UC-NRLF ^ HF €6 ^B 3fl ?M7 f Double Entry Bookkeeping ri.-r !;(|].\ICAI. CLA^^h^ AM) MHUOLS GEORGE F. CLARKE, Aud't^^n ii V examination). '•. KEEPING AM) AdVANGKI) AcXOUNTS AT THK S lUXlCIPAL T'-' ■" THE Bookkeeping Examinations oh the V: ':!^ESHmE Institutes, Sod^ETv of Arts, C-- ■ COLEKGE OF PRECEPTORS, &C. CO lO C\J LO OJ [O LONDON : 'UBLISHERS, 62 MOORGATE STREET, i8g8. ACCOUNTANCY BOOKS Published by GEE & CO., 34 Moopgate Street, LONDON, E.G. ACCOUNTANT, THE (Established 1874). A weekly news- paper. Price 6rf. Subscription: — 24s. per ann., post free U.K. Foreign, 26s. Issued Weekly, in time for Friday evening's mail. The Accountant is the recognised organ of Chartered Accountants and Accountancy throughout the world. 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Dicksee, M.Com., F.C.A., Author of " Auditing," " Bookkeeping for Accountant Students," " Bookkeeping for Company Secretaries," &c. COMPANY-SECRETARY, THE. Fourth Edition. Price 25s. net. (Foolscap folio.) By W. H. Fox, Chartered Accountant. Containing a Full Description of the Duties of the Company-Secretary, together with an APPENDIX of FORMS and PRECEDENTS. COST ACCOUNTS OF AN ENGINEER AND IRON- FOUNDER, THE. Price 2s. 6d. net. By J. W. Best, F.C.A. The first portion deals with the Engineering and the second with the Foundry Department, and numerous forms of books and accounts are given and explained. ^ 34 MOORG&TE STREET, LONDON, E.G. Double Entry Bookkeeping FOR TECHNICAL CLASSES AND SCHOOLS BY OEOROB F. CLARKE, Associate of the Society oj Accountants and Auditors (Incorporated 1885) (by examination). Lecturer on Bookkeeping and Advanced Accounts at The St. Helens Municipal Technical School, &c., &c. Adapted for the Bookkeeping Examinations of The Uxion of Lancashire and Cheshire Institutes, Society of Arts, Civil Service, College of Preceptors, &c. LONDON : Gee & Co., Printers and Publishers, 34 Moorgate Street, E.C. pu ^ / K^ PREFACE A S a teacher of the important subject which is set forth in this book, I have found some difficulty in obtaining a suitable text-book in which the theory of Bookkeeping is in harmony with actual practice. In the subsequent pages I have endeavoured to supply this want, and the result of my effort must be decided by the measure of success which the students, who study its pages, may obtain. It only remains for me to add that the book has been written in accordance with the method I have adopted in teaching, a method which I am pleased to state has met with conspicuous success in both the Elementary and Advanced Bookkeeping Examinations of the Union of Lancashire and Cheshire Institutes. I shall at all times be glad to consider any suggestions that may be made to me by teachers who have adopted the book for their classes. GEO. F. CLARKE. S Lord Street, Liverpool, September 1898. 1 f^' > » ^ '^ Digitized-by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/doubleentrybookkOOclarrich CONTENT s. TA. EEEA Substitute' "are" for "is" on Page 7 hne 20 "account" „ "side" 10 „ 11 "drawee" or ,,j„„„^„" "acceptor" " ^'''^^'' 22 „ 14 ,, " champertor " ,, " champertee ' 48 „ 31 "cost" "charges" ^^^^ " opposite O.I.i^. 52 „ 6 "T." „ -C." 71 „ 24 "T." „ "J." 71 „ 26 "23 13 0" „ "22 13 0" 73 „ 27 „ "192 16 8" „ "122 16 8" 73 „ 38 „ "115 2 9" ,,"105 2 9" 73 „ 40 "4 0" „ ^'2 0" 90 „ 14 „ "1,008 6 8" ,,"1,008 8 6" 92 „ 8 Add to Exercise 6 bottom of page 73. Stock £145 ,, after sundry debtors page 102(Thos. line23lEdwd Tiger . Eagle 1,254 1,215 9 3 10 DODSignmenis ^inwaras; ... ... 35 Composition ... ... 37 Cost Accounts ... ... 41 Contracts 43 Commercial Terms 47 Double Entry Bookkeeping ... 1 , 2 Discount Columns in Cash Book 15 CONTENTS. PAGE Account, What is an 2 Assets and Liabilities 4, 18 Assets and Liabilities, Order of 30 Bookkeeping, What is ... ... 1 Balance Sheet, What is a 4, 29 Balance Sheet, Form of 4, 67 Bank Columns in Cash Book 16 Bank Interest and Commission 16 Bills of Exchange 20 Bills of Exchange, Payment of 21 Bills of Exchange, Dishonoured 21 Bills of Exchange, Discounting 22 Balancing the Accounts 45 Capital, What is 4 Closing Journal Entries 10 Cash Book, The 12 Cash Book, Form of 14, 61 Cash Columns in Cash Book 15 Cheques 23 Current Accounts 33 Consignments (Outwards) 34 Consignments (Inwards) 35 Composition 37 Cost Accounts 41 Contracts 43 Commercial Terms 47 Double Entry Bookkeeping 1, 2 Discount Columns in Cash Book 15 VI. CONTENTS. PAGE Deed of Assignment 37 Depreciation ... 38 Exercises in Bookkeeping 9—44 Examination Papers in Bookkeeping ... 56—102 Goods Account 25 Gross Profit 26 Impersonal Accounts ... 3 Insolvent Debtors 37 Journalising 5 Journal, The 9 Joint Ventures 33 Ledger, The 7 Merchant's Books, A ... 6 Manufacturing Accounts 42 Nominal Accounts 3 Nominal Accounts, Transfer of 28 Opening Journal Entries 10, 19 Personal Accounts 3 Profit and Loss Account ... 5, 27, 67 Profit and Loss Account, Closing 28 Posting into Ledger 5 Petty Cash 17 Promissory Notes ... ... ... 22 Partnership Accounts ... 32 Eeal Accounts ... 3 Eeserve Accounts . . 38 Single Entry Bookkeeping 1 Stock on hand ... 26 Stock on hand, Bringing down 27 Sinking Fund 38 Society of Arts' Paper (fully worked) 56-67 Trial Balance ... 5, 28 Transfer Journal Entries 10 Trading Account 24 Work in Progress 43 DOUBLE ENTRY BOOKKEEPING. CHAPTEK I. Introduction. Bookkeeping has been defined by one of the most com- Bookkeeping, petent accountants of the present day as " the science of " correctly recording in books transactions involving the Dicksee'a " transfer of money or money's worth.'' The necessity of °gQ ^eepmg keeping such a record of his transactions is perfectly plain to the merchant, or trader, as it enables him to ascertain : — 1. What he owes to other people. 2. What his business consists of. 3. What profit or loss his business shows. 4. What capital he has in his business. There are two systems of bookkeeping generally under- Single entry stood, although it is doubtful whether one is entitled to be described as a system at all. This latter one is called Single Entey, so styled because every transaction is entered in the books one 3. In single entry only Personal Accounts are kept. By this method a merchant cannot arrive at the four objects above-named, the records of his buying and selling only being sufficient to show him : — 1. What he owes to other people. 2. What amount is owing to him. A single entry system pure and simple would not allow a merchant to keep a Cash Book, this being a book in which the principle of Double Entry is adopted. Double entry, as the name suggests, necessitates the entry Double entrj of each transaction twice, in one form or another. '•A DOUBLE ENTRY BOOKKEEPING. Its primary rules are : — 1. Every debit must have a credit. 2. Every credit must have a debit. 3. The total of several debits must be a credit. 4. The total of several credits must be a debit. These are rules that must be regarded with the greatest strictness and accuracy, as the slightest deviation therefrom will prevent our realising one of the principal advantages of double entry, i.e., balancing the accounts. If goods are Sold to a customer, by that transaction he becomes our Debtor, while we in turn must credit the account which the sale to the customer has decreased, which is the Goods Account. This action you will observe complies with our rule, the entry made resulting in a ^ Debit to the Customer's Account and a Credit to the Goods Account. The reverse applies where we Buy goods from another person, he in this case becoming our Creditor. Here we Credit the Seller's Account, and Debit the account which has been increased, i.e., the Goods Account, which, briefly put, means a Debit to the Goods Account and a Credit to the Seller's Account. Emphasising these points it may be said : — A. Where we Buy goods, we Debit Goods Account and credit the persons we buy from. B. Where we Sell goods, we Debit each buyer and credit Goods Account. C. Where we Eeceive cash, we Debit Cash Account and credit the person who pays us. D. Where w^e Pay cash, we Debit the person we pay and credit Cash Account. What is an An account in the sense in which we have so far referred to the word is a ruled page, in the book known as the Ledger, at account ' DOUBLE ENTRY BOOKKEEPING, the top of which is written the name of the person, or other descriptive name, whose transactions will be entered in that account. The form and uses of various columns is shown by the following illustration : — Di . (Or debit sidf .) Andrew Black. (Or credit side .) Cr. Date Particulars Fo. Amount Date Particulars Fo. Amount 1898 Jan. I To Goods To Balance . . I £ s d 10 1898 Feb. 1 June 30 1 By Cash on c.b. Account , 3 „ Balance .. | .. £ s d 7 10 2 10 £10 June 30 2 10 Where one side of an account is greater than the other the difference is called the balance. If the debit side is greater then the difference is a debit balance. Vice versa, if the credit side is greater the difference is a credit balance. In double entry bookkeeping the accounts may be classified Three classes under three headings, viz. :- °^ accounts. 1. Personal x\ccounts. 2. Eeal or Property Accounts. 3. Nominal or Impersonal Accounts. Personal Accounts are those of various persons, either Personal and debtors or creditors. Personal Account. Andrew Black's account as above is a Real Accounts. Real or Property Accounts include those which represent something tangible or real, something that may be converted into money or exchanged, e.g. : — Goods. Land and buildings. Cash. Fixtures and fittings. Investments. Plant and machinery. These are a subdivision of the Profit and Loss Account (the Nominal or account by which the merchant ascertains if he is making a ^^^^^^^ profit or a loss), and, strictly speaking, may be said to represent the merchant himself. They include, principally B2 DOUBLE ENTRY BOOKKEEPING. What is a Balance Sheet? Assets and liabilities. What is capital? accounts which are a subdivision of his Profit and Loss Account, so analysed that he may see how the profit or los has been made, e.g. : — Wages Interest and discount Eent, rates, and taxes Bad debts Depreciation Carriage, etc., etc. are all nominal or fictitious accounts." If the books of a merchant have been properly kept and his transactions correctly entered, w^e shall be able to prepare what is technically termed a Balance Sheet. A' Balance Sheet is a classified statement of all the balances of the merchant's accounts, showing on the one side (1) Whal_ property he has, including debts owing to him. \ These are called his Assets. And on the other side is shown — (2) What amount he owes to creditors. These are described as his Liabilities. A Form of Balance Sheet. Liabilities. £ Sundry Creditors . . . . 20 Capital 30 AsaCtS. Cash in hand . . Cash at bank . . Sundry Debtors Stock on hand £ 5 10 15 20 £50 £50 To decide which are assets and which are liabilities the following simple rules are given : — An asset is always a debit balance that will subsequently be received by the business. A liability is always a credit balance that the business may subsequently have to pay. A Capital Account in a merchant's books is practically the amount his business owes to him. This is ascertained by his * The word fictitious is sometimes used to describe the Impersonal Accounts connected with the Profit and Loss Account. DOUBLE ENTRY BOOKKEEPING. O first finding out the total assets he has in his business, and by how much they exceed his liabilities. The excess of his assets over his habihties is his capital. If his assets amoun *: to £100, and his liabilities to £50, his capital would be £50, which amount would be shown in the Capital Account in the Ledger. A Profit and Loss Account is, as the name implies, an what is a account of the merchant's gain or loss. The form of account £^°^* ^^^ is the same as any other in the Ledger. The account is Account? debited with all expenses incurred in the conduct of the business, and credited with all profit made by the business. The detailed working of a Profit and Loss Account will be more fully dealt with in a subsequent chapter. A Trial Balance (only possible in a system of double entry what is a bookkeeping) is a detailed list of the balances of every ^"^^ ^ account in the Ledger. All the debit and credit balances are placed in separate columns, and, if the work has been correctly done, the total of the debit balances, including the balance of cash in hand, will equal the total of the credit balances. This is a proof that each balance is correct as recorded in the Ledger. Journalising is the art of recording in the Journal in chrono- Journalising, logical order all the transactions affecting the merchant's business. It also apphes to the making of what are known as opening entries, transfer entries, and closing entries. For full explanation of these see Chapters II. and III. This is a phrase used to describe the operation of entering in Posting into the Ledger each transaction, previously recorded in the Journal ^ e ger. or Cash Book. In Andrew Black's account, given on page 3, the value of goods, £10, therein debited or charged to him, is said to be posted to his account from the Journal. So with the cash paid by him, the amount of £7 10s., first entered in the Cash Book, is now posted to the credit of his account in the Ledger. CHAPTER IT A Merchant's Books. The books The question what books does a merchant require must require . always be answered according to the nature of his particular business. Experience often proves that by opening special books adapted to the character and requirements of any busi- ness much Jabour and time may be saved. This fact, then, prevents u^ giving any stereotyped list of books, but, generally, the following books would be required by a merchant whose business was of an ordinary character. Cash Book. Sales Day Book. Journal. Bought Day Book or Invoice Ledgers (Debtors and Book. Creditors). Bills Receivable Book. Returns and Allowances Bills Paj^able Book. (Inward and Outward). It must be observed that in all these books the principle of double entry is adhered to, and that one or other of the four rules given on page 2 is fully complied with. Their various uses will be better understood by the student as he obtains a more complete grasp of double entry principles, but it may be pointed out that the Sales Day Book, Bought or Invoice Book, Bill Books and Returns Books are all an enlargement of the Journal, special books being required in consequence of the large number of entries that have to be made therein, and the desirability of keeping separate the different classes of transac- DOUBLE ENTRY BOOKKEEPING. / tions. It also facilitates a quick analysis of a merchant's ^accounts, and the totals of each book indicate, without much labour, the extent and volume of a merchant's business, e.g., the Sales Day Book or Journal, as we may choose to call it, containing only a record of sales, will enable him to see what his total sales are for any given period ; and so with all the other books, the objects for which they are used afford the same exclusive information. As, however, this book has been written for the purpose of assisting those who contemplate being examined in bookkeeping by the Society of Arts, the Union of Lancashire and Cheshire Institutes, and kindred institutions, a detailed study of these books is not necessary, but our consideration will be confined to three of the principal books m every business, trading or otherwise, viz. : — (1) The Journal. (2) Cash Book. (3) Ledger. The Ledger and its Uses. To the merchant or trader it is of the highest importance The Ledger, that the Ledger should be well and properly kept. In it is contained the Accounts of all persons with whom he has done any business, and also others which come under the heading of Eeal Accounts and Impersonal Accounts. The Ledger may be called the keystone of the business, for into it is posted every transaction, whether it be a sale or purchase of goods, or the receipt or payment of cash. The form of each Ledger Account previously given will be noted by the student, and it is well that he should now understand how these accounts are made up. Nothing is entered or posted into the Ledger that has not first been recorded in the Journal or the Gash Book. (1) In a Ledger Account, the left-hand side is the Debtor side, and here we debit the receiver by entering into his account the amount of goods or cash he lias received from us. 8 DOUBLE ENTRY BOOKKEEPING. The Ledger. (2) The right-hand side of a Ledger Account is the Creditor side, and here we credit a person's account with the amount of goods or cash we have received from him. As, however, in double entry bookkeeping each amount must be entered twice, debit and credit, it follows, in connection with the two rules above, that — (1) The Goods Account (which is really our Trading Account) is debited with all the goods purchased, ard is credited luith all goods sold. (2) The Cash Account (or Cash Book, as we shall henceforth speak of it, as all cash receipts and payments are entered in a separate boo^) is debited with the cash that is received, and is credited wit% the cash paid away. The following transactions taken from the Journal or Cash Book may be traced to their respective accounts shown below : — 1898. Jan. 1. Bought from A. Brown Goods value . . £500 10 6 „ 2. Sold to C. White Goods value . . . . 650 15 „ 4. Eeceived Cash from C. White . . . . 600 ,.10. Paid Cash to A. Brown 500 10 6 1898 Jan. 2 To Goods To Balance B 650 15 1898 Jan. 4 „ 10 50 15 Df A. Brown's Account. Cr. 1898 Jan. 10 To Cash . . D £ s d 500 10 6 1898 Jan. 1 By Goods A £ s d 500 10 6 Dr. ( 3. White's Account. Cr. £ s d 600 o o 50 15 o £650 15 o DOUBLE ENTRY BOOKKEEPING. Dr Goods Account. Cr. 1898 Jan. I To A. Brown • • A 500 10 6 1898 Jan. 2 By C.White .. B £ s d 650 15 Dr. Cash Account. (This account is the Cash Book.) Cr, The Ledger. 1S98 Jan. 4 To C. White To Balance c £ s d 600 1898 Jan. 10 99 9 6 By A. Brown „ Balance £ s d 500 10 6 99 9 6 £600 The debit and credit entries of each transaction are shown by the same letter being placed in the folio column of each account. The accounts of A. Brown and C. White and the Cash Book are now closed, and the balances are brought down, which is always done when a Profit and Loss Account and Balance Sheet are to be prepared. It will be seen that the Goods Account has not been closed, the reason being that this account is dealt with in a different manner to the other three. Its treatment is fully explained in the chapter on Profit and Loss Accounts. Exercise I. Post into the Ledger the following transactions : — 1898. Jan. 2. Sold Goods to G. Carter . . ,, 7. Bought Goods from T. Morrison . . „ 10. Sold Goods 10 G. Carter , „ 31. Boughc Goods from F. Murray .. The Journal. In the early days of the system of double entry book- The Journal, keeping, the Journal proper was a far more important book to the trader than it is at the present time. Under the old Italian method of keeping accounts, from which our present system of double entry is derived, a book was kept called the Waste Book. In this book every transaction was recorded. £110 10 278 14 2 98 2 9 50 10 DOUBLE ENTRY BOOKKEEPING. The Journal, whether for the sale or purchase of goods, or the receipt or payment of cash. From this Waste Book the transactions were all passed into the Journal, and from there posted into the Ledger. In practical bookkeeping there is now no such book as a Waste Book, the various transactions being entered at once into one of the books named at the beginning of this chapter. The Journal of that day no longer occupies the position it did, and its uses to-day are limited to three : — (1) Opening entries (journalising assets and liabilities). (2) Transfer entries (transferring an amount from one side to the other). (3) Closing entries (transferring all Expense Accounts and profit to Profit and Loss Account, and finally to the Cz "cT ^ c TJ o o '7u M '-' 8 t« ; o ; o .4^ 5 ^ '-' Cj s d d fe < 23 2j ■< g » • O ' ' o 'S 5J 3i r^ ■s o J2 \ X 01 rt > cJ O h a / >. y c ' ' ' CO -* If? ?, ^ rt T! o o o o en o o o o M rt a ^ 8 ^ o o -U o o o o o -= en O o o o o f^ !§ o •-^ 2 8 o z? ^ 'o' ^J n3 •3 3 •n o o o as en ; o o . o ■49 3 s ■-+2 lO N t^ ^ o 03 ^ i : < • 23 M CO ■«J -o o c a a 'i 3 "3 a c : 8 c .s s: 1 H C8 ri "cfl CQ cJ u a ra o o H ' ' ' ' H - - CO o ID VO c ^ J. 5 J. J rS DOUBLE ENTRY BOOKKEEPINO. 15 We need not explain the transactions under Exercise IV., The Cash which are fully set forth in the form of Cash Book given above. ■^°°^' The uses of the various columns are given at the top of each, but the part stating what particular items should be entered on each side should be diligently studied. It will assist the student to understand the necessary procedure for entering similar transactions. The advantage of having a discount column in the Cash The discount Book is well known to all who have to keep traders' accounts. °° ^^^' By entering the discounts in addition to the cash or cheque received or paid the two amounts may be posted into the Ledger to the credit or debit of the account concerned, e.g., the amount entered in above Cash Book on January 3rd from C. Gould would be credited in the Ledger to C. Gould's Account — By Cash, £100, Discount £5, £105. The payment to T. Jones on January 26th would be posted to the debit of T. Jones' Account in the Ledger— To Cheque £30, Discount £1 10s., £31 10s. The totals of the two discount columns need not be the same, as the total on each side is posted separately. The total on the receipts side is posted to the debit of the Discount Account in the Ledger, and the total on the payments side to the credit. From the discount entries in our form of Cash Book the postings in the Ledger Account would be thus : — Dr. DIScou^'T Account. Cr. £ s d To Discounts, per C.B 700 £ s d By Discounts, per C.B i 10 o The cash columns are practically the Cash Ledger Account, Cash columns cash being debited, and the payor credited, with what is received, and on the payments side, cash is credited, and the payee debited, with the amount paid to him. This principle applies whether cash or cheques are paid, the only distinction necessary being the columns in which the entry is made. The totals of the cash columns must agree by the balance 16 DOUBLE ENTEY BOOKKEEPING. being included on the payments side and brought down on the receipts side in the manner shown in our form of Cash Book. Bank The bank columns, the same as the cash columns, are equiva- column. ^gj^^ J.Q g^ Ledger Account, the column on the receipts side being the debit, and the one on the payments side the credit. The payment of a cheque, instead of cash, to a creditor presents no difficulty, the amount in either case being posted to his debit, the credit being made by the simple entry of the amount in the cash column, if cash is paid, and bank column if a cheque is given. The payments into and withdrawals from the bank are rather more confusing, and probably the student will have wondered why, in the list of entries to be made on each side of the Cash Book given on page 12, it should be stated that cash paid into the bank must be entered on the receipts as well as on the payments side. This is, how- ever, in accordance with fact, and as the cash and bank columns represent two separate accounts, the following rules must be observed : — 1. When cash is paid into the bank. Credit Cash and debit Bank as shown in the Cash Book entries opposite the letter A . This is one transac- tion as given in Exercise IV., on January 3. 2. When cash is withdrawn from the bank. Credit Bank and debit Cash in the way we have dealt with the transaction in the same exercise on January 15. The letter B shows the debit to cash on the receipts side and the credit to bank on the payments side. Bank interest Interest allowed by the bank is entered on the receipts side commission, in the bank column and posted to the credit of the Interest and Commission Account, the bank being debited by the amount being entered in the bank column. Commission charged by the bank is entered on the pay- ments side in the bank column, and posted co the debit of the Interest and Commission Account. DOUBLE ENTRY BOOKKEEPING. 17 A separate account is opened in the Ledger for Petty Cash, Petty cash, and any payments out of this account must be first passed through the Journal, before being posted into the Ledger. EXEECISE V. Enter the following in the Cash Book : — Jan. 1. Received £50 from A. Brooks and allowed him discount £2 10s £52 10 2. Paid into Bank 40 „ 7. Paid A. Robinson Cash 10 „ 10. Withdrew from Bank 20 10 ,, 15. Received from Loreing & Co. cheque and paid into Bank 100 „ 21. Paid Jas. Chorlton cheque £80 and was allowed discount £3 83 Exercise VI. Write up and balance the Cash Book. £ s d Feb. 1. Balance of Cash in hand 50 „ „ Do. at Bank 300 „ 10. Paid A. Marshall cheque £100 and was allowed discount £5 105 „ 15. Received from Lane & Nimmo Cash £70 and allowed discount £3 . . . . 73 „ 20. Paid into Bank 100 „ 25. Paid H. Fleming Cash 15 „ 28. Withdrew from Bank 75 „ „ Advanced for Petty Cash 5 CHAPTER III. Assets and Liabilities — Bills of Exchange — Promissory Notes and Cheques. Assets and Liabilities. The opening entries usually made in the Journal are those relating to the trader's assets and liabilities. Bearing in mind what has already been written on this head in our first chapter, we now show how these opening entries must be made. As before stated, assets are always shown in the books as debit balances and liabilities as credit balances. Whenever a list of assets are given to be journalised, and they exceed the amount of liabilities, the difference must he credited to Capital Account. As — in the Journal — the accounts with debit balances are always stated first, our first entry will be Assets Dr. .To Liabilities Cr., and we then give, in their proper order, the separate balances. Example. On June 30th 1882 the books of Allen & Co. were closed with the following result : — Assets. £ s d Cash in hand 16 12 8 Cash at Bank 138 12 4 Goods 1,500 o o Bills Receivable . , . . 723 18 10 Business Premises .. .. 1,200 o o T. Davies 83 3 8 Mackenzie Bros 109 13 4 Liabilities. Bills Payable Wood & Co. £ s 329 2 113 13 Make the opening entries of above balances in the Journal. DOUBLE ENTRY BOOKKEEPING. 19 Journal, 30th June 1882. Sundry Assets . . . . • • nr Dr. £ s d i6 12 8 138 12 4 1,500 723 18 10 1,200 83 3 8 109 13 4 Cr. £ s d To Liabilities Ccish in hand . . . . . . . . Dr. Cash at Bank .. Dr. Goods Dr. Bills Receivable Dr. Dr. T. Davies Dr. Mackenzie Bros. To Bills Payable , . Dr. Cr. „ Wood & Co Cr. Cr. 113 13 8 „ Capital Account 3,329 4 5 These Journal entries respective accounts : — will now be . posted into their The cash in hand\ , . , . . , . , each into their respective columns m the Cash Book, and ]■ The cash at bank) The remaining balances into their separate Ledger Accounts. Debit and credit amounts in the Journal appear as debits and credits in the Cash Book and Ledger Accounts. Exercise VII. Assets and liabilities of Richard Bright on 31st December 1887 :— He owed P. Wilkins F. Davis Wright & Co. . . C. Dickins On Bills payable He had Cash at Office £342 10 Cash at Bank 1,600 Petty Cash 2 3 Bills Receivable 549 18 Wine 6,859 Spirits 1,215 10 £240 10 150 7 78 15 305 689 a Business Premises T. King owed him J. Jackson owed him . . S. Johnstone owed him B. Hare owed him 600 265 10 75 9 183 12 10 315 14 11 Make the necessary opening entries in the Journal. C 2 20 double entry bookkeeping. Bills of Exchange. The definition of a bill of exchange in the Bills of Exchange Act 1882 is as follows : — " 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 demand, or at a fixed or determinable future time, a " sum certain in money to, or to the order of, a specified "person or to bearer" (section 1). Bills of exchange are drawn in various forms, the one mostly used being as under : — FoEM OP Bill. £100 Liverpool, 1st January 1898. (Stamp Is.) rS j^ H e 5^ S e f§ -£ ^ Three montlis after date pay &( ^ ^ 00 A. B., or order, the sum of One hundred pounds sterling "^15°^ 5? for value received. H^ Q M 2 § ■« i5 "^ ^ e W C. D. To Messrs. Black & White, Manchester. The parties to this bill are three : — The drawer, C. D., the payee, A. B., the drawees, Messrs. Black d White. When the bill is accepted by Messrs. Black & White they become acceptors, i.e., they agree to do what the drawer C. D. requires. Thenceforward the bill is styled Messrs. Black & White's acceptance. Before being accepted by them it is called C. D.'s draft. A bill is accepted by the drawee writing across the face of the bill in the manner shown on the above form. When these formalities are completed the bill becomes, to the drawer C. D., a bill receivable; to the acceptors, Messrs. Black & White, a bill payable. After acceptance C. D. would enter the bill in his Bills Eeceivable Book, and in his Journal would credit Messrs. Black & White by making the following entry :— Jan. 1. Bill Eeceivable, Dr. . . £100 To Black & White . . £100 DOUBLE ENTRY BOOKKEEPING. 21 In the case of C. D. accepting a draft from Messrs. Black & White, that becomes a bill payable by him, and after entering particulars of the bill in his Bills Payable Book would make the following Journal entry : — Jan. 1. Black & White, Z>r. .. £100 To Bill Payable .. £100 When the time named in a bill has expired, and three Payment extra days, called days of grace, have elapsed, the bill is presented for payment at the place named on the bill. In the form above the bill is payable at Lloyds' Bank, and on the 4th April 1898 we call there with the bill, or, it may be presented by our bankers, and if the acceptor has sufficient money in the bank we obtain cash for it. This is called honouring the bill. C. D. would then enter the amount in his Cash Book on the receipts side to the credit of Bills Eeceivable Account in the Ledger (not Black & White's account, as they were credited when they gave the bill), as under : — Cash. Contra. 1898 April 4. To Bill Receivable— — Black & White's acceptance £100 Should C. D. have to meet a bill, i.e., pay it when it becomes due, his Cash Book entry would be on the payments side, when the amount would be entered to the debit of Bills Pay- able Account, as follows : — Cash. Contra. April 4. By Bills Pay- able .. £100 A bill of exchange when presented for payment may be Dishonoured what is technically termed dishonoured, i.e., payment of it is l^iHs- refused. The acceptor may not have sufficient money in the bank to cover the amount of the bill, in which event certain formalities have to be gone through. The person who has presented the bill for payment must have the bill noted, or 22 DOUBLE ENTEY BOOKKEEPING. protested for non-payment before a notary. Notice of the bill being dishonoured must be given to the parties concerned, and the following entry made in the Journal : — April 4. Black & White, Dr. . . £100 To Bill Receivable . . £100 For their acceptance returned dishonoured. Messrs. Black & White would also have to pay any expenses that had been incurred by the dishonouring of the bill, w^hich would be debited to their account through the Cash Book. Discounting bills. A bill is discounted by payment being obtained before it is due. The discount is the charge made by the bank for giving the holder of the bill the necessary accommodation. When a bill is discounted it is entered in the Cash Book in the same way as if piayment had been made by the drawer, the dis- count being entered in the discount column, and the net cash received in the cash column, the total being posted to the credit of Bills Eeceivable Account. To take up, or to retire a bill, is to pay cash when the bill is presented for payment. Promissory notes. Promissory Notes and Cheques. A promissory note is treated in our Journal as a bill receivable or payable, according to w^hether we are to receive or to pay the amount named in the note. In form, however, it is different to a bill of exchange, being defined in the Act of 1882 (Bills of Exchange) as ''An unconditional ** promise in writing made by one person to another, signed by *' the maker, engaging to pay on demand or at a fixed or " determinable future time a sum certain in money to or to '* the order of a specified person or to bearer." In this case there is no need for the note to be accepted by the person who will ultimately have to pay the money, the mere fact of his signing the note making him liable for the sum stated therein. The only person named in the note beside the payor is the payee, i.e., the person to whom the note is DOUBLE ENTRY BOOKKEEPING. 28 addressed, or named in the body of it, while the parties to a bill are generally three, viz., drawer, acceptor, and payee. Form of Promissory Note. £100. Liverpool, 1 January 1898. On demand (or three months after date) I promise to pay C. F. or order (or bearer) one hundred pounds. A. E. A cheque, although only an order on a bank to pay a stated Cheques, amount to a person named in the cheque, is dealt with in the books of account as if it were cash. Cheques are made pay- able either to bearer or order. A bearer cheque entitles the holder to receive the cash, while an order cheque must be endorsed by the person, to whom it is payable, writing his name on the back before the bank will pay the money. A cheque is crossed generally by drawing two parallel lines Crossed across the face of it, and writing ** & Co." between them. The ° ®^^®^ effect of crossing a cheque in this way is to allow payment of the cheque only through the medium of a banker. The words " Not negotiable " are also sometimes written across, which gives additional safety to a cheque, as any person receiving such a cheque can only take it with the same title as the transferor possessed. Cheques are specially crossed when a banker's name is written between the parallel lines, and when this is done payment will only be made through that banker. Exercise VIII. Enter the following transactions in their proper books of account : — April 5. Received from J. Hill, his acceptance ,, 7. Accepted T. Jones' draft at 3 months ,, 10. Received from H. Clarke, his drafc on S. Howarth . . ,, 15. Gave A. White Promissory Note. . July 8. Received Cash for J. Hills' acceptance „ 10. Met T. Jones' draft due this day . . ,, 13. Received Ca^h for S.Howarth's acceptance ,, 31. Paid amount of Promissory Note given to A. White 250 ^150 200 300 250 150 200 300 CHAPTER IV. Trading Account. Trading Account — Goods Account — Profit and Loss Account — Trial Balance — Balance Sheet. In practical bookkeeping the account by which a merchant ascertains his gross profit is called a Trading Account, ix., a record of his business transactions, leaving out the expenses that have been incurred in the conduct of such trade. The profit shown bj this account can then only be the gross profit, and the balance is transferred, through the medium of the Journal, to |he credit of the Profit and Loss Account. There is some difference of opinion as to how a Trading Account should be prepared in its strictest sense, but the one most generally adopted includes the following particulars : — Tbading Account. Debit. £ Stock on hand at commencement of Trading Period Total Purchases of Stock since do. Balance — Gross Profit s d Credit. £ Total Sales during Period of Trading Stock on hand at the end of Trading Period It is not, however, our intention to discuss in detail the method of working such an account as this, seeing that in our Goods Account we are able to obtain exactly the same result as can be showm by a Trading Account. Eeference to it is only made for the information of the student in order that he might understand that in practical bookkeeping a distinction is drawn between a Trading Account and a Profit and Loss Account. The difference is really only in name, as the final balance of each of these accounts shows either a profit or loss. To the merchant the value of a Trading Account lies in the fact that he can see the result of his business on his buying and selling alone. DOUBLE ENTRY BOOKKEEPING. 25 This information our Goods Account will give us, and it is Goods to this account that we must turn for a record of all our purchases and sales. There are also other small items entered in our Goods Account that a merchant would not put into his Trading Account, such as carriage on goods bought. This is done because a Goods Account must be debited with the total cost of the goods, and where carriage has to be paid, in addi- tion to the purchase price, it is evident that the amount so paid must be added before we can get at our total cost. In like manner, all freight paid, a term used to imply the cost of conveyiug goods by ship from one port to another, is added to the purchase price of the goods in respect of which the freight is charged, by being debited to the Goods Account. From the particulars given above as to how a Trading Account is generally made up, we have an insight into the composition of our Goods Account, which will be more fully explained by the Goods Account that is shown below, pre- pared from the following transactions: — 1898. Jan 1. " >> 5. 10. 15. 20. 25. 31. Stock on band at commencement Purchased Goods for cash Paid Freight on above purchase Sold C. Donem Goods value Sold D. Simple Goods Bought Goods from A. Piper Paid Carriage on same Sold Goods for cash Bought Goods from B. Long Stock on band at this date nt .. £550 . 500 .. 12 . 350 . 500 . 600 . 17 10 . 750 10 . 200 . 650 Note. — It must be borne in mind that although a Goods Account only is given here, the above transactions are supposed to have first been passed through either the Cash Book or Journal. DOUBLE ENTEY BOOKKEEPING. Dr. Goods Account Cr. 1898 Jan. I « 15 « 25 -, 31 £ s d To Stock on hand . . 550 „ Cash for Goods C 500 „ „ Freight C 12 „ A. Piper, Goods J 600 „ Cash, Carriage C 17 10 „ B. Long, Goods J 200 £1,879 10 „ Gross Profit, trans- ferred to Profit and Loss Account 371 1898 Jan. 5 „ 10 „ 20 » 31 £ s d By C. Donem, Goods J 350 „ D. Simple, „ J 500 „ Cash for Goods C 750 10 £1,600 10 „ Stock on hand . . 650 £2.250 10 £2,250 10 « 31 To Stock on hand brought down . . 650 Dr entries. To take the above series of entries separately, we have first in order the ^tock on hand at the commencement of our trading period. This is always the first debit to the Goods Account, except in 00 « 0000 Nt^M 001-0 -^•H NNOt^ VO 1 2* t Cash £ s d 15 9 6 6o o o 4 10 127 17 10 il 13 N 1 C^ ■":: ::::: :: :::m:::|N '--J - «^ 1 VO 1 8* - ^v^gj? ""^ 2^;?«'i2'S . "1 By Rent, &c., Water Rate „ Wages „ Bill Payable, Retired Bill „ Bill Payable, Paid Acceptance . . „ Cash „ Wages „ Rent, Rates and Taxes „ John Cross, Capital A/c „ Sundry Creditors, per Cheques „ Wages „ H. Morris, Noting Expenses „ Bank „ Purchase A/c, Sand . . „ Alton & Co „ Wages „ H. Pike, Drawings „ Balance carried down «§.. . ..... .. St....- noovo 0«Ocno\ (ANN Ofoovnm S.S?, R v8 -Rg JJ.J^ VO 0^ i 00 i 1 naoocevo ovD 00 J) a VO in w^-vovo °°">^ M«V *° *^ 2°^ "a '. To Balance at this date . . „ Bill Receivable „ Sales A/c, Sundry Sales Do. do. „ Stokes & Co., Cheque £70 and Discount £3 5S. 6d „ Bank „ Sales A/c, Sundry Sales „ Sales A/c, 12 tons Cast- ings at 62s. „ Sales A/c, Sundry Sales „ Cash „ H. Bland, Dividend of los. in the £ .. „ A. Black „ H. Morris, Amount of Bill and Charges „ Sundry Debtors.. To Balance brought down ^M.o .0.- ^voo JJ1- ^ rj. ^ =0 ro 62 DOUBLE ENTRY BOOKKEEPING. Trial Balance. Folio £ s d £ s d I W. Jones 9 13 7 3 Ford & Son 4 6 5 Sundry Creditors 12 9 4 7 A. Black 35 9 T 9 Sundry Debtors 210 2 f) II Bills Receivable 642 6 /| 12 Bills Payable 235 13 Plant and Fixed Machinery 4,109 15 14 Moveable Plant 1.387 9 15 Purchases 239 10 i6 Sales 885 2 8 17 Stock-in-Trade, ist January 2,928 15 i8 Wages 95 II q 19 Interest and Discount 37 7 20 Rent, Rates, and Taxes 27 17 21 Depreciation 25 17 6 22 Bad Debts 76 3 2 23 John Cross, Capital 5,714 10 6 25 Do. Drawings 24 17 8 24 Henry Pike, Capital 3,724 15 26 Do. Drawings 64 4 C.B. I Cash in Office 127 17 10 H ,, Cash at Bank 597 18 10 £10,606 8 9 £10,606 8 9 Dr. (1) Ledger Accounts. W. Jones. Cr. Jan. 7 « 31 To Goqds „ Balance £ s d 49 12 o 9 13 7 £59 5 7 1888 Jan. I By Balance By Balance £ s d 59 5 7 £59 5 7 Dr. (2) Alton & Co. Cr. Jan. 3 „ 24 To Bill Payable „ Cash and Discount £ s d 105 o o 177 13 2 £282 13 2 Jan. I » 3 By Balance „ Goods £ s d 177 13 2 105 o o £282 13 2 Dr. (3) Ford & Son. Cr. Jan. 26 To Goods To Balance £ s d 90 o o £90 o o 4 6 Jan. I « 31 By Balance „ Balance £ s d 89 15 6 4__6_ £90 o o EXAMINATION PAPEBS. 68 Dr. (4) S. Green. Cr. Jan. 14 „ 30 To Bill Payable „ Goods £ s d 130 107 19 Jan. 14 u 30 £237 19 By Goods „ Bill Receiv- able £ s d 130 o 107 19 £237 19 o Dr. (5) Sundry Creditors. Cr. Jan. 20 . 31 To Cash „ Balance .. I £ s d 74 I 5 12 9 4 Jan. I « 31 By Balance . . By Balance I £ s d 86 10 9 £85 10 9 £■86 10 9 12 9 4 Dr . (6) H. Bland. Cr. 1888 Jan. I To Balance . . I 152 6 4 £152 6 4 1888 Jan. 24 „ 31 By Cash „ Bad Debt .. I 2 £ s d 76 3 2 76 3 2 £152 6 4 Dr. (7) A. Black. Cr. Jan. I » 2 To Balance . . , Goods To Balance brought down . . £ I 235 I 450 s d 9 I Jan. 2 » 27 n 31 By Bill Receiv- able „ Cash „ Balance car- ried down I I £ s d 450 200 35 9 I £685 9 I £685 9 I « 31 35 9 T Dr • (8) Stokes & Co. Cr. Jan. I To Balance . . I £ s d 73 5 6 ! Jan. II 1 By Cash and Discount I £ s d 73 5 6 Dr. (9) Sundry Debtors. Cr. Jan. I To Balance To Balance brought down . . £ s d 527 8 6 Jan. 28 » 31 £527 8 6 210 3 9 By Cash „ Balance car- ried down £ s d 317 5 9 210 2 9 £527 8 6 64 DOUBLE ENTRY BOOKKEEPING. Dr. (IC) H. NORRIS. Cr. Jan. i8 „ 23 To Goods „ Bill Receiv- able „ Cash I I I £ s d 55 10 172 3 9 I 6 Jan. 18 „ 27 By Bill Receiv- able , Cash I I £ s d 55 10 172 5 3 £227 15 3 £227 15 3 Dr. (11) Bills Receivable. Cr. 1888 Jan. I « 2 „ 18 „ 30 To Balance . . „ A. Black . . „ H. Norris . . „ S. Green . . To Balance brought dovrn I 1 I 2 £ s d 251 13 7 450 55 10 107 19 £865 2 7 1888 Jan. 23 „ 5 „ 31 By HenryNorris „ Cash „ Balance car- ried down I I £ s d 172 3 9 50 12 6 642 6 4 £865 2 7 » 31 642 6 4 Dr . (12) Bills Payable. Cr. Jan 9 12 31 To Cash and Discount „ Do. „ Balance car- ried down I I £ s d 72 10 39 7 6 235 £346 17 6 Jan. I „ 3 „ 14 « 31 By Balance „ Alton & Co. „ S. Green . . By Balance I I I £ s d III 17 6 105 130 :£346 17 6 235 Dr. (13) Plant and Fixed Machineby. Cr. Jan. I To Balance . . To Balance brought down . . I £ £ s 4,127 5 d Jan. 31 By Depreciation „ Balance car- ried down 2 £ £ s d 17 10 4,109 15 4,127 5 4,127 5 » 31 4,109 15 Dr . (14) Moveable Plant. Cr. Jan. I To Balance . . To Balance brought down I £ £ s d 1,395 16 6 Jan. 31 By Depreciation „ Balance car- ried down 2 £ £ s d 876 1,387 9 « 31 1,395 16 6 1,395 16 6 1,387 9 EXAMINATION PAPERS. 65 Dr. (15) Purchases Account. Cr. 1888 Jan. 3 „ 14 „ 24 To Alton & Co. „ S. Green . . „ Cash 1 I 105 130 4 10 1888 Jan. 31 By Trading Ac- count 2 £ s d 239 10 £239 10 1 £239 10 1 Dr. (16) Sales Account. Cr. Jan. 31 To Trading Ac- count 2 £ 885 s di 2 8 1 j Jan. 2 : .i „ 26 » 30 « 5 : .i u 20 n 21 By A. Black . . „ W.Jones .. „ H. Norris .. „ Ford & Son „ S. Green . . „ Cash „ Do. „ Do. „ Do. „ Do. I I I 2 2 I I I I I £ s d 450 49 12 55 10 90 107 19 18 10 8 3 I 6 21 II 6 37 4 c 51 14 £885 2 8 £885 2 8 Dr. (17) Manufacturing and Trading Account. Cr. Jan. I » 31 To Stock on hand „ Purchases . . „ Wages. .. „ Depreciation „ Profit and Loss To S t c k-i n- Trade .. I 2 2 2 2 £ £ s d 2,928 15 239 10 95 II 9 25 17 6 332 4 2 Jan. 31 By Sales „ Stock on hand 2 £ £ s d 885 2 8 2,736 15 9 3,621 18 5 3,621 18 5 » 31 2,736 15 9 Dr. (18) Wages Account. Cr. Jan. 7 H 14 „ 21 „ 28 To Cash „ Do. „ Do. „ Do. I I 1 I £ s d 27 15 24 I 9 21 10 22 5 Jan. 31 By Trading Ac- count 2 £ s d 95 II 9 £95 II 9 £95 II 9 1 Dr. (19) Interest and Discount Account. Cr. Jan. 31 To Sundries . . „ Discounts per C.B... 2 I £ s d 40 13 8 3 5 6 £43 19 2 Jan. 31 By Discounts per C.B... „ Profit & Loss Account.. I 2 £ s d 6 12 3 37 7 £'43 19 2 1 F 66 DOUBLE ENTRY BOOKKEEPING. Dr. (20) Rent, Rates and Taxes. Cr. ''.°- .1 To Cash „ Do. I I 12 7 6 15 9 6 ;f27 17 Jan. 31 By Profit & Loss Account.. 2 £ s d 27 17 £27 17 Dr. (21) Depreciation Account. Cr. Jan. 31 To Sundries . . 2 25 17 6 Jan. 31 By Trading Ac- count 2 £ s d 25 17 6 Dr, (22) Bad Debts Account. Cr. Jan. 31 To H.Bland .. 2 £ s d 76 3 2 Jan. 31 By Profit & Loss Account. . 2 £ s d 76 3 2 "~~"~"^ Dr. (23) John Cross, Capital. Cr. i888 Jan. i8 » 31 To Cash „ Balance I £ £ s d 250 5.834 16 8 1888 Jan. I « 31 n n By Balance . . „ Drawings Ac- count By Balance . . I 2 £ 5,964 10 6 120 6 2 6,084 16 8 6,084 16 8 5,834 16 8 Dr. (24) Henry Pike, Capital. Cr. Jan. I » 31 By Balance „ Drawings Ac- count I 2 £ £ s d 3.724 15 31 4 6 3.755 19 6 Dr • (25) John Cross , Drawings. Cr. Tan. 31 To Capital Ac- count 2 £ s d 120 6 2 Jan. 31 By Interest „ Profit, half share 2 £ s d 24 17 8 95 8 6 £t20 6 2 £120 6 2 i Dr. (26) EXAMINATION PAPEES. Henby Pike, Drawings. 67 Cr. Jan. 30 « 31 To Cash „ Capital Ac- count I 2 £ s d 80 31 4 6 Jan. 31 By Interest „ Profit, half share 2 2 £ s d 15 16 95 8 6 £111 4 6 £111 4 6 Dr. (27) Profit and Loss Account. Cr. Jan. 31 To Interest and Discount „ Rates and Taxes „ Bad Debts.. John Cross, half share net profit Henry Pike, half share net profit £ s 37 7 d 1888 Jan. 31 27 17 76 3 2 141 7 2 95 8 6 95 8 6 £332 4 2 "" By Trading Ac- count,gross profit £ s d 332 4 2 £332 4 2 Balance Sheet, 31st January 1888. Liabilities. Sundry Creditors :— On Open Account :— W. Jones ..£913 7 Sundry Accounts 12 9 4 On Bills Payable . , John Cross, Capital . . Henry Pike, Do £ s d 22 2 II 235 o o 5,834 16 8 3.755 19 6 9,847 19 I A ssets. Cash in ofl&ce . .£127 17 10 Cash at Bank . . 597 18 10 Sundry Debtors : — On Open Account : — Ford & Son . . 46 A. Black . . 35 9 I Sundry Accounts 210 a 9 On Bills Receivable Plant and Machinery Moveable Plant Stock-in-Trade £ s d 725 16 8 245 x6 4 642 6 4 ,109 15 o 387 9 o 736 15 9 F 2 68 DOUBLE ENTRY BOOKKEEPING. Exercise I. By the College of Preceptors. 1. — Write up the Cash Book, make necessary Journal entries, prepare Trial Balance, Profit and Loss Account and Balance Sheet. June 1. Cash in hand .. .. £82 10 „ Cash in .Union Bank . . 275 ,, Goods valued at .. .. 925 „ C. Beaumont owes me . . 57 10 £1,340 „ I owe Graham & Co 145 2. Sold P. Stanley, Goods . . . . . . 37 12 6 „ Bought of Graham & Co., Goods .. .. 175 15 „ Sold for Cash, Goods 59 14 10. Received from C. Beaumont, Cash . . 40 „ Sold W. Russell. Goods 45 10 „ Paid Graham & Co., Cash.. £100 And was allowed as Dis- count . . . . . . 5 105 „ Sold Goods for Cheque, paid in Union Bank 66 15. Sold for Cash, Goods .. ... .. 66 5 „ Bpught for Cash, Goods 73 15 „ Sold C. Beaumont, Goods . . . . 48 2 6 ,, P. Stanley has paid into my Bank Account 25 12 6 20. Paid Rates and Taxes 17 10 „ Sold W. Russell, Goods 52 10 „ Received from W. Russell, Cash £70 And I have allowed him as Discount . . . . 1 15 71 15 24. Paid into Bank 60 „ Paid Graham & Co., a Cheque on Union Bank for £150 And was allowed as Discount .. .. 7 10 157 10 „ Paid Rent of Business Premises, by Cheque on Union Bank. . .. .. 50 30. P. Stanley has become insolvent and pays 8s. in the £, and I have received for his debt 4 16 „ Paid Wages this month 12 10 „ Estimated value of Goods unsold . . 876 EXAMINATION PAPEKS. 69 Exercise II. By the College of Prece'ptors. 1. — Write up the Cash Book, make necessary Journal entries, prepare Trial Balance, Profit and Loss Account and Balance Sheet of the Imperial Coal Co., Limited, from the following transactions : — Jan. 1. Capital at Bank £10,000 „ 9. Purchase from Clay, Cross & Co., 3,000 tons at 15s 2,250 „ 11. Purchase from Butterly Co., 2,000 tons at 14s 1.400 „ 19. Purchase from Cannock Chase Co., 500 tons at 12s 300 „ 23. Purchase Premises, and pay by Cheque 2,500 „ 29. Pay by Cheque for Fitting up Premises 278 11 ,, 31. Paid by Cheque for Preliminary Expenses 450 9 Feb. 4. Forwarded to Clay, Cross & Co., Accept ance at 2 months 1,000 And Draft on Bank for . . . . 1,250 „ 11. Sell to H. Clarke & Co., 1.650 tons at 16s. 6d 1,361 5 „ 17. Draw from Bank 200 ,, 20. Forward to Butterly & Co., a Cheque on Bank for 1,200 Mar. 9. Sell to MacBean & Co., 1,250 tons at 17s. 6d 1,093 15 „ 11. H. Clarke & Co. forward their Accept- ance at 1 month for .. .. 1,000 „ 31. Pay Salaries and other Expenses . . 85 April 5. Forward to Cannock Chase Co., Cheque 200 ,, 7. The Bank pay Acceptance due to-day for 1,000 „ 12. MacBean & Co. forward a Cheque .. 893 15 And Acceptance at three months . . 100 „ 14. H. Clarke & Co's. Acceptance duly honoured 1,000 „ 30. Sell to Fitzwilliam & Co., 650 tons at 19s. 6d 633 15 May 11. Sell for Cash, 120 tons at 18s. 6d. . . Ill „ 24. Fitzwilliam cfe Co. forward Cheque .. 633 15 „ 31. Purchase from Cannock Chase Co., 620 tons at 14s. 6d 449 10 „ „ Lodge in Bank 1,400 June 30. Paid Salaries and other Expenses . , 64 9 3 „ „ Took Stock for Half-year, value on hand 2,700 70 DOUBLE ENTRY BOOKKEEPING. Exercise III. By the College of Preceptors. 1. — Write up the Cash Book, make necessary Journal entries, prepare Trial Balance, Profit and Loss Account and Balance Sheet from the transactions of Harry Clarke, as under : — June 1. 12. 15. 20. 29. 30. Gash in hand Gash at Bank Goods valued at T. Allen owes me £39 10 275 350 35 10 £700 „ I owe Bennett & Co 57 10 5. Sold A. Carter, Goods 30 16 „ Sold T. Allen, Goods 45 12 „ Sold for Cash, Goods 37 7 6 10. Beceived from A. Carter, Cash £30 And I have allowed his Discount . . . . 16 r^ 30 16 T. Allen has paid into my Bank Account 50 Bought for Cash, Goods 67 10 Sold A. Carter, Goods 24 15 Sold W. Freeman, Goods 48 5 Bought of Bennett & Co., Goods . . . . 56 16 Paid Bennett & Co. a Cheque for . . . . £100 And was allowed by them a Discount of . . . . 5 105 Received from W. Freeman, Gash . . 40 Sold for Cash, Goods 36 12 6 W. Freeman has become insolvent, and I have received for his debt a dividend of 10s. in the £ 4 2 6 Paid Rent of Warehouse, by Cheque . . 20 Paid into Bank, Cash 75 Paid Trade Expenses during the month 7 17 6 Estimated value of Goods unsold is . . 300 EXAMINATION PAPEKS. 71 EXEECISE IV. By the College of Preceptors. 1. — Write up the Cash Book, make necessary Journal entries, prepare Trial Balance, Profit and Loss Account and Balance Sheet, showing position of affairs of S. Bhnker on 31st May : — April 1. May 10. 30. 4. 15. 24. 30. 31. I have in hand Cash In Bank Goods valued at T. Ashton owes me.. £35 365 250 45 Goods I owe Mapleson & Co. Sold to K. Oakley, Goods Bought of Mapleson & Co. Sold to T. Bircham, Goods Sold Goods for Cash this month . . Received from R. Oakley, Cash £50 And I have allowed him a Discount of . . . . 1 5 Bought Goods for Cash . . Sold to T. Ashton, Goods . . Paid Mapleson & Co. a Cheque for And they have allowed me a Discount of . . £150 7 10 C. Bircham paid to rcjy Bank Account . . Bought Goods for Cheque. . Received from J. Ashton, Cash . . And his Acceptance at 3 months for . . Sold Goods for Cheque and sent it to Bank Paid into Bank, Cash Paid Cash for Warehouse Repairs Paid Clerk's Salary by Cheque on County Bank T. Bircham having failed, I received for his debt a dividend of 8s. in the £ Sold Goods for Cash this month Estimated value of Goods unsold £695 72 10 65 15 127 10 56 5 92 12 6 51 5 75 67 10 157 10 50 84 16 48 50 33 10 100 15 26 5 2 10 87 15 225 72 DOUBLE ENTRY BOOKKEEPING. EXEECISE V. By the College of Preceptors, 1. — Write up the Cash Book, make necessary Journal entries, prepare Trial Balance, Profit and Loss Account and Balance Sheet. Carter & Co. commence the year under the following con- ditions : — Jan. 1. They owe to E. Thomas £1,560 „ R. Brown owes them 420 They hold Merrion & Co.'s Bill in their favour for 300 „ „ Goods in hand, valued at 750 „ „ Cash in hand 2,000 „ Ca&h in Bank 1,000 „ 2. Forward to Bank the above Bill for collection 300 „ 3. Purchase from Simmons & Co., Goods . . 1,233 10 4. Pay Simmons & Co.— By Cash .. .. 77 By Cheque . . 500 By Bill, due Jan. 28, for . . . . 650 By Discount allowed 6 10 „ Lodge in Bank 1,200 8. Forward to R. Thomas, Cheque . . . . 560 „ And Acceptance at 3 months . . . . 1,000 11. R. Brown pays to Bank 400 18. Sell to R. Brown, Goods 260 10 „ Sell to S. Lush, Goods 170 10 „ Sell for Cash, Goods 86 10 20. R. Brown forwards me his Acceptance for 150 21. S. Lubh settles his Account, Cash . . 168 „ Discount 2 10 23. Sell to Baker Bros., Goods 978 10 „ Sell to R. Brown, Goods 338 10 25. Receive from Baker Bros, their Accept- ance at 1 month . . . . . . . . 478 10 26. R. Brown forwards me Cash . . . . 169 28. The Bank honour my Acceptance to Simmons & Co. for 650 31. Paid Month's Expenses, by Cash.. .. 96 10 „ Paid Rent by Cheque 87 10 ,, Goods on hand, valued at. . .. .. 400 EXAMINATION PAPERS. 7& Exercise VI. Civil Service Examination Paper. 1. — Write up the Cash Book and Journal, and prepare Trial Balance, Profit and Loss Account, and Balance Sheet. The following are balances brought down in J. Grey's Ledger, on December 3l8t : — Dr. Cr. Jan. 1. John Smich £115 2 9 „ W. Faber 31 5 6 „ Bank 490 9 8 „ J. H.Jones 7 11 2 „ Goods 75 10 „ W. W. Cooper & Co. . . £i65 4 „ Capital 222 10 „ Bills Receivable . . . . 38 7 2 „ Bill Payable 192 16 8 „ Cash 122 4 5 4. Bought of W. W. Cooper & Co., Goods .. •• .•• 315 ,, ,, Faber's Acceptance due this dav, paid at Bank . . 38 7 2 „ Sold W. Moffett, Goods . . 154 5 6 ,, 10. Received of W. Faber, bis Acceptance at 1 month . . 31 5 6 „ Received of W. Mofiett . . 154 5 6 „ Paid W. W. Cooper & Co., by Cheque .. .. 315 i^ess 7 i per cent 22 13 . 291 7 „ 15. Paid into Bank .... 250 „ Accepted Draft of W. W. Cooper & Co. at 3 months 465 4 ,, ,, Drew Cheque for Private Personal Expenses . . 50 ,, ,, Bought of Johnson & Co., Goods 105 17 2 „ 17. Sold J. Doubleday, Goods . . 11 15 9 „ 21. Sold R. Jameson, Goods . . 115 5 4 „ 24. J. & J. Smith's Draft, due this day, paid at Bank . . 122 16 8 „ ,, John Smith paid into my Bank Account . . . . 105 2 9 Less Discount . . . . 2 17 9 112 5 „ 28. J. H. Jones absconded bank- rupt ; his debt a total loss 7 11 2 ,, 31. Wrote off as provision for future Bad Debts . . 25 „ ,, Petty Expenses paid during month 17 11 „ Rent still due to J. Smart.. 10 74 DOUBLE ENTRY BOOKKEEPING. Exercise VII. Civil Service Examination Paper. On the 31st December 1884, A. Aubret starts business with a capital of £3,000 in cash at the Bank of London. On the 1st January 1885, he purchases the business, with the assets, stock, and habihties of J. Blackham, for which he pays £2,500. The Balance Sheet of J. Blackham, on the 31st December 1884, stood as follows : — To Goods „ Bills Receivable „ T. Williams „ C. Anthony £ s d 1,500 o o 250 o o 294 8 6 305 II 6 £2,350 o o By National Bank „ Bills Payable „ D. Wilkinson „ Capital £ s d 53 U 10 184 3 2 30 18 5 2,081 9 7 £2,350 The WasteJBook of A. Aubret contains the following trans- actions :— 1885. Jan. 2. 10. 12. 13. 20. 27. 31. Consigned to A. Fernandez, of Oporto, per steamship Walrus, on his account and risk, Goods valued at . . . . £800 Freight and Dock Charges on the above shipment 15 6 10 Bought of T. Joyce, Goods 123 18 Bought of C. Twist, Goods 82 5 4 Received of T. Williams, in part payment of his debt to J. Blackham, his Cheque 150 Allowed T. Williams for Discount . . 2 18 6 J. Blackham's acceptance to T. Moore, paid this day by cheque . . . . 150 Accepted draft of T. Joyce, at 1 month 123 18 PaidintoBank 100 Bought of S. Wortley, Goods . . . . 172 17 6 Accepted Bill of S. Wortley for . . . . 172 17 6 Paid Cash for freight on consignment . . 12 2 4 Paid Clerk's Salary due this day . . . . 10 302 18 6 93 16 2 422 3 4 1 18 6 305 11 6 123 18 EXAMINATION PAPEBS. 75 1885. Feb. 1. Bought of C. Twist, Goods 302 18 ,, Bought of T. Soper, Goods 7. Sold T. Joyce, Goods ,, Paid Carriage of same ,, 12. Drew Bill on C. Anthony in respect of his debt to J. Blackham „ 15. My acceptance to T. Joyce, paid at Bank ,, 20. Discounted with Samuel & Co., C. Anthony's Bill, and received their cheque on the London and County Bank Allowed Discount .. 25. Accepted C. Twist's Draft at 1 month ,, Paid C. Twist, by cheque . . Discount allowed by C. Twist 26. Received of A. Fernandez a cheque on the London and County Bank for £450, on account of my consignment to him . . 450 ,, 28. Charged T. Williams interest upon the balance of his debt to J. Blackham. . 15 „ Paid for Petty Office Expenses .. .. 3 2 1 Write up Cash Book and Journal, post all the transactions into the Ledger, inserting the proper folio references. Balance and close the Ledger, showing the Trial Balance, Profit and Loss Account, and Balance Sheet. Goods on hand valued at £917 17s. 2d. 803 10 2 1 6 300 83 2 3 10 76 DOUBLE ENTKY BOOKKEEPING. Exercise VIII. Society of Arts' Examination Paper. Write up, and post in proper technical language and form,, the following transactions, and make out from the Ledger a Trial Balance, a Profit and Loss Account, and a Balance Sheet :— On the Ist January 1882, John Rose, Cooper, was possessed of the following business assets : — Freehold Premises, valued at £3,000 Plant and Machinery . . 1,608 Stock-in-trade 2,410 19 2 Office Furniture 106 5 Cash at Bankers £915 1 6 and in Office 16 5 9 931 7 3 Bills receivable : — Ship Brewery Co., due Jan. 7 .. 281 6 6 R. Conway, due Jan. 19 .. . 174 10 J. Smith, due March 6 88 11 8 494 8 2 Book Debt« : — F. Stamp 251 3 8 C. Hart 113 5 364 8 8 8,915 8 3 At the same time he owed : — On Bills Payable : — S. Hill, due Jan. 4 150 P. Jones, due Jan. 12 219 u 405 To Creditors : — N. Hobbs 376 18 Stiff & Co 527 3 7 ■ 904 1 7 1,309 1 7 His transactions for the month were: — Jan. 1. Paid Stiff & Co. their account, less 2j per cent, for ca^h .. .. .. 514 „ ,, Sold Star Brewery Co., for net cash, 150 kildns., at 14s 105 3. Received of F. Stamp . . £245 ,, „ Allowed him discount .. 6 8 8 251 3 6 ,, ,, Paid Fire Insurance .. .. .. 57 13 4 Paid S. Hill's draft, due this day . . 186 ,, 5. Paid Office Expenses for week .. .. 10 5 6 „ „ Wages as per Wages Book .. .. 74 8 9 EXAMINATION PAPERS. 77 Jan. 7. 9. » 11. » 12. 14. Jan. 16. „ 18. „ 19. „ 20. »» >> i> >> 22. >> 23. 24. »> >» 26 >> 27. Received payment of Ship Brewery Co.'s acceptance . . Bought of Stiff & Co., Timber, per invoice Drev^ cheque for Office Cash Bought Hoop Iron of N. Hobbs, 3 tons at tl5 lOs Paid Office Expenses for week Paid Wages . . Paid P. Jones's bill, due this day Sold W. Stpcud & Co. :— 100 barrels at 21s. 6d. . . £107 10 200kildns. at 13s. 9d. .. 137 10 Drew on them for amount at 2 months : . . . . Paid Repairs to Boundary Wall . . Paid for Portable Steam Engine, delivered this day, per contract with W. Edleston £120 Less 5 per cent., as agreed. . 6 Paid Poor and Highway Rates . . R. Conway's acceptance dishonoured . . Paid Office Expenses Paid Wages . . . . Sold Trueman & Co. 750 casks, at 21s £787 10 Less 5 per cent. . . . . 39 7 6 Drew on them at 2 months for . . Received Cash to balance . . Paid N. Hobbs Received payment of R. Conway's dis- honoured bill and expenses Sold for Cash to W. Stroud & Co.— 350 barrels at 20s. . . £360 Less 5 per cent, discount . . 17 10 Received first and final dividend of 3s. in the £ on debt owing by C. Hart Paid Subscription to Hospital . . Paid Water Rate Bought for Cash of P. Loader, Coal, 40 tons at 12s. 6d. . . Paid Gas Company's Bill . . Drew Cheque for Office Expenses Sold H. Joyce (net) : — 200 hogsheads at 258. . . £250 150 kilderkins at 14s. . . 105 31. Received Cash Received Acceptance, due 30th March . . Paid Office Expenses for week Paid Wages, as per Wages Book . . Paid Midland Railway Carriage Account for month Stock of Goods on hand 231 6 6 357 11 6 30 46 10 11 15 82 19 219 245 :o 14 15 6 114 27 15 9 174 10 13 17 6 79 5 10 748 2 6 500 248 2 6 150 174 11 6 332 10 16 19 21 15 17 9 6 25 36 15 10 25 355 200 155 9 1 67 14 6 27 19 2,122 17 78 DOUBLE ENTKY BOOKKEEPING. Exercise IX. City of London College Paper. A. — James Key and William Read commence business in partnership on the 1st January, agreeing to divide profits equally. At the end of the year they value their stock-in-trade at £1,000, and produce the following Trial Balance. Prepare Balance Sheet and Profit and Loss Account, showing the state of their affairs at 31st December. James Key, Capital Account £1,000 William Read, Capital Account 1,000 Sales 6,500 Cash £300 Bills Receivable 750 Bills Payable 200 A. Brand 42 10 T. Keating 63 10 D. Lambert 228 10 G.Welch 95 W. Clarke . . 608 R. Carter 25 10 S. Harris 338 Bad Debts .. ... .. .. 83 Purchases .. ' .. .. .. 5,000 Rent, Salaries, and other Charges . . 492 James Key, Drawings . . . . 388 William Read, Drawings .. ,. 422 £8,768 £8,768 B. — Lambert, Welch and Clarke are in partnership, and have at credit of their respective Capital Accounts on the 1st January £3,000, £2,500, and £2,000. The partnership deed provides that each partner is to receive interest at 5 per cent, per annum on his capital, and that the profits are to be divided in the proportions — one-half, one-third, and one-sixth. After- EXAMINATION PAPERS. 79 deducting interest, the net profit on the year's trading was £1,700, and the partners' drawings were respectively £900, £600, and £500. Make up the partners' accounts so as to show the final Balances at the 31st December. C. — Write up the Cash Book and Journal from the fol- lowing transactions : — Jaa, 1. You buy 100 tons of Coal from George Washington, at 15s. per ton, delivered. ,, 5. You give George Washington your Promissory Note at 3- months for £75. ,, 6. You sell 80 tons of Coal to John Adams at 17s. per ton. „ 10. John Adams gives you his Acceptance to your draft at 3" months for £68. „ 21. You discount the £68 acceptance at your bankers, who credit your Current Account with £67 7s. 6d. in respect thereof. „ 22. You pay sundry charges for £15 by cheque on your bankers. „ 24. You buy 200 tons of Coal from George Washington, at 16s per ton. „ 28. You give George Washington your Promissory Note at 3- months for £160. Feb. 3. You sell 150 tons of Coal to Thomas Jefferson, at 168. 9d. per ton. „ 7. You receive from Thomas Jefferson his Acceptance to your draft at 1 month for £125 12s. 6d., which you discount at your bankers on the same day for £125 2s., placed to credit of your Current Account. April 8. Your Promissory Note due this day is paid by your bankers. „ 12. Adams's Acceptance is retired, he giving you a new one at 1 month for £68 7s., which you discount immediately,, getting credit at your bankers for £68 Is. D. — Show the following Ledger Accounts as posted from your entries of the transactions above recorded : — John Adams, Bankers' Current Account, and state what amount of profit you would have made — if any. •80 DOUBLE ENTRY BOOKKEEPING. ExEECISE X. Examination for County of Lancaster Commercial Exhibitions to Evening Classes, 1892. On June 30 1892 the books of Allen & Co. were closed with the following balances : — Cash in hand, £16 12s, 8d. ; Cash at bank, £138 12s. 4d. ; Stock of goods, £1,500 ; Business Premises, £1,200 ; Bills Eeceivable, £723 18s. lOd. ; Bills pay- able, £329 2s. 9d. ; Sundry debtors, viz. :— T. Davis, £83 3s. 8d. ; Mackenzie Brothers, £109 13s. 4d. ; Sundry creditor, viz. :— Wood & Co., £113 13s. 8d. N.B. — Cash in hand is to be kept distinct from cash at the bank. All cheques pass through the bank the same day. The following are the transactions of July : — July 2. Bought Goods from Wood & Go. . . £76 14 3 „ 3. Our acceptance, No. 13, due to-day, paid by Bank .. .. .. .. 143 13 4 „ 4. Discounted with Bank the following Bills — No. 19, Roberts & Co. . . £125 4 7 No. 20, James Phillips.. 203 3 2 328 7 9 Discount . . 17 1 327 8 6. Sold Goods to T. Davis . . . . 84 4 3 , 7. Amount of Watson & Co.'s acceptance, No. 17, due to-day, collected by Bank.. 229 9 2 , 8. Our acceptance, No. 14, due to-day, paid by Bank .. .. .. .. 185 9 5 , 11. Paid to T. Davis, by order, and for account of Wood & Co. (cheque) , 13. Bought Goods from Mackenzie Brothers. . , 14. Paid Mackenzie Brothers in full settle- ment of Invoice of Goods bought yesterday (cheque) . . , 16. Sold Goods to Davis & Co. , 17. Amount of J. Richards' Acceptance, No. 8, due to-day, collected by Bank . . 166 1 11 120 74 4 8 72 329 2 9 EXAMINATION PAPERS. 81 July 18. Sold a portion of the Business Premises, receiving cheque for . . . . 400 And invested the proceeds in Railway Shares costing . . . . . . 401 12 9 Pay for same by cheque. „ 21. Received from Mackenzie Brothers — Their Acceptance at 1 m/d . . . . £75 Cheque . . . . 25 Cash .. .. .. 9 13 4 « 109 13 4 ,, 24. Sold Goods to Davis & Co. .. .. 74 12 10 „ 27. Received from Davis & Co. (cheque) . . 100 And their Acceptance at 1 m/d . . .800 ,, 31. Bank received Dividend on Railway Shares (to be included in month's profits) 7 10 „ ,, Paid Office Expenses for ore month (Cash) 13 4 6 Write up the Cash Book, journalise the transactions, post the Ledger, take out the Trial Balance, close the books, making the necessary Journal entries, and draw up a Balance Account. Take goods on hand as worth £1,200. 82 DOUBLE ENTKY BOOKKEEPING. Exercise XI. City of London College Paper. On the 1st January 1882 John Atkins, previously a clerk in an underwriter's office, and whose assets consisted of £2,000 Consols, worth in cash £2,060, a house and land called Tithe- barn Place, valued at £4,000 (there being no liabilities), com- menced business as insurance broker and underwriter. He arranged with Ezekiel Abrahams & Co., merchants, that he should have all their orders for insurances, taking his brokerage on the premiums, and giving them the benefit of the discount at 10 per cent., which underwriters allow for monthly payments, and that their partners, Jonas Abrahams and Eli Moss, should employ him to underwrite in their names, each paying him £150 per annum certain, and one- third of the^rofits derived from their underwriting, after pay- ments of all losses and expenses, including interest at 5 per cent, on the capital they might provide him wdth in relation to such underwriting. In case of loss, one-third thereof, similarly ascertained, to be borne by John Atkins. All cash, save petty cash, is understood to pass through the Banking Account. 1882. Jan. 1. Received from Union Bank, advance of £1,000 on security of £2,000 Consols, the said sum being placed to credit of a Current Account opened with that Bank. „ ,, Drawn from Bank for petty cash . . £50 „ 15. Insured £6,000 on ship Amethyst at six guineas per cent., debited E. Abrahams & Co., insurance £378, and stamp £3 . . 381 „ „ Credited sundry Underwriters for SHid Insurance . . . . . . . . 359 2 And Brokerage .. .. .. J8 18 78 15 6 77 19 76 15 EXAMINATION PAPERS. 83 1882. Jan. 31. Premiums underwritten this month for sundry Brokers — On account, Jonas Abrahams On account, Eli Moss On account, John Atkins . . Feb. 10. Received from sundry Brokers for January Premiums, less 10 per cent, discount . . 210 2 7 ,, ,, Paid sundry Underwriters for Insurance per Amethyst . . . . .. 323 3 10 ,, ,, Allowed sundry Brokers Discount — On account, Jonas Abrahams . . 7 17 6 On account, Eli Moss . . . . 7 16 11 On account, John Atkins . , . . 7 13 6 ,, ,, Credited E. Abrahams & Co., Discount, de- ducted from sundry Underwriters' Ac- counts .. .. .. .. 35 18 2 ,, ,, Cash received of E. Abrahams & Co. .. 345 1 10 „ 25. Settled General Average wath Underwriters on ship Amethyst amounting to . . 83 7 8 ,, „ And credited same to E. Abrahams & Co. after deducting 1 per cent, brokerage, say, 163. 8d. „ 28. Premiums underwritten this month : — On account, Jonas Abrahams On account, Eli Moss On account, John Atkins ,, ,, Losses and Averages settled this month : — On account, Jonas Abrahams On account, Eli Moss On account, John Atkins ,, „ Returns settled this month : — On account, Jonas Abrahams On account, Eli Moss And credited sundry Brokers accordingly. Mar. 4. Received of Jonas Abrahams on account of his underwriting capital ,, ,, Received similarly of Eli Moss .. ,, 10. Drawn from Bank for Petty Cash ,, „ Paid E. Abrahams & Co. ,, „ Received of sundry Underwriters ^, ,, Paid sundry Brokers .. G 2 94 14 9 93 11 6 92 15 257 18 207 18 157 18 4 15 4 15 100 50 £0 82 11 83 7 8 379 5 : 10 84 DOUBLE ENTEY BOOKKEEPING. 1882. Mar. 10. 31. 8 17 9 5 Allowed sundry Brokers Discount : — On account, Jonas Abrahams On account, Eli Moss On account, John Atkins It appears that of £100 drawn out for petty cash, £78 had been spent for salaries and ofl&ce expenses, £3 for stamp, and there remained £19. Premiums underwritten this month : — On account, Jonas Abrahams On account, Eli Moss On account, John Atkins Averages settled this month : — On account, Jonas Abrahams On account, Eli Moss Returns settled this month : — On account, Jonas Abrahams On account, Eli Moss On account, John Atkins The discount of 10 per cent, on premiums less returns is to be credited to the brokers on the March business, and Jonas Abrahams and Eli Moss having been charged with the proper sums for three months' fixed charges, and interest having been computed on their capital to 31st March, £100 on each of the three underwriting accounts being carried forward as a pro- vision for unascertained losses, the balance of the respective underwriting accounts is then to be adjusted as per agreement. Interest at 3 per cent, to 31st March is to be computed on the Union Bank Loan, and the exact position of John Atkins on. 31st March thus ascertained. . 181 19 . 179 15 . 163 14 . 28 16 3 . 28 16 3 4 2 6 4 2 6 3 15 £3.000 1,350 150 1,520 EXAMINATION PAPEKS. 85 Exercise XII. Ufiion of Lancashire and Cheshire Institute's Examination, 1892. 1. — Write up the Cash Book and Journal. Post into Ledger. Prepare Trial Balance, Profit and Loss Account, and Balance Sheet. Assets. Cash at Manchester and County Bank . . Bill Receivable— No. 8, J. Marsh, due 6th March.. C. Wolland owes Sugar, valued at Liabilities. J. Wood, due to him . . . . . . . . 50 Bill Payable— No. 64, J. Shaw, due 31st March, accepted and payable at Bank . . . . 170 The interest of A. C. Brown in the above is £4,200, and he is to receive three-fourths of the profits, the remainder is to belong to David Wallace, who is to receive one-fourth of the profits and £250 per annum for salary. All cash and cheques are to be paid direct into the bank, and all payments are to be made by cheques on the bank. Capital and drawings to boar interest at 5 per cent, per annum. In the succeeding five months their transactions were as follows: — Jan. 1. Bought of Simon Wilson, 50 casks CoEfee £1,700 „ „ Paid Simon Wilson by Cheque . . 1,700 „ 2. Drew from Bank for Petty Cash . . 50 „ 10. Received advice from Langworthy & Co., Hong Kong, of their purchase, on Joint Account with ourselves, of 200 chests Tea, which they intend shipping per Queen Mary .. . . . . 1,502 10 „ ,, Insured on Tea, per Queen Mary, £1,500 at 70s. per cent, and stamp, with Thames and Mersey IMarine Insurance Company.. .. .. .. 52 13 9 „ 20. C. Wolland, paid by Cheque his debt .. .. £150 „ ,, Interest on same.. .. 10 150 10 86 DOUBLE ENTRY BOOKKEEPING. Jan. 25 Feb. 5. »» 8. „ 20. Mar. 8 „ 10 „ 31. Apr. 23. 30. May 29. , 30. Accepted Langworthy & Co.'s draft (with Bill of Lading of Tea, per Queen Mary, attached), No. 47, at 3 months' date. . Sold to W. Law, 25 casks Coffee for And received his cheque for the amount. Paid Thames and Mersey Marme Insur- ance Company, by Cheque £52 18 9 Less Commission allowed . . 5 5 9 Bought of S. Walls, for account of Winter & Co., Rotterdam, 1,500 bags of Sugar, and shipped per Lion Due to S. Walls for brokerage . . Manchester Ship Canal for shipping charges . . For insurance on 1,500 bags of Sugar, say, £1,400 at 5 per cent., with Thames and Mersey Marine Insurance Co. . . Our Commission Paid S. Walls, by Cheque Paid into Bank Bill Receivable, No. 8, due 6th March Received from Winter & Co., Rotterdam, Bill Receivable, No. 9, at 3 m/d, on King, King & Co. . . Manchester and County Bank paid Bill, No. 64, due this day A. C. Brown drew from Bank . . " Queen Mary " having arrived, we have retired our Acceptance, No. 47, with Bill of Lading Paid freight on our Joint Account Tea, per " Queen Mary,'' by Cheque Paid Landing Charges on same by Petty Cash Sold to Turner & Co., our 200 chests Joint Account Tea, and received their Cheque . . Made up our account of our Joint Account Tea, and charged for Commission . . Paid Rent of Office Paid Clerks' Salaries . . Paid Manchester Ship Canal Co. A. C. Brown's interest on Drawings A. C. Brown's interest on Capital David Wallace's interest on Capital Value of Coffee on hand Value of Sugar on hand 1,502 iO 950 47 8 1,200 6 2 16 5 70 25 1,226 2 1,350 1,250 170 60 1,502 10 95 25 1,890 35 75 90 16 5 8 4 87 10 33 6 8 940 1,520 EXAMINATION PAPERS. 87 Exercise XIII. Union of Lancashire and Cheshire Institutes' Examination, 1893. Up to 31st December 1892, James Midwood carried on business as a wholesale wine and spirit merchant on his own account. In recognition of the faithful services of his traveller, David Brice, he decided to take him into partnership as and from 1st January 1893, Brice to bring in £1,000 capital, and to be entitled to one-third of the profits each year, the part- nership to be carried on in the name or style of Midwood & Brice. On the Isl January 1893 the books of James Midwood showed the position of his affairs to be as stated below : — Assets : Cash at Bankers, £1,000 ; Cash in hand, £50 ; Port Wine, 5 pipes at £60, £300 ; Sherry, 6 butts at £50, £300 ; Dowley & Son, debt on open account, £450 ; Bills Receivable, No. 114, January 15th 1893, Wm. Bell & Co., £900; Total, £3,000. Liabilities, Hans Johnsen, £300 ; Thomas Buckley, £300; Bills Payable, No. 60, due January 12th 1893, J. Nooks, £500 ; Total, £1,100. Each partner's capital is to be credited with interest at the rate of 5 per cent, per annum before arriving at the balance of profit and loss. During the month of January the transactions of the firm were as follows : — Jan. 1. Brice paid into Bank Account of firm his portion of Capital £1,000 2. Sold to Dowley & Son, 3 pipes Port Wine for 210 ,, 3. Paid Cash for Dock Charges on 8 pipes Port sold yesterday . . . . . . 8 15 5. Bought 40 hhds. Brandy, at £40, from E. Liutott and gave him a Bill at 2 months, he allowing 2^ per cent. . . 1,600 31 25 41 2 5 25 88 DOUBLE ENTRY BOOKKEEPING. Jan. 8. Shipped per Annie, on Joint Account with ourselves and Harrison & Co., Liver- pool, each one-half concerned, 40 hhds. Brandy, invoiced at £50 .. .. 2,000 Received Debit Notes as below : — Insurance on Brandy . . Dock Charges . . Commission to Charles Kells & Co.. . 12.*J Paid Dock Company's Charges by Cheque Bank advise having paid Bill No. 60 this day 500 Received Cheque, crossed not negotiable, for £1,000, from Harrison & Co., being their half-share per ^wme ., .. 1,000 14. Paid Anglo Assurance Company, by Cheque, £31 Insurance on £2,400, at 25 per cent., on Brandy, per Amiie, for Sydney 31 „ 15. William Bell & Co.'s Bill, No. 114, for £900, returned dishonoured . . . . 900 „ ^^-Paid Cash for Noting Charges .. 3 6 „ '^old W. Scott, 4 butts Sherry for .. 270 ,, „< Received Cash £270, for Sherry sold to W. Scott, and paid to Bank . . . , 270 ,, „ Paid Cash £11 12s., Dock Charges on Sherry sold to W. Scott 11 12 ,, 31. Paid Trade Charges, £15, for expenses this month „ ,, Stock on hand — Port „ ,, Stock on hand— Sherry 15 125 110 EXAMINATION PAPERS. 89 Exercise XIV. Union of Lmicashire and Cheshire Institutes, 1897. On the 1st January 1897, the books of Godfrey Simpson showed the position of his affairs to be as follows : — Property and Assets : — (a) Business Premises . . . . . . . . . £500 (6) Wine in stock and bond . . Brandy ,, ,, (c) J. Wall, Open Account {d) Bills Eeceivable, viz. : — J. South T. North [e) Cash in hand. . (/) Cash in Union Bank of Manchester And Liabilities : — (a) Bills Payable, viz. : — J. Sandbach & Sons . . (&) W. Brown, Open Account . . (c) Godfrey Simpson, Capital . . 3,662 12 4 Eequirmg additional capital, David Scott was admitted into partnership as and from 1st January 1897. Scott introduced £2,000, which was paid to the credit of the partnership account at the Union Bank of Manchester on the 15th January 1897. Each partner to draw £20 per month. Simpson to have two-thirds profit and Scott one-third. Interest at the rate of 5 per cent, per annum to be allowed on the capital, and 5 per cent, per annum to be charged on drawings. Business premises to be depreciated at the rate of 5 per cent, per annum. £1,000 1,000 2,000 205 £200 152 r 352 52 10 553 2 4 3,662 12 4 •• • • 300 44 3,318 12 4 1897. Jan. 2. Bought additional Business Premises . . £200 „ Discounted J. South's Acceptance . 197 10 ,, ,, Discount 2 10 ,, 6. Bought Wine for Cheque . 342 10 90 DOUBLE ENTEY BOOKKEEPING. 189 7. Jan. 7 ,, 9 ,j 10 Sold Brandy for Cheque . . Bought Brandy from J. Black Drew Cheque from Bank for loan to Jno South Sold G. Green, Win Accepted G. Green's Bill, due March 16th 1S97 G. Green accepted our Bill at 2 m/d David Scott paid in his share of Capital to the Union Bank Received Cheque from J. Waii Allowed Discount Paid W. Brown, Cash Discount allowed by him Sold Brandy to J. Wilson . . Sold J. Wilson, Wine Received J. Wilson's Acceptance at 21 day Bought schooner Doljphin from J. Wall And paid Cheque for charges for bringing her from Newcastle to Manchester Paid Cash for repair to Dolphin Paid Cheque to 'J. Wall, Account (^ Dolphin /A^ccepted J. Wall's draft at 2 m/d, bein 31. balance of purchase money account o Dolphin Paid Trade Charges : — Salaries to Clerks by Cheque . . Gas, Water, and Coal by Cheque Private Drawings for the month, viz. : — G. Simpson . . . . £32 D. Scott 20 L. and Y. Railway Co.'s Account for carriage of wines and spirits during the month Effected an Insurance of Business Premises and Stock for £2,000, abd paid premium at 5s. per cent. To accommodate Mort & Sons, accepted J. Wallis's draft at 2 m/d for And charged them Commission and Interest.. Allowed G. Green £20 for loss of Wine through leakage . . Paid Cooperage, by Cheque Stock on hand, Wine Stock on hand. Brandy 845 400 100 500 300 200 2,000 200 5 40 2 240 800 1,0^0 2,000 25 12 10 1,000 1,000 30 3 10 52 15 100 1 10 6 20 2 10 6 200 350 EXAMINATION PAPERS. 91 Exercise XV. Scotch Leaving Certificate, 1896. Charles Mitchell, having purchased the iron foundry busi- ness of J. Strachan & Co., Aberdeen, finds his assets and liabihties, at 1st January 1895, to be : — Assets : Premises, £1,370 ; Manufactured Goods, £2,375 ; Pig Iron, £570 ; Sundry Goods (used in manufacturing), £335 ; Goodwill, £350 ; Town and County Bank, £4,500 ; Cash on hand, £50 ; Total, £9,550. Liabilities: Capital, £4,550; J. Strachan & Co., £5,000; Total, £9,550. He makes the following transactions : — 1895. Jan. 1. Paid J. Strachan & Co., to Account (by Cheque) £4,000 2. Cash lodged in Bank 30 ,, ,, Sold Ramsay & Taylor, Manufactured Goods, invoiced at . . . . . . 690 10 ,, 4. Sold A. Rutherford, Manufactured Good^, invoiced at 865 12 6 20. Purchased from J. Williamson k Co., Pig Iron, invoiced at .. .. .. 320 5 ,, 31. Purchased from William Crawford, Sundry Goods, invoiced at . . . . 125 6 8 Feb. 4. Received from Ramsay & Taylor . . 621 9 ,, ,, Discount allowed them .. .. .. 69 1 ,, ,, Received from A. Rutherford, to Account 100 ,, Above amounts received to-day, lodged in Bank 721 9 15. Sold Ramsay & Taylor, Manufactured Goods, invoiced at . . . . . . 422 7 6 ,, ,, Sold A. Rutherford, Manufactured Goods, invoiced at 270 2 6 „ 20. Purchased from J. Williamson & Co. Pig Iron, invoiced at . . . . . . 210 3 „ „ Purchased from Wm. Crawford, Sundry Goods 62 7 92 DOUBLE ENTRY BOOKKEEPING. 1895. Feb. 27. Paid for Kepairs to Premises (by Cheque) 23 9 6 28. Borrowed from A. Kinnaird, bearing interest at 5 per cent. . . ,, „ Same lodged in Bank ,, ,, Paid John Williamson & Co.'s January Account (by Cheque) „ „ Discount allowed by them. . Mar. 1. Paid J. Strachan & Co. (by Cheque) ,, 3. Paid Wm. Crawford his Account (by Cheque) . . ,, ,, Discount allowed by him .. ,, 31. Cheque drawn for Cash ,, ,, Paid Wages (in Cash) „ ,, Paid Insurance (in Cash) .. On the 31st March Charles Mitchell shows his goods on hand as follows :— Manufactured Goods, £1,341 3s. 8d. ; Pig Iron, £490 3s. ; Sundry Goods, £320 5s. Frame Journal entries for the following : — March 1st, allow J. Strachan & Co. interest on £1,000 for 2 months at 5 per cent. (£8 6s. ^cl.). 500 500 288 4 6 32 6 ,008 8 6 168 18 4 18 15 4 250 235 4 15 15 6 March 31st, allow for interest at 5 per Kinnaird, on £500 for 1 month, £2 Is. 8d. cent, to A. Write £50 off goodwill. Journal. Write up the Cash Book and Post all the entries to Ledger Accounts. Separate Ledger Accounts should be opened for each class of expenditure, viz., wages, insurance, &c. Frame a Profit and Loss Account (or a Trading Account and a Profit and Loss Account), and carry the balance to the debit or credit of Charles Mitchell's Capital Account. Then frame a Balance Sheet. EXAMINATION PAPERS. 93 Exercise XVI. Society of Arts, 1895 William Stokes and John Wright, silk mercers, had respectively capital, on 1st January 1895, £2,126 15s. and £1,850 10s., and their liabilities on that date were :— Bills Payable, No. 54 . . Bills Payable, No. 55 . . Samuel Grice, Open Account Philip Jones, Open Account Heiros & Co., Open Account Their assets at the samB time were Stock-in-trade, at cost price . Cash at Bankers Cash in Warehouse Bills in hand : — Holland & Joyce, No. 214 . Smith & Co., No. 125.. Broad & Hatton, No. 216 . Lease of Warehouse, valued at Fittings and Fixtures . . Consignments in the hands of town, invoice x^rices Book Debts :— William Robins Holland & Joyce King & Kerry . . Giobo & Co., Cape il78 10 220 14 6 285 7 10 338 8 6 468 13 10 2,648 11 9 497 10 6 106 5 9 176 9 4 108 10 201 5 5 500 124 845 107 15 4 56 17 96 14 7 Their transactions for the month are set forth below. You are required to record and post these in proper technical language, and, having balanced the accounts, to draw out Trial Balance, Profit and Loss Account and Balance Sheet, with profits and losses divided equally (after crediting 5 per cent, interest on capital), and carried to the Partners' Capital Accounts, All receipts are paid into the bank the same day, and all payments over £5, unless otherwise stated, are by cheque. 94 DOUBLE ENTRY BOOKKEEPING. Jan. 9. 11. 12. 13. )) 16. 18. 20. >» 21. 23. >> 21. n >> 26. >> >> 27. Sold Win. Robins, Goods as per invoice. . Paid Bill No. 55, due this day . . Received from Giobo & Co., Account Sales of Consignment in their hands, net proceeds, with bill for that amount due Feb. 17 Received Cash, Sundry Sales Paid Cash, Water Rate Received Payment, Bill No. 216 . Paid Cath, Fire Insurance Bought of Hieros & Co., Goods . Gave thf^m bill at 2 months Bill No. 214 returned dishnnourec Paid noting Paid Porters' and ]Messengers' Wages . . Sold Broad & Hatton, Goods per invoice Received Cash, Sundry Sales Paid Bill No. 54, due this day Paid Cash, Sundry Warehouse Charges . . Received of Holland & Joyce, for Bill and " Charges . . pbnsipned to Giobo & Co., at our risk and ^ account, Goods invoiced at Paid Freight, Insurance, and Charges thereon Bought of Philip Jones, Goods for bill at 2 months . . Sold Wm. Robins, Goods as per invoice. . Paid Samuel Grice (discount £10 7s. lOd.) Paid Cash, additional Warehouse Fittings Received of William Robins, Cheque Received of William Robins, Bill at 2 months Drawn out by William Stokes Drawn out by John Wright Received of King & Kerry, first and final dividend, 15s. Paid Cash, Porters' and Messengers' W^ages Sold Broad & Hatton, Goods as per invoice And received from them Cheque for £114 10 220 14 6 1,017 4 6 15 9 6 3 2 4 201 5 5 2 14 6 194 15 550 176 9 4 1 6 4 7 6 84 9 6 ■27 14 9 178 10 2 15 176 10 10 1,210 18 6 36 1 9 489 9 6 60 10 275 15 10 130 152 15 4 50 50 72 10 11 4 7 6 241 9 8 300 EXAMINATION PAPERS. 95 Jan. 28. Received of Holland & Joyce ,, ,, Received payment of Bill No. 215 31. Paid Cash, Warehouse Salaries for mouth ,, ,, Paid Cash, Postages and Parcels for month ,, ,, Credited William Stokes, Interest on Capital ,, ,, Credited John Wright, Interest on Capital ,, Stock on hand at this date ,, Depreciation of Fittings and Fixtures .. 56 15 6 108 10 17 14 16 3 8 17 2 7 15 10 1,915 5 9 3 1 6 96 DOUBLE ENTRY BOOKKEEPING. Exercise XVII. Society of Arts, 1890. Henry Fox, iron merchant, at January 1st 1890 had a balance at his banker's of £1,724 10s., and cash in office £85 16s. 4d. His bills in hand amounted to £704 7s. 6d., being Accept- ances No. 74, £186 17s. 6d. ; No. 76, £300 ; and No. 77, £217 lOs. Debts owing to him on open accounts were : By Joseph Ball, £58 19s. ; Thomas King, £275 18s. 4d. ; William Wright, £285 9s. 9d. ; and Henry Dale, £178 10s. He had also goods on consignment with Henry Poole, Smyrna, of the cost value of £680. His freehold business premises were valued at that date at £1,740, and his stock-in-trade at £2,876 15s. He had given acceptances, which were then current, as follows : No. 43, £281 10s. ;, No. 44, £250; No. 45, £140 16s. 8d. He owed on open accounts : To Sims & Co., £85 Is. 6d. ; Jones & Young, £41 17s. ; Percy Bright, £60 ; and John Kerr, £102 5s. 6d. Find and credit his capital. On the same date he admitted as partner Joseph Crane, who paid into the Bank Account £3,000 as his capital, to receive, in accordance with the deed of partnership, one-fourth of the profits, Henry Fox guaranteeing the debts then owing to the concern, and reserving a preferential claim to the extent of £50 on the first month's profits in respect of business previ- ously done. The further transactions of Fox & Crane for the month of January are subjoined. You are invited to arrange and post their accounts and draw out a Trial Balance, Profit and Loss Account, and Balance Sheet, with the results of their trading carried to their Capital Accounts. £780 81 4 1 6 175 10 186 17 6 EXAMINATION PAPERS. 97 All amounts for £5 or over were paid by cheque, all under that amount in cash, unless otherwise stated. All cheques received were paid into the bank the same day. Jan. 2. Bought of Sims & Co., for 4 months' bill, less 2^ per cent., 100 tons of Angles, at £8 3. Paid them Cheque ,, They allowed Discount ,, Sold Henry Dale, for prompt cash, less 2^ per cent., 20 tons Bars, at £9 . . 5. Received payment of Bill No. 74 ,, Sold Hugh Forbes, for 2 months' bill, 12 tons Fish Flates, at £8 96 6. Shipped on consignment to Henry Poole, Smyrna, 80 tons Angles, at £8.. .. 640 ,, Paid Freight, Insurance, and Charges thereon 56 2 9 ,, Debited Sims & Co., for short delivery Angles, 1 ton, 15 cwts., at cost. . . . 13 13 „ Paid Wages 450 8. Paid Fire Insurance on ofiBce and ware- house .. .. .. .. ., 350 „ Received payment Bill No. 77, due this day 217 10 10. Sold on commission, at 2s. 6d. per ton, for the Western Steel Co., to Joseph Ball, 70 tons Steel Rails, at £7 per ton, on 3 months' acceptance . . , , 490 ,, Endorsed and forwarded acceptance to Western Steel Co., debited them with commission . . . . . . . . 8 15 12. Bought of Percy Bright, 12 cwt. Rivets, at 22s „ Paid him ,, Discount allowed 13. Sold Hugh Forbes. 10 cwts. ^Rivets, at 25s. 6d. for net cash for 1 moath ,, Paid Wages .. 15. Received of Henry Poole, Smyrna, Account Sales and sight draft. . „ Received of William Wright, Cheque . . 13 4 70 3 4 12 15 4 5 750 6 8 280 96 DOUBLE ENTRY BOOKKEEPING. 100 2 5 6 2 12 6 's Cheque for 8 15 850 4 5 300 292 10 5 3 4 281 10 150 40 15 1 2 Jan. 16. Paid John Kerr „ ,, Discount allowed by him „ 17. Paid Water Kate .. ,, ,, Received Western Steel Co. commission ,, 18. Retired under discount acceptance given to Sims & Co., 2nd inst., for .. .. 768 10 „ 19. Sold William W^ght, for 3 months' bill, 100 tons Bars, at £8 10s. net . . „ 20. Paid Wages „ 22. Bought of Western Steel Co., 40 tons Steel Sleepers, at £7 10s. ,, „ Paid Cheque, less 2^ per cent, allowed . . 23. Paid Poor Rates ,, 25. Paid Acceptance, due this day, No. 43 .. ,, ,, Received of Henry Dale, Cheque on account ,, 26. Paid Jones & Young „ ,, Discount allowed „ 27. Received of Trustee of Thomas King, - r'^^ first and final dividend of 19s. in the £ 262 2 5 Debited loss hereon to Henry Fox's separate account . . .. ,. .. 13 15 11 „ Paid Wages 450 29. Received Account Sales, Sight Draft, and Stock Account from Henry Poole, Smyrna, Consignment . . . . . . 420 30. Paid Plumber's Account, warehouse roof . . ,, Paid Acceptance No. 44, due this day .. ,, Received Cash, sundry small sales 31. Paid Clerk's Salary Debited Depreciation of Premises and Furniture. . Value of Stock on hand— cost price ,, Value of Stock on consignment, Smyrna ,, Petty Expenses paid for month . . Credited Henry Fox, Rent of warehouse and office 10 0' 2 1 9 250 15 12 10 5 a ,346 7 4 338 4 6 4 13 8 EXAMINATION PAPERS. Exercise XVIII. 9.9 Society of Arts Exa7ninations. — Seco7id Examination, 1896. The following was the statement of affairs of Arthur Archer, wine merchant, on 31st January 1896 : — LiabiUHes. £ s d Assets. £ s d Bills Payable — No. 241, Stock in hand, in cellars, £187165.; No. 242, £150.. 337 16 and with agents, at cost . . 3,070 15 Overdraft at Bankers 213 5 Bills Receivable— No. 104, Concia & Co., Lisbon 824 17 6 £137 ; No. 105, £50 187 Druitt & Duse 596 10 Stock on consignment with Sundry Creditors .\. Archer's Capital . . 1,438 10 q Henry Hart, Montreal .. 874 10 6 4,364 2 6 Europa Club 185 6 Grant & Green 72 15 Sundry Debtors :— Agents r,i44 9 6. Trade Accounts 2,240 5 9 £ 7.775 I 9 r 7.775 I 9 On February 1st the business was transferred to Bruce Balfour on the following terms : — The capital, together with a premium of £800 for goodwill, to be paid on taking possession, in cash £1,664 2s. 6d,, and three promissory notes for £1,000, £1,000, and £1,500 at 3, 4, and 6 months, any of which might be retired at any time, less a rebate at 6 per cent., Balfour taking all the assets, with all profits and risks, and undertaking to discharge all liabiHties. You are required to open accounts for these particulars, to record and post the following transactions of Bruce Balfour, to balance the accounts, and finally to prepare a Trial Balance, Profit and Loss Account, and Balance Sheet. All receipts paid into bank the same day, and all payments, unless otherwise stated, by cheque. 1896. Feb. 1. Paid Cash into Bankers £3,000 Delivered to Arthur Archer, Cheque . . 1,664 2 6 Delivered to Arthur Archer, 3 Promissory Notes, Nos. 243,244, and 245 for £1,000, £1,000, and £1,500 3,500 100 DOUBLE ENTRY BOOKKEEPING. 1896. Feb. 1. Drew Cheque for office casli .. .. 50 3. Drew Bill, No. 106, at 3 months on Europa Club, which they accepted . . 150 „ ,, Sold Kirk & Co., Wines, as per invoice .. 72 10 ,, 4. Keceived Cash, sundry trade debtors collected, as per Cash Book .. .. 238 ,, 7. Paid Traveller's Commission and Expenses 14 „ Sold Kirk & Co., 10 cases Champagne . . 38 10 10. Accepted Concia & Co.'s Bill at 3 months 700 „ Paid them Cheque 124 17 6 ,, 12. Received from Henry Hart Account Sales of consignment, with sight draft net proceeds . . . . . . . . . . 936 17 6 „ 15. Paid Local Board Rates 8 14 „ ,, Paid Law Costs, Transfer of Business . . 23 6 8 „ 18. Received Payment of Bill No. 104 . . 137 „ ,, Sold Lord Lingrove, Wines as per invoice 185 „ 19. Received of Kirk & Co., Cash . . . . 109 Allowed them Discount . .. .. 2 Shipped on consignment to Henry Hart, Wines at cost 742 Paid Shipping Charges, Freight and Insurance.. .. .. .. .. 18 12 6 „ 21. Sold Europa Club, 10 cases Claret at 45s. 22 10 „ 25. Paid ofi Bill No. 245, under rebate . . 1,461 10 „ ,, Accepted Druitt & Duse's draft at 3 months 500 „ 28. Paid Bookkeeper and Month's Wages, office cash 28 9 4 Mar. 1. Received of Henry Hart on account con- signment . . . . . . . . . . 450 ,, „ Received of sundry agents Cash as per Cash Book 284 „ 3. Bought of Nuelli & Co., 10 pipes Port for bill at 4 months 580 „ 5. Sold sundry Wines, as per Day Book . . 421 5 ,, 7. Paid sundry Trade Creditors, as per Cash Book 356 10 „ 9. Received of Ochoa & Co., Wines on con- signment . . . . . . . . . . 746 15 ,, „ Paid Dock Charges . . . - . . . . 5 9 6 50 1 6 20 81 15 EXAMINATION PAPERS. 101 1896. Mar. 12. Rose's Bill, No. 105, returned dishonoured and noting ,, Drew Cheque for office casu 15. Sold Lord Lingcove, further Wine 17. First and final dividend, 17s. 6d. in the £, from Grant & Green 63 13 2 18. Sold out of Bond goods consigned by Ochoa & Co 825 ,, Charged Commission 5 per cent... .. 41 5 „ Remitted them 7 days' draft in settle- ment 778 5 6 20. Bought of Druitt & Duse, 40 cases Champagne 22. Paid Bill No. 241 ,, Received Cash, sundry agents ,, Received Cash from R. Rose for bill and expenses . . 24. Sold Europa Club, for cash, Wines ,, Received Cash, sundry trade accounts . . 26. Bought of Nuelli & Co., Claret . . ,, Claimed on them for ullage (leakage) of Port, claim allowed „ Paid them Cheque . . ,, Discount allowed .. 80. Paid Month's Wages and Petty Expenses, office cash. . 31. Paid Quarter's Rent, offices and cellars. . ,, Stock-in-Trade. valued at cost 120 187 16 203 5 50 1 6 39 15 234 7 4 78 10 5 69 11 6 3 18 6 29 6 6 25 341 4 6 102 DOUBLE ENTKY BOOKKEEPING. EXEECISE XIX. Society of Arts' Examination, 1894. The following shows the state of affairs of Messrs. John and Joseph Tough, ironwork contractors, at January 1st 1894, followed by a record of their transactions during the month. You are required to arrange and post these transactions to proper accounts opened in the Ledger, and having balanced them to draw out a Profit and Loss Account, Trial Balance, and Balance Sheet, to credit each partner with 5 per cent, interest on his capital, and carry the amount of the profit or loss in equal shares to their respective Capital Accounts, x\ll payments over £5 by cheque, unless otherwise stated ; all under that amount in coin ; all receipts paid into bank same day. Liabilities. — Capital : John Tough, £13,057 14s. Id. ; Joseph Tough, £15,960 Is. 6d. Sundry Creditors: Peter Jones, £923; John Smith, £1,027 16s.; Henry Brown, £450. Bills payable. No. 391, £1,000; No. 392, £850 10s. Instal- ments received on Current Contracts : No. 124, Wessex Bridge, £960; No. 125, Mercia Tanks, £1,845; No. 126, Cantia derricks, £2,460. Mortgage on Premises, £15,000. Assets. — Freehold Works valued at £26,000; Plant, Machinery and Polling Stock, £5,280 ; Cash at bankers, £2,456 Is. 9d. ; Cash in office, £84 7s. 4d. ; Bill receivable. No. 248, £365. Sundry Debtors- — Value of work done : No. 124, Wessex Bridge, £1,530 2s. 9d. ; No. 125, Mercia Tanks, £3,160 10s. 4d. ; No. 126, Cantia derricks, £5,130 12s. 8d. : No. 127, Devonia Viaduct, £815 10s. Stocks of materials on hand, £6,241 17s. 6d. Jan. 1. Bought of John Smith, 100 tons Plat* s at £7 £700 2. Paid him Cheque 1,200 ,, Paid him Bill at 2 months .. .. 500 3. Paid Rates and Taxes 31 17 6 3G5 1,000 4 16 32 1 6 EXAMINATION PAPERS. 103 Jan. 4. Received payment, Bill No. 248 . . ,, 6. Received Instalment, Contract No. 125. „ ,, Paid sundry Petty Expenses ,, ,, Paid Fire Insurance ,, 8. Took Contract for Anglia girders, No. 128, £1,250. 9. Paid Bill No. 392 850 10 ,, ,, Bought of Peter Jones, for cash, 45 cwts. Rivets at 32s 72 ,, ,, Material supplied to date : — Contract No. 124, £248 15s. ; Contract No. 125, £132 7s. 6d. ; Contract No. 127, £315 9s. 8d. ; Contract No. 128, £264 7s. 6d. 11. Received of Thomas Tiger, Cheque . . 400 ,, 12. Contract No. 126, completed and passed, and balance of contract received . . 3,500 ,, ,, Partners' Drawings : John Tough . . 500 ,, „ Partners' Drawings : Joseph Tough . . 500 ,, 13. Bought of Henry Brown, for 2 months' bill, 50 tons Angles at £7 10s 375 ,, ,, Drew Cheque for Wages this day :— Con- tract No. 124, £222 6s. ; Contract No. 125, £107 5s.; Contract No. 126, £5 16s. 6d. ; Contract No. 127, £128 18s. 6d. ; Contract No. 128, £52 3s. 4d. 16. Paid Henry Brown 430 Discount allowed . . . . . . 20 „ 17. Received of Edward Eagle .. .. 1,200 Allowance on settlement . . . . 15 10 ,, 18. Received Instalment on Contract No. 124 500 ,, 21. Bought of Stephen Spicer, Timber as per invoice . . . . . . . . . . 142 3 6 22. Received Instalment, Contract No. 128 . . 350 G 23. Received Cash, Sundry Sales .. .. 18 1 G „ 24. Partner's Drawings, John Tough . . 150 ,, „ Paid Peter Jones 500 25. Paid Bill No. 391, due tbis day . . . . 1,000 ,, ,, Received of Thomas Tiger, Bill at 3 months 841 3 6 104 DOUBLE ENTRY BOOKKEEPING. Jan. 26. Paid Stephen Spicer 140 Discount allowed 2 3 6 „ 27. Drew Cheque for Wages paid this day:— Contract No. 124, £125 19s. 4d. ; Con- tract No. 125, £22 lis. ; Contract No. 127, £173 78. lid. ; Contract No. 128, £230 4s. 4d ,, ,, Keceived net proceeds, sale by auction of loose plant, Contract No. 126, value in books £350 186 15 Paid Office Salaries for month '.. .. 27 10 ,, ,, Received Instalment, Contract No. 127 1,000 „ 28. Contract No. 125 completed and passed. Final Balance due £2,100, Instalment received 1,650 „ 29. Paid half-year's Interest on Mortgage . . 300 „ 31. Materials supplied to date: — Contract No. 124, £831 15s. ; Contract No. 127. £463 10s. ; Contract No. 128. £159 17s. 6d. Paid Water Rate 10 4 6 Paid Inspector's Fees, Contract No. 125 31 10 Paid of! Mortgage 2,000 Depreciation of Buildings.. .. .. 54 10 Depreciation of Plant and Machinery . . 24 6 Credit John Tough, Interest on Capital. . 54 4 Credit Joseph Tough, Interest on Capital 65 15 3 Stock of Materials on hand . . . . 4,822 16 8 ACCOUNTANCY BOOKS. COMPARATIVE DEPRECIATION TABLES. Price IS. net. By Lawrence R. Dicksee, M.Com., F.C.A. Containing a full set of Tables, showing the practical effect of providing for depre- ciation on the Fixed Instalment and the Fixed Percentage methods, and discussing their respective advantages. DEPRECIATION, RESERVES, AND RESERVE FUNDS. Price 3s. 6^/. net. 80 pages. By Lawrence R. Dicksee, M.Com., F.C.A. This Work — which is Vol. XXVI. of " The Accountants' Library" series — deals fully and impartially with the most Debatable and Important Subjects in connection with Accounts. It is divided into Twelve Chapters, with a Complete Index, and is the most Exhaustive Work upon the subject that has yet been issued. ELECTRIC LIGHTING ACCOUNTS. Price 5s. net. Over 140 pages. By George Johnson, F.S.S., F.C.I. S. This Work— which forms Vol. XXIX. of " The Accountants' Library "—deals very fully with the Accounts of Electric Lighting Companies. It is divided into r8 Chapters, and contains a set of pro forma transactions. With a complete index. EXAMINATION GUIDES.— INTERMEDIATE AND FINAL. Price 3s. 6^. and 55. net respectively. By John G. Nixon, Junr., A.C.A. These Books have been compiled in order to provide Accountant Students with a series of the Questions actually set at the Examinations of the Institute. The Questions and Exercises include practically all those set from December 1893 to June 1903, and have been divided into sections. They have been arranged, according to subject, in alphabetical order; the dates when they were set being also given. EXECUTORSHIP LAW AND ACCOUNTS, Second Edition. Price 7s. bd. Revised and brought up to date by Frederick Whinney, Junr., B.A., Barrister-at-Law, assisted by Arthur P. Van Neck, M.A., Barrister-at-Law. Containing an Epitome of a Will and a Set of Executorship Accounts. By Arthur F. Whinney, A.C.A. EXECUTORSHIP ACCOUNTS. Third Edition. Price 3s. 6rf. net. Revised under the FINANCE ACT and brought up to date. By O. H. Caldicott, F.C.A. Containing a COMPLETE SET of TRUST ACCOUNTS with explanatory text. EXECUTORSHIP ACCOUNTS, STUDENT'S GUIDE TO. About 124 pages. Price 3s. 6i. net. By Roger N. Carter, A.C.A. (Senior Honours Institute Examination, June 1893), Joint Author with Mr. Adam Murray, F.C.A., of " A Guide to Income-Tax Practice." 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Containing a Summary of the various Enactments relating to Income-Tax ; Instruc- tions as to the preparation of Returns for Assessment and Accounts in support of Appeals on the ground of over-assessment ; also for claiming Exemption and Abate- ment; and a concise popular digest of the principal legal decisions on the construction of the Acts, JEWELLERS', SILVERSMITHS', & KINDRED TRADERS' ACCOUNTS. 170 pages. Price 55. net. By Allen Edwards. This Work deals fully with the Accounts of Manufacturing, Wholesale, and Retail Jewellers, and is clearly and concisely illustrated by upwards of fifty Forms, specially drawn up for the Work. In the preparation of the book the Author has had the advantage of the assist- ance of leading Manufacturing Jewellers, Silversmiths, and Electro- Platers in Birmingham. MUNICIPAL ACCOUNTS. Price los. 6d. net. 200 pages. By John Allcock. In this Volume the entire system of Bookkeeping and checking of Municipal Accounts is dealt with, and facsimiles of all Books and Forms recommended are given. MUNICIPAL INTERNAL AUDIT, A. Price 3s. 6d. net. 150 pages. By Arthur Collins, This Work will be found to be of especial importance to Municipal Financial Officers, Auditors of Municipal Accounts, Students of Municipal Accountancy, and members of the Profession engaged in the keeping and Audit of Municipal Accounts. PARTNERSHIP ACCOUNTS. Third Edition. Price 2s. 6d. net. By Percy Child, A.C.A. The principal headings and sub-headings of the work are — The Parole Agreement— The Agreement by Deed— The Partnership Act and the Deed — The Opening of Partnership Accounts — The Partnership Transactions — The Dissolution — An explanation of Partnership terms. PUBLISHERS' ACCOUNTS. Price 25. 6d. By Clarence E. Allen, This Book deals fully with the nature and practice of the Publishing Business the method of recording the Transactions, and the points to be noticed in connec- tion with the Audit and the Treatment of Copyright, RETAIL TRADERS, ACCOUNT BOOK FOR. Price 5s, 112 pages. (Foolscap folio,) Compiltd by W. G. Day, A.C.A., A.C.I.S. This Book will be found very useful for small Traders, such as Drapers, Hosiers, &c., especially those doing a Cash business. Many Traders who have no time or inclination to adopt a proper system of Bookkeeping by Double-entry, will find no difficulty in entering up their Cash transactions in the form provided. SOLICITORS' ACCOUNTS. Price 3s. 6d. net. By Lawrence R. Dicksee, M.Com., F.C.A. This Volume is designed to meet the requirements of either large or small practices. The system of Accounts advocated is clearly described, and numerous alternative methods, suitable under various circumstances, are fully dealt with. The work contains a fully worked out set of pro forma transactions, illustrating the correct method of keeping each book described, 34 MOORG ATB ;LSTREET, LONDON, E.G. ACCOUNTANCY BOOKS. YC 25253 STAMP DUTIES & RECEIPTS, HAND-BOOK TO. Price2s.6rf.net. 52 pages. By H. Lakin-Smith, A.C.A. The Book contains a full discourse upon " Receipts," particulars of the duties and fees payable upon the Registration of Companies, the Death Duties, and, generally, the rites and particulars of all the more important Stamp Duties now in force. STOCKBROKERS' ACCOUNTS. Price 3s 6d. net. By W. D. Callaway, Chartered Accountant. The unique system of Dealing and Accounting that obtains on the London Stock Exchange is fully explained in this book, which also contains a Glossary of Stock Exchange Words and Phrases, a comprehensive Index, and an Appendix. STUDENT'S GUIDE TO Price ' This Work gives a description of *' profession, and the best means of se' the Student the means of empl' advantage. /- DOUNTANCY, THE. ts offered by Accountancy as a ■ance thereto, and points out to during his articles to the best TRAMWAY BOOK^ IDS. 6d. net. By Donald (Triple Number) of " This work is based upr in the Glasgow Corpora' s ervice to Tramway C America. The entir' facsimile of all i\v k ACCOUNTS. Price orporation Tramways). Vol. XV. -IBRARY." ip-to-date methods in operation t, and will be of considerable in Tramways both here and in clearly and fully described, and .ded are given. TRIAI This effic' ar'' t' HT^ \>! if>J^ >OK, THE " HANDY." ->. per doz. '..•-■" ' J. view to meeting the modern demand for (^> .ne Counting House. The Account Headings allowed for extraordinary Headings, so that all ^ct Balance is to fill in the figures. The scheme Ade to embrace all kinds of Businesses, and the Itself. . %- • • TRUSTEES IN BANKRUPTCY AND LIQUIDATORS OF COMPANIES, A LEXICON FOR. Price, 3^. 6d. net. By Sidney Stanley Dawson, F.C.A., Fellow of the Roy'al Statistical Society. (of the firm of Dawson, Langley & Chevalier, Liverpool). Author of "The Accountant's Compendium." There is no other existing work dealing exclusively with the Rights and Duties of Trustees in Bankruptcy and Liquidators of Companies to which Practitioners can refer for detailed information upon the numerous points which arise in connection with these offices. Authority is quoted for practically every line in the work. TRUSTEES IN BANKRUPTCY, LIQUIDATORS AND RECEIVERS, THE LAW OF. Price ss> net By W. R. Willson, B.A. Oxon., and of the Middle Temple, Barrister-at-Law. Being a succinct statement of the law on those subjects as established by the latest Statutes and Decisions, written analyticallv for Students with a view to the Examinations of the histitute and Society of Accountants. WATER COMPANIES' ACCOUNTS. Over 80 pages. Price 3s. 6d. By Frank Key, A.S.A.A. This Work— which forms Vol. XIX. of "The Accountants' Library" series- deals at length with the Accounts of Water Companies, and describes the various necessary books. The system advocated is illustrated by full pro forma Accounts and extracts from the Acts of 1847 and 1902 are appended. AUTHORS' WORKS PRINTED AND .PUBLISHBD.