negotiable documents, orders or promises to pay a certain amount of money, (b) Notes, drafts, B/L. 142. (a) Inc. — The firm is a corporation. (b) Assignment — They have transferred their rights in their property or assets to a certain person (or persons) who will distribute the assets for the benefit of the creditors, subject to review by the courts. (c) Insolvency — Inability to pay their debts. (d) Defalcation — Embezzlement or theft of money or prop- erty by an agent who holds it in trust. (e) Consignee — The person or firm to whom the goods are consigned or sent. (f) To realize in full — To get the full value or KXK/c of the debt or amount due. (g) Promissory Note — See Answer 120. (h) Indorsed — See Answer 130. (i) Secured by collateral — Sufficient property has been de- posited as security to guarantee the payment of the full amount due on the note. 143. (a) Draii'n on us — A. & H. have drawn a draft to be presented to us for acceptance. (b) At 10 days sight — Payable by us ten days after we have accepted same draft. (c) Net proceeds — The amount due them after commission and expenses have been deducted. 144 Answers in Advanced Bookkeeping (d) Consignment — The merchandise sent to us for sale. (e) Honor their draft — To accept it for payment. (f) Collateral — See (i) in the preceding Answer. (g) Indorscr—Ste (h) in the preceding Answer. 144. (a) Journal. James Thornton has invested $4200 in the business. Cash Book and Ledger, (b) Cash Book. Edwin Brooks paid $300 on account, and the business paid $50 for rent and $250 to Lawton & Co. Ledger, (c) Journal. Milwaukee Stores bought a bill of goods amounting to $1500, terms, Cash, $500; Note (30-days), $700, the balance on time. Cash Book, Ledger, Notes Book. 145. A resource. 146. Assets or Resources : Real Estate. Merchandise, Cash, Liabilities : Notes Payable, Accounts Payable. 147. (a) C. B. (b) Dr. (c) Amt. ford, (d) Pes. (e) C. O. D. 148. (a) Collect on delivery, (b) Subject to a discount of 40% from the list price, (c) By or each, (d) Free on board (the cars or steamer) at the shipping (or mentioned place) ; i.e., without charges for packing, drayage, etc. 149. $500. Buffalo, N. Y., Nov. 19, 1917. Three months after date, we jointly and severally promise to pay to the Order of Herman C. Price Five Hundred #. ..Dollars at the Exchange National Bank of Brooklyn, Value received, with interest. No. Due Frederick C. Martin, James L. Horton. 150. (a) Letter of Credit — A letter of notification issued and sent by a bank to its correspondents to the effect that the per- son (named) presenting the letter of credit is entitled to draw up to the amount named. The amount or amounts drawn are written on the back of the letter. (b) Certificate of Deposit — A document issued by a bank that the person named has deposited the amount named therein. • (c) Voucher — An original document to prove the truth of certain facts. Answers in Advanced Bookkeeping 145 (d) Protest — A legal notification to the debtor to the effect that a certain amount of money due has not been paid. (e) Lease — A legal document granting the use of real estate or property for a certain time on certain conditions. (f) Lien — A legal claim on goods or real estate with right to control or retain same until certain conditions have been satisfied. 151. Merchandise 175. Cash 175. 152. Cash 244. R. H. Macy & Co. 244. 153. Merchandise 126.45 Corbett & Co. 126.45 154. Corbett & Co. 126.45 Cash 122.66 Merchandise Discount 3.79 155. Franklin Simon & Co. 475. Merchandise 475. 156. Cash 465.50 Merchandise Discount 9.50 Franklin Simon & Co. 475. 157. R. H. Montgomery & Co. 1250. Merchandise 1250. 158. Cash 625. R. H. Montgomery & Co. 625. 159. As in Answer 158. 160. Merchandise 744. Marshall Field & Co. 744. 161. Marshall Field & Co. 250. Cash 250. 162. As in Answer 161. 163. Expense 76. Cash 76. 164. Rent 200. Cash 200. 165. Cash 100. Rent ' 100. 166. Notes Receivable 137.25 Merchandise 137.25 167. Cash 137.25 Notes Receivable 137.25 146 Answers in Advanced Bookkeeping 168. James A. Hearn & Son 298. Notes Payable 298. 169. Notes Payable 298. Cash 298. 170. Cash 5000. Samuel Johnson, Proprietor 5000. 171. Samuel Johnson 125. Cash 125. 172. Samuel Johnson 75. Merchandise 75. 173. Cash 1750. Samuel Johnson 1750. 174. Cash 1500. Merchandise 1500. Notes Receivable 500. Accounts Payable 700. Notes Payable 250. Walter Lippman 2550, 175. Cash 985. Discount 15. Notes Payable 1000. 176. Cash 1990. Discount 10. Notes Receivable 2000. 177. Cash 2955. Discount 45. Notes Payable 3000. 178. Walter Emmerich & Co.'s entry • Thomas Talcott & Co. 3287. Merchandise 3287. Thomas Talcott oz: Co.'s entry: Merchandise 3287. Walter Emmerich & Co. 3287. 179. Cash 500. Notes Payable 500. Discount 4.92 Cash 4.92 Notes Payable 500. Cash 500. Answers in Advanced Bookkeeping 147 5. 500. 5. 500. 5. 2.53 100. 100. 100. 100. 500. 5. 500. 5. 180. A's entry: Notes Receivable 500. B Cash Interest B's entry : A Notes Payable Interest Cash A's entry: (B makes no entry) 181. Cash Notes Receivable ^ u - Cash Interest Discount Cash 182. A's entry: 4 c 502.50 Notes Receivable Interest B makes no entry. C's entry : Notes Receivable 500. Interest Accrued 2.50 A 183. A's (Drawer's) entry: C B B's (Drawee's) entry: B (Notes Payable) 100. Cash C's (Payee's) entry: Cash A 184. A's entry: Cash B B's entry: A 5. 2.53 500. 2.50 502.50 100. 100. 100. 100. 148 Answers in Advanced Bookkeeping Cash 100. 185. A's entry: C 400. B 400. 186. B's entry: A 400. Notes Payable 400. 187. C's entries: Cash * 400. Notes Receivable 400. Discount 3.53 Cash 3.53 188. B's entry: Notes Payable 400. Cash 400. If C holds the acceptance until maturity his entry then will be: Cash 400. Notes Receivable 400. » If the draft is payable "after sight" instead of "after date " in the preceding, then there will be a difference of two (2) days which must be added to the items in the answers preceding. A's entry: 189. Shipment B 200. Merchandise (Sales) 200. 190. A's entry: Shipment B 40. Cash 40. 191. B's entry: Consignment A 10. Cash 10. 192. B's entry: C 125. Consignment A 125. 193. B's entry: Cash 150. Consignment A 150. 194. (a) A's entry: Cash 100. Answers in Advanced Bookkeeping U9 Shipment B 100. B's entry : Consignment A 100. Cash 100. (b) Notes Receivable 100. Shipment B 100. Consignment A 100. Notes Payable 100. 195. B's entry : Consignment A 7. Charges Con. 7. 196. B's entry : Consignment A 2.75 Cash 2./D 197. Consignment A 13.75 Commissions 13.75 198. The first entry is made by A, and the second by B. (a) Cash 141.50 Shipment B 141.50 Consignment A 141.50 Cash 141.50 (b) Ascertain who is to pay the exchange charges. Cash 141.50 Shipment B 141.50 Consignment A 141.50 Shipment B 141.50 (c) B 141.50 Shipment B 141.50 Consignment A 141.50 Cash 141-50 (d) Notes Receivable 141.50 Shipment B 141.50 Consignment A 141.50 Notes Payable 141.50 199. Assume that there is no element of exchange involved. A's entry : Shipment B 11-50 Loss & Gain 11.50 B has no entry, since his Consignment A Account bal- ances. 150 Answers in Advanced Bookkeeping 200. Cash 3000. Merchandise 2000. Martin Holman 5000. 201. Loss & Gain 276. Expense 276. To transfer loss shown by Ex- pense % to Loss & Gain % to close account. 202. Discount on Purchases 427. Loss & Gain 427. To transfer gain shown by D/P Account to L/G Account to close account. 203. Loss & Gain 298. Discount on Sales 298. To transfer loss shown by D/S Account to L/G Account to close account. 204. Loss & Gain 18. Interest & Discount 18. To transfer loss shown by I/D Account to L/G Account to close account. 205. Merchandise 2350. Loss & Gain 2350. To transfer the gain shown by the Merchandise Account to the L/G Account to close account. Loss & Gain 2350. Merchandise 2350. To transfer the loss shown by the Merchandise Account to the L/G Account to close account. 206. Loss & Gain 750. Proprietor 750. To transfer the net gain shown by the L/G Account to the Pro- prietor's Account to close the ac- count Proprietor 750. Answers in Advanced Bookkeeping 151 Loss & Gain 750. To transfer the net loss shown by the L/G Account to the Pro- prietor's Account to close the ac- count. 207. Expense Inventory 60. Expense 60. To show and enter expense inventory on books. Loss & Gain 140. Expense 140. To transfer loss shown, etc. 208. Purchases 2500. Merchandise Inventory 2500. To transfer old Merchandise Inventory to Purchases Account to close the account. 209. Merchandise Inventory 1800. Purchases 1800. To transfer new Merchandise Inventory to Purchases Account to close the account. 210. Sales 3500. Purchases 3500. To close Purchases Account into Sales Account for the deter- mination of gain (or loss) on Merchandise Account. 211. Sales 1350. Loss & Gain 1350. To transfer the profit of the Merchandise Accounts to the Loss & Gain Account. Loss & Gain 1350. Sales 1350. To transfer the loss, etc. 152 Answers in Advanced Bookkeeping 212. The advantages are: They are self -indexing, easily access- ible, reduce errors in posting, capable of expansion or reduction without the need of a new set of cards, aid office efficiency, and may be used by more than one person at a time. The disadvantages are: They may be misplaced or lost, and they make fraud easy. 213. The advantages of columnar books are: They enable us to post items in total and therefore save time and labor; they enable us to present the facts in the general ledger in su-rmary form, and thereby make monthly and yearly comparisons easy; they enable us to introduce controlling accounts with all their advantages. They are time and labor savers. 214. In addition to the advantages enumerated in the preceding we may be able to tell at a glance the sales or the purchases by department, commodity or group of commodities. Of course, the advantages accruing depend upon the use and the number of col- umns. 215. A partnership, or copartnership, is an association or com- bination of two or more persons or firms for the purpose of conduct- ing a business and sharing in the profits and dividing the losses, with all the powers and privileges under the laws that each partner enjoys as an individual. 216. The articles of copartnership is the contract entered into between the individuals and firms forming the copartnership, stating the powers and duties, limitations and restrictions of the copartnership, and the individual members. 217. The names and addresses of the individual members or firms comprising the partnership, the amount of each member's investment, the powers and duties, the restrictions and limitations of each member, the purpose of the organization, the length and duration of the partnership, the division of the profits and the losses, and such other details as are found necessary to the nature of the business conducted by the partnership. 218. By mutual consent and agreement; expiration of time limit as noted in the articles of copartnership; withdrawal of a partner; bankruptcy of a partner or the firm ; death of a partner ; war between nations represented by the partners; appointment of a receiver by court decree for misconduct or insanity, or any other cause. 219. (a) A corporation is "an artificial person, separate from its Answers in Advanced Bookkeeping 153 members, authorized by law, created by charter and having in addition to the powers expressed by its charter, the implied powers of a natural person." " An artificial being, invisible, intangible, and existing only in contemplation of law." (&) The charter is the document or license issued to a corporation by the government stating its powers and privileges, and providing for compliance with the general state law on corporations, (c) A franchise is a certain specific right or privilege granted by a government to a corporation or to an individual and stated in the charter. 220. (a) Capital stock is the total amount of capital authorized by the charter or certificate of incorporation. (6) The capital of a corporation is the net assets, or the excess of assets over and above the liabilities. It is equal to the paid-in capital plus the surplus, plus the undivided profits, plus the general reserves, if any. (c) The surplus and undivided profits are practically synonymous, both showing the undistributed profits, accumulated and left in the business to strengthen its financial standing. (d) The reserves are part of the net earnings of a business, partnership or corpora- tion, withheld from distribution and set aside to meet any contin- gent expense or loss of the business, or depreciation of assets, (e) A sinking fund is a sum of money set aside at certain intervals and consequently increasing in amount, for the purpose of (i) liquidat- ing a known existing liability, (2) providing a quick asset to meet a contingent liability, or (3) protection against a future and unfore- seen contingency or loss. 221. (a) Issued stock is stock issued by a corporation to raise and provide for a working capital; it provides the paid-in capital. (b) Unissued stock is that part of the capital stock which has not been issued and therefore not subscribed for. It is held in reserve. (c) Treasury stock is the issued stock which has been returned to the treasury through purchase from the funds of the corporation or through gift and donation, and does not participate in the dividends. (d) Common stock is the stock upon which the dividends are to be declared and paid after the preferred stock has received its stated dividends, (e) Preferred stock is stock to which preference has been given in the payment of dividends from the accrued profits at a fixed and stated rate before dividends are paid to the holders of the common stock. X.B. Both common and preferred stocks j 54 Answers in Advanced Bookkeeping may be separately preferred as to rights and privileges in the matter of the regulation of the corporation and its affairs; e.g., voting rights, rights of purchase of subsequent issues of stock, etc. These naturally depend upon the charter provisions. (/) Watered stock is stock issued by a corporation for which no actual or material value has been received by the corporation, (g) The stock certifi- cate is the document issued by the corporation to the stockholder, certifying to the holder's ownership of the stated number of shares of stock in that corporation. N.B. Shares of stock are now issued " without par value." 222. (a) The dividend is the pro rata division of the profits or some stated portion thereof among the stockholders of the corpora- tion. It is generally a fixed and stated per cent of the profits on the outstanding preferred or common stock; it may be a stock issue. (b) Cumulative preferred stock is the preferred stock to which the fixed dividend is attached each year whether earned and issued or not, such accumulated dividend to be satisfied and paid before the common or any other preferred stock can receive any dividend. (c) Non-cumulative preferred stock is preferred stock which receives a dividend only when it is earned, and after the cumulative preferred stock has received its dividends. 223. The advantages of incorporation are: (a) Limited liability of stockholders, (b) centralized control of all the activities and func- tions of the corporation, (c) continuation and perpetuity, (d) the ease and facility of extension of capital, (e) greater ease of securing of credit, (/) ease of transfer of ownership, (g) extent of powers and activities limited only by law. The disadvantages are: (a) The limitations of the law; (b) the control of the corporations and its assets may be in the hand of one or a group holding just a bare majority of the stock, or of a particular class of stock, to the detri- ment of the minority stockholders. 224. Depends upon the laws of the State in which the corporation has been chartered. But generally by (a) vote of the directors and the stockholders, two-thirds of the stock voting in the affirmative, (b) court order after the appointment of a receiver, (c) lapse of char- ter, (d) legislative enactment. The consent of the Secretary of State (or other designated state official) is necessary in order to protect the interests of the minority stockholders. Answers in Advanced Bookkeeping 155 225. (a) Raw materials are materials which enter into the manu- facture of an article, and forming an element thereof, (b) Goods in process are goods having been partially completed in their manu- facture, (c) Finished goods are those which have been completed in their manufacture and are ready for sale. 226. (a) Prime (or first) cost is the cost of the materials plus the cost of labor, (b) Net cost, factory cost, is the prime cost plus the burden or overhead, (c) The gross cost is the total cost, and is the sum of the cost of all elements entering into the cost of the commodity, cost of materials, labor, expenses, burden, etc. The profit is fixed on this cost, and the sum of the profit and the gross cost equal the selling price. (:/) The burden or overhead is the factory expenses and includes the rent and taxes of factory, depre- ciation of machinery, power and lighting, unproductive labor, interest of machinery, etc., and cost of superintendence. Dis- tinguish the factory expense from cost of labor in the prime cost. 227. (a) Selling expenses are those relating to the sales depart- ment or selling force, and include such items as wages and commis- sion of the selling force, traveling expenses, advertising, delivery equipment depreciation, etc. (b) The general and administrative expenses are those relating to the general management of the busi- ness, and distinguished from the manufacturing and the selling departments, and include such items as rent, office expenses, sala- ries and wages of the office force, office supplies, general superin- tendence of the business, etc. See Answer 94 an 1 the various Statements of Income, Profit and Loss throughout the book. 228. An account sales is an itemized statement rendered by the commission merchant to the consignor showing the goods received, the sales, the charges, in detail, commission, and the net proceeds. See Answers throughout the book. An account purchase is the itemized statement sent by the purchasing agent to his principal, giving in detail all the items entering into the gross cost. 229. (a) Good will {goodwill) is the value attached to a business over and above the value of its property actually due to its standing and reputation, to its location, to its established trade, kind of trade, patent rights, etc., and is the difference between the capital and the actual value of the property, (b) Depreciation is the lessening or decline in value of property due to use, wear and 156 Answers in Advanced Bookkeeping tear, or obsolescence, (c) Reserves. See 220 (d). (d) Turnover is the amount of merchandise sold during the fiscal or business period, generally the year. It may be many times the amount of its capital. 230. In single entry bookkeeping each transaction has only one entry in the journal or ledger, either a debit or a credit, while in double entry there are two entries, a debit and a credit, for each transaction. For greater detail as to the differences, see the fol- lowing answer. 231. See the preceding answer. In single entry : Only personal accounts are kept ; only one entry is possible; a cumbersome proof of posting is used to test the accu- racy of the posting; the statement of assets and liabilities is prepared from various sources, and therefore the danger of omissions; an itemized statement of profits and losses cannot be made, since loss and gain accounts are not kept in the ledger; since no profit and loss statement is possible, no possible guide as to the efficiency of the business; its suitability and adaptability is limited to only retail businesses. In double entry : Both real and nominal accounts are kept ; there are two entries for each transaction, therefore the books are always in balance; the trial balance is used to test the accuracy of the work; balance sheet is prepared from the books, and therefore omissions are not possible; the profit and loss statement is proved by the bal- ance sheet; from the separate sources of profit and loss are set forth very clearly and therefore a test of the efficiency of the business; it is adaptable to all kinds and conditions of business. 232. Ascertain whether the same books are to be used. If a new set of books is to be used, find out if controlling accounts are to be opened. Then follow the following well defined rules: (a) Take complete inventories of all items of value connected with the business. (b) Classify the items into appropriate groups, such as Cash, Merchandise, Furniture and Fixtures, Delivery Equipment, Machin- ery, Supplies, Real Estate, Accounts Receivable, Notes Receivable, and others. Classify items owing by the business in similar groups; such as Accounts Payable, Notes Payable, Mortgages Payable, and others, according to the nature of the business. (c) The net difference between the total of the above Asset items and the Liability items- is the present worth of the business. (d) List the Assets and Liabilities in the Journal, noting the Answers in Advanced Bookkeeping 157 present worth of the business as the Proprietor's Account on the Liability or Credit side. (e) Open a separate sheet for each account listed, both debit and credit, including the personal accounts. (/) Take off complete trial balance to establish proof of correct posting. (g) Open Trading Accounts or other appropriate accounts that will better fit the needs. 233. John Brooks and Henry Lang have formed a under the firm name of Brooks & Lang to conduct a ness with the following investment: Cash $5000 John Brooks Henry Lang 234. Explanation: Cash, in Bank Merchandise, Inventory Accounts Receivable, Schedule A John Brooks (Capital) Cash Merchandise Accounts Receivable Henry Lang (Capital) 235. Explanation: Cash Merchandise Accounts Receivable Accounts Payable, Schedule B John Brooks Cash Merchandise Accounts Receivable Accounts Payable Henry Lang 236. Explanation: Cash 2000 Merchandise 1000 Accounts Receivable 2000 John Brooks, Personal John Brooks, Capital partnership busi- 2000 1000 2000 2000 2500 1500 2000 1000 2000 2000 1500 1500 $2500 2500 5000 6000 750 4250 1000 4000 500 4500 158 Answers in Advanced Bookkeeping Cash 2000 Merchandise 1500 Accounts Receivable 1500 Henry Lang, Personal 500 Henry Lang, Capital 4500 237. Explanation: Cash 2000 Merchandise 1 500 Notes Receivable 1 500 Interest Accrued on Notes Receivable 10. 25 Accounts Payable 750 John Brooks, Personal 260.25 John Brooks, Capital 4000 Cash 2000 Merchandise 1000 Notes Receivable 3000 Interest Accrued on Notes Receivable 15 Accounts Payable 800 Henry Lang, Personal 12 15 Henry Lang, Capital 4000 238. The Manhattan Chemical Company has been incorporated under the laws of the State of New Jersey with an authorized capital of $25,000, divided into 250 shares, each of a par value of $100. W, L. and P. W. each subscribe for 100 shares, the balance, remain- ing in the treasury. Subscriptions $20000 Unsubscribed Stock 5000 Capital Stock 25000 239. Cash 20000 Subscriptions 20000 W. L. and P. W. paid their subscrip- tions in full 240. Subscriptions 2000 Unsubscribed Stock 2000 J. M. subscribed for 20 shares of stock. 241. Subscriptions Preferred Stock 2000 Preferred Stock 2000 Answers in Advanced Bookkeeping 159 Cash 1000 Subscriptions Preferred Stock 1000 Explanation. 242. Explanation : Subscriptions 30000 Capital 30000 Patent Rights (James Foster) 18000 Subscriptions 18000 Cash 12000 Subscriptions 12000 243. (a) Treasury Stock 2000 Donation 2000 (b) Subscriptions 2400 Treasury Stock 2000 Donations 400 Cash 2400 Subscriptions 2400 244. Reid, Walker & Co., Subscriptions 26000 Unsubscribed Stock 24000 Capital Stock 50000 245. See Answer 239 246. Profit and Loss 550 Reserve for Bad Debts 550 247. Reserve for Bad Debts 350 Accounts Receivable 350 248- 250. See Answer 246 251. No Entry 252. (a) Profit and Loss 400 Reserve for Bad Debts 400 (b) Profit and Loss 1000 Dividends Payable, No. I 1000 (c) Profit and Loss 1000 Surplus 1000 (d) Dividends Payable, No. 1 1000 Cash 1000 i6o Answers in Advanced Bookkeeping i-7- Acct. Pay. General $12960 954050 925 175 2376 4500 27. 75 18169.25 $669.50 72 250.00 74i -50 $99i • 50 January 1912 MAY I, I9II C. W. Harkins and T. J.- Burke have this day- formed a partnership un- der the firm name of Harkins & Burke, to carry on the business of the former in Buffalo, N. Y., investing: Cash, Investment Merchandise, Inventory Furn. & Fix., Inventory Expense, Ins. prepaid Acct. Rec, Schedule A Notes Pay., In favor of Barker Accrued Int., On note above Acct. Pay., Schedule B C. W. Harkins Notes Rec, Griffin's Note Accrued Int., On above note Cash, Investment T. J. Burke 5 Arthur Kelly Richard White 10 William Anderson Notes Payable Reserve for Bad Debts Gorham & Co. Accounts Payable, Dr. Accounts Rec, Cr. General Acct. Rec $1300 13 1966. 22697 50 22697 $669.50 72 250 9I9-50 $991-50 Owing to lack of space and the difficulties of composition, the explanations to the various Journal entries have been omitted. The approved forms of the Sales and the Purchases Books and various business forms are illustrated in one or two sets of answers, and references to these are made throughout the book. A few answers have been placed out of their regular position in order to preserve their unity. Answers in Advanced Bookkeeping 161 - c u a iO c iO N *— -r — ue M -r re _ -J - o X — d : V. H _ i •r. m IT. rr- — 1/3 ir. X X o *£= iO w C - -f re Tt" -t -T c«3 - C 3 ir; CN ir. re to x — — re x x n re •r ■r- z. i 2; z •r. +^> C x lO m X C7 \r. -+■ io - -tN >. to - x i- r^ x o m - Dd u < u +J d ci u to — : — ■ H r- >.-■=. ~ Z Z rt o a „ co - -r -i-x w re - _ - m — <~r, o u 3 a o — o o c *2 oJ C i - b x — ■f. H r/l O Cfl - . • 3 Q Cfl .U. cfl - u ° " -r ■r. < ~ -: - =^ x - C) >. w £ CD 5 o 52 5 - u P tfl ■ p S -~ : P «-• d pu pis x u cd -i c^ - »o - - - re 1 62 Answers in Advanced Bookkeeping For Purchase Book and Sales Book, see Answers January 1914. 8. SALES LEDGER THOMAS FLEMING May 3 $354.00 May 8 D. J. MANNING $354 00 May 8 150 May 12 DAVID NELSON 150 May 11 210 RICHARD WHITE May 1 1876 May 5 669.50 May 31 Balance 1206.50 GORHAM & CO. May 1 500 May 13 May 13 250 250 9- ACCOUNTS RECEIVABLE May 1 May 31 $2376 May 31 714 May 31 May 31 $919- 50 754 1416.50 June 1 $3090 $1416.50 ABSTRACT OF SALES LEDGER $3090 David Nelson $210 Richard White I206. 50 1416.50 10. STATEMENT OF INCOME, PROFIT AND LOSS OF 5. JOHNSON, MAY 31. I9II Sales $35000 Purchases $30000 Inventory May 31,1911 ' 5000 Cost of Purchases 25000 GROSS PROFIT ON TRADING $10000 Answers in Advanced Bookkeeping 163 Expenses: General Expense Insurance Total Expense income from operations Additions to Income: Merchandise Discount Real Estate Appreciation Tuial Additions income for period Deductions from Income Interest and Discount net profit 11. See Answers 1,23 and 132. 12. JOHN BLAKE, CAPITAL $3235 225 $3460 $6540 50 500 550 7090 40 7050 Dec. 31 Jan. S7000 7000 2000 Jan. 2 Dec. 30 $5000 2000 7000 13. (a) See Answer 123. (b) Notes Receivable Charles Tracey Discount Explanation. $975 $970.61 4-39 1 64 Answers in Advanced Bookkeeping June 1912 1-7. Acct. Pay. JANUARY 2, 19 1 2 General Henry Fairley continues the business of Henry Fair- ley & Co. (Henry Fairley and Francis King), taking over all the assets and lia- bilities of the firm and giv- ing King a six-month note for his share of the partner- ship settlement. $4410.90 Cash, On hand 14928.62 Merchandise, Inventory 1 68 1 Furn. & Fix., Schedule 5 8 97-56 Acct. Rec, Schedule A 3842 Noted Rec, Schedule B Acct. Pay., vSchedule C Notes Pay., Schedule D Interest, Accrued Henry Fairley Francis King 2 7533 • 73 Francis King Notes Payable $547 • 50 Smith & Mason Notes Payable 25 1000 Notes Receivable William White 29 38.72 G. B. Anderson & Son Returned Purchase 31 586.22 Accounts Payable, Dr. Accounts Rec, Cr. General Acct. Rec. $3671.40 12000 22. 22 75; 3 ■ 73 7533-73 d^o- /3 547-50 $1000 38.72 1000 Answers in Advanced Bookkeeping 165 en H u ■r. < •— ; IN reOO re ' 2 rOKN re § C lO r^ lO 4 C - rcO ■* O c m o <"i o o oo C o o 05 o\ ON u~> w> O do o » *» r? 00 - >o <* ^d o 1* O vO vO re tN (N r^. >-c oo r>. 00 oo 00 Tf -f r^ M N- HH l-H re ^. ^ft <«i «» C*3 re • o o w t^ t>. d 3 oo 00 cj.2 * On Q C , ^- rj- ^ a o Tf <* m iO «* «* o ^* ^= d o c t^ t^ VO C/3 d 00 (N re 00 O vO r- C\ CO i-i t^ lO t^. ON t^NN iO r^ ie £'5 o o o o vo n vd vd re en H W ■-■ o ^e re ievo re v£ ►h O l*** O —i tJ- re r^ c\ t>. O | - 1 re^O On c ^ Z « ■^-00 oc o *i- o -t- ~ cs r^ o »o ^t w* < Ch s o C en a o < 2 {2 u £ o -I- 3 o c Uj aJ iam A. W of i coun nal invest fl i n E. I t. Allison' count U r e •a z | si lance, ( )n hand ites Receivable, Will nes Young, B; lance nry Fairlc y, Additic 1 !. Peter i n, St. dra ites Receivable, Disc n. White, Balance i r\ o ton, Marsh & Co., I •Us Payable, Pd. An scount, On Allison's ►tes Payable, Pd. Ki: crest, Pd. int. to Cc pense, Miscellaneous scount on Purchases count, Payable, Dr. pense, Dr. neral, Dr. lance i—i u in -_ .: d r- - J count Receivabl n< ral, Cr. o 1 - - - - • - ." • •— u u cd ^ i; x i; c ^ '^ ° x 0r:; nzAswz^ —1 < a P3 n . (N • - q m f,/. - - - \n ~— -g - - C Cn reoo c- — Cs 3 — — — c i ' '. — i ft 0" .-: r. — — ce - — . - i — i66 Answers in Advanced Bookkeeping 8. HENRY GARLAND, MAY 31, 1912 Cash Notes Receivable Account Receivable Merchandise $1610.75 945 2291 .60 6847.50 $11694.85 500 8794.85 $9294.85 Account Payable Present Worth March 1 Profit * $2400 9294.85 Withdrawals Present Worth $11694.85 8270 1524- 85 $9294 . 85 9. See Answers 132, 120, 121, 122. 10. (a) See Answer 220(a). (b) See Answer 229(6). (c) See Answer 15. (d) See Answer 229 (a). 11. Subscriptions Capital Stock Cash Subscriptions or $200000 150000 $200000 150000 Cash Unsubscribed Stock Capital Stock 150000 50000 200000 12. See Answers 14 and 4 (January 19 17). 1. January 1913 JOURNAL, DECEMBER 31, I912 Accts. Payable, To close $1792. 50 Notes Pavable, To close 2400 Charles Williams 21489. 86 Henry Groves 21489. 86 Cash, On hand $6000 Merchandise, Per Inventory 22500 Accts. Receivable, To close 5298.22 Notes Receivable, To close 2810 Expense, Unused coal, etc 239 Furniture 1800 Real Estate 7500 Delivery Equipment 800 Insurance, Unearned premiums 225 Answers in Advanced Bookkeeping 167 2. JOURNAL, JANUARY 2, I912 Cash, On hand Merchandise, Per Inventory Accts. Receivable, Schedule Notes Receivable, Schedule Expense, Unused coal Furniture Real Estate Delivery Equipment Insurance, Unearned premium Unissued Stock Good Will Accts. Payable, Schedule Notes Payable, Schedule Capital Stock 3- (a) Subscription Unissued Stock, 10 $6qoo 22500 5298.22 2810 239 1800 7500 800 225 1 0000 7020.28 $5000 $1792.50 2400 60000 $5000 (*) Cash Subscription 4. (a) Profit and Loss Reserve Dividends vSurplus (b) Dividends Cash 15 5000 9000 5500 5000 1000 5500 2500 5500 5. (a) Consignment, Geo. Wilson & Co., No. 1 22. 10 Cash 22.10 (b) general commission company Fruit and Produce Commission Merchants Rochester, N. Y., Jan. 8, 1913. Messrs. George Wilson & Co., Medina, N. Y. Gentlemen: Below find Account Sales of Peaches showing net proceeds 1 68 Answers in Advanced Bookkeeping $202.90, for which please find enclosed my check No. 74657 on Commercial National Bank, payable to your order. Respectfully soliciting the continuance of your favors, Yours trulj r Shpt. Jan 5. E. & 0. E. 500 boxes Peaches @ .50 $250 Charges Freight $14.60 Cartage 5 . 00 Insurance 2 . 50 Commission 25 . 00 c 47- 10 ■ $202. 90 Cash $250 Consignment, Geo. Wilson & Co., No. 1 $250 Consignment, Geo. Wilson & Co., No. 1 227. 90 Cash 202. 90 Commission 25- 00 6. (a) Shipment, General Com. Co., No. 1 468 Merchandise 350 Cash 118 (6) Cash 603. 75 Shipment, General Com. Co., No. 1 603. 75 7. JOURNAL, JANUARY I, 1913 Cash, On hand $2380 Unfinished Goods, Inventory 12570 Finished Goods, Inventory 4600 Notes Receivable, Schedule 1500 Accts. Receivable, Schedule 15420 Plant 50000 Machinery and Tools 12680 Office Fixtures 1200 Materials and Supplies 10382 Expense, Unused items 560 Accts. Payable, Schedule $15645 Notes Payable 1 120 Jones Manufacturing Co. 94527 8. Notes Payable 3840 Cash 3002 James Wilson 6842 Answers in Advanced Bookkeeping 169 O 75 1— • 02 H 0. w o a < Ov J Q 3 .r^3 a> 3 ? W . S r Jr u W J-> « u u 3 3 n c »- - O 7) 2* G 72 3 x x <" rt ed y t— ( c ►5- in. 00 o M o 00 O O "5 m in M O N O *o WO N in 00 o o o en M o w «OOhO»vOO«0 wO'tmmiH'+in m - V- O u) . rt *o SQ^ •0 & o-S '+_: *> a o Cu_*a J3 . u e of ac Discou inv. o J. L. p Drew sig e. J. & A A. note Q c 3 Q • O •§ h$4 o y co oT .5 * • to CO s *3 CO 3 > , On ng.. ecei ecei 3 o o c O o VhI— i CD 03 w +j a> S£^ u w o — 8*8 CO O 3 « 'rt o c to oo en a J=! tO 4> CD B o to u C Bala: lohn Rate Geor Note to in a) H u CO CD u 0) Cha Not Inte CD a i— i CD CO Disc Not Gen a) h m in t^oo c M H M M C H 3 Gj Ih CD C CD c SI'S in u CD a! cu J5 M ^^ t-> CD Oh O o cu y _ o Q..S o o o 01 m 6^ o o CN O oo M *^ O O -3--0 vO r^ O ■<+00 O v> mvO M o <*> r> ■<* t^ O cs ro m *0 <*> '_£ o o 5 >> >> g ftftQ w 03 CV3 - Sec «J lH (H C CD CD CD ■*-> +> rv m m K CD CD I-. o CD CO C3 y ft. c o c o y CO p nj y ^ S 4) cj W^!^ ft, Q OPQ mo «3 flS o 00 o v-l o 1/3 O t- o Ov fO "* (N CS 1/3 I ° 00 O v-t O 10 -0 O O o 1/3 N OO 1-1 V-4 O tO ,— , 1/3 O rt C O \n H* Pi c -r V>vO 10 O m 03 C *<* o o 10 >o 1*3 Ov M -o o V. H W S < p. a «< U O cfl o o 03 V- O n o 10 v> t^ ooco IflO HvO tO O «*»sO O rOO O O O N O 10 ": 1/3 M O O M H* c O c c X, O c ^03 ■x. ~c8 **-• o Q.S3 «' ■— 03 rt - . ^ 6iJ o •=£ 2 jjow > 3 2 ri « 8 n u I-. 1- ' >> O U t- "°0 O - Or£ O O tf c o O U U 05 *J c e c - -L" <" - tl £ 03 >> ■ 4) 1/) 03 * q O Ujf «« CC ffi i/; K c/2 <2 w c/3 g . 2 O 03 4> 03 «i C o • & c lot * — ><-" v^"y C ., ^O ^Pi rt^ u Dr. ase, - X °s w*> 9 ; i) u — 3 •Sccg-g^SO i;.~ cl rt nj c x •'-''• - at e IV 2 Q Q c u 1 — 1 - od 1—1 c ?3 "O *f • ' — gao£SH3 *-- — 3 eneral, alance ^ -5 0- X u Xt O 0) CJ • — £ww.°.uG«.* * r- H _ M M « ro i 7 6 Answers in Advanced Bookkeeping 2* a o 1— t On « w 3 a u w fl J" psj o o a* CI e TO a u to a 0) ° £ lO vO 4^ O TO u a> C CD o s £ y TO CD o 4J a> bC TO cd TO ojo 4^ bjO+J *-< o TO 4-> hH in o TO CD > TO o 3 o o o CO o »o o l-t On o CN) ^o «* o ON 00 o — %6= o \Q hi -t" ON O 00 CO CO o »— i > o TO gO • ^h TO «— 2 T^ CD Q. TO g O w %> O 8 §^< 2< o lO hi \Q ON <* oc o vo o to hi o ON oo Answers in Advanced Bookkeeping 177 SALES BOOK Brown & Potter, City, 10 vpc. P. S. 10 D. T. 3 1/2 cash, 90-day note 18 8 ton, N. J., B/L, S/D 40 12.50 $4O0 I80 $580 Riley and Cohen, Tren 1 P. S. 1 I). R. S. 3 B. R. S. Trade, 5' " 85 45 120 $250 1 237- 50 Acct. Receivable, Dr. Sales, Cr. 3i PURCHASE BOOK $817. 50 817 50 2 John Williams, 11-29 Grand Rapids, Mich., 5-10; 2-30; n-90 1200 1200 3i Purchase, Dr. 1200 Acct. Payable, Cr. 1200 7-8. STATEMENT OF INCOME, PROFIT AND LOSS OF HENRY WATKINS, DECEMBER 31, I913 Sales $115*36 Inventory, Jan. i, 1913 518572.50 Purchases 95349 • 23 Total cost of Purchases 1 1 392 1 . 73 Inventory, Dec. 31, 1 9 1 3 2165 Total Cost of Goods Sold JP27 1 73 GROSS PROFIT ON TRADING 22864. 27 General Expense 5636 . 6 1 Rent 6000 Insurance 560 Depreciation on Furniture and Fixtures 98 . 20 Collection and Exchange 116.40 Total Expenses 124 11.21 INCOME FROM OPERATIONS IO453.06 Additions to Income: Discounts on Purchases 2084 56 Interest Accrued on Notes Receivable 126.50 Total Additions to Income 221 1 TOTAL INCOME FOR PERIOD I2664.06 178 Answers in Advanced Bookkeeping Deductions from Income: Discount on Sales Interest and Discount Total Deductions from Income net profit 356o 561.80 4121 .80 $8542 . 26 9. Investment Withdrawals Gam Present Worth JOHN ALLEN $1500 3517- 99 $4287.46 730.53 Investment Withdrawals Gain Present W T orth GEORGE BACON 700 593- 51 1050 243 -51 Assets Liabilities 7564 3452. 50 Present Worth Total Investments Net Withdrawals 4111 . 50 5337.46 2200 Net Investments Net Gain Bacon's share, \ of Net Gain Allen's share, f of Net Gain 3I37-46 974.04 243=51 730.53 10. JOURNAL, JANUARY 10, I914 John Lyman and Davis Norman become partners to carry on the retail hardware business investing : Cash, On hand Merchandise, Inventory Notes Receivable, Schedule Real Estate, Inventory Mortgage Pay., On Store and Lot John Lyman, Investment Cash Notes Payable, D. N. to A. D. Davis Norman, Investment $1000 4000 1200 1 1 000 9000 $9000 8200 800 8200 Answers in Advanced Bookkeeping 179 11. (a) See Answer 229. (b) See Answer 92. (c) See Answer 91. (d) See Answer 220. (e) See Answer 220. (/) An account with goods which we have sent to others to be sold on commission, and which shows a loss or gain on the shipment. Cf. Consignment Account, (g) Cf. Account Sales. See Answer 228. 12. (a) A voucher check is a check which shows the detailed items for which the check is payment. It is a combined check and receipt for the items so noted, (b) The petty cash book should contain a complete record of all the petty cash expenses, these being placed on the credit side, the amount the cashier receives for this purpose being entered on the debit side. See Answer 34. 13. (a) Consignment, Fred Mott 772 Cash 772 Cash 2200 Consignment, Fred Mott 2200 Consignment, Fred Mott 1428 Commission 66 Storage • 40 Cash 1322 13. (b) See January and June, 1913. i8o Answers in Advanced Bookkeeping Cft 4) C 3 I O c 13 >/■> lO 01 M O o OS C3 00 »/> "5 >0 0) 1/3 O -o c o o o m N l/l t CU o ■* t 15 t^-vO ro M w ■<* jj w «fe c O 03 Q Ph «1» o ■ o o v> PI o N O ■* O t^ oo x»© i/i O O N M O H4 o o a, c »/i ID -!-> o a d CO o fv-i O 1— 1 (V) . | s ffi ■* . %£ s d q t/3 5 o t c/3 o > o Q V-i o u d Q."2 co cu Q a . nS 3 «. On hand Cash, F Cash ceivable, atson, P cu > • — (I) O > '53 cu cu t/5 < C u U "c3 V-i CO (J Balai Sales Sales Note Henr Note Acco Disc< 0} cu CO CO « cu "rt CQ >. w 1/100 rtO w ►H ph ^ ro^j f} M CI C o cu 03 c 0) ft x £ B3 O rt 4) 1-^ CO CO... J? O g cu hH *HH +j -4-> t/3 03 ry) 4J "- 1 T G.C r' CJ dJ b. r J4 M « £ u« kwh,> . a ■>-■> ft q rr. cu t/> rt n Hi « ft rt ft o o.a O C Q +-> o o o • -i x cu rt •< Q W OH c O o C/3 S « o C 1-, j-4 cu cu S ft C^S 00 h riHi ro Answers in Advanced Bookkeeping 181 -^L October • i4. 13 ia At ninety days after eight O npnrR nr CurBelves wss'S ,a Pay to the $ 1900$ Cne Thoueand Nine Hundred # a.-£2fto Dollars VALUE RECEIVED AND CHAROS "9KO S A> E TO • O J T „ Strong* Sons, J ^ o Vulcan New York, N. Y. \ /^j ACCOUNT Iron ^o of rka , z^Treaa. r No 658 At eix months afte u 3 Ng Y. . Nov. 6. 1918 -| 9 order or Ourselves r eight j-^ Five Thousand $ w a *%$2 , Pay to the 5000# Dollars TO VALUE RECEIVED AND CH&nGE^T-S^S&E TO ACCOUNT OF a, am as Commercial National Bank a ^XggeAt k Price . o vo tr> o v lO fvi »o tr> vO <« w vO o o t>. t*5 H NO tO *rf 10 oo rOvO vO Ih . « 0J 1— 1 ci -* rc ro Pi M NvOOO 0> «% *A rO M o hH l-H (A - Oil o o •T-< o3 o o t/2 > a u 0) ft o o o3 o 0) A ■0 O 0) (S oo vO CT3 G o a b£ Pi ■C c +-> o *d V c +? a; w> o • oj en Pi . O o O o| pq g o u PQ (U Pi > _ ^^ +-> o V3 iU w o3 rCl o »-< pi qjPh 6 £° ^> in O o Cm Q 03 pq PQ o.s cd XI Pi ^o3 CC ■«-( (LI CJ a © gO '53 aT in o3 13 Pi^ ^ P ^ Pl o "S S o o<2; o o 10 00 o 10 Mi VO CO o254-75 The Schenectady Shoe Co. is incorporated to take over the shoe busi- ness of O. P. Henderson: $10000 O. P. Henderson 1 0000 Unsubscribed Stock Capital Stock 10 87.50 F.G.Bills L. M. Brewster 13 150 Commission 87.50 Traveling Expenses Robert Sullivan 14 Case & Hart Notes Payable 17 145 Notes Receivable Grady & Son 31 254.75 2047000 General, Dr. 254.75 Accounts Payable, Dr. General, Cr. Accounts Rec, Cr. $20000 $87.50 237-50 254- 75 H5 $20492.25 $232.50 232 50 For Purchase Book and Sales Book see Answer January I9H- 186 Answers in Advanced Bookkeeping ft. — H U 3 8 «< U 4> c O c O t/J 83 Q o WJ tO N 00 vO hOu)<» r^ a Tf O M T}- OS r*? 1/5 O « n N H M O W <*. M M 00 00 to l/> PO r*> lO >n w c* Tt ** tp% t*> "V »t IN 00 00 M C 1/5 \r»o t* *i-o H rfH ro to o cs M ^ N ^1 o IX. M 0\ T o lO lO t*5 O 00 O M +j • a 3 O o w o c ,o!2 o-— e 4) o o y •d'Sd.'SH J8 Q 3 a -«* in > .8 S-3«*23 so w «$ £ u i» « w o 3.* O . ortO W c o C o «> .2 § Q O o rt 3 o w 3 « OO^CON lO O M lO t^vO N IO to 6% - iflO h iflh ts io oo e *o to •O r- (■• w P»5 TPO « to H -t M o o 1/5. a: ir, o 00 t* 3 P »h rt .2 S Zo o o o O w 1/5 r~ m n M M N *j I— i c/3 re 3 09 O UJt *-i tn C a) 3 +»ffi y-dxl « o lu 1) ' rt iu "t3 www wPh r flCCC'.S OJ 4) 4) U rr, b> a a o. a w g K X K K • O +-"0 S c 3 s& O . 2*3 "3 a rt u wwww u 4) U) rt ^S u u 3 Ph c O ■»-> c 3 O u w CI Answers in Advanced Bookkeeping 187 8-9. trial balance of summers & barrett, december 31, i914 P. D. Summers, Investment $4500 D. B. Barrett, Investment 4500 P. D. Summers, Personal $250 D. B. Barrett, Personal 300 Cash 1075 Merchandise Inventory, Jan. i, 191 4 3845-87 Purchases 6397-43 Sales 7453- 18 Discount on Purchases 386. 19 Discount on Sales 483-74 Collection and Exchange 43-25 General Expense 843 98 Interest and Discount 27- 52 Rent 1125 Freight Inward 328 Furniture and Fixtures 890 Salaries 675 Accounts Receivable 1684.62 Accounts Payable 1500 Notes Receivable 925 Notes Payable 500 $18866.89 $18866.89 STATEMENT OF INCOME, PROFIT AND LOSS, OF SUMMERS & BARRETT, DECEMBER 31, I914 Sales >7453-i8 Inventory, January I, 1914 $3845-87 Purchases 6397-43 Freight Inward 328 Total Cost of Purchases IO57I.3O Inventory, December 31, 19 14 6974 25 Total Cost of Goods Sold 3597 05 GROSS PROFIT ON TRADING 3856.13 General and Administrative Expense: General Expense 843.98 Rent 1250 Salaries 675 Furniture and Fixture Depreciation 89 Total Expenses 2857-9* INCOME FROM OPERATIONS 998.15 188 Answers in Advanced Bookkeeping Additions to Income: Discounts on Purchases Interest and Discount Interest Due on Notes Receivable Total Additions to Income TOTAL INCOME FOR PERIOD Deductions from Income: Discount on Sales Collections and Exchange Interest on Notes Payable Total Deductions from Income NET PROFIT 10. accounts receivable $12895.37 $5468 . 93 Bal . 7426 44 $12895.37 12895 37 A. H. Burtis 419 29 C. E. Snyder 1543 27 M V. Hughes 1128 19 T. E. Baker 1324 52 M A. Hurst 1 196 45 F. M. Andrews . Balance 1814 72 Dt $7426 44 Bal. 386.19 27.52 11.25 424.96 1423- II 483.74 43 25 l 4-75 53L74 891.37 ACCOUNTS PAYABLE $2128.43 $5195-47 3067 . 04 . $519547 $5195-47 346. 19 W. K. Landers 819.26 E. M. Griffin 1324.75 H. B. Cook 576.84 A. R. Kempton $3067.04 Cr. Balance 11. (a) Rebates and allowances are deductions or reductions in prices from the list prices of merchandise made for various purposes. (b) Royalty is a fixed compensation paid to the owner of a patent or a copyright for its use. (c) Commission is a percentage of the amount of sales paid or retained by the agent for his services in making or effecting the sales, (d) Trading Account is the Merchan- dise Account. See Answer II. (e) Bank reconcilement is the check- ing up of the bank book and the check book to determine the actual and real balance by deducting uncanceled checks from the amount of the bank book balance. See Answer 13, June, 1914. (f) Freight out are the charges paid on merchandise shipped or outgoing freight. \g) See Answer 221(c). (h) See Answers 8(b), 10 and 13. 12. (a) See Answers January and June 1913. (&) Amount of Check, $228.25. Answers in Advanced Bookkeeping 189 June 1915 5-6. STATEMENT OF INCOME, PROFIT AND LOSS OF TRAINOR & WARNER, MAY 31, I915 Sales Returned Sales Net Sales Inventory, Dec. I, 1914 Purchases Returned Purchases Net Purchases Freight Inward Total Cost of Purchases Total Cost of Goods Inventory, May 31, 191 5 Total Cost of Goods Sold GROSS PROFIT ON TRADING Selling Expenses: Delivery Automobiles Depreciation Advertising Commissions Traveling Expenses Total Selling Expenses General and Administrative Expenses Furniture and Fixtures Depreciation General Expense Salaries and Wages Insurance Total General and Administrative Expenses Total Expenses INCOME FROM OPERATIONS Additions to Income: Discount on Purchases TOTAL INCOME FOR PERIOD Deductions from Income: Interest and Discount Discount on Sales Total Deductions from Income NET PROFIT 1 63 IO 7. (a) See Answers 230-231. (b) See Answer 232. $140000 2500 $95000 3250 6000 $137500 91750 1650 93400 99400 9000 90400 47100 500 2500 4700 6000 13700 200 8500 6300 210 uses 1 52 10 28910 18190 1440 1440 19630 520 2800 3320 190 Answers in Advanced Bookkeeping +a y o 5 cd Ih CO G to O M On > < ►j O I Ed u <0 C ID o y (d £ 6 CO w Jh G W -*J cd .5P-Q 'C •> o !>.G *a o u i- o co cd u H.S «| J3 O * y o> M t/3 * ° co o a c O o.*3 ii O "1 o C "t « lO f> *> O O O wiO o o o o to o '53 o 5 « 1/3 to r? »_, +j booo * « c 3 co a; Cdy£ O o>-£ cd< Ih O 4) frlffiPn (— I h- 1 .G ■-23 ^ S, Pi C & toot G O cj ° c/l c cd >» cd Pn t/3 to -(J o CO Ih u ^ \~ u CO «h :,u (VPQ G • J ro fO be ^3 cd cd o 'J y vi co c« ■§ I CO P o VI Q> 03 cd. J3 y 3' Ph. o to 5^ in cd 3 oooooooom 00«00100")0 ooioioaoH f*5vO t»(IH « t** W Hi o V) «rt o ■* N lO fO Answers in Advanced Bookkeeping 191 § 10 o o § o o W5 a o o "1 - "5 O O f»i T 1-4 r^ IT O O O r* to C O cd M M 1^ M cd c cd « g nn & Co. Meyers & Co. to"C J - to — O 5 E to u > c cd > "v pi - - C — c u to & Co. lipment No. u cd C C 00 _'~ •— I to : •— > Q |« « 10 S cd *-> c • a < O 2 c CO I o CO § ,S u r- d • - 'i Q o to u v- 2 1/! o o i> c o*e _ -_ - C<2 O O *t m m N o o a" — u -;- •- ~ — ■ 1 Xi 1->V cd U~ >» v. cd 15 c 1 - i- 3 to oc«J Co*? c\veks in Advanced Bookkeeping 193 3 C (0 rt V- o C O c O t« . -J V ; Q <* (A 1 a 05 10 m -T ■t r- O O O r^ C O O lO t-t » O -i ►> - ' > 3 w O "-1 3 v u c/3. c v c SSO — - — r n .: b «•- A 3*H ■S3 ,8 ft«H eeft. . •HI 3 C 2 2 o dftlclg" «.2 «> 09 - : 1y. .- so > o o o rt . C QQZ Q at o C o c 9 o o (/I a u c (23 ifl r^ O - -1 -0 u 01 o O c a x W «3 si-g 3 Sr <0h rO 00 O O 10 00 IO ♦ft O t^ f< IO CS1 IN i- fO 1-1 »o r O C 10 t~- c 00 O "0 1- O ro N 0>N IT) O r- m M 5 ir K w KJ X c -. c X - "■ N N V, 1ft u^ u • 3 rj o'o / r* ' C es « > O .-0 > ~ : ,|2z ro e - o b o 5. gg - B 5 1 ft'S ft& - : J. X -3 So... CS (I V V *< ^ x x fj u oT C3 o u 3 ft. C o a 3 o o 1/1 CJ2 CJ c« O ifl-tO >-. M ro 194 Answers in Advanced Bookkeeping o o> 01 . 4) >> -t-> cd to M u B a w > o < O cd c O cd t-. cu C v O 01 . £f* cd «i d "° O 5 s w o> d 5 d o •d u O O -° d o a o o -t-> u ^3 . t/3 4) d W d cd o pq J3 *> o •• O 3 Ih ^ cd cd O n 4> J3 J3 a o to ro N o O »>■ o M » i/» t 00 M t/» nj «» n to W a M • • H t» M Ol N CO cO ro f> Ih o c a > *u i— i d « 2 Si £ c O cd . .d -d 2 >» i-i o ■»-» d & « M > oT d o> 1—1 s § bo cfl cd rtf o d c H 3 H PQ o> id l» . .a 4) cd 3.5; .5 c a) s tn a > *d ►— i C o Pn "43 « S 2 - S s I— I vJ 0) id o •d CO U3 Ah a> a; »— » d >, a Pv O Cfl c 3 O ^ < o I c 5 > .5 C ft, O PQ o CJ y p ^ cd Cv> fi 12 cd ■d a) Ih d c > .C C 4) 4) tfl* frf a O c cd 3 0) X, o CO .a cd >. cd O lO OOOOOOOr^ OOOOOO'tO o p» in a "5 co no U) fl N l-t 00 O O lO o o »o O O f5 o n t-» o >o m O «0 vD O N «>■ tQ t» M MO H O o Pk id .„ 1-1 o o Pk 1 1 C cd d ^ til tn " 0> cd ■_, bo Z o Answers in Advanced Bookkeeping 195 •o O — to o § "0 O 10 m rO 10 oo ro i- — \rt t M Oi o M to «* CO CO co o t/1 ,0 *3 o ,3 >. o 5 — o . >. cS «- K co ^ 2 • Ph 4-> o O t) cu - — — 1 z£ o J3 — E ad rt ^ H-5 f ) >. 9) u Pi - CO s . *-> O 2 CO co 09 co o o CN > fl CO CU 6 '53 6 2 3 O X O o .> « Q CO +1 O 2 c3 -a O - s Rece Tames d <*-■ CO C c 4-> 0) co o C/2 C/2 2 n •7? -i ,0 09 . > CO CO ^ - U2 eS >. c 3 o y o U "3 CO o u U J u 3 u CO > . — 11 CO o 2 - CO ft co ■A ft gg 2 CO o *j U o u z< o o O M o IT) 00 O "1 -" *r - o - r: M o o Ci Pi \n CO no to o 196 Answers in Advanced Bookkeeping PURCHASE JOURNAL Nov. 3 Smith Bros., Amsterdam, N. Y., 5-10, 2-30, n-90 $1540 9 Sanford & Co., Phila., Pa., 5-10, 2-30, n-90 1290 12 Michigan Furn. Co., Grand Rapids, Mich., 60-day note 953 30 Purchases, Dr. $3783 Acct. Payable, Cr. $3783 SALES journal Nov. 4 John White, City, Cash, 300; bal. on acct. 19 Donald Morgan, 5-10, 2-30, n-90 29 Henry Lamb, 60-day note 30 Acct. Receivable, Dr. Sales, Cr. 2415 2. (a) See Answer 220(g). (b) A waybill is a list made up by the common carrier of the goods carried by each car and train, giving a description of the goods and the shipping directions, (c) See Answer 132(b). (d) See Answer 228 and elsewhere in book, (e) An open or running account. (/) See Answer 221(e). (g) See An- swer 91(d). (h) See Answer 122(c). 3. See Answers 13, June 1913, 231 and 232. journal Accounts Payable Notes Payable H. M. Kerr O. E. Weir Accounts Receivable Raw Materials Plant Real Estate Cash Finished Goods To close the old books Accounts Receivable Raw Materials Plant Real Estate Cash Finished Goods Good Will Unsubscribed Stock Accounts Payable Notes Payable Capital Stock To open the books of the Corporation $4800 1500 30000 20000 $12000 9000 9000 1 0000 7600 8700 $5 6300 $56300 $12000 9000 9000 1 0000 7600 8700 1 0000 15000 $4800 1500 7500Q $81300 $81300 Answers in Advanced Bookkeeping 197 Subscriptions Unsubscribed Stock (Or separate entry for each subscriber.) 3000 3000 5-6. statement of income, profit young, december 31, Sales Return Sales Net Sales Inventory, January i, 1915 Purchases $64396 . Returned Purchases 1167. Net Purchases $63228 . Freight Inward 1246. Total Co ;t of Purchases Total Cost of Goods Inventory, December 31, 1915 Total Cost of Goods Sold GROSS PROFIT ON TRADING Selling Expenses: Delivery Equipment Depreciation General and Administrative Ex- penses: Furn. and Fix. Depreciation 160 General Expense 6332 . Insurance 135 Rent 2400 Total General and Admin. Exp. Total Expenses INCOME FROM OPERATIONS Additions to Income: Discounts on Purchases Accrued Interest on Notes Receivable Interest and Discount Total Additions to Income . TOTAL INCOME FOR PERIOD Deductions from Income Discounts on Sales Accrued Interest on Notes Payable Total Deductions from Income NET PROFIT Distribution of Net Profits: Paul Wilson Carl Young Total AND LOSS OF WILSON & 1915 $94392 . 40 I762.5O $92629.90 82 93 75 45 8471.20 644 75.68 72946.88 9700 $120 63246.88 $29383.02 9027.45 961.30 112.50 210.42 1975.80 61.25 9741 -37 9741-37 9147 -45 -0235.57 1284.22 2I5I9-79 2037 5 19482- 74 $19482.74 198 Answers in Advanced Bookkeeping 0) C 3 u cu C 0) O r> en « ce) c O en Q o o o o o o CM CM ui CM O >o CM lO CM »« ^ ^ CM o T o o o *t ui UI ■* M f*5 cm C5 O U5 O u^ io r- to -n- ~5 O O o C\ •* o c CWICN O lO 1/5 U) c c "5I^N IflTfN H c ir> ■rf \r> •. 4J +J 4) £ = c c°* O 1 -*"d «C0 c ^ ~* > • *d +j .S CU . „, ._, 'c3 & stmen ment d invo paym . G. B t, On scoun' 6 =3 o u 2fs-5£§Q o cu Q 1-1 5 -U c u o cu 3 3 ccS > en -_■ Knowle Hooper, ord & Sc & Olney Receiva st and D Receiva for cash Receiva en r! o w. C — a) o cu Pi CO ■*-» 3 CO e o s 3 O o m u u "5 o ej R. M. A. F. Crawf Quirk Notes Intere Notes . CO en cu CU s 3 .oZ rt yj <0 "3 41 "3 MMMTf r*5 lO O O H V 3 M »-t (-4 M« cm ro 3 i- 41 3 41 o o in o o o ui u» O o o 4) CA c i/» 4) & W VI M M « o N t %^ Q^ t^ ui CM CN o o t rr <0, 00 C\ o U"; ro «» oo ro O ■o ui 00 O cm io ir> Ok uio O u^ r*5 O <*> 00 00 O u-j •rj- rt io t^ rf P5N m t^ io ro N CM a CO a o o Vt 4) en C 4) u-> o &" CO ui I u> a; o M^.2 33 o o o >> K4: S c -h c8 a! • ctf -fl. - J2 0,72 '^'— ' o 0) C - - X -^ c3 ^-r 4/ +j l- c n v,-_ . Q. O. 3 "'^ H CM *t en o J3.S ° c ctj as* . i- 5 o PL, S 3 C * 3 C J 3 cu . C +j» 3 S-Sfo S in o en 3>t- - ^ CU •a >. 3 CO °3 >, O .2 ° ci"^ CO ca ! a, cu u • en »-• Cu Q en 1-1 ct) - X CU o ' w 3 1 3 ad ea 3 en W « a s^S X 4» eel felOWZW < Q W Ocq vO CO U500 11 MM fl) Answers in Advanced Bookkeeping 199 M o > _* - _ O 4> £ 0, 4) c 4/ a I- 4> W5 ox; <= c p* X 9 = Pi' .s ^ — *~3 C i/J C ex 5 0) c o 'J is o :* £ 5 * Stir. 2 3 -X 41 ^ O O O CI «- 00 t-» 00 © re r»j v>oo 00 00 i/> o 't-O 00 00 r» n f> 1000 O0 *N t - O c 4> > o£ o c tn cj 12 » V rt 3 ir E <3 31 > u ._ 4> U CO? «££ 10 3_h •3 r = o|;o Z. « 4) -t-> o ro O ro £=3 o o <23 IT) T Ifl "*- O O f*5 u « 4) >i c« O o « 4) C ># M o 41 O X > o 41 o v to e«. 41 x o < 2 00 o to a 41 u u . — o s o 1/1 ro u u X O u od .-JfK iu O oz o y o 10 (S ^t t-- vo 00 Tt (N 5 ^ 1- $14937-34 12087. 13 $8540.27 240 . 6o $8299.67 325 90 $8625.57 $20712.70 I2I5330 8559-40 200 Answers in Advanced Bookkeeping See Answers, January and June 19 14, and January 19 16, for Sales and Purchase Books. 2. STATEMENT OF INCOME, PROFIT AND LOSS OF KLEIN & JONES, APRIL 30, I916 Sales $15027.90 Returned Sales 90.56 Net Sales Inventory, January 1, 1916 Purchases Returned Purchases Net Purchases Freight Inward Total Cost of Purchases Total Cost of Goods Inventory, April 30, 1916 Total Cost of Goods Sold GROSS PROFIT ON TRADING 6377 . 94 Selling Expenses: Advertising 495 General and Administrative Exp. : General Expense 780.97 Wages, Paid and unpaid 1585 Rent 800 Office Equipment Depreciation 28.50 Total General and Admin. Exp. 319447 Total Expenses 3689 . 47 INCOME FROM OPERATIONS $2688 . 47 Additions to Income: Discount on Purchases 259.40 INCOME FOR PERIOD $2947.87 Deductions from Income: Discount on Sales 3 2 3 • 6 4 Interest on Discount 85.33 Total Deductions from Income 408.97 NET PROFIT $2538.90 Distribution of Net Profits: *A. R.Klein 1269.45 W. P. Jones 1269.45 * It is assumed that the partners share profits and losses equally. 3. (a) The new ledger contains the following new accounts: Capital Stock, Subscriptions, Unsubscribed Stock, Treasury Stock. No partner's names appear in the corporation books, but in the stock certificate register, (b) In a partnership, the total profits are divided between the partners according to the terms of their agreement; but in a corporation the profits are apportioned among all the stockholders, according to the nature of their stock holdings each share of stock receiving a certain per cent of the profits. The surplus is the remainder of the profits after the dividends have been paid. 4. See Answers elsewhere in book for the business forms required. Answers in Advanced B iokkeepin ; 20I o o *— 4 — c a B c o> O 00 ro o> I" C) O M X o 00 in •— • m d tN t/> o c 00 O t/i • . « O M -C/3 o O n 00 00 o o a I* 5 C n ■j. Z o r^ ifl M N o X o ■* O M 00 i- TT *» o o o o r» iflO* l-« vO N 0C 00 NON 00 nninto o lO *f -. — 1 N o w O P< vO 00 M t- <* M M a: <*> O O 00 6* a u - C c (/) c a x W On 3 <0< in r 1/5 -l a o O 90 00 o -r lOO M ~3 o to P0 w* •o I Z B a «JSl«S™ o - — ■ i) U 5 u a 4; A QWJ2 " « Q2 202 Answers in Advanced Bookkeeping gg O rt <* Co- I- ll c 4> a — a w pg - w u - •< z 05 D o o M "5 00 e *tN N O »"• >■> r^ O 00 oo li0\O M M f5 r- *<» — 00 6 o 00 o H -r o 10 o 00 TfTt ■O O t^- O oo r< O \0 •€> 00 p» >33 ° 5 o rt u w a ft &T3 f>£ S i- 4) s 4> O y cy <;ft s -1 ._ re 3 ■^ y > •> *-■ « O y IB C O! " -■£ rt >> rt yCU *3 <" 4)TJ *j ^ y o - = c ■ Is.JS ° 9 S " a; rt y ■ S^ "£ 3-^ 3.-0 O C o o ^ — CO o re tin. y P< rt «^x; to 3 |H 1- a rt S >> rt rt"^H ft" Coo *o H H N IO 00 00 O O 10 10 Tt N On '^■00 00 t-i N N rr fe^ M c o %c o 00 00 OJ rt O *j (Sj o O M 1/5 M « — Q 3 O o N Q o . ^« l< HI 0] . rt ft, rt > O ft< tfl 0) y *-< ^ y re > u 4) O «^J •o u 3 ft Ih o 2 1) o i2 *rt 3 IA I— I 0) • »-i > rt ft a v. o u o < a v: rt £ft 00 ; V rt _> _- y rt y <- y ^ w rt C^ 3 to O 4) "£ y O <2 r- o 10 10 O Oi t^ t* 00 N o 6* o Answers in Advanced Bookkeeping ^03 2. statement of income, profit and loss of dickinson & gray, december 31, i916 Sales $22816.55 Returned Sales 125875 Net Sales $21557.80 Inventory, January 1, 1916 12393.45 Purchases 13516.80 Returned Purchases 895 40 Net Purchases 1 262 1 . 40 Freight Inward 75° 95 Total Cost of Purchases . 13372-35 Total Cost of Goods 25765 . 80 Inventory, December 31, 1916 15325.48 Total Cost of Goods Sold 10440 32 GROSS PROFIT ON TRADING $11117 48 Selling Expenses: Traveling Expenses 1185.25 Motor Trucks Depreciation 393 75 Total Selling Expenses $1579 General and Administrative Expenses: General Expense 3772.61 Rent 800 Wages, Paid and unpaid 1665 Furniture and Fixture Depreciatio n 78 Total General and Administrative Expenses 6315.61 Total Expenses $7894.61 INCOME FROM OPERATIONS S.^222 . 87 Additions to Income: Discounts on Purchases $1240. 64 Interest and Discount 19-73 Accrued Interest on Notes Rec. 26. 14 Total Additions to Income 1286.51 INCOME FOR PERIOD 45°9 • 3$ Deductions from Income: Discounts on Sales $1528.38 Accrued Interest on Notes Payable 12.81 Total Deductions from Income I54 1 *9 NET PROFIT 2968. 19 204 Answers in Advanced Bookkeeping Distribution of Net Profits: C. E. Dickinson E. L. Gray C. E. Dickinson E. L. Gray 3. See Answer 96. Or 1780.92 1187.27 $1484.09 1484. 10 BALANCE SHEET OF PRICE & MILLER CURRENT ASSETS Cash Sxxxx . xx. Acct. Rec. xxxx.xx Notes Rec. xxxx.xx Mdse. xxxx.xx Fixed assets Fur. & Fix. $xxxx.xx Real Estate xxxx.xx bxxxx.xx xxxx.xx CURRENT LIABILITIES Acct. Pay. $xxxx.xx Notes Pay. xxxx . xx FIXED LIABILITIES Mort. Pay. PROPRIETORSHIP Invest. $xxxx.xx Withdraw. xxx . xx Net Invs. $xxxx.xx Net gain xxx . xx Pres. worth - Invest. $xxxx.xx Withdraw. xxx . xx Net Invs. xxxx.xx Net Gain xxx.xx Pres. worth - 2968. 19 2968. 19 Sxxxx . xx xxxx . xx xxxx . xx Sxxxx . XX XXXX . XX Sxxxx . XX 4. Controlling Accounts. See Answers 14 and 43. The advan- tages are that the use of these accounts allow more than one book- keeper to work upon a set of books at one time; that the head book- keeper has a check upon the assistants in charge of the subordinate ledgers; in case of emergency the trial balance can be made avail- able for the construction of the statements, verification being made as soon as possible with the subsidiary books; the labor of making trial balances is considerably lessened due to the fact that they enable us to localize errors. Columnar Books possess the following advantages: They facili- tate the work of classifying the items posted to the various sub- ordinate ledgers, and of posting their totals to the controlling accounts in the general ledger; they enable us to present facts in the general ledger in summary form, thus making monthly and annual com- parisons easy; they enable us to introduce controlling accounts with all their advantages. They are time and labor savers. Answers in Advanced Bookkeeping 205 d h 4) c O o.£ d o ° 3* 4J Q. Z o H 4> 00 PI •*: o t o o to t/i O o o «o M O 1 o 90 T PI 3 o to T o to «* 35 tO PI P> POO 00 T C 7! - - K O H K = - ri rO to O O C\ to TfJ,«lM0C f*i o t ^ o\ 00 P0 PI o to •/ r- W = Efl d 4> c 0) C of .2 C o od v. *-> C * E z >, d - mm* woiO « ooONto cs (>< _ r- (s •-< oo too •-< too 4 'f ? n "to >*) O n 000 00 o Oflf( h 00 r- ►* pi « pi x t O 00 _ 1-11-1 PI to o o t/i o O i*5 O o "5 PI 1-1 c e O 3 c O f O d O 4> r , c >. u M— u . . - S: = u t< Q 6 «c d V; O _• V. —^ 5 h ob 0" c 3 3 O "d nT *-» d On nan eceivabl Cont. C 11. Con eceivabl VI d a> U Pi U V) V) 5 •d c d u e in v> 4-i c 4-> v: "(3 CJ .. 3 O In C H O O 4> c rt CQZ,-.~X < C 0) >-l ci 01 O c- O O t- 4) - C O 3 OtOtOoO t/}©>0 N rfOv^ l- ' t^^ 1-1 00 t 00 O O O O d to O TOO •- TOO Ifl to o «s T T O « TO "lO O H O0000O OO fl« M OOOt^i-iM-'^ <-j5o ■*= i-oo ^ M 1-1 M M -1 00 DC *-* -T 1- -i to r- ro T •y, x. 00 M I to o o '0 > ■d d Ph 6 O 1- 4) a 3 CO d 00 M o > - . <- d o £u 3 z s, w O d u <% oUPh o >5 o * J — u - o 3 h 4j JT '"'^ 1-r 1 4) .u p o. v: L>"^ C > > 6 4; - 4) a! |H U J2 , t- 111 s V. *^ . — C ,,* - 4) . dW «cx • &> c 8 c |H o . vT Q g O I) 0,3 a. - c W w c *^ c v) o 1 - _ tcirjr 5 c &> ag.Ho.2f ox : M-tC Bo. a - fe n ;7 i~i ,0 C V- o Q ado O c rt - o d Pi M M ci fi TO t» Oi O O 0> ON O O 206 Answers in Advanced Bookkeeping 2. Cash $1500 C. E. Burns $1500 Freight Inward 76.80 Cash 76.80 Western Grain Co. 76.80 Freight Inward 76.80 Purchases 1072 Western Grain Co. 1072 Cash 425 Sales 425 Cash 344 Sales 344 Cash 19.20 Sales 19.20 Expense 5-6 5 Cash 5-6 5 Expense 6.40 Cash 6.40 CLOSING ENTRIES Sales 788.20 Inventory, June 13, 191 7 452-25 Purchases 1072 Profit and Loss 168.45 Profit and Loss 12.05 Expense 12.05 Profit and Loss 156.40 C. E. Burns 156.40 3. (a) Dividend $6000 Surplus 1 0000 Undivided Profits 2765.20 Profit and Loss $18765.20 (b) ) Profit and Loss 7I3-52 Reserve for Bad Debts 7I3-52 4. Sight draft with B/L attached. Check. See Answers 125, 132, 138. 5. See Answers 125, 132, 138. 6. Balance Pass Book Balance Check Book $972. 13 Outstanding Checks: $324.89, $63.14, $263.84, $73-28, $276.88 = 1002.03 Interest on bank balance 14 .23 $1988.39 215 $1986.24 Collection and Exchange $1986.24 $1986.24 Answers in Advanced Bookkeeping 207 7- ASSETS Cash Acct. Rec. Mdse. Inv. Motor Trucks Total BALANCE SHEET, JANUARY 2, I917 LIABILITIES $3465 . 40 Salaries and Wages 4375.20 Notes Pay. 8145 Acct. Pay. 1265 Int. Accrued, N. P. $17250.60 Total Present worth $17250.60 $1869.50 7200 1234 75 56 110360 6889 $17250 60 40 65 95 ASSETS BALANCE SHEET, MARCH 31, I917 LIABILITIES Cash Mdse. Inv. Acct. Rec. Total $958.60 9615 43H- 25 $14887.85 $1488785 Present Worth, January 2, 191 7 Present Worth, 'March 31, 191 7 Losses during period Acct. Pay. Notes Pay. Salaries and Wages Total Present Worth January 1918 $3978.84 9675 345 50 $13999 34 888.51 Si 4887. 85 50889.95 888.51 56001 . 44 (a). TRIAL BALANCE OF HILL & HALE, J QNE ;o, 191 7 A. W. Hill, Capital $6000 E. E. Hale, Capital 4000 A. W. Hill, Private $2.-0 E. E. Hale, Private 175-35 Cash 672 . 40 Accounts Receivable 2165.84 Merchandise Inventory, Dec. 31, 1916 7787.11 Purchases 8400 Sales 12560.50 Returned Sale; 250 Traffic Equipment 1400 Notes Payable 500 Rent 600 Freight Inward 3 1 2 . 60 Advertising 200 Discounts on Purchases 168.40 Expenses 1015.60 $23228.90 $23228.90 208 Answers in Advanced Bookkeeping 2 (b) CLOSING ENTRIES Merchandise, Inventory, New $8373-67 Sales 12560.50 Merchandise Inventory, Old $7787-11 Purchases 840 Returned Sales 250 Freight Inward 312.60 Freight Unpaid 18.75 Profit and Loss 4165.71 Profit and Loss 190 ' Advertising 80 Equipment 1330 Advertising 200 Equipment 1400 Profit and Loss 157740 Expenses 38.20 Expenses 1015.60 Rent 600 Discounts on Purchases 168.40 Profit and Loss 168.40 Profit and Loss 5 Interest Accrued on Notes Payable 5 2. (c) STATEMENT OF INCOME, PROFIT AND LOSS OF HALE & HILL, JUNE 30, 191 7 Sales $12560.50 Returned Sales 250 Net Sales $12310.50 Inventory, December 31, 1916 7787. n Purchases . 8400 Freight Inward, Paid and unpaid 33 1 .35 Total Cost of Purchases 16518. 6 Inventory, June 30, 191 7 8373.67 Total Cost of Goods Sold 8144.79 GROSS PROFIT ON TRADING 4165. 71 Selling Expenses: Traffic Equipment Depreciation Advertising Expenses, Prorated 120 Total Selling Expenses 190 General and Administrative Expenses: Rent 600 Expenses (less unused items) 977.40 Total Administrative and General Expenses: 1577.40 Total Expenses 1767.40 INCOME FROM OPERATIONS 2398. 3I Answers in Advanced Bookkeeping 209 Additions to Income: Discounts on Purchases 168.40 168.40 income for period 2566.71 Deductions from Income: Interest Accrued on Notes Payable 5 e net profit _\^6i .71 3. (a) See Answers 120-122. (b) See Answers 123-126. 4. See Answers 34; I, June, 19 16 (May 31). 1. journal, july 2, 1917 Pay." General General ^ $365 75 Purchases Cortland Cement Co. S365 . 75 9 275 Notes Receivable H. Barber & Co. £275 10 702.50 J. H. Case & Son 450 Fairchild Lumber Co. Sales 1152.50 12 245 . 50 Notes Receivable Sullivan Building Co. 245 . 50 $454.50 Tonawanda Lumber Co. Notes Payable 454.50 814.40 Purchases Louisiana Cypress Co. 814.40 15 814.40 Louisiana Cypress Co. Notes Payable . 814.40 3i £1268.90 Accounts Payable, Dr. Accounts Rec, Cr. $520.50 2IO Answers in Advanced Bookkeeping C o c . C' in CS y y 00 00 CM o o \r> cm O CO •* »/> O to N H O O N 00 f*5 C3 OO iflO cm CO w» cm ■O co c*5 "^ f*5 ■^t' Tt CM P)« T CM 00 00 CM o CM a o\ o Ft o U » 3 00 bo £ 2S y - y o o a*o •£ •o'cs -ft, u : 3 © >U is ■o.S cs y °< 2 T) .£ cS o C Xjo O 4,'Q o " v> cS op O >& cSS « CQOZ ft" 3 C -< ™ 3 rt cu § c_, r w oo ■ Sit' £ cS CO C u o o c O y a^Z^ ^ li^ t~ r»j o c< lO 00 o H o t» » CM ro 00 "OC l/)iO»^'t' v 5 (*) ro t^O 1> CM r» l/ 5 OCS O^f^OO 1 - 1 «% tj- cm rf co ^r a nz <* oc r^ IN tT o Ov c> w M (^ c ID I • ft O So o . ^> vO CM >o co" o 'o > *2 '3 ft. U O > S£ ai CS o 4> O c o U oi os f a ^r r< h '"'C ° a — O. P" y** c G o -T? c^to 3»SS cS oi 4)-r; Ci; cs t: *» « 3 ft d C O O -g o «rt o UZiJWtflG s « 2 c >.- cS ft rtS ■c £ o ^2 &« ^s ^"^ w«0 o - s 1) CJ cS rv * c U ft. C Q d o 01 § S |S U 01 P •— o •- « d u S •o •O c o OJ cS S ■»-» c y u a> ft C 3 o y 01 H ~ CM CO CO «0 tOO OOC5rOC0i-< "- 1 '-' , - 1 ^,5 MMM ri 1 nn 1 es UNIVEKSITY OF CALIFOENIA LIBEAEY, BEEKELEY Qi At Ale^CT 3 Ari Bu En Bo Bo THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW Books not returned on time are subject to a fine of 50c per volume after the third day overdue, increasing to $1.00 per volume after the sixth day. Books not in demand may be renewed if application is made before expiration of loan period. KS Ql Qu H NE KJ 8 giene ion ion less nee •NTS Cents 1 ,Inc. CAGO 50m-7,'29 Oaylord Bros. Make* Syracuse, N. Y. PAT. JAN. 2). 1908 YB 18597 SfF^ZC ■ \ UNIVERSITY OF CALIFORNIA LIBRARY