GIFT OF F. P. Nutting Book-Keeping Notes for Cambridge Senior Local With Examination Papers and One Fully-Worked Key BY H. LOGAN RAMSEY, B.A. (Cantab) Assistant Masti Cam Hdi .. CAMBRIDGE : W. HEFFER & SONS LTD. 1922 Digitized by the Internet Archive kvJIIIBIlllItlllltllOllll Microsoft Corporation http://www.archive.org/details/bookkeepingnotesOOrarr Book-Keeping Notes for Cambridge Senior Local Book-Keeping Notes for Cambridge Senior Local With Examination Papers and One Fully-Worked Key BY H. LOGAN RAMSEY, B.A. (Cantab) M Assistant Master Cambridge ami County School for Boys CAMBRIDGE : \V. HEFFER & SONS LTD. 1922 « > a 9 % ?■•■' * > «* 3 * J.* 8 [-4// n^/s reserved.] fiv>^*^ ^W^*-**f i LONDON AGENTS : SIMPKIN, MARSHALL, HAMILTON, KENT & Co. Ltd. Preface This little book is intended primarily for students who are preparing for the examination in Book-keeping as set by the Cambridge Senior Local Authorities; and the student who works through the whole of the papers should have no difficulty in passing the examination. In addition to being useful to candidates, I hope it may be found to supply teachers in Secondary Schools (and teachers in other schools who prepare pupils for this examination) with a convenient form of reference for class work. As the examination seeks to test candidates in their knowledge of Partnership A/Cs., I have confined the notes as far as possible to questions on Partnership only. Cambridge Senior Local Examinations are held in July and December in each year. Book-keeping, which cannot be taken alone, is one of the optional subjects. In conclusion, I wish to thank the Cambridge Local Syndicate for their kindness in allowing me to reprint the Senior Book-keeping papers. H. LOGAN RAMSEY. Cambridge, December, 1921. 547656 Mercantile Firms A firm usually consists of two or more individuals carrying on business together in partnership. A firm cannot by law exceed twenty persons, while in banking business ten is the limit. The members of a firm are called partners, the partners col- lectively are called the firm, and the name under which the business is carried on (e.g. " Brown, Jones & Co.") is called the firm name, or style of the firm. The partnership is usually entered into by an agreement, called the Articles of Co-Partnership. This specifies the conditions of the partnership, and, if for a fixed term, the duration thereof. There are two principal kinds of partners, viz., active and dormant. Active or ordinary partners are those who are actually engaged in carrying on the business. Dormant, sleeping, or silent partners are persons who are publicly known as partners, but who share in the profits and are equally responsible to the creditors of the firm. Each partner is entitled to share in the profits of the firm, according to the terms of the partnership agreement, and each partner is of course jointly liable for the debts and obligations of the firm incurred while he was a partner. The law of partnership is contained in the Partnership Act, 1890 m A single individual may, and frequently does, carry on business in the name of a firm, e.g.. John Smith might trade as Brown, Robinson & Co. There is nothing to prevent this, but the person carrying on the firm is of course liable for all debts, etc. Points to be Remembered in Regard to Partnership I. A partner's interest in the firm cannot be transferred without the consent of the other partners. II. If a partner dies it may cripple the partnership to pay out ©f the concern the deceased partner's capital, if that be required. 8 BOOK-KEEPING NOTES FOR 111. A partner's liability for the debts incurred by the firm is* unlimited. IV. Partners, as a rule, are managers of the partnership business. V. All partners share in profits and share the losses ; the propor- tions in which they divide may differ or vary as between different partners, and may or may not be calculated accord- ing to the proportionate amount of the capital contributed by each partner. Note. — Partnerships in which the liability of one or more of the members may be limited to a certain specified sum can now be formed under the "Limited Partnership Act, 1908." Essentials for Good Rook-keeping I. Good penmanship. II. Accuracy. III. Sound knowledge of commercial arithmetic. IV. Neatness. V. Thorough knowledge of the principles of "double entry.' * Debit Side. — Left-hand sidepf an A/c. Credit Side. — Right-hand side of an A/c. Debit, what comes in. Credit, what goes out. Debit Losses. Credit Gains. Assets. — What the business owns. Liabilities. — What the business owes. Capital. — Excess of Assets over Liabilities. A man is said to be solvent when he can pay, and insolvent when unable to pay all just debts. When the Liabilities of a firm are greater than the Assets, the excess is called "Deficiency." CAMBRIDGE SENIOR LOCAL Correct Order of Accounts in the Ledger for the Cambridge Senior Local Examination I. Each partner should have a separate Capital A/c. II. The Drawings or Current A/c should follow the Capital A/c of the partner concerned. III. Money A/cs. IV. Bills Receivable and Bills Payable A/cs. V. Personal A/cs. VI. Property A/cs. VII. Goods and Consignment A/cs. Drawings of partners are those amounts which are withdrawn by them from the firm for their private use during the progress of the business in anticipation of profits. These sums must not be debited to their Capital A/c, but to a subsidiary A/c, known as Drawings A/c. Each partner will have his own Drawings A/c. The Interest allowed on the Capital of each partner as well as his share of the profit realised or loss sustained, must be placed to his Capital A/c unless a Current A/c is kept in which case they may be transferred thereto. Drawings and Current A/cs are balanced in the ordinary manner, but being subsidiary to the Capital A/cs, the difference of each must be transferred to the Capital A/c affected. Note. — Never post the value of goods bought and sold on credit ''To" or "By" Bank, because no money has been passed. e.g. (a) Purchases Dr. To the Person Cr. {b) The Person Dr. To Sales Cr. io BOOK-KEEPING NOTES FOR Subsidiary Accounts to Profit and Loss A/c Rent. Discount. Interest. Bad Debts. Depreciation. Commission. Repairs. Expenses. Partner's Salary. (Must always be charged to Profit and Loss A/c.) Definitions Interest and Discount. — Interest is the price paid for the loan of capital, whereas Discount is the price paid for the loan of legal tender. v Rent. — If any particular form of capital is borrowed, e.g. machines, buildings, etc., we call the payment for its use not "interest/' but "Hire," or "Rent." Commission. — Your profit for effecting a sale on a merchant's account. Commission can be either "earned" or "paid away." Bad Debts. — These are the result of a customer purchasing goods and failing to pay for them. Depreciation. — A periodical deduction in respect of the diminished value of any form of property caused by wear and tear and obsolescence. Journal paper can be used to advantage for Trading, Profit and Loss and Net Profit or Loss A/cs, also Balance Sheet. To find Gross Profit or Loss Credit Trading or Goods A/c with the value of the goods on hand at the end of the period under consideration and find the difference between Debits and Credits. If the Credit side is greater than the Debit side, there is a Gross Profit. If the Debit side is greater than the Credit side there is a Gross Loss. To find Net Profit or Loss Bring down Gross Profit to the credit of the Profit and Loss A/c or Loss on Trading to debit of Profit and Loss A/c. CAMBRIDGE SENIOR LOCAL n Debit Profit and Loss A/c with Gross Loss. Credit Profit and Loss A/c with Gross Profit. Close all Subsidiary A/cs "To" or "By" Profit and Loss. Now find the difference between the Debits and Credits in the Profit and Loss. If the Debit side is greater than the Credit side there is a Net Loss. If the Credit side is greater than the Debit side there is a Net Profit. The Ledger should not be closed until the Net Profit or Loss for each partner has been ascertained. When the accounts have been closed all balances should be brought down to the opposite side of each Ledger A/c "To" — or "By" — Balance, by dating them for the first of next month. When this is done a Balance Sheet should be opened. It will be found that Journal paper is more convenient for the setting out of a Balance Sheet for the reason that there will be more room for the formation of figures and the extending of totals. Debit balances not transferred to Profit and Loss A/c should be brought down, and these represent Assets to appear in the Balance Sheet. Credit balances not transferred to Profit and Loss A/c should be brought down, and these represent Liabilities to appear in the Balance Sheet. Liabilities are placed on the left-hand side and Assets on the right-hand side of the Balance Sheet. The words "To," "By," "Dr." and "Cr." should be omitted in the Balance Sheet because it is not a Ledger A/c, but a Statement of Assets and Liabilities showing the financial position of the firm at a certain date. As its name implies, a Balance Sheet is merely a sheet of balances. As to the order in which the Liabilities and Assets are stated in a Balance Sheet there is no law whatever, and the practice of the best accountants varies in many respects. Generally speaking, in marshalling or arranging the order of Assets on the Balance Sheet, fixed Assets should be placed first, followed by those not readily realisable, Bank Balance appearing last. 12 BOOK-KEEPING NOTES FOR Correct Order of Accounts in The Balance Sheet Assets • Money A/cs. Bills Receivable. Reserve (Investment). Sundry Debtors. Payments in advance. Stock. Property. Goodwill. Liabilities Bank (Overdraft). Bills Payable. Sundry Creditors. Small Outstanding A/cs. Reserve Fund A/c. Capitals or Capital. A Reserve Fund is a fund created out of Profits to meet possi- bilities and contingencies. In the case of a Limited Company it could be used for equalisation of dividend, or to meet some extra- ordinary loss, e.g. on sale of machinery or property. This fund is created by debiting the Net Profit A/c and creating a Reserve Fund A/c. When an amount of money is invested in some Specific Investment that investment becomes the "Reserve Fund." A Reserve Fund is not an Asset ; but the Investments representing this fund may be headed "Reserve Fund Investment Account." Goodwill This is a matter which frequently arises in connection with Partnerships. Goodwill is the benefit accrued to a business through its reputation and connections. It has been said that "it is the probability that the old customers will resort to the old place." Goodwill cannot be so readily bought and sold as more tangible assets, but it nevertheless possesses real value, and when private businesses are turned into Limited Liability Companies a large part of the purchase -money is usually accounted for by this item alone. Similarly, when a new Partner is taken into an existing Partnership he frequently, in addition to the capital he has agreed CAMBRIDGE SENIOR LOCAL 13 to contribute, is called upon to pay a sum of money, termed a Premium, in consideration of the goodwill attaching to the Partner- ship. This Premium is divided amongst the existing Partners of the business in the ratio in which they share profits, and is not to be confused with the capital of the new partner, from which it is quite distinct. The old partners may take their respective shares of the premium right out of the business or allow it to remain in the business and thus increase their capital holdings. The balance of Goodwill A/c is carried to the Balance Sheet, and must appear on the Asset side. Reconciliation Statement At frequent intervals every trader should compare the Bank Pass Book with his Cash Book. The balance shown in the Pass Book will not usually agree with the Bank balance shown in the Cash Book. The difference will arise from the extra charges, interest, expenses of collection, etc., which must be entered in the Cash Book from the Pass Book, and also from the fact that some cheques issued by the trader to his creditors may not have been presented to the Bank for payment at the time the Pass Book was written up, and therefore do not appear on the Cr. side ; or because Irish and Scotch cheques paid into the Bank have not yet been collected and therefore do not appear on the Dr. side. The cashier should then draw up a Reconciliation Statement, and write the details of the statement at the foot of the monthly ruling-off of the Cash Book, thus: — Bank Reconciliation Statement, December 31ST, 1921. £ s. d. £ s. d. Balance as per Bank Pass Book. 618 10 9 Deduct cheques drawn but not yet debited : Warren & Sons Finch & Co. Mitchell Bros Add cheques paid in but not yet credited : Simson, Edinburgh Armour, Belfast ... Balance as per Cash Book 12 10 8 7 53 2 9 6 1 4 74 190 10 80 11 544 8 7 10 5 271 2 3 £815 12 8 14 BOOK-KEEPING NOTES FOR Form of a "DRAFT," i.e., BEFORE it is Accepted. l55°- No. 7, Glasgow, 31st Dec, 1921. Two months after date, pay to me, or my order, the sum of Five Hundred and Fifty Pounds sterling, for value received. Charles Stirling. To Mr. S. Glover, 570, Petty Cury, Cambridge. This " Draft " has no intrinsic value as it is only a request to Mr. Glover to pay money. When this document is "Accepted" by Mr. Glover, it becomes of value, i.e., has power in exchange, and it is then called a " bill " or "acceptance." Form of a "Bill," or "Acceptance" (B/E.) No 7, Glasgow, 31st Dec., 192 1. £550 Due February 28th, 1922^/ -. Two months after datef pay to me, or nafy order, the sum of Five Hundred ajra Fifty Pounds/sterling, for value received. To Mr. S. Glover, 570, Petty Cury, Cambridge Charles Stirling. Form of a "Promissory Note" (P/N.) £550. 570, Petty Cury, Cambridge. 31st December, 192 1 Due February 28th, 1922 Two months after date, I promise to pay to Mr. Charles Stirling, or order, the sum of Five Hundred and Fifty Pounds sterling, for value received. S. Glover. To Charles Stirling this is a Bill Receivable, and his Journal entry is: — Bills Receivable Dr. To S. Glover Cr. To Sidney Glover this is a Bill Payable, and his Journal entry is : — S. Glover Dr. To Bills Payable Cr. Difference BETWEEN AN "I.O.U." and a PROMISSORY NOTE. An " I.O.U." is a written document unstamped acknowledging a debt, and has no "negotiable" value. A Promissory note is a written promise on stamped paper to pay a specified sum at a given date. CAMBRIDGE SENIOR LOCAL 15 Bills I. When a debtor gives me a written promise to pay his account at some future date it is called a "Bill Receivable." II. When I give a creditor a written promise to pay him at some future date it is called a "Bill Payable." How to Post (a) Bills Receivable Dr. To the Person Cr. (b) The Person Dr. To Bills Payable Cr. Contractions used in connection with Bills P/N = Promissory Note. BE = Bill of Exchange, m d = Months after date. d/d = Days after date. d/s = Days after sight. " a/s = At sight. A cheque is a B/E payable on demand. A Bank Bill is equivalent to a "Bill at Sight." Phrases used in connection with Bills To "meet," "retire," "redeem," and "honour" a bill, all means to pay when due. Discounting Bills To "discount a bill" means to receive money for a bill before it has matured, i.e. before it is due. Under these circumstances the receiver of the money must be prepared to lose a little for discount. The amount deducted for discount is the Broker's or Banker's reward for services and risk taking. How to Post Bills you have Discounted Bank Dr. ' Discount : To Bills Receivable Cr. How to Post a Bill that has been Dishonoured by a Customer Acceptor Dr. (with amount of Bill plus charges). To Bills Receivable Cr. To Bank Cr. " To draw on a person" means to receive a bill. 16 BOOK-KEEPING NOTES FOR Reserve for Bad Debts (''To write off as a provision for Bad Debts.") Calculated on the amount owing by Sundry Debtors. How to Post Bad Debts Dr. To Bad Debts Reserve Cr. Bad Debts A/c closes to Profit and Loss. Bad Debts Reserve A/c closes to balance and will appear on the Asset side of the B/S as a deduction from Sundry Debtors. Consignments Outwards How to Post (a) Consignment to Turin A/c Dr. To Goods or Sales A/c. (Vide 1921 Examination.) (b) When expenses are paid on such a consignment, debit Con- signment A/c and credit Bank A/c. (c) When the proceeds of a Consignment have been received, debit Bank and credit Consignment. (d) Close the balance of Consignment A/c to Profit and Loss. Consignments Inwards 1. When you receive a Consignment of Goods to sell for another person, debit the Owner's Consignment A/c and credit his Personal A/c. 2. When you pay expenses on a Consignment received debit the Owner's Personal A/c and credit Cash (or Bank). 3. When you sell his Goods, debit the persons to whom you sell, and credit the Owner's Consignment A/c. If sold for Cash, debit Cash (or Bank), and credit the Owner's Consignment A/c. 4. Debit the Owner's Personal A/c and credit Commission. 5. Transfer the Balance of the Owner's Consignment A/c to the Owner's Personal A/c. CAMBRIDGE SENIOR LOCAL 17 Outstanding Accounts An 0/S A/c should be opened when a sum of money is " due " or "not paid," e.g. Rent, Wages and Insurance due. How to Post Rent A/c Dr. To Rent O/S A/c Cr. Wages A/c Dr. To Wages O/S A/c Cr. Insurance Dr. . To Insurance O/S A/c Cr. Rent, W T ages and Insurance close to Profit and Loss in the ordinary way, and the O/S A/cs will appear among the Liabilities in Balance Sheet. Where payments have been made in advance such as Rates, Insurance, Advertising, etc., these accounts should be credited and "Payments in Advance" debited, the total of this latter A/c appearing on the Balance Sheet as an Asset. Trading- A/c Dr. Side. 1. To Stock on hand at the beginning of the period. 2. ,, Purchases. Less Returns. 3. ,, Wages or Productive Wages. 4. ,, Gross Profit. (When credits exceed debits.) Cr. Side. 1. By Sales. Less Returns. 2. „ Stock on hand at the end of the period. 3. ,, Gross Loss. (When debits exceed credits.) 18 BOOK-KEEPING NOTES FOR Points to be Remembered in Connection with the Trading Account i. All items entered in the Trading A/c and Profit and Loss A/c will appear on the same side in the Trial Balance; while in the Balance Sheet they are entered on the opposite side. 2. When ''Wages and Salaries" are joined in one a/c they must be entered in the Profit and Loss A/c, but when "Wages" and "Salaries" are separated, put "Wages" in Trading A/c and "Salaries" in Profit and Loss A/c. 3. Printing, Advertising, Travelling Expenses, Coal and Coke, Gas and Fuel, etc., if a large amount, should be entered in Trading A/c, but if a small amount put them in the Profit and Loss A/c. If in doubt, place in Profit and Loss A/c. 4. Anything .that tends to increase the cost of production of Goods must be placed in the Trading A/c. 5. Goods on hand at the beginning of the period under consideration are given in the Trial Balance, while Goods on hand at the end of the period are not; the former will be debited and the latter will be credited to the Trading A/c. 6. In a Trial Balance the debits will consist of Assets and Losses, while the credits will be Liabilities and Gains. 7. If a " Reserve for Bad Debts " appears in the Trial Balance, and a new Reserve is to be created, cancel (or "write back") the old Reserve by crediting Profit and Loss A/c. The new Reserve will then be treated in the usual manner. Trial Balance Its use. To prove the postings in the Ledger. It should be noted that although the totals of Trial Balance may agree, it does not prove conclusively the accuracy of the accounts, as it will not disclose the following errors: — 1. An amount posted to the wrong account, although on the right side of the Ledger. 2. An error in the book of original entry, such as the purchase of goods amounting to £63 7s. od. entered in the Purchases Book as £6 3s. yd. CAMBRIDGE SENIOR LOCAL 19 A Trial Balance may not agree for the following reasons: — 1. Omission to post an item from the book of original entry to the Ledger. 2. Mistake in posting an item such as £6 3s. yd. for £63 7s. od. 3. Posting an item to the debit instead of to the credit, or vice versa. 4. Extracting the balance as a debit instead of a credit, or vice versa. 5. Omitting a balance altogether. 6. Incorrect casting. 7. Indifferent subtraction. Note. — From the Trial Balance the Profit and Loss A/c and Balance Sheet can be prepared. 20 BOOK-KEEPING NOTES FOR h in On ^5 00 M?oo CO 00 1 °° 00 MiM CO Mi 1 00 H H Mi J o p « °3 oc CO ^ r^ O CO C/3 >» * pq s o o CO CO On 3 O lOHOO in h Mi . •<43 ^5 O 3 Ph M ,4 I u SPg COPh ^o o H * * * H d d d co ro ro 8* S <^t— > - * * (SI • • c^ H O W < • £ P •— > 1 W ! H O H CO a o : Q ■+-> o Ph 1 CO g P-, W o d O PQ < H i— i Ph >> PQ VO '§ W OOOC 00 1 Ph r^5 o o o o ffi Mim 1 § -M C/5 1 1 » cd cd u5 73 &:£ S-O & ^& < O O N *■ CO 00 o O* O vO ro vO M* o • wi •to a a o «o Lo< --> 22 BOOK-KEEPING NOTES FOR The following instructions apply to all the papers on the succeed- ing pages:— All payments are made by cheque and all amounts received are paid into the Bank on receipt. Post into the Ledger the opening balances and transactions; no Journal is recurred. Take out a Trial Balance, Balance the Ledger, and then prepare a Trading and a Profit and Loss A/c, according to the agreement. Make out a Balance Sheet. Appropriate subsidiary accounts are to be opened in the Ledger, and the Profit and Loss A/c opened only after all the transactions have been posted into the Ledger. (i) 1906. 14 December, 1906. 3J to 5J or 4 Book-keeping to 6. [Handwriting and neatness of work will be considered in awarding marks.'] George and Henry Johnson are partners on the following terms : 1. Each to receive 5 p.c. interest on the amount of his capital in the business. 2. George Johnson is managing partner, and receives a salary of £200 per annum, payable half-yearly. Henry Johnson is a sleeping partner, and receives no salary. 3. Depreciation of plant to be reckoned at 10 p.c. per annum. 4. The net profit or loss to be ascertained at the end of each year and divided between the partners, one-third to go to George Johnson and two-thirds to Henry Johnson. On December 31, 1904, the plant was valued at £1460; stock in hand at £3970; George Johnson's capital was £2000, and Henry Johnson's was £4000. On November 30, 1905, the Ledger of the firm showed the following balances:- — George Johnson (Capital A/c as on Jan. i) Henry Johnson (Capital A/c as on Jan. i) George Johnson (Current A/c, half-year's salary, clause 2) Williams & Co. Brown & Co. Edwards & Co. Purchases . . . . . . . . . . . . . . 3962 Dr. Cr. £ £ 2000 4000 100 330 212 4 6 3 CAMBRIDGE SENIOR LOCAL Sales Wages and Office Expenses Bills Payable Bills Receivable Cash at bank Plant (as on Jan. i) Stock (as on Jan. i) 23 Dr. Cr. £ £ 5332 1213 250 350 448 1460 397° £12045 £12045 Open the Ledger with the above balances, and post the following transactions for the month of December, 1905: — £ Dec. 4. Sold goods for cash . . . . . . . . » . . .• 37 6. Sold goods to Brown & Co. . . . . . . . . 125 7. Accepted Edwards & Co.'s draft for £200 . . . . . . 200 1 1 . Williams & Co. , having previously been declared bankrupt, pay a first and final dividend of 2s. in the pound . . 33 12. Sold goods for cash . . . . . . . . . . . . 67 14. Cashed Bill Receivable, due to-day .. .. .. 150 18. Received Cheque from Brown & Co. . . . . . . 150 21. Bank paid Bill Payable, due to-day .. .. .. 100 30. Paid wages and office expenses .. .. .. .. 112 30. George Johnson draws his salary for the half-year . . 100 31. Stock .. .. .. .. .. .. .. .. 4290 (2) 1906. 15 December, 1906. iof to i2f or nj to \\. [Handwriting and neatness of work will be considered in awarding marks.] William and Robert Macintosh are partners on the following erms : — 1. Each to receive 5 p.c. interest on the amount of his capital in the business. 2. William Macintosh to receive a salary of £240 per annum and Robert Macintosh a salary of £160 per annum — these salaries to be paid quarterly. 3. Depreciation of plant and machinery to be reckoned at 10 p.c. per annum. 4. The net profit or loss to be ascertained at the end of each year, and to be divided equally between the partners. On December 31, 1904, the plant and machinery were valued at £3800; stock at £2780; William Macintosh's share of capital was £4000, and Robert Macintosh's £3000. 24 BOOK-KEEPING NOTES FOR On November 30, 1905, the Ledger of the firm showed the following balances: — Dr. Cr. £ William Macintosh (Capital A/c as on Jan. 1) . 4000 Robert Macintosh (Capital A/c as on Jan. 1) 3000 William Macintosh (Current A/c, see clause 2) 180 Robert Macintosh (Current A/c, see clause 2) 120 Purchases 4935 Sales 6880 Jones & Co. . . . . . . 227 Robinson & Co. ... 326 Young & Co. 545 Bills Receivable 250 Wages and Office expenses 1365 Cash at Bank 442 Plant and machinery (as on Jan. 1) 3800 Stock (as on Jan. 1) 2780 £14425 £14425 Open the Ledger with the above balances, and post the following transactions for the month of December, 1905: — Dec. 16. 19. 21. 30. 30. 31. Sold goods to Jones & Co. Bought goods from Young & Co. . . Accepted Young & Co.'s draft for £300 Sold goods for cash Owing to an accident in the workshop £200 worth of machinery is totally destroyed. The machinery is insured at half its value Received from Robinson & Co. a cheque for £200 Cashed Bill Receivable due to-day The Insurance Company pays half the value of the machinery destroyed Paid wages and office expenses The partners draw their quarterly salaries Stock £ 113 45 300 47 200 200 150 100 126 100 3200 CAMBRIDGE SENIOR LOCAL 25 (3) 1909- (Two hours.) [Handwriting and neatness of work will be considered in awarding marks.'] Rogers and Stanton are partners in a wholesale business, Rogers being the manager. According to the terms of their agreement: — 1. Each partner is to receive 5 p.c. interest on his capital. 2. Rogers, as manager, receives, in addition, £200 per annum as salary. 3. The profit and loss is to be ascertained at the end of each year, and after providing for interest and the manager's salary, the net profit is to be divided equally between the partners. On December 31, 1907, stock in hand was valued at £4800, Rogers' share of the capital was £1000, and Stanton's share £4000. On November 30, 1908, the Ledger of the firm showed the following balances: — Rogers (Capital A/c as on Jan. 1) Stanton (Capital A/c as on Jan. 1) Williamson & Co. Cartwright & Co. Field & Co. Nolan & Co. Purchases Sales Bills Receivable Bills Payable . Cash at bank . Wages Stock (as on Jan Dr. Cr. £ £ 1000 4000 427 332 258 327 1361 550 677 825 4800 3237 150 ^8972 ^8972 26 BOOK-KEEPING NOTES FOR Open the Ledger with the above balances, and post the following transactions for the month of December, 1908: — £ Dec. 2. Bought goods for cash . . . . . . . . . . 57 „ 4. Sold goods to Cartwright & Co. . . . . . . . . 119 ,, 5. Cashed Bill Receivable for ^100 at a discount of 2% . . 98 „ 7. By special arrangement between the partners, Rogers draws ^400 for his own personal use, this amount to be debited against his current account „ 9. Sold goods for cash . . . . . . . . . . 129 ,, 12. Bank paid Bill Payable, due to-day, for ^100 . . . . 100 „ 15. Williamson & Co. accept draft for ^400 . . . . . . 400 „ 17. Sold goods to Williamson & Co. .. .. .. .. 259 „ 19. Bought goods from Nolan & Co. . . . . . . . . 126 „ 21. Accepted Field & Co.'s draft for ^200 and paid them by cheque ^58 . . . . . . . . . . . . 258 „ 31. Paid wages 75 All payments are made by cheques, and all amounts received are paid into the bank upon receipt. Stock in hand on December 31, 1908, is valued at £4040. (4) i9°9- {Two hours.) [Handwriting and neatness of work will be considered in awarding marks.'] Jones and Robinson commence business in 1908, Jones supplying £2000 capital, and Robinson £1500. By the agreement between them, — 1. The profit or loss is to be ascertained at the end of the year. 2. 10 p. c. of the net profit is to be placed in a Reserve Fund, against which Bad Debts and other accidental losses are to be debited. Jones, who acts as manager, is to receive two-thirds % of the remainder and Robinson one-third. CAMBRIDGE SENIOR LOCAL 27 On November 30, 1908 the Ledger • of the firm shows the f ollow- ing balances : — Dr. Cr. £ £ Jones (Capital A/c) 2000 Robinson (Capital A/c) 1500 Philipson & Co. 227 Armstrong & Co. 134 Bird & Co. 295 Jenkins & Co. 179 Purchases of stock 2665 Sales of stock 2279 Bills Receivable 350 Cash at bank . . 504 Wages 573 Plant • 1800 £6253 £6253 Open the Ledger with the above balances, and post the following transactions for the month of December : — Dec. in the pound, ritten off as a 10. 12. 14- 17- 19- 21. 28. 3i- £ 167 100 Sold goods for cash Paid Jenkins & Co. £100 on account Armstrong & Co. pay a composition of 10s the remainder of their account being w Bad Debt Sold goods to Philipson & Co. Philipson & Co. accept a draft for ^200 Accepted Bird & Co.'s draft for ^200 Sold goods for cash Goods to the value of £30 stolen during the night ^15 worth of the stolen goods recovered, the remainder are considered irrecoverable and are written off as a loss Sold goods for cash . . . . . . . . . . . . 73 Bought goods from Jenkins & Co. . . . . . . . . 95 Paid wages . . .... . . . . . . . . 55 All payments are made by cheques and all amounts received are paid into the bank upon receipt. Stock in hand on December 31, 1908, is valued at £1537. 48 200 200 173 28 BOOK-KEEPING NOTES FOR (5) 1910- (Two hours.) [Handwriting and neatness of work will be considered in awarding marks.'] Jameson and Hicks are partners on the following terms : — 1. Each partner is to receive 5 p.c. interest per annum on his capital. 2. Each partner is to be at liberty to draw £20 per month, the amount so drawn to be deducted at the end of the year from his share of the profits. 3. The profit or loss is to be ascertained at the end of each year and shared equally between the partners. On November 30, 1909, the Ledger of the firm shows the follow- ing balances : — Dr. Cr. 1 Jameson, Capital A/c (as on Jan. 1) . . 3000 ,, Current A/c (drawings under clause 2) 200 Hicks, Capital A/c (as on Jan. 1) 2000 ,, Current A/c (drawings under clause 2) 180 Jones & Co. 226 Barton & Co. 3i9 Bailey & Co. 157 Hargreaves & Co. 183 Purchases 1126 Sales 254° Bills Payable 170 Bills Receivable 34° Cash at bank 325 Wages and Office Expenses . 604 Stock (as on Jan. 1) 2730 Premises 2000 ^8050 ^8050 Open the Ledger with the above balances, and post the following transactions for the month of December, 1909: — Dec. Bought goods from Bailey & Co. . . Bank paid Bill Payable due to-day Jones & Co. accept our draft for Sent goods of the value of ^56 for sale by auction Paid Hargreaves & Co. ^176 and were allowed discount £7 £ 57 100 200 56 183 CAMBRIDGE SENIOR LOCAL 29 i 48 Dec. 15. Sold goods to Jones & Co. . . „ 16. Received from the auctioneer for the goods sent on Dec. 10 a cheque for ^68, being the price at which the goods were sold, less his commission . . . . . . 68 ,, 18. Paid wages . . . . . . . . . . . . . . 26 „ 21. Barton & Co. accept our draft for . . . . . . 200 ,, 22. Sold goods for cash . . . . . . . . . . 47 „ 31. Paid wages and office expenses . . . . . . . . 37 „ 31. Jameson & Hicks each draw ^20 .. .. .. .. 40 All payments are made by cheques and all amounts received are paid into the bank upon receipt. Stock in hand on December 31, 1909, is valued at £3200, Premises at £1900. (6) 1912. (Two hours.) [Handwriting and neatness of work will be considered in awarding marks.'] Messrs. King and Longsden are partners on the following terms: 1. Longsden receives a salary of £400 a year, payable half- yearly, for his services as manager. 2. At the end of each year interest at the rate of 4 per cent, per annum is added to the capital standing to the credit of each partner at the beginning of the year. 3. The net profit or loss at the end of each year is to be shared by the partners in the ratio of their capital at the beginning of the year. On 30 November, 1910, their books showed the following balances: — £ Sundry Creditors . . . . . . . . . . . . . . 1230 Sundry Debtors . . . . . . . . . . . . . . . . 875 Rent . . 220 Salary . . . . . . . . . . . . . . . . . . 200 Wages, etc. . . . . . . . . . . . . . . . . 357° Purchases . . . . . . . . . . . . . . . . 1290 Sales 5618 Bank (account overdrawn) . . . . . . . . . . . . 27 Longsden — Current A/c (Credit balance) . . . . . . . . 100 Longsden — Capital on 1 Jan. 1910 . . . . . . . . . . 2500 King „ „ „ 4500 Stock „ „ „ 6345 Bills Receivable . . . . . . . . . . . . . . 1475 ioi8 337 12 525 25O 30 BOOK-KEEPING NOTES FOR Their transactions during December, 1910, were as follows: — i Dec. 1. Sundry Bills Receivable matured this day and were paid into Bank .. .. .. .. .. .. 4 J 7 „ 3. Sold Goods for Cash ^437, and to Sundry Debtors ^581. „ 7. Received from Sundry Debtors, Cash and allowed them discount „ 15. Acceptances granted to Sundry Creditors „ 27. Goods valued at ^250 wholly destroyed by fire . . These were fully insured with the Alliance Assurance Company. , ; 30. Accepted from J. Allen (whose account is included under Sundry Debtors) a composition of 6s. 8d. in the £. Received accordingly his cheque for . . . . . . 85 arid wrote off the remainder of his account as a Bad Debt . . . . . . . . . . . . 1 70 „ 31. Longsden drew half of his salary for the six months July-Dec. . . . . . . . . . . . . 100 Paid Wage 5 : ^355, Rent for Dec. £20 and Sundry Creditors ^400 775 Received from the Alliance Insurance Company on account of Goods destroyed by fire on 27 December. . 250 All payments are made by cheque, and all amounts received are paid into the bank upon receipt. Stock in hand on 31 December, 1910, was valued at £5706. (7) 1912. (Two hours.) [Handwriting and neatness of work will be considered in awarding marks.] Messrs. Hide and Tanner are partners in a manufacturing busi- ness under the following agreement: — 1. At the end of each half-year interest at the rate of 4 per cent, per annum is to be added to the capital standing to the credit of each partner at the beginning of the half-year. 2. Depreciation is to be reckoned at the end of each year at the rate of 10 per cent, on Plant and Machinery and 5 per cent, on Premises. 3. At the end of each year the net profit or loss is to be shared equally by the partners. On 1 January, 1911, the capital of the firm was £25,000 of which Hide held £10,000 and Tanner £15,000. On 30 June Hide increased his capital by paying into bank £1000, while Tanner drew £500. CAMBRIDGE SENIOR LOCAL 31 On 30 November, 1911, their Ledger showed the following balances : — Hide's Capital (on 1 July) i 11,200 Tanner's Capital (on 1 July) 14,800 Interest (Jan.-June) 500 Wages and Trade Expenses 3475 Bills Payable 54° Premises 16,000 Plant and Machinery 55oo Stock of finished Goods and Materials on 1 Jan., 191 1 . 12,500 Bank 325 Sales 15,800 Purchases 2240 Sundry Creditors 1375 Sundry Debtors . . 3175 15. ID. iS. Their transactions during December, 191 1, were as follows: — i Dec. 4. ^Sundry Debtors paid . . . . . . . . . . 550 „ 6. Sundry Bills Payable matured, and were paid by Bank The rest were discounted with their holders, who accepted in lieu of them Bought Materials, for Cash ^127, from Sundry Creditors £«« Sold Goods for Cash ^475 to Sundry Debtors ^513 Sold by Auction for Cash Goods belonging to J . Allen . . and charged him Commission ^22, Expenses of Sale, paid this day, £10 ,, 22. Despatched to Curzon & Co., Calcutta, to be sold by them on Commission, Goods taken out of Stock and valued at and paid on account of this Consignment Insurance, Freight, etc. „ 23. Granted Bills to Sundry Creditors „ 30. Paid Wages and Trade Expenses All payments are made by cheque, and all amounts received are paid into the bank upon receipt. Stock in hand on 30 December, 191 1, was valued at £1816. 300 233 338 988 220 32 2390 70 1400 300 32 BOOK-KEEPING NOTES FOR (8) 1914. {Two hours) {Journal paper is supplied and may be used ; but candidates who journalise will be given no preference over those who make all entries direct into the Ledger. Handwriting and neatness of work will be considered in awarding marks.'] Messrs. John Ford and William Marston are partners on the following terms : — 1. Marston receives a salary of £600 a year as manager. Ford's capital is to be credited with interest at the rate of 4 per cent, per annum. 2. Ten per cent, per annum of the Gross Profits are to be added to a Reserve Fund. 3. One-third of the Net Profit is to be credited to William Marston and two-thirds to John Ford. On May 30th, 1914, their Assets and Liabilities are as follows : — i i Sundry Creditors . . . . 2490 Bills Payable .. .. 510 John Ford, Capital . . 9000 William Marston, Capital . . 9000 Cash Stock of Corn valued at £ 4000 . . 5020 Bills Receivable 480 Business Premises . . 9000 Sundry Debtors 2500 « £21,000 ^21,000 Their transactions during June, 1914, were as follows June 24. 27. 30. 3°- Sold Corn to Sundry Debtors Bought Corn from Sundry Creditors Paid Sundry Creditors Discounted Sundry Bills Receivable: Receiving Cash and being charged discount Bought Corn for Cash Wrote off as Bad Debt Salary due to Marston (1 month) Paid Wages Wrote off depreciation on Business Premises Stock of Corn on June 30th, valued at £ 740 450 340 309 5 130 200 50 120 50 5460 CAMBRIDGE SENIOR LOCAL 33 (9) 19*7- (Two hours.) [Candidates who journalise will be given no preference over those who make all entries direct into the Ledger. Handwriting and neat- ness of work will be considered in awarding marks. ,] Messrs. D. Lewis and J. Richardson are partners on the following terms : — i Each partner is to be credited with interest at the rate of 5 per cent per annum. 2 Net Profits are to be divided as follows, viz. Lewis two-thirds, Richardson one -third. On May 31, 1917, the following balances appeared in their Ledger : — i D. Lewis, Capital J. Richardson, Capital Stock of Carpets Cash Bills Receivable Bills Payable Business Premises Sundry Debtors Sundry Creditors 12,000 4800 2420 2740 865 824 10,000 4240 2641 Their transactions during June, 1917, were as follows: — June 9- 9- „ 11. H- 25. 25 H 30. 30- „ 30- 30 Sold carpets to Sundry Creditors Bought carpets for Cash Discounted Bill Receivable: Cash Discount Consigned carpets to Naples Paid charges on the same Paid our Acceptance Bought carpets from Sundry Debtors . . Received cheque, net proceeds of consignment to Sold carpets for Cash Wrote off Depreciation on Business Premises Paid clerks' salaries Partners' Interest (1 month) Stock of carpets valued at Naples £ 530 500 40 1200 50 430 1560 1410 350 100 60 2142 34 BOOK-KEEPING NOTES FOR (10) 1917. (Two hours.) [Candidates who journalise will be given no preference over those who make all entries direct into the Ledger. Handwriting and neatness of work will be considered in awarding marks.'] Messrs. T. Jones and W. Roberts are partners on the following terms : — 1. Each partner is to be credited with interest at the rate of 5 per cent, per annum. 2. Net Profits are to be divided equally. On May 31st, 1917, the following balances stood in the Ledger: — i T. Jones, Capital W. Roberts, Capital Stock of Oil Bills Receivable Bills Payable Sundry Debtors . Sundry Creditors . Business Premises Cash Their transactions during June, 1917, were as follows Sold oil to Sundry Creditors Sundry Debtors paid Cash Bought oil from Sundry Debtors Discounted Bill Receivable Cash . . Discount Bought oil for Cash. . Consigned oil to Milan Paid charges on the same Received cheque, net proceeds of consignment, Paid clerks' salaries Partners' interest (1 month) Wrote off depreciation on Business Premises Stock of oil valued at une 2 5 9- 15. ,, 18. 23. „ 25. „ 30. 30- „ 30- 30. „ 30. 3600 6000 2000 476 340 768 1225 6910 IOII i 200 68 500 124 5 250 480 25 550 70 100 2500 CAMBRIDGE SENIOR LOCAL 35 (n) 1921). (Two hours.) [Candidates who journalise will be given no preference over those who make all entries direct into the Ledger. Handwriting and neatness of work will be considered in awarding marks.'] The terms of partnership between Hope and Prosper are as follows :• — 1. At the end of each year the capital of each partner is to be credited with interest at the rate of 6 per cent, per annum. 2. At the end of each year 10 per cent, of the value of the Premises is to be written off for Depreciation. 3. After these adjustments have been made, 5 per cent, of the net profits is to be carried to the Reserve Fund, to which Bad Debts are to be debited. 4. The remaining profits are to be divided between the partners proportionately to their respective Capitals. At the end of November, 1920, their Ledger showed the following balances : — £ Hope. Capital on Jan. 1, 1920 . 4000 Prosper, ,, „ 8000 Stock in hand on Jan. 1, 1920 . 8070 Purchases 2496 Sales 4824 Bills Receivable . . 750 Bills Payable 240 Sundry Creditors . . 200 Reserve Fund 300 Office Expenses . . • ' 528 Salaries (Clerks) 360 Premises 5400 Cash (Bank) overdraft . 40 36 BOOK-KEEPING NOTES FOR Their transactions during December, 1920, were as follows :- 1920 Dec. 4. Sold Goods to Sundry Debtors 8. Discounted a Draft for ^300 for . . 9. Drew on Sundry Debtors for Received their acceptances 10. Sent consignment of Goods to Turin 1 1 . Paid charges on the same 12. Bought Goods from Sundry Creditors 17. Received cheque from Jones in payment of an % off in 1919 as a Bad Debt 20. Received proceeds of sale of consignment to Turin Paid Office Expenses Partners' Interest Depreciation of Premises Stock of Goods valued at (See fully worked key pp. 38 — 48). written £ 820 296 700 942 42 124 78 1056 24 793; (12) 1921. (Two hours.) [Candidates who journalise will be given no preference over those who make all entries direct into the Ledger. Handwriting and neatness of work will be considered in awarding marks.'] The terms of partnership between North and West are as follows : — 1. At the end of each year the capital of each partner is to be credited with interest at 6 per cent, per annum on the amount of capital at the beginning of the year. 2. At the end of each year 10 per cent, of the value of the Premises is to be written off for Depreciation. 3. After these adjustments have been made 5 per cent, of the net profit^ is to be carried to the Reserve Fund to which any Bad Debts are to be debited. 4. The remaining profits are to be divided between the partners as follows: one-third to North and two-thirds to West. CAMBRIDGE SENIOR LOCAL 37 At the end of November, 1920, their Ledger showed the following balances : — i North, Capital on Jan. 1, 1920 . . . . . . . . . . 8000 3000 6500 8700 3420 7842 413 45o 276 900 492 284 327 West, Business Premises Stock, Jan. 1, 1920 Purchases Sales Cash (Bank) Bills Receivable Bills Payable Reserve Fund Sundry Debtors Sundry Creditors Office Expenses 1920 Dec. Their transactions during December, 1920, were as follows: — £ 4. Sold Goods to Sundry Debtors . . . . . . . . 940 6. Sundry Debtors accepted my Drafts for . . . . . . 1000 9. Wrote off an % (included in Sundry Debtors) as a Bad Debt . . . . . . . . . . . . . . 125 13. Bought from Sundry Creditors . . . . . . . . 849 17. Accepted Drafts for . . . . . . . . . . 700 20. Paid Sundry Creditors in full settlement of % amounting to ^433 430 24. Discounted Draft for ^300 . . . . . . . . . . 298 31. Cash Sales for month .. .. .. .. .. 453 31. Paid Office expenses . . . . . . . . . . 42 Partners' Interest 'K Depreciation on Premises Stock in hand valued at . . . . . . . . ... 7402 38 BOOK-KEEPING NOTES FOR o3 C • i— i a M o o a3 O O In C a; £ 'C ^ < H PM CO o ^ o ooo oo 00 «5 ° O CM CM H 0* H o o o , O ^"N <-+? O CM TO "st" o o H 00 o H 00 5 •"2 CO -+-> pqpm£ o . . . «H H H a cO CO CO M ^00 OD t3 ° ° Tr ^J- ^*- ^ O OiO *0 m O O H ooo -t 00 H H est o O 13 1 cd PQ .pqph£; >» >> PQ O pq * * H . < o . , CM H Ph *SJ PQ o a; ^3 © •fj o fa 13 PQ o . SI H as co CJ Q 13 PQ o H o . CM H On CO H . O Q CAMBRIDGE SENIOR LOCAL 39 -d o c o o O . c/5 o o o o c tT ^" CM CM CO o CO a (fl •9 •- g 8 M-H > o o 5?o cd 1 en W 0) o CD o i H CD d 13 jzj ^S "rt PQ UOfi ►, PQ ~ o . CM H H H H C* H CO CO H 6 < CD .. M < -d ° o o PC m o C \Q 00 o <-tf C* ^ iO cm c ^ o o o o o <«■ CO CM *■ CO H H M4 ^ ^ c c o Cfl G C o O — 01 00 "tf- CM o o 00 << - I s o CD -+-> S „ £ CD .5Pt3 22 fl n 3 O ,lH OH pq - o . 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N H C^ 0* H Q £> ,fi 8 8 § § -a 13 pq pq H H . H . d H C* H O On H . H . H-3 Q 42 BOOK-KEEPING NOTES FOR ^ U -6 ° ° o O I c/5 O N N M CO o o CO ^3 ^ o c cr. W3 3 m -J c o u c/5 o V s ? o -+? m in o o H M M3 ^ « PQ ^ o . . . > >» PQ J PQ H < o . M H O CO C/3 H c to CJ o3 »— i C/3 to X w to u to to C ^ cc c I cr! C C o , 00 '*■ m in in 1 oj M 1 1 QQcj o „ o . . N H H Os CO H . O g 5 p H O H H W w >— c PQ c . ^ c •d O 9 o o c/3 s o c • o N PI o H • O to * " -+-> O to : • o u 0) _1^ 1/3 y pfl B c -4-1 ^ 0$ o3 j-i cncjH o H * * c . (M c M M On h H CO H d 6 •i CAMBRIDGE SENIOR LOCAL o en M3 _J ■J. M3 "** C 43 c I c - S3 2| S3 ^ q H c • (S M < c to c CO •a O B* a u H >, CJ_ « < c • W M ir. M d cj_ 3 < Q c -3 C c (/> y c/i c c £ H *»+? ^r 3 P* < ^ c . E c .« ^< ^ c PP c . __; c c c c o v5 . c ed > i PQ c H ° ~; (s oc c o< «•* 11 8^ o « u •2 - o 2 ffiPU c „ c- = c • N M c m H O > PQ PQ o o . 3 ^ i^ .•d « o ' - Cfl u X w on ' c n c 47 BOOK-KEEPING NOTES FOR c/5 O O o < : 0) u O S ° o CO H M3 73 ° ° ° o ri O O O o 6 00 ooo H sP 00 O o m CO H CO On O P O o a *-■ o o p o „ CAMBRIDGE SENIOR LOCAL 46 00 ~i x r, ^ CO _J 3 /. ~ "I -43 Z CO .: -1 CO PQ £ w J w Q "■ ■" y H • — r. H 3 *~. +J X — £ S Cfl w ~ — — 1 g g — X - 5c- g"S-g £2 < fi3« _ >, - ; I* PQ - U U PQ C 3 M ^" C N m c^ m io 00 CO *-+* ■f. C/3 — _,, z < Gfl . . L^ u Cfl — — 13 f. — 2£ . 3 Z — .I-m Q Gfl X ._, "H c£j '- 1 T- .— ^ to _'~J CJ 3 E £ = Jj u 1; u V X pL( OO ~Z Q O : c eg . "S3? - = - 4 8 5" i ^ ? * "*; ^ *«.«* -• BOOK-KEEPING NOTES o5 ^ O C/ o o c M tnOC 1 o o o Vi , ^C O N o *-P c>l m N co o w CO H H o c/5 O O 0* H — S«* c C M H 01 d^ CSJ CO CO 00 O * CN t3 o o c c 00 C C Tt- o c/5 O