Modern Bookkeeping Accounting and Business Practice A Book Containing a Thorough and Practical Course in Modern Methods of Bookkeeping and Accounting, Illustrating the Best Business Practice. Prepared for the Use of Students Attending Business Colleges, High Schools, Normal Schools, Academies, and the Higher Grades of Public and Private Schools. BY S. IRVING STRAYER AND H. WINFIELD WRIGHT, LL.B., C.P.A. Member of Pennsylvania Institute of Certified Public Accountants, The American Institute of Accountants, and American Association of University Instructors in Accounting. PUBLISHED BY THE MODERN TEXT BOOK COMPANY PHILADELPHIA 1918 -5 £ COPYBIGHT 1918 BY S. Irving Strayer MA/N LIBRARY A/kJ/Ll Modern Bookkeeping, Accounting and Business Practice. This book contains a carefully graded series of lessons in Bookkeeping, Accounting and Busi- ness Practice. The lessons aie made so plain and are illustrated so fully that even a child can understand them. Any person of average intelligence, without any previous knowledge of Book- keeping can become a fully competent double entry bookkeeper by mastering these lessons, pro- vided he is proficient in Arithmetic and Penmanship or makes himself proficient in these subjects. In order that the student may easily and quickly acquire a practical working knowledge of Double Entry Bookkeeping, he is taught the principles in the following order: First. How to keep the Cash Book; — when to debit cash, when to credit cash, what explana- tions to use; how to balance cash daily, how to open and keep a bank account, and how to reconcile the bank balance. Second. When to debit and when to credit Personal accounts, Property accounts, Expense accounts, and the principle of Double Entry Bookkeeping. Third. How to keep the Journal ; what to enter in the Journal and what in the Cash Book ; how to Post; how to take a Trial Balance; the proper forms of Bills or Invoices and Statements; the importance of Collections and how to make them. Fourth. How to Open a New Set of Books and how to keep Stock accounts. Fifth. How to keep Private accounts; the Loss and Gain account; how to make up a Six Column Statement; and how to Close a Set of Books. Sixth. About Notes and Drafts; how to keep a Bills Receivable account and a Bills Payable account; how to keep the Bill Book; how to keep an Interest and Discount account. Seventh. About the indexing of the Ledger, the arrangement of accounts in the Ledger, the use of a General Ledger, a Sales Ledger and a Purchase Ledger. Eighth. About the use of Columnar Books; the use of a Sales Book, an Invoice Book, and a Petty Cash Book. Ninth. About the subdivision of the Merchandise account; — the Merchandise Purchases account; the Cash Discount on Purchases account; the Purchases Returned account; the Freight Inward account; the Merchandise Sales account; the Cash Discount on Sales account; the Sales Returned account and the Freight Outward account. Tenth. About Partnerships, Leases, and Fire Insurance. Eleventh. How to keep Controlling accounts; how to use the Bill Book as a book of original entry. Twelfth. How to keep books by Single Entry and how to change books from Single Entry to Double Entry. Thirteenth. How to do bookkeeping for a Commission business; about Shipments and Con- signments; the use of the Receiving Book, the Consignment Ledger, the Customers Ledger, the General Ledger, and the Account Sales. Fourteenth. Corporation bookkeeping; Capital Stock account; Unissued Stock account; Subscribed Stock account; Subscribers account; Treasury Stock account; Undivided Profits account; Dividend account; Surplus account; the Minute Book; the Stock Ledger; the Dividend Book. Fifteenth. The Voucher System, with forms for the Voucher Book and the Voucher Register. Sixteenth. Profit and Loss Statements and Balance Sheets. 3 405336 4 :'\':WoiiXR^l BOOK KEEPING, ACCOUNTING AND BUSINESS PRACTICE. Seventeenth. Cost Accounting; the Per Cent method; Rate Calculations. Eighteenth. Auditing . The book contains data for a sufficient amount of practice in the art of bookkeeping to develop efficient bookkeepers. The methods of Bookkeeping and Accountancy illustrated and taught, are those in use at this time by the best Certified Public Accountants. - A knowledge of the best business practice is imparted to the student in these lessons and this training will be helpful in preparing anyone for an administrative position. The fact that one of the authors of this book has been for the past twenty-five years the head of what is today one of the largest business schools in the United States, and that -the other author is a practicing Certified Public Accountant under the laws of the State of Pennsylvania, guarantees the quality of the instruction contained in it. Bookkeeping. 1 . Bookkeeping consists of keeping a properly classified, accurate record of all of the business transactions performed in the business for which the books are kept. 2. Double Entry Bookkeeping is a system of bookkeeping in which there are two entries — a debit and a credit — equal in amount, for every transaction. 3. Single Entry Bookkeeping is a simple system of bookkeeping in which there is only one entry for many of the transactions. The Cash Account or Cash Book. 4. In keeping a Cash Account or a Cash Book, whenever cash is received you mark it down on the left-hand side of the account or left-hand page of the Cash Book and whenever cash is paid out you mark it down on the right-hand side of the account or right-hand page of the Cash Book. See illustration on pages 10 and 11. 5. The left-hand side of all accounts is always called the DEBIT side and whenever you mark anything down or make an entry on the left-hand side of an account, you are said to debit that account. The right-hand side of all accounts is always called the CREDIT side and when- ever you mark anything down or make an entry, on the right-hand side of an account, you are said to credit that account. 6. In making entries in a Cash Book, the date is put in the date column, the amount is put in the money column and whatever explanation may seem necessary or desirable is put in the explanation column. The usual explanation on the debit side of the cash book is the name of the person from whom the cash is received and some explanation such as "On Account" or "In Full" or "Bill of (date of bill for which payment is received)" or the name of the account that is to be credited, as "Mer- chandise," and some explanation such as "Cash Sales" or the name, or a description of what is sold. The usual explanation on the credit side of the cash book is the name of the person to whom the cash is paid with some explanation such as "On Account," "In Full," or "bill of (date of the bill paid)" or the name of the account that is to be debited, as "Merchandise" or "Expense," and some explanation, such as an enumeration of the articles purchased or of the expenses paid. See illustration on pages 10 and 11. 7. Checks, Post Office Money Orders, Express Money Orders, Bank Drafts and Sight Drafts are considered and entered as cash. For information about checks, post office money orders, express money orders, bank drafts and sight drafts, see pages 16 to 19. 8. If the cash account is debited at the start for all cash on hand as it always should be, and then is debited for all cash received and is credited for all cash paid out, the difference be- tween the debit and credit sides of the cash account will always be the same as the amount of cash on hand. For method of proving cash, see article 13. 9. Whatever money we have on deposit in bank is counted as part of our cash on hand just the same as though we had it in our own cash drawer or had it locked up somewhere for safe keep- ing. In view of this fact we do not make any entry in our cash book when we deposit money in bank, but simply add the amount of the deposit to the balance already in bank as shown by the record on our check book stub, or by the record of our balance in bank wherever we keep such record. 6 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. When we give a check, it is just the same as though we paid out the amount of cash for which the check is drawn, since the bank pays out that much of the money we have on deposit with it, and therefore an entry must be made in our cash book for every check we give, and the amount must be deducted from the balance on deposit in bank, which is generally shown on the check book stub. Study carefully the instruction given in articles 14 to 28 inclusive, relative to checks, post office money orders, express money orders, bank drafts, sight drafts, opening a bank account, endorsements and receipts. See page 16. 10. When you know what has been taught thus far, and have studied articles 14 to 28 in- clusive as directed, turn to exercise No. 1 and think how you would make the entry for each trans- action give in that Exercise. Immediately after deciding how you would make the entry for each transaction, turn to the illustration on pages 10 and 11, and see whether the transaction is entered on the page, and in the manner, you thought it should be entered. If you find that you have made any mistake as to the page on which the entry should appear or as to the proper form for the ex- planation, study articles 4, 5 and 6 over again until you are sure that you know what is taught in them, then try again. Follow this plan until you can tell without looking, on which page each entry should appear and what the form of the explanation should be. 11. After you have examined the transactions in Exercise No. 1 as directed, turn to page 7, and write answers to the questions in Test No. 1. When you can answer all of the questions in Test No. 1 to your own satisfaction without referring to the text book, you may apply to the College Currency Department for Exercise No. 1 Packet, which contains all of the cash received in Exercise No. 1. You are expected to handle this cash as though it were real money. You will verify daily the amount that you receive for each day's transactions and will be responsible for the return to the College Currency Department of the amount that you should have on hand at the end of the Exercise. You will open an account with the bank, will make a deposit daily if you have sufficient cash on hand; will pay all of your large bills by check; will pay out all paid- out items into an out-going College Currency container, or an outgoing Check container, the contents of which will be collected daily by runners from the College Currency Depart- ment and the College Bank, respectively. The list of paid out items, which the runners will re- ceipt, must agree with the amount of currency and checks delivered to the runners. In connec- tion with handling the money, you should now make the cash book entry for each transaction in Exercise No. 1, without referring to the illustration. After you have written up Exercise No. 1 and proved your cash, you shall examine it carefully or audit it, and if you believe it to be correct, you shall then submit it to your teacher for approval. After Exercise No. 1 has been approved by the teacher, you shall turn in to the College Cur- rency Department your balance of cash from Exercise No. 1, and take out Exercise No. 2 Packet, and shall work out Exercise No. 2 just as Exercise No. 1 was worked out. After you have finished Exercise No. 2, you shall audit it and then submit it to the teacher for approval. All of the Exercises and Sets in this book are to be treated in the same way. You will first get the necessary Packet from the College Currency Department and work out the Exercise or Set, then examine it carefully for possible errors and after that, submit it to your teacher for ap- proval. No Exercise or Set is to be submitted for the teacher's approval until you have first audited it yourself. Beginners are apt to make errors through carelessness, but insistence upon the part of your teacher that you shall find all of your own errors, will soon teach you the importance of accuracy in all of your work, and you will verify all of your additions, subtractions and multiplications, and by having everything right or finding your own errors if you make any, you will soon develop the confidence in yourself that is so essential to every bookkeeper. The succeeding Exercise or Set is not to be begun until the teacher has approved the Exercise or Set that you have finished. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 7 12. Every bookkeeper should know how to do ruling neatly. To do this, lay your rule so that the edge of the rule that is to guide the pen is up away from the paper and farthest from you. This will enable you to rule clean lines without blotting the paper, and by holding the pen at a slightly different angle, you can rule a double line without changing the position of the rule. For practice in ruling, take a sheet of paper and rule it so that it will show all of the red lines that ap- pear on page 76 of this text book. Repeat this exercise daily until your teacher O.K's your skill in ruling. WRITTEN TEST NO. 1. 1. What is the first entry you make on opening a Cash account or Cash Book? 2. Which is the DEBIT and which is the CREDIT side of the Cash Book? 3. Will the same rule as to which is the debit side and which is the credit side hold good for all other accounts or not? 4. When do you debit the Cash account? 5. When do you credit the Cash account? 6. What explanation is usually put on the debit side of the Cash Book? 7. What explanation is usually put on the credit side of the Cash Book? 8. How do you debit the Cash account and how do you credit it? 9. What else besides money is considered as cash and entered in the Cash Book accordingly? 10. How can you tell from your Cash account how much money you have on hand? 11. If on counting the money in your cash drawer you do not find an amount equal to the difference between the debit and credit sides of your Cash Book, what does that prove? 12. Where else besides in your cash drawer is part of your cash on hand likely to be? 13. What entry or entries do you make when you deposit money in bank? 14. What entry or entries do you make when you give a check? 15. What entry do you make when you receive a check? A sight draft? A money order? A bank draft? Cash? 16. What do you usually do with checks, money orders and drafts that you receive? 17. What entry do you make when you buy a bank draft or money order to send away? When you pay out cash? When you give a check? • 18. What is a check? A post-office money order? A bank draft? An express money order? A sight draft? 19. When, where and how should endorsements on checks be made? 20. Tell how to open a bank account. 21. Tell how to make a deposit in bank. 22. Explain the check book stub method of keeping account of the money you have in bank. EXERCISE NO. 1. RETAIL FURNITURE BUSINESS OF & CO. (Student's name) SEPT. 3, 19—. Cash on hand $976. (Verify this.) Open a bank account. Deposit $950. Sell 1 oak chiffonier for $18.75. Sell \ doz. cane seat dining room chairs for $7.50. Sell 1 cherry finish rocker for $5. Sell 1 oak wardrobe for $14. Issue check to Wm. H. W. Quick & Bro., Inc. for Sept. store rent, $75. Pay $8.35 for freight on shipment received today from Rivers Furniture Co. Prove your cash daily. See article 13. 8 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. SEPT. 4. Receive post-office money order for $12.50 from J. D. Thomas in settlement of acct. Send Perfection Mattress Co. order for 1 doz. No. 1 irattresses, and enclose check for $30 in payment for same- Sell 1 ten piece chamber suit, complete with spring and mattress, for $54. Sell 40 yds. matting at 25^ per yard, $10. Pay upholsterer for laying 40 yds. matting, $2. Pay for repairs to furniture wagon, $9.60. Pay for 2 tons No. 2 hard coal, $11.50. Sell 4 kitchen chairs and kitchen table for $3.50. Make a deposit at the close of each day's business if you have any checks on hand or if you have more than $50 on hand. SEPT. 5. Sell 4 three piece oak chamber suits at $18.50 each. Receive sight draft for $83 on Henderson, Green & Co., Commission Merchants, from L. F. Adams, one of our country customers, in settlement of his account. Send Cedar Rapids Furniture Co. check for $237.20 in settlement of account. Sell 1 Morris chair for $4.50. Sell 1 Pompadour parlor suit to Mr. C. N. Roderick for $85. Send an order to the Hartwell Furniture Co., Cincinnati, for \ doz. leather couches at $25 each, enclosing check for same. Receive money order from O. J. Bruce for $19.25 in settlement of account. Buy 10 bu. oats at 45c" per bu., and 1 bale hay at $2. SEPT. 6. Sell 1 six-foot extension table for $9. Sell three brass bedsteads at $20 each. Sell 1 velour couch, large size, for $18. Sell set of 6 leather seat library chairs for $45. Sell 1 ten-section Globe-Wernicke book-case for $32.50. Pay gas bill for August, $13.50. Send Rivers Furniture Co. check for $150 in settlement of bill of July 10th. Sell 5 XXX springs at $3 each. Pay Oldershaw & Son for repairs to furnace, $38. (Pay by check.) Pay for advertisement in Tuesday's "Herald," $21. (Pay by check.) SEPT. 7. Receive check from Alfred Brown in settlement of bill of August 1st, $63. Receive money order from F. N. Smith for $15 to be applied on account. Sell 3 upholstered chairs for $27. Sell 1 spring for $4. Pay the Wilson Furniture Co., on account, $50. (Check.) Sell 1 Excelsior parlor suit for $39. Sell 3 single wardrobes at $10 each. Sell dining room outfit — table, 8 chairs and side-board — for $42. Receive for Sept. rent of furniture out on rental at the "Blue Mountain House," $135 (Check.) Pay fire insurance, 1 year's premium on policy for $10,000— from Sept. 1, 19 — to Sept. l y 19—, $80. Check to Henry M. Paist, our insurance broker. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. SEPT. 9. Sell 1 claw foot center table, mahogany, $26. Sell 3 curly birch rockers at $5.50 each. . Sell quartered oak chiffonier for Sell plate glass door wardrobe for Pay John Jones, clerk, $12 for week ending today. Pay P. Murphy, driver, $9 for week ending today. Pay for 2,000 bill-heads, 1,000 letter-heads and 2,000 printed envelopes, $6.50. Issue check to the Enterprise Furniture Co. to apply on account, $250. Make a deposit. Have bank book balanced. Reconcile your bank balance. See article 20. Page 21. Pay the amount of your cash on hand to the College Currency Department by currency and check. EXERCISE NO. 2. WHOLESALE HARDWARE BUSINESS OF & CO. (Student's name) JAN. 7, 19—. Cash on hand, $1285.19. Verify. Make a deposit. Sell to X R. M. Adams, 2 doz. carpet sweepers at $29.14, $58.28. Sell to J. C. Bailey, 14 cherry stoners at $5.10, $71.40. Sell to Miller Supply Co., 10 meat cutters at $51, 1 doz. egg beaters at $7.52, total $517.52. Sell to J. F. Pearson & Co., 4 doz. drawing knives at $8.90, $35.60. Buy from Fred. Beck & Co., 4 doz. carpet stretchers at $5.82, $23.28. (Check.) Make a deposit at the close of each day's business. Prove your cash daily. JAN. 8. Receive check from Oscar Bear for $143.37 in full. Pay National Tool & Stamping Co., by check, $342.65, for bill of Dec. 15th. Receive from Edw. Stinson & Co., check for $525.83 in full. Sell to Geo. Keller, 10 doz. curry combs, at $6.87, $68.70. Sell to Reily Bros. & Raub, 10 hand cultivators at $15, I gross auger handles at $3.75, total $153.75. Buy from Geo. P. Thomas, 1 gross weeding hoes at $97.90. (Check.) JAN. 9. Pay Jas. Bates by check, $57.50 bill of Dec. 22nd. Pay Wm. Cole & Son, by check, $125 on account. Received from Chas. T. Mitchell, check for $89.75 for bill of Dec. 8th. Receive from John Brown & Sons, check for $275.86 in full. Sell to Jas. Brady, 1 doz. level winding jeweled fishing reels at $76. Sell to Keystone Hdwe. Co., 2 hand cultivators at $13, 1 doz. hammers at $2.09, total, $28.09. Sell to Central Pa. Supply Co., 12 doz. frying pans at $8, 1 doz. blind hinges at $2.85, total, $98.85. 10 CASH BOOK. /£- *J^J U tZ /Vt^uy s 4 7 0- /VZ^UtS /^u^y iU/ ;t> 4*0 4£^^* : z*>£<3 //• "' sf 7sA 3. J XXX^U^^z^zJ QySt /%^&ux £,&■ /o^d^^iC^^yi^^^ Orz, v^t^- ^ ^^^^^i^^e^^^^s^^^^^^^ / rj JLZ ?-£> A/f- 30 7 T 7 fo ^^^' (Ly ^^t^^>l^ C-**-' ^Zizz^s2^Z^Lt&^*s-' *-^0-£4*sZ&t*Z^&*>' 7*' -2 f / / 6 o 7<2 6 — ^■■i"^ vf* f OJL &J 12 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. JAN. 10. Receive from Wilcox Hdwe. & Iron Co., check for $321.37 in full. Receive from Geo. Yakel & Co., check for $275.25 for bill of Dec. 15th. Pay John W. Russell, by check, $87.50 en account. Buy of Diamond State Iron Co., 5 oak cabinets at $19.50, $97.50. Sell to Baltimore Hdwe. Co., 10 doz. gate hinges at $5.60, 1 doz. files at $2.75, total $58.75. Buy of Henry Keidel Co., 48 doz. hay knives at $10, 12 doz. harness snaps at $1.50, total $498. Sell to J. R. Emerson & Co., 2 Little Giant meat cutters at $39.24, $78.48. Sell to Baltimore Hdwe. Co., 4 doz. razors at $9.10, $36.40. Sell to Dillon & Co., 1 doz. lawn swings $83.95. JAN. 12. Sell to Lindamuth & Co., 100 doz. cans metal polish at $3.50, $350. Sell to J. H. Bowman Co., 2 gross kraut cutters at $20, 1 doz. scythe stones at $6.45, total $46.45. Sell to F. H. Davidson & Co., 4 doz. screen doors at $9.50, $38. Sell to M. L. Bauserman & Co., 12 doz. knives and forks at $3.50, 48 doz. gate hinges at $4, total $234. Have your bank book balanced. Reconcile your bank balance. Pay the amount of your cash on hand to the College Currency Department. EXERCISE NO. 3. WHOLESALE DEUG BUSINESS OF & CO. (Student's name) JAN. 1, 19—. Cash on hand, $1875.28. Verify. Make a deposit. Sell to Double & Co., 1 gross boxes Anti-billious Pills at 40j£ per box, $57.60. Sell to M. B. Schmeilt, 1 gross bottles Panepentic Tablets at $3 per doz., $36. Sell to R. W. Stone, 2 gross boxes special Gelatin Coated Cathartic Pills at 50^ per box, $144. Sell to Double & Co., 1 gross 4 oz. bottles Hydriodic Acid at $1 per bottle, $144. Sell to John J. Long, 1 gross Aromatic Cod Liver Oil at $7.50 per doz., $90. Buy of Sharp & Dohme, 3 gross Extract Witch Hazel at $2.90 per doz., $104.40. Buy of Hance Bros. & Wight, 5 gross bottles Aromatic Cod Liver Oil at $6 per doz., $360. Sell to Miller & Davis, 8 doz. bottles Syrup Hypophosphites at $7.50, $60. Receive from Arnold & Co., $100 on account. Make a deposit daily. Prove your cash daily. JAN. 2. Buy of Shackman & Loewy 5 gross Cascarets at $2 per doz., $120. Send check to Smith Bros. & Co., for $200 on account. Receive check from Jas. P. Frames & Son for $36 in full. Sell to Henry Schmidt, 5 doz. boxes Black's Feric Pills at 30^ per box, $18, and 3 doz. Chloro- form Liniment at 20^ per bottle, $7.20, total $25.20. Buy of Gilbert Bros., 4 gross Crystal Castor Oil at $1.25 per doz., $60. (Check.) MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 13 Sell to Doan & Carter, 3 gross Extract Vanilla at $2 per doz., $72. Sell to Miller & Shower, 1 gross Jamaica Ginger, select, at $1.75 per doz., $21. Receive of Jos. W. Moore & Co., check for $125 for bill of Dec. 10th. Pay Winkleman-Brown Drug Co., $100 on account. Receive check from Paul Hauser for $57.60 in full. Send check to Gilpin, Langdon & Co., for $45 in full to date. Sell Thomas Finch & Son, 10 gross Soda Mints at 70^ per doz., $84. Sell to National Drug Co., 5 doz. Eagle Brand Condensed Milk at $2 per doz., $10. Receive check from Chas. Ware for $10 on account. Buy of Sharp & Dohme, 5 doz. Extract Cinchona at $1.50 per bottle, $90. JAN. 4. Send check to W. J. Parker & Co., for $250 on account. Buy of Hance Bros & Wight, 5 doz. Fluid Extract Cantharides at $5 per bottle, $300. Pay Stevenson & Harmanson $120 on account. Buy of Sharp & Dohme, 6 gross boxes Tasteless Quinine Tablets at $1.25 per doz., $90. Sell Burkhart & Brown, 1 gross bottles sewing machine oil at 45^ per doz. $5.40. JAN. 5. Sell Becker & Anderson, 15 lbs. Ginger Root at 24^ per lb., $3.60; 1 doz. boxes Tanglefoot Fly Paper at 35^ per box, $4.20; and 1 gross Camphorated Toilet Soap at $1.20 per doz. $14.40, total $22.20 Sell to J. H. McVeigh & Co., 1 doz. bottles Avene Sativa at $5.10 per doz. Buy of Sharp & Dohme, 6 doz. Black Cohosh at $4.50 per doz., $27.00. Pay Jas. Bailey & Son on account, $300. Pay John Hurth & Co., $50. Bill of Dec. 14th. Receive from Chas. Sears check for $150 on account. Have your bank book balanced. Reconcile your bank balance. Pay the amount of your cash on hand to the College Currency Department. EXERCISE NO. 4. WHOLESALE GROCERY BUSINESS OF \ & CO. (Student's name) JAN. 1, 19—. Cash on hand, $4351.16. Verify. Make a deposit. Sell Boyer & Co., 10 cases Lion Brand Coffee, 24 packages to the case, at $2.50 per case, $25. Sell Jordan Stabler & Co., 25 bbls. GambrilPs Best Flour at $4.40 per bbl., $110. Sell Reitz Bros., 8 boxes Ivory Soap, large size, at $6, $48. Pay Thos. G. Cranwell & Co., on account, $500. Sell Bryant & Clarvoe, 10 cases Quaker Oats, 24 packages to the case, at $2.25, $22.50. Receive check from Gold Bros., on account, $150. Pay sight draft of C. A. Gambrill Mfg. Co., for $1,000. (Certified check.) Buy of Woolson Spice Co., 100 bbls. granulated sugar, total weight 34,362 lbs., at b\i per lb., $1804. (Check.) Send check to National Biscuit Co., to apply on account, $1,000. Receive on account from Bryant & Clarvoe, check for 14 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. Sell Boyer & Co., 15 cases Eagle Brand Tomatoes, 24 cans to the case, at $1.50 per case, $22.50. Make a deposit daily. Prove your cash daily. JAN. 2. Receive check from McGaw & Co., on account, for $953.92. Sell Jordan Stabler & Co., 20 bbls. granulated sugar, total weight 6,851 lbs., at 5f^per lb., 8393.93. Sell Wm. Jackson 5 bbls. granulated sugar, weighing respectively 337, 353, 340, 344, and 342 lbs., at b\i per lb., $98.67, and 6 bbls. GambrilPs Best Flour at $4.40 per bbl., $26.40,— total $125.07. Sell L. W. Johnson, 100 lbs. California Evaporated Peaches at 12^ per lb., $12, and 10 cases Eagle Brand Corn, 24 cans to the case, at $1.75 per case, $17.50, total $29.50. Send National Biscuit Co., on account, check for $400. Receive check from Jordan Stabler Co. for $536 for bill of Dec. 1st. Sell Reitz Bros. 6 bbls. Goldenrod Syrup, containing respectively 48, 55, 57, 45, 50, and 53 gals., at 32^ per gal. $98.56. Buy from C. A. Gambrill Mfg. Co., 200 bbls. Gambrill's Best Flour at $4 per bbl., $800. Sell Gold Bros., 3 bbls. cider vinegar at $2.52 per bbl., $7.56. Buy from National Biscuit Co., 300 cases Uneeda Biscuit at $1.75 per case, $525. JAN. 3. Sell Maynadier & Co., 25 cases Uneeda Biscuit at $2 per case, $50. Sell Percy M. Reese, 500 lbs. best mixed Mocha and Java Coffee at 30^ per lb., $150. Receive from Reitz Bros., on account, check for $125. Buy from Woolson Spice Co., 100 cases Lion Brand Coffee at $2.12^ per case, $212.50. Sell Bryant & Clarvoe, 24 doz. Eagle Brand Corn at $1.50 per doz., $36. Buy from C. A. Gambrill Mfg. Co., 50 bbls. Superior Flour at $3.75 per bbl., $187.50. Sell Snyder & Co., 3 bbls. granulated sugar, weighing 339, 346 and 336 lbs., total weight, 1,021 lbs., at b\i per lb., $58.71. Sell Gold Bros., 6 bbls. Gambrill's Best Flour at $4.40 per bbl., $26.40. Sell Reitz Bros., 15 cases Uneeda Biscuit at $2 per case, $30. Have your bank book balanced. Reconcile your bank balance. Pay the amount of your cash on hand to the College Currency Department. 13. Daily Proof of Cash. d?,/?— /<7j2,/.-z>3~ Debit side of Cash Book >;7..^r Credit side of Cash Book ^,?t:<^7 Cash on hand per Books. £jis fd In Cash Drawer, Safe, etc. fyr-r. In Bank &.? r.4-0 Cash on hand. Make this Daily Proof of Cash on the back of a check book stub, for the date of the proof, so that it will be preserved for future reference if needed. If everything has been entered correctly and no money has been lost or stolen, the cash on hand as per books and the actual cash on hand will be the same. If the figures do not agree, find your mistake or find the money. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 15 Recount your cash. Go over your additions in the Cash Book. Verify your subtraction to find the balance on hand. Examine your check book stubs to see that the deposit, if any, has been properly entered and correctly added and that the checks issued, if any, have been subtracted correctly. If any person besides yourself has access to the cash drawer, find out whether or not any money has been taken in or paid out without a proper entry having been made for it. Ques- tion any person who is accustomed to take funds for temporary uses from the drawer and who generally leaves an I.O.U. It is possible that this person forgot to put an I.O.U. ticket into the drawer when he took out funds during the day, or m.ajybe he returned funds without taking back his ticket. If, after having done as above directed, you still have not found the mistake, examine every entry for the day to see whether you can discover a mistake in some entry or whether some entry that you see brings to your mind some transaction that you failed to enter. Make a resolution that in the future you will always make your entry before you issue a receipt for any money com- ing in and that you will always make your entry before you part with any money that you are paying out. Some bookkeepers advise the balancing of cash before the deposit for the day is made, so that if the cash does not balance properly, all checks received can be compared with the entries for them. Other bookkeepers keep a carbon copy or a letter press copy of every deposit slip for the purpose of checking in the event of an error having been made. You should do this if the firm -for which you are working wishes it done. It is far more important, however, to con- centrate your mind on your work in all cases, and to prove your work as you go along. You will in this way avoid many errors. If an error has been made and you cannot find it, as soon as you reach this conclusion, on the same day that you discover the discrepancy, you should report it to your superior or to the man- ager or proprietor of the business and follow his instructions. One of the common ways of handling such a situation is to put a card in the cash drawer marked "Cash Excess" and the date and amount, or "Cash Deficiency" and the date and amount, as the case may be; and then allow for the excess or deficiency in proving the cash on succeeding days. If there is an excess, it may be cleared up the next time you send out your statements by one of your customers saying that your statement is incorrect, — that he paid you such an amount, naming the amount of your excess, on such a date, and he may even produce a receipt or his can- celled check to prove that he made the payment, but you would probably not require either of these proofs if the amount and the time that he claims to have made payment agree with the amount and time of your excess of cash. If, on the other hand, there is a deficiency, be very sure that you, personally, are not responsible for it, and be more careful in the future in making change, in counting money you pay out, and in seeing that no payment goes out without an entry first having been made for it. If the reason for the excess or the deficiency is not discovered within a few days, cash may be debited for the amount of the excess, with the explanation "Excess cash," and the date of the excess, or if it is a deficiency, cash may be credited for the amount of the deficiency, with the ex- planation "Cash Deficiency" and the date of the deficiency. Such a Cash Book entry would be posted to the "Excess and Deficiency" account in the Ledger, about which you will learn a few days later. If, at any time, the reason for a previous excess or deficiency entered in the Cash Book is discovered, an entry in accordance with the real facts in the case should be made in the Journal with a complete explanation of the occurrence. For instance, suppose that on the 15th instant Jones paid us $75 on account but we transposed the figures and charged Cash and credited him with only $57. This threw our cash out— there was an "excess" or "over" of $18 when we proved the cash for the day. Not being able to locate the "over," we debited Cash and credited the "Excess & Deficiency" account. At the end of the month we sent a statement to each of our customers. The statement we sent to Jones was returned to us by him with a complaint that he 16 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. had received a credit of only $57 for a $75 payment made to us on the 15th. Now to correct mat- ters, bearing in mind that the Cash Book has already been corrected, we must make a Journal entry to correct Jones' account and the "Excess and Deficiency" account. The proper Journal entry in the above case would be one in which "Excess and Deficiency" would be debited and Jones would be credited with $18. The explanation column should contain a clear statement of the facts in the case. A bookkeeper is not apt to have an "Excess" or a "Deficiency" for which he cannot account, very many times, without his employer's reaching the conclusion that he needs a more accurate bookkeeper. CHECKS. 14. A check is a written order to a bank in which the bank is directed by the maker of the check to pay out of the funds that the maker of the check has on deposit with it, a definite sum to the person or to the order of the person named in the check; or it may direct the bank to pay the sum mentioned to "Bearer" or to "Cash." In order to guard against paying money to the wrong person, banks will seldom, or never, pay money to any person unknown to the bank. A stranger who desires to get a check in his favor cashed at the bank on which it is drawn, must either get some person who is known at the bank to introduce him or else must endorse the check and have the maker of the check write under the endorsement, "Endorsement O.K.," or "Endorsement Guaranteed," and sign his name. If a bank pays money to the wrong person, the bank must stand the loss. This is why a bank must be absolutely sure that it is paying the money to the right person. If you wish to issue a check that can be collected by anyone without identification, make it payable to "Bearer," but probably a better plan is to make it payable to the order of the person whom you wish to receive the money and then O.K. his endorsement. In this way, in his endorse- ment you have his acknowledgment of the receipt of the money, which you would not have if a check given him, payable to bearer, were lost and cashed by some other person. The maker of a check is the person who signs the check. He is called the drawer of the check. The payee is the person to whom the check is made payable. An endorser is any person through whose hands the check has passed who has endorsed it. For a specimen form of check see page 17. Upon receiving a check it is important to have it cashed or to deposit it in bank promptly, first, because a check that is good today may possibly not be good tomorrow. The maker of the check may fail in business or the bank on which the check is drawn may fail. These things do not happen often but they do happen sometimes. Second, if you have received the check from some person other than the maker, you cannot hold any endorser or the person from whom you received it responsible for payment, if your inability to collect it is due to your negligence in not having presented it promptly for payment. It is better to deposit checks with your bank for collection the day they are received and never later than the following business day. Most business houses have a rule, — "No checks cashed." This will be a good rule for you to adopt. The reason for this rule is, — sometimes a careless person will issue a check for a larger amount than he has on deposit in the bank on which the check is drawn and if you have cashed such a check and deposited it in your bank for collection, two or three days later it will be brought back to you by a messenger from your bank marked "N. S„" (not sufficient funds), and you must then pay your bank the amount of the check and try to collect the amount from the person for whom you cashed the check, which is often a difficult task. He has usually spent the money you gave him for the check and if he hasn't any money in bank he usually hasn't any money anywhere else and you may have to wait until he earns the money or until he can borrow it somewhere, and that sometimes is a long time. You may get the money eventually if he is honest, but you will b»e MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 17 inconvenienced in the meantime by not having the use of the money. Again, sometimes an un- scrupulous person will issue a check on a bank in which he has no funds on deposit. In this case, the procedure is very similar to that in the other case. However, in addition to losing the money paid in cashing the check, you will probably be called on to pay from $1.50 to $4.50 in protest fees. Any person issuing a check on a bank in which he has no funds on deposit, is apt to be sent to jail if caught, but that doesn't give you back your money. The safest plan is, — do not cash checks for strangers. Do not accept checks from strangers in payment for goods and give change. If you sell goods to a stranger and accept a check in payment, get the check cashed before you de- liver the goods, or have the check certified at the bank on which it is drawn, or get references from the customer and satisfy yourself that the man and the check are all right before you part with property that has a known value. It has long been a common custom with crooks to buy a bill of goods and to offer a check for a larger amount in settlement of the bill, in the hope of being able to get the change in cash. Always be on your guard when a stranger offers you a check. There are probably very few men who have been in business any considerable length of time who have not lost money more than once by cashing checks for persons with whom they were at least slightly acquainted. You will learn this lesson. Will it be from instruction or will you learn it by ex- perience? If by experience, let it be your own money and not the firm's money that you use and lose in learning it. Check. (2^^£ 9aMm^i^. SIGHT DRAFTS. 15. A Sight Draft is a written request for the person to whom the draft is directed or on whom it is drawn, to pay to the order of the person who issues the draft or to the order of some other person named in the draft, a definite sum of money. The person who draws or issues the draft is called the DRAWER. The person on whom the draft is drawn, that is the person who is to pay the draft, is called the DRAWEE, and the person to whom the draft is to be paid, is called the PAYEE. Drafts are usually drawn by persons to whom money is owed, on persons (customers) who owe the money, and are usually made payable to the order of the person drawing the draft, or to the order of some person to whom the drawer of the draft is indebted. For illustration of a sight draft see page 18. When you issue a sight draft and leave same at your bank for collection, unless you are sure that it will be paid, use a form with a perforated slip attached, reading, "No protest— Detach this before presenting." In this way you avoid having to pay protest fees in the event of the draft not being honored or paid by the person on whom it is drawn, — the Drawee. 18 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. Sight Draft. I— — * I '" I M 1 * I "Til fc yj^y^^/^ ^7^^^^^. ^^±ZL^1 <&^< BANK DRAFTS. 16. A Bank Draft is a written request made by one bank to some other bank to pay a definite sum of money to the order of the person named in the draft as Payee. Banks draw drafts on banks in other cities in which they have money on deposit and sell these drafts to such of their customers as ask for them, at either face value or for only a slight extra charge. These bank drafts constitute a good method of sending money from one city to another as they are accepted anywhere as the equivalent of cash. However, do not cash a bank draft or any other paper for a stranger. The draft may be a forgery. Bank Draft. Third National Hank •^/^Wv/-. J2^^^^ • 1/ 40058 IMPORTERS & TRADERS' NATIONAL BANK, NEW YORK. tf"~ 2r~S- /oo , //'///■//'.), POST-OFFICE MONEY ORDERS— EXPRESS MONEY ORDERS. 17. Post-office Money Orders and Express Money Orders are similar to each other and are both quite similar to bank drafts. In the case of Post-office Money Orders, a person wishing to MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 19 transmit money from where he is to any other part of the world, can go into the nearest Money Order Post-office and pay the money he wishes to transmit, together with a small extra fee, and receive in return an Order for the Money Order Post-office nearest to the point to which he de- sires to send the money, to pay the money to the person to whom the sender wishes it paid. The person who wishes to send the payment, mails the Post-office Money Order to the person to whom he desires to pay the money and the person receiving the Money Order can get it cashed at the Office upon which it is drawn, upon presenting it and being properly identified, or he may deposit it in bank as cash and realize on it in that way. Express Money Orders are just like Post-office Money Orders except that instead of being issued by the Post-office Department and purchased at Money Order Post-offices, they are issued by Express Companies and are purchased and cashed at the offices of the Express Companies. In the case of either a Post-office Money Order or an Express Money Order, the purchaser should retain the receipt issued to him until he learns of the receipt of the remittance by the per- son to whom it is sent so that he can easily recover the amount of the remittance in the event of the money order miscarrying or being lost in any way. Express Money Order. ; TheSuMOF. When Countersigned i^l^^KKiui'iq^i^Hi^ i] 371179 .-371179 Br AGENT AT POINT OF ISSUE " ( |(totelpi^fe J j , ^# J ttf *% Payto the order of_ AGREES TO TRANSMIT AND ^ (1 tfa DC!' f.MS '00 £&~ y NOT GOOOFTJR MORE THANTME HIGHEST MINTED MARGINAL AMOUNT. IN NO CASE TO EXCEEO FIFTY DOLLARS. nrsDOLLARS ^'5ta£o*^&£ ' „ AME OF Hm ^f Issued at ^<^fy -19 _ i;.S.EX£0. MONEY ORDER. REMITTER'S RECEIPT. KEEP IT. Af**-ERA5URE,ALTERATtON.DEFACEMENT ORMUTILATION OF THIS ORDER RENDERS IT VOID. £? y . '-/9-^Cif-U^ ' BLANK 5PACCSAREFOR HIS SIGNATURE iN INK WILL PREVENT FMAUDULENT F»C- TUNO SHOULD TVIS RECEIPT Be LOST. OPENING A BANK ACCOUNT. 18. In opening a bank account, it is desirable, if possible, to be introduced to the Cashier or to whatever official of the bank attends to receiving the new customers of the bank, by someone who is known to and who is well thought of by the bank. First impressions are often lasting and since "Birds of a feather fly together," if you are introduced by a solid, conservative business man, you presumably belong to that class yourself. To most business men, because of the need of credit, it is a matter of prime importance to be thought well of at the bank. It is good business practice to keep most of your money in bank. Doing this will not only protect you from the danger of losing large sums of money through burglary, but will also make it easier for you to borrow money from the bank if you should have occasion to do so, since banks will usually loan a responsible depositer four or five times the amount of his average daily balance. In all of your work as a bookkeeper, if you have charge of the cash, make a deposit daily and re- tain in the cash drawer or safe only enough money to enable you to make change and to pay the small bills that you do not wish to pay by check and never keep out of bank an amount in excess of One Hundred Dollars unless you have some specific use for it before the next banking day. 20 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. Banks are usually glad to receive new customers even though their accounts may be small at the beginning. The smallest amount the bank will receive as one's first deposit and the small- est daily balance that is considered satisfactory, differs at different banks. Probably an initial deposit of Two Hundred Dollars and a daily balance of not less than One Hundred Dollars would be acceptable to the majority of banks. » When you are ready to make your first deposit in the College Bank, ask your teacher to in- troduce you at the bank. When you have been introduced, the bank official who receives you will have you sign a signature card which will be placed on file in the bank so that the signature to your checks can be verified or compared to avoid the danger of the bank paying out your money on a check made and signed by some other person but purporting to be signed by you, in other words, to avoid the danger of the bank paying out your money on a forged check. In signing the signature card, sign your name just as you will write it in signing your checks. I heard of a case in which a student's penmanship improved so much while he was taking a business course that a bank in which he had deposited money before beginning his course, refused to honor his check until he produced other means of identification. There will be reason for gratification if your penmanship improves to that extent during your course. The bank will furnish you deposit slips, a bank pass book and a check book without charge. Ask the Receiving Teller for additional deposit slips and for another check book when you need them. Bank Pass Book. r THIRD NATIONAL BANK, BALTIMORE, MD, X3R. In account with r Cr. /? - lt£6&k / ; ~^£hcZ^£*Z?^7^^S^. — 1 l r& l i A 2- "■"C^sT-jk^^ — ?,*- i , 1 -f> 1 I i i 6, 7 ^ \/4^/ r# i i // // ^ 1 3^T i M /^ y^ 1 / . . i // '/4 y^ r z,r & ft ^ s a~s?*^--£^2-^ c^c^^. /., S^ /**■/&. 7 6 Sf 7// 7J2.0 7:2,/ ^.^0 /^S ^^^^^^^^ ^^^ -^^^^X^ 24 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. PERSONAL ACCOUNTS. 29. Personal accounts are kept in the Ledger with persons who owe us, and with persons whom we owe, to show how much other persons owe us and how much we owe other persons. Ac- cordingly, whenever another person (meaning either a person, firm, company or corporation) gets in debt to us, or whenever we get in debt to another person, we open an account in the Ledger with that person. See illustration pages 46 to 49. WHEN TO DEBIT A PERSON. 30. Whenever you give another person anything without at that time receiving something in exchange for it, debit his account for what you give him. Debit the receiver. Commit the above rule to memory. According to the above rule — If a person owes you anything at the time you begin keeping accounts, or when you open a set of books, you should debit his account at that time for the amount of his indebtedness to you, because it represents what you have already given him without receiving anything in exchange for it. If you sell him anything on account, you should debit his account for it, because you give him what you sell him on account without at that time receiving anything in exchange for it. If you work for him without receiving immediate payment, you should debit his account for the amount of your bill, because you give him the work without at that time receiving anything in exchange for it. If you loan him any money on account, you should debit his account for the amount you loan him because you give him the money without at that time receiving anything in exchange for it. If you owe him money, and give or send him payment in full or in part, (either in cash, by check, money order or bank draft, or if you pay his draft on you at sight, on demand, or at 1, 3 or 5 day's sight) you should debit his account for the amount of the payment, because you give him that amount without at that time receiving anything in exchange for it. If you give him your note or accept his time draft on you, you should debit his account for the amount of the draft or note, because you give that to him without at that time receiving anything in exchange for it. If you return goods to him with which his account has been credited, you should debit his account for them, because you give them to him without at that time receiving anything in ex- change for them. If there is any other transaction in which you give another person anything without at that time receiving something in exchange for it, you should debit his account for what you give him. WHEN TO CREDIT A PERSON. 31. Whenever another person gives you anything without at that time getting something in exchange for it, credit his account for what he gives you. Credit the giver. Commit the above rule to memory. According to the above rule — If you owe a person anything at the time you begin keeping accounts, or when you open a set of books, you should credit his account at that time for the amount of your indebtedness to him, because it represents what he has already given you without getting anything in exchange for it. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 25 If you buy anything from him on account, you should credit his account for the amount of the bill, because he gives you what he sells you on account without at that time getting anything in exchange for it. If he does work for you without receiving immediate payment, you should credit his account with the amount of his bill, because he gives you the work without at that time getting anything in exchange for it. If he loans you money on account, you should credit his account with the amount he loans you because he gives you the money without at that time getting anything in exchange for it. If he owes you money and gives or sends you payment in full or in part, (either in cash, money order or bank draft, or if he pays your draft on him at sight, on demand, or at 1, 3 or 5 day's sight), you should credit his account with the amount of the payment, because he gives you that without at that time getting anything in exchange for it. If he gives you his note or accepts your time draft on him, you should credit his account with the amount of the note or draft, because he gives you that without at that time getting anything in exchange for it. If he returns to you goods with which his account has been debited, you should credit his account with them, because he gives them to you without at that time getting anything in ex- change for them. If there is any other transaction in which another person gives you anything, without at that time getting something in exchange for it, you should credit his account with what he gives you. 32. If the rules given in articles 30 and 31 are followed, the amount that the debit side of any personal account is larger than the credit side, will be the amount that the person with whom the account is kept, owes us, and the amount that the credit side of any personal account is larger than the debit side, will be the amount that we owe the person with whom the account is kept. See illustration pages 46 to 49 and tell which persons we owe and which persons owe us, and in each case, how much. PROPERTY AND EXPENSE ACCOUNTS. 33. In all businesses, a number of accounts known as Property Accounts and Expense Accounts are kept for the sake of the information they supply. In some sets of books there are but few such accounts kept; in others, there are many, the number depending upon the nature of the business, the minuteness with which the proprietor of the business wishes to classify his expenses and his sources of income, and upon the number of details in connection with the business about which he considers it desirable to have specific information. Three of the most common among Property and Expense Accounts are, — the Merchandise account, the Store & Office Fix- tures account, and the Expense account. WHEN TO DEBIT AND WHEN TO CREDIT PROPERTY AND EXPENSE ACCOUNTS 34. Debit Property and Expense accounts whenever those things for which they stand, cost you anything — whenever you buy those things — whenever they are an expense to you. Credit Property and Expense accounts whenever you receive anything from those things for which they stand — whenever you sell those things — whenever they are a source of income. Debit what is received. Credit what is given. You will remember that when you receive cash, you debit cash, and that when you give out cash, you credit cash. The same rule holds good for every thing else. If you buy merchandise, you receive merchandise, and you debit the merchandise account. If you buy store and office fixtures, you receive store and office fixtures, and you debit the store and office fixtures account. If you buy expense items, you receive the expense items, and you debit the expense account. On the other hand, if you sell merchandise, you give out merchandise, and you credit the merchandise account. If you sell store and office fixtures, you give out store and office fixtures, and you credit the store and office fixtures account. If you sell expense items, you give out expense items, and you credit the expense account. Always, you debit what you receive and credit what you give. 26 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. THE MERCHANDISE ACCOUNT. 35. Merchandise is the general term applied to the goods in which we deal. The Merchan- dise account is kept to show what we pay for merchandise and what we receive for it, and thus whether we lose or gain on it. According to article 34, we would debit the Merchandise account when we begin business, or open our books, for whatever merchandise we then have on hand, because it has cost us some- thing. We have received merchandise. From that timo J2<^ ^=^7ZZ^iZZ^Z^C^^ '^z^i^t /0O00 ^77-z-f / ££> 1#- 7*3 'J-0 ;v (^>MM* (S *- ^ j2^ ^>^^^f^c>€i^^i^j^x - j£^~ ^r ;j0 xjy K J/ ^JZ-f^ JZ0& ^^r^-^^C>€^ft^i^^-e^^-^^!^Z^t^ W6 rtv ?j-£ /\jT6 - ^rj&- iJ-t - ^ — 44 JOURNAL. ^£2/. /r- ^^^oy< //cs, f00 -2* . /J£c i &<^*ri/ „>"4 ^7 "7- t<4^ V^tZi&sd^ (j^^Ja/' JL ^Uu^ (&), /^T<2 '<~2^c???/ A~&g2^2^7 (^tyz^&s (5/-^ /-&&' 4=2^ @^, — J&JJUf? JLSJ2^F0 /jT^rt y ff Lr& ^rsr; J- *// j& <¥' ^j-z6< r^ *r — M^ JZ,S-Z ^a ■z? /sA, *» / f7 J-o J* */J -2-2 vjT^- S?J<7<2 -** /JJ *7 A? — 3/ 7 s4 ^>/ 7 J/6 3<7 >*/■ */* /3a j£ 36 — 3~* '7/ jL* ' J/0 3 * ■ ^*04 *rte yy-C £ ^i^y^. ^ &s/z^>4* O . /y-^^ ' U/£ S^^^Z^Z* >5*Z^ t^Z>m/^M. JS* /LZ, J^/ 3,^2 j/r— ^^ jl -vc /^>S SS j* MS f6 yy^ l> //*? -.-e^z^^z-** • <**&- //^x^i~-^-e^£^ // -2*» ^^L^& L4t^2 '^iTT^gZ- J' A~^£^u •>*-^t y^j^/ --^^^^z^^s^^^^i-r^/ / sj&j J2 Us£ v^zSj* *yC j/r ft^<^£*z>*^<^ *d^~ /<7- • | j-^c /?- 1 ififr**" jzr MJ2. / / o Xb^s 'Ja W .So 3 f '3 Af U^3 373 ?3 ^L *t^ JJ2+3 JrZsz£*i ^A y**s^+ & /?— 1 c ^ < =2f 3/ Ma ^0 48 LEDGER. /• z i^z^d-e^.- '9- (r^^ / LEDGER. 49 ^Sc^^y^^^ "7- ///J' 50 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. ^s J/6. #7 #r //rv^r ^7VjT/> J2 o / 6^a a ~ x * MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 51 EXERCISE NO. 6. WHOLESALE HARDWARE BUSINESS OF & CO. (Student's name) FEB. 4, 19—. Buy from the National Tool & Stamping Co., on account, 10 30 in. Excelsior Horse Mowers at $110.00 and 2 doz. engineers' wrenches at $19.20, total $1,138.40. Sell to Marshall, Wescoat & Co., on account, 25 doz. heavy communicating door locks, at $24.00, 12 doz. vestibule latches, at $20.00, and 1 gross window catches at $26.86, total $866.86. Sell to Samuel Emmert, on account, 25 doz. porcelain door knobs, at $3.00, and 1 doz. bell pulls, at $8.19, total $83.19. Receive from Marshall, Wescoat & Co., $862.63. Pay gas bill for Jan., $10.00. Sell to Young Bros., on account, 3 doz. sliding door locks, at $18.00, and 1 doz. wood door knobs, at $4.57, total $58.57. Sell to J. H. Constantine, on account, 1 doz. large door pulls and plates, at $65.35 and 4 doz. coat hooks, at $5.00, total $85.35. Pay for new counters, $35.00. Pay rent for Feb., $125.00. FEB. 5. Sell to J. R. M. Adams, for cash, 4 doz. wrought iron padlocks, at $7.84, $31.36. Buy from Frank B. Sloan & Co., on account, 4 doz. Gem Food Choppers, at $28.10, $112.40. Pay for repairs to wagon, $5.00. Sell to Miles Hdwe. Co., on account, 12 doz. blacksmiths' hammers, at $30.00, 10 doz. West- ern Cow Bells, at $11.50, and 1 doz. awning pulleys, at $2.38, total $477.38. Pay subscription to "Hardware Journal," $3.00. Pay for shoeing horse, $1.25. Sell Frank Beall & Co., on account, 2 doz. rip saws, at $46.80, $93.60. Buy from Henry Disston's Sons, for cash, 1 gross saws, (special) at $158.40. Sell to C. C. Pursey & Co., on account, 1 doz. umbrella stands, at $59.95. Pay National Tool & Stamping Co., $324.63. Receive from Samuel Emmert, check for $54.18. Buy from Francis Albert & Co., on account, 1 gross double pointed tacks, at $14.86. Receive from Miles Hardware Co., check for $384.25. FEB. 6. Pay for 5 bus. oats for horse, at 42^ per bu., $2.10. Sell to C. S. Pitcher & Co., on account, 1-25 in. Excelsior Horse Mower at $56.55. Receive from Young Bros., $26.15. Receive from J. R. M. Adams, $30.75. Pay Henry Disston's Sons, $142.60. Sell to Union Hardware Co., on account, 4 bench vises, at $10.00, 1 jack screw, at $6.90, total $46.90. Receive from Frank Beall & Co., on account, check for $64.50. Sell to Cumberland Hdwe. Co., on account, 10 doz. mortise door bolts, flat fronts, at $36.00, and 2 gross cupboard casters, at $17.31, total $394.62. Buy 5 bales hay for horse, at $1.22^ per bale, $6.13. 52 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. FEB. 7. Send Frank B. Sloan & Co., check for $74.25. Buy from Maryland Hinge Co., on account, 1 doz. store door handles at $29.87. Receive from C. C. Pursey & Co., check for $32.65. Sell to A. B. Cochran & Co., for cash, 3 doz. natural finish communicating door locks, at $24.17, $72.51. Buy from Francis Albert & Co., on account, 6 doz. push buttons, at $10.50, and 1 gross doo keys, at $9.78, total $72.78. Buy from Wm. Cole & Sons, for cash, 8 doz. wire pliers, at $15.00 and 1 doz. levels, at $12.23, total $132.23. EXERCISE NO. 7. WHOLESALE DRUG BUSINESS OF , . = ; & CO. (Student s name* FEB. 8, 19—. Buy from Hance Bros. & Wight, on account, 10 gross bottles Ammonia at $9, 12 gross bottles Laudanum at $10, 25 gross Chlorate of Potash Tablets at $9, 4 doz. Mother's Gelatine at $18, 1 gross bottles Syrup of Ipecac, at $9.50, total $516.50. Sell to John D. Singer, on %, 25 doz. bottles White Solution Carbolic Acid at $2, 100 lbs. Lump Copperas at 20, total $52. Sell to C. R. Myers, for cash, drugs amounting to $250.00. Pay for advertisement in "Bulletin," $12. Sell to Double & Co., on %, 24 doz. bottles Hydrogen Dioxide at $6.00, 75 doz. boxes Insect Powder at 750, 2 doz. bottles Laudanum at $5.09, total $210.43. Pay rent for Feb., $175. Sell to Oliver P. Robinson, on %, 1 gross bottles Spirits of Camphor, at $9, 4 doz. bottles Spirits of Nitre at 750, total $12. Pay for labels, $3.50. Sell to Jefferson D. Fore, on %, 4 doz. Allcock's Porous Plasters, at $1.15, 3 gross Corn Plasters at $9, total $31.60. Buy of Muth Bros. & Co., on %, 10 doz. pkgs. Epsom Salts, at 360, 60 doz. pkgs. Canary Seed at 750, 2 gross Bunion Plasters, $6.50, total $61.60. Sell to Chas. A. Brooks, on %, drugs amounting to $331.20. FEB. 9. Receive from Double & Co., check for $182.68 on account. Send check to Hance Bros. & Wight, $126.75 on account. Sell to S. S. Davis, on %, 100 doz. Seidlitz Powders at $2.00, 100 rolls Belladona Porous Pasters, at $1.00, total $300. Buy of Wyeth Bros., on %, 38| doz. bottles Carbolic Acid at $1.00, $38.50, 50 doz. bottles Hydrogen Dioxide at $6.00, $300, total $338.50. Sell to A. O. Pilson, on %, 24 grosss bottles Paregoric at $9.00, $216. Pay for show case, $35. Sell to T. E. Zimmerman & Co., on %, 1 gross bottles Laudanum $7.60, 15 doz. bottles Hydrogen Dioxide at $8.00, $120, total $127.60. Sell to D. C. Auginbaugh & Son for cash, 1 gross bottles Calomel, $5.27, 25 doz. boxes Seidlitz Powders at $2.00, $50.00, total $55.27. Pay for 3 tons coal, $18.75. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 53 Sell L. N. Meadows, on %, 1 gross bottles Ipecac at $8.15, 100 doz. bottles Witch Hazel at $1.40, $140.00, total $148.15. Pay for washing and oiling floors, $8.00. Receive from Chas. A. Brooks, check for $250.25. Pay clerks for week ending Feb. 9, FEB. 11. Buy from Muth Bros. & Co., for cash, 20 doz. bottles Balsam Copaiba at $9.27, $185.40. Sell Ezekiel Forman, on %, 1 gal. Witch Hazel, $1.10, 40 doz. boxes Cox's Gelatine at $2.00, , total $81.10. Buy from Heckerman & Son, for cash, drugs amounting to $132.40. Receive from Oliver P. Robinson, check for $12. Pay for repairing store room, $85.25. Sell to John D. Stotlemeyer, on %, 100 doz. pkgs. Senna Leaves, at 37^, $37.50. Receive from A. O. Pilson, $213.63. Pay subscription to "Druggist's Journal," $3.50. Sell to Wm. Stewart, on %, 25 doz. boxes Cox's Gelatine, at $2.00, $50, 1 gal. Bay Rum, 75, total $52.75. FEB. 12. Receive from Ezekiel Forman, check for $32.50. Pay for stationery and postage, $5.38. Buy from Sharp & Dohme, on account, 100 doz. 1 lb. bottles Hydrogen Dioxide, at $6.00, ), 100 doz. I lb. bottles Hydrogen Dioxide at $2.00, $200, 4 gross Oil of Cloves at $9.15, $36.60, total $836.60. Receive from Jefferson D. Fore, check for $23.98. Sell to Robert Rose, on %, 40 doz. cans Insect Powder at $1.00, $40, 1 doz. bottles Carbolic Acid at $1.90, total $41.90. Receive from S. S. Davis, check for $250.00. * Pay for Cash register, $165.00. Sell to Hall, Atkinson & Co., on %, 10 cartons Quinine Pills at $1.54, $15.40, 5 gross bottles Paregoric No. 5, at $4.00, $20, total $35.40. Pay for packing cases $43.00. Receive from T. E. Zimmerman & Co., check for $116.32. Pay for Underwood typewriter $100. Receive from Wm. Stewart, $43.66. Pay for office desk, $22, and for 1000 circulars, $5. 54 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 49. WRIGHT'S RULES FOR FINDING TRIAL BALANCE ERRORS. 1. Add both sides of the trial balance again to see whether the error is in the addition. 2. Find the exact difference between the sides of the trial balance and note whether the ex- cess is a debit or a credit. 3. Whenever you locate an error, make the necessary correction in all of the books affected and on the trial balance and determine whether the correction of the error found increases or di- minishes the difference between the sides of the trial balance. If the correction of the error increases the difference between the sides of the trial balance, add the amount of the error to the difference you already have, but if the correction of the error diminishes the difference between the sides of the trial balance, subtract the amount of the error from the difference you already have, to see ex- actly how much your trial balance is still out of balance. Doing this will save you the necessity of re-adding both sides of the trial balance every time a mistake is found. The difference be- tween the sides of the trial balance will become zero when all of the errors have been found. 4. Glance through the Ledger to see whether any account with a balance equal to the error has been missed in writing up the trial balance. 5. Glance through the Cash Book, Journal and other books of original entry to see whether an amount equal to the error has been missed in posting. If the credit side of the trial balance is the larger, look for the amount among the debits in the books of original entry and vice versa. 6. If the amount of the error is divisible by two, look for a sum equal to one-half of it in the trial balance, and if you find such a sum in the trial balance, look and see whether that sum has been carried from the Ledger to the wrong side of the trial balance. Look, also, through the books of original entry for an amount equal to one-half of the error and if you find such an amount, see whether it has been posted to the wrong side of the Ledger. 7. If the amount of the error is divisible by either nine or eleven, look for a transposition or a transplacement of figures made in carrying some balance from the Ledger to the trial balance. 8. Add again both sides of the Cash Book and all special columns, being careful to see that all footings are correctly carried forward from page to page, and that all special column totals are properly posted to the Ledger. Be on the lookout for transposition or transplacement of figures in both forwarding and posting. 9. Add again both sides of all accounts in the Ledger, seeing in each case that the subtrac- tion of the smaller side of the account from the larger side of the account has been correctly per- formed and that the correct balance has been carried to the proper side of the trial balance. As this is done, place a small dot or check mark to the left of the balance on each account where it appears in the Ledger, and to the left of the same number on the trial balance. 10. As a last resort, review all of the posting from the Journal, Cash Book, etc., to the Led- ger. Make a small dot or a check mark on the first double red line to the left of the number in both books every time you find an amount correctly posted. This double checking is the only sure way to locate numbers that have been posted twice. 11. If, after having done all of the things mentioned above, your trial balance is still out of balance, begin at the beginning and do them all over again. Whenever you have done everything right, your books must balance, — they can not help it. If you have made a mistake, you must find it, and you can find it if you will hunt patiently and persistently for it. You will never be a good bookkeeper until you can find any mistake that you may make, so never give up. The confidence in your own ability that will come to you when you prove to yourself that you can find all of your own mistakes, will be worth to you many times what it will cost you in time and labor to prove this. Stick to it and win. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 55 OPENING BOOKS. 50. In opening a new set of books, the first thing to do is to take a sheet of paper and make out a statement of the Resources and the Liabilities of the person for whom or the business for which the books are to be opened. If the business is a partnership, a separate statement should be made for each partner, showing just what resources and what liabilities the partner brings into the business. The difference between the resources and the liabilities brought into the business by any partner, is the Net Investment of that partner. The preliminary statement or statements having been made, an entry should be made in the Journal showing the resources and the liabilities that are to constitute a part of the business at the time the books are opened. Remember that the difference between the resources and the liabilities is the net investment, and the net invest- ment or each net investment should appear in the credit column of the Journal to balance the excess of the resources over the liabilities. The form of a Journal entry for the opening of a set of books will be found illustrated on page 59. Study that illustration. (Resources are things of value, such as — Cash, Merchandise, Store and Office Fixtures, Ma- chinery and other equipment, Teams, Automobiles, Real Estate, Notes Receivable and Accounts Receivable. Liabilities are debts, such as Notes Payable and Accounts Payable.) In posting the opening Journal entry, the cash that forms part or all of the investment will, of course, be posted to the debit side of the Cash Book, or Cash account. It is Cash on hand. (See page 60.) If a stock of merchandise forms part of the resources, the value of the stock, as stated in the Journal entry, will, of course, be posted to the debit side of the Merchandise account. It is Mer- chandise on hand, per inventory. If store and office fixtures on hand form part of the resources, the Store and Office Fixtures account will be debited with their value as shown in the Journal entry. They are Store and Office Fixtures on hand, per inventory. If things which would properly belong to the Expense account, are part of the resources, the Expense account will be debited with the value of such things on hand as shown in the Journal entry, as Expense items, per inventory. If some personal accounts owed to the person or firm for whom the books are opened, appear in the Journal entry as part of the resources, accounts with the persons will, of course, be opened in the Ledger and debited with the amounts owed. If accounts owed by the person or firm the books are being opened for appear in this Journal entry among the liabilities, accounts will be opened in the Ledger with the persons and will be credited with the respective amounts shown by the Journal entry to be owed to them. When all of the resources of the firm, as shown by the opening Journal entry, have been posted to the debit side of the proper accounts, and all of the liabilities, as shown by the opening Journal entry, except the net investment, have been posted to the credit side of the proper ac- counts, if a Trial Balance is taken, the Trial Balance will show the total of the debits to be in ex- cess of the total of the credits just the amount of the net investment as previously figured in mak- ing the preliminary statement. To off -set this excess in debits, and to show how much is invested in the business, a Stock account must be opened and credited for the amount of the net investment. In the case of a partnership, a Stock account should be opened for each partner and credited with the amount of the partner's net investment. When the net investment or net investments have been credited the books will balance, and may be kept in balance by following the rule previously learned for Double Entry Bookkeeping; namely — "Whenever you debit any account, credit some other account or accounts for the same amount and whenever you credit any account, debit some other account or accounts for the same amount." After opening a set of books, always take a Trial Balance in order to be sure that the books balance before proceeding to make entries for business transactions. 56 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. THE STOCK ACCOUNTS. 51. Previous to this lesson there has been no instruction given for the keeping of the Stock account, or Stock accounts. As has just been mentioned, the Stock account is kept to show how much is invested in the business. When a person opens a business, the natural way to do would be to give him credit for all of the resources he invests in the business and to debit him for all of his liabilities which the business assumes. Then, the difference between the sides of his account, that is, the difference between the resources and the liabilities that he brings into the business, would be the amount actually in- vested by him in the business; but instead of crediting him with his resources and debiting him with his liabilities, we simply give him credit for the difference between his resources and his lia- bilities (which amounts to the same thing), and term that his Net Investment. If the business for which the books are kept is owned by one person, there will be only one Stock account and sometimes where a business is owned by two or more partners, only one Stock account is kept, and it shows the entire investment, but usually a separate Stock account is kept for each member of the firm when a business is owned by more than one person, and in that event, each person's Stock account goes by his own name, with the words "Stock Account" added, and shows his Net Investment. If there is but one Stock account, it is sometimes kept under the heading "Capital" or under the name of the firm instead of under the heading "Stock Account," but no matter under what heading it is kept, it is kept for the same purpose and in the same way. As has been stated above, a Stock account for the firm or a separate Stock account for each member of the firm is opened when the books are opened, and at that time the Stock account is credited with the Net Investment of the person for whom it is kept. If at any time the person for whom the Stock account is kept withdraws any of the capital he has invested in the business, his Stock account should be debited for the amount of the capital withdrawn and cash, or any other account representing what he withdraws, should be credited for the same amount. If at any time the person makes any additional investment in the business, his Stock account should be credited for the additional investment and cash or any other account representing what he invests, should be debited for the same amount. Unless the person for whom the Stock account is kept either invests more money in the bus- iness or withdraws part of what he has previously invested, there is no occasion to make any entry to the Stock account until the books are closed. The Stock account stands on the books simply showing the amount the person for whom it is kept has invested in the business. For an illustration of Stock accounts, see page 62. The entries there are posted from the Journal, page 59. WRITTEN TEST NO. 4. 1. When you wish to open a set of books, what should be done first? 2. Where should the first entry be made, and of what should it consist? 3. The resources invested in the business should be posted to which side of the accounts to which they belong? Why? 4. The liabilities invested in the business should be posted to which side of the accounts to which they belong? Why? 5. How is the net investment of a person who invests both resources and liabilities found? 6. For what should the Stock account of each member of the firm be credited? 7. If cash forms all or part of his investment, to which side of the Cash Book would it be posted, and how would the entry in the Cash Book be balanced, equalized or off-set? 8. If a stock of merchandise forms part of the investment, to which side of the Merchandise account would it be posted, and how would the entry to the Merchandise account be balanced? MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 57 9. If store and office fixtures form part of the investment, to which side of the Store and Office Fixtures account would their value be posted, and how would the entry to the Store and Office Fixtures account be balanced? 10. If some personal accounts due one of the firm form part of his investment, in what accounts would they appear, and how would the entries be made? 11. If some personal accounts owed by one of the firm form part of the liabilities he invests in the business, in what accounts would they appear, and how would the entries be made? 12. When all of the entries have been made for opening a set of books, for what purpose should a Trial Balance be taken? 13. If the books do not balance after all of the entries for opening a set of books have been made, what does that prove? What must be done in that event? 14. What are Stock accounts kept for, and how many of them should be kept in each set of books? 15. When should Stock accounts be credited, and for how much? 16. When should Stock accounts be debited, and for how much? 17. What does the Stock account for each member of the firm show? EXERCISES FOR PRACTICE IN OPENING BOOKS. When you can answer satisfactorily all of the questions in Test No. 4, and know how to keep Stock accounts, and how to make the entries for opening a set of books, think how you would make the Journal entries for opening a set of books for the Hardware Business of & (Student's name) Trader, Exercise No. 8, then after thinking how you would make each entry, turn to the Journal, page 59, and see whether it is made just as you thought it should be. When you have thought out all of the Journal entries, and verified them, turn to the Journal and look at each itemand think how and where it should be posted, referring to the Ledger, pages 62 to 66, after deciding about each item, to see whether or not it is posted just where and in the way you thought it should be posted. After having thought out and verified all of the postings, take a Trial Balance and see whether the books balance, and whether you are ready to proceed with the recording of all transac- tions according to the principles of Double Entry Bookkeeping. • After the above work has been done, the student may open a set of books for the Hardware Business of & Trader, without referring to the illustration, and after (Student's name) the books have been opened, may take a Trial Balance and submit the work to the teacher, after which Exercises Nos. 9, 10, and 11 may be written up and submitted. EXERCISE NO. 8. HARDWARE BUSINESS. & A. E. Trader enter into partnership, January 1, 19 — , (Student's name) to conduct a Wholesale Hardware Business, the firm to be known as (Student's name) & Trader. Gains and losses to be shared equally. invests cash, $5,000. (Student's name) A. E. Trader, who has been conducting the business heretofore, invests cash, 506.17; Mdse., per inventory, $3,324.81; Store and Office Fixtures, $225; Accounts due him as follows: Miles Hdwe. Co., $476.27; Marshall, Wescoat & Co., $362.45; Sam'l Emmert, $572.72; Young Bros., $410.25; J. H. Constantine, $398.07; Union Hdwe. Co., $272.50; J. R. M. Adams, $315.30; Frank Beall & Co., $405; Pursey & Co., $257.55. Accounts owed by him, as follows: National Tool & Stamping Co., $789.83; Maryland Hinge Co., $592.65; Frank B. Sloan & Co., $342.18; Wm. H. Cole & Son, $425.50; Francis Albert & Co., $375.93. 58 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. EXERCISE NO. 9. DRUG BUSINESS. and A. E. Trader enter into partnership, Feb. 1, 19 — , to conduct a Whole- (Student's name) (Student's name) sale Drug Business; firm to be known as & Trader; gains and losses to be shared equally. invests cash, $6,000. (Student's name) A. E. Trader, who has been conducting the business heretofore, invests in cash, $426.70; Mdse., as per inventory, $3,846.27; Store and Office Fixtures, $315; Accounts due him as follows: Double & Co., $172.25; S. S. Davis, $375.60; Oliver P. Robinson, $272.15; Jefferson D. Fore, $132.38; Charles H. Brooke, $362.75; Ezekiel Forman, $154.48; A. O. Pilson, $372.63; T. E. Zimmerman & Co., $263.72; D. C. Aughinbaugh & Son, $184.89; L. N. Meadows & Co., $323.65; Hall, Atkinson & Co., $173.21; and Accounts owed by him as follows: Wyeth Bros., $342.37; Gilbert Bros., $345.65; Sharp & Dohme, $185.87; Hance Bros. & Wight, $285.34; Muth Bros. & Co., $216.45. EXERCISE NO. 10. GENERAL STORE. and A. E. Trader enter into partnership, March 1, 19 — , to conduct a retail (Student's name) business in a general store. Firm to be known as & Trader. Gains and losses (Student's name) to be shared equally. invests cash, $1,750. (Student's name) A. E. Trader, who has been conducting the business heretofore, invests in cash $314.29; Mdse., $1,425.73; Store and Office Fixtures, $150; Accounts due him as follows: John Lange, $25; Sarah Dennison, $6.75; G. H. Terrell, $10.25; W. S. Barnes, $9.72; Mrs. J. B. Reed, $12.40; Louis P. Doub, $8.72; L. B. Durant, $20.15; William Wilson, $10.05; W. S. West, $12.42; James Beall, $12.72; Frank Jones, $18.68; Mrs. Jas. Stotlemeyer, $7.23; George F. Crawford, $25; Samuel Wright, $75; Mrs. Emma G. Crawford, $18.75; Jos. L. Purcell, $10.95; John D. Powell, $40.31; George W. Baker, $32.05; David C. Hensell, $7.23; Mrs. John Harris, $12.75; Accounts owed by him as follows: Silberman & Todes, $125.; D. M. Crabill, $20.75; Stickley Milling Co., $172.25; Baltimore Bargain House, $225.15. EXERCISE NO. 11. GROCERY BUSINESS. and A. E. Trader enter into partnership, April 1, 19 — , to conduct a wholesale (Student's name) grocery business, firm to be known as & Co. Two-thirds of the gains or losses (Student's name) are to be received or borne by and one-third by A. E. Trader. (Student's name) invests cash, $1,050; Mdse., $5,400; Store and Office Fixtures, $840; (Student's name) Accounts due him as follows: Boyer & Co., $450.50; Miller & Hartman, $253.60; and L. W. Johnson, $165.40. Accounts owed by him as follows: National Biscuit Co., $960; and C. A. Gambrill Mfg. Co., $1,009.50. A.sE. Trader invests cash, $1,000; Mdse., $3,500; the following account due him: Oscar Bear, $242.56; and the following accounts which he owes: Thos. G. Cranwell & Co., $1,700; and Woolson Spice Co., $42.56. JOURNAL. ■ 59 6>0 6*2 6* 6J 6j 63 6^ 6>* 6* Cs &J- 6J- 6>& 66 66 C2, ^>^^>Z^-^< 4s/£*X^£-~eS, ^Jli>^2^^Z^(^^Z^^^Z^~ / Otuc/enf^ b^' <7&<£&~2^t-^C~£*^' ^-^zSi^^eii^-^^^^^r^^/^^z^a!^?^^^ *^A> ^festf^^-z^^ ^£^£4>i£l*&*£>S ^J~& 6) ^r6 J ^7J% 3 9<$\ -2 763.y 6J2.J+3 4<^ Jbf?S^ ^ft^- C=^B^^*^5»*-^ j0^!^z^ ^T# ^oo a\ s*7- ih&^riS / ^^^3^*«6^^z-^tj^' S7- KJT000 / /t ~^±J^& = ,: rt^ t Z^£3>W~<2<&S S<7 ^7^72, V<7- /\^&&&a^u<^> y ' <^7 ^/StZ€&^-2-^=^^ ^T7\^ r ^^iT^i^. C-4&e>&4tf' St?— V vjT^ 7??s y ft^zzz^jet>^-z^c-^^c5 jra / ///3 JZ^^C^A <3<3/<2'i^_f/ £>-^ X3j^SJJl &3 /C^7-i ■"fsfy f, ^ 74 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. WRITTEN TEST NO. 5. 1. What are Private accounts kept for, and how many of them are usually kept in each set of books? 2. When are Private accounts debited, and what entries are made to balance the debits to Private accounts? 3. Under what circumstances should Private accounts be credited and for how much? By what debits should such credits be balanced? 4. What are books closed for? Usually how often? 5. What should be done before the books are closed? If they do not balance, what then? 6. What is carried into the Loss and Gain account? 7. On which side of the Loss and Gain account should all the losses appear? 8. Name and describe the accounts, or kinds of accounts, on which there are likely to be losses and gains, and those on which there are not. 9. When is there a loss on a Personal account? 10. Describe all the entries you would make in closing a Merchandise account, or any similar account on which there has been a loss. A gain. 11. Describe the entries you would be likely to have occasion to make in closing a Store and Office Fixtures account? 12. Describe the different methods of closing an Expense account. 13. Describe the entries you would make in closing a Personal account on which there was a loss. 14. Describe the entries for closing a Loss and Gain account when the gains exceed the losses, and also when the losses exceed the gains. 15. Describe the entries for closing a Private account when there is a gain on it, and when there is a loss on it. 16. Describe the entries for closing a Stock account. 17. Why is red ink used in making the entries in which it is used in closing books? 18. When a set of books has been closed, what should be done before anything else is entered in them? Why? 19. What will the credit side of each Stock account show after a set of books has been closed When the student has so thoroughly mastered the instructions in this lesson that he can give the information above asked for, he may make a Six Column Statement and then close the books for the Wholesale Grocery Business of & Co., which he is directed at the beginning (Student's name) of this lesson to keep, and may give the net private loss or gain of each member of the firm, and the amount of each Stock account on the morning of Feb. 3, 19 — . The Six Column Statement should be submittted to the teacher before the closing entries are made on the books. JOURNAL. 75 y ^ '?- 77 7f 76 rjz 7* ^^Y^t* 76 7 L 76 ^c^/ -#c£S (<5£u3cn7<2 7?a77zeJ iJj/^ S? / 70.02 ,/va tu \ 'cftf, rZe.nh / Sgza U. ^^ J& ^^^^^ ,/ 7eaJ> / 6<77JJ~^ /rt*- J2, '7— 6r 7^ 4'dr-^?£*^*/ 7^ ff */dT ^£ *6J~ /^^z^^y *7 6>f 6^3 &V* g~ao fY / f 7\fa JJ / &7 . &O &J2^> _3J? 1 fte~^.2J' 1£if ■ 2J '7*>zy J2 2, /-&&^ 6 &3J 6>0 r^ }/# S 3?<3 ?J ^J& ^^^/^.'^-^4(^ /*^*-> y^i^y a£/& y^^^t^^^-rt^J^^- "7 JL^ J2, T= 67 6r 6? ^^ / 67 /^=3^SV«^ £ SWz- <&^z/ £Lf j ; „ cfy&A?: */r£ jw s^^ w - i*y*sSi J&. / Hfo-Wlt. Hoskins , Stationers ^MuOm%dm\ ~Ay Demand Note. ^2^ «/» '(&£ <*fr 4?- : ^/-e^M ^C^e^*^ y^ /■//; — ^/JU£'- MfoMTi- Hoshjn.3 , Stu* tenets MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 91 Collateral Note. Philadelphia, ^*~*^ >*j 19 — after date, for Value Received^;-*-"*— promise to pay to the order of 7^\ DOLLARS, with intereit, having deposited as collateral security for payment of this or any other Jiability or liabilities tp-^aid holder hereof, due or to become due, orjhatmay be hereafter contracted, the^following property, viti jm.r..^?... JUL with the right on the part of the holder hereof, to repledge the securities above mentioned, or to substitute or exchange for the same other certificates of Ilka tenor and amount, and also from time to time to demand additional collateral security, and upon failure to comply with any such demand, this obligation shall forthwith become due, with full power and authority, to the holder hereof, or assigns, in case of such default, or of the non-payment of any of the liabilities above mentioned at maturity, to sell, assign, and deliver the whole, or any part of such securities, or any substitutes therefor or additions thereto at any broker's board, or at public or private sale, at their option, at any time or times thereafter, without advertisement or notice to the undersigned, and with the right on the part of the holder hereof, to become purchaser thereof at such sale or sales, freed and discharged of any equity of redemption. And after deducting all legal and other costs and expenses for collection, sale and delivery, to apply the residue of the proceeds of such sale or sales so made, to pay any. either or all of said liabilities, as said holder hereof shall deem proper, returning the overplus to the undersigned : and the undersigned will still remain liable for any amount so unpaid. It being further understood and agreed that the Feus National Bane of Philadelphia shall have a like lien upon any and all funds, stocks, bonds, notes, and other property at any time in the hands of said Bank belonging to the maker, or endorser or endorsers, guarantor or guarantors hereof, as security for this note and for any and all liability of liabilities, matured or unmatured, ot such maker, endor- ser or endorsers, guarantor or guarantors to said Bank, which lien shall be enforceable in like manner and shall be subject to all the provisions herein above and before mentioned and set quL In the event of an application for the appointment of a Receiver for the undersigned or any party hereto, or the making of a general assignment by, or the filing of a petition in bankruptcy by or against, the undersigned, or any guarantor or endorser of this note, or any party hereto, or of any other act of insolvency of any of said parties, however, expressed or indicated, all aforesaid liabilities shall, without notice, at the option of the said holder, become immediately due, without demand for payment thereof. It is further agreed that upon any transfer of this note, the said holder may deliver the said collateral or any part thereof to the transferee, who shall thereupon become vested with all the powers and rights herein above given to the said holder in respect of said note and collateral, and the said holder shall be thereafter forever relieved and fully discharged from any liability or responsibility in connection therewith. PAYABLE AT THE PENN NATIONAL BANK. Chn.lRnmml. Judgment Note. [No. 161.] Printed and sold by Wm. F Murphy's Sons Co , 509 Chestnut St. , Philadelphia. pav^to the order of..^ C^x..:. yL/2..:. &, T, 'y/^UC^A^ a. w y Z H w u"s I 2 g fc £ B S»S g o - * °s2 H (CITY OF DRAWFR) (bAIB) ON. (DATE OF MATUR1T '\ Q -m- ACCEPT THIS BILL PAYABLE AT ANY Bi.NIC BANKER OR U u < TO (MAMS OF DRAWEE) .191 THE OBLIGATION OF THE ACCEPTO£-«EREOF ARISES OWf OF IT- E PURCl-j^SE OF GOODS FROM THE DRAWER. THE DRAWEE MAY IjjkuST COMPANY (STREET ADDRESS) .PA\ *IN THI o \ o 5 No.. TO THE ORDER OF OURSELVES .(DOLLARS $_ J UNITED STATES WHICH HE MAY DESIGNATE. (SIGNATURE 0» DRAWER) BY. (CITY OF DRAWER) The Trade Acceptance is confined to credit obligations arising from the sale of goods, note or a draft may cover any kind of obligation. 94 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. If we are to receive the money, it is Bills Receivable, and if we are to pay the money, it is Bills Payable. 78. With a two-party draft, the Drawer is the Payee. Such a draft, when it has been ac- cepted, to the Drawer-payee will always be Bills Receivable because he is to receive the money for it; to the Drawee, when he has accepted it, it will be Bills Payable because he is to pay the money for it. In the case of a three party time draft, the Payee is a third person, usually a creditor of the Drawer, and when such a draft is drawn, the Drawer makes an entry in his Journal debiting the Payee and crediting the Drawee. The Drawee makes an entry in his Journal, debiting the Drawer and crediting Bills Payable, and the Payee makes an entry in his Journal, debiting Bills Receiv- able and crediting the Drawer. When this acceptance is paid, the Drawee credits Cash and debits Bills Payable and the Payee debits Cash and credits Bills Receivable. 79. At this point, before the student proceeds with this lesson, the teacher will drill the student so much and so thoroughly on notes and acceptances payable to us and by us, that he will always know what such papers are when he sees them, and will always know which are Bills Receivable and which are Bills Payable, and which must be entered in the Bills Receivable ac- count, and which in the Bills Payable account. In the illustrations, let the name (Student's namel & Trader be used as the name of the firm with which the student is connected. Material for il- lustrations may be obtained by turning to Exercise Nos. 5, 6, and 7. Instead of every remittance and payment received in those exercises, allow a note to be received or a draft to be accepted or the payment to be in settlement of a note, and instead of every remittance sent or payment made, allow a note to be sent or a time draft to be accepted, or allow the remittance to be in payment of a note or an acceptance. THE BILLS RECEIVABLE ACCOUNT. 80. Any note or acceptance for which we are to receive the money, always belongs in the Bills Receivable account, whether we are receiving the note, or our draft is accepted, or we are receiving money in payment of the note or acceptance. 81. The Bills Receivable account is kept to show what notes and accepted time drafts of other persons we hold and when we are to receive the money for them. 82. If at the time a set of books is opened, there are Bills Receivable on hand, they will appear in the Journal entry among the resources invested in the business by the person to whom they belong, and should be posted to the debit side of the Bills Receivable account. All such debits to the Bills Receivable account at the opening of the books are balanced by being included in the credit of the Net Investment to the proprietor's Stock account. 83. If at any time after the books are opened, we receive a note or an acceptance in part or full settlement of an account, we debit the Bills Receivable account for the amount of the note or acceptance. The debit to the Bills Receivable account in that case is balanced by crediting the account of the person who gives us the note or accepts our draft. 84. The Bills Receivable account should be credited whenever we receive the money for any note or acceptance we hold, whether we receive the money from the person who gave us the note, or accepted our draft, or receive it by getting the note or acceptance discounted, or by turn- ing it over to some other person whom we owe, in payment or part payment of our indebtedness to him. If we receive cash for the note, the credit to the Bills Receivable account will of course be balanced by a debit to the Cash account. If the note is turned over to some other person, the credit to Bills Receivable account will be balanced by a debit to the account of the person to whom the note is turned over. MODERN BOOKKEEPING,- ACCOUNTING AND BUSINESS PRACTICE. 95 85. If we have a note discounted, we debit the Cash account and credit the Bills Receivable account for the entire amount of the note, just as if we had received the whole amount, although in fact we receive only the face of the note less the discount on it to maturity. We then credit the Cash account and debit the Interest account for the amount of the discount, just as if we had paid the bank the amount of the discount charge, which we have really done in getting the note discounted. When we have a note which does not bear interest discounted, the bank charges us simple interest on the face of the note for the time it has yet to run, including both the day of dis- count and the due date. If the due date happens on Saturday, Sunday or a legal holiday, the note is due on the next succeeding business day and the interest or discount must be figured ac- cordingly. If a note bears interest at a rate which is satisfactory to the bank, the bank will pay us the face of the note plus the accrued interest to the date on which we turn the note over to it. If the bank pays us accrued interest, the Interest account is credited for the interest and the Cash account is debited. Some banks in discounting another person's interest bearing note for a de- positor, will find the amount of the note at maturity and will deduct from this the discount for the time that the note still has to run and credit the depositor with the difference. The interest in this case is figured upon the amount due at maturity. Other banks will simply deduct the dis- count for the time that the note still has to run from the face of the note and credit the depositor with the difference, and then credit the depositor with the entire amount of interest paid by the maker of the note at the time that the note is paid. The bookkeeper understanding the method pursued by the bank with which his firm deals, will do his bookkeeping in accordance with the facts. 86. If the person who owes us a note does not pay it when it becomes due, but gives us a new note for the old one, we may make the entry in either of the following ways: either write on the Bills Receivable account or in the Bill Book, where the entry for the old note was made, "re- newed," and the date and time of the new note, or credit the Bills Receivable account for the old note, because it was paid by the new note, and debit the Bills Receivable account for the new note, because a note is received. If the second method is used, the Journal entry will be — "Bills Re- ceivable to Bills Receivable" for the amount of the note. When notes are renewed, it is custom- ary for the person owing the note to pay the interest on the old note in cash. Then the person paying the interest credits his Cash account and debits his Interest account for the amount paid, while the person to whom the interest is paid, debits his Cash account and credits his Interest account for the amount received. 87. Persons sometimes make a part payment on a note which they owe. If we receive a part payment, we debit Cash and credit the Bills Receivable account for the amount received, entering in the explanation column of both books, the name of the person who owed the note and the date of the note upon which the payment is to be applied. It is possible that we may receive a note which is given to settle an old note and also a personal account. In this case, the Bills Receivable account must be debited for the amount of the note received, and two credit entries must be made to balance this debit; one to the Bills Receivable account, because the old note is settled, and one to the Personal account affected, because the note pays that account. For an illustration of the proper Journal entry to cover a case such as has just been cited, see page 103, the second entry under date of January fifth. THE BILLS PAYABLE ACCOUNT. 88. Any note or acceptance that we are to pay always belongs in the Bills Payable account whether we are issuing the note or accepting the draft or paying the note or acceptance. 89. The Bills Payable account is kept to show what notes we have given other persons and what time drafts of other persons we have accepted, and when we are to pay them. 90. If at the time a set of books is opened, there are Bills Payable outstanding, they will appear in the opening Journal entry amoung the liabilities of the person by whom they are owed, 96 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. and should be posted to the credit side of the Bills Payable account. All such credits to the Bills Payable account at the opening of the books are balanced by what are equivalent to debits to the Stock account of the person who owed them, for like amounts. These debits to his Stock ac- count, instead of being entered as such, are merely subtracted from the credit to his Stock ac- count, in making the entry for his Net Investment. All credits for liabilities invested in the business are balanced in just the same way, in opening entries. 91. After the books are opened, at any time when we give a note or accept any person's time draft on us, the Bills Payable account should be credited for the amount of the note we give or the time draft we accept. The credit to the Bills Payable account in this case, is balanced by debiting the account of the person to whom we give the note or whose time draft we accept. 92. The Bills Payable account should be debited whenever we pay any of our outstanding notes or acceptances and the debit. to the Bills Payable account in this case is balanced by a credit to the Cash account for the cash paid out in taking up the note or acceptance. 93. Whenever we give a note or accept another person's time draft on us, and whenever another person gives us a note or accepts our time draft on him, the first entry for the transaction is made in the Journal, because the transaction is one in which cash is neither paid nor received. All transactions in which cash is neither paid nor received, are entered first in the Journal. For the form of the Journal entry, see illustration on page 103. 94. Whenever we pay a note or time draft which another person holds against us, and when- ever another person pays a note or time draft which we hold against him, the first entry is made in the Cash Book, because the transaction then is one in which cash is paid out or received. 95. If we renew a note that we owe, we debit the Bills Payable account for the old note, be- cause the old note is paid, and credit the Bills Payable account for the new note, because a new note is given, or we may write the word "renewed" on the account, and the date and time of the new note. 96. Be careful in making entries for notes and drafts to write in the explanation column of the Ledger the name of the person from whom the note is received or to whom the note is given and the date, time and rate of interest, unless a Bill Book is kept, containing a full description of all notes and drafts receivable and of all notes and drafts payable, in which case the number of the note or draft will be sufficient explanation, since it will enable us to refer to our Bill Book and get a complete description of the paper at any time. 97. One of the most common forms of ruling for bill books is illustrated on pages 98 to 101. Usually half of a Bill Book is devoted to Bills Receivable and the other half to Bills Payable. Nearly all business people receiving or issuing notes and drafts in any considerable number, keep a Bill Book. INTEREST AND DISCOUNT ACCOUNT. 98. The Interest and Discount account is kept to show how much we pay and how much we receive as interest for the use of money. Whenever we pay interest for the use of money, the Interest account is debited for the amount paid, and of course the Cash account is credited for the same amount. Whenever we receive a payment of interest for the use of money, the Interest account is credited and the amount of this credit is balanced by a debit to the Cash account for the same amount. The money we pay for interest is usually the amount of interest we pay on some interest-bearing note that we have is- sued, or the discount on some note of our own that we have had discounted at the bank in bor- rowing money, or the discount on some other person's note or acceptance that we have received and have had discounted so as to get the money at once instead of waiting until the maturity of the note or acceptance. For illustration of an Interest and Discount account, see page 106. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 97 WRITTEN TEST NO. 7. 1. What are Bills Receivable? Describe them so fully that a person who had previously known nothing about them would always recognize any paper of that class on seeing it. 2. What are Bills Payable? Describe them as above. 3. What papers are always entered in the Bills Receivable account? What papers are al- ways entered in the Bills Payable account? 4. In what cases in which the Bills Receivable or Bills Payable account is affected, are the first entries made in the Cash Book? 5. If the first entry in a Bills Receivable or Bills Payable transaction is made in the Cash Book, how do you know on which side of the Cash Book to make it? 6. If the first entry in a Bills Receivable or Bills Payable transaction is made in the Cash Book, how could you tell, if you did not know in any other way, to which side of the Ledger that entry must be posted? 7. What is the Bills Receivable account kept for? 8. If at the time the books are opened, there are notes or acceptances on hand, payable to the firm for which the books are being opened, what entries should be made for them? 9. After the books have been opened, when should the Bills Receivable account be debited, and when should it be credited? 10. In recording transactions which affect the Bills Receivable account, in what cases should the first entry be made in the Cash Book, and in what cases in the Journal? 11. If we sell a note that we hold, or have it discounted, what entries should be made on our books? If we give it to one of our creditors to apply on account, what entries? 12. What is the Bills Payable account kept for? 13. If at the time the books are opened, there are notes or acceptances outstanding, which the firm is to pay, what entries should be made for them? 14. After the books have been opened, when should the Bills Payable account be credited, and when should it be debited? 15. In recording transactions which affect the Bills Payable account, in what cases should the first entry be made in the Cash Book, and in what cases should the first entry be made in the Journal? 16. What is the Interest account kept for, and when should it be debited and when credited? BILLS RECEIVABLE AND BILLS PAYABLE EXERCISES. 99. The Cash Book, Journal, Bills Receivable, Bills Payable, and Interest account entries for Exercise No. 16 will be found illustrated on pages 103 to 106. Look at each transaction in Exercise No. 16 and decide in your own mind, whether it should be entered in the Cash Book or in the Journal, and how the entry should read, and after deciding, turn to pages 103 to 105 and see whether or not it is entered in the book in which you thought it should appear and in the way you thought it should be entered. After having decided about, and verified, the entry of all of the transactions in the Cash Book or Journal, you may take the Cash Book and look at each entry, and decide whether it should be posted to the Bills Receivable or to the Bills Payable account, and to which side of the account it belongs, and after deciding you may look and see whether or not it is posted to the account, and to the side of the account, to which you thought it should be posted. After having decided and verified all of the postings from the Cash Book, you may turn to the Journal and look at each entry, and decide whether it should be posted to the Bills Receiv- able or to the Bills Payable account, and in each case to which side of the account, and after de- ciding you may look and see whether or not it is posted to the account, and to the side of the ac- count to which you thought it should be posted. 98 BILL BILLS No. When Rec'd Drawer and Endorser Drawee op Maker In Whose Favor For What Rec'd Where Payable / 2. ,f- cT "to ^X2^&L^a^ ^2^&Lt^^> ., 7 'A 't~ n ^ When Due Jan & & Jo 6 Je Fen 7 t* 7 3-m*-. Mr Apr MajJun Jul Aug Sep Oct Nov Dec / Amount Int. Rate When and How Disposed of /£J — /23 — J-J6 — JSt — cT/ — //^ 6 J 6rj — I //f zs- 63 — 7 — ^t^tt^e-e^e^C^tf S&tr' j <& J%Z^s**>&>f^^/£<>^', 100 BILL BILLS No. When Giv i Drawer and Endorsi Drawee or Maker In Whose Favor For What Giver Where Payable so / ■ / J- i 4 y - /' f A '9 .^M^~^^ %ZUt~j*^Li~A&j<%2L' BOOK. 101 PAYABLE Yiar Date Month Day _ Ime fear J n Feb Mr Apr ! la Ji n J il A ig S p :t N iv D K When Due I Amount I ate When and How Disposed of <*— 'jr— fa JU -2 3+n+ Co Jo 6* Co f* Co Co Jo 'r- t- *j 7 JZ^f — 3fX 7z 2£L/ 102 MODERN BOOKKEEPING, AC COUNTING AND BUS INESS PRACTICE. C c— Z i- , <■!■ - , rf i- r ~ r r rl ~ r The student will note that all of the posting that it is necessary to do from the Cash Book is done in the illustration, but that only half of the posting that it is necessary to do from the Journal is done in the illustration. The other part of the posting from the Journal is not done because the Personal accounts to which the Journal entries should be posted are not shown in the illustra- tion. The student of course knows that every Journal entry must be posted to both the debit and the credit side of the Ledger, and that whenever the Bills Receivable account is debited, the Personal account of the person giving us the note or accepting our time draft must be credited, and that whenever the Bills Payable account is credited, the Personal account of the person to whom we give the note, or whose time draft we accept, must be debited. The illustration does not show the entries that had been made to the Bills Receivable and Bills Payable accounts prior to the date of the transactions given as examples for the illustration. It shows only such entries as were occasioned by the examples. EXERCISE NO. 16. BILLS RECEIVABLE AND BILLS PAYABLE. JANUARY 2, 19—. Send Perfection Mattress Co. note at 60 days for $300. Receive from L. F. Adams, note at 30 days from Jan. 1st for $683. Pay note due Cedar Rapids Furniture Co., $237. Have Gold Bros, note for $150, due in 60 days from this date, discounted, and receive from the bank, $148.45 for it. 3. Mr. C. N. Roderick paid his note due today, $185. Receive note at 60 days from Jan. 7th from O. J. Bruce in settlement of account $119.25. Accept 60 day draft of Henderson, Greene & Co., for $347. 4. Pay our note due Globe-Wernicke Co., $325. Reitz Bros, renew their note for $125. They give us a new note for $125 due in 30 days, and pay interest due on old note, 63e\ Send Rivers Furniture Co. a 90 day note for $150. Receive from Oldershaw & Son, $380, in payment of their note due today. 5. Jordan Stabler Co. pay us $250 on their note of $536. Receive note at 30 days from Oliver Brown in settlement of his account, $63 (note 30 days from Jan. 2). Receive from F. M. Smith, $51 in payment of his note due today. Bryant & Clarvoe give us their note, due 60 days from today, for $399.07 in settlement of their note of $179.63, and balance on their account, $219.44. We send the Woolson Spice Co., our note at 60 days for $398, renewing our note of like amount and enclose our check for $3.98 to pay the interest on the old note. We buy from Gambrill Mfg. Co., flour worth $187.50, and give in payment our note due 60 days from today. 7. Accept 30 day draft of Wilson Furniture Co., for $500. Pay note due Excelsior Mfg. Co., $390. Receive from Thomas Brown note due 3 months from date, $70. JOURNAL. 103 *£^£: = ^^^^^^^^^^^^^^^^^^ i sK^rtis' '& > c£j. y^- 3^L&£- '. ^sLtstt^cv?'. Az&y*z^isrPY?&zAs&^^ '/± ^L^-t^z^ yy 3 £■ -• 3^/ /2J - 63 3#f — 2-J V //*/ LCr^' r t^J^z^^^^- tsi~?k2~£z&^?-*£*e^' *7' j&j 7 SIS 3 ?r / / & /j 106 LEDGER. '?• /m £>3 7" '■f^ZZ z^z^zz-- ^r- vjr t/C^?^--^&**-V /74 && J2, 7 C^ij^C/ /s^r /0^ &3? if \ i J(^U^ l ^J' r / 3 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 107 EXERCISE NO. 17. BILLS RECEIVABLE AND BILLS PAYABLE. Make out all notes given by, and all drafts drawn by your firm in exercises 17 and 18. begins business March 1, (Monday) with a cash investment of $10,000 Buy (Student's name) from McGaw & Co., for cash, bill of groceries amounting to $4800. Buy from Woolson Spice Co., bill of groceries amounting to $5600, giving in payment your note at 60 days from date, with interest. 6. Sell to Snyder & Co., bill of groceries amounting to $650, receiving in payment, their note at 30 days. 9. Buy from C. A. Gambrill Mfg. Co., bill of groceries amounting to $7540, giving in payment your note at 30 days. 12. Sell to Reitz Bros., bill of groceries amoimting to $1200, receiving in payment, their note at 60 days, with interest. Pay for stamps, $20. 15. Sell to F. W. Johnson, bill of groceries amounting to $2500, receiving in payment two notes, each for $1250, the first payable in 30 days and the other in 90 days. 16. Buy from McGaw & Co., for cash, bill of groceries amounting to $3200. Sell to Boyer & Co., bill of groceries amounting to $250, receiving in payment their note at 3 months. 24. Sell to Maynadier & Co., bill of groceries amounting to $1500, receiving their note at 30 days for one half the amount, and cash for the balance. 27. Sell to Jordan Stabler Co., on account, bill of groceries amounting to $2500. 29. Buy from National Biscuit Co., bill of groceries amounting to $650, giving in payment Snyder & Co.'s note received on the 6th instant. 30. Sell to F. W. Johnson, for cash, bill of groceries amounting to $275. Sell to Bryant & Clarvoe, on account, bill of groceries amounting to $850. Sell to Percy M. Reese, bill of groceries amounting to $925, receiving in payment his note at 30 days with interest. Sell to Reitz Bros., bill of groceries amounting to $1500, receiving in payment their sixty day note for $500, cash $500, balance on account. Pay clerks, $350. APRIL 1. Sell to Wm. Jackson, bill of groceries amounting to $342.10, receiving in payment his note at 60 days, bearing interest at 6%. 108 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 3. Buy office furniture for $350, from Hall, Headington & Co., giving a note at 30 days in payment. Pay for stationery, $38. 5. Buy from McGaw & Co., on account, bill of groceries amounting to $720. Sell to Jordan Stabler Co., for cash, bill of groceries amounting to $362.40. 8. Sell to F. W. Johnson, bill of groceries amounting to $425, receiving in payment his note at 30 days. 14. Give Alex. Yearly & Co., your note at 30 days to pay rent for March and April, $1500. Buy from McGaw & Co., bill of groceries amounting to $1326.70, for which accept their draft at 90 days. F. W. Johnson pays his note of the 15th ult., due today. 23. Maynadier & Co., pay their note of March 24th. 29. Percy M. Reese pays his note of March 30th and $4.62 interest. 30. Pay note of 1st ult., favor of Woolson Spice Co., and $56 interest. Sell Gold Bros., bill of groceries amounting to $625, for which they accept your draft at 3 months. Pay clerks, $350. MAY 3. Pay note favor Hall, Headington & Co., 8. F. W. Johnson renews his thirty-day note due today, giving you a new thirty-day note bearing interest at 6%. 11. Reitz Bros, pay their note of March 12th due today, and $12 interest. Sell to Boyer & Co., bill of groceries amounting to $320, receiving in payment their note at 60 days. 15. Renew your note due today in favor of Alexander Yearly & Company, giving a new thirty- day note bearing interest at 6%. 20. F. W. Johnson pays his 90 day note of March 15th, less discount for 34 days, (discount $7.08). 24. Sell to Reitz Bros., bill of groceries amounting to $1520, receiving in payment their note at 30 days for $800, and cash for balance. Pay for advertising in "Sun," $150. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 109 28. Discount at the bank Boyer & Company's note of the 11th instant and receive $317.55 for it. 31. Wm. Jackson pays his note of April 1st, and $3.42 interest thereon. Pay clerks, $350. Take a trial balance, and close the Ledger, using the following inventories; Mdse., $13,092.20; Store and Office Fixtures, $350. EXERCISE NO. 18. ■ begins a Wholesale Hardware Business Oct. 1, (Tuesday) with the following (Student's name) investment: Mdse., $5800; Cash $21,500; Store and Office Fixtures, $1200; C. C. Pursey & Co.'s note for $3600 for thirty days, dated Sept. 6th.; Marshall, Wescoat & Co., owe him, on account, $2546. He owes on a note in favor of Maryland Hinge Co., at 60 days, dated August 10 h, $783, and also owes National Tool & Stamping Co., on account, $1645. OCT. 7. Sell to Miles Hardware Co., bill of hdwe. amounting to $296, for which they accept your draft at 30 days. Buy from Francis Albert & Co., bill of hdwe. amounting to $2400, giving in payment your note at 60 days, bearing 6% interest. Pay for stamps, $25. C. C. Pursey & Co. pay their note for $3600 due today. 9. Accept draft drawn by National Tool & Stamping Co., at 30 days, for $645. Pay rent, $400. Pay note for $783, favor of Maryland Hinge Co. 12. . . Sell to Frank Beall & Co., bill of hdwe. amounting to $1200, receiving in payment their note at 30 days, bearing 6% interest. Buy from W. H. Cole & Son, hdwe. amounting to $324,60, for which accept their draft at 30 days in favor of Chicago Stamping Co. Buy additional office furniture, $120. 15. Marshall, Wescoat & Co., accept your draft at 30 days for $1000 favor of National Tool & Stamping Co. Sell to J. A. Constantine on account, bill of hdwe. amounting to $523.10. Sell Miller Hardware Co., bill of hdwe. amounting to $1213, receiving in payment their note at 60 days, with interest at 6%. 18. Sell to J. R. M. Adams, on %, bill of hdwe. amounting to $215. Pay for cleaning windows, $15. 24. Sell to Young Bros. & Co., bill of hdwe. amounting to $762, receiving in payment their sight draft on Frank Beall & Co. 110 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 27. Buy from Maryland Hinge Co., on account, bill of hdwe. amounting to $3400. Sell to A. B. Cochrane for cash, bill of hdwe. amounting to $280. Pay gas bill, $34. Sell to Geo. Keller, Bill of hdwe. amounting to $1862.20, receiving in payment his note at 60 days. J 30. Sell to Union Hardware Co., bill of hdwe. amounting to $2500, receiving in payment their note at 30 days for $1750 and draft at 30 days drawn on C. S. Pitcher for $750. Pay clerks, $400. NOV. 2. Sell Frank Beall & Co., bill of hdwe. amounting to $285, receiving in payment his note at 90 days. 6. Sell to C. S. Pitcher, on account, bill of hdwe. amounting to $2500. Pay Maryland Hinge Co., bill of Oct. 27 by giving them a sight draft which you draw on Marshall, Wescoat & Co., for $1546, and cash for the balance. 8. Buy from Francis Albert & Co., bill of hdwe. amounting to $2000, giving in payment a check for $750, and your note at 30 days for the balance. Pay for letter-heads and envelopes, $105. Pay your acceptance of Oct. 9, favor of National Tool & Stamping Co. 11. Sell Marshall, Wescoat & Co., bill of hdwe. amounting to $2400, for which they accept your draft at 30 days. Frank Beall & Co., pay their note of Oct. 12 and 30 days' interest on same, $6. Buy from Wm. H. Cole & Son, bill of hdwe. amounting to $2500, for which accept their draft at 30 days favor Vulcan Iron Works. Pay your acceptance of Oct. 12, favor of Chicago Stamping Co. 14. Have discounted at the bank Marshall, Wescoat & Co.'s acceptance, receiving from the bank $2388.80 for it. 16. Buy from Frank B. Sloan & Co., bill of hdwe. amounting to $5600, giving in payment your note at 30 days. Pay for stationery, $25. 27. Sell to Cumberland Hardware Co., bill of hdwe. amounting to $1,163.40, receiving in pay- ment their note at 90 days. Buy from Henry Disston's Sons, on account, bill of hdwe., amounting to $1536.30. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. Ill 30. Receive from C. S. Pitcher $750 in payment of Union Hardware Co.'s draft on him in your favor, Oct. 30. Sell to J. R. M. Adams, bill of hdwe. amounting so $293.20, receiving in payment his note at 60 days. Union Hardware Co. pay their note of Oct. 30. Pay clerks, $400. | , DEC. 1. Sell to A. B. Cochrane & Co., for cash, bill of hdwe. amounting to $342.10. Sell to C. C. Pursey & Co., bill of hdwe. amounting to $256.20, receiving in payment their note at 30 days. Sell to Union Hardware Co., on account, bill of hdwe. amounting to $386. Pay freight, $320. 4. Pay your acceptance of the 11th ult. in favor of the Vulcan Iron Works, less discount for the time it has to run. (Discount $2.92). 5. Pay your note of Oct. 6, $2400, favor of Francis Albert & Co. (Interest on same $24). Buy from National Tool & Stamping Co., on account, bill of hdwe., amounting to $3220. 8. Pay your note of Nov. 8, favor of Francis Albert & Co. Draw draft at 30 days on C. S. Pitcher, $1750, in favor of National Tool & Stamping Co. 10. ' Buy of Anderson & Ireland, bill of hdwe. amounting to $2957, giving in payment your note at 30 days. 14. Miller Hardware Co. pay their note of Oct. 15th. (Interest $12.13). 19. Frank Beall & Co. pay their note of Nov. 2, less discount for 43 days. (Discount $2.04). 26. George Keller pays his note of Oct. 27th. 31. C. C. Pursey & Co. pay their note of Dec. 1. Pay clerks, $400. Take a Trial Balance and close the books, using the following inventories: Mdse. $19,486.20; Store and Office Fixtures, $1200; Expense, $250. 112 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. WRITTEN TEST NO. 8. 1. What is a promissory note? Draw up one for $1000 at 60 days, dated Dec. 1, 19 — , in favor of John Wanamaker. Make it payable at 807 Chestnut St. Omit signature. (Never sign a note unless you mean to pay it). 2. Name the parties to a note. 3. What are notes used for? 4. What do you mean by Bills Receivable account? When is this account debited? When is it credited? 5. What entry is made when we transfer a note to a third party? When part payment is made on a note? 6. When there is a balance in the Bills Receivable account, on which side do you find it? What does it show? 7. What is an inventory? How do we take an inventory? What is meant by taking stock? Why is an inventory taken? When? 8. How is the gain or loss found on Mdse. account? How is mdse. account forwarded? 9. Into what account is Mdse. account closed? Expense? 10. What does the credit side of Loss & Gain account show? The debit side? The differ- ence? Into what account is Loss & Gain closed? 11. What do we find in the proprietor's stock account? 12. To what account and to which side do you carry the gain shown by the Loss & Gain account? The loss? 13. What does the balance of the proprietor's stock account show after the books are closed? If on the debit side? If on the credit side? 14. What is meant by closing the Ledger? How often should books be closed? For what purpose? 15. What accounts do you make entries in at the time of closing books? 16. In closing books where and why do you use red ink? 17. How do you forward personal accounts? 18. What should you write in the accounts? 19. What should you write on the debit side of Jas. Stein's account : When you sell him mdse? Pay him money? Give him a note? Return to him mdse. you have bought of him? Do work for him? What would you write in the credit side, should these values pass from him to you? 20. What does the difference between the resources and liabilities of a business show at the time of opening the books? At the time of closing the books? MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 113 PRACTICE IN BOOKKEEPING. From the preceding pages, you have learned the elementary theory of Double Entry Book- keeping, and you are now ready to put the theory into practice by keeping complete sets of books by Double Entry. CLASSIFICATION OF BOOKS. 100. The books used in bookkeeping are classified as follows: — Books of Original Entry, Books of Subsequent Entry, and Auxiliary Books. 101. Books of Original Entry are the books in which the first record of any transaction is made. The chief books of original entry are the Cash Book, the Journal, the Invoice Book, the Sales Book, the Voucher Register, and sometimes the Bill Book. Books of Original Entry are the books which will be admitted as evidence in court. In order that they may be used as evidence they should be entirely free from erasures and should contain full, clear, explanations of the trans- actions recorded in them. If an error has been made, it can be corrected by ruling two red lines through it and writing the correct entry above the one that is crossed out or by making a counter entry with a proper explanation and then making the correct entry. 102. Books of Subsequent Entry are books into which entries are posted or transferred from other books. The Ledger is the chief book of subsequent entry. 103. Auxiliary Books are books other than books of original entry and books of subsequent entry, which are kept to supply information about the business. Among the Auxiliary Books in most common use are Check Books, Bill Books, Receipt Books and Order Books. ARRANGING ACCOUNTS IN THE LEDGER. 104. It is customary with bookkeepers to keep the proprietors' stock accounts, the proprie- tors' private accounts, and the general business accounts such as the Merchandise Account, the Store and Office Fixtures Account, the Teams and Auto Trucks Account, Stable and Garage Ex- pense Account, Real Estate Account, Real Estate Expense Account, the Bills Receivable Ac- count, the Bills Payable Account, the Merchandise Discount Account, the Expense Account, and the Loss and Gain Account in the first part of the Ledger. The accounts with persons from whom the firm buys are grouped in another part of the Ledger, or are sometimes kept in a separate Ledger known as the Purchase Ledger, and the accounts with the persons to whom the firm sells are grouped in still another section of the Ledger or are kept in a separate Ledger known as the Customers' Ledger. The bookkeeper from his knowledge of the business, can usually estimate with a fair degree of accuracy about what space should be allowed in the Ledger for each account. The student in ruling the Ledger for the succeeding sets, until further notice, may allow a full page for the Mer- chandise account, half a page for all other business accounts, and one-fourth page for each personal account. INDEXING THE LEDGER. 105. Every account in the Ledger should be entered in the index at the time that the head- ing for the account is written in the Ledger. A Ledger index is arranged alphabetically and may be found in the front of the Ledger or it may be a separate book or a card index. When the name of the account is written in the index, the number of the page in the Ledger on which the account appears should be written after it. In a small Ledger such as is used in these practice sets, index- ing may not seem to be of much consequence, but the student should form correct habits with reference to indexing right from the start. In actual business, where a Ledger may contain sev- eral hundred pages, if an accoimt has not been properly indexed when it is opened, it may be neces- sary for the bookkeeper to spend a lot of time hunting for the account when he wishes to post to 114 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. it, or failing to find the account, the bookkeeper may think he has no such account and may open a second account with the same person or thing, in which case neither account will be complete until the mistake is discovered and the two accounts are united in one place. 106. In posting, a busy bookkeeper can sometimes save considerable time by having a jun- ior clerk, before the posting is begun, look up the Ledger pages in the index and mark in the folio column opposite each item in the Cash Book and opposite each item in the Journal, the Ledger- page to which the item is to be posted. If this is done, the bookkeeper as he does the posting should make a check mark of some kind as each item is posted to indicate that the posting has actually been done. 107. A Card Ledger Index is a convenient form of index for a bookkeeper's use, since it can be consulted without turning over or closing a large Ledger every time the index is consulted. Another plan adopted by many bookkeepers is to keep a card on which the accounts most frequently needed in posting are listed alphabetically with their page numbers. This card can be consulted at a glance and for that reason is much quicker for the accounts that it covers than either a regular index or a card index. Probably the majority of bookkeepers soon memorize the page numbers of all accounts to which they post at all frequently and thus save the trouble of consulting any form of index except for accounts to which posting is of infrequent occurrence. SET 1. WHOLESALE PAPER BUSINESS. 108. In this set use the following accounts, besides the necessary personal accounts: .Stock Account, Private Account, Merchandise, Expense, Store (Student's name) (Student's name) and Office Fixtures, Teams, Teams Expense Account, Interest and Discount, Merchandise Dis- count, Bills Receivable, Bills Payable, and Loss and Gain Account. 109. Do not get "Interest and Discount" and "Merchandise Discount" confused. In- terest and Discount is the account used for the interest or discount on notes or drafts and time is an element in the computation of the interest or the discount. Merchandise Discount is the account used for all deductions from the face of a bill of merchandise for prompt payment, or pay- ment within a specified time. It is simply a certain per cent, of the face of the bill and is computed without reference to time. The per cent, of discount and the time within which it may be claimed are stated in the terms of the bill. Merchandise discount often goes by the name of "Cash Discount." 110. The person who sells goods "on account," unless there is some understanding to the contrary, usually expects the purchaser to pay for the goods before the 10th of the month follow- ing the month in which the sale is made. All goods that you sell in this business, unless otherwise specified, are sold subject to the terms 2/10 N/30, which means that you will allow 2% discount for cash if the bill is paid within 10 days from the date of the sale or will expect payment without any discount in 30 days from the date of the sale. JANUARY 2. .begins a Wholesale Paper Business January 1, with a cash investment of $10,000. (Student's name) Pay for one month's rent of store, $50; for office desk, $65; books, stationery, etc., $37.50. Buy two horses, $175; two sets of harness, $50; wagon, $100. Receive from Smith, Dixon & Co., on account, invoice of paper amounting to $1,560. Pay one year's dues for membership in the International Creditors' Association, $48. Pay for stamps, $2, for bill-heads and letter-heads, $34. Take out insurance policy for one year in Hartford Insurance Co., \°/ on $5,000, $25. Do your posting after each day's transactions. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 115 3. Sell to Williams & Wilkins Co., 10,000 lbs. Butchers' Manilla at 2£ 9,000 lbs. Jute Manilla at 6p. Terms; 2/10 N/30. (When no address is given it is understood that the person is one of our city customers. Always place the address at the head of every Personal account in the Led- ger.) Receive invoice of paper from National Paper Co., New York, for $1,840, 2/10 N/30. Fay for two office chairs, $6; for linoleum for office floor, $26.75. 4. Receive from Weston Paper Co., Davis, W. Va., invoice of paper for $2,400. 2/10 N/30. Sell J. E. Hurst & Co., 100 reams Butchers' Manilla at 40^, 1,000 lbs. Manilla No. 1 at 2f 0. Sell Pearre E. Crowl Co., 10 reams Weston's Ledger at $12 a ream, 1,000 lbs. Tagboard at 3^. Sell Geo. Murphy 900 lbs. Letter-heads at 11^, 1,200 lbs. Bill-heads at 10^, 4,000 lbs. Gray Manilla at $1.50 per cwt. Pay for Underwood Typewriter, and desk, $160, letter-press and copying books, $26.25. 5. Receive from Williams & Wilkins Co., check in full of their account of the 3rd instant, less discount. Receive from the Cumberland Paper Co., Cumberland, Md., invoice of paper amounting to $1,580, 2/10 N/30. Sell to H. J. Fosnot, York, Pa., 900 lbs. Colored Flats at 7& 1,0.00 lbs. Extra Fine Flats at 9£, 10,000 lbs. R. R. Manilla at U, 2,500 lbs. Colored Express at 4^. Sell W. W. Trout & Co., Norfolk, Va., 3,000 lbs. No. 2. Manilla at 3^, 5,000 lbs. No. 1 Manilla at 2|c. Sell J. F. Clark, Salisbury, Md., 1,000 reams Light Straw at 25^ per ream, 1,000 lbs. Gray Manilla at $1.50 per cwt., 1,000 lbs. Jute Manilla at 6& 1,300 lbs. Tagboard at 3£. , Pay salaries as follows: Bookkeeper $12, Stenographer $8, Driver $10, Office Boy $3. 7. Proprietor withdraws for private use, $50. Pay for rent of stable one month, $10, for feed for horses, $8.50. Cash sales for day amount to $75.80. Send Smith, Dixon & Co., a check to pay bill of the 2nd instant, less discount of 2%. Pay for two store trucks, $10. Cash sales, $52.30. 9. Sell to World Publishing Co., 9,500 lbs. Manilla at 2& 3,500 lbs. Tagboard at Zi, 1,521 lbs. Extra Fine Flats at 9& 6,240 lbs. Colored Flats at 7^. Sell A. S. Abell & Co., 2,500 lbs. Jute Manilla at 6& 2,000 reams Butchers' Straw at 40^ per ream. Sell Friedenwald Co., 100 reams Weston's Ledger at $12 per ream, 800 lbs. Letter Heads at ll£ Have office partition put up worth $240, for which give Wm. C. Dulany your note due 60 days from date. Cash sales, $72.40. 116 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 10. Buy from Smith, Dixon & Co., 1/10 (1/10 indicates the date of the invoice, Jan. 10) $3,420, 2/10 N/60. Buy from National Paper Co., New York, $1,735.20, 2/10 N/30. Pay gas bill for private, residence, $8.50. (Student's name) Cash sales, $45.80. 11. Sell L. R. Guthbert on his note at 30 days, 2,700 lbs. Packet-heads at llc\ 2,100 lbs. Extra Flats at 9£, 2,200 lbs. letter-heads at llc\ Pay freight, $48.60, 5,000 Statements $12. Cash sales, $126.30. 12. Receive check from J. E. Hurst & Co. in payment of their bill of the 4th instant, less discount of 2%. Receive check from Pearre E. Crowl Co. in payment of their bill of the 4th instant less dis- count of 2%. Pay salaries: Bookkeeper $12, Stenographer $8, Driver, $10, Office Boy, $3. Cash sales, $48.65. 14. Send check to the National Paper Co. in settlement of invoice of 3rd inst., also to Weston Paper Co. in settlement of invoice of the 4th inst. Deduct 2% discount in both cases. Receive from Geo. Murphy his check in full of his bill of the 4th instant, less discount. Cash sales, $72.40. 15. Send Cumberland Paper Co. check for bill of the 5th instant, less discount. Pay plumber's bill, $41.60. You may now take a trial balance, after which you may make out a Six Column Statement, using the following inventories: Stock of paper $5,640 .92 Office desk 60.00 Books, stationery, etc 30 . 00 Partition, in office 240 .00 Two horses 175 .00 Wagon 100 .00 Linoleum 15 . 00 Office chair 5.00 Two sets of harness 45 . 00 Stamps 1 . 10 Unexpired Insurance 24 . 00 Typewriter and desk 150 .00 Letter press and copying books 24 . 00 Two store trucks 9 . 00 Prepaid rent of store 25 . 00 Unexpired membership in International Cred- itors' Association 46 . 00 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 117 111. You should form the habit of reviewing your work before presenting it to your teacher for approval. Ilia. See that a full, clear explanation of every transaction is made in some book of original entry, — that is, the book in which an account of the transaction is first entered, as the Cash Book or the Journal. lllb. See that the date of the invoice, note, or acceptance paid, is entered in the Cash Book as part of the explanation in any entry covering interest or discount. 111c. See that payments properly chargeable to expense or to subdivisions of that account are not charged to fixtures, teams and wagons, automobiles, real estate, buildings, or other ac- counts representing the assets of the business. 11 Id. See that there is no omission of book folios in posting. llle. Follow the Six Column Statement in closing the books and see that the Loss and Gain Account agrees exactly in all its parts with the Loss and Gain columns of the Statement; that the Present Worth brought down in the Proprietor's Stock Account agrees with the Present Worth on the statement. Do not fail to bring down the Present Worth, Inventories, and Balances, and check the items on the Statement as each accoimt in the Ledger is found by actual examination and comparison to agree with it. 11 If. See that the pencil balance of each account shows right on the face of the Ledger in the explanation space on the larger side of the account. See that this pencil balance agrees with the balance shown on the Statement sent out to the customer at the end of the month. This pencil balance will be the first item on the Statement sent out at the end of the following month. See that pencil figures, whenever addition is elone, are right up against the last fine used for ink figures and not larger than one-fourth of a space high. If made and placed as directed, the pencil figures need never be erased and will be of material advantage to the bookkeeper later on. 112. When the Six Column Statement has been finished, you will present it to the teacher for approval after which you may close the ledger. 113. After closing the Ledger, present all books for approval. WRITTEN TEST NO. 9. 1. What advantage is derived from subdividing the Expense account? 2. Why is the proprietor's Private account opened? When debited? When credited? 3. Into what account is the prooprietor's Private account closed? When? 4. If a cash account is kept in the Ledger what amounts are posted to it? When? 5. Why do you carry the debits in the Cash Book to the credit side of accounts in the Led- ger? The credits to the debit side of accounts? 6. What is meant by Ledger folio columns? What do you place in them? 7. Why are diagonal rulings placed in Ledger accounts? 8. How do you correct errors in the Journal? Cash Book? Ledger? 9. Name in their order the several steps to be taken when closing the Ledger. 10. What are resources? Liabilities? 11. If a Trial Balance does not balance what should be done? 12. Does the Trial Balance prove the Ledger to be absolutely correct? 13. What errors can there be in the Ledger when the Trial Balance balances? 14. What means have business men other than the Trial Balance of proving the Ledger correct? 15. Tell of two ways to find the Present Worth or Net Capital? The Net Gain? 16. Posting $104 to the wrong side of an account would throw your Trial Balance out how much? How would you look for errors of this sort? 118 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. COLUMNAR BOOKS. 114. In the work done thus far, we have used only the simplest forms of ruling in our book- keeping but in most large businesses, forms of ruling are used which save the bookkeeper consid- erable work and time, thus enabling each bookkeeper to keep the records for a larger volume of business. Columnar books are one of the most important labor saving devices. 115. If a Cash Book with three money columns on each side is used, the first money column on the debit side may be used for Miscellaneous Credits, the second money column on the debit side may be used for Merchandise Credits and the third money column on the debit side may be used as a Total column. You will note that this is an addition of just one money column on the debit side of the cash book, — the column for Merchandise Credits. In a Cash Book of this kind, when- ever money is received from the sale of Merchandise for cash, the amount received is extended into the Merchandise Cr. column and this amount need not be posted to the credit side of the Mer- chandise account separately, but the Merchandise Cr. column can be totaled and forwarded from page to page until the end of the month, at which time the Merchandise account can be credited in one entry for the total amount of the cash sales of merchandise during the month. In order to avoid danger of posting these Merchandise credits separately, it is well at the time the entry is made and extended into the Merchandise Cr. column, to make a check mark in the folio column in the cash book, thus indicating that the item is not to be posted separately but will be included in the total to be posted at the end of the month. Of course, all cash received from other sources than from the sale of merchandise for cash, is extended into the miscellaneous column on the debit side of the Cash Book and each item is posted separately as heretofore. 116. If a Cash Book has three money columns on the credit side, the first money column is usually used for Miscellaneous Debits, the second money column is usually used for Expense Debits and the third money column is used as a Total column. In a Cash Book of this kind whenever money is paid for anything that should be charged to Expense, the money paid is extended into the Expense Dr. column and a check mark is put in the folio column to show that this item need not be posted separately and this Expense Dr. column is added and forwarded from page to page until the end of the month, at which time the debits for the entire month can be carried to the Ex- pense account in one entry. 117. For an illustration of a Cash Book with a Merchandise Cr. column on the debit side, and an Expense Dr. column on the credit side, see pages 120 and 121. 118. You will note that the keeping of these special columns saves much of the time that would otherwise be spent in posting and that just the same thing is accomplished as by posting each of the items under consideration separately. 119. Firms frequently classify their receipts and expenditures in such a way as to enable them to use several special columns on each side of the Cash Book to advantage and when this is the case, each column is treated just like the Merchandise and Expense columns explained above. 120. In the Journal, special columns can be used to just as much advantage as in the cash book. In a three column Journal, the first column may be used for Merchandise Debits, the sec- ond column for Miscellaneous Debits and the third column for Credits. In a Journal of this kind, the Merchandise Debits are all entered in the Merchandise Dr. column and instead of being posted separately, they are totaled and carried forward from page to page until the end of the month and then the Merchandise account is debited in one entry for the whole amount. All other debits are extended into the Miscellaneous Dr. column and each of these is posted separately as hereto- fore. All credits in a three column Journal of this kind are also posted separately. For an illus- tration of a three column Journal such as has just been described, see page 122. 121. In a four column Journal the first column may be used for Merchandise Debits, the second column for Miscellaneous Debits, the third column for Miscellaneous Credits and the fourth column for Merchandise Credits. In a Journal of this kind, the Merchandise Debits are all ex- MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 119 tended into the Merchandise Dr. column and the Merchandise Credits are all extended into the Merchandise Credit column and instead of being posted separately these amounts are totaled and carried forward from page to page until the end of the month and the totals are posted to the debit and credit sides respectively of the Merchandise account. All other debits are, of course, ex- tended into the Miscellaneous Dr. column and all other credits are extended into the Miscellaneous Cr. column, and each of these items is posted separately to the appropriate account. For an illustration of a four column Journal such as has just been described, see page 123. SET 2. 122. In this set you may use a Cash Book with three money columns on each side, using the extra column on the debit side for Merchandise Credits and the extra column on the credit side for Expense Debits. A four column Journal may also be used. Use the special columns for Mer- chandise Debits and Merchandise Credits. The transactions in this set are a continuation of the business conducted in the preceding set, therefore do not open a new set of accounts in the Ledger, but use those already opened. WHOLESALE PAPER BUSINESS OF CONTINUED. Student's name JANUARY 16. Buy of Smith, Dixon & Co., invoice of paper amounting to $3,120.24, 2/10 N/30. Sell to Williams & Wilkins Co., 3,400 lbs. Letter-heads at 11^. Receive from H. J. Fosnot, check for bill of the 5th instant, less 2% discount. Sell to J. E. Hurst & Co., 1,500 reams light straw at 25^ per ream. Receive check from W. W. Trout & Co. for bill of the 5th instant, less 2% discount. Pay for having horse shod, $4.75. Cash sales, $39.25. 17. Sell Pearre E. Crowl Co., 25,000 lbs. Gray Manilla at $1.50 per hundred lbs. Sell A. S. Abell Co., 50 reams Weston's Ledger at $12 per ream, receiving their note at 30 days for one-half the amount, balance on account. Pay rent on private dwelling, $25. (Student's name) Sell the World Publishing Co., 1,520 lbs. Tagboard at 3^. Pay for stamps, $3.50. Cash sales, $39.40. 18. Buy stationery for office use, $3.87. Pay for feed for horses, $5.60. Sell George Murphy, 5,600 lbs. Jute Manilla at 6£. Sell J. F. Clark, 2,400 lbs. Extra Fine Flats at llji. Cash sales, $52.81. Pay Smith, Dixon & Co. for bill received the 10th instant, less 2% discount. 19. Receive from World Publishing Co., check for bill of the 9th instant, less discount. Receive from A. S. Abell Co., check for bill of 9th inst. less discount. Pay $8 for ton of hay for horse. Sell Friedenwald Co., 2,300 lbs. R. R. Manilla at 4£ Pay salaries as follows: Bookkeeper, $12, Stenographer, $8, Driver, $10, Office Boy $3. Cash Sales, $121.40. 120 SPECIAL COLUMN CASH BOOK. r -tf&H rtiscel. Mdse. Total 7?! 3 //- oT 4 2*. 33 V /J3 //t>^^2--(? c>/-^Cc^C^^^^lJZZ^f ^^4^/^^M^^t^^^ ^i^ yC ^^"^^^^^^^^^vfe^^-^^^^^^^ 7^ ff ^^^Ycy tTT, (Tr?^/ /c^ / ^^tz^^z^-i^c-^^- Z3 £ // / 73 /0 3/44? 60J& 3f^0 4AJ "- 3 4*' 60 / && /ft? /\3 / 2-6 &6 JT<7 ^"A^P /J Zip 6^jT# 1^ ?/.^ i£ 122 THREE COLUMN JOURNAL. y /, /f — Mdse. Dr. Other Dr. Cr. 1* 31 s V <{ f ■-zr-^c^/' //# /*£-# >. 2, 1>~sSO& Jb^-,3, T^zz^z^c 1^1 /# XS-p %*U^. C^n/,' d~2-^73 3 j/t^^t 3 te^- />2^-— 3^6 - /f2-0 '-# ¥c 6# 24*2.\JT? 3~z£ 7^r (># 3 4<6j'^0 3(0 2J- ^J/2J~0 /XJ" 3// 6 — FOUR COLUMN JOURNAL. 123 J&zz^? Mdse. Nlscel. ? ^Z^>C^?^t^/ /, / y 6 / f - Miscel. ^ Mdse. 2-<4~0 2J-- ^7 / 2*J~- ^jT6 ^rJkr^&^, ^^: 2- &- 6C*r-Zs-, C^cz^-Z^f fi 44 a^z Z£t?-ct 2^T0 — JU-— •JT'. 7 $ :/ /JUS'-* UT^ ^TcT 7<.-r^^d t / Y/0 .'23 fZ /^z^ (*D//6 ^ \3~ // (*Dy/2^ 2*2 2&0-Z^, £>et^z^/ ~~yC^€Z^ y^^2Z "/ 33 ^J~0 4AJ~6S 3 £\7J- /At-** 2-/ ^0 /3~0 7 /r 22\3~0 2^0 /A ^0 60 22. 6 V 3~0 2^3 £73 7^ff 302 3~0 7* / /3 3~0 f£2\0^ INVOICE BOOK. 129 .^5^^ -og-»y^£^i^-2, 7¥- JZ<3 J20 /

y v -g^g^'g^&g-^^^ ?- <^ ^i^J^^zSv-fri^y/Ct. t**7 *2 ^J^z^^-^-t^^y /& "/^ /va ' < /&J 2./ -^S //o *^&a ■2-/ "^/ "^//J ^Tsc j2/ *wS //# /<3a '/* "/<£' /J&j£o * JZ3c-*7 \ Car No. 33756 p. r..r. aJ RFRFIVFn 7/36/19— ■* jgj^Pgggj'» — '~TT7T. ■ - ' Sold ForAccount Of Wm. E. Smith, FRUITIPMIIIE Bridgeville, .Del. ^^t&a^//my/- _iuljL_30, .40- 504 Crates Peaches SALES 7/26 300 Crates Peaches §3.25 450 7/37 TOO n r 1 i a 73 o ^ c S ^ 3 §7 < \s oO fa $> o to s 3 O o o < o E £ CO O E 3 U, ~ * ■a «« V o Gd 1 fa a o O Q 0) X! V a ** ■ c S u 9 1 1 rt D. ^ e Q !i a 1 o ^ o O i naq M N ^ pauama^i \\ N \ N 1 sjaqono^ \\ VS "§ gin 1 i 1 1 1 ^ ^ * ^ Q o ^ > H ^ * ^ 7 '3 * o \ ^ <> a 9 ^ S* N* & \\ \\ v\ S " a 3 Q $ ¥ ^ SN ^ * 09 i a ^ .* >}T3Q a * $ $ 6 2 \ «! ■Or - — -*- pi ro Whom Issued ^ 1 V. \1 >J ^ J 4 \ w ^ k1 1 ^ \i \ ■" MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 219 3. Buy of Telfair W. Marriott, a building in Woodbury for $10,000 giving him a check for $3,000, a first mortgage upon the property for $5,500 to run three years, and our note at sixty days for the remainder. Interest upon the mortgage and the note is to be at 6%. 270. In a manufacturing business, we do not keep a Merchandise account, but in place of it we open the following group accounts: Income from Operations, Cost of Goods Sold (Turnover), Selling Expense, Administrative Charges, Income from Other Sources, Profit and Loss Charges, and Inventory Account. 271. Separate accounts are opened for each article used in manufacturing, and the cost of conducting the business is ordinarily shown under the headings of these accounts. In this set besides the necessary corporation accounts and the group accounts named above, we will use the following accounts : — Real Estate, Mortgage Receivable, Mortgage Payable, Bills Receivable, Bills Payable, Office Furniture and Fixtures, Machinery, Mill Fixtures, Tools, Teams and Auto Trucks, Stable and Garage Expenses, Repairs and Renewals — Machinery, Repairs and Renewals — Other than Machinery, Heat, Light, and Power, Insurance, Advertising, Postage, Freight Inward, Freight Outward, General Expense, Oil Purchases, Cotton Purchases, Paper Purchases, Cash Discount on Purchases, Wages, Salaries, Manufactured Goods Sold, Waste Goods Sold, Cash Discount on Sales, Reserve for Bad and Doubtful Accounts, Reserve for Depreciation on Machinery, Reserve for Depreciation on Mill Fixtures, Reserve for Other Depreciation. 272. Arrange those accounts of the above list which will appear upon the Balance Sheet in one group and those which will appear upon the Income and Profit and Loss Statement in a sec- ond division, each following directly after the group account to which it belongs and into which it will be closed at closing time. (See form of Statement of Income and Profit and Loss, and form of Balance Sheet.) If accounts are arranged in the proper order or sequence, the making of financial statements at any time is, comparatively speaking, an easy matter. Freight and Express, Office Furniture and Fixtures, Insurance, Oil, Fuel, Interest and Dis- count, Discount on Finished Goods, Discount on Cotton, Lost Accounts and Notes, Teams Ex- pense, Discount on Paper, Discount on Mill Fixtures, Discount on Oil, Tools, New Parts and Repairs. 272. In closing the books, discount on cotton is closed into the Cotton account, after which Cotton account, Wages, Waste, Paper, Oil, Fuel, Freight and Express, Insurance, and Discount on Manufactured Goods, etc., are closed into Manufacturing account. This accourit is then closed into the Trading account, which, according to the statement at the end of this set, is closed into Profit and Loss account. t Use the Voucher System. Make all payments by voucher checks. 5. Buy of National Machine Co., Philadelphia, Pa., Looms, Cards, Spindles, etc., amounting to $4,257,68; Machinery, Shafting, Pulleys, etc., $485, paying cash for same. (This last item comes under the head of Fixtures.) 8. Buy of Cushing & Co., for cash, blank-books, pencils, pens, ink, amounting to $52.65. Buy of Underwood Typewriter Co., for cash, one typewriter, $100, three desks, $150, five chairs, $25, letter copying press, $12, mimeograph, $38.50. 220 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 11. Pay Williams & Wilkins for note, bill and letter heads, $126.50. Receive from Baldwin & Co., Philadelphia, boiler, engine, steam-heating plant and connec- tions, and give our check for their bill, $3,850. (Debit Plant Acct.) Pay freight to date, P. R. R., $268.54. Charge one-half of this amount to Plant and one- half to Machinery, as it properly represents a part of their cost. 15. Buy, for cash, from Miller Safe & Lock Co., of Baltimore, 1 safe, $365. Pay Standard Oil Co., for 1 bbl. machine oil, $18.75. Take out insurance policies on building and contents, $30,000. Pay premium, |%, in cash. Buy of Brown Bros., Providence, R. I., 1 driving belt, for cash, $100. Pay Baltimore Machine Co., for setting machinery, $123.50, for putting in fixtures 5 $53.25, installing plant, $250. Give check for linoleum for office, $42.50. Pay Davis Coal Co., for 80 tons coal at $3.75 per ton. 23. Receive from Ealdman & Co., Baltimore, 25 bales, 12,875 lbs., cotton, at 1\$. per lb., terms, N/30. Pay Baltimore Transfer Co. for hauling machinery, $78.25. 26. Buy, for cash, 8 horses, $720, two wagons, $186, two carts, Pay telephone rent, $48. Fay for stamps, $10. Pay for electric clock with connections, FEB. 1. Receive from all subscribers to capital stock cash for installment No. 2, 25% of amount subscribed. Dispose of $5,000 worth of Unissued Stock by subscription to J. J. Hill. Mr. Hill pays first two installments, 50% of amount, subscribed. Buy from John Hopkins Oil Co., 1 bbl. tallow, 510 lbs. at 5£ per lb., 1 bbl. spindle oil, 15^ gals., at 15^ per gal., terms, 2/10 N/30. Pay for three months' rent of stable, $60. Pay for feed, $24.50. 2. Pay pay-roll for week amounting to $583.60. Sell to John Wanamaker, Philadelphia, the following bill, at 14^ per lb., 2/10, N/30. 5 rolls, 30 in. No. 10 averaging 86 lbs. per roll. 4 " 36 " " 8 " 126 " " " 4 " 60 " " 4 " 210 " " " 2 " 84 " " 10 " 240 " " " MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 221 Sell to J. B. Claflin Co., New York, on %, 2/10, N/30 at 14^ per lb. 10 rolls, 54 in. No. 6 averaging 223 lbs. per roll. 4 " 60 " " 6 " 248 " " " 1 " 64 " "6 " 264 " " " 10 " 66 " " 10 " 189 " u " 10 " 76 " " 10 " 209 " " " 4. Pay cash for 5,000 circulars, $45, and an equal amount for one cent stamps for mailing above circulars. Receive from Elliott Bros., 19 bales cotton of an average weight of 510 lbs. at 8^; terms, 2% discount if paid in 15 days. 6. Give Baltimore Machine Co. our check to pay for the following articles: blacksmiths' forge, $30, 2 anvils at $10, 1 doz. assorted hammers, $15.60, 50 horse shoes at 8j£, two tubs for cooling irons at $2.25. Sell Wagner, Willis & Co., terms 15 days, 10 rolls of 76 inch No. 10, 210 lbs. per roll, at 14^ per lb. 7. Buy from Smith, Dixon & Co., 8,000 lbs. jute manilla wrapping paper at f^ per lb., 2/10 N/30. Sell to J. Spencer Turner, New York, 2/10, N/30, the following bill at 14^ per lb. 4 rolls, 76 in. No. 6 314 lbs. per roll. 2 " 80 " " 6 330 " " " 5 " 120 " " 10 342 " " " 4 " 34 " " 10 97 " " " 3 " 50 " " 6 207 " " " ' Ship to Murdock Commission Company, Boston, Mass., to be sold on our account and risk, fifty rolls, 84", No. 10, averaging 240 pounds per roll, at 9^ per pound. Sell to Baltimore Waste Co. N/30, 2,425 lbs. waste at 3^ per lb. Pay cash for putting in automatic sprinkler and fire extinguisher, $250. Buy of Henderson & Latham, 50 bales cotton of an average weight of 498 lbs. at 7fc\ 2/10, N/30. Pay wages for week, $795.32. 11. Sell Studebaker Mfg. Co., South Bend, Ind., on their note at 30 days, interest 6%, (with the understanding that if payments are made before note is due, the merchants' rule will be used in finding balance due) the following bill at 14^ per lb.: 20 rolls, 54 in. No. 6 averaging 223 lbs. per roll. 10 " 76 " " 10 " 210 " " " 20 " 60 " " 6 " 249 " " " 5 " 64 " " 6 " 264 " " " 25 " 66 " " 10 " 190 " " " Buy from Turnbull & Norris, 2/10, N/30, 100 bales cotton weighing 496 lbs. each at 7j£ per lb. 222 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 12. Buy from Brown Bros., Providence, R. I., on %, 2/10, N/30, 300 ft. 2\ in. double belting at 10£ 200 ft. 2 in. single belting at' 4^. Pay John Hopkins Oil Co. for bill of 1st, less discount. Receive cash from John Wanamaker for bill of 2nd instant less discount. 13. Sell to J. B. Claflin Co., N/30, at 14^ per lb., the following bill: 10 rolls, 30 in. No. 10 averaging 85 lbs. per roll. 4 " 84 " " 10 " 240 " " " 5 " 36 " " 8 " 126 " " " 6 " 60 " " 4 " 210 " " " Pay Elliott Bros, for bill of 4th, less discount. Pay for fire escape, and for erecting same, $360. Pay for 6 tons hay, $108, 50 bu. oats, $20. 15. Take 300 feet canvas belting to use on your own machinery. (The material in this belt is worth 30^ a ft., and you will have to pay ?>i a ft. cash to have it made.) Pay $3 for having our boiler inspected. Receive of J. B. Claflin Co., on %, $350. -Pay cash for new parts to looms, $6.50. 16. Pay wages for week, $601.68. 18. Pay Henderson & Latham for bill of 9th, less discount. Sell John Wanamaker, 2/10, N/30, at 14^ per lb., the following bill: 10 rolls, 76 in. No. 6 averaging 314 lbs. per roll. 3 " 80 " " 6 " 330 " " " 5 " 120 " " 10 " 342 " " " 10 " 34 " " 10 " 97 " " " Pay Smith, Dixon & Co. for bill of the 7th less discount. Buy bill of wrapping paper of Smith, Dixon & Co., for cash, $50. Receive from Baltimore Waste Co., check in full of account. 19. Ship to Higgs Commission Company, Brokers, Chicago. 111., to be sold on our account and risk, one hundred rolls, 80", No. 6, averaging 330 pounds per roll at 9^. 20. Sell J. B. Claflin Co., N/30 the following bill at 14^ per lb: 8 rolls, 54 in. No. 6 averaging 223 lbs. per roll. 5 " 60 " " 6 " 248 " " " 10 " 64 " " 6 " 264 " " " 12 " 76 " " 10 " 209 " " " MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 223 Pay Brown Bros, for bill of 11th, less discount. Pay $125 to have smoke stack painted. Pay J. Frank Eline, $300 for installing dynamo in our building to furnish electricity for light- ing, ringing bells, etc. Pay McKay Engineering Co. for wiring bells, incandescent lamps, fixtures, etc., $85.75. Pay Turnbull & Norris for bill of 11th, less discount. Receive Account Sales from Murdock Commission Company (Shipment No. 1, Murdock Commission Company), Boston, Mass., showing our net proceeds to be $1250.00. They enclose a Bank Draft for the amount. 23. Sell to J. Spencer Turner, 2/10, N/30, at UU per lb.: 8 rolls, 54 in. No. 6 averaging 223 lbs. per roll. 5 " 36 " " 8 " 126 " " " 6 " 60 " " 8 " 210 " " " 5 " 84 " " 10 " 240 " " " Receive from J. B. Claflin Co., on %, their note at 30 days, interest 6% for $1,000. Pay Ealdman & Co., in full of account. Pay wages for week, $636.54. 25. Pay for postage stamps, $10. Pay cash for 2 bbls., 51 gals, each, machine oil at 16^ per gal. Receive from Studebaker Mfg. Co., to apply on their note of the 11th instant, $250. 26. Buy of Elliott Bros., 50 bales cotton, average weight 504 lbs. each, at If. per lb., 2/10, N/30. 27. Wagner, Willis & Co. several days ago made an assignment in favor of their creditors. Their business has been disposed of so as to pay 75^ on the dollar on their indebtedness, which amount we accept in full settlement of their account due us. Sell Baltimore Waste Co., 1,378 lbs. waste at 3& per lb., terms, 2/10, N/30. 28. J. Spencer Turner pays his account in full less discount to which he is entitled. Sell J. B. Claflin Co., N/30, at 14^ per lb.: 8 rolls, 76 in. No. 10 averaging 209 lbs. per roll. 20 " 66 " " 10 " 189 " " " 12 " 84 " " 10 " 240 " " " 8 " 60 " " 4 " 210 " " " Receive check from John Wanamaker for bill of the 18th, less discount. MARCH 1. Receive from all subscribers to capital stock cash for installment No. 3. Albert J. Swan has subscribed for $25,000 worth of Stock, paying the first three installments by giving his check for $5,000, and first mortgage on his property at No. 412 Calhoun St., for the balance. Pay for repairs to machinery $22.60, and for new parts, $128.75. Pay freight bills, $10.75. 224 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 2. Pay pay-roll for week, $649.70. Buy of Baldwin Co., Philadelphia, a steam boiler to be used in addition to the one we now have, paying cash, $300. Pay for horse feed, $68.50. 4. Receive an Account Sales from Higgs Commission Company (Shipment No. 2, Higgs Commis- sion Company), Chicago, 111., showing our net proceeds to be $3100.00. They enclose a Cashier's Check for the amount. Sell to John Wanamaker, 2/10, N/30, at UU per lb.: 10 rolls, 120 in. No. 10 averaging 342 lbs. per roll. 7 " 34 " " 10 " 97 " " " 8 " 50 " " 6 " 207 " " " 5 " 60 " " 4 " 210 " " " 6. Sell to Marshall, Field & Co., Chicago, 2/10, N/30, at 14^ per lb.: 5 rolls, 120 in. No. 10 averaging 342 lbs. per roll. 12 " 50 " " 6 " 207 " " " 15 " 54 " " 6 " 223 " " " 5 " 60 " " 6 " 248 " " " Sell to Baltimore Waste Co., 5,000 lbs. waste at 3^, 2/10, N/30. Sell to Gimbel Bros., Philadelphia, 2/10, N/30, at 14^ per lb.: 16 rolls, 36 in. No. 8 averaging 126 lbs. per roll. 14 " 60 " " 4 " 210 " " " 6 " • 84 " " 10 " 240 " " " 12 " 54 " " 6 " 223 " " " 7. Buy from Telfair W. Marriott, 5 acres land adjoining our mill property, on which to erect houses for the use of our employees, paying cash, $6,000. 8. Sell to J. B. Claflin Co., 2/10, N/30, at U& per lb.: 3 rolls, 76 in. No. 6 averaging 314 lbs. per roll. 5 " 80 " " 6 " 330 " " " 4 " 120 " " 10 " 342 " " " 6 " 60 " " 4 " 210 " " " 5 " 36 " " 8 " 126 " " " MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 225 9. Pay roll for week amounts to $660.01. Receive balance due on Studebaker Manufacturing Company's note. (Find balance by merchants' rule for partial payments.) It has been decided to close the books at this time to ascertain whether or not we have been conducting a paying business. We find that we have the following resources and liabilities be- sides the personal accounts, cash, bills receivable and bills payable: 30 bales cotton, average weight, 500 lbs., worth 7£ per lb. 5000 lbs. duck which we estimate to be worth 13^ per lb. We allow 1% for wear on the mill fixtures, also 1% for depreciation on tools. Machinery worth its cost, exclusive of repairs or new parts. Real Estate worth its cost. Teams, $950. - Fuel, $115. Office furniture and fixtures worth 5% less than cost. Interest due us on one note and interest payable on one note. Insurance unexpired, $110. Wrapping paper, $25. Oil, $15. Waste, $30. Salary owed to the manager $400. Create a Reserve of $200 out of profits to take care of losses on doubtful and bad accounts. After closing the books and prior to making the second trial balance, make the proper entries for $2000, invested today in United Railways Bonds at 100. Charge the amount to Sinking Fund. You may, after having closed your Ledger, write answers to the following questions: At what per cent, of gain were goods sold? What per cent, of total cost of manufacture was cost of cotton? What per cent, of total cost of manufacture was wages? Have we (in your estimation) been conducting a profitable business, considering the amount of capital invested, and the risk incident to carrying on such business? • Take a Trial Balance. INCOME AND PROFIT AND LOSS STATEMENTS (See illustration, pages 226 and 227). 273. A statement of Income and Profit and Loss begins with the gross sales. From this figure is deducted the returns, also all allowances made to customers for defective goods and for breakage and other damages and losses. A proportion or percentage of the stable and garage expense and outward freight should also be deducted at this point. The result gives us the net income from sales. The next thing is to find the cost of bringing in this income. This is called figuring the cost of goods sold or the "Turnover." We begin in this group with the gross outlay in respect of all Materials and Supplies purchased. Next the returns are deducted which gives us the net pur- chases. To this figure is added a proportion of the stable and garage expense and the inward freight, also the expense of running the purchasing department. The result is the total cost of purchases. From this figure is deducted all allowances made to us in respect of breakage and other damages. We next apply to this result the difference between the opening and closing inventories, and get as the outcome, the cost of materials and supplies consumed in manufacturing. The following items are next added, — Direct Labor and Factory Expense the latter covering superintendence, indirect labor, salaries of factory clerks, factory office expense, heat, light and power, factory sup- plies, repairs and renewals, depreciation of machinery, etc., etc. The result now is the total manu- 226 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. Philadelphia Manufacturing Company Statement of Income and Profit and Loss for Month Ending September 30, 19-- Sheet 1, Income :- Prom operation: Gross sales Less returns Net Sales Deductions from sales - Sales allowances Outward freight and cartage Proportion of stable and garage expense Total deductions Income from sal-ps Cost of goods sold: Manufacturing Cost (factory cost): Gross purchases Less returns Net purchases Add: Inward freight and cartage Duty Proportion stable and garage exp. Lab o r- -&• t o rage dept. Total additions Total cost of purchases Deductions from purchases: Allowances Total Deductions 200.00 300.00 200 . 00 300 . 00 27.50 Net cpst of purchases Deduct increase in inventory of materials ahd supplies Cost of purchases consumed in mfg. Manufacturing supplies Labor Superintendence H£at, light and power Bepairs to machinery Other repairs and renewals Provision for depreciation on Bldgs . and equip. Office salaries—factory Office expenses-- " Miscellaneous factory expense Total charge to manufacturing Add decrease in inventory of goods in process .Manufacturing or factory cost Deduct increase in inventory of finished goods Total cost of mfg. goods sold (Turnover) Gross profit on sales (For"d) 94 490 234 20725 42 20682 1000 21682 27 21655 2788 18866 214 13076 1300 80 42 20 1000 375 98 120 36549 1111 37661 ]605 50 53284 317 52967 819 52147 60 60 00 10 90 36055 16092 60 30 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 227 Shnnt . .fl. Forward (Gross Profit on Sales) Selling- expense: Salaries of salesmen Traveling expense of salesmen Commissions to salesmen Advertising Total selling expense Selling profit Administrative expense. Salaries of officers Salaries of general office clerk? Stationery and printing expense Postage expense Telephone and Telegraph General office expense Legal expense General expense Total administrative expense Net profit on sales--income from operation Prom sources other than operation: Income from securities owned Interest on bank' balance Rent on factory sheds Interest on notes receivable Cash discount on purchases Total other income Income from operation and other sources Deductions from income: Interest on bonds and mortgage payable Interest on first mortgage bonds payable. Interest on notes payable ^ Cash discount on sales Rent Taxes Insurance Royalty Expense Total deductions from income Total net income from all sources--Profit and Loss Profit and Loss charges: Provision Tor depreciation, furniture and fixture Provision for doubtful accounts Good-will--written off Organization expense--written off Discount on bonds—written off Patents—written off Provision for redemption of bonds Total Profit and Loss charges Profit and Los"s for the period — credit to Surplus Dividend declared — charge to Surplus Net credit to S'urplus for period ending Sept. 30, 19-- 1579 421 535 2096 300 200 8 16 18 100 75 115 250 53 30 22 459 300 600 300 238 400 337 218 100 200 200 500 500 200 149 400 16092 4631 11460 80 90 40 834 10626 00 40 815 11442 80 20 2495 8947 20 00 2149 6798 3600 3198 00 00 00 228 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. facturing cost. We next apply the increase or decrease in the inventory of the goods in process, also the increase or decrease in the inventory of finished goods. Our result now is the actual and total cost of sales. Deducting this from the net income from sales, gives us the gross profit on the manufactured goods which have been sold. From this result we next deduct the selling expenses as follows, — salaries, traveling expense, commissions, advertising, entertainment of customers, office expenses, etc., etc. Next in order is deducted the administrative expense, such as, — salaries of officers, salaries of general office clerks, stationery and printing expense, postage, telephone, telegraph, general office expense, legal expense, general expense, directors' fees, traveling expenses of officers and clerks. Result, — Net profit on sales — income from plant operation. To this vitally important result, we next add all items of income from sources other than from operating the plant. Some of these are, — Interest on bonds owned Dividends on stocks owned Interest receivable on bonds and mortgages Cash discount on purchases Interest on bank balances Interest on notes and acceptances receivable Rent (receivable) Royalties ( " ) Commissions ( " ) Accumulation on bonds bought below par. Next are subtracted the deductions from income, as follows, — Interest on bonds and mortgage payable Interest on accounts payable Interest on loans and notes payable Cash discount on sales Rent (payable) "*•» Insurance Taxes Royalties (payable). Next are deducted the profit and loss charges as follows, — Provision for depreciation — buildings and equipment Provision for doubtful accounts Provision for depreciation— furniture and fixtures Good-will — written off Organization expense — written off Discount on bonds — written off Patents — written off. Whatever is left is now charged to Profit and Loss account and credited to Surplus account. The Surplus account is next charged with the amount of any dividend that the directors may decide to declare, Dividends account being credited at the same time. Whatever is left in Surplus stands as a credit balance and appears on the liability side of the Balance Sheet. When constructing the statement of Income and Profit and Loss, create a Reserve for Unexpected Renewals to take care of more than ordinarily serious machinery breakdowns. Add to this reserve by charging off a portion of the net profits to it at the end of each fiscal period. The rate will be 3% of the present value of machinery. In the same manner create a Reserve for Depreciation, the rate being 4%, based upon the present value of plant, machinery, and other fixed assets. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 229 MANUFACTURING STATEMENT, TRADING STATEMENT, AND PROFIT AND LOSS STATEMENT 274. Some accountants instead of using the form of Income and Profit and Loss statement outlined in Article 273 and illustrated on pages 226 and 227, arrive at the same result by construct- ing a Manufacturing Statement, a Trading Statement and a Profit and Loss statement such as are illustrated on pages 230 to 232. The Manufacturing Statement shows the cost of making the goods (the factory cost) , up to the time they are completed and ready for sale. The balance of the Manufacturing Statement, which shows the cost of the goods made plus the money expended upon goods partly made (in process), is carried down to the debit side of a Trading Statement, which shows the cost of manufacture plus the cost or expense of selling, col- lecting, running an office and all the losses and profits incidental to the headings mentioned, ^- e.g. freights outward, cost of maintaining a shipping department, defalcations of collectors or other employes, commissions paid to special collectors, legal fees, office rent, cost of administration and general expense. Up to this time, we have dealt only with outlay or cost. On the credit side of the Trading Statement is placed the net amount of sales. This figure represents income. The difference be- tween the columns, if on the credit side, is carried down to the credit side of a Profit and Loss State- ment, as Undivided Profit. The debit side of the Profit and Loss Statement shows the provisions made for the various reserves considered vitally important by up-to-date managers and the appor- tioning of profits — part as a periodic Dividend and part as carried to a Surplus account or other similar accounts. The remainder or balance of the Profit and Loss Statement, which is also the balance of the Loss and Gain account in the Ledger, is carried down to Undivided Profits. When this form of statement is used, as in the case of the other form of statement, reserves should be created to care for unexpected renewals necessitated by more than ordinarily serious breakdowns of machinery, for depreciation of plant, machinery and other fixed assets, and for bad and doubtful debts. 230 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. Manufacturing Costs Statement for. Fiscal Period Ending March 9, 19-- Section 1, Mar. 11, 19-- 30 40 50 60 70 80 90 100 110 20] Cotton, outlay, 20000. Less disct. allowed, 300, Net cost of cotton, Cotton on hand 3/9/19 — , " consumed during the period, Paper, outlay, Less disct. allowed, Net cost of paper, Paper on hand 3/9/19--, •' consumed during the period, Oil, outlay, Less disct. allowed, Net cost of oil, Oil on hand 3/9/19--, " consumed during the period, Puel, outlay, ■ on hand 3/9/19--, ■ consumed during the period, Mill Fixtures, outlay, Less disct. allowed, Net cost of fixtures, Mill inventory, 3/9/19--, " depreciation, Teams, outlay, " inventory, 3/9/19--, • depreciation and upkeep, Tools, outlay, ■ inventory, " depreciation, Office Fixtures, outlay, ■ " inventory, * " depreciation, Insurance, outlay, " unexpired, " expired or consumed, Wages up to and including week ending Mon., 3/4/19--, outlay, 3500. Wages for 5 days, owing- unpaid outlay, 500. Total " 19700.- 1000.- iod, 400.- 10.- 390.- 100.- Dd, 100.- 1.- 99.- . 10.- > 600.- 100.- >d, 2000 . - 10.- 1990.- 1900.- 2000.- * 1800.- - 100.- 90.- 1000.- 990.- 200.- 100.- Torwardi 18700 290 89 500 90 200 10 10 100 4000 23989 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 231 120 Freight and Express, outlay New Parts and Repairs, ■ Brought Forward Total cost of manufacturing, Gross costs to Trading Statement (Section 2) 23989 100 200 24289 24289 24289 24289 Section 2. Trading Statement for Fiscal Period Ending March 9, 19- 220 140 150 170 190 210 230 Income. Manufacturing,. Sales, 50000.- Less Disct. allowed 1000.- Net sales for period ending 3/9/19 — 49000 Finished goods on hand 3/9/19 — 10000 Finished goods, output 59000 Waste, sales, period ending 3/9/19 — 200.- ", on hand, 3/9/19--, 100.- ■ output 300 Factbry output for fiscal period, Profit on shipment of goods sold on commission Expenditure Cost of manufacturing from Manufacturing Cost Statement (Section 1) General Expenses, (administration, etc.) outlay, Lost Accounts and Notes, uncollectible claims Int. and Disct. owing others fliability inventory), 100. ■ " ■ owing us, (resource inventory) 10.- ■ ■ ■ allowed us 30.- " " " total income 40. " " ■ net expenditure Total Expenditure for period ending 3/9/19-- Net profits from trading to Statement of Profits and Losses (Section 3). 24289 10000 1000 60 35349 24051 59400 59300 100 59400 59400 232 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 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CO -H CO CD Q0 cd • t>D co P -P 5m O O O •H = rC! CO cd = o • P>5 • 5m • O r^ "P C- o cd cd P P CD t»D CO ae tH H O r-\ O O O O >d CD r«M CO •H ■ C ■ •H 5m CD ft CD Cd 2 CD a a aj > >d cd CD Jd^rH •H d ^ CD cd TirJH •H 5m -H cd o cd ft o > — cd < CD 5m 5m CD 5m CO CD CD CmP Q CD 234 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. DEFERRED ASSETS. 279. Under this heading will be listed assets of a nature which makes it difficult to turn them quickly into cash at any time, especially in the near future. As the name implies, these assets represent values which will some time be received but the cash value of which cannot be secured for present use. Examples: Reserve funds, amounts due from shareholders, unissued stock, treas- ury stock, etc. DEFICIENCY. 280. Should the Capital Stock and the Current Liabilities taken together, ever exceed the sum of the assets, the difference will appear upon the asset side of the Balance Sheet, the figure having been charged against Deficiency account. Although not an asset of a nature similar to those mentioned above, it must be listed along with them. LIABILITIES. 281. The liabilities on the balance sheet of most companies appear on the right-hand side the sheet and are listed as below: 1. Capital stock for the authorized capitalization, showing the number of shares and the par value of each; the number of shares issued of each, common and preferred stock. 2. Bonds and mortgages payable, representing the permanent debt. 3. Current Liabilities, sometimes called Floating Debt. Examples: accounts payable, bills payable, unpaid wages, unpaid dividends, etc. 4. Reserves . The purpose of creating reserves is to give the concern more strength. If all the profits are paid over to shareholders, the business never becomes any stronger, but steadily weaker. The undertaking needs the extra strength, or reserve force, in the event of sudden and unexpected losses, because of the failure, say of several customers (trade debtors), the total break- down of some important machine, which cripples the plant until it is replaced, or breakdowns caused by depreciation,* — wear and tear, — which we have overlooked in our periodic accounting. 5. Surplus. This represents an amount of net profit which has not been paid over to share- holders, but has been reserved to enable us to be sure of paying future dividends which we might not otherwise be able to pay at the end of some fiscal year, because of lack of profits. If a sur- plus has been created, we will probably always be able to pay dividends each year, even during the bad years when profits are scarce. 6. Undivided Profits. After all provisions have been made (dividends set aside, reserves for bad debts, unexpected renewals, depreciation, etc., have been created, and a surplus also provided for) the figures of net profit remaining is credited to an account called Undivided Profits. WRITTEN TEST No. 19. 1. Define a Joint Stock Company and show its advantages over a Partnership. Define a Limited Joint Stock Company. 2. What are the liabilities of a member of a Partnership ; of a stockholder in an ordinary Joint Stock Company? In a limited Joint Stock Company? 3. What is a Corporation and what are the liabilities of its stockholders? 4. Describe fully the successive steps in the organization of a Corporation. 5. Define surplus, Surplus account, dividend, Dividend account, Issued Stock account, Treas- ury Stock, Treasury Stock account, Capital Stock, Capital Stock account, Unissued Stock, Unissued Stock account. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 235 6. What are the books needed to show the corporate transactions of a business? 7. Describe a Stock Ledger. With what account in the General Ledger should its balance agree? 8. Describe the Reserve for Bad Debts account and explain when and with what it will be debited and credited. 9. Explain the use of Depreciation account, and show its advantages. 10. What are Public Corporations? Private Corporations? 11. What is a Charter? From whom is it obtained? What does it show? 12. What is a Stock Certificate? Paid-up stock? 13. How does the bookkeeping of an incorporated business differ from that of an individual or a firm (1) as to opening entries, (2) as to closing entries, (3) as to accounts, (4) as to books kept? 14. Describe the change from a Partnership to a Corporation as it shows on the books. 15. Supposing the present worth of the business is now $50,000, could the partners organize a Corporation whose capital stock is $100,000? 16. Describe the bookkeeping required to show a change of this sort, when the same set of books is to be used. 17. What is a Manufacturing account? 18. What items are entered into this account and when? 19. What is an Undivided Profits account, and when used? 20. When is an Undivided Profits account debited and when credited? 21. Why are personal accounts equated? 236 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. COST ACCOUNTING. 282. Cost is of vital importance to the manager of any business. The up-to-date account- ant has an opportunity in this branch of his profession, to show his real worth. TRUE COST. 283. True Cost includes, first, direct labor; second, material; and third, expense. The last item will admit of further subdivision and originates from two sources : first, the expense of operat- ing the workshop, mill or factory itself; second the expense of maintaining offices and the cost of administration. The cost of production, therefore divides itself into the following items. Direct Labor xxxx.xx Material xxx.xx Factory Expense xx.xx General Expense xx.xx Manufacturing Cost xxxx.xx SELLING EXPENSE. 284. The selling expense is figured separately when computing cost in large concerns, but when the business is small, the selling expense is generally figured in along with administration, or general expense. BASIS OF COST ACCOUNTING. 285. In arranging a cost system there must be a basis. The best authorities make that basis, direct labor, as the amount paid for operating expenses (wages of foremen, sub-foremen, inspec- tors, shop clerks, tool keepers, grinders, the up-keep of tools and machines, lighting, etc.) is closely related and directly dependent upon the number of men employed on direct labor. Reduce the number of producing laborers and the operating expenses can be cut. Less supervision is re- quired; the wear and tear on machinery and tools is less, etc. DISTRIBUTION OF COST BY PER CENT. METHOD. 286. Accounting authorities have settled upon the Per Cent. Method as being the most ac- curate and at the same time, most simple. By means of a percentage, or rate, we are able to dis- tribute the overhead cost, administration, operating expenses, etc., over any operation, or series of operations. Knowing the cost of material and direct labor, which are both easy to ascertain, we are able with the rate, based upon the cost of direct labor, to figure the overhead expense and get the exact cost. In other words, the cost of the output from, say, the Blacksmith Department would be the cost of the direct labor of the department, plus the material used, plus the operating expense of the department, plus its share of the general expenses of the whole plant. There is no estimating in any step of the work. We just figure the relation between productive labor and operating expenses, also between productive labor and administration expenses, and express the results as so many per cent. These percentages are the rates which are absolutely essential in cost accounting by the Per Cent. Method. No matter how many departments there are, using figures easily taken from business accounts, we simply get the percentage which shows the relation between the elements mentioned for each department. In the following example let the direct labor charge be $60, material $40, factory expenses figured at 25% of the direct labor and general expense 40% of the direct labor. Figuring this out we have the following: MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 237 Direct Labor $60.00 Material. .- 40.00 Factory Expense (25% D. L.) 15.00 Factory Cost $115.00 General Expense (40% D. L.) 24.00 Manufacturing Cost $139.00 ADVANTAGES OF PER CENT. METHOD. 287. 1. It is based on actual figures easily extracted from the regular books of account; figures which are a true statement of facts. There is no guessing or estimating. 2. The totals may be taken from the books for, say, the last year, six months, or three months, and from these we can easily figure the rate for the next three months, six months, or other period not longer than one year because what has been the average rate over a term of moderate length is practically sure to be the average over the next succeeding similar term under like conditions. 3. It can be used in any manufacturing plant, and in all the departments of the plant, thereby assuring uniformity. It will enable the manager to tell just what each department is doing. 4. The rate can be so easily figured at the end of each period, that changes in the rate will be made to keep pace with changed conditions. 5. It requires little work from the cost clerk. 6. It is so sample that a junior clerk can handle it for a large company, only a rudimental knowledge of Commercial Arithemetic being needed. 7. Figuring by percentage can be done rapidly. 8. The per cent, system is endorsed by the best accountants. RATE CALCULATIONS. 288. In order to get the cost of direct labor the pay-roll should be divided into two parts productive or direct labor, and unproductive, or indirect labor. The latter is often referred to as part of the operating expenses. 289. Productive Labor. Wages paid to workmen for labor spent in producing things which are offered by the manufacturer for sale and from which the business derives its regular income, is properly classed as productive labor, or direct labor. The amount of productive labor is com- mensurate with, or in direct proportion to, the output. 290. Non-Productive Labor. All labor not distinctly productive as just outlined must be classed as non-productive, or indirect labor. This includes, foremen, sub-foremen, watchmen, the various factory clerks, the maintenance of their offices, repairs, renewals, tools, etc., and all the many expense-men not working on product, but necessary to keep the plant in repair and opera- tion. Non-productive labor is necessary to keep the factory organization up to concert pitch but it does not directly regulate the quantity of the production. 291. Periods for Figuring Rates. As there is liable to be some item of extraordinary expense in any month, calculations made on conditions shown by one month's operations are liable to be found misleading but calculations made on results of operation, running over six months or more will give an average, setting forth quite accurately the true percentages of factory expense and general- expense as compared to the cost of direct labor in a manufacturing plant's activities. How- ever, in the work which the student is about to take up, we will, in order to facilitate and shorten the work, use one month's manufacturing as the basis for comparison. From this month's work we will secure results which will show us the rate of overhead expenses for the following period. 238 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. COST ACCOUNTING SET. June 1st, 19 — . The boat building business of R. J. Bonsall and H. J. Fields, conducted at Alleghany Avenue and Delaware River, Philadelphia, under the firm name of Bonsall & Company, decided to incor- porate under the name of Philadelphia Boat Building Company. The capitalization, or Capital Stock, authorized by the charter secured under the laws of Pennsylvania, is $5000 (50 shares of $100 each). As the Pennsylvania statute, regulating the formation of corporations, stands, there must be at least three incorporators, one of whom must be a citizen of Pennsylvania. In order to get a charter in Pennsylvania, was asked to sign the application for a charter, (Student's name) and become one of the shareholders. He agreed to become the third incorporator and to take ten shares of the Capital Stock at par. Following is the Balance Sheet of the firm, Bonsall & Company. May 31, 19 — . ASSETS . Cash in hand $10 " " bank .500 . . $310.00 Building (Delaware River and Allegheny Ave) . . .' 400.00 Lot (at above mentioned location) .200.00 Machinery (per inventory) 300.00 Moulds and Patterns " 20.00 Tools » ' . ' 5o!oO Oil, Machine (20 gals. @ 50/) 10.00 Coal (8 tons @ $2.50) 20.00 Mill Fixtures (per inventory) 50 .00 •Office Fixtures ■ ■ ..... 20.00 Finished Product, 26 yacht tenders @ $20 ....$520. 16 row boats @ $8. . . .128. 648.00 Hardware , 100 lbs. Copper nails @ 15/. 15. 200 lbs. Galv. nails @ 5/... 10. 48 prs. 7 ft. oars @ 75/ 36. 48 prs. Brass oar locks @ 20/ 9 t6 48 prs. Galv. oar locks @ 9^ 4.32 100 lbs. Miscl. @ 10/ 10.00 ' 84.92 Paints & Varnishes, 100 lbs. White lead @ 7/. 7.00 ■ " Putty @ 2/ 2.00 50 gals. Linseed oil @ 70/. 35. 00 44.00 Lumber, 400 ft. White oak® 5/ 20.00 Cypress @ 3/. 30.00 White Cedar @ 8/.. 80. 00 Red Cedar @ 6/. .. .60.00 i round, £ Cedar Mahogany Moulding @ 3/. . .15.00 100 ft. Honduras Mahog. @ 15 / -15.00 Good will 1000 1000 1000 500 220.00 200.00 2576.92 LIABILITIES. Accts. Payable. C...B. Coles & Sons, Inc. Camden, N. J $75.00 Theo. C. Ulmer, Richmond St. & E. Columbia Av. City .200.00 $275.00 R. J. Bonsall* s Stock Account 1215 . 67 H. J. Field's Stock Account 1086 . 25 2301 . 92 2576.92 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 239 A. J. Bonsall received for his interest in the old business, twelve shares of stock, full-paid and cash for the balance. H. J. Field received for his interest ten shares, full-paid and cash for the balance. The fol- lowing Journal entry will adjust matters on the new books of the Company: — Unissued Stock 1800 Subscribers 3200 R. J. Bonsall 12 shares 1200 H.J. Field, 10 " 1000 10 " 1000 (Student's name) To Capital Stock 5000 A. J. Bonsall Stock % 1200 H.J. Field " " .1000 Subscribers 2200 Interests in the old business transferred to the corporation. Pay R. J. Bonsall balance on his Present Worth over and above the stock issued to him, $15.67. Pay H. J. Field, $86.25 for a like purpose. (Cash account should be credited with these amounts and their capital accounts charged. These cash payments, when posted, will close the old stock accounts of Bonsall and Field. Receive $1000 from as payment for stock issued to him. (Student's name) — is to draw a salary of $100 a month for managing the business. Bonsall and (Student's name) and Fields are interested in other ventures which consume their entire time. Ask for a Stock Record form and keep in touch with stock consumed so as to buy new sup- plies and material just when needed. The manufacturing of the company will be restricted for the time being, to building yacht tenders and row boats as the season is too far advanced to make any constracts for the delivery of larger craft this season. For the present season, the Manufacturing will be divided into two departments: — "Yacht Tender Department" and "Row Boat Department." A pair of brass oar locks will be delivered with each yacht tender sold for cash; a galvanized pair with each row boat sold for cash. MONDAY, JUNE 3rd. Fill a shop order on stock, signed by Wm Yacht Tender Dept. 150 ft. White oak, 400 " White cedar, 200 " Red cedar, 200 L. ft. Mahogany moulding, 50 " " Honduras, 20 lbs. Copper nails, 10 " Miscel. hdwe., 2 " Caulking cotton, 1 gal. Spar varnish, 5 lbs. White lead, 1 gal. Linseed oil, 4 lbs. Putty. Glenn, for the following items :- Row Boat Dept. 50 ft. White oak, 400 " Cypress, 200 " Red cedar, 40 lbs. Galv. nails, 10 " Miscel. hdwe., 2 " Caulking cotton, 4 " Putty, 5 " White lead, 1 gal. Spar varnish, 1 " Linseed oil. 240 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. Buy 2/10, N/30, from Theo. C. Ulmer, 10 gals. Spar varnish @ $2.00 10 lbs. Tallow @ .06 50 " Caulking cotton @ .10 Write up the Stock Record daily. Consign 12 Yacht tenders @ $40 each, to Gimbel Bros., City, to be sold on commission, on our account and risk. Sell 1 Yacht tender complete @ $40 for cash, to Howard P. Wilson, Frankford. Pay incorporation fee, $46.67; lawyer's fee, $10; freight on incoming goods, $1.18. Pay telephone rental for one month — $4.50, postage $4, water rent $12, printing and sta- tionery $6. WED., JUNE 5. Sell for cash to Dr. Swayne, 1 yacht tender complete @ $40. Consign to John Wanamaker- New York City, to be sold on our account and risk, 12 yacht tenders @ $40, 12 row boats @ $8, draws on account of salary, $25. Pay insurance, one year, $30, taxes $9, (Student's name) ad. in Philadelphia Ledger, 6 weeks $24. SAT., JUNE 8. Receive weekly report from Wm. Glenn. Work completed: 4 Yacht tenders 12 Row boats. Pay-roll, Direct labor, yacht tenders $34, row boats $16. Indirect " " " $12, " " MON., JUNE 10. Fill shop order signed by the foreman, Wm. Glenn, Row Boat Dept. 50 ft. White oak 450 " Cypress 250 " Red cedar 6 lbs. White lead 20 " Galv. nails 10 " Miscel. hdwe. 2 " Caulking cotton 1 gal. Spar varnish 1 " Lindseed oil Yacht Tender Dept. 120 ft. white oak 500 " White cedar 250 " Red cedar 150 L. ft. Mahogany moulding 50 ft. Honduras moulding ' 6 lbs. White lead 40 " Copper nails. 10 " Miscel. Hdwe. 1 lb. Caulking cotton 1 gal. Spar varnish 1 " Linseed Oil. Sell one row boat complete to Jas. Hully @ $15. WED. JUNE 12. Pay Theo. C. Ulmer's bill of 5/3, less 2% also the old balance due this firm. THURS. JUNE 13. Receive an Account Sales from Gimbel Bros., showing our Net proceeds to be $425— and their check for that amount. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 241 FRI. JUNE 14. Buy of C. B. Coles & Sons, Inc., 2/10 N/30 1500 ft. White oak @ .05 1000 " Cypress @ .03 1000 " White Cedar @ .08 600 L. ft. \ round \" Mahogany Moulding @ .03 200 ft. Honduras Mahogany Moulding @ .15 Paid cartage on the above $4.50, freight $8.50. SAT. JUNE 15th. Weekly report from foreman, work completed, Yacht tenders 5, row boats, 12. . Pay-roll, Direct labor, — tenders $42, boats, $25.50, Indirect " " $12, " 10.00 MON. JUNE 17th. Fill shop order of Wm. Glenn, foreman: Yacht Tender Dept. 800 ft. White cedar. 250 " " oak. 100 " Red cedar. 300 L ft. Mahogany moulding 50 ft. " Honduras 40 lbs. Copper nails. 40 " Miscel. hdwe. 10 " White lead. 1 lb. Caulking cotton 3 gals. Spar varnish. 1 gal. Linseed oil. WED. JUNE 19th. Receive an account sales, from John Wanamaker, New York City, showing our net proceeds to be $500.40, — for tenders $420, for boats $80.40, Cashier's check for the amount is enclosed. Sell for cash to Robert P. Smith, one yacht tender complete @ $40. one row boat " @ 15. » THURS. JUNE 20th. Buy 2/10 N/30 of Theo C. Ulmer, 200 lbs. Copper nails @ .15 200 " Galv. " @ .05 48 prs. " oar locks @ .09 48 " Brass locks @ .20 50 lbs. Miscel. hdwe. @ .10 draws $5 for traveling done in the interests of the business. Pay Student's name.) for repairs to building $12, machinery repairs $4. Bought for cash, one Stilson wrench, which was added to our stock of tools, $1.50. Write up the stock record daily. 242 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. SAT. JUNE 22. Pay-roll Direct labor, y. t. $72.50. Indirect " " " $23.50 Foreman's weekly report. Work finished, 10 yacht tenders. MON. JUNE 24. Fill foreman Glenn's material requisition: Yacht Tender Dept. 120 ft. White oak, 200 " Red cedar. 150 L ft. Mahogany Moulding " Honduras White lead. Copper nails. Miscel. hdwe. Caulking cotton. Spar varnish Linseed oil. 30 ft. 4 lbs 40 " 10 " lib. 1 gal i << 2 Row Boat Dept. 30 ft. White oak. 200 " Red cedar . 400 " Cypress. , 6 lbs. White lead. 40 " Galv. nails. 10 " Miscel. hdwe. 1 lb. Caulking cotton. 1 gal. Spar varnish. i 2 Linseed oil. WED. JUNE 26. Sell for cash yacht tenders complete at $40 each, to the following: — A. B. Cartledge, Wm. Wolsencroft, Wm. Geiger, Dr. Pond, Dr. Drexler and Wm. Stead. THURS. JUNE 27th. Consign 24 row boats @ $8, to Gimbel Bros., City, to be sold on our account and risk. FRI. JUNE 28. Sell for cash 12 row boats complete @ $8 each, to John Greenlee, who has the rowing privilege at Willow Grove Park. Pay 25(£ for telegram to R. J. Bonsall. SAT. JUNE 29. Foreman's weekly report. Work completed, 4 yacht tenders, — 10 row boats. Pay-roll Direct Labor, yacht tenders, $51. — row boats $22. — Indirect " " " $12.— " " $10 — Pay Theo. C. Ulmer's bill of 5/21, less discount. Credit with his salary for one month, $100. — (Student's name) SAT. JUNE 29. Take a Trial Balance at this point. Figure and make a list of loss through depreciation at the rate of 1% on the book value of the following fixed assets: — building, machinery, moulds and patterns, tools, office fixtures and mill fixtures. By examination it is found that 5 tons of coal and 12 gals, of machine oil are still on hand. Consulting the stock record, the student will figure and make a list of the material used for the month for constructing yacht tenders, and a separate list of material used for row boat con- struction. Divide the amount used in each case by the number constructed to find the average material used for each boat. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 243 Figure, and make a list of the loss on the various subdivisions of General Expense, for the month as follows: — Executive's Salary, for 1 month xxx . xx Insurance, for 1 month or 1/12 yearly charge x.xx Water, for 1 month of 1/12 of the yearly charge x.xx Taxes, for 1 month or 1/12 of the yearly charge x . xx Legal, 1 /12,-the figure being spread over the first year. . x . xx Postage, figure paid during the month x.xx Freight, " " " " " xx.xx Depreciation, figure provided for above xx.xx Traveling Exp., " paid during the month x.xx Repairs and Maintenance, figure paid during the month, xx . xx Telegraph and Telephone " " " " " (1 mo. rent) x.xx Expressage, figure paid during the month x.xx Printing and Stationery, 1 /6 of 6 months' supply, con- sumed ! x . xx Cartage, outlay for the month x . xx Advertising, 2/3 of figure paid for 6 weeks x.xx Coal, 3 tons @ $2.50, consumed during month x.xx Machine oil 4 gals. @ 50^ consumed during month x.xx Total General Expense for June xxx . xx Next find the relation between "Direct Labor on Yacht Tenders" and "Indirect Labor" on the same, i. e., find what percentage Indirect Labor on Yacht Tenders is of the Direct Labor on Yacht Tenders. This rate will be useful to us in the future. Now find what percentage General Expense listed above is of the Direct Labor on Yacht Tenders. This rate will also be useful in the future, for instance; We have the figure of direct labor, which can always be taken from the books, and the amount of material consumed which is easily extracted from the Stock Record. Let us say, — Direct Labor on 1 yacht tender is $5 . 00 (Found by dividing the Direct Labor on Yacht Tenders account by number made during month.) Material in 1 yacht tender is (found above) 7.50 Indirect Labor (rate 40%) on . 1 yacht tender ( " " ) 2.00 Then the Factory cost is 14.50 General Expense (rate 25%) on 1 yacht tender is (found above) 1 . 25 Then the Manufacturing cost is 15 . 75 Therefore, during the next cost period, say, six months, it will only be necessary to know the cost of Direct Labor and Material. With the rates found we can get both the Factory Cost and the Manufacturing Cost. What is the percentage of Indirect Labor on Yacht Tenders to the Direct Labor on Yacht Tenders? What is the percentage of Indirect Labor on Row Boats to the Direct Labor on Row Boats? What is the percentage of General Expense to the Direct Labor on Row Boats? What is the percentage of General Expense to the Direct Labor on Yacht Tenders? 244 MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. AUDITING. 292. The Auditor's Qualifications. Authorities unite in saying that an exhaustive knowledge of every department of bookkeeping is the very basis of the auditor's qualifications. Next in importance is a thorough acquaintance with Commercial Law and general business customs, regulating the various undertakings in which the auditor may be concerned. Added to the foregoing should be a substantial knowledge of the especial manner in which various particular businesses are conducted. If the Auditor is working on a corporation report, his knowledge of business should be so wide that he knows not only what methods of figuring depreciation should be followed, but also what actual allowances are reasonable in each case. He must know, for instance in shoe manu- facturing, what rate of depreciation to allow on the different sorts of shoe machinery. In the wholesale shoe business he must know what allowances to make for old stock on the shelves and for bad bills. In the retail shoe trade, again, he must know what valuations he should use for the stock and for bad and doubtful book accounts. His knowledge should include all the common trades, hardly any two of which are alike. He must see that allowances are made for terminable values, such as patents, leases, premiums on bonds, copyrights, etc. He must see that provision is made for debts due in the future, such as bonds, mortgages, accrued interest, rentals, etc. He must see that certain costs charged to capital are not too long carried there. 293. Auditing has come during recent years to rank as a profession, ranking equally high with law, medicine, engineering and the other professions. This is just, because it requires not only a high degree of intellectual equipment and training, but also a high sense of honor and re- sponsibility. Every part of accounting from the merest clerical drudgery to the most shrewd financial engineering should be so familiar to the auditor that he can protect not only the ignorant against the shrewd, but both against themselves. It is no rare thing for an auditor to discover and disclose in commercial affairs, conditions of critical importance of which the proprietors and bookkeepers had no inkling. Advantages of an audit. 294. (1) Placing before the Board of Directors and the public an accurate certified state- ment of the company's present condition along with the statement of profits and losses showing how this position has been arrived at is appreciated in no uncertain measure by the up-to-date manager. This certified statement of the business is of the greatest convenience in the event of the Directors wishing to sell the business, dissolve, or borrow money from a bank. When bor- rowing, the Balance Sheet is now almost always required as a basis for loans. The Reserve banks before rediscounting paper invariably demand a certificated balance sheet. (2) Many banks require their customers and prospective borrowers to submit certified Balance Sheets. The American Bankers' Association is in favor of joint action by all banks, requiring certified statements from all borrowers. The time when certified Balance Sheets will be required is bound to come as business becomes more complex. (3) The up-to-date purchaser of a business, now, requires a certified statement of assets and liabilities and profits before buying. It redounds to the benefit of both seller and buyer. The seller receives a better price, the certified statement being taken at its face value. The buyer is assured against loss, being aware that a Certified Public Accountant has prepared the statement. (4) Periodical preparation of reliable statements cuts down the risk of partnership disputes with their accompanying annoyance and expense. (5) While there are no recorded decisions of the higher courts in the United States bearing upon the liability of auditors for gross negligence, the law is very well settled in England that auditors are liable for gross negligence. Our courts would, in the absence of American decisions, follow the English decisions. This assures careful work on the part of auditors, which redounds to the benefit of American business men, and at the same time places a correspondingly higher value upon the services of the auditor, widening his field and increasing his clientele. MODERN BOOKKEEPING, ACCOUNTING AND BUSINESS PRACTICE. 245 Instructions, or suggestions, for an audit. 295. (1) When commencing a new audit, obtain a list of all the books kept and of all the persons authorized to receive or pay money and to order goods. (2) In the case of a corporation, examine the by-laws and board minutes, respecting the authorized receipt and payment of monies, the treatment of checks, notes, bond issues, etc. (3) Note the general system of account keeping. How the correctness of payments is vouched for, or checked. Note whether checks are used generally, or not. (4) Note if the accounts and vouchers have been systematically checked and certified by the client's clerks. Note any errors. (5) Compare the cancelled checks with the Check Book stub, or Check Register and these with the cash payments. Compare a portion of the deposit items as entered in detail on Check Book stubs, or elsewhere, with the receipt side of the Cash Book to find out whether all items de- posited have been properly entered in the Cash Book. Prove the reconcilation of the Check Book balance at the end of the period with the Bank Pass Book and see that the latter has been fre- quently balanced and examined. Secure direct confirmation of the bank balance at date of audit. (6) Note any unusual or extraordinary payments or receipts. (7) Note any unusual items concerning the payment of wages and cash. (8) See that vouchers for all other payments are kept and produced. (9) When the concern includes branch houses, look into the reports, made periodically to the head office, governing income, operation expense, etc. (10) When examining the Purchase and Sales Books, see that they are properly entered up; that all the sales and purchases of each department have been reported ; that the invoices are prop- erly checked as to quantities and prices. Satisfy yourself that every liability of the year has been brought into the accounts. (11) Check, or test, the posting in the Individual Ledgers from the Cash Book and a part of these Ledgers with all of the auxiliary books. (12) Check all the posting in the Private or General Ledger. (13) Examine and test the journalizing. (14) Examine critically the Notes Receivable and Notes Payable Books; scrutinize all past due, renewed, and protested, commercial paper, making a list of same along with any collateral security. (15) Examine the entries and transfers posted through the journal. Check the postings. The auditor is not held responsible for the details of classification, yet it is desirable that sugges- tions for improvement be made where needed, especially in relation to the division of charges be- tween the capital and revenue accounts. (16) Examine Mortgages and Bonds accounts. (17) In reference to stock taking, see that all stock sheets are signed by heads of depart- ments, and that totals of same are correctly carried forward to the general inventory. See that goods finished and in process are inventoried at cost price or at present market value if that is lower than cost. (18) When checking the Profit and Loss account, see that the usual and proper deductions have been made for wear and tear and depreciation. (19) See that no expenditure is capitalized without the authority of a responsible person. (20) See that the proper distinction has been made between new construction and mere replacements. (21) Ascertain the correctness of the cash balance, and of the promissory notes, acceptances and securities on hand. Note any items or memoranda carried as such. (22) Use a separate Memoranda Book or sheet for each class of errors. Directory Abell, A. S. & Co., Calvert and Saratoga Sts. Abel, Louis, 873 N. 6th St. Adams, L. F., 762 Ridge Ave. Adams, J. R. M., 324 Girard Ave. Adams, John W, 1027 Vine St. Albert, Francis, & Co., 1006 Arch St. Alt, Caspar, 2041 N. Bodine St. Anderson & Ireland, 111-115 Light St. Andrae, Wm, 413 N. 4th St. Andrews, L. J., Bethlehem, Md. Armour & Co., P. D., Chicago, 111. Arnold & Company, 5th and Allegheny Ave. Auginbaugh, D. C, & Son, 8th and Morris Sts. Baily Bros. & Raub, Lancaster, Pa. Baily, Jas., & Son, 301 Cambria St. Bailey, J. C, Woodstock, Va. Bailey, John T., 2040 N. 2nd St. Baker & Co., Staunton, Va. Baker, Fred., Fisher Hill, Va. Baker, Geo. W., 300 N. 35th St. Baldwin & Co., Philadelphia, Pa. Baltimore Bargain House, Baltimore, Md. Baltimore Drayage Co., Baltimore, Md. Baltimore Machine Co., Ill S. Race St. Baltimore Transfer Co., 109 E. Lombard St. Baltimore Hdwe. Co., Baltimore, Md. Baltimore Waste Co., Baltimore, Md. Barbour, James & Son, Washington, D. C. Barrett, J. B., 1903 S. 20th St. Bates, Jas., 1430 Ridge Ave. Bauserman, M. L., & Co., Harrisonburg, Va. Beall, Jas., 1938 N. 23rd St. Bear, Oscar, 148 Chew St. Beall, Frank & Co., Hancock, Md. Beck, Fred & Co., 725 N. 27th St. Becker & Anderson, 1705 S. 7th St. Bill & Sunderland, Ocean City, Md. Bloom S. N. & Co., Hagerstown, Md. Bowers, Geo., Martinsburg, W. Va. Boyer & Co., 114 German St. Bowman, J. H., Hanover, Pa. Brady, Jas., 1721 Hunting Park Ave. Bronson, J. M., 45 W. Chelten Ave. Brooke, Chas. H., 1420 Locust St. Brooke, Henry, 4th and Walnut Sts. Brooks, Chas., 1307 Girard Ave. Brown, Alfred, 1915 Orthodox St. Brown Bros., Providence, R. I. Brown, Geo., 617 Cherry St. Brown, John & Sons, 19 S. 34th St. Brown, Mary, 1324 Pine St. Brown, Thos., 919 N. 42nd St. Brown & Clark, 24th and Locust Sts. Brown, Oliver, 1206 N. 47th St. Bruce, O. J., 1440 Louden St. Bryant & Clarvoe, 2801 N. Lee St. Burriss, E. L., 1509 Tiogo St. Burrows, Oscar, 740 Carpenter St. Carver, John, 1307 Diamond St. Carpenter, Thos., 2042 Chestnut St. Carpenter, Thos. G., 822 S. 20th St. Carter, Chas., Martinsburg, W. Va. Cedar Rapids Furniture Co., Cedar Rapids, Iowa. Central Pa. Supply Co., York, Pa. Charlottesville Woolen Mills, Charlottesville, Va. Chicago Stamping Co., Chicago. Claflin Co., New York City, N. Y. Clark, J. F., Salisbury, Md. Cochrane, A. B. & Co., 515 Commerce St. Cole, W. H. & Son, 918 Filbert St. Cole, Wm. & Sons, 522 Commerce St. Coles, C. B. & Sons, Inc., Front St. below Kaighn Ave. Constantine, J. A., Sunbury, Pa. Constantine, J. H., 1718 Vine St. Consolidated Gas Co., 418 Main St. Crabill, D. M., 3403 Baring St. Craig, John, 87 Fairmount Ave. Cranwell, Thos. G. & Co., 120 S. Delaware Ave. Crawford Woolen Mill Co., 5215 Wissahickon Ave. Crawford, Geo., 909 S. 47th St. Cross, F. L., 810 Walnut St. Crowl, Pearre E. & Co., 16 S. 5th St. Crum, C. B., Meadow Mills, Va. 246 DIRECTORY. 247 Cumberland Hdwe. Co., Cumberland, Md. Cumberland Paper Co., Cumberland, Md. Cushing & Co., 845 Walnut St. Davidson F. H. & Co., Charlottesville, Va. Davis, S. S., 8th & Porter Sts. Davis Bros., 29th and Bristol Sts. Dennison, Sarah, 5528 Greene St. Dewy, Robt., 1432 Diamond St. Diamond State Iron Co., Real Estate Trust Bldg. Diffendall, Chas. & Co., Berwick, Pa. Dill, Win. H., 1422 S. 52nd St. Dillon & Co., Columbia, Pa. Disston's, Henry, Sons, Tacony, Pa. Doan & Carter, 127 S. 4th St. Doub, Louis P., 125 W. Mt. Airy St. Double & Co., 1015 Columbia Ave. Dulany, Wm. C, 918 Chestnut St. Durant, L. B., 228 S. 19th St. Ealdman & Co., Baltimore, Md. Earp, Samuel H., Elkridge, Md. Edmondson, J. A. & Son, 108 Hanover St. Elder, Samuel, 508 E. Allegheny Ave. Elliott Bros., 3rd and Chestnut Sts. Emmert, Samuel, Concord, N. C. Emerson, J. R., Hdwe. Co., Frederick, Md. Enterprise Furniture Co., 452 N. Howard St. Evans, Geo., 1032 Walnut St. Excelsior Mfg. Co., 203 Quarry St. Finch, Thomas, & Son, 22 S. 52nd St. Fore, Jefferson D., 142 N. 11th St. Forman, Ezekiel, 2665 E. Huntingdon St. Fosnot, H. J., York, Pa. Frames, Jas. P. & Son, 1825 Tiogo St. Frantz, J. N., Hancock, Va. Frazier & Bishop, Martinsburg, W. Va. Friday, J. B., & Co., Danville, Va. Friedenwald Co., 1313 Cherry St. Gable, John, Williamsport, Pa. Gallup, W. A., 310 E. Somerset St. Gambrill, C. A., Mgf. Co., 14 E. German St., Baltimore, Md. Gilbert Bros., Baltimore, Md. Gilpin, Langdon & Co., 393 Spruce St* Gilpin, Wm. C, Duncannon, Pa. Gimbell Bros., Phila., Pa. Glassman, John, Hagerstown, Md. Globe- Wernicke Co., 1018 Chestnut St., Phila. Gold Bros., 323 W. Saratoga St. Goodwin, James, 4713 Cedar Ave. Goodwin, Thos. F., Glyndon, Md. Gray & Straight, 51st & Ogden St. Green, A. H., 1018 Pine St. Grove, F. C, Stephenson, Va. Guthbert, L. R., 8 N. 13th St. Halderman, J. D., Kernstown, Va. Hall, Headington & Co., Charles and Lexing- ton Sts. Hall, Atkinson & Co., 35th and Queen Lane, Phila. Haltman, Frank, 1713 Pine St. Hance Bros. & Wight, 623 CallowhHl St. Handley, Albert, 436 N. Broad St. Harris, John, 5420 N. 12th St., Phila. Harris, Mrs. John, 917 Diamond St. Harrison, Thos., Lake View, Md. Hartwell Furniture Co., Cincinnati, Ohio. Hayes & Nurff, Atlanta, Ga. Hauser, Paul, 271 S. 12th St. Hazard, John, Shepherdstown, W. Va. Henderson, Green & Co., 842 Germantown Ave., Phila. Henderson & Latham, 839 Market St. Heckerman & Son., 4915 Lancaster Ave., Phila. Hensell, David, C, 1333 N. 33rd St., Phila. Higgs Commission Co., -Chicago, 111. Hight, Samuel, Front Royal, Va. Himmel & Co., 1702 Market St. Hopkins, John, Oil Co., 54 N. 13th St. Howell, Jas. R., 5508 N. Fairhill St., Phila. Hottle & Smith, Alexandria, Va. Housel, J. L., 5218 Master St. Hurth, John & Co., 1800 Ridge Ave. Hurst, J. E., & Co., Denckla Bldg., Phila. Independent Ice Co. International Creditors Association, St. Louis, Mo. Jackson, James, 727 Walnut St., Phila., Pa. Jackson, Wm., 217 E. Baltimore St., Balti- more, Md. 248 DIRECTORY Jarrett, J. P., Strasburg, Va. Jenkins, F., Hillensburg, N. C. Johnson, F. W., 400 N. 53rd St., Phila., Pa. Johnson, L. W., Baltimore, Md. Jones, Edward, 5009 Hazel Ave. Jones, Frank, 1518 Harrison St., Phila., Pa. Jones, Harry, 1310 N. 52nd St., Phila., Pa. Jones, John, 710 S. 13th St. Jones, Robinson & Co., Brunswick, Md. Jones, Robt., Columbia, S. C. Jones, Samuel, 173 Maplewood Ave., Phila., Pa. Jordan Stabler & Co., 318 N. Charles St. Katz Bros., 729 Sansom St., Phila., Pa. Keidel, Henry Co., 234 Commerce St. Keller, Geo., Winchester, Va. Kennedy, .Samuel, Cherry Run, Md. Keystone Hdwe. Co., Bedford, Pa. Kreamer, C. P., 2614 Van Dyke St., Phila., Pa. Lake, James, 6037 Carpenter St., Phila., Pa. Lange, John, 4230 N. 8th St., Phila., Pa. Lea, William, & Sons, 434 Walnut St., Phila., Pa. Lampe, Christian, Frederick, Md. Lewis, Albert, 1817 Columbia Ave., Phila, Pa. Lindamuth & Co., Emmitsburg, Md. Long, John J., Emmitsburg, Md. Lower, James, 318 N. 41st St. Long, R. A., Beadford, S. C. Lyons, J. W., 1004 Arch St., Phila., Pa. McClung, S. B., Upper Tract, W. Va. McGaw & Co., 906 S. 21st St., Baltimore, Md. McGee, W. A., Hanover, Pa. McKay Engineering Co., 604 Arch St. McVeigh, J. H. & Co., 243 E. Cambria St. Maloney & Carter, Charlotte, N. C. Mann Axe Co., Lewistown, Pa. Marriott, Telfair W., 8 S. 40th St. Marshall Field & Co., Chicago, 111. Marshall, James, 415 Locust St. Marshall, Wescoat & Co., Columbia, S. C. Maryland Fire Insurance Co., Baltimore, Md. Maryland Telephone Co., Lexington, Corner Courtland St. Maynadier & Co., 144 N. Howard St. Maryland Hinge Co., Baltimore, Md. Maryland Milling Co., Hagerstown, Md. Maynard, Daniel L., 528 N. 18th St. Meadows, L. N., 10th and Green Sts. Meyers, Frank, 100 Chestnut St., Phila., Pa. Miles Hdwe. Co., 1213 Filbert St., Phila., Pa. Miller, Daniel & Co., Baltimore, Md. Miller Hardware Co., Atlanta, Ga. Miller & Hartman, Lancaster, Pa. Miller Supply Co., Winchester, Va. Miller & Davis, 2066 Ridge Ave., Phila., Pa. Miller & Shower, 217 N. 3rd St. Miller Safe & Lock Co., Baltimore, Md. Miller & Son, 5300 Westminster Ave., Phila., Pa. Mitchell, Addison G., 918 Walnut St. Mitchell, Charles F., 382 S. 15th St. Morgan, J. P., 504 Chestnut St. Moore, Jos. W. & Co., 1629 S. 20th St. Murdock Commission Co., Boston, Mass. Murphy, George, 2650 Bridge St., Phila., Pa. Murphy, P., 329 S. 3rd St. Muth Bros. & Co., Baltimore, Md. Myers, C. P., 7th and Reed Sts., Phila., Pa. National Biscuit Co., 1301 Glenwood Ave. National Drug Co., 4677 Stenton Ave. National Machine Co., 1323 Arch St. National Paper Co., New York City. National Tool & Stamping Co., Harrisburg, Pa. Nicodemus, N. A., Edgemont, Md. New England Cutlery Co., New Haven, Conn. Nogood & Bro., Creditville, Pa. Norwood, J. F., 1722 Green St. Oldershaw & Son, 1018 W. York St. O'Rear, W. A., Clear Brook, Va. Ortel, Wm, 1523 Snyder Ave. Palmer, Edward L., & Co., Baltimore, Md. Parker, W. J., & Co., 514 Commerce St. Parsons & Co., 761 N. 25th St. Parsons Paper Co., Holyoke, Mass. Parsons, Mrs. T. W., 4654 Penn Ave. Pearson, J. F., & Co., Baltimore, Md. Perfection Mattress Co., 1930 Market St., Phila. Pilson, A. O., 5105 Ridge Ave. Pitcher, C. S., & Co., Newton, N. C. ' Poltz, R. P., 2765 N. 26th St. DIRECTORY 249 Powell, John D., 4634 Oakland St. Purcell, Jos. L., 2646 S. 17th St. Pursey, C. C, & Co., Richmond, Va. Pughsley, Frank, 314 W. Franklin St. Radcliffe, S. J., & Son, Ellicott City, Md. Ramsburg & Co., Frederick, Md. Reed, J. B., 2034 Locust St. Reese, Percy M., 1115 N. Charles St. Reily Bros. & Raub., 740 S. 20th St. Reitz Bros., 416 W. Lexington St. Reist, Frank, York, Pa. Ridgeway, C. P., Ridgeway, W. Va. Riley, W. F., 1819 N. 26th St. Rivers Furniture Co., 612 Market St. Robinson, D. A., Brucetown, Va. Robinson, James & Co., Vineland, N. J. Robinson, Oliver P., 541 S. 52nd St. Roderick, C. N., 2420 N. 6th St. Rose, Robert, 412 S. 50th St. Ross, Robert, 31st and Morris St. Rosenberg, J., 420 Market St. Roth, George, 325 S. 52nd St. Russell, John W., 3547 Germantown Ave. Snare & Miley, 15th and Louden St. Snyder & Co., 350 W. Mulberry St. Standard Oil Co., Phila., Pa. Starrell, C. A., & Co., Chicago, 111. Steiner, Edw., & Co., Hagerstown, Md. Stevenson & Harmanson, 1134 Girard Ave. Stewart, Henry A., 272 N. 23d St. Stewart, Wm., 2566 E. Norris St. Stickley Milling Co., 612 Chestnut St. Stinson, Edw. & Co.. 940 Race St. Stone, R. W., 149 N. 9th St. Stotlemeyer, James, 1614 W. Erie Ave. Stotlemeyer, John D., 54th and Race St. Studebaker Mfg. Co., South Bend, Ind. Terrill, G. H., 519 E. Washington Lane. Tielman, Otto & Son, Columbus, S. C. Thomas, George P., 1144 Huntingdon St. Thomas, J. D., 705 N. 2nd St. Traverse, Robt. E., 6013 Market St. Trout, W. W. & Co., Norfolk, W. Va. Turnbull & Norris, 1512 Chestnut St. Turner & Son, Betterton, Md. Turner, Spencer J., New York. Sanders, M., 1423 West St. Sampson, S. T., Richville, Pa. Saum, Charles, 1404 S. 3rd St, Schmeilt, M. B., 849 N. 10th St. Schmidt, Henry, 226 N. 7th St. Schoenewolf & Co., 406 Commerce St. Schriver, Bentley & Co., 206 W. German St. Sears, Charles, 1728 N. 19th St. Seigel, D. & Co., Easton, Md. Sellers, John, 710 Sansom St. Sharpe & Dohme, 510 Arch St., Phila. Shackman & Loewy, 113 York St. Sherman, Walter L., 158 Dauphin St. Shull, E. C, Columbia, S. C. Silberman & Todes, 1222 N. Mascher St. Singer, John D., 16th and Brown St. Sloan, Frank B., 421 Arch St. Sloan, Frank N., & Co., Baltimore, Md. Smith, J. P., 1734 S. 4th St. Smith Bros. & Co., 3268 Joy St. Smith, F. M., 905 Walnut St. Smith, Dixon & Co., Baltimore, Md. Smith, Z. L., Bluefield, W. Va. Ulmer, Theodore C, Richmond Street and E. Columbia Ave. Union Hardware Co., Union, S. C. Vulcan Iron Works, Steelton^ Pa. Wagner & Johnson, Charleston, S. C. Wagner, F. W. & Co., Raleigh, N. C. Wagner, Willis &' Co., 427 Chestnut St. Walburn, C, & Co., Charleston, S. C. Wall, W. W., Winchester, Va. Walters, Samuel L., 520 N. 18th St. Wanamaker, John, Phila., Pa. Waream, J. S., 1011 Chestnut St. Washburn Flour Mills Co., Minneapolis, Minn. West, W. S., 411 Walnut St. West, Robt., 1013 S. 17th St. Weston Paper Co., Davis, W. Va. Wilcox Hdwe, & Iron Co., Gettysburg, Pa. Williams & Wilkins Co., 2419 Greenmount Ave. Williamson Creamery Co., Williamson, Pa. 250 DIRECTORY. Wilson, A., Bethesda, Md. Wilson, Chas., Emmittsburg, Md. Wilson Furniture Co., 1925 Arch St. Wilson, Howard P., Frankford, Pa. Wilson, William, 1517 N. 56th St. Winkleman Brown Drug Co., Pittsburgh, Pa. Woolson Spice Co., Toledo, O. World Publishing Co., 208 N. Calvert St. Wright, Samuel, 719 S. 58th St. Wyeth Bros., 11th and Washington Ave., Phila. Yakel, Geo. & Co., Charleston, S. C. Yearley, Alex., & Co., 338 W. Logan St. Young Bros., Danville, Va. Young, H. O., 105 Walnut St. Zimmerman, T. E., & Co., 2501 N. 33d St. Index PAGE Acceptance 92 Acceptance, Trade 93 Account Sales 198 Account Sales, Illustration 199 Account, Sales on 114 Account with Attorney — ' 136 Accounts, arrangement in Ledger 113 Accounts, Controlling 167 Accounts Payable account 168 Accounts Receivable account 167 Advances to Consignor 198 Advertising account 71 Arrangement of accounts in Ledger 113 Assets, Available. 232 Deferred .- 234 Fixed 232 Attorney, account with 136 Audit, advantages of 244 Auditing 244 Audit, Suggestions for 245 Auditor, Qualifications for 244 Automobile account 26 Auxiliary books 113 Available Assets 232 Balance Sheet 72 Illustration 73 Balance Sheets 232 Illustration ' 233 Bank Account, How to Open 19 Bank Account in Ledger 174 Bank Balance, Reconciliation of 21 Bank Book Balance 21 Bank Drafts 18 Basis of Cost Accounting 236 Bill Book as Book of Original Entry t 168 Bill Book :....' 96 Illustration 98-101 Bills or Invoices 33' Bills Payable account 95 When to Debit 96 When to Credit 95 When the First Entry Should Be in the Journal 96 When the First Entry Should Be in the Cash Book 96 251 ARTICLE 76 231 110 162 104 190-196 195 190-194 226 60 104 278 279 277 162 294 292-295 295 2°2 37 103 278 69 275-281 18 197 20 20 16 285 196 97 44 88-89 92 90-91 93 94 252 INDEX PAGE ARTICLE Bills Payable account, Illustration 106 Bills Payable and Bills Receivable, How to Distinguish 92 77 Bills Receivable account 94-95 80-87 When the First Entry Should Be in the Journal 96 93 When the First Entry Should Be in the Cash Book 96 94 Bills Receivable account, Illustration 106 Bills Receivable account Instructions for studying illustration 97 99 Bills Receivable account 94 80-87 When to Debit 94 82-83 When to Credit 94 84-85 Bonus Stock 212 242 Bookkeeping, Double Entry, Rules for -. 29 . 39-40 Books, Classification of Books 113 100 Of Original Entry 113 101 Of Subsequent Entry 113 102 Auxiliary 113 103 Books, How to Open 55 50 Opening Journal Entry Illustrated 59 Books, How to Close 69 54-68 Capital Stock account 210 236-246 Capital Stock Increased 211 239 Capital Stock, Paid for in Installments 211 240 Sold below Par 212 • 241 Cash, What is cash 5 7 How to find amount on hand 5 8 Daily Proof of 14 13 Excess 14 13 Deficiency 14 13 Drawn on account by employes 136 160 Account with, in the Ledger 136 163 Cash Account, When to Debit and When to Credit 5 4 Usual Explanations : 5 6 Cash Book, Petty 131 134 Cash Book, Three-column 118 115-119 Illustration 120-121 Cash Discount or Merchandise Discount 114 109 Cash Discount on Purchases account ' '. 131 135-137 Cash Discount on Sales account 132 142 Certified Public Accountants 213 249 Changing from Single Entry to Double Entry 194 215-216 Checks 16 14 Checks, Writing of 22 21 Check Book Stub Records 21 19 Classificat'on of Books 113 100 INDEX 253 PAGE ARTICLE Closing Books 70 % 56-68 Illustration of Journal Closing Entries 75 How Often Done 72 67 Collateral note 89 71 Collections, Importance of 36 47 How to Make 36 47 Columnar Books 118 114 Columnar Cash Book 118 115-119 Illustration 148 165-178 Commission Account . . 198 232 Commission Bookkeeping 196 218-235 Common Stock 212 243 Consignments 197 222-234 Consignment Ledger 197 224 Controlling Accounts 167 190-196 Corporation Bookkeeping * 210-215 236-265 Correction of Errors 32 43 Cost Accounting 236 282-291 Cost Accounting, Rate Calculations 237 288-281 Cost by Per Cent Method 236 282-287 Creditors' Ledger 167 189 Customers' Ledger 167 189 Daily Proof of Cash 14 13 Day Book or Journal, use of 31 42 Deferred Assets 234 279 Deficiency 234 280 Deposit Ticket '. 19 18 Directory 246 Discount, Trade 157 181-184 Cash 114 109 Merchandise 114 109 Bank On Sales 132 142 On Purchases 131 135-137 Dividend Account 214 256 Dividend Book : .' 215 265 Donated Stock 213 250-252 Double Entry, Advantages of " 194 214 Double Entry Bookkeeping, Rules for 29 39-40 Drafts 17 Sight.. - 18 15 Bank." 18 16 Time 92 76 Parties to 17 15 Presentation of 92 76 Acceptance of 92 76 Protest of 92 76 256 INDEX PAGE ARTICLE Manufacturing Statement 229 274 Illustration : 230-232 Merchandise Account Closing of 69 55-56 Illustration of Journal Closing Entry 75 Illustration of Merchandise Account Closed 77 Merchandise Account 26 35 When to Debit and When to Credit 26 35 How to Find Loss or Gain on .... 26 36 Illustrations of Merchandise Account 45-77 Merchandise Account, Subdivision of 131 135 Merchandise Discount or Cash Discount 114 109 Merchandise Purchases Account 132 137 Merchandise Sales Account 132 141-142 Minute Book 214 261 Money Drawn on Account by Employee 136 160 Money Orders, Post Office . 18 17 Express 18 17 Monthly Statement 34 45 Illustration , 35 Net Investment 55 50 Net Proceeds 198 233 Non-Productive Labor 237 290 Notes, Promissory 89 70 Joint and Several Notes 89 71 Collateral Note 89 71 Judgment Note 89 71 With Demand, Notice and Protest Waived. -r 89 71 Illustrations 90-91 When Due 89 73 Protest for Non-Payment 89 75 Counting Time for Discount 89 74 Entries if Renewed 95-96 86-95 Entries for Part Payment 95 87 Opening a Bank account 19 18 Opening Books 55 50 Preliminary Statement 55 50 Journal Entry for, Illustrated 59 Opening Books by Single Entry 193 210-21 Opening Entries for Corporation Bookkeeping 211-212 237-246 Original Entry, Books of 113 101 Partners, General or Ostensible 133 147 Dormant or Secret 133 147 Special 133 147 Nominal 133 147 INDEX 257 PAGE ARTICLE Partnership, Forming 133 146 Outline of Agreement 133 149 Patents 213 247 Pencil Figures 69 54 Personal Accounts, Closing of 71 65 Personal Accounts 24 29 When to Debit 24 30 When to Credit 24 31 Illustration 46-49 Petty Cash * 131 134 Posting 30 41 Posting, Junior Clerks' Assistance 114 106 Post Office Money Orders 18 17 Preferred Stock 212 243 Preliminary Statement for Opening Books 55 50 Private Accounts, Closing of 71 65 Illustration of Journal Closing Entry 75 Illustration of Private Account Closed 76 Private Accounts, When to Debit and When to Credit 67 53 Illustration 76 Private Ledger 167 189 Productive Labor .' ' 237 289 Profit and Loss Statement, Form of 225 Profit and Loss Statement 225 273 Illustration ' 226-227 Promissory Note 89 70 Protest for Non-Payment 89 75 Illustrations 90-91 Property Account ; 25 33 W T hen to Debit and When to Credit 25 34 Purchase Ledger 167 189 Purchases Returned Account 131 135-138 Real Estate Account 158 185-186 Receipts • 23 28 Receiving Book 197 223 Reconciliation of Bank Balance 21 20 Red Ink, When Used 72 68 • Resources 55 50 Rent Account 71 60 Ruling, Instruction in . 7 12 Statement, Monthly 34 45 Use of • 34 45 Illustrations '. 35 258 INDEX. PAGE ARTICLE Sets, Number 1 114 " 2 *.... 119 3 135 " 4 " 149 5 * 158 6 168 " 7 174 8 183 9 ■*. '. 200 10 217 Store and Office Fixtures Account 26 37 When to Debit and When to Credit ^ . . 26 37 Illustrations of Store and Office Fixtures Account 45 Teams and Wagons Account 26 37 Tests, Number 1 - , , 7 2 27 " 3 , 36 4.. 56 5 74 6 88 7 97 " 8 112 9 •....: 117 10 126 11 145 " 12 157 " 13 166 14. 173 15 182 " 16 ' ." 191 " 17 195 Trade Acceptance 93 Trial Balances 32 43 Errors, How to Find 54 49 Illustration 50 Undivided Profits Account 214 255-258 Unissued Stock Account 211 238 Voucher Book * 215 267 Voucher Book, Illustrated 216 Voucher Register 217 268 Voucher Register, Illustrated 218 Voucher System 215-217 266-269 Wright's Rules for Finding Trial Balance Errors 54 49 THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW AN INITIAL FINE OF 25 CENTS WILL BE ASSESSED FOR FAILURE TO RETURN THIS BOOK ON THE DATE DUE. THE PENALTY W.LL m^REASE TO SO CENTS ON THE FOURTH DAY AND TO $1.00 ON THE SEVENTH DAY OVERDUE. LD 21-100m-7,'33 **-> YE 02754 UNIVERSITY OF CALIFORNIA LIBRARY