UC-NRLF • «l444.s »444'» ^'^w* *4#-* *<444°^ *■■ ««»**»'• »u4Mb» «4#fk® m 4M^» « F HnHiwimwMi ■«wi iwi'iiiiwiiiiiieww— w iL« •4'4'* »»**•» •4fr» •4f=r» •7 i f ii nm i — --irn i T * ^i in i - r-.r-^-" ■ - "^ ' ' '' '^ * «'tfr» ««fw* •* «*- CO o >- LIBRARY UNIVERSITY OF CALIFORNIA. Clius ) THE' Theory of Accounts CONTAINING THE ESSENTIALS OF BOOKKEEPING AND FORMS OF HIGHER ACCOUNTING -BY- SAMUEL H. GOODYEAR, A. M. AUTHOR or THE GOODYEAR COMMERCIAL SERIES. CEDAR RAPIDS, IOWA. THE GOODYEAR-MARSHALL PUBLISHING COMPANY. 1901. f i:^ ~W^ 2Ay. A e>o 2 J 6 •/ .S£> S.oo / 2 /J' '/ d sa\ 7'' / c ^c 7' lo ESSENTIALS OF BOOKKEEPING. 3 (transactions with H. THOMPSON.) May I. Bought of H. Thompson on account 20 yards print at 6^c, 36 yds. brown sheet- ing at 83^c. 3. Sold him on account 10 bu. potatoes at 65c. 10. Bought of him on account 6 yds. broadcloth at ;^3.25. I 5. Paid him cash to apply on account ;^iO. , 17. Sold him on account 2 cords wood at ^4.75. 22. Bought of him on account sundry merchandise, per bill rendered, ^9. 24. Worked for him on account 2 days in store at $ 1 .50. 25. Bought of him on account 24 yds. flannel at 50c. 26. Sold him on account 24 lbs. butter at 15c. 27. Returned the flannel, bought on the 25th inst., which was damaged, receiving credit for the same, and buying on account 12 yds. cashmere at 90c. 28. Sold him on account i^ tons of hay at ;^8.50. 29. Received cash from him in full of account ;^i.6o. Close the account. 4 (transactions with M. NEWMAN.) June I. Sold M. Newman on account 20 lbs. butter at 18c. 3. Bought of him on account 30 lbs. sugar at 6c, 10 lbs. coffee at 22c. 5. Sold him on account 3 cords wood at ,^4.50. 9. Bought of him on account 2 lbs. tea at 75c. 15. Sold him on account 15 doz. eggs at 12c. 16. Bought of him on account 3 cans peaches at 25c, 20 lbs. sugar at 5c. 17. Sold him on account 20 lbs. butter at i.S^c. 18. Received cash from him to apply on account ;^5. 20. Sold him on account i ton hay at ^8. 22. Bought of him on account sundry groceries, per bill rendered, $22.75. 30. Pastured two horses for him on account for the month, charging ;^i.25 for each. Paid him cash to balance account $2.50. Close the account. III. Property Accounts. A person can keep an account with his property or with any variety of his property, and thereby determine the profit or loss derived from the same. A farmer can keep an account with his wheat field or corn field, or his cattle or poultry and determine which department of his farming is most profitable. A merchant can keep an account with his merchandise, and determine the profit or loss on his sales. A carpenter can keep an account with each house he builds on a contract, debiting it with the cost of all materials and labor expended upon the house, and crediting it with the amount received for the house, and the difference will show his profit or loss on the contract. Property accounts may be kept in any business, such titles being chosen as will distinguish these accounts from others on the books. Property accounts may be kept in any of the forms used for personal accounts. If the total credits exceed the total debits, the excess shows a gain. If the total debits exceed the total credits, the excess shows a loss. PR OPER TT A ceo UNTS. 1 1 RULE FOR PROPERTY ACCOUNTS. Debit property titles for any value expended upon them ; and credit them for any value realized from them. Property accounts are closed the same as personal accounts, except that "Loss" or "Gain" is written in place of the word "Balance" in the red ink entry. Paper can be used, as already explained, for the following accounts, allowing a page for each one. TRANSACTIONS. 1 (account with a potato field.) {See Illustrated Account on page 12.) May I. Worked two days plowing and marking potato field at $l per day. 5. Planted 15 bu. seed potatoes worth 6oc per bu. 6. Worked 5 days planting potatoes at ;^i.50 per day. June 5. Worked 3 days cultivating potatoes at ^2.50 per day. 10. Worked 6 days hoeing potatoes at ;^i.50 per day. July I. Worked 3 days cultivating potatoes at ^2.75 per day. 10. Worked 7 days hoeing potatoes at $1.2^ per day. Oct. I 5. Worked 10 days digging potatoes at ^^1.25 per day. Nov. I. Sold 250 bushels potatoes from potato field at 40c per bu., and kept for home use 50 bu. potatoes worth 35c per bu The use of the ground for the potato field is worth ;^ I 5 My gain on the potato field is ,$34. Close the account. 2 (account with 20 head of horses.) {See Illustrated Account on pag'c 12.) July I. Paid for 20 head of horses ;^2450. 10. Paid for care of horses ^^7.50. 15. Paid for freight on horses $250. 17. Paid for feed and care of horses ;^30. 20. Received cash for 5 head of horses ;^750. 25. Paid for advertising horses ^ I 2.50. 26. Paid for feed and care of horses $g. 27. Received cash for 8 head of horses ^1280. 28. Paid for feed and care of horses ^12.75. 29. Received cash for 7 head of horses ;^685. 30. My time and expenses while selling horses amount to;^57.7 5. My loss on the horses is ^i 14.50. Close the account. 3 (account with 20 HEAD OF HOGS.) Aug. I. Paid for 20 head of hogs, weighing 2360 lbs. at 3c per lb. Nov. I. Paid for pasturing hogs 3 months at ^7.50 per mo. .5. Paid for i 50 bu. corn, for feeding hogs, at 40c per bu. 6. Paid for grinding 50 bu. corn for hogs at 6c per bu. Dec. I. Care of hogs to date is worth ;^7.50. 5. Received cash for 10 head of hogs, weighing 2425 lbs. at 5c per lb. 10. Paid cash for 50 bu. corn for hogs at 35c per bu. 12. Paid for grinding 25 bu. corn for the hogs at 5c per bu. 24. Received cash for 10 head of hogs, weighing 2720 lbs. at 5^c per lb. 25. Care of hogs since Dec. i, is worth $g. What is my gain ? Balance and close the account. 12 ESSENTIALS OF BOOKKEEPIXG. \^Exainple One — Pai^'c //] Aj-l/ -^y^. / s /o / /c /J / 2. £a:^U>su<-e/0''^^^-t<''«'-'--s-^ £2^»-/ 2B2ySL 2 8-2*^/. SO BOOKKEEPING FOR FARMERS AND TRADESMEN 13 4 (account with building, no. 59 ELM STREET.) Entered into a contract to build a house on Lot No. 59 Elm street, for which I am to re- ceive ;^2000, payable in installments during the progress of the work. Apr. I. Paid for stone for the basement ^i 50. 5. Paid for lime and sand ;^30. 8. Paid for excavating cellar ;^20. 1 5. Paid for laying stone walls $60. 20. Received cash to apply on contract ^300. 24. Paid for lumber for the house $62^^. May 15. Labor of self and men enclosing the house amounts to ^355. 20. Received cash to apply on contract ;$500. June I. Paid for lime and sand for plastering ^50. 25. Paid the masons for plastering ;^i i 5. 26. Received cash to apply on contract ;^6oo. 28. Paid for tin work on roof ^75. . ^ July 15. Labor of self and men finishing the carpenter work amounts to 1^125. . 25. Paid for painting the house ;^I50. 30. Received cash for balance due on contract What is my gain? Balance and close the account. • * . SET ONE. BOOKKEEPING FOR FARMERS AND TRADESMEN. Laboring men are not usually engaged in speculative enterprises, and hence, they do not require a complicated set of account books. If every wage worker would take a few minutes at the close of each day to record his cash transactions, as well as his dealings on account during the day, he would find these records of great value and satisfaction to himself in succeeding months. In addition to his accounts with persons, every man should keep a record of his verbal contracts and agreements, so that he may refer to them at any time in the future. The form of cash account and personal accounts already illustrated will be adapted to the limited transactions of persons of this class. A farmer can keep his accounts in the same form, but his business, if properly cared for, will require one or more property accounts in addition to his accounts with cash and with per- sons. It would be well for him to notice carefully the results from the different departments of his labor, and by comparing these results he can determine with greater certainty which de- partment pays the best. If a farmer employs hired help, he should open an account with each laborer, entering un- der his name a memorandum of the terms of che contract, and giving his former address if he is not from the same neighborhood. If a hired hand is engaged to work by the month and loses time, he should be debited with the time he has lost, as well as with any amounts he has received to apply on his wages ; and at the end of each month he should have credit for the full month's wages at the contract price. In case of a settlement of an account with any person, if the account is paid in full, or even if a balance unpaid is agreed upon as correct, the account should be closed, even if a balance is forwarded and new entries are to be made at once after the agreement. The account with Reuben West, given on page 16, illustrates the application of the last three paragraphs. 14 ESSENTIALS OF BOOKKEEPING. In the following transactions we have made provision for two property accounts, one with Poultry and another with Cornfield. In Poultry account, as in other accounts like it, where the business is continued from year to year, and the entire property is not disposed of at any one time, the value of the poultry on hand at the close of the year should be added to the credits, before the actual gain or loss can be found. This value, called an inventory, can be brought down as a debit in the new account, if it is desired to continue the account. The account with Poultry, given on page 15, illustrates the method of recording the value of poultry at the beginning and close of the year, and also the gain on poultry during the year. In recording the following transactions the student will -give a page in the complete ac- count book each to Cash, Poultry, H. Grant, James Drew, Reuben West and Cornfield. Un- less the student has a clear understanding of accounts, it would be to his advantage to write the accounts on loose pages and submit them for correction, before recording the transactions in his blank book. TRANSACTIONS. JANUARY. {See Illustrated Accounts on ^ag'es 75 and 16.) 1. My cash on hand amounts to ;^ 120 Poultry on hand are worth $^$. 2. Sold H. Grant on account 5 cords wood @ ;^4.50. 5. Paid cash for repairs on wagon $1, and for shoeing horses 1^2.50. 6. Sold James Drew on account two tons hay @ ;^8, and bought of him on account sun- dry dry goods amounting to ^7.50. I 5. Received cash of H. Grant to apply on account ;^io. 18. Paid cash for taxes on the farm ^28,20. 20. Bought sundry groceries of H. Grant on account amounting to ;^4.8o. 25. Paid cash for 10 head of sheep at $4 each. 30. Feed for poultry during the month is worth $t.2^, and their care is worth ;^3. [Debit Poultry.] FE.BRUARY. 2. Received cash for 50 bu. oats @ 30c. 5. Bought sundry groceries of H. Grant on account amounting to $6.45, 20. Paid cash for suit of clothes for self;$ 16.50. 21, Received cash for five head of hogs ^65. 25. Have used 5 doz. eggs worth 22 cts. per dozen for which poultry should have credit. 27. Sold H. Grant 20 doz. eggs on account at 23 cts. per doz. [Debit Grant. Credit Poultry.] . 28. Feed for poultry during the month is worth ^1.50, and their care is worth ^3.25. MARCH. I. Engaged Reuben West, of Blairstown, Iowa, to do general farm work for me till Aug. I, at ;^20 per month and board, commencing today. 1 4. Bought of James Drew on account one overcoat for self costing ;^ 16.50. 19. Bought sundry groceries of H. Grant on account amounting to $9.55. 21. Have sold eggs for cash as follows: 30 doz. @ 22c, and 10 doz. @ 21c. [Cash received, credit Poultry.] 25. Have used 10 doz. eggs worth 20 cts. per dozen. 26. Paid cash for lumber to repair poultry house ^5. [Cash paid, debit poultry.] 31. Feed for poultry this month is worth $2, and their care ;^i.2 5 Reuben West has lost 3 days' time during the month estimated at 70 cents per day. [Debit West for lost time, and credit him for wages one month.] BOOKKEEPING FOR FARMERS AND TRADESMEN. 15 ^ya-z-^-'C^ZyL^ c/y^iy. --t^^t^ ^ / (S^i^-c^^^ JS J^ ^^^'f^^^/ /.2S'^ -1^et^.^^y^ J V 2S ^^. 2S / /o V ¥ &0 2.8 ^yS&,e.^=»-7_^X--<^ic<.^t.e^ / 7^ /S /O J/ JO /■2 / / S 2.3 s-o SO 20 1:11 OS ¥0 23 ¥ fS 23¥ ss i6 ESSENTIALS OF BOOKKEEPING. X 'yi^ ^^i^^. >. ii<:«-l/' y J/ s 3/ / ^:J^-a 2 S i'^/ /6 J-^/ [-^w Account from the Ledger 7\ y ■U^a^dJ^^ J 2 S Z^^- ^ / o£Uy^.^.^ / 2 3 (^ fs- ¥ J /CO 3 ., / ^f V c \yj CLJL^tlL,^^-y-\--R. E. Lee to apply on account $25. SINGLE ENTRY FOR RETAIL MERCHANTS. 27 Sent Hart & Co. cash per draft to apply on account t'^Q. Also paid cash for exchange on the draft 10 cents. Received cash of J. Q. Adams to apply on account $%. Paid M. E. King cash to apply on account ;$20. • Paid cash for suit of clothes for self ^18.75. Received cash of A. E. Blair to apply on account $6. Sold H. S. Lovvry on account 10 yds. cashmere @ ^i, 6 spools thread @ ^c,4i}4 yds. bleached sheeting @ loc, 43 yds. print @ 6c. Received cash of R. E. Lee to apply on account ;^40. Cash sales to-day per tickets amount to ^80.52. Paid James Dawes cash on account ;^20. Received cash from the Union Woolen Mills to apply on account ;^i5o. Paid L. A. Kemp cash on account $2$. Paid cash to sundry persons for 400 flbs. butter @ 20c. Shipped to Lee & Shepard, New York, 700 ibs. butter on account @ 22)^c. Paid cash for freight on the butter 1^3.50. The cash in safe and drawer this evening amounts to ^279.66. The student may close all accounts in the ledger, using balance entries if the accounts are not already in balance. STATEMENTS. A statement is a summary of the resources and liabilities, showing the present condition of the business, and comparing this with the condition at some previous time, thereby indicating the progress of the business. Resources include the balances which others owe us on account, the balance of cash on hand and in bank, other people's notes and written obligations payable to us, and the values of property shown in our inventory. Liabilities include the balances which we owe others on account, our notes and written obligations outstanding, and the amounts we owe as shown by the inventory. Inventories are taken to show the present value of property not shown on the account books. The ledger in Single Entry shows the balances due to us or from us on verbal prom- ises, the note book shows the balances due on written promises, the cash book shows the bal- ance of cash on hand ; and all the merchandise, chattels and real estate on hand and intei'est unpaid, can only be shown in either Single or Double Entry by the inventory, which is an itemized list of such property, giving the quantity and present value. All expenses of the busi- ness prepaid, such as unexpired rent or insurance, wages paid in advance, etc., are also re- sources which can only be shown by the inventory. Sometimes it is necessary to make an inventory of debts not shown on the account books, such as rents due and not yet paid, wages due workmen, interest due and unpaid. In the broadest use of the term, the inventory is a list of resources or liabilities not shown on the account books. In making statements, care should be exercised that they do not give an inflated showing of the business. Personal accounts are frequently uncollectible, and notes are not always good for their face value, and even property is sometimes inventoried at more than its real worth. The statement is not an absolute showing of our worth, as it merely announces our worth, pro- vided the personal accounts are all good, the notes all collectible, and the inventories not over- estimated. Some firms, in making statements, deduct a certain per cent from their unsecured accounts and notes, their experience in dealing with a certain class of traders enabling them to approximate closely to the actual shrinkage of these values. We cannot give any standard rate at which to discount these values, as the shrinkage depends mainly on the caution used by the firm in giving credit to others, and in their promptness in urging collections. Merchants and stock companies usually make a statement of their business once a year, although some make statements as often as every three or six months. At the beginning of 28 ESSENTIALS OF BOOKKEEPING. the statement should be recorded the name of the firm whose business is represented, and the date when the statement is rendered. The resources are arranged together and their sum taken, which shows the entire property of the firm. Tlie liabihties are also classified together and their sum deducted from the total resources, flowing the remainder as the real value of the firm, called its Present Worth or Net Worth. If the business has been adverse to such a degree that the liabilities exceed the resources, the excess of the liabilities is called the firm's Net Insolvency. It is evident that if the present worth is greater than the amount invested, the difference must be a gain, and if the present worth is less, the difference must be a loss. The sources of information from which the statement is arranged are the following: Lcdg-er. — If the debtor side of an account is the larger, the excess will be a resource. If the creditor side is the larger, the excess will be a liability. Cash Book. — If the received side is the larger, the excess will be a resource. The paid side of cash may be equal to the received, but it can never properly be larger, because the merchant cannot pay out more money than he has had on hand, unless the cash account includes his transactions at bank and he is allowed to overdraw his bank account, in which case the credit balance would be a liability due the bank. "^ Note Book. — Olher people's notes in our favor still unpaid are resources. Our notes still outsranding are liabilities. Inventory. — All property on hand, such as real estate, merchandise, chattels, stocks and bonds, interest receivable and expenses prepaid, if estimated at their market value, are resources. Expenses and interest payable, and other obligations not shown on our books, are liabilities. In making a statement at the close of Set Two, the student will find all of the facts required except the inventories, in the cash balance, the ledger balances, and the opening day book entry. The following results appear in the inventory : Unsold merchandise at cost price amounts to ;^546.95, 350 lbs. wool on hand is worth 27 cts. per pound, and the unexpired rent and pre- paid insurance amount to $15. (See Illustrated Statement on page 29/) RUL^S RELLATING TO STATELMILNTS. /. To find the Present Worth, subtract the total liabilities from the total resources. 2. To find the Net Insolvoicy, subtract the total resotirces front the total liabilities. J. To find the Net Gain^subtract the net capital at co})iniencing'froni the present xvorth. 4. To find the Net Loss, subtract the present zuorthfroni the net capital. 5. To find the Net Capital, subtract the liabilities invested from the resources i)tvested. PRACTICE IN STATEMENTS. The student may rule pages of paper and write statements from the following examples : I. A merchant commenced business with a capital of 52,000. At the end of six months his books show the following : RESOURCES, Ledg'er. — Balance due from A. B. ;^300, balance due from C. D. ;^25o, balance due from E. F. ;^3 50, balance due from G. H. ;^ioo. » Cash Book. — Balance of cash on hand, ^ 1,5 50. Note Book. — Notes on hand unpaid $750. Inventory. — Merchandise unsold amounts to ;^750. LIABILITIES. . Ledg-er. — Balance due J. K. ;^300, balance due L. M. ^250. Note Book. — Notes outstanding ;$750. Inventory. — The merchant owes for unpaid rent $75, for clerk hire ^42. 50. Give the present worth, and the gain or loss. SINGLE ENTRY FOR RETAIL MERCHANTS. 29 - \^i^ &, /^f- Or ■ ^iLe-e^ if^, ^.^ L'i^'y^^ .J-^ / ^O / J 5 (7 VS' /sy s^ SVC fv / s fS so 3 ¥ / / ¥¥ ¥Z Z2 / (PS 6 22s oz &s / 2 7^^ C,J c. / S 8^-/ S^ C S .OS' / 8- 2 sy ^3 / 02 /^ y vf 30 ESSENTIALS OF BOOKKEEPING. II. A merchant invested in business $6,000. At the end of one year his books and inventory showed the following results: Lcdocr. — Herbert Mann Dr. $S7S^ Cr. ^$225; James Johnson Dr. $275, Cr. $S^S\ G. Lam- bert Dr. $375; M. Stafford Dr. $495, Cr. $645; C. Harter Dr. $775, Cr $325; C. I. Mason Dr. $342, Cr. $592. Cash Book. — Cash received $13,295, paid $12,145. Note Book.-^Notes receivable received $2,750, disposed of $1,925; Notes payable issued $1,750, redeemed $1,250. Inventory. — Value of store room $1,500, merchandise unsold $1,250, insurance prepaid $15; accrued interest on notes payable $27.50, one-half month's wages due the bookkeeper at $50 per month. What is the present worth, and the gain or loss. III. A man rented a farm and began the work of the year without capital. At the end of the year he had the following resources and liabilities : He owes the grocer $35.64, the merchant $54.25, the blacksmith $23.62, the shoemaker $25.25. The miller owes him for wheat $75, the butcher owes him (or i cow $40, his neighbor owes him for wages, $32.75. He has cash on hand $57.39. He had given notes for a team $375, and for 2 cows $75, and has since paid on these notes $150. He now has a team worth $390, cow and calf worth $50, 2 colts worth $85, poultry worth $35, and farm products on hand worth $275. He still owes on farm rent $1 25. How much is he now worth, and what is his gain beside.s his living expenses for the year ? IV. A man failed in business and began anew with no capital but his experience and with liabilities from former business $775. At the end of a year his books show the following results: Due from persons on account $625, due to persons on account $1,250, merchandise on hand $1,395, store room $3,750 on which there is a mortgage securing his notes payable for $3,250, accrued interest on the notes $242.50. He has cash on hand $27.25 and in bank $125.25. He owes the bank on his note discounted there $650. What is he worth and what has he gained? QUILSTIONS FOR REVIEW. I. What accounts are usually kept in Single Entry, and what books are used? 2. What transactions are recorded in the cash book? 3. What distinction is made in recording cash entries that apply on account, and those not applying on account? 4. What is the office of the day book? 5. How are transactions on account recorded in the day book? 6. What is the office of the ledger ? 7. In what does a ledger differ from a complete account book? 8. What is the process called posting? 9. From what books are the ledger ac- counts posted ? 10. What date is posted in the ledger entry? i r. What is written in the explanation column of the ledger account ? 12. What is written in the page column ? 13. What postmark is used in the historical books to indicate that entries have been posted to the ledger? 14. How are ledger accounts indexed? 15. In opening up a new set of books, what record should first be made? 16. How should the investment in business be recorded? 17. What should be done, after entry in the day book, with balances of account invested from a former business? 18. Where should we note the address of persons having accounts in our ledger? 19. When should such address be given ? 20. What record is made of invoices of merchandise bought at wholesale? 21. What entries should itemized in the daybook? 22. What is meant by a historical or original entry? 23. Is the original entry more import- ant than the ledger entry ? 24. If so, why? 25. When should sales be itemized ? 26. When should purchases be itemized ? 27. In correcting an error, is it safe to erase any part of an original entry? 28. Can a ledger entry be erased and corrected? 29. What is a statement? 30. What does the term, resources, include? 31. What does the term, liabili- ties, include ? 32. Of what does an inventory consist ? 33. How may we guard against the showing of fictitious or inflated values in a statement? 34. How often are statements usually made? 35. What is the present worth of a firm ? 36. When is a firm said to be insolvent? 37. How may the net gain be found ? 38. How may the net loss be found ? SINGLE ENTRY FOR PA R TNERSHIP A CCO UNTS. 3 1 SET THREE,. SINGLE ENTKY FOR PARTNERSHIP ACCOUNTS. Ill recording a partnership business, the day book should begin with an account of the partnership agreement, after which each partner sliould be credited with his resources invested, and debited with his liabilities assumed by the firm. In case one of the partners makes only a cash investment, the entry could be omitted from the day book, and be posted from the cash book; but being a part of the investment record, it would seem advisable to give it a place in the day book. If cash received or paid on account is entered in both day book and cash book, the words " Day Book " should be written in the prominent place in the cash book, instead of the person's name, indicating that the entry will be posted from the day book, and not from the cash book. In case an account is settled in full, part being paid in cash and the balance being discounted, the entire entry should appear in the day book, the discount being debited or credited along with the cash. The first debit in the cash book on page 36, and the tenth credit on page 37, illustrate cash entries that appear also in the day book. The sixth entry on page 34 illustrates the method of entering cash and discount in the day book. It is customary for wholesale merchants to offer a cash discount with each invoice they send out, if the same is paid within a specified time, and the prosperous retail merchant will watch these offers and pay his bills within the specified time, in order to receive the discount. The discount rate and the discount period are not uniform, changing with different firms and on different classes of goods; hence, the merchant needs to keep a careful record of his dis- count offers. The second entry on page 34 illustrates a good method of recording discount offers in the day book, and the same entry posted to the ledger on page 38 illustrates the method of recording dit>- covint offers in the ledger. Debits and credits are posted from the cash book, the same as in the preceding set. If a part of the cash is deposited in bank, and some of the payments are made by check on the bank and others by cash, it would be convenient to use separate columns in the cash book for the bank transactions. The second one of the received columns can be used for recording de- posits in bank, and the second of the paid columns for payments by check. The first column on each side will show cash receipts and payments, and the balance between these columns will show cash on hand, while the balance between the deposit and check columns will show the cash in bank, or the balance due the bank, if the checks exceed the deposits. Sometimes small amounts of cash are received or paid out, and tickets or entries for the same are forgotten. In such case the cash in the money drawer will fail to agree with the bal- ance shown in the cash book, and such discrepancy can best be shown by the entry " Not accounted for," with the amount of the discrepancy in the proper column, leaving the balance of cash, as shown in the cash book, equal to the cash in drawer or safe. This entry can be written with a pencil, and afterward erased and the transaction properly described, if discovered after the account is balanced. The model cash book on pages 36 and 37 illustrates the use of cash and bank columns and the method of recording cash on hand and not accounted for. The note book illustrated on pages 36 and 37 is the standard form adapted to either single or double entry. Other columns may be added, adapting the note book to special forms of double entry bookkeeping. There should be a column for the date when the note is used in the business, and another column for the date of the note, as these two dates are sometimes 32 ESSENTIALS OF BOOKKEEPING. different. Another column should contain the number of each note, the notes being numbered in the order that they are issued or received. Other columns should contain the name of the maker or signer, the name of the person to whom the note is payable, for what the note was given or received, where it is payable, the term of payment, when due with special columns for each month, the amount or face of the note, the rate of interest, and a column for recording when and how the note is disposed of. Three days longer than the term of credit, called days of grace, are usually allowed on all notes before they are considered legally due, the legal date due being recorded in the note book. Some states have dispensed with days of grace, making the note fall due at the expiration of the term named. In our computations in this text we have allowed days of grace on notes and drafts. An accepted draft creates the same responsibility as a note. The person accepting a draft makes a promise to pay the draft according to its terms. If it is payable a certain time after sight, the time when it is seen and accepted gives it date as a promise, and its time to run counts from the date of acceptance. If the draft is payable a certain period after date, the time of acceptance would not affect the maturity of the draft. If a note has been given or a draft accepted to apply on account, the transaction should be entered in the day book, before being posted to the ledger. A note or accepted draft received from a person to apply on account, should credit that person; and a note or accepted draft given to a person to apply on account, should debit that person. Some bookkeepers post such debits and credits directly from the note book to the ledger; but, unless such transactions occur frequently, they are liable to be overlooked in posting the ledger. The day book, cash book, note book, and ledger should be used in recording the following transactions. Each account should have one-fourth of a page in the ledger. TRANSACTIONS. OCT. 4, 189 — The student and Harvey Patterson have this day entered into partnership as dealers in groceries and produce, under the firm name of (Student) & Patterson, each investing an equal amount and sharing equally in gains and losses. The student has invested a stock of groceries inventoried at $\ 5347 5, a horse and wagon for delivering goods valued at ;$250, and the following ledger balances from city customers and country dealers considered responsible: H.Emery, No. 139 Fourth avenue, $\2.'-^o\ Myron Jones, No. 129 Sixth street, ^37.75; Charles Trenton, No. 232 Fifth street, ^35.25; O. Sherman, dealer at Riverside, ;^7.5o; E. C. Martin, dealer at Stanton, ;^54.25. The student owes the following balances of account, which the firm has assumed to pay: Meade & Morton, St. Louis, ^$175; Archer & Parton, Chicago, ^268.50. Harvey Patterson has invested cash ;^ 1488.50. Deposited cash in bank ^1400. Gave check to H. O. Pratt, to pay rent of store room to Nov. r, ;^50. 5 Bought of R. Newland, a market gardener, on account, 20 bu. polatocs @ 40c, 100 heads cabbage @ 5c. Paid cash for sundry produce ^8.50. Sold Charles Trenton on account 20 ft)s. A sugar @ 6c, 5 Bbs. Rio coffee @ 20c, j^ bu. potatoes @ 50c. Received for cash sales today ;^37. 75. '* Received cash of H. Emery in full of his account ;^I2.50. Received invoice of groceries from Archer & Parton, amounting to $350.50, with an offer of 3 per cent cash discount, if paid within 10 days. Gave check to the Commercial Railway to pay freight on last invoice, ;^ 10.75. Deposited cash in bank $50. [transactions continued on page 35.] SINGLE ENTRY FOR PARTNERSHIP ACCOUNTS. 53 S yPirst Pag-c of I he Day Book^ 2^, i^-^-z-^-ciX 0, ■^. ^^.^^'i-^t'^^T^^ „ / i- 3 'JJ\ 7 j5V /^ // J" / f 32 .je:^<7!-t:^cyl^ty<~£^ L.J^C^uCZ-<>L<£-tP--T^ -y^-Ay. ■.'^L'Ce-'Ci^ /i9 .OS- //5 2 (>S' SO s ¥VJ SO / ^S'S'SO / 3 34 ESSENTIALS OF BOOKKEEPING. \_Second Pag'e of the Day Book^ j/z. .y^-u,^. Oi^^^«^^h-^t-dy .so / Z(7 IS 2 3S ■ 2 2 / Z7 3S / / 2 ¥ S ¥S 2 id S'O SO 6 2c:J c:C<^. 0<^^t^L-^c, 40 baskets grapes @ 25c. Gave a check to the Commercial Railway for freight on peaches and grapes ;^5. • Sold Reed & Young on account 30 bu. potatoes @ 40c, 12 baskets peaches @ 48c, 8 baskets grapes @ 33/^^- Received cash from them to apply on account ^5. Sold E. C. Martin on account 50 bu. potatoes @ 40c; and received his note at ten days in our favor, payable at our bank, for $jO without interest, to apply on account. Bought of R. Newland on account 20 squashes @ I2%c, 10 bu. turnips @ 30c. Sold him on account 20 lbs. bro. sugar @ 6c, 5 lbs. Rio coffee @ 20c, i lb. Japan tea @ 70c, 4 lbs. soap @ 6%;c. Received cash of Charles Trenton to apply on account, ;^20. Sold him on account i sack flour @ ,^1.70, I basket peaches @ 75c, 2 lbs. corn starch @ I2c. Sold Smith & Lee on account 20 bu. potatoes @ 40c, 8 baskets peaches @ 48c, 15 baskets grapes (6^ 33/f c. Gave O. Sherman a check for ^10 to apply on account. Sold him on account 12 baskets grapes Qj^ 33/^c, 20 baskets peaches @ 45c. Received for cash sales today ^71.25. Sold Charles Marvin on account 30 bu. potatoes @ 40c. Paid cash for postage and stationery ^2.25. Plarvey Patterson has taken sundry groceries on his private account, amounting to;^6.85. Sold Henry Carter on account 20 bu. potatoes @ 40c, 5 baskets peaches @ 48c. Deposited cash in bank $go. [transactions continued on page 39.] 36 ESSENTIALS OF BOOKKEEPING. (9a. \_The Left Folio of the Cash Book^ '^i^l.^d-.-A^ ^P^^-T.^.-c:^ Cyfc^^ -i^ <«-'T^i/c>n'-T^c<^ cTT-t^ u^czy / ^?- S' ^c L>7^£-<^2-*'Z-z:ijL-^\y^^ y--v-fe-- NOTES AND BILl^S. Date Recorded. WHOSE FAVOR FOR WHAT WHEKE PAY «^l-tc^<-^6^^ 6 O / O 7 jjf 3 (. / / ^/vT /jTf ^ / S SO 7^ 7-^ l^ECEIVABtB. Date Term -Whkn Due 12 1 AMOUNT Int. Mos Days. Years. I 2 3 4 S 6 1 7 8 9 10 It Disposed of. frf^ - acJr- 7 / /rf- AC 7' iyj - 10 f o 3o (oO // • /o /.; Zoo (oyo (CU^ /3(jLj^ '. / o 1 '/ /3 S-Tc OJIr ' // ±C 1/ 3 J-c f»AKA BI^E. f o / II Term- Mos! X)ay! 7iar3 Tl 2] 3] 4! 5] o /(9 l<5- /!?Z^i-^Z^^^^ /^ ■ /«rf_ 6^ c> -Y:?ci.^y 7 25 6U. ^ i^Cy^t^UY Ofc^t:>'^^ ^ / ¥^? 50 ' ^ yy / S yff\i/¥ 1 (Pa. /3 / S 2^ ^^ ./X ''/< QP^T-T'-T^-U^^ , /J'y <^^ c'-t..<.yt^A/r^ uCi^-K /3 a47ecy Ofcrr^--^ 6. f / 2 , — ( ! /3 -(^ccd-JT-y C> " 1 / 2 sa ■ / / .3 3J~ J ^s J 3S 6^ /J. 1 J 3-5 ^ ^'^— -<^^^^^E.---^/^^^V>^^ "i^^^^-i^Coo.s:?:-^ // /o' J5 / a / 1^? 1 / J" ? 3 ^ ¥S 50 50 L^S^ CCo/ /2 /J 6^, / 2 ^LJ^,<^<2'-»'j-<:-i2-^ ^9 OS O^^-^J'Z-i*^^ C/f^=e--<^::z-^>-i-r /'-^ (>zs (>/ 9i,^-^^ kJ^o-c^C'^ /^i^-?ile.i^i'(-e^T't^c^-i-Y IS 3/ 1¥S ZS 7^ 2 4/^ ¥ Z/ f ^r / 3 8-5 c:>J-l^-^i^-^^L^.^^y- ajA.^....^.^ /yZe^^z.<;6eJ¥- .^2^c^Vi£^^^ / 7^ /^ ^:^^^.cA.^^'^6^^^Uir^^ Z/ S 4^i- LA. /'^^oiAz^c^-^-t-iTt:!-^ / os /'^ST5'-'i-«Jt'Z--^'t-'»--t.-^ J^ so -^.-^^^^-.....^ ^0 yZ-tH^-^y C>f.z 2S / / (f3 ^J- 30 26, 03 Kj^^'?--Z-'Ty<-^.- ^? ~r 3VZC> 03 SINGLE ENTRY FOR PARTNERSHIP A CCOUNTS. 43 Ledg'er, — Personal accounts due the firm ^5,000, of which ;^i,ooo is worth only 50 cents on every dollar. Personal accounts due from the firm ^3,000. Casli Book. — Cash on hand ;^500. Bank Book. — Balance of cash in bank, 1^3,500. Note Book. — Notes Receivable unpaid ^2,500, Notes Payable unpaid ;^3,ooo. Inventory. — Merchandise unsold, $2,750, store room ^3,500. During the year Smith has drawn out on his private account ^200, and Perkins has like- wise drawn out ;^iOO. Required the present worth of the firm and of each partner, after allowing the balance of gain not drawn out by each partner to increase his capital stock. III. H. Sherwood and M. Parks enter into partnership as real estate and insurance agents. Sherwood makes no investment. Parks invests the ofifice equipments and good will of a busi- ness already established and estimated worth ^i 150. Each partner devotes his whole time to the business, and Sherwood is to receive one-third of the profits and Parks two-thirds. At the end of one year they have cash in bank ;^668.iO, their office outfit and the good will of the business are now worth ;^I575. James Parton owes the firm on account ^i 12.50. The firm owes Caleb Martin on account ;^75, Cyrus Clement on account ;^57.50, Myron Newman on account ^27.50, and the College Insurance Co. on account ^95.60. During the year Sherwood has drawn out ^$650, and Parks has drawn out ^950. What is each partner's present worth after the gains have been credited? QUESTIONS FOR REVIEIW. I. What opening entry should be made in a partnership business? 2. How should part- ner's investments be recorded ? 3. What record should be made of balances of accounts in- vested ? 4. If a cash transaction is part of a day book entry, how should it be entered in the cash book to avoid repetition in the ledger? 5. How may cash and bank accounts be kept separately in the cash book? 6. What record should be made in the cash book, to show an excess or a shortage of cash on hand ? 7. What record is made of a discount, if it is allowed on a cash payment to apply on account ? 8. How may discount offers from wholesale merchants be shown in the ledger? 9. How is the maturity of a note found? 10. What is the effect of accepting a draft. 1 1. What date on an accepted draft is used in estimating its maturity ? 12. Where should notes and acceptances be recorded, when given to apply on account ? 13. What record is made in the books of the gain or loss of each partner ? 44 ESSENTIALS OF BOOKKEEPING. DEBITS AND CREDITS. Every transaction in business will make equal debits and credits, if all accounts are kept that are affected by the transaction. There may be one or more debit amounts, and likewise one or more credit amounts, but in every case the total of the debits will equal the total of the credits. GENERAL RULE. FOR DEBIT AND CREDIT. Debit the account that costs or receives value; credit the account that produces or gives value. In every possible transaction we will find some person receiving, or some department of our business costing value; and some person giving, or some department of our business pro- ducing value. Thus, if I buy merchandise of a firm on account, the merchandise costs value, and the firm gives value. If I sell merchandise to a firm on account, the firm receives value, and the mer- chandise produces value. If I pay cash for merchandise, the merchandise costs value, and cash, representing the cash drawer or safe, gives value. If I sell merchandise for cash, the cash receives value, and the merchandise produces value. If I receive cash from a firm on account, cash, representing the cash drawer, receives value, and the firm gives value. If I pay a firm cash on account, the firm receives value, and cash, representing the cash drawer, gives value. Thus we might analyze every possible transaction, showing that there is one account re- ceiving or costing value, and another account giving or producing value. There are transactions that affect more than two accounts. If I sell merchandise to a firm and receive cash for a part of the price and their verbal promise to pay the balance at another time, cash receives a value and the firm also receives a value ; and merchandise produces the two values. If I buy merchandise of a firm and pay them cash for a part of the purchase and owe them for the balance, merchandise costs the entire amount; while cash gives a part of the value and the firm gives the balance. In every transaction in which one or more accounts receive or cost value and are debited, and in which one or more accounts give value and are credited, it will be seen that the sum of the debit values must equal the sum of the credit values. Double Entry bookkeeping keeps every debit and credit that is related to the business ; while Single Entry bookkeeping keeps only a part of these debits and credits, anxi omits the others. It will appear, therefore, that if we desire a complete showing of all results connected with the business, we must use the Double Entry System. DEBITS AND CREDITS. 45 SPECIAL RULES FOR DEBIT AND CREDIT. All debits and credits may be determined by applying the general rule already given, yet it will assist tlie young accountant, if we give him a number of special rules, each of which re- lates to a distinct variety of transactions. 1. Persons or Corporations should be debited for what they owe us, or what they re- ceive from us on account; and credited for what we owe them, or what we receive from them on account. Personal accounts include accounts kept with individuals, companies, banks and all corporate institutions that are legally competent to make contracts and transact business. A personal ac- count, if not in balance, shows a resource or a liability. 2. Cash account should be debited for all cash, or papers equivalent to cash, received; and credited for all cash, or papers equivalent to cash, paid out. Cash represents money, or its equivalent, and includes specie, currency, bank checks, bank drafts, certificates of deposit, postoffice orders, express orders, and all drafts and orders on other firms payable at sight or on demand. If such papers as the last two named are entered as cash received, they will be counted among the items of cash on hand, and if we find that they are not collectible at once, we can afterward enter them to the credit of Cash, and debit Bills Receivable account for their amount. Demand notes and due bills payable on demand are not usually classed as cash; because they are not practically collectible at once, although they are so written. If the maker of a de- mand note or due bill expected to pay it at once, he would pay cash or write a check instead of giving the note or due bill. These papers are properly time papers, and should be classed as bills receivable. The creditor side of Cash can never properly be larger than the debtor side. Unless the ac- count balances, the debtor side should be in excess, showing a resource just equal to the amount on hand and in bank. If we keep a bank account separate from the cash account, the bank should be debited for all sums deposited; and credited for all checks drawn on the bank. 3. Bills Receivable should be debited for all promissory notes and written promises of others, when received, and credited for the same when disposed of. Bills Receivable include notes, due bills, time drafts on other firms payable to us, and any other paper that contains a written promise to pay us at some future time. If we draw a time draft on a firm, and sell the draft, we cannot credit Bills Receivable, for the reason that we must credit the firm whose account has given us the value. Hence, we can make this rule, that no paper can be credited to Bills Receivable, unless it has previously been debited to that title. We must, debit and credit the face value, no matter how much we give or receive for the paper* the discrepancy, if any, being carried to some other title. If Bills Receivable account does not balance, the excess, which must be on the debtor side, will show a resource. The value of the resource will depend upon the responsibility of the makers and endorsers of the bills which we still hold. 4. Bills Payable should be debited for the face value of our notes and written promises to others, when we pay them; and credited for the face value of our notes and written promises to others, when we issue them. When we pay a firm's draft on us at once, instead of accepting it, we debit the firm who drew on us and credit Cash. When we accept a draft instead of paying it at once, we debit the firm who drew on us and credit Bills Payable. If Bills Payable account does not balance the excess, which must be on the creditor side, will show a liability; this amount showing our written obligations outstanding. 5. The Proprietor, or Partner, should be debited for any liabilities assumed by the business for him. and for any money or property taken from the business by him; and credited for any money or property received by the business from him. Early bookkeepers used the title Stock to represent a single proprietor's investment account, but modern bookkeepers have discarded the use of this title, except in the business of a joint stock company; where it is used to represent the aggregate capital of the corporation. 46 ESSENTIALS OF BOOKKEEPING. 6. Merchandise, or some other property title, should be debited for the cost of all mov- able or personal property, or its worth when invested; and credited for all amounts realized from such property. The title Merchandise generally includes all goods and wares that are bought and sold in trade; although some merchants desire accounts that will show the loss or gain of special varieties of merchandise. In such cases, special titles will be used; as Grain, Pork, Live Stock, Coal, Wood, etc. Freight and drayage, if paid entirely for merchandise, or any other outlay of money directly in purchasing merchandise or in preparing it for sale, should be debited to this account. If the merchandise is all sold, an excess of the creditor side of each of these accounts will show a profit, while an excess of the debtor side will show a loss. If part of the merchandise remains unsold, an inventory of its present value must be added to the credit of the proper account, before the profit or loss can be determined. The value of this in- ventory is also classed as a resource. 7. Real Estate should be debited for the cost of all fixed property, such as, buildings, town lots and lands, or their value when invested; and credited for all amounts realized from such property. Repairs, taxes, insurance, etc., should be debited to Real Estate as part of the cost. Property owners sometimes wish to know the profit that comes from special pieces of property. In such case, they designate the property by special titles; as. Elevator A, Elevator B, Store Room No. 1, Dwelling 39 Fourth Ave. If the special title does not fully locate the property, its location should be described in explanation at the right of the ledger title, so that a stranger might under- stand the books if it were necessary. As real estate is only a variety of property accounts, it requires an inventory, and shows a profit, loss, and resource, in the same way that Merchandise does. 8. Stocks should be debited for their cost or for any assessments we may have to pay while a stockholder; and credited for values received from them, either in sales or dividends. The term Stocks includes shares in joint stock companies, and bonds issued by Government, State, County, Township, City, and by railroad and manufacturing corporations. The accountant keeps a separate ledger account with each variety of stocks that comes into his possession, naming them after the corporation to which they belong; as, U. P. Stocks, meaning shares or bonds issued by the Union Pacinc Railway; B. C. R. Stocks, meaning shares or bonds is- sued by the Business College Railway. Stocks being a variety of property accounts, must be credited with the value of stocks unsold, the profit, loss, and resource being found as in Merchandise. 9. Shipment accounts, if kept, should be debited for the cost and charges of all merchan- dise sent by us for sale on our account; and credited for all amounts received from such sales. The shipment account is used when we desire to keep a special account of the gain or loss re- sulting from a shipment of merchandise sent to a commission merchant for sale on our risk. Many merchants do not keep a shipment account, merely making a memorandum of the mer- chandise shipped, and carrying out no debits or credits, except for freight or other expenses until the shipment is sold, when they credit merchandise account with the amount realized from the sale. In such a case, freight and ether expenses of the shipment should be debited to merchandise ac- count, r ,- I-- If we keep a merchandise account, we should debit it for all expenses of the shipment. Shipments made to different agents, are each kept under a different ledger title; and sometimes, each distinct shipment to the same agent is given a separate account, so that the merchant may know the exact gain or loss on any particular venture. Examples of these ledger titles: Shipment to Stacy & Wentworth, Shipment to Morey & Lane, No. 1, etc. . , . All shipment accounts are like merchandise, and should be credited with any values per in- ventory, these values being resources; after which, the accounts will show a gain or loss, unless the sides balance. 10. Expense should be debited for all outlays in conducting the business, that cannot be debited directly to other accounts; and credited for all values returned directly from these outlays. Expense usually includes outlays for rent, salaries, books and stationery for ofiiceuse, postage, fuel, light, office furniture, advertising, traveling expenses, etc. Sometimes the item paid for and debited to Expense, is afterward sold or disposed of in such a way as to return some value to us; as, the selling of second hand office furniture, or of postage stamps and stationery that have been bought for office use and debited to Expense. In such case. Expense should have credit for the amount received. DEBITS AND CREDITS. 47 An inventory- is often necessary in Expense account, before the actual gain or loss on this account can be determined. A merchant may prepay his rent for six months and only three months of the time may have expired when he closes the account. Rent prepaid and unexpired should be entered as an inventory to the credit of Expense account. In like manner, rent or salaries due, but unpaid, should be entered as inventories to the debit of Expense. The inventory named in the preceding paragraph is a resource, and the last named inventory is a liability, and the excess of the debit side of Expense account shows a loss. I I. Interest a)id Discount should be debited for all interest paid or assumed by us and all discount allowed to others by us; and credited for all interest received by us and all dis- counts allowed by others to us. Interest is the amount allowed the lender for the use of money. Discount is the deduction allowed from any given amount. Some accountants separate these into two titles. Premium or Exchange is another title like the above, and it is used by some to represent the amount in excess of the face value that is paid in the purchase of drafts. Interest payable due but unpaid should be entered as an inventory to the debit of Interest and DiscDuit, aid interest re^sivable da3 bat unpaid should b^ entered as an inventory to the credit of this account, after which the account, if not in balance, will show again or loss. Interest payable in- ventory will be a liability, and interest receivable inventory will be a resource. 12. Loss and Gain should be debited for all losses that cannot be debited to other titles; and credited for all gains that cannot be credited to other titles. All of the ledger accounts, whose differences show a gain or loss at closing, are balanced, and these differences are carried to an account entitled " Loss and Gain Closing," to distinguish it from the regular loss and gain account. In this closing account, the losses carried from other accounts are entered as debits; and the gains as credits. The balancing entry of this account will show a net loss to the business if the debits are the larger, or a net gain if the credits are the larger. Other titles than those given may be used as they may be required in any particular busi- ness, but the debits and credits of such titles will conform to the general law already given; Debit zv hat costs; credit zv hat produces value. METHODS OF BOOKKEEPING. The principles of debit and credit are recognized by all Double Entry bookkeepers; but their methods of recording the entries are various, each business developing a system adapted to its S[)ecial requirements. The complete routine of bookkeeping consists of making the historical entries, determining the debits and credits, and posting each debit and credit under its appropriate title. In the simpler methods of Double Entry three books are used, the Day Book, Journal, and Ledger. THE. DAY BOOK, The Day Book contains a complete record of every transaction and agreement, entered in consecutive order as they occur. It differs from the Single Entry day book in two respects; namely, it gives a historical record of each transaction without naming the debits or credits, and it records every transaction, whether for cash or other terms. Every transaction carried out, and every agreement relating to the business, should be carefully described; thus making the book a complete and reliable history of the business, re- corded in historical order. The first entry should contain the location of the business, the pro- prietor's name, and an account of his investment. The date should be given at the top of each page, and if the date changes before the page is completed, the new date should be written in the center of the page, leaving the column at the left for check marks. The first set of money columns are only used when there are several items in a transaction, totals or single amounts being carried to the second set of money columns. The footing of 48 ESSENTIALS OF BOOKKEEPING. this second set of columns, being forwarded to each new page, will finally give the total amount of the business transactions for the period represented. All sales should be itemized except retail sales for cash, so that a duplicate bill of the items may be given when required. All purchases from other firms should be itemized, unless a bill of purchase, an invoice, is received. In the latter case, the invoice can be filed away and the entry can designate " Merchandise per invoice " THE JOURNAL. The Journal is an intermediate book of entry in which we name the ledger titles that are affected by the transactions recorded in the day book. The debit and credit amounts are kept distinct by using separate columns for each, and the titles are usually kept distinct by writing the debit titles in the left half of the wide column and the credit titles in the right half of the same column. The process of transferring entries from the day book to the journal is called Journalizing. When a record is transferred from the day book to the journal, a check mark is made on the left margin of the day book entry, so that the bookkeeper may know what entries have been journalized. Since the ledger titles are the names of persons, or of accounts represented as persons, they should always be written as proper names; hence, ledger titles written in the journal should begin with capitals. As journal paper is ordinarily ruled, the column to the left of the wide space is used for recording the ledger pages as postmarks, when the entries are posted to the ledger ; the wide space is used for recording the ledger titles that are affected by the transaction, the left half of the space being reserved 'for debits, and the right half for credits ; the left of the two sets of money columns is used for debit amounts, and the right of the two sets is used for credit amounts. The date is kept at the top of the page, and a change of date on any page is recorded between the entries in the space for titles, as in the day book. A journal entry complete consists of the date of the transaction either expressed or bear- ing the date last given, the debit and credit titles affected by the transaction, and the amount of each debit and credit. This entry may be made at any time after the transaction, but it should bear the date of the original entry. As the debit and cred-t amounts in each transaction are equal, it follows, that the debit and credit columns of the journal must have equal foot ngs, each of which must agree with the footings of the day book, if all entries have been journalized. THE. LEDGER. The Ledger is the book of results, containing every debit and credit of the business, prop- erly classified and summed up. Each title recorded in the journal has a separate page or part of a page in the ledger. If the title is debtor in the journal, its amount should be written under the same title in the ledger, on the left or Dr. side. If the title is creditor in the journal, its amount should be written under the same title in the ledger, on the right or Cr. side. The page of the journal from which the entry is posted, is written in the folio column of the ledger. The explanation column in the ledger is not used by practical bookkeepers, except in sys- tems of bookkeeping in which the ledger is posted from two or more books, in which case the name of the book from which the entry is posted, will appear in the explanation column. If it is desired to keep a record of the term of payment of a sale or purchase, the same can be entered in the explanation column, as illustrated in account of H. P. Smith on page 54. The ledger may be posted at any time, but each entry should bear the date of the original transaction, as shown in day book and journal. To avoid the tendency to reverse debits and credits, it would be well for the student to follow the custom of many practical accountants; namely, posting all debit entries in the journal on the dates to be posted, before posting any of the credit entries, as the repeated change from debit to credit, or the reverse, makes an occasional reversed entry possible and highly probable. EXERCISES IN DOUBLE ENTRY. 49 .Since the journal contains equal debits and credits, and since the debits in the journal are posted as debits in the ledger, and the credits in the journal are posted as credits in the ledger, it follows, that all the debits in the ledger will make a sum equal to all the credits in the ledger. When this is found to be true, the ledger is said to be in balance. If the total of all the debits in the ledger is not equal to the total of all the credits, the ledger is said to be out of balance. The ledger is proven to be in balance by means of the proof sheet. THE PROOF SHEET. The Proof Sheet, often called a Trial Balance, is a list of the ledger titles with the totals of the debits and credits of each. The debits and credits on the proof sheet are arranged in columns, so that the total debits and credits may be obtained. Before taking a proof sheet, it is customary to add up the debits and credits of each ledger account, and place the footings in small pencil figures under each column. These proof foot- ings may be kept in the ledger permanently, by recording them in small red ink figures, which will not interfere with other entries in the columns. If the totals of the debits and credits of each ledger account are carried to the proof sheet, the total of the debit column of the proof will equal the total of the credit column, and each will be the same as the journal and day book footings. In business it is customary to close accounts that are in balance, and leave such accounts out of the proof sheet. In such case the proof sheet would be in balance, but the totals of the proof sheet would not equal the totals of the journal and day book. Frequently, the ledger is tested by taking a list of the balances or excesses of each account. Such a list is properly called a Trial Balance, as it is a trial of the balances of the ledger accounts, and. if the ledger is correct, the total of the debit balances will equal the total of the credit balances. EXERCISERS FOR PRACTICE. The following exercises are provided to give the student practice in day book entries, journalizing, posting to the ledger and taking proof sheets. The process of closing the ledger will be illustrated later in the text, as it is not the author's desire to confuse the student by in- troducing too many new subjects at one time. E,XE,RCISE ONE,. DIRECTIONS. The student will record the following transactions in the day book, giving the total of the amount column. After journalizing all of the transactions, the amounts of the debit and credit columns should each agree with the amount of the daybook column. Afte-r posting all journal entries to the ledger, the proof sheet should show the ledger in balance, and the debit and credit footings of the proof sheet should each be equal to the journal and day book footings. The student will have ledger accounts, requiring space as follows : Cash 13 lines, Student 6 lines. Merchandise 16 lines, H. P. Smith 6 lines, J. Mason 6 lines. Expense 9 lines, H. Jud- son 6 lines, and B. Spencely 6 lines. The spaces just named will allow for the closing entries that will be required later. Following B. Spencely's account at least a half page of space in the ledger should be re- served for the closing titles, before entering the accounts belonging to Exercise Two. After taking a proof sheet, the student will leave the ledger accounts open, until he has studied the process of closing the ledger, which will be given after three exercises have been posted to the ledger. In the following transactions reference will be made to the rules for journalizing given on preceding pages. Model entries in the day book, journal and ledger will be found on pages 51 to 55. ESSENTIALS OF BOOKKEEPING. The check marks are not made in the left column of the day book when the day book entries are first written, but are made when the entries are journalized. The figures in the folio column of the journal are not made until the journal entries have been posted to the ledger. The first page of the ledger represents the method of ruling that we would advise the student to employ, when he has several titles on a page of the ledger. Merchandise account on page 53 illustrates the method of forwarding an account to an- other page, and Merchandise Forward, on page 54, illustrates such an account forwarded. TRANSACTIONS. NOVBMBBR 1, 189 The student began business this day with cash ;^8oo, [Rules 2 and 5.] Bought merchandise of H. P. Smith, Chicago, on account, receiving an invoice for the same amounting to $2'j<^.^o. [Rules 6 and i.] When an invoice accompanies a purchase on account, it is not necessary to give a list of the items in the day book. Paid cash for freight and drayage on merchandise $9.75. [Rules 6 and 2.] Bought merchandise of J, Mason on account, receiving an invoice of the same amounting to ^30. [Rules 6 and i .] Paid cash for store rent one month ;^I5. [Rules 10 and 2.] Sold H. Judson on account 10 lbs. Rio coffee @2ic, 25 lbs. A sugar (jut, 5c, i lb. black tea @ 50c, 2 gallons syrup ^; 55c. [Rules i and 6.] Sales on account should be itemized in the day book entry. Received cash for sundry sales of merchandise ^^7.50. [Rules 2 and 6.] 2 Sold B. Spencely on account 5 lbs. S. G. Starch @ 8c, 10 lbs. Rio coffee ^ 21c, 80 lbs. C sugar du] 4}4c. [Rules i and 6.] Bought of B. Spencely on account 24 lbs. butter @, 20c. [Rules 6 and i .] Purchases on account should be itemized in the day book, unless an invoice accompanies the purchase. Received cash for sundry sales ^12.75. [Rules 2 and 6.] Paid cash for advertising ^3.75. [Rules 10 and 2.] 3 The student has drawn out cash $2^. [Rules 5 and 2.] Received cash for sales this day ;$28.55. [Rules 2 and 6.] 5 Sent H. P. Smith cash per draft to apply on account ^150. [Rules i and 2.] Paid cash for exchange on above draft 25c. [Rules 10 and 2.] Received cash for sundry sales 1^25.50. [Rules 2 and 6.] 6 Sold B. Spencely on account 10 lbs. Rice @ 8c, 2 lbs. Japan tea (o; 75c, 30 lbs. A sugar @ 5c, 3 sacks flour @ ;^r.20. [Rules i and 6.] Paid cash for cleaning store room $3. [Rules 10 and 2] Received cash for sundry sale's ^19.85. [Rules 2 and 6.] 7 Paid J. Mason cash on account ^25. [Rules i and 2.] Sold H. Judson on account 5 lbs. prunes @ 12c, 2 lbs. cheese @ i6c, 25 lbs. G Sugar @ 5)^c, I sack flour ;^i.20. [Rules i and 6.] Received cash for sundry sales $22.75. [K.ules 2 and 6.] EXERCISES IN DOUBLE ENTRY. 51 , ^Zc^T^^ /, /i^f - / \/ y/ 0^. ^/v><2^;e£^-.,.:^;^.Zc:;..^ K C>^..-t,£^!^£>,st.;«<^Cx.-^;Z^-^,-S/i^^ / /-^^-Z^-e?. l/^ / ./" «/ >^ -2 ^,<5^et-t>'. jS'y^v.^yt^C't^lA^ ■ SS ^ ;2. ■^. jZU . Z/ ^^ -'_^-^^er-»-- ' c-is?,'^- /O "/ ?S / so^ /o ^ 80 ¥ ^O ./ Z 3 7 'S 7 s 7- 'S jy. JT />>'>-t-'€>-t-<-->l- -> 2S ^/ 'y^ Z^ / / ^9 /P EXERCISES IN DOUBLE ENTRY 53 /Sf-\ 2, 3 J- X Z^t^t^L^e.-'i-T^-'^f' ■P^ T JisT ^l -^y^z<:£jLy i O O 7 // 1 2- 7^ ■f-? ^7 9 7 3 o 3 7. (^ o .}- ro r;^Le.->'Z-«^-^-->^ / 2. /4 J 7s- 2S- 3o EXERCISES IN DOUBLE ENTRY. 55 9S' "T />;- /rf- ll-i--^ V_yt:i^^/-e^^yiybn^..^ s / ¥0 so e Zf ss 7 / r 5¥- 8- 2f ss 55 55 CLOSING THE LEDGER. 65 /ST I /n- }l.^ <7 3 ^ ^ 2^ J — ^A-T" ^-4 ^^TAi- ^5".5~" /c -2^ 7^- J Y^' .2o 6 rv5"/\3 f / (,f o 66 ESSENTIALS OF BOOKKEEPING. yUnr Cra-> /. fy- B-v-u.-- -ft «-**' / 31'f OS- Itnr- cT- ^'^'^/^^T" / /J~Jvi^ 7 J\S-^C-^f4^ / X y'fS'o 1 Ufl-- it-'C-'O^'V-i.^ . \i^ ClJL'i^. u-T_-<_«,^ TS" --<_^ ». ^ ? 70 /o?' r"^ fj 1 ^0 ' £^c^<:2-^^?>7-t^ ^. /^^_ 7 ^^^^^tc'C'tsCc-'i-'l'K J-^ v^ d~vj5 ^.?J" 7 7^ 7^ 3-J- 5-^ 7 ^,;l^A^ / ^^5 /s 7h^ 7 j27j!7uc-<:'tU^>-^ / S Zf 65 / 2 5/ 7^ .A^JL^^o;^ z / 2y ^^ 0)^x>/i-^^'y^!-.d-'^-^ 2 / J7, 7h..cz.''-<^-^^ z (. (yj^j2K/t.t.--t-T-.^^-e^^ 3 ? yo ^yo OS 97' OS 68 ESSENTIALS OF BOOKKEEPING. EXERCISE, FOUR. DIRECTIONS. In recording the following transactions, the student will use his own name to represent the proprietor, recording the transactions in the day book, journal, and ledger, as usual. As the business commenced in Exercise Four is to be continued in Exercise Five, we have made provision in spacing the ledger, for closing each account, bringing down balances and in- ventories, and continuing in Exercise Five. The ledger accounts should be opened in the order named, and spaced as follows : Cash 25 lines, Real Estate 13 lines. Bills Receivable 6 lines. Student 8 lines, Merchandise 14 lines, J, V. Farwell 8 lines, T. Jones 8 lines. Expense 12 lines, Interest and Discount 6 lines, Hills Payable 6 lines, R. E. Saner 4 lines. TRANSACTIONS. 1. Began business with the following investment : Cash $200, a store room and business lot worth ;^28oo, and a note in my favor signed by N. Mason for $^Q>o. [Rules 2, 3, 7, and 5 ] 2. Bought of J. V. Farwell on account an invoice of merchandise amounting to;^896.50. 3. T. Jones has completed shelves and counters in my store room, for which he has charged me ;^450 on account. [Rules 7 and 1.] 4. Paid cash for freight on the merchandise ;^ 18.75. 5. Paid cash for cleaning store room $3.50. [Rules 10 and 2.] 6. Paid cash for advertising the business $22.75. [Rules 10 and 2.] 7. Received casli for sales of merchandise $27.50. 8. Paid T. Jones cash on account $50. 9. Borrowed cash at bank, giving my note at 30 days for $500 and receiving cash for the proceeds $496.33, the bnlance being retained for discount. [Rules 2,11, and 4.] 10. Paid cash for a bank draft for $300, and sent same to J, V. Farwell to apply on account. 1 1. Paid cash for exchange on above draft 50 cts. 12. Received cash for sales of merchandise $37.75. 13. Paid cash for painting my store room $52.50. [Rules 7 and 2.] 14. Paid cash for clerk hire in store $7.50. 15. Received cash of N. Mason to apply on his note, invested in Transaction i,$250. [Rules 2 and 3.] 16. Paid cash for office books $8.50. [Rules 10 and 2] 17. Paid cash for insuring my stock of merchandise $17.50. [Rules 10 and 2] 18. Sold R. E. Saner on account 45 yds. Newport denims @ i 5c, 42 yds. Keystone flan- nel @ 40c, 40 yds. Empress cashmere @ 90c, 42)^ yds. Long Branch alpaca @ 37^c, 126 yds. American prints (w, 5c, 85 yds. Union bleached sheeting @ 8c. 19. Paid Howard Smith cash $1 50 and sold him merchandise amounting to $25, to pay for labor and material in finishing a hall in the second story of my store building. 20. Received cash for sales of merchandise $148.36. The student may post and prove the ledger as usual, alter which he will close the ledger, using th-' following inventories: Real estate $3600, merchandise $671.25, insurance prepaid $16, office books not used $7. The business is to be continued in Exercise Five, and the student will bring down the bal- ance or inventory in each account, ready for the next exercise. Loss & Gain account will be closed as usual into the student's account. The balances and inventories should be brought down in the ledger, with the opening date of Exercise Five. EXERCISES IN DOUBLE ENTRY 69 We give below the proof sheet of the ledger before closing, and the trial balance of the ledger after the accounts have been closed and the balances and inventories have been brought down. PROOF SHEET BEFORE CLOSING. Cash 1159 94 63150 Real Estate 3477150 Bills Rec. 500 250 Student 3500 Merchandise 915,25 327 20 J. V. Farwell 300 896 50 T. Jones 50 450! Expense 60 25 Int. and Discount 3 67 Bills Pay. 500 R. E. Saner 88j59 6555 20 — 6555 20 TRIAL BALANCE AFTER CLOSING. Cash 528 44 Real Estate 3600 Bills Rec. 250 Student 3664 78 Merchandise 671 25 J. V. Farwell 596 50 T. Jones 400 Expense 23 Bills Pay. 500 R. E. Saner 88 59 28^ 5161 5161 28 HXERCISE FIVE,. DIRECTIONS. The following transactions are a continuation of the business commenced in Exercise Four. The transactions should be recorded in the day book, journal, and ledger. Before posting to the ledger, the student should see that the balances and inventories brought down in the several accounts correspond to the amounts given in the last trial balance. Only one new ledger title will be introduced, J. C. Smith, requiring 3 lines. The Loss and Gain account closing the preceding exercise, should have for its title "Loss and Gain — Exercise Four." The Loss and Gain account closing the following transactions, should be a separate account, under the title "Loss and Gain — Exercise Five." TRANSACTIONS. Continued the business from Exercise Four. 1. Drew out cash for personal use ^24.75 [Rules 5 and 2.] 2. Sold J. C. Smith on account 85 yards Union prints @ 5^c, 40 yds. Hampton brown sheeting @ 7c, 124 yds. Houston cotton flannel @ i2}^c, 41 yds. cotton drills @ 15c, 5 doz. Clark's spool cotton @ 40c. 3. Gave T. Jones my note at 30 days for ;^200 to apply on account. [Rules i and 4.] 4. Received cash for merchandise sales ;^92.50. 5. Bought of J. V. Farwell on account an invoice of merchandise amounting to ^327.25. 6. Paid cash for taxes on my real estate ;^2 2.50. 7. Paid cash for freight on merchandise ^8.75. [Rules 6. and 2 ] 8. J. V. Farwell has drawn on me at 10 days' sight for ^596.50, to apply on account, and I have accepted the draft. [Rules i and 4.] When we accept a draft on us, payable at some future time, we should debit the person that draws on us and credit Bills Payable, the same as we would do if we had given a note to apply on account. 9. Received cash from N.Mason to p'ay the balance of his note ;^2 50 and interest on same $2. [Rules 2, 5, and 1 1.] 70 ESSENTIALS OF BOOKKEEPING. 10. Paid cash to redeem my note given to the bank in the preceding exercise, ;^500. [Rules 4 and 2.] 1 1. Received cash for rent of hall above my store room ^17.50. 12. Sold my entire stock of merchandise to T. Jones for ;^975, receiving cash $\df'j.'j% and charging the balance to his account. [Rules 2, i, and 6.] 13. Heceived cash from T. Jones ;^35, to pay for rent of store room. [Rules 2 and 7.] 14. Paid cash for my note given in Transaction 3, ;^200 and ^1.75 for interest on the same. 15. Received cash of T. Jones for unexpired insurance on merchandise, which I have assigned to him, $\2. 16. Drew on T. Jones at 10 days' sight for ;^327.25, and sent the draft to J. V. Farwell to apply on my account. When we draw a draft on a person, we should give that person credit; and the person to whom we give the draft should be debited. 17. Drew on R. E. Saner at 30 days for ;^88.59, and on J. C. Smith at 30 days for ;^3i.i3. and sold the drafts at bank for cash ^[15, the balance being deducted as discount. 18. Sold my ofifice books to T. Jones for cash $^. 19. Paid cash ^596.50 for my accepted draft, given in Transaction 8. 20. Paid cash for my personal expenses ^26.33. 21. Sold my lot and store building to C. I. Lane for cash ;^36oo. After posting and proving the ledger, the student may close the ledger without inventories, and carry all balances into Balance account. The student's net worth after closing Loss and Gain into his account will be ;$37 24.61. EXEF^CISE, SIX. DIRE.CTIONS. In the following transactions the student enters into partnership with C. C. Smith, each making the same investment and sharing equally in the gain or loss. The firm engages in the business of note brokers. A note broker is one who buys and sells notes given by other firms. If a note is bought at less than its face value, Bills Receivable should be debited for the face value of the note, and Interest and Discount should be credited for the amount paid less than the face value. If a note is disposed of for less than its face. Bills Receivable should be credited for the face, and Interest and Discount should be debited for the amount received less than the face. Some bookkeepers have an account with Interest, keeping a separate account with Discount. In such case, the transactions referred to in the last paragraph would be entered to the debit and credit of Discount. In recording the transactions the student will use the day book, journal, and ledger, as usual. Ledger accounts will be opened in the order named, and will require the following spaces: Cash 19 lines. Student 6 lines. Real Estate 6 lines, C. C. Smith 6 lines. Bills Receiv- able II lines, Interest and Discount 13 lines. Expense 8 lines, Commercial Bank Stock 8 lines, Loss and Gain 6 lines. After taking a proof sheet, the ledger should be closed, no inventories and balance entries being required. The Loss and Gain account used in closing, should be called "Loss and Gain Closing," to distinguish it from the Loss and Gain account posted from the journal. TRANSACTIONS. 1. The student invested cash in the business ^3500. 2. C. C. Smith invested in the business a house and lot worth ;^3000, and cash ;^50O. 3. Bought a note for ;^6oo, signed by C. A. Mason, for which we paid cash ;^58o. [Rules 3, II, and 2.] EXERCISES IN DOUBLE ENTRY. 71 4. Bought of Henry Sullivan his draft at 30 days on C. A. Curtiss for ;^575.50, paying cash for the same 1^560. 5. Received cash for rent of the house invested by Smith ;^20. 6. C. A. Mason has paid us cash ^15 for interest on his note, which we purchased in Transaction 3. [Rules 2 and 11.] 7. Paid cash for advertising the business ;$ 12.50. 8. Bought twelve sale notes of R. E. Sherman, the face of the notes amounting to 1^778.50, paying cash for them ^^600. 9. The student has drawn out cash $4S- 10. Sold our house and lot to A. R. Grant for ;^325o, receiving cash ^1250 and his note for ;^2000. [Rules 2, 3, and 7.] 1 1. Paid cash for ten shares Com nsrcial Rink stock ;^i 000. [Rules 8 and 2.] 12. Cash amounting to ^525 was stolen from the office safe last night. [Rules 12 and 2.] 13. Paid cash for office rent 1^27.50. 14. Collected cash ;^2 50 for four of the notes bought in Transaction 8, and ;^ 13.2 5 for interest on same. [Rules 2, 3, and 11.] 15. Bought a note signed by T. Mason, dated one year ago, paying cash ;^I200 for the face of the note and $72 for accrued interest. [Rules 3, 1 1, and 2.] 16. Paid cash for ofifice books and stationery $i$.7S- 17. The money lost in Transaction 12, S525, has been returned. 18. Paid cash :^50 for detective services. Payment made in Transaction 18 could be debited to Expense; but, being an unusual expen- diture, it would be the author's advice to debit Loss and Gain. 19. Paid cash for postage and stationery ;^7.50. 20. Received cash ;^6o for dividends on our Commercial Bank stock. [Rules 2 and 8.] 21. T. Mason has piid us cash ;^I200 for his note, received in Transaction 15, and $g6 for interest on the same. [Rules 2, 3, and 1 1.] 22. Received cash ^400 for seven of the notes bought in Transaction 8, and ;^I7.50 for interest on the same. 23. Received cash ^550 for 5 shares of Commercial Bank stock. 24. The last one of the notes bought in Transaction 8, amounting to ^128.50 is con- sidered doubtful as to its collection, and we have sold it for cash-;^75. 25. Received cash of C. A. Curtiss ;^575.50, in payment of Sullivan's draft on him pur- chased in Transaction 4. 26. Sold our remaining shares of Commercial Bank stock for cash ^565. 27. Received cash ofC. A. Mason, ;^6oo in payment of his note, received in Transaction 3, and ;^I2 interest on the same. 28. C. C. Smith has withdrawn from the business A. R. Grant's note for ;^2000 with in- terest accrued on same ;^io, and cash $1782. [Rules 5,3, 11, and 2.] 29. The student has drawn out cash 1^3747. 30. We have credited each partner for his share of the net gain and have dissolved the partnership. 72 ESSENTIALS OF BOOKKEEPING. QUE^STIONS FOR REVIEW. I. What is the general rule for debit and credit ? 2. In what does Double Entry bookkeeping differ from Single Entry? 3. What is the rule for debiting and crediting per- sons? 4. What results are shown by a personal account, if not in balance? 5. What is the rule for debiting and crediting Cash ? 6, What kinds of business paper are considered as Cash ? 7. Can the credits of Cash exceed the debits ? 8. When should Bills Receiv- able be debited, and when credited? 9. What business papers are recorded as bills receiv- able? 10. What result is shown by Bills Receivable account, if not in balance? 11. When should Bills Payable be debited, and when credited? 12. What result is shown by Bills Payable account, if not in balance? 13. When should a proprietor or partner be debited, and when credited? 14. When should Merchandise be debited, and when credited? 15. What record is made of the unsold merchandise? 16. What results may be shown by Merchandise account? 17. When should Real Estate be debited, and when credited? 18. What results may be shown by Real Estate account? 19. When should Stocks be debited, and when credited? 20. What results may be shown by an account with Stocks? 21. When should a shipment account be kept? 22. When should shipment account be debited, and when credited ? 23. What results may be shown by a shipment account ? 24. When should Expense be debited, and when credited? 25. Are inventories ever recorded in Ex- pense account? 26. What results may be shown by Expense account? 2y. When should Interest and Discount be debited, and when credited? 28. Are inventories ever recorded in this account? 29. What results may be shown by this account? 30. When should Loss and Gain be debited, and when credited ? 31. May other titles of accounts be used, than those already named? 32. What three books are used in the simpler methods of Double P>ntry ? 33. In what respects does the Double Entry day book differ from the Single Entry day book? 34. VVhat is the office of the journal? 35. How do the footings of the journal compare with those of the day book? 36. What is the Double Entry ledger? 37. When is a ledger said to be in balance? 38. What is a proof sheet, and what is its value? 39. What is a trial balance? 40. What is the first step in open- ing a set of account books? 41. How should the statement, made at the opening of the books, be journalized? 42. How can a set of Single Entry books be changed to Double Entry? 43. What should govern the bookkeeper in choosing titles for the property and in- cidental accounts ? 44. How often are ledgers generally proven in balance? 45. What methods may be used for detecting errors in a ledger that is out of balance? 46. Is a proof sheet or trial balance an absolute test of the accuracy of the ledger? 47. What additional test of personal accounts is used by large mercantile houses? 48, How may corrections be made in original entries? 49. In what books may erasures be made, in correcting errors? 50. How often is the ledger usually closed in business? 51. What should be done preparatory to closing the ledger? 52. What inventories are resources, and what ones are liabilities? 53 What accounts belong to class one? 54. What accounts belong to class two ? 55. How are inventories recorded in the ledger? 56. With what entry should accounts of class one be closed? 57. With what entry should accounts of class two be closed? 58, How should the closing Loss and Gain account be closed ? 59. How is the proprietary account closed ? 60. When should Balance account be used, and when not? 61. If several ledgers are used in successive years, how are these ledgers distinguished? HISTORICAL JOURNAL AND CASH BOOK. 73 SET FOUR. Using- Historical Journal^ Cash Book, Bill Book, and Lcdg-cr. EXPLANATIONS. The Historical Journal combines the day book record and the journal entry in one book. The book containing these combination entries is sometimes called a Journal — Day Book. In the combined records the journal entries pertaining to a transaction are given first place, followed immediately by the descriptive entries necessary to explain the transaction. In this way the historical journal becomes a book of original entry, and, if properly kept, its records are admissible as evidence, the same as entries in a day book would be. The journal part of each entry should be written in a larger and heavier hand, in order to be more readily distinguished by the bookkeeper, when he posts to the ledger. The form on page 75 represents the historical journal. The Cash Book, as illustrated on pages 76 and Jj, is kept in special columns for cash and bank. If a cash book is used it is unnecessary to enter cash transactions in the journal, since cash received credits the person or thing bringing the cash, and cash paid debits the person to whom or the thing for which it is paid. In making a cash entry, the date should first be recorded, followed by the title that is debited or credited, the explanation, and the amount. The method of recording the date, and the arrangement of the special columns to keep the cash and bank accounts distinct, are ex- plained on page 33, and the method of balancing the cash and bank columns is illustrated on page 34. If a cash debit or credit has been recorded in the journal as part of a transaction, the word "Journal" should be written in the title space in the cash book, indicating that the opposite title will be found in the journal. The Bill Book, or note book, is kept in this set in the same manner as that described and illustrated in Set Three. Whenever a proof sheet is taken of the ledger, the debit balance of Bills Receivable account should correspond to the amount of unpaid notes receivable recorded in the bill book and the credit balance of Bills Payable account should correspond to the amount of unpaid notes payable recorded in the bill book. THE LEDGE.R TITLES USED. The class one accounts in any business would be kept the same by all bookkeepers, but the same bookkeepers would differ widely in their choice of titles representing the property and incidental accounts. Jn order to secure uniformity in the students' books, we would suggest the following use of the titles that are most likely to be changed : Two property titles may be used : Grain account for wheat, corn, oats, and barley; and Merchandise account for wood, coal, salt, and cement. The cost of insuring merchandise is frequently debited to Merchandise account, but in the present set, the insurance is taken in one amount on grain and merchandise, and, because we cannot readily distribute the proportionate cost to each, the outlay for insurance should be debited to Expense. 74 ESSENTIALS OF BOOKKEEPING. " An account should be kept with Teams, in which is debited the value of teams invested or purchased, and in which is credited the amount received for teams when they are disposed of. The cost of feed and care of horses, and of repairs on wagons and harness, should be debited to Expense, as these outlays do not add to the original value of the teams. When a purchase or sale is made subject to draft, it should be journalized as on account; and when the draft is accepted or paid, it should be entered as given to apply on the account. The regular shipments of grain to commission firms to sell for us, should be entered in the historical journal as descriptive memoranda without carrying out any values or opening any new ledger titles. If any outlays are made in connection with these shipments, such outlays should be debited to Gain as part of its cost. When the consignments are sold, the proceeds reported should be credited to Grain. Each consignment of merchandise to us, for sale for other firms, should have a title in our ledger. If we were in the commission business and made a specialty of such transactions, we would have a separate book for such accounts. A consignment account, if kept in the ledger, should have each debit and credit itemized, unless the descriptive entries would require more space than the explanation column affords. The itemized consignment accounts will enable the bookkeeper to estimate the commission on sales and draw off account sales directly from the ledger, without referring back to the historical entries. In order to secure uniform entries in the ledger, we would suggest the following routine of posting : Post all debits and credits of a given dite from the journal first, and afterward from the cash book, opening new titles in the ledger in the order required. The student's proof sheets on Nov. 4 and Nov. 6, and his trial balance after closing the ledger Nov. 6, should agree with the results given in the Continued Trial Balance Book on page 79. The account with Grain, on page 76, illustrate the usual form of entry, when an account is posted from more than one book. Words and figures in italics indicate red ink entries. The account with Consignment of Crescent Mills, on page "j"] , illustrates the form of entry, when it is desired to itemize the debits and credits in a consignment account. To allow for balancing accounts and bringing down balances, as required in the trans- actions, the ledger accounts should be spaced as follows: Student 12 lines. Teams 10 lines, Stacey & Stevens 14 lines, Merchandise 28 lines. Bills Receivable 16 lines. Real Estate 16 lines, Bills Payable 15 lines, Union Coal Co. 11 lines. Grain 25 lines, Howard & Payne 12 lines, Consignment of Lee & Hutchins 12 lines, H. Martin 10 lines, Lee & Lacey 10 lines. Consignment of Crescent Mills 21 lines, P2xpense 24 lines, Interest and Discount 11 lines, Akron Cement Co. 8 lines. Prospect Mining Co. 8 lines, P. M. French 8 lines, R. Houston 5 lines. Commission 8 lines. Loss and Gain Closing, Nov. 6, i 1 lines, H. Miner 5 lines. Loss and Gain 5 lines, Loss and Gain Closing, Nov. 16, 10 lines. Balance Account 12 lines. TRANSACTIONS. NOVBMBBR 1. 189 The student began business to-day with the following resources and liabilities: Resources. — Cash, ;^i,ooo; 2 teams with wagons used for hauling and delivering grain and merchandise, estimated worth $425 each ; a balance of account due from Stacey & Stevens, $520; a stock of coal, wood and salt inventoried at ;^344.50 ; a note at 20 days for ^200, a note at 30 days for ;^I50, and a note at 40 days for ;^ioo, each note being in favor of the student, and dated Oct. 8th ult., and each being signed by Henry Preston ; a note at 20 days for 1^250, dated Oct. i6th ult., signed by Ploward & Payne; and a vacant town lot fronting 40 feet on Third street, worth ;^20 per front foot. [After journalizing, enter cash in Cash Book and notes in Bill Book.] Liabilities. — A note at 30 days for ;^400, a note at 40 days for ;^500, a note at 45 days for $6Q)0, each note being signed by the student and payable to James Crosby, and each being dated Oct. 12th ult.; and a balance of account in favor of the Union Coal Co., $214.50. Deposited cash in the Commercial Bank $900. [Cash Book only.] [transactions continued on page 78.] HISTORICAL JOURNAL AND CASH BOOK. 75 C^L-^^/'Z.'t^-^yL.^d^ ^- /, z^^- /S '7/ ^^-M-^f-L qL ' 'Ziy.--7-T,iA-^.-^,. \37 ^c-^C^/^aA;to^ ^.^^^ 2. £^''L.^e^ $S, 12 cords stove wood ^/' ;$2.75, 25 sacks flour @;^i. 40, 25 bu. lime @ 35c. [Make three entries in Cash Book.] Made other sales to-day as follows: H. Martin on account 100 bu. lime (cr, 345^c. How- ard & Payne on account 10 bbls. salt @ ^^1.25, 5 bbls. cement ^ 1^2.75. P. M. French on account 10 sacks flour (^ ^140. L. Bacon on his note at 5 days, payable at our bank, 10 tons soft coal @ ^4.25, 20 bu. lime @ 35c. Paid cash for advertising ;^ 17.50. Paid cash for building sidewalk in front of our vacant lot ^27.50. Sent our check for ;^7 5 to the Crescent Milling Co. to apply on their consignment. Sold our sight draft on Stacey & Stevens to R. E. Lee for cash $125. Paid cash for the student's personal expenses ^19.25. Paid cash for wages of teamsters and warehouse clerk to date $y2.$o. Deposited cash in bank ;^275. Post the ledger and make a proof sheet, showing the ledger in balance, and record the proof sheet in the continued trial balance book. [tr.\nsactions continued on page 80.] THB COJVr/ALTBO TRIAL, BAI^ANCB BOOK. Nov. 4. j Nov. 6. After Closing:. Kov. 11. Nov. 16. Cash Balance 5 39 75 j 36 50 ■ 1 36 50 Bank Balance 5 149 12 I 48819 488 19 Student 1 1733 75 4214 50 1758 75 4214 50 3017 to I Teams 1 1060 1060 475 675 Stacey&St'v'ns 1 520 600 1364 89 1000 364 89 Merchandise 2 1237 25 522 50 1763 30 1202 75 1009 50 Bills Rec. 3 784 50 j 814 50 200 614 50 Real Estate 3 827 50 827 50 i 850 Bills Pay. 4 400 1714 50 ! 400 1835 50 ! 1435 50 Union Coal Co. 4 214 50 529 50 1 529 50 794 70 265 20 Grain 5 1190 93 : 10 75 1477 56 855 64 703 28 Howard &P'yne 5 326 25 709 66 1029 25 888 41 140 84 Const. L. & H. 6 15 95 75 — — — — H. Martin 6 52 52 25 27 Lee & Lacy 61 28 48 25 25 23 25 Const. C. M. 7 95 161 — — — 1 Expense 7 150 177 25 66 25 1525 Int. and Dis. 8 89 7 69 — 1 — Akron Cem. Co. 8 157 .50 157 50 157 50 Pros. Mining Co 81 121 121 24025 119 25 P. M. French 9 14 41 30 11 ' R. Houston 9 — ' Commission 9 37 50 1 1 H. Miner 10 Loss and Gain 10 8837 55 883755 11989 44 1198944 5010 20 5010 20_ 1 8o ESSENTIALS OF BOOKKEEPING. 5 Received account sale from Stacey & Stevens of the wheat shipped them on the 3d inst. Net proceeds to our credit ^844.89. Bought of the Union Coal Co. on account 52 tons hard coal @ i^S-io. Gave our check to the Commercial Railway for $'j?> to pay freight on the coal. Gave the following checks to pay for grain : M. Powers 55 bu. oats @ 30c, H. Preston 98 bu. oats @ 31C, R. I. Saner 1 10 bu. corn @ 35. Sold flour at $1.35 per sack as follows: P. M. French 20 sacks on account, Lee & Laqey 15 sacks on account, sundry sales for cash 50 sacks. Sold for cash 20 bbls. salt @ ^1.40, i 5 tons hard coal @ $8, 50 bu. lime ({/, 35c. Sold R. Houston, of Riverton, 10 bbls. cement (^ ;^3, and drew on him at 20 days sight for the amount, forwarding the draft by mail for his acceptance. [Houston should be debited until the draft comes back with his acceptance.] Sold drafts on Stacey & Stevens for cash: Favor A. Johnson $200, favor M. Parks $125, favor C. Cusey $j$. Received cash of Henry Preston to pay his note of ;$200 now past due, and 50 cents inter- est on same since maturity, making a total of ^200.50. [Cash Book, two entries. Mark paid in Bill Book.] Closed the consignment of the Crescent Milling Co., charging for commission as per agree- ment, and sending them a check for the balance due them on the net proceeds. Gave our check to pay Howard & Payne's sight draft on us for ^275. Received cash from H. Martin $25, to apply on his account. Paid cash ;^22.50, premium for insurance on grain and merchandise in warehouse to the amount of ;^i 500. Paid cash for postage 25c. Deposited cash in bank $^^0. 6 Paid Lee & Hutchins's sight draft on us for ^75, to apply on their consignment, giving a check for the same. R. Houston has accepted and returned the draft we drew on him on the 5th inst., his ac- ceptance also being dated the 5th inst.. [Journal and Bill Book.] Bought of the Prospect Mining Co. on account 53 tons soft coal @ ^2.25. Gave a check to the Commercial Railway for $61.60 to pay freight on the coal. Howard & Payne have sent us, freight prepaid, 275 bu. barley for which we have given them credit at 65c per bu. Shipped to Stacey & Stevens, our regular commission dealers, 450 bu. oats to sell on our account and risk. Paid cash for freight on the shipment of oats $22.50. Sold Howard & Payne on account 3 i tons hard coal @, $8, 20 tons soft coal ^/) $4. Sent our note at 10 days to the Prospect Mining Co., to pay for their invoice received on the 4th inst. Received cash of P. M. French $^0, and of Lee & Lacey $2^ to apply on account. Sold for cash 25 bbls. salt @ $1.40, 15 tons hard coal @ $8, 7 cords wood ((f. $2.75, 25 bu. lime @ 35c. The Union Coal Co. have offered a cash discount of 2 per cent on their invoice of 2d inst. We have accepted their offer and sent them our check for the amount of the invoice less 2 per cent. [Journal and Cash Book.] Sold one of our double teams for cash $^'JS- Closed Lee & Hutchins's consignment and sent them an account sale, charging them with our commission as per contract, and sending our check for the balance of the net proceeds still unpaid. Paid cash for postage $1, and for stationery $'^.^0. Paid cash for Howard & Payne's sight draft on us for $;oo. Deposited cash in bank $650. > Drew out cash for personal use $2^. Post the ledger and make a proof sheet, showing the ledger in balance, and record the proof sheet in the continued trial balance book. HISTORICAL JOURNAL AND CASH BOOK. CLOSING ROUTINE. Take a trial balance of the ledger, preparatory to closing the same. [This trial balance does not need to go on permanent record.] Credit the following inventories to the proper titles: Coal, wood, salt, and cement on hand worth ^1,009.50; grain on hand worth ;^568.28; oats shipped to Stacey & Stevens, not yet re- ported sold, worth $135 ; teams worth ^675 ; town lot worth ^850; rent and insurance prepaid and unexpired amount to $^2.^^ ; hay and oats on hand for teams worth ^7.50; books and postage on hand $6. The wages due our clerk and teamsters, and not yet paid, amount to Close the ledger, carrying the net gain and debit in personal account to the investment account in order to show the proprietor's present interest in the business. As the accounts are to be continued in the same ledger, carry the resource and liability balances and inventories down in their respective accounts, and take a trial balance of the ledger after all balances are brought down, recording the trial balance in the continued trial balance book. 8 H. Miner has entered into partnership with the student, to continue the business under the firm name of (Student) & Miner. The partners are to make equal investments, and share equally in gains and losses. H. Miner invests $2,500 in bank drafts which are deposited in the bank as cash. The student draws out ;$5 17.50 per check, leaving his net investment equal to Miner's. Received cash from Howard & Payne in payment of their note due today ^250. Received a second consignment of flour from the Crescent Milling Co., consisting of 300 sacks, which we are to sell for them on commission on same terms as those of the former con- signment. Bought of A. C. Kirby the lot, warehouse and coal sheds, which we now occupy, for ;^3,ooo; giving in part payment our vacant lot valued at ;^i,ooo, estimating as part payment ;^35 for unexpired rent which we have prepaid, giving our check for ;^965 and our note at 60 days, bearing interest at 8 per cent, for the remaining ;$r,ooo. [Journal, Cash Book and Bill Book.] 9 Received advice from Stacey & Stevens of the sale of oats shipped on the 6th inst., report- ing the net proceeds to our credit $176.50. Accepted the Union Coal Company's draft on us at 3 days for $200, payable at the Commercial Bank, to apply on our account. Gave our check to pay the Akron Cement Company's sight draft on us for $100, to apply on our account. Received cash of Lee & Lacey to apply on account $20. Gave checks for purchases of grain, as follows : Henry Martin, corn in the ear, gross weight of load 3,936 lbs. less weight of empty wagon 996 lbs., at 34c per bu., estimating 70 lbs. to the bushel. C. Carter, corn in the ear, first load weighing 4,012 lbs. less 1,002 lbs., second load 4,039 lbs. less 959 lbs., third load 4,145 ibs. less 995 lbs., @ 35c per bu. How- ard Button, barley, 48 lbs. per bu., first load weighing 3,138 lbs. less 978 lbs., second load 2,907 lbs. less 987 lbs., third load 3,167 lbs. less 1,015 lbs., (^; 56c per bu. Sold 20 sacks flour for cash (t/) $1.35. Sold James Creston i 5 bbls. cement (f/) $3, receiving in payment his note at 3 days, pay- able at our office. Sold 15 tons hard coal for cash @ $8. Deposited cash in bank $400. 10 Received cash of Henry Preston $100, and his new note at 30 days bearing interest at 6 per cent for $50, to pay his note due this day. Paid our note of $500 favor James Crosby, receiving a discount equal to interest on the note at 10 per cent for the days it has yet to run, before maturity, and giving our check for the proceeds $498.06. [Journal and Bill Book.] 82 ESSENTIALS OF BOOKKEEPING. Shelled all corn on hand and shipped the same to Morey & Lane, New York, to sell on our account and risk. Gave checks for purchases of grain as follows: C. Hartson, 2 loads oats, 2,791 lbs. less 959 lbs., and 2,758 lbs. less 998 lbs. @ t,oj4c per bu., estimating 32 lbs. per bu. P, Magoon, I load oats, 2,879 lbs. less 959 lbs. @ 30c per bu. Bought of Howard Preston, giving our due bill in payment, 3 loads oats, 3,030 lbs. less 1,002 lbs., 2,615 less 999 lbs., and 2,782 lbs. less 998 lbs. @ 31c per bu. Sold to the Crescent Milling Co. 300 bu. wheat (oj 85c, to apply on their second consign- ment account. Gave our check for ;gi5 to the Commercial Railway to prepay freight on the wheat. Received cash for 5 loads corn cobs @ ^1.25 per load. Sold for cash 10 bbls. cement @ ^3, 25 sacks flour @ $1.35, 20 bu. oats @ 35c. Paid cash for straw for bedding teams $3.50. Deposited cash in bank ;^I70. II Drew cash from bank on our check 1^40, for use in cash payments. Paid cash for workmen's wages to date ;^62.50. Gave C. E. Hartson our check for ^175 for labor and material in fitting an office for rent m our warehouse building. Made the following sales for cash : 60 sacks flour @ ^^1.35, 5 tons hard coal @ $8, 20 bbls. salt @ ;^i.40, 15 bu. oats @ 36c. Sent our sight draft on Stacey & Stevens to the Prospect Mining Co. to pay the balance due the latter firm. Received cash from R. Jennings to pay his note due today $}$• Received cash of A. I. Lane ^17.50 for rent of the office we had fitted up in the warehouse building. Sold to M. E. Magnus for cash 400 bu. barley @ 62^c per bu. Paid cash for gas bill 1^2.75. Drew on Howard & Payne for the balance due from them, making the draft payable to our bank at sight and leaving the dralt at bank for collection. [Make a memorandum entry in the journal; but make no credit until advised that the draft has been paid.] Deposited cash in bank $450. Make a proof sheet of the ledger, and record the same in the continued trial balance book. 12 Gave a check for ;^2I4.50 to pay our note favor the Union Coal Co., due today. Sold our sight draft on Stacey & Stevens for $250 to R. M. Patterson for cash. Bought of Union Coal Co. on account 75 tons hard coal @ $5.15. Gave a check to the Commercial Railway to pay freight on the coal $i 12.50. Settled in full with the Akron Cement Co., giving them a sight draft on Stacey & Stevens for the balance due them ;^ 5 7.50. Sold Lee & Lacey on account 10 tons hard coal @ ;^7.50, 20 sacks flour (aj. ^1.30. Exchanged our single horse and wagon for a heavy double team and wagon, giving a check for ;^I90, to pay the difference. Paid A. C. Kirby cash ;^io for ;^ 1,000 of unexpired insurance on the warehouse we bought of him, which the insurance company has transferred to us. [Debit Real Estate.] Sold H. Martin on account 10 sacks flour @ ^f.35, 15 bu. oats @ 41c. Received cash of L. Bacon for his note due today $49.50. Gave C. E. Hartson a check to pay for labor and materials used in completing an addition to our warehouse 1^1,050. Made the following sales for cash: 5 bbls. cement @ $3.10, 8 tons hard coal @ ;^8, 5 tons soft coal @ $4.50, 4 bbls. salt @ ;^i.40, 20 sacks flour @ ;$i.35, 12 bu. oats @ 41c. [Three entries] Deposited cash in bank 1^400. HISTORICAL JOURNAL AND CASH BOOK. 83 _ 13 ~ Gave C. E. Hartson our note for ^400, due on demand, for labor and materials used in building a barn for our teams on our lot adjacent to the warehouse. Gave a check to Howard Preston to pay the due bill given him on the loth inst. ;^52.58. Received an account sale from Morey & Lane, of the corn shipped to them on the loth inst., enclosing a bank draft for the net proceeds ^257.25. Received cash from the Central Feed Co. to pay for storage of their grain and merchan- dise in our warehouse $\ 7.25. The Union Coal Co. have drawn three drafts on us, as follows : Draft payable on demand for 1^65.20, which we have paid at once by check ; a draft at 30 days for ;^200, and a draft at 60 days for the balance due them, both of which we have accepted to-day. [Journal, Cash Book and Bill Book.] Received cash of H. Martin to balance his account $46.6^. Sold Howard & Payne 20 tons hard coal (a^ ;^7. 25, receiving their note at 30 days for ;$ioo, and cash for the balance. Received cash of P. M. French in full of account ^11. Paid cash for i ton hay for feeding teams $g. Our draft on Howard & Payne, left at bank for collection i ith inst.,ha^ been paid and the bank has entered the proceeds to our credit as a deposit, after deducting 25 cents for collection charges. Deposited cash in bank ^425. IS A fire broke out in the barn yesterday and spread to the warehouse and coal shed, destroy- ing all grain and merchandise on hand and the balance of flour belonging to the Crescent Milling Co., also destroying the warehouse, barn, wagons, harness and horses, nothing being saved but the account books, notes and cash. Received cash of J. Creston in payment of his note ^45. Gave our check for ;^200, to pay our acceptance favor the Union Coal Co., due to-day. Paid cash to A. I. Lane ^12.50, for office rent unexpired which he paid in advance before the fire. Paid cash for workmen's wages to date ^^32. 50. 16 Received ^1,000 in cash from the insurance company to pay for the insurance on the warehouse destroyed yesterday. H. Miner has become discouraged on account of the recent losses and proposes to with- draw from the firm. By mutual agreement the partnership is dissolved and H. Miner withdraws, taking cash ;^ 1,000 for his entire interest in the business. [Enter in Journal and Cash Book.] The student has become sole proprietor of the business, having authority to collect all resources due from other persons, and assuming payment of all Habilities of the firm. Paid cash for advertising the dissolution of the partnership $$. The insurance company has adjusted and paid our loss on grain and merchandise, covered by the policy issued on the 5th inst., allowing the following amounts : ;^78.40 for grain, ^1,004 for merchandise belonging to the firm, and $1 52.25 for the flour in our possession and belong- ing to the Crescent Milling Co. Rendered an account sale to the Crescent Milling Co., charging them ;^30 for commission on flour, and sending them a check for $75.50, to pay the balance of the proceeds of their second consignment. Deposited cash in bank ;^ 1,225. Make a proof of the ledger and record the same in the continued trial balance book. Enter the following inventories, preparatory to closing the ledger : The lot on which the warehouse stood is worth ;^ 1,500. Accrued interest on our note favor A. C. Kirby amounts to ;^i.78, and accrued interest on H. Preston's note, our favor, amounts to 5 cents. Close the ledger, carrying all resources and liabilities into balance account. The student's net worth at closing is ;g 1,247. 89. TEST QUESTIONS. 1. Did the student gain or lose by purchasing Miner's interest in the business, and how much ? 2. What would have been the student's net worth at closing, if he had not purchased Miner's interest in the business? 84 ESSENTIALS OF BOOKKEEPING. Changing From Single to Double E.ntry. The process of changinpj from Single Entry to Double Entry bookkeeping is very sin:ple. The historical journal will take the place of the single entry day book. The double entry cash book differs from the single entry cash book only in giving the ledger title for every cash entry. The note book is usually kept the same in each system. Tiie double entry ledger retains all accounts kept in the single entry ledger and adds to these the accounts with notes, property and incidental titles, such as Expense, Interest and Discount, etc. Before changing the books a statement should be made, giving the resources and liabilities. This statement should be Journalized, debiting each resource and crediting each liability under its appropriate title, and crediting the proprietor for his net worth, which would make the debits and credits equal. The following is the opening journal entry made from the statement given on page 29, changing the system to double entry. COl^l^BGB CITY, FBB G, 1»9.... Continued the business from Set Two, with resources and liabili- ties journalized as follows: 140 50 R. E. Lee, A. E. Blair, 1 50 J. Q. Adams, 1 1 98 Union Woolen Mills, 350 Lee & Shepherd, 157 50 Cash, 279 66 Merchandise, 641 45 ; Expense, 15 James Dawes, 30 M. E. King, 34 Hart & Co., 499 44 L. A. Kemp, 11 42 H. S. Lowry, J^ 22 Student, 982 51 As a drill in changing from single to double entr}^, the student may journalize the state- ments made from the examples for practice, given on pages 28 and 30. If the personal accounts are to be continued in the same ledger, and there are a considera- ble number of them, it will not be necessary to itemize these personal debits and credits in the opening entr}', but merely group them as "Debits on Ledger" and "Credits on Ledger," and give only the new titles that did not appear on the single entry ledger. The opening journal entry of Set Five illustrates such a change, as the personal accounts are to be continued, and the same ledger is to be used as had been used in Set Three. BALANCE SHEETS. Balance Sheets. The Balance Sheet is a combination of the proof sheet and statement. It is a convenient form of showing the condition of all ledger accounts, and also the condition of the business at any given date. It consists usually of six amount columns, two being used for the ledger debits and credits, two for balances and inventories showing resources and liabilities, and two for balances showing losses and gains. The inventory amounts should be written in red ink, to indicate that they are not balances from the ledger debits and credits. The difference between the losses and the gains is written in red ink in the smaller of these columns. If the business belongs to one proprietor, the bal- ance entry in loss or gain column is written in one amount ; if the business belongs to partners, th.e balance entry, showing the net gain or loss, is divided according to contract, and a red ink entry is made for each partner's share. These amounts are extended in black ink to the lia- bility column, if they are giins, and to the resource column if they are losses, after which the resource and liability columns will be equal. The balance sheet is ruled in two different forms, as indicated below. In form one the six columns are all placed on the right hand side of the titles; and in form two the ledger debits, resources and losses are placed on the left of the titles, and the ledger credits, liabih'ties, and gains are placed on the right of the titles. In the balance sheets given below, the debit and credit columns represent the proof sheet of a ledger. The inventory of merchandise unsold amounts to $1,968.88 and of prepaid ex- penses amounts to $300. \^Balance Sheet — Form Oiie.^^ Brown & 'Bentley's UalanvG Sheet Dec. 31st, 189- Debits. Credits. Resources Liabilities Losses Gains A. M. Barton 65 37 ' 56 35 902 C. E. Long-ley 113 08 100 13108 R. Norton 17 98 ' 33 75 15 77 H. A. Summers 114 06 310 195 94 H. C. Morton I ; 124 25 12425 J. G. Storey 99 29 99 29 Merchandise 3303 04 1792 70 1968 88 458:54 G. A. Smith 126 28 65 6li28 Charles Mason 110 45 50 60145 Henry Cushman 40 65 30 1 10 65 R. E. Carter 175 305 130 C. (i. Lane 213 84 83 50 : 130 34 Bills Receivable 570 1 520 ' 50 Expense 383 75 I 300 83,75 Interest and Discount 2 48 24 02 2154 Bills Payable 371 25 ! 866 75 495 50 ; Cash Balance 128 10 12810 Bank Balance 1802 28 1802 28 M. I. Brown (Partner) 100 1638 50 1538,50 H. Bentley (Partner) 50 1588150 1538 50 Brown's ;^ Net Gain 1 198 17 198 17 Bentley's )4 Net Gain 198 16 : 198 16 7687 61 7687 61 4534|08 4534 08 480'08 480 08 (Red ink amounts are indicated by italics.) 86 ESSENTIALS OF BOOKKEEPING. \^Balcmce Sheet — Form Tzco.'] JBroyvn A JBentley*s Balance Sheet. Losses. Resources Debits Dec. .-51. 189.. Credits Liabilities Gain s 902 6537 A. M. Barton 56 35 13:08 11308 C. E. Longley 100 , 1 1798 R. Norton 33 75 15177 • 114 06 H. A. Summers H. C. Morton J. G. Storey 310 124 25 99 29 19594 124 25 99 29 1968\8S 330304 Merchandise 1792 70 i 458 54 61 28 12628 G. A. Smith 65 60 45 110145 Charles Mason 50 10 65 40:65 Henry Cushman 30 175 R. E. Carter 305 130! 130 34 213 84 C. G. Lane 83 50 50 570^ Bills Receivable 520 : 83 75 300 383 75 Expense 2 48 Interest and discount 24 02 2154 . 371 25 Bills Payable 866 75 495 50 128 10 128 10 Cash Balance 1802 28 1802 28 Bank Balance 1 1 100 M. I. Brown (Partner) 1638 50 1538 50 50 H. Bentley (Partner) 1588 50 1538 50 19S 17 Brown's %. Net Gain ' 1 198117 198 16 i Bentley's Y^ Net Gain (Red ink amounts are indicated by italics.) 1 19816 480 08 4534 08 1 7687 61 7687 61 4534; 08, 480 08 ! PRACTICE, IN BALANCE SHEETS. The student may rule paper and make balance sheets from the following ledger proofs: Henry Sherman's Proof Sheet, June 30, 189.. John J. Aiken's Proof Sheet, March 31, 189.. Henry Sherman (Proprietor) 50 1982151 R. E. Lee ! 140 50 117,03 James Dawes 35 30 M. E. King 29 68 34 Hart & Co. 714 19 917 17 A. E. Blair 143 25 156 L. A. Kemp 110 50 93'92 J. Q. Adams 23 78 21 R.D. Mills 132 50 H, S. Lowry 43 28 30 22 Lee & Shepard 577 50 500 Merchandise 1974 68 1290 48 A. R. Davis 127 25 75 M. M. Parton 242 50 127 50 Produce 1268 25 1102 .50 J. G. Gilbert 327 75 250 25 Expense 130 10 Interest and Discount 34 54 52 27 C. M. Brown 125 25 Real Estate 2275 1750 P. A. Newton 457 28 237,50 Morgan & Lee 737 50 1529 75 Cash Balance 672 57 10372 10 10372|l0 John J. Aiken (Proprietor) 2000 1 Bills Payable 950 12751 College Bank 3730 72 : 1210.21 Cvrus Carter 345 120 G. H. Hartson i 280 35 155.35 A. B. Jenkins 1 1375 765 L. F. Totten ; 145 45 W. E. Sutton 1 290 75 3()5i75 R. M. Parton 1 181 54 81 C. A. Rogers 29 29 19 R. V. Smiley 150 360 83 Interest 17 50 42 50 Expense Bil s Receivable 171 25 2965 1915 Discount 18 25 12 26 P. A. Farley , 125 1175 Merchandise 4567 70 5615 20 B. C. Kramer 251 126 French & Ford 2625 40 3915 65 Loss and Gain 115 295 John C. Newlin 31 75 H. B. Parker 126 25 298 85 Real Estate 3125 3375 Grain 717 326 15 Cash Balance j 1160 ! 23493 75; 23493' 75 1 Sherman's inventory shows the following re- sources and liabilities not shown on the ledger. Merchandise unsold $1075, produce unsold $275, prepaid expenses $67.50, real estate unsold $900, unpaid wages due clerks $31.50. Aiken's inventory shows the following re- sources and liabilities not shown on ledger: Merchandise unsold $1265.25, accrued interest on notes payable $17.50, accrued interest on notes receivable $39.25, balance due clerks $27.50, rent prepaid $33.33, insurance prepaid $7, grain unsold $325. DOUBJ^E ENTRY FOR PARTNERSHIP ACCOUNTS. 87 SET FIVE. DOUBLE ENTRY FOR PAF.TNERSHIP ACCOUNTS. This set is a continuation of the business from Set Three, page 41. The statement made at the close of Set Three is journahzed as the opening entry of Set Five. The historical journal, cash book, note book, and ledger should be used as in Set Four, The cash book, note book, and ledger blanks used in Set Three should be continued in Set Five, and the day book used in Set Three should be used for a historical journal in Set Five. Space was reserved in opening accounts in-Set Three, to allow for continuing these ac- counts in Set Five. The new ledger accounts required in Set F'ive will require space as follows: Bills Receivable 7 lines, Merchandise 32 lines, Expense 15 lines. Interest and Discount 15 lines. Bills Payable 10 lines, Loss and Gain 6 lines. If the ledger accounts of Set Three are to be continued in Set Five, the opening journal entry will be as follows : COLLEGE CITY, OCT. 14, 189., Continued the business from Set Three, journalizing the state- ment of Oct. 13, 189 _ Debits on Ledger Cash Balance Bank Balance Bills Rec. Merchandise Expense Interest and Discount Credits on Ledger Bills Payable 185 2903 62561 570 2537 270 i 2 352763 692 25 sonal If a new ledger is to be used for Set Five, the opening journal entry should contain each per- debit and credit given in the statement on page 42, each partner having credit for his net worth. TRANSACTIONS. GGTOBBR 14, 189— Continued the business from Set Three, with resources and liabilities as given in the state- ment on page 42. Bought of R. Newland on account 20 lbs. butter @ 15c, 12 doz. eggs (JLlj, I2)^c. Sold R. Newland on account i bbl. apples (t/, ;^2.25, 20 lbs. C sugar diT 5^0, 3 lbs. Rio coffee @ 20c. Received from Norton & Quinn on account 50 baskets grapes @ 20c, 10 bbls. Bartlett pears (g; $d,. Gave a check to the Commercial Railway to pay freight on grapes and pears $"] . Sold H. Emery on account 10 lbs. G sugar ^ 6c, 3 lbs. butter (?/; i 8c, i gallon vinegar^ 30c, 3 lbs. Rio coffee ^ 20c, Received invoice of groceries from Archer & Parton, amounting to ;^99.29, billed on ac- count with an offer of 2^ per cent discount if paid in 10 days. Gave a check to the Commercial Railway to pay freight on above invoice $3.29. 88 ESSENTIALS OF BOOKKEEPING. Sold O. Sherman on account 2 bbls. Bartlett pears @ i^S, i 5 baskets grapes (oj 28c, 5 bbls! apples @ $2. Received from him cash to apply on account ;^io. Received cash from Charles Trenton to apply on account ^I5- Sold Reed & Young on account 3 bbls. apples @ $2, 2 bbls. Bartlett pears (S) ;$5,-i i bas- kets grapes @ 28c. Sold E. C. Martin on account 6 bbls. apples @ $2, i bbl. Bartlett pears @ ;^5, 12 baskets grapes @ 28c. Received from him cash to apply on account ^$50. Sent C. Crisman our check for $60 to balance his account. Paid cash for stove for heating room ^27.50. [Expense.] Received cash of H. Emery in full of account ^5.39. Paid cash for cleaning store room $2.2^. Norton & Quinn have offered us 5 per cent discount on invoice received this morning, if paid in 5 days. Accepted their offer and sent them our check for the proceeds of the in- voice after discount, $47.50. Cash sales of merchandise amount to $'J<^A9- Paid cash to farmers for sundry produce ;^ 17.50. Deposited cash in bank $125. 15 Deducted the discount offered by Archer & Parton in their invoice recorded i 2th inst. in Set Three, and sent them our check for $\ 14.24, for the proceeds of the invoice after deducting a discount of $6.01. Received Norton & Quinn's invoice of grapes and quinces amounting to $20, bought of them on account. Paid cash for express charges on last invoice ;$3.50. Sold Henry Carter on account 5 baskets quinces c2C, 2 bbls. N. O. molasses, 48 and 49^ gals. @ 38c, i chest Y. H. tea, 69 lbs. @ 40c, i sack Rio coffee, 148 lbs. @ 1 8c, 2 sacks rice, 100 and 102 lbs. (oj 4^c, charging for drayage 25 cts. Gave a cash discount of 2 per cent on the entire bill, receiving cash to apply on same $40 and sending the balance C. O. D, [transactions continued on page 99.] DOUBLE ENTRl^ FOR WHOLESALERS, 6 /<^^- 95 ^ "K^ Cl--Z'«--e--^ 'c^^^. ._%^h^xlfi^^^^^ ^^/ J 5 / V^f 2J- J"^ ^7 JO 7 7^ 7 s ^ 3 f / -5 O ^^ 7^ f / // ■? v^ z^ / 5 ^ / ^0^ 3 5 /y^f 3 f /^ 30 7 // J^^ /^' ^ 96 ESSENTIALS OF BOOKKEEPING. 'cn/-<, / rf - ,iPi>d.-^^i^ Jlu M^ 1 i,-i,^ V4>c cc^c C<^-e^.C-< c^-c-t^i. 't-t^ ^39 / S JO 7 ^^^■^ 1. -^/ 7^ /s^/- ^^. / J J /Of (p3 ^7 DOUBLE ENTRY FOR WHOLESALERS. 97 ^)^ "Y^c^^iy ^^^ ^^^ 3 ■^-^-"-'-^^i-^^ 55 /J" ^^ 3 2S 5 2 .3 2 3 JO 7A so 2S SO 7/^ 2S S2 f/SZ n ^ •"--^gr^-^-^r^-^-^ 2 S O "-7 J .d2. 25 \S1? zs ^ ^s __--^3^;^;?:,^^<:^cS7l^.£?t^!^,^-,^'^-7 /ff- /^f- 7f^. s J2Jcz£e^ Ozr^np-^ 3 / y i 6 ^o ^^. J itPcxy-^Ly Cg^^o-tt^^ Z ^"/(^ 7^ s 'tSPoi-iiJ^ C^CrZ''^ 3 yf /^3 ¥ JJi-ruut^p-t-tx-Cy 3 9^. 7 i/i7T>tv2-j'T-t::?>«^ J /^ - 7 '&c=i-d^(7Scrz>^ ¥ / / 1¥ s-/ 7 ^cc£e.<£y OftPir^y (o / a z¥ OS ^^^A^^^^c^^^ f 2 2 07 (M^t!i.C // /rf — / 2. .2. / 3 « o 3 / 'T '^d^ Z-o cL.ct.y^4_y ^ "r^ • V^a^. 3 IS- 3 IJ- 3'T kA^ -^.^ix-ie^iiA-/ •3 01 ^r^Jb>, .33 ^c^ 3l,o o^fic^t^. ^ ^c, i bbl. G sugar, 305 lbs. @ 4^c, I bbl, P. R. molasses, 49 gals. @ 33c, i chest Y. H. tea, 68 lbs. @ 40c, 5 bbls. XXX flour @ $S-^7y2, I case oat meal, 48 lbs. @ 3/^c, 2 boxes laundry starch, each 48 lbs. @ 5i^c. Billed on account. Received cash from Kingman & Co. to pay yesterday's invoice, less the cash discount we offered. Received an invoice of dried and canned fruits from Hunter & Parsons, New York, amounting to ^469.29, bought on account for 30 days, with a discount offer of 5 per cent if paid in 10 days. Paid cash for freight on last invoice ^14.50, and for drayage 85c. Paid cash for books and stationery for office use ;^27.5o, 3 Received cash from C. E. Gray for rent of office in third floor of store building for i month ^10. Paid cash for postage ;s^3.50. Sold E. M. Bundy, Deerfield, 2 sacks Java coffee, 100 and 103 lbs. @ 22c, 2 sacks rice, each 100 lbs. @4^c, 3 bbls. XX flour @ $S-S'^y 3 boxes laundry starch, each 48 lbs. @ 5>^c, 2 boxes laundry soap, each 60 lbs. @ 3^c. Gave a cash discount of 2^ per cent, and drew on Bundy at sight for the proceeds of the invoice in favor of our bank, with whom we left the draft for collection. Sold Bemis & Brown, Stanton, 3 tbls. C sugar, 305, 307 and 312 lbs. @ 4c, i chest E. B, tea, 44 lbs. @ 45c, 2 sacks Rio coffee, 145 and 147 lbs. @ i7/^c, i bbl. oat meal, 150 lbs. @ 3c, I sack tapioca, i 25 lbs. @ 5 /^c, 3 boxes cheese, 58, 60 and 62 lbs. @ lo^c, charging dray- age 25 cts. Billed on account 30 days, with a discount offer of 3 per cent if paid in 10 days. Received a draft from the Bank of Galesburg for the C. O. D. bill of C. E. Horton, sent out yesterday, less collection charges deducted by the bank 25 cts. Received an invoice of cheese from the H. A. Hudson Company, Falls City, amounting to ;^392. 25, billed on account 30 days, with a discount offer of 3 per cent if paid in 10 days. Paid cash for freight on the cheese 1^25.50, and for drayage 75cts. Received cash from E. C. Martin to pay his invoice of ist inst., less a cash discount of 3 per cent. Sold Christy & Eckles, city, i sack dried peaches, 90 lbs. @ I2^c, i box Turkish prunes, 60 lbs. @ 7^c, I box dried apricots, 40 lbs. @ I3^c, i bbl. English currants, 225 lbs, @ 4^c. 10 bbl. XXX flour @ $S-^7}^i i bbl. cranberries @ ^10.25. Gave a discount of 5 per cent and received cash for the proceeds. Gave cash to pay for office furniture ;^37.75. Received cash of Reed & Young to apply on their account ^50. Sold Henry Thompson, Thompsonville, i chest Y, H. tea, 68 lbs. @ 40c, i case ground coffee, 60 lbs. @ 225^c, i sack rice, 102 lbs. @ 4%!c, i bbl. oat meal, 150 lbs. (cr^ 3c, 1 box cheese, 60 lbs. @ i ic, charging drayage 25c. Billed on account 20 days. Received an invoice of cranberries from C. M. Nelson, Milwaukee, amounting to 1^82.50 bought on account subject to their sight draft. Paid cash for freight on cranberries ^^5, and for drayage 50 cts. Sold }. A. Strong, Monmouth, 2 sacks Rio coffee, 149 and 152 lbs. @ i7/^c, i chest Japan tea, 66 lbs. (^ 42^c, 4 bbls. A sugar, 290, 295, 300 and 303 lbs. @ 4^c, 5 sacks rice, each 102 lbs. at 4-)4^c, charging for drayage 25 cts. Gave him a cash discount, of 3 per cent on coffee and tea, and 2 per cent on the balance of invoice, receiving cash to apply on the invoice ;^45, and sending balance C, O, D. 100 ESSENTIALS OF BOOKKEEPING. Sold Emerson & Hatch, Brownsville, 2 chests Japan tea, 63 and 65 lbs. (?/' A2j4c, 3 cases ground coffee, each 60 lbs. @ 22y^c, i bbl. oat meil, 150 lbs. (r/; 3c, i sack tapioca, 125 lbs. @ 5/^c, 3 boxes laundry soap, each 60 lbs. @ 3^c, 1 box French prunes, 45 lbs. ^; I2^c, i doz. No. I wash tubs @ $g, 2 doz. 3 hoop pails @ $2.25. charging drayage 50 cts. Billed on account 30 days, with a discount offir of 5 per cent if paid in 10 days. Sold Smith & Lee, city, 2 bbls. cranberries @ ;^ 10.25, ' bbl. English currnnts, 220 lbs. (j[j, 4%c, I sack dried peaches, 92 lbs. (U) I2^c, 2 boxes cheese, 60 and 64 lbs. @ lo^c. Billed on account. Received a note at 5 days from Henry Thompson for ;^ioo to apply on his account. Received an invoice of wooden ware from D. M. Stevens & Co., Detroit, amounting to ;^ 127.50, bought on account 60 days, with a discount offer of 5 per cent if paid in 10 days. Paid cash for freight 1^7.50 and for drayage 25 cts., on above invoice. Carry out the totals of all special columns, post the ledgers and take proofs of the same, recording the same in the trial balance book. 4 Sold Chas. Marvin, city, one box cheese, 55 lbs. (a), i ic, 2 cases canned peaches, 4doz. @ ^3.25, I bbl. cranberries ^ ^10.50 i doz. brooms @ ;^2.25. Billed on account. Received an invoice of sugar and syrup from Kephart & Co., Philadelphia, amounting to ;^96o.6o and billed on account for 60 days, with a discount offer of 2^ per cent if paid in 20 days. Paid cash ^78 for freight and drayage on above invoice. Accepted Hunter & Parson's discount ofifer on their invoice received 2d inst.,and sent them our check to pay the balance of the invoice after discount. Bemis & Brown report a shortage in one barrel of C sugar, the net weight being 290 lbs. instead of 3 i 2 lbs. as billed. We have made the allowance to their credit at the price we billed to them. [Pinter in the journal.] Returned to C. M. Nelson i bbl. cranberries, received the 3d Inst., the same being below the grade represented, for which we have charged him ^8.80. [Enter in Journal.] Sold Henry Carter, city, 3 bbls, A sugar, 300, 310 and 320 lbs. (?/] 4^c, 2 chests Y. H. tea, 72 and 73 lbs. at 40c, 5 bbls. XX flour @ $5.50. Gave him a cash discount of 3 percent, and received his check on the bank for ^48.53, and his sight draft on A. C. P'urlong & Co , Chicago for the balance. [Consider sight drafts of other firms as cash.] Sold James Lee, Vinton, 2 bbls. P. R. molasses, 48 and 50 gals. (^) 33c, i chest \i. B. tea, 46 lbs. ^) 45c, 2 sacks rice, each 100 lbs. Q/^ 4^c, charging drayage 25 cts. Billed on ac- count 30 days. Gave cash to H. A. Horton, city, for 200 bbls. apples ^, $1.75. Received cash at bank, for the proceeds of our draft on Ray Turner left for collection 2d inst. The bank deducted 25 cts. for collection charges. Paid cash for drayage on sales to date ;iS2.7 5. [Mdse.] Paid cash for insuring merchandise ;^50. [Debit Merchandise] Received cash of H. Sherman in payment of his bill of Nov. 2, less the cash discount we offered. Gave a check to C, E. Hartman for salary as salesman, ;^20. Forwarded Henry Carter's draft for $"/$ on A. C. Furlong & Co., received to-day, to that firm for credit on our account. 5 Received a draft from the Commercial bank of Monmouth for the proceeds of the C. O. D. bill of J. A. Strong collected by them after deducting 50 cts. for collection charges. Henry Carter's check for ;^48.53 which we received yesterday and deposited in bank as cash, has been returned unpaid, with protest charges $1.10. Gave cash to the bank to pay for the amount of protested check and charges. [Debit Sales Ledger, and also debit Carter in the Sales Ledger.] Sold Kingman & Co., Toledo, i chest E. B. tea, 48 lbs. (t/1 45c. 2 sacks Rio coffee, ! 52 and 153 lbs. (^/', ! 7 J^c. 3bbls. XXX flour ^/, ^5.87 ^, 10 bbls. apples @ $2.25, charging drayage 25c. B lied on account 30 days, with a discount offer of 2 per cent for cash in 10 da}s. DOUBLE ENTRY FOR WHOLESALERS. loi Received an invoice of rice and ground coffee from Grant, Kennedy & Co., amounting to ^107.25, bought on account 50 days, with a discount offer of 3 per cent for cash in 10 days. Paid cash for freight ;^5 25 and for drayage 25 cts., on last invoice. Sold O. Sherman, city, 5 bbls. apples @ %2 25, i bbl. cranberries @ ;^io.50, 3 bbls. XX flour @ $^.^0. Billed on account. Received from him cash to apply on account $2^. Our sight draft on E. M. Bundy, left at bank for collection, has been paid, and proceeds, after deducting 25 cts. collection charges, have been handed to us. Gave cash to pay for subscription to Bradstreet's Mercantile Agency ^^25. [To be used in determining the responsibility of dealers who may order from us.] • J. A. Strong has reported an overcharge of 6 lbs. tea @ 42 ^c, in our invoice to him of 3d inst., and we have sent him a check for the amount less the cash discount estimated on tea in his invoice. [Debit Mdse.] Sold Henry Thompson, Thompsonville, 2 bbls. G sugar, 322 and 328 lbs. @ 4%^c, 5 bbls. XXX flour @ ;^5.85, 3 boxes laundry soap, each 60 lbs. @ lyic, i box dried apricots, 40 lbs. ((J\ I3^c,i bbl. cranberries @ ^10.50, i doz. No. 2 Wash tubs @ ^8.25, 2 doz. 2 hoop pails ^) $2, charging drayage 50 cts. Billed on account 10 days. The student has received cash ^500, a bequest from a friend recently deceased, and has invested the same in the business, thereby increasing his capital. [Cash Book.] Sold Smith & Lee, city, 3 bbls. G sugar, 315, 318 and 320 lbs. @ 4^c, 2 bbls. amber syrup, 43 and 44 gals @ 42c, 2 sacks Java coffee, each lOO lbs. @ 22c. Billed on account. Received from them cash ^50 to apply on account. Bemis & Brown have discounted their bill of 3d inst., sending us a bank draft for the pro- ceeds of the bill, discounted after deducting the shotnge reported on the 4th inst. Received an invoice of cranberries from C. M. Nelson, Milwaukee, amounting to $80, bought on account subject to his sight draft. Paid cash ior freight and drayage on last invoice ^5. Discounted and paid the H. A. Hudson Co.'s invoice of 3d inst., sending our check for the proceeds. Emerson & Hatch have written asking us to deduct discount from their bill of the 3d inst., at the rate we offered, and draw on them at sight for the proceeds, which we have done, leaving the draft at our bank for collection. [Enter the discount on both sides of the cash book, on the paid side to get in discount column, and on received side to crec it Sales Ledger.] Paid cash for stove for heating ofifice ^24.50. Received cash of Henry Taylor for rent of an office in the third floor of our building ^12.50. Sent A. C. Furlong & Co. cash per draft 1^250. to apply on account. Sold for cash to sundry purchasers, 50 bbls. apples @ 1^2.50. Henry Carter's sight draft on A. C. Furlong & Co., sent them for credit on the 4th inst , has been returned. Carter has already overdrawn the amount due him, and Furlong & Co. write that they cannot accept the draft. [Journal.] Sold Henry Thompson, Thompsonville, 3 bbls. A sugar, 300, 305 and 307 lbs. @ 4)^c, i bbl. amber syrup, 46 gal. @ 42c, i sack tapioca, 125 lbs. @5i^c, 5 bbls. apples @ ^2.25, charging drayage 25 cts. Billed on account 20 days. Paid cash for advertising 1^9.25. Paid C. M. Nelson's sight draft on us for ^73.70. .Received an invoice of dried fruits from Hunter & Parsons, New York, amounting to $75.75, bought on account 60 days, with a discount ofTer of 5 per cent if paid in 15 days. Paid cash for freight ;^3.2 5 and for drayage 25 cts , on last invoice. Sold J. PL. Johnson, Wayneville, 1 chest E. B, tea, 48 lbs. ^) 45c, i chest Japan tea, 64 lbs. @ 42^c, I sack Rio coffee, 150 lbs. (t/) I7>^c, i box French prunes, 45 Ids. @ I2^c, i bbl. English currants, 230 lbs. @ 4^c, charging drayage 30cts. Allowed a discount of 3 per cent on the entire bill, receiving cash to apply on same $25, and sending the balance C. O. D. Gave a check to pay for printing and stationery for use in the office $17.75- 102 ESSENTIALS OF BOOKKEEPING. Sold Reed & Young.' city, 2 bbls. cranberries @ ^10.50, 6 bbls. apples @ $2.25, i box Turkish prunes, 60 lbs. ^ 7>^c, 2 boxes cheese, each 60 lbs. @ i ic. Billed on account. Re- ceived cash from them to apply on account $'J'^. Sold H. Sherman, Creston, i bbl. P. R. molasses, 51^3 gals. @ 33c, i chest Y. H. tea, 72 lbs. @ 40c, I case oat meal, 48 lbs. @ 3>^c, i bbl. cranberries @ ^10.50, 2 bbls. A sugar, 312 and 315 lbs. @ 4^c,, charging drayage 25 cts,, and billing on account 30 days, with 2 percent discount if paid in 10 days. Received an invoice of flour from A. C. Furlong & Co., Chicago, amounting to $127.50, billed on account. Paid cash for freight $i 2.50 and for drayage 75 cts., on last invoice. Sent A. C. Furlong & Co. a check for $150 to apply on account. Paid cash for drayage bill to date $\. [Debit Merchandise.] Received cash from bank for proceeds of our draft on P>merson & Hatch, left for collection 5th inst., after allowing 50 cts. for collection charges. Paid cash to each partner $25, for his salary to date. Carry out the totals of all special columns, post the ledger and take a proof, recording the same in the trial balance book. 8 Closed the store to-day and took an inventory, prepartory to closing the books. The merchandise on hand amounts to $8958.77. Books and stationery, purchased for office and not used, are worth $30. Stove purchased for office is worth $24. Office furniture is now worth $35. . Unexpired rent of store building amounts to $100. Office rents collected by us and unexpired amount to $15. C. A. Carpenter has drawn out cash for the amount of his net gain, and the student has also drawn out cash for the amount of his net gain. Henry Hudson has been admitted as a third partner in the business, having invested the store building now occupied by the firm, valued at $6000, and cash enough to make his invest- ment one-half of the entire capital of the new firm. Hudson devotes no time to the business and receives no salary. The other partners devote their time to the business and receive sal- aries as stipulated in the former contract, after which each partner shares in the gain or loss, according to his invested capital. Hudson has also paid the firm cash $600, $100 being for rebate on rent prepaid, and $500 being his proportion of the estimated good will of the business, the latter not being named in the inventory. 9 Sold E. C. Martin, city, 10 bbls. XXX flour @ $5.85, 2 chests Y. H. tea, 71 and ']2 lbs. @ 40c, 3 sacks Rio coffee, 150, 152 and 153 lbs. @ ^7/4^, billing on account. Received cash of James Lee for his invoice of Nov. 4, less 2j4 per cent discount. Paid Grant, Kennedy & Co. for their invoice of ist inst., after deducting the discount they offered, the net amount paid them being $1430.55. Receive an invoice of cheese from the H. A. Hudson Co., Falls City, amounting to $107.95, bought on account, with a discount ofTer of five per cent if paid in 10 days. Paid cash for freight $7.20 and for drayage 60 cts. on last invoice. Sold Chas. Marvin, city, [ bbl. P. R. molasses, 48 gals. @ 33c, 2 bbls. G sugar, 320 and 330 lbs. (6r3 4 ^c, 10 bbls. XX flour @ $5.50, 2 bbls. cranberries^ $10.50, 5 boxes cheese, 60, 62, 63. 65 and 70 lbs. @ i ic, billing on account. Received cash of him for his invoice of 4th inst., less 2 per cent discount. Sent cash to D. M. Stevens & Co., to pay their invoice credited 3d inst., less the discount they offered. Sold E. M. Bundy, Deerfield, 3 sacks Rio coffee, 150, 148 and 152 lbs, @ ^7}4c, 2 chests Japan tea, 64 and 66 lbs. @ 42}4c, 3 bbls. A sugar, 300, 305 and 308 lbs, @ 4,^c, i bbl. oat meal, i 50 lbs. @ 314^0, charging drayage 25 cts. Discounted the entire bill 3 per cent and drew on Bundy at sight for the proceeds, leaving the draft at bank for collection. DOUBLE ENTRY FOR WHOLESALERS. 103 Received cash of Smith & Lee to apply on account ^80. liought Henry Carter's stock of groceries in order to save our account, as he was unable to pay his bills. Allowed him ;^429.75 for the entire stock, assuming to pay Kephart & Co. $127.25, Hunter & Parsons $'/6.2(^, and giving Carter cash for the balance due after deducting our account against him. Sold Ray Turner, Dayton, 2 bbls. C sugar, 315 and 319 lbs. @ 4c, i chest \\. B. tea, ^7 lbs. @ 45c, I sack Java coffee, 102 lbs. at 22^c, i bbl. N. O. molasses, 47 gals. @ 38c, charg- ing drayage 40 cts, and billing on account. Paid cash for postage ;j§i.50. 10 Received cash from H. Thompson ;^ioo in payment of his note. Sold Emerson & Hatch, Brownville, 2 gross matches @ $2.50, 2 doz. 3 hoop pails @ $2.25, I doz. zinc washboards @ $2.50, i bbl. cranberries @ ;^io.50, 3 boxes cheese, 64, 62, and 63 lbs. @ iic, 3 bbls. G sugar, 315, 318 and 321 lbs. @ 4^c, charging drayage 25 cts. Billed on account 30 days, with a discount offer of 3 per cent for cash in 10 days. Received a draft from the Bank of Waynesville for the amount of the C. O. D. bill sent to J. ¥.. Johnson, 7th inst., less 50 cts. deducted by the bank for collection charges. l-i-cceived cash for the rent of two offices in the third floor of our building ;^2i.50. Sold Bemis & Brown, Stanton, 6 bbls. XXX flour @ $5.85, 3 sacks rice, 100, 102 and 104 lbs. @ ^^/i.c, 2 sacks Rio coffee, 15 r and 153 lbs. @ I7^c, i bbl. amber syrup, 45 gals. @ 42c, charging drayage 25 cts., and billing on account. H. Sherman has paid his invoice of the 7th inst., less the cash discount we offered. Paid A. C. F"urlong & Co., cash 1^146.78, the balance due on their invoice of 2d inst., after deducting payments already made and $9.47 discount for payment of enlirebill within 10 days. Received cash of E. C. Martin to apply on account $ys. Sold the stock of groceries purchased of Henry Carter 9th inst., to O. Sherman for ;^42 5, receiving cash to apply on same $125, balance on account. Paid cash for painting the front of our store building $47.50. [Real Estate.] Discounted Hunter & Parson's invoice of 7th inst. at the rate they offered, sending cash for the proceeds. Received an invoice of sugar and molasses from Kephart & Co., Philadelphia, amounting to $275 25, billed on account 30 days, subject to a discount of 1 ^ per cent for cash in 10 days. Paid cash for freight $12.50 and for drayage 75 cts., on last invoice. Sold Smith & Lee, city, i chest E. B. tea, 43 lbs. @ 45c, i chest Y. H. tea, 68 lbs. @ 40c, I chest Japan tea, 63 lbs. @ 42c, 2 cases ground coffee, each 60 lbs. @ 22^c, i sack dried peaches, 90 lbs. @ I2j4c, billing on account. Received cash of them to apply on account $60. Paid cish for electric light in the store room $7.50. Received an invoice of wooden ware from D. M. Stevens & Co., Detroit, amounting to $77.25, bought on account. Paid cash for freight $2.50 and for drayage 25 cts., on last invoice. Gave cash to pay A. C. Furlong & Co.'s draft on us for $75 to apply on account. 11 Sold Reed & Young, city, 2 bbls. C sugar, 320 and 324 lbs. @ 4c, 2 bbls. cranberries @ $10.50, 5 bbls apples @ $2 25. Received cash to apply on the purchase $25, balance on account. Received cash for rent of hall in our building $25. Sold James Lee, Vinton, i bbl. N. O. molasses, 45 gals. @ 38c, i chest E. B. tea, 47 lbs. @ 45c, I sack Rio coffee, 147 lbs. @ i7}4c, 2 boxes laundry soap, each 60 lbs. @ 3%^c, charging drayage 25 cts., and billing on account. Paid cash lor clerk hire $17.50. Discounted Kephart & Co.'s invoice received 4th inst., at the rate they offered, sending cash for the proceeds. Sold to sundry city dealers, for cash, 15 bbls. apples @ $225, 10 bbls. cranberries @ $10.25. 104 ESSENTIALS OF BOOKKEEPING. Our sight draft on E. M. Bundy, left at bank 9th inst., has been paid and we have received cash for the proceeds after a deduction of 50 cts. for collection charges. By consent of the firm, H. Hudson has withdrawn $\oQ)Q from his invested capital, receiv- ing cash for the same. Sold Kingman & Co., Toledo, 10 bbls. XXX flour @ ^5.85, 2 bbls. oat meal, each i 50 lbs. (?/; 3c, 2 boxes Turkish prunes, each 60 lbs. (^, y%c, charging drayage 25 cts. Billed on ac- count subject to 5 per cent discount for cash in 10 days. Received cash of Charles Marvin to apply on account $'/0. Gave a check to pay for building a new sidewalk in front of our store room $37.50. Received a note at one day from Smith & Lee for $102.30 to balance their account. [En- ter on both sides of the cash book.] Gave cash to pay C. M. Nelson's sight draft on us for the balance of his account $80. Sold H. Sherman, Creston, i sack tapioca, 125 lbs. @ 5^c, i bbl. English currants, 230 lbs. (^ 4-%c, I bbl. cranberries @ $10.50, 2 bbls. C sugar, 312 and 318 lbs. (^\ 4c, charging drayage 25 cts., and billing on account. Received cash from Kingman & Co., for proceeds of their invoice of 5th inst., after deduct- ing the discount we offered. Paid cash for postage and stationary $3.50. Carry out the totals of all special columns, post the ledger and take a proof, recording the same in the trial balance book. 12 Paid A. C. Furlong cash for invoice of 7th inst. less a discount on same of 5 per cent. Received cash from O. Sherman to apply on account $150. Sold E. C. Martin, city, i bbl. P. R. molasses, 49)^ gals. @ 33c, 2 sacks rice, 100 and 102 lbs. @ 4^c, 1 case oat meal, 48 lbs. (^ 3}4c, i box cheese, 60 lbs. (^ 1 ic, i box French prunes, 45 lbs. @ i 2 i^c, billing on account. Received cash from him to apply on account, $40. Paid cash for clerk hire to date $35, Sold to city dealers for cash, 25 bbls. apples (({] $2.25, 5 bbls. cranberries @$io.50, i bbl. A sugar, 320 lbs. @ 4}4c, 10 boxes cheese, weighing 61 5 lbs. ^f) lie. Received cash from Kingman & Co, in payment of their invoice of I'lth inst., less the dis- count we offered. Sent our check to Hunter & Parsons to balance their account. Paid cash for repairs and improvements on our store building $125. Sold E. M. Bundy, Deerfield, 3 bbls. A sugar, 308, 312 and 310 lbs. @ 4}4c, i sack Rio coffee, 150 lbs. @ I7^c, 2 bbls. XXX flour @ $5.85, i bbl. English currants, 220 lbs. @ 4^c, I bbl. cranberries (^; $10.50, i doz. No. 2 wash tubs @ $8.25, i doz. carpet brooms ^) $2.25, charging drayage 25c. Discounted the entire bill 3 per cent, receiving cash to apply on the proceeds $25, and drawing on Bundy at sight for the balance payable to our bank, with whom we left the draft for collection. Received cash for hall rent in our building $17.50. Discounted the H. A. Hudson Go's, invoice, received the 9th inst., sending them our check for the proceeds, after deducting the discount they offered. Bemis & Brown have sent us cash to pay their invoice of the loth inst., after deducting a cash discount of 3 per cent. Paid cash for fuel for heating office $3.50. We have allowed H. Thompson a discount of 3 per cent on the balance of his account, and he has paid us cash in full for the balance due. 14 Received cash from Emerson & Hatch in payment of their invoice of loth inst., less the cash discount they were authorized to deduct. Paid cash for drayage to date on merchandise sales $2. Gave a check to pay Kephart & Co.'s sight draft on us for $127.25, to apply on account. Received cash of O. Sherman in full of account. Paid cash for 50 bbls. apples @ $1.75. DOUBLE ENTRY FOR WHOLESALERS. 105 Sold Reed & Young, city. 1 chest Y. H. tea, 71 lbs. @ 40c, i sack Rio coffee, 149 lbs @ 17c. Received cash from them to balance their account including to-day's sale, the whole amount due us being discounted 2 per cent. Paid cash for postage and stationery $},.'J^. Received cash from Smith & Lee ;$ 102.30 in payment of their note. Received cash from James Lee to pay his invoice of i i inst., less a cash discount of 2^ per cent. Our sight draft on E. M. Bundy has been paid and the bank has given us cash for the proceeds, after deducting 25 cts. for collection charges. Sold to city dealers, for cash, 20 bbls. XXX flour @ ,^5.85, 10 bbls. XX flour % ;^5.50, 10 bbls. apples @ ;^2.20, 5 bbls. cranberries @ ;^io.25. Drew at sight on E. C. Martin, in favor of Grant, Kennedy & Co. for the balance due them, and sent them the draft to balance their account. Sent cash to D. M. Stevens & Co. to pay their invoice of loth inst. less a cash discount of 5 per cenr. Received cash of Ray Turner to pay his invoice of 9th inst., less a cash discount of 5 per cent. Drew on H. Sherman at 10 days' sight for the balance of his account, in favor of our bank, who have paid us cash for the draft, less a discount of ^i. Received cash of E. C. Martin on account 1^12.93. Received cash of C. Marvin for balance of his account less a discount of 2^ per cent. Paid cash for proceeds of Kephart & Co's invoice of loth inst., after deducting the dis- count they offered. 15 The student and C. A. Carpenter have each drawn $25 for salary due them to i 5th inst. Paid cash for gas bill to date $S-3^. The firm of C. A. Carpenter & Co. have decided to dissolve partnership, the student and H. Hudson withdrawing, and Carpenter continuing the business. C. A. Carpenter takes the stock of merchandise on hand inventoried at $77S9-7^, allowing for the prepaid expenses ;$7 5, and tor the good will of the business ^600, the same being charged to his account. Henry Hudson takes back the real estate, inventoried at 56200, the same being charged to his account. All ledger accounts should now be closed except the partners' accounts, the net gain being divided according to contract and credited to the partners, C. A. Carpenter invests enough cash to balance his account after allowing for his share of the net gain. The student and Henry Hudson each draw out cash to balance their accounts after allow- ing for their share of the net gain. The partners' accounts should now be closed, no balance account being required. io6 ESSENTIALS OF BOOKKEEPING. SELT SEVEN. LUMBE^R BUSINESS. SPECIAL COLUMN BOOKS. We have planned the following set to illustrate a method of recording purchases and sales, so that the books may give us an approximate inventory at any time; also to illustrate the use of a journal with special columns for cash and merchandise entries ; and along with these v^arie- ties of bookkeeping, to afford the student practice in rapid and easy computation of lumber. The style of recording sales and purchases in special columns is adapted to any kind of business in which but a few varieties of merchandise are bought and sold ; as buying and ship- ping grain or live stock, selling wood and coal, and any other line of business in which there may be special columns conviently arranged on a page, to represent each variety of merchan- dise handled. The left page is ruled like a day book or journal, and the entire transaction is there re- corded either as a day book entry or a historical journal entry, after which the quantity of each article is extended on the right page to its special column. In this way the special columns will show the quantities sold of each variety of merchandise represented. If an invoice or purchase book is kept with corresponding columns, the difference between the total purchases and sales will give the quantity on hand at any time. In the lumber business, the leading varieties of lumber can be represented in special col- umns, and other varieties that are sold less frequently, or only in small quantities, need not be extended to special columns. By using such a book, the lumber merchant can readily estimate the quantity on hand of each staple variety, and in case an estimate is wanted of the value of the lumber on hand, he can approximate very nearly to the correct amount, by the use of these special columns. The form of journal represented in this set, called the Six Column Journal, is one that is used by many accountants. It is especially adapted to varieties of business where two ledger titles are frequently repeated. In a business where cash and merchandise enter into a large proportion of the transactions, by using special columns for the debits and credits of each, we can avoid long ledger accounts with these two titles, and get the same results by posting the totals of cash and merchandise columns once a month ; or these can be carried to the proof direct from the journal columns, as cash is from the cash book. If cash columns are kept in the journal, the cash book will not be used. The columns should be added at the foot of each page, and the amounts carried forward. The footings of the three debit columns (Cash, Merchandise, and general Debits on the left of the journal page) should just equal the footings of the three credit columns (the same titles on the right of the journal page.) In posting from the special column journal to the ledger, the cash and merchandise entries are omitted, and only the entries found in the general columns are carried to the ledger. Two folio columns are given, the one on the left being for debits, and the one on the right for credits. The totals of Cash and Merchandise columns should be posted from the last page of the journal to the ledger, writing in the explanation column of the ledger, "Journal Debits," "Journal Credits," and using the date of the last journal entry, usually the last of each month. The number of special columns may be increased by having larger pages ruled especially for them. The same rules would apply to a journal having any number of columns, as apply to the six columns illustrated in the present example. SPECIAL COLUMN BOOKS. 107 In estimating lumber, the unit of measure is a board one inch thick, on; foot wide and one foot long, making one foot of lumber; in other words, a foot of lumber is a square foot with a thickness of one inch, and in computing all dimensions of boards, joists, scantling, and timbers, we virtually reduce them to inch boards and then find the number of square feet in each board. If the width of lumber were given in feet or fractions of a foot, we would not require a special rule; but the width is always given in inches, which are twelfths of a foot. Thus, an inch board 10 inches wide and a foot long would contain |'2'xi=l^ ft. board measure, and if it were 12 ft. long, it would contain J§xi2=io ft. board measure. If the board were i^ inches thick, there would be one-half more lumber, or 15 ft.; or if 2 inches thick, there would be 20 ft. Lumber sawed less than one inch thick is counted the the same as inch lumber in computing the number of feet, board measure. RULE,S FOR ESTIMATING LUMBER. 1. When the thickness is one inch or less. Multiply the zuidth in inches by the Icng'th in feet, and divide the -product by tiuelve. Or, multiply the zuidth, in feet or tzuelfths of a foot, by the length infect. 2. When the thickness is more than one inch. Multiply the thickness in inches by the ividth and length, the latter tzco being ex- pressed in feet or tzuelfths of a foot. The result in either case will be the number of feet of lumber. The process of cancellation can be used to good advantage in making lumber calculations, EXAMPLES. I. How much lumber in a board 18 ft. long, 8 in. wide, and i in. thick? (ix8 — 18.) / How much lumber in a plank 24 ft. long, 8 in. wide, and 2 in. thick? (2x8 — 24.) f 3L- V-nSr- 3. How much lumber in 6 pieces 2x4. in. and 16 ft. long? (6 pes. 2x4 — 16 -^ Lumber is usually estimated and quoted by the thousand feet, board measure. Shingles by the thousand, the standard shingle being 4 inches wide; thus a shingle that is 8 inches wide will be counted as two shingles in buying or selling. L^th are estimated by the thousand. The denomination thousand is represented by the Roman character M. Since the different varieties of lumber are quoted by the thousand feet, and the quantity sold may be less than a thousand feet, we would suggest the following RULE FOR ESTIMATING VALUE. OF LUMBER. Multiply the price per thousand by the number of feet expressed deciuially as tlious- andths. The product properly pointed off wjH give the value. io8 ESSENTIALS OF BOOKKEEPING. EXAMPLES. 1. What is the value of 753 ft. Finishing lumber (gi $17.^0 ? 2. What is the value of 2,1 24 ft. Flooring (a), $24.. Logically, in the second example, we should multiply 24 by 2,124; but for convenience, we multiply 2,124 by 24, which gives the same product in the abstract. (I) .(2) 37.50 2.i:j4 753 24 1 1 250 8496 18750 4248 26250 50.976 Ans. ;^50.98. 28.23750 Ans. 1^28.24. REMARKS ON THE, ILLUSTRATED FORMS. A few entries are given in the purchase and sales books, to illustrate the use of the special columns. If such a system were used in any business adapted to it, the history of each trans- action and the results could be entered on the left page at the time of the transaction, and the quantities could be extended to the special columns at any convenient time afterward. The journal given on the left folio represents the first page of the journal with the footings of each column at the bottom in small figures, and as a test of their accuracy, the three amounts in the debit columns are added horizontally to the right and their sum written in small figures in the wide center column, and the three amounts of the credit columns are added horizontally to the left and their sum also written in the wide center column. If these two sums are equal, the journal is in balance and the footings are correct, and the same should be forwarded to their respective columns on the next page of the journal. The journal given on the right folio represents the entries continued, with the footings for- warded from the preceding page. At the bottom of the right page the totals of Cash and Mer- chandise are carried to the general column, to illustrate the method of closing the journal ready for posting. The student will continue forwarding the footings of each column from page to page, until he has entered all the transactions in the set, after which he will close the journal according to the model given. If the final footings of Cash debits and credits are the same, it would hardly seem necessary to post this account in the ledger. Usually, these columns do not agree, and, in such case. Cash requires a ledger title for the monthly totals. Titles that do not require posting should be checked in the folio columns. After the student has entered a full page in his journal, he should review the amounts carefully, to see if all are extended to their proper columns, before the columns are added and their amounts forwarded. If he fails to extend any of the amounts to their proper columns, his ledger will be out of balance after posting. The sales and purchases are itemized in their special books and are journalized together at the close of the day. Other transactions will be journalized at once in the order of their oc- currence, with proper explanatory entries. We present in this set a form of the note book slightly different from that given in Set Three. The present form is especially adapted to varieties of Double Entry in which the Bills Receivable and PayabiC accounts are kept in the note book exclusively, no accounts with these titles being kept in the ledger. We should always number our notes payable in the order in which we issue them, and notes receivable should also be numbered by us in the order in which they come into our pos- session. A note receivable will probably have recorded on it the maker's number as he issues it, and our receiving number can be written in red ink on the margin of the paper, without in any way interfering with the body of the note. SPECIAL COLUMN BOOKS. 109 The double titles in the second and third columns make them adapted to either drafts or notes, Drawer and Drawee applying to a draft, and Endorser and Maker to a note. The column "When Due" may be divided into thirteen spaces, the same as represented in the bill book on page 37; or it may be divided into three spaces, for recording the year, month, and day of maturity, as represented in the bill book on page 113. In estimating maturities in this set, the student will count days of grace. The remaining space, after the interest column, is so ruled that the book may be used for original entries, if so desired, and posting made direct from its pages to the ledger. The col- umn marked "Debit Item" in Bills Payable gives the title which is made debtor by our note issued, and the one marked "Credit Item" gives the title or titles that are made creditor by the payment of our notes. The column marked "Credit Item" in Bills Receivable gives the title that is made creditor when we receive a note, and the one marked "Debit Item" gives the title that is made debtor when we dispose of such a note. If we do not post debits and credits from the note book, we can make a check mark in the folio column as soon as we enter each note, which indicates that the entry is not to be posted. In working Set Seven, the student may copy the opening entries in his bill book fiom the bill book represented in the text, as the description of the notes invested is not given in the transactions. As all transactions are journalized in this set, the student will post no debits and credits from the note book to the ledger. The debits and credits of Bills Receivable and Payable that appear in the journal should not be posted to the ledger, as the results of these two accounts can be carried from the bill book to the proof sheet, and these titles in the ledger w ould be superfluous. The student may substitute his own name for A. Learner, and may keep t^vo ledger ac- counts with himself, one for his investment account and the other for his private account. Be- fore closing the ledger, he will balance his private account and debit the same in his investment account. TRANSACTIONS. FE,B. 1, I89-- A. Learner began business as dealer in lumber, with the following resources and liabilities from a former business: Resources — Cash 1^1520, a stock of groceries inventoried at $21"]. ^o, four notes receivable, as described in the bill book, amounting to ;^867.75, balance due from Henry Trenton, on ac- count ;^4i.i5, postage stamps and stationery for office use $\.2^, fuel for heating office ;$ 2.2 5, a farm of 30 acres worth $2750, 4 d.iys' interest receivable on H. Seabrook's note. Liabilities — Four notes payable, as described in the bill book, amounting to 1^1400, and 7 days' interest on the two notes in favor of S. T. Lacey. Bought of Quick & Sharp, their entire stock of lumber, the following being a summary of the inventory. 10 M Finishing Lumber, 20 M P"looring, 15 M Siding, 15 M Ship Lap, 30 M Common Boards, 60 M Joists and Scantling (including sawed timbers), 95 M Lath, 120 M Shingles, and other sundry materials, including, Doors, Windows, Mouldings, etc., the whole inventory amounting to ^3195.25; for which we gave them in payment 10 acres of our land valued at ^100 per acre, cash ;^iooo, and our three notes, one at 10 days for 1^250, one at 15 days for ;^300, and one at 20 days for $l^o, payable at our office, the balance, ;^295.25, being placed to their credit on account. 2 Paid cash in advance for i month's rent of office and lumber yard 1^50. Sold Henry Trenton, on account, 2 M No. 2 Ship Lap @ 1^16.50, 10 pes. 6x8-14 (mean- tng 6 inches thick, 8 inches wide and 14 feet long), 10 pes. 6x8-12, 15 pes. 6x8-16, @ $\(>\ 5 M Lath @ ;^3. Paid cash for set of office books ;^ 12.75. Bought of H. B. Matter 1 200 split Posts @ i 5 cts. each, paying him cash. Paid cash for freight on the Posts ;^55. Paid cash for advertising ;^7.75. [transactions continued on page 112.] no ESSENTIALS OF BOOKKEEPING. INVOICE BOOK. 189— ' Items Amount Feb. 1 2 Bot. of Quick & Sharp, their stock of Lumber, invoicing Selling them in part payment 10 acres land Paying them in cash r ;r. Giving them our 3 notes as per Bill Book Balance to their credit 1000 1000 900 295 25 3195 180 25 Bot. of H. B. Matter, paying cash, 1200 split posts, 15 SALES BOOK. 189- Feb. ^ M oS H. Trenton 2 M No. 2 Ship Lap 10 pieces 6x8—14, 560 feet 10 " 6x8-12, 480 " 15 " 6x8-16,960 " 2000 feet 5 M Lath P. J. Franlclin 18 pieces 6x8—12, 864 feet 16 " 6x6—16, 768 " 12 " 4x6—18, 432 " 40 •' 2x4—12,320 " 2384 feet 1500 feet No. 1 Flooring 1250 " Sheeting 4 M Shingles G. M. Null, 180 Second avenue 5 boards 1^x16-16, 160 feet 9 " 1x18-16, 216 feet Items On account! $16.50 : 33 16.00 32 3.00 15 Cash 16.00 38 14 30.00 13.00' 3.00 45 16 12 25 On account 40.00 45.00 6 40 9 72 Amount 80 11139 1612 THE SIX COLUMN JOURNAL. DAYTON, EEBRUARY 1, 189.. Cash Debits Mdse. Debits General Debits fa Q LEDGER TITLES. Cash Q General Credits Mdse. Credits Cash Credits 1520 V 217 50 867 41 3 2750 75 15 50 37 V Merchandise Bills Receivable Henry Trenton Expense Real Estate Int. Receivable Bills Payable Int. Payable A. Learner V 1400 3999 90 37 3195 25 v' Invested in business 1000 Mdse. Real Estate Cash V 1000 Bills Payable • 900 Quick & Sharp 295 25 Per Invoice Book 2 Expense Cash 50 ^ 50 Rent of Office and Yard 1 mo. 12 75 Expense Cash Office Books. ^ 12 75 180 • Mdse. Cash Per Invoice Book, H. B. Matter • . . 180 55 V Mdse. Cash Freight on Matter's Invoice. V 55 1520 3647 75 3725 52 8893.21 8893.27 7595 52 2297 75 SPECIAL COLUMN BOOKS. I II IN COLUMNS, Finishing Flooring Siding Ship Lap Common Boards Joists and Timbers Lath Shingles Fence Posts 10,000 20,000 15,000 15,000 30,000 60,000 95,000 120,000 1,200 IN COLUMNS. Finishing Flooring Siding Ship Lap Common Boards Joists and Timbers Lath Shingles 2,000 2,000 5,000 1,500 1,250 2,384 4,000 160 216 - THE, SIX COLUMN JOURNAL. FEBRUARY 2. 189— Cash Debits Mdse. Debits General Debits u Q o General Credits Mdse. Credits 1 Cash Credits 1520 3647 75 3725 80 52 Two Entries Omitted H. Trenton Mdse. si • 1595 52 80 1297 75 111 39 16 12 V Cash Mdse. G. M. Null Mdse. 111 16 39 12 14 88 25 18 V Cash Mdse. R. 0. Graves Mdse. 14 25 88 18 12 60 18 40 14 v' Cash Mdse. M. I. Martin Mdse. To-day's sales per Sales Book. V' • 12 18 40 60 14 A. Learner (Per.) Mdse. Kept out groceries for private use. 160 • Cash Mdse. Bal. groceries to Hartley & Brown. V 160 54 oo @ I ^ per cent. [Mdse.] Paid cash for postage and stationery $2.75. Received cash of H. C. White on account ;$32. Received cash of R. O. Graves on account 1^30. Sold A. R. French, Fairfax, car No. 31 13, C. & N. W. Ry., 10 pes. 6x6— 20,60 pes. 2x12-- 20, 60 pes. 2x6 — 20, 50 pes. 2x4 — 18 @ $[7.50 ; receiving French's sight draft on H. B. Mat- ter for the amount of the sale. Presented Norton's and French's sight drafts and Thomas's due-bill to H. B. Matter, who received the drafts at their face value, and the due-bill at a discount of 2 per cent, giving us credit on account for the entire amount allowed. A. Learner has deeded 5 acres of land with the dwelling house rented on the 3d inst., to his wi e as a homestead, withdrawing its value, estimated at $1200, from his capital. The student may take a proof of his ledger before advancing further, carrying the totals of Cash and Merchandise from the journal columns and the debits and credits of Bills Receivable and Payable from the bill book to the proof, without posting them to the ledger. This proof may be made out on loose paper without being entered in the books, as it is merely a test exercise. Bought of the Central Lumber Co., Burlington, invoice of lumber summarized as follows: 10 M Finishing, 20 M Flooring, 10 M Siding, amounting to $950, freight prepaid, for which we have given our note at 30 days. Prepaid our note given to Cyrus Clark, on the 3d inst., receiving a discount at the rate of 10 per cent per annum for the time unexpired, paying the proceeds in cash. Paid taxes on real estate $100. Sold B. O. Norton. Nevada, car No. 4646, C. & N. W. Ry., 200 boards 1 1^x12 — 16 @ $30, 60 pes. 2x4^ — 14 @ ^16, 100 pes. 4x4—18 %$\6\ car No. 4141, C. & N. W. Ry., 3 M 3 inch Pickets @ ;^I3.50. 90 pes. 2x8 — 16. («^ $16, 12 Doors 2''x6*xl^ @ ^2.05 each, 24 Windows 24x32, 2 lights, @ $2.25 per Window. Discounted the entire bill 5 per cent and received cash for the proceeds. Received cash of H. Seabrook in full for his note given us Jan. 28, with interest from that date to the present at 6 per cent per annum. Prepaid the balance due on our note favor Ray Turner, receiving a discount for the num- ber of days before maturity at 10 per cent per annum, and paying cash for the proceeds. Sold the following lumber to city customers: G. M. Null, 180 Second Ave., on account, 2,400 ft. Flooring @ ;^26. 50 Fence Posts, sawed, @ 25 cts. each, 40 pes. 2x6 — 16 @ $\6, 1,500 3 inch Pickets @ ;?I3.75 M. L Martin, 239 Fifth Ave., cash ^12.50, balance on account, 750 ft. Clear Siding @ $2T , 500 ft. Flooring @ ;^26, 2 Windows, 12x28, 4 lights, @ l?i-75 pe*" Window H. C. White, 222 Third St., on account, 6 pes. 6x8 — 16, 4 pes. 4x4 — 18, 32 pes. 2x4 — 18 @ $16.50; 900 ft. Ship Lap-® ;^ 17.50. Received notice of the protest of a note for ^2,000, signed by our neighbor, Henry Moore, and which we had endorsed as a matter of accommodation. The note, interest, and protest charges amount to $2,125.50. [No Pantry.] SPECIAL COLUMN BOOKS. 115 We have borrowed ^$2,000 of the Commercial Bank on our note at 30 days indorsed by H. B. Matter, deducting interest at 8 per cent paid in advance for 33 days. We have give H. B. Matter a chattel mortgage on our stock of lumber for ^2,000, to secure him in indorsing the above note for us, the same to be void when we pay the note. [No entry] Paid the protested note and charges jn full, ;^2,i2 5.50, which we now hold as a claim against Henry Moore. [Open an account with protested paper.] Received cash of H. Orton on account ;$ioo. Paid H. B. Matter's demand draft on us for ;S200. Drew out cash for personal use $1'] .'^o. Sold Henry Trenton, on account, 10 M Shingles @ %i, 1,250 ft. Sheeting @ ;^I4.50, 60 pes. 2x4-12 @ ^15. Paid H. B. Matter cash on account ;^ 156.84. Sold five acres of our farm to S. T. Lacey for $TOO, receiving in payment the two unpaid notes given him Jan. 25, with interest since that time at 6 per cent, paying him cash for the excess. R. Graham has returned the note given him Jan. 29, and we have given him his note re- ceived in exchange for the former, each being for J&200. H. Smith has paid us cash for his note dated Jan. 7. Sold C. Emerson, Vinton, on account, 24 boards 1x18-18, 36 boards 1x14-16, 20 boards 1 34^x12-14 @ ;^35 ; 20 M Shingles @ ^3.12^ ; 7 M Lath @ ^3.1 5 ; 9 Doors 2''x6''xi^, second quality, @ ^1.75 each; 12 Windows, I2XE4, 8 lights, @ ;^i.48per Window. Sold H. Orton, Belle Plaine, cash $^0, balance on account, 2 M Flooring @;^22.50, 1,500 ft. Siding @ ;^2i.75, 1,250 feet F"inishing Lumber @ ;^35; 18 pes. 6x8-20, 6 pes. 8x8--i6, 21 pes. 2x8--i6 @ ;^I7.25. Sold Quick & Sharp, on account, 500 Split Posts @ 22^^ cts,, 20 M Fencing @ ;^I4.50. Received cash of H. Trenton in full of account. Sold H. B. Matter the balance of our real estate, 5 acres of land, for ;^62 5, paying the note given him on the 4th inst., with interest since that date at 6 per cent, and receiving cash for the balance of the consideration. A fire broke out in the lumber yard last night, destroying all our lumber, and also destroy- ing a part of the posts and fencing which we had billed to Quick & Sharp yesterday, but had not yet delivered. Notified the Insurance Co. of the loss, and also of the chattel mortgage in favor of H. B. Matter, requesting them to make the loss payable to him. We find that 300 Posts and i 5 M Fencing had been delivered to Quick & Sharp yester- day, the balance is our loss, and hence must be credited to their account. The Insurance Co. required an approximate inventory of the quantity of Lumber on hand, as shown by our purchase and sales books, which proving satisfactory, they have paid their policy in full to H. B. Matter, who has paid the same to the Commercial Bank and taken up the note for ;^2,ooo which we discounted there on the 5th inst. We have collected cash in full of account of G. M. Null, R. O, Graves, M. I. Martin, and H. C. White. We have settled with H. Orton, discounting $5.11 from his account and collecting cash for the balance, and also with C. Emerson, discounting ;^6. 15 from his account and collecting cash for the balance. Paid cash to the yard men for wages to date $40.93. 1 1 6 ESSENTIALS OF BO OKKEEPING. Have disposed of the entire remnants of lumber that were saved from the fire, to Quick & Sharp for ^165.25, which they have indorsed as paid on the first note due them. They have also settled their account by indorsing the amount of same as paid on the second note due them. The protested note of Henry Moore being estimated worthless, should now be cariied to Loss and Gain. Our creditors have all agreed to accept the cash we now have, as full payment of their claims, the same to be distributed proportionately among them, and we have made payments accordingly. The student may now complete the posting and close the ledgtr. B U SI NESS FORMS . 117 Business Forms. We shall group the various forms together in this chapter for convenient reference at any time, illustrating the forms as partly printed and partly written, as they usually appear in busi- ness, the blank forms being printed ready for use, and the address, date, time, amount, and names of persons being written in as the blanks are used. PROMISSORY NOTES. A promissory note is a written promise to pay a certain sum of money at a specified time. The person who signs the note and thereby makes the promise is called the maker ; the person to whom it is made payable is called \}:\q payee; if the payee transfers the ownership to another by writing his name on the back of the note, he is called an indorser, and the writing is called an indorsement ; and the person to whom he makes the indorsement is called the indorsee. One who signs a note with the maker, to give it additional credit, is called a surety. A note made payable only to a specified person, is said to be non-negotiable. A note made payable to a certain person or order, or bearer, is called negotiable; being negotiable by in- dorsement, if payable to order, and negotiable by delivery, if payable to bearer. FORMS. I {Negotiable by Indorsement — Individual^ % ^^1.'^^.... Wi^fi^, Jf^a ? 9. T3 t (u o the Col , Mich., HN SoNE ^ CD •^ 2i e ^ X § i* as •? 8Q ^-. >3 > K K o •— > S i^ •<<;' o 1 — » ^ o . t— > *•* 1 ^ 4i^ o o :2 >— . 1 "i O 8 >.8 "^ O ■5 8 u. 3 O o 10 1" r3 order d Rap (U o a, 1 s 3 5l ^ ^ S ^O. i 13 c o O '" :s o «j -M -M -Z CQ . c i: <*- o o ^ 8 T3 Pay Bank c collecti 4-1 o No. I transfers the ownership from Sones to Sherwood. No. 2 transfers ownership, but relieves Sones from any responsibility if the note is not paid when due. No. 3 transfers the ownership to any party who may hold the note, making it in effect pay- able to the bearer. No, 4 transfers the ownership as in No. 3, except that it relieves Sones from further re- sponsibility. No. 5 is a receipt for money paid to apply on the promise indorsed. Such indorsements need no signature. No. 6 does not transfer the ownership of the paper to the bank, but merely gives authority to the bank to collect the paper as Sones's agent. No. 7 renders Sones liable as surety without a formal notice or protest, as the law usually requires. RECEIPTS. A receipt is a written acknowledgment of the giving of a value, or the fulfillment of a promise. The essential elements are place and date, of whom received, what or how much received, for whatj^nd the name of the one receiving. BUSINESS FORMS. ^2i 11 [Receipt — Ofi Account. Stillwater, Minn., Aug. 20, />?^ (ff^ecGwed of ^^^^7 ^- ^^^^^^^^^^^^^ One Hunded Twentv-seven and 7S_ ^^n///J p*^ to apply on accoimt. i2y.y^ George IV. Carter A receipt given for money whicn was never paid is like a note without a consideration. It cannot be made binding in law. So a receipt given in full of an account, when only a part of the account was paid, is not binding, unless the account was under dispute and a comprornise was agreed upon, or unless it was paid before the time agreed upon, or paid in a place or man- ner not agreed upon ; in which case the deviation from the contract could be taken as the re- mainder of the consideration. MARGINAL RECORDS. The business forms printed for general use are bound in books of convenient form and size, and so arranged that single sheets can be torn out and used. On the left margin of each sheet is a blank space that remains in the book, with a memorandum of the sheet that is torn out. This margin is called the stub of the note, check, or draft, and the important facts that should be re- corded on the stub are the date and number of the paper, to whom issued, the amount, and for what it was given. Thus, if Johnson & Turner had given their check No. 13 to Oscar Simmons for rent one month, the check and stub would be filled out as follows : 12 [Check and its Mafgin) ^^t-Ji 189 -• No. 'I pgynp Oscar Simmons %.JMo For ^^'*' "^ month- Austin, Texas, Sept. i, IQO* • NO ^^ Second National Bank Pay to II16 order of ^'i :?^^'^'':' V't^y:'^^!.'^. Too Dollars, %.37:5o.. Johnson & Turner ^f THt 1 24 B US W ESS FORMS. These marginal records being retained by the one issuing them, serve a double purpose. They assist him in keeping a record of the amounts he has drawn from the bank, and the num- bers of the checks ; and what applies equally to all classes of paper, they assist him in keeping a memorandum of his transactions until it is convenient to enter them on his books. REHARKS AND LEGAL POINTS. The preceding forms (receipts excepted) comprise the varieties that are ordinarily grouped together under the general title of Commercial Paper. The note and the certificate of deposit are promises, while the draft, check, and order are each orders to a second party directing pay- ment to a third; all of the varieties last enumerated may become promises by acceptance or certification. The drawee of a draft, check, or order, corresponds to the maker of a note ; the payee is common to all ; while the drawer of a draft or check corresponds to the indorser of a note. Date. If a paper is not dated, and the time of payment is not specified, it is considered due at any time. Place of Payment. If the place of payment is specified on a note, the maker is expected to call at that place and pay the note when due. Leaving the note at the place of payment on the day it is due, is considered the same as demanding payment. If no place of payment is designated, it is then payable wherever it is held. A draft or check is payable at the drawee's place of business : and if not in business, at his residence, or wherever he may be found. Time of Payment. Checks and orders are generally payable on demand or at sight, and are not entitled to days of grace. All classes of commercial paper that are negotiable, and that are made, payable a certain time after date, after sight, or after any given event, are entitled to three days more than the specified time, these being called days of grace. If the last day of grace falls on Sunday or on a legal holiday, the paper is payable on the second day of grace; but if the second and third days of grace are occupied by a holiday and a Sunday, then the paper falls due on the day following the third day of grace. A note payable on demand is not due until it is presented for payment, and is not entitled to days of grace. In computing the time of payment on papers written payable a certain number of days after date, we count the actual days in each month up to the time of payment ; but if the time in specified in months, we count calendar months. Thus, note No. i is due 30 days after Sept. 3, or Oct. 6, allowing the days of grace. No. 2 is due Mar. 14. A note dated P'eb. 28, and payable in one month, is due March 31 ; but if payable in 30 days, it is due April 2, if in a common year, and April i , if in a leap year. A note dated Jan. 2'8, 29, 30, or 3 i , and payable in one month, will fall due March 3. The same note at thirty days will fall due March 2, 3, 4 or 5. Consideration. The expression "value received" indicates that the paper has been given for value. The words are not strictly necessary in negotiable paper, because the law assumes that a valuable consideration was received, or the note would not have been given. A paper that is given without consideration cannot be collected, if it is still held by the one to whom it was made payable. Payable in Money. All commercial papers arc considered payable in money, unless otherwise stated. A paper that is not payable in money cannot be classed as negotiable paper. Amount. The amount should be written in words in the body of the paper, and also ex- pressed in figures. If there is a discrepancy between the words and figures, the words are con- sidered correct. Interest. If interest is to be paid, it is better to state the rate agreed upon. If the rate is not specified in the paper, it will draw interest according to the law of the state where it is payable. All varieties of commercial paper, if not paid when due, are subject to legal interest, whether 't is specified in the paper or not. BUSINESS FORMS. 125 Negotiable Paper. Negotiable paper is such as can be transferred from one to another by indorsement or merely by delivery. It is written payable to order, or bearer. It is entitled to days of grace on all time paper. In order to be classed as negotiable paper, and share its special privileges, it must be pay- able in money; it must also be payable absolutely, that is, the payment cannot be based on a con- tingency which may or may not happen. Nox- Negotiable Paper. Notes and other commercial papers are non-negotiable, when they are not written payable to order or bearer, and when they are made payable in merchan- dise or chattels. Indoksemexts. The special laws governing indorsements pertain only to negotiable paper; because, non-negotiable paper is usually only transferable by assignment. A paper that is made payable to a certain person or order, or to the order of a certain per- son, must have his name indorsed upon it, in order to effect a transfer of the paper to a third party. His indorsement is not only a transfer of ownership, but also a guaranty or surety for the payment of the paper. The indorser of a paper is responsible for its payment, if the maker or payer fails to pay it. Each indorser, unless he qualifies his indorsement, as in indorsements 2 and 4, virtually executes a warrant to every subsequent holder: That the paper is what it represents to be. That he has a good title to it. That, if the paper is dishonored, he will upon due notice, unless such notice is excused, pay the amount due thereon. Other parties who have had no relation to the paper may write their names as indorsers in blank (written like indorsement 3,) thereby becoming surety for the payment of the paper. Rights of the Maker or Payer. The maker of a note, or the drawee or acceptor of a draft may refuse payment of the same under certain circumstances, usually based on the follow- ing conditions, called legal defenses : 1 . Want of consideration, either total or partial. If the paper was given without value, he is not obliged to pay it; or if he has received only a part of the value named, he can be made to pay only that amount, provided the payee still holds the paper. If the payee has indorsed it, before it was due, to an innocent purchaser, that is, one who knew nothing regarding the want of consideration, the purchaser can collect the paper, even when the consideration was incomplete. 2. Obtained by Fraud. If it can be shown that the note was obtained by fraud, the maker is not obliged to pay the payee; but an innocent holder may collect the note. 3. Obtained by Finding. The maker cannot be compelled to pay the party having found a note; but a man who has purchased it from the finder for a consideration, provided he knew nothing of the circumstances, and provided that it is payable to bearer, or openly indorsed, can enforce its payment. 4. Obtained by Theft. The one having stolen a note cannot enforce its payment; but one who has purchased it in good faith, even from the thief, provided it is payable to bearer, or openly indorsed, has a perfect title to it. [This law of title pertains to no other class of stolen property except negotiable paper.] 5. Lapse of Time. If any paper remains unpaid for more than six years after it is due, and no partial payment has been made on it, its collection cannot be enforced by any one. The length of time varies in different states. . 6. Forged Paper. A paper with a forged signature is worthless even to an innocent pur- chaser, except as he may have recourse to a genuine indorser. 7. Amount Raised. A paper whose amount has been raised by substituting a larger amount for the one originally written, is good for the original amount, the amount raised being treated the same as a forgery. Rights OF Purchasers. In order that the various classes of negotiable paper may be of the greatest use to the commercial world, that they may be used with great freedom in the place of money in the various transactions, the law has granted this class of property special privi- leges, and has given purchasers of such property peculiar rights, that pertain to no other variety of property. 126 BUSINESS FORMS. If a person buys any negotiable paper before it falls due, and gives a valuable consideration for it, he can collect it, even if it was given without value, or if it was stolen; in other words, the law sustains him in taking the paper for just what it says ; provided, the signature is genuine, and the paper is not yet due. If the paper is past due and remains unpaid, it is pretty conclusive evidence that the maker of the note has some good defense; hence, a person pur- chasing a paper after it is due, must take it subject to any defense that may exist between the maker and the payee. A purchaser of a .orged paper does not have any peculiar rights ; because, the law regards a forged paper merely as any piece of blank paper, so far as it represents property value. Rights of Indorse rs. In order to hold indorscrs responsible for the payment of negoti- able paper, it must be presented to the maker for payment when due ; and in case of non-pay- ment, the indorser must be notified at least by the day following the dishonor of the paper. This notice may be given personally, or it may be a written notice, directed to the indorscr's address, and deposited in the postoffice, postage prepaid, not later than one day after the dis honor. An indorser may wish to avoid the trouble and expense of sending notices, and also of writing a protest for non-payment; in such case, he writes "Notice and Protest Waived" above his signature in the indorsement, thus making himself responsible without receiving notice and protest. Presumptions of Law. The law presumes certain facts regarding commercial paper; just as it presumes any man innocent until his guilt is clearly proven. These things presumed by law must be disproven, if any person would establish any con- trary fact regarding them. These presumptions are : I. A valuable consideration, whether expressed on the paper or not. • 2. That the holder of the paper is the owner, unless circumstances indicate otherwise. 3 That the transfers and indorsements were made before the maturity of the paper. 4. That the holder received the paper for value, in some business exchange. 5. That the maker of the paper meant just what was expressed on the paper. NOTICE OF NON-PAYMENT. As soon as any paper that has been indorsed becomes due and payment is not made by the maker, the indorsers should be notified by the holder of the paper, if he desires to make them responsible for the payment of the paper. The notice may be given verbally or in writ- ing. In either case it should describe the dishonored paper with reasonable certainty. This notice may be given by the holder of the paper or by any party connected with it, Wiio may be called on to pay the holder, and may be sent to each indorser from whom the holder would have the right to reimbursement. The drawer of a check or draft should be noti- fied, in case of non-payment or non-acceptance. 13 {Notice of Non-Payment)) Note No. I , if indorsed by the payee, James T. Johnson, to the present holder, Charles Graham, would require the following notice, if not paid at maturity, which, according to the note, would be Oct. 6, 189. . Waco, Texas, Oct. 7, 189... Mr. James T. Johnson, Denison, Texas. Dear Sir: — Please take notice that a note for ($249.25) Two Hundred Forty-nine !-§ Dollars, signed by Henry Thompson, dated Sept. 3, 189.., due Oct. 6, 189.., and indorsed by you, was duly presented by me, the holder, to the maker, for payment, and was not paid ; therefore, I shall look to you for payment of the above mentioned note. Respectfully, Charles Graham. D USINESS FORMS. , 2 ; PROTEST. A protest is a formal declaration made by a notary public, giving a copy of a bill or a note, or referring to the original paper annexed to the protest, and stating that its acceptance or payment has been demanded and refused, giving the reason of the refusal, if any, and also stat- ing the object of the protest. The protest is necessary in case of the dishonor of foreign bills, and it may or may not be made in case of dishonor of drafts and notes. In case of protest, the notary usually writes the notices of non-payment, and mails a copy of the notice to each indorser on the paper protested. 14 {Protest for Non-Payment) The bank draft given on a lormer page, if indorsed by Gilbert & Patterson to Archer & Parton, would require the following protest to be drawn by a notary public, in case the Central National Bank of Chicago, should refuse payment. STATE OF ILLINOIS, 1 Cook County. J On the Twelfth day of November, A. D. 1 89 . . , at the request of Archer & Parton, the holders of the original bill hereto attached, I, Richard Blank, a Notary Public, duly appointed, commissioned and qualified, residing in Chicago, in the County and State aforesaid, did present the original bill, which is annexed hereto, and demanded payment of the drawee thereof, which was refused. Whereupon, I, the said Notary, at the request aforesaid, did PROTEST, and by these presents do solemnly PROTEST as well against the drawee and indorsers of said bill as against all others whom it doth or may concern for exchange, re-exchange and all costs, damages, and interest already incurred, and to be hereafter incurred, by reason of non-payment. And on the day and year above written, I deposited due notice of the foregoing protest in the postoffice in Chicago aforesaid, postpaid, signed by me, as follows : Notice for Gilbert & Patterson, directed Mansfield, Ohio. Notice for Students' Commercial Bank, directed Mansfield, Ohio. Each of the above named places being the reputed place of residence of the persons to whom said notice was directed respectively. ' FEES. Protesting 75 cents In Testimony Whereof, I have hereto Notices ID " set my hand and Notarial Seal at Registering 50 " - Chicago aforesaid, the day and year Demand 50 " above written. Postage 10 " Richard Blank, $1.^^ Notary Public in and for Cook County. BILLS. The term bill, as commonly used, refers to a statement of the items of a sale ; or of the indebtedness of one party to another for services rendered ; or the statement of an account. It is customary for wholesale dealers to send statements of account at the end of each month, to all who are indebted to them ; so that the accounts may be corrected if they arc wrong, and also that collections may be kept up promptly. An account current differs from a monthly statement, in that it contains an itemized list of the debits and credits, while a statement contains merely the aggregate of each debit and credit, assuming that a bill of items has already been sent for each. It is used in business when item- ized bills have not been sent with each purchase. 128 BUSINESS FORMS. 15 oM^. Q^e^Ui ^i ih {Sale of Merchandise.) ;i Real Estate Company Signed at College City this ^.{^^. day oi....¥^'^.^J.[ 189. R E. Rogers, Sec. JcHN Mor; Prs*. CERTIFICATE OF STOCK PARTLY PAID UP. Capital Stock g 10,000. .^^...ShiTS^ Union Real Estate Company. This Cer tifies that... ^:.:^^^^^^ is entitled to... ^":^ Shares of One Hundred Dollars each, of which. ..f'.^''?'.... per cent is paid, in the capital stock of the Union Real Estate Company, transferable only on the books of the company, by him or his lawful representative, on surrender of this certificate. 3th March Signed at College City this.....-?.rf day oi...3^':!':.\ 189— R. E. Rogers, Sec. John Morgan, Pres, 142 HIGHER ACCOUNTING. THE CERTIFICATE BOOK. Certificates of stock are printed with a stub on the left margin, on which the secretary- records all items of importance pertaining to the certificate. These blanks are bound in a book, and when the certificates are issued ana torn out, the marginal memoranda remain in the book, and from the?Se memoranda the transfer entries are made in the Stock Ledger. The following is the ordinary form of a certificate of stock, together with the marginal record. Certificate No ^..... ...¥.^^^!!'..'.P. 189 ..iP... Shares ^100 Each. Issued to...^:..^-..^'^.^^^'^.. Folio ^. Transferred from^.f ^^^:'f^.^ Folio I Received this Certificate. H. C. Warden No. I. 30 . Shares Capital Stock $10,000. Union Real Estate Company. CERTIFICATE OF STOCK. This Certifies that....^:..^-..^':'.''^''^... is entitled to ..ffr^f Shares of One Hundred Dollars each in the Capital Stock of the Union Real Estate Company, transferable only on the books of the Company, upon surrender of this Certificate properly indorsed. Signed at College City, this .. ^5^^''. day of March 189- R. E. Rogers, Sec. John Morgan, Pres. When the above certificate is torn out of the certificate book and delivered to H, C. War- den, he is required to sign his name in the marginal record in the stub, acknowledging delivery of the certificate. If Warden is not present, the party authorized to receive the shares for him can acknowledge delivery of the certificate for him. ORDER FOR TRANSFER. The following order for transfer may be written on a blank specially prepared and bound in a book of transfer blanks, or the same may be indorsed on the back of the certificate which is surrendered. The latter method seems more in harmony with usage pertaining to all varieties of papers used in bwsiness. College City, March 15, 189 For value received, I hereby transfer to H. C. Warden, all my right and inter- est in Thirty Shares of the Capital Stock of the Union Real Estate Company, now standing in my name on the books of the Company. A. Learner. If this transfer were written on the back of the certificate, the word "within" would be inserted in the clause, "all my right and interest in the within Thirty Shares." If A. Learner wished to dispose of only ten of his shares and keep the rest, he would sur- render the old certificate and transfer only ten shares, taking a new certificate for the remain- der, and hi« order of transfer or his indorsement would be expressed accordingly. BOOKKEEPING FOR CORPORATIONS. 143 THE. STOCK LE.DGEK. The regular account books of a corporation are kept by the same methods as those of individuals or partners. The only account book peculiar to a corporation is the Stock Ledger, which is a private book kept by the secretary, showing the capital stock Owned by each of the stockholders. Each stockholder has a page in this private ledger, and his account has credit for the paid up value of the stock he holds. The stock ledger is ruled like any other ledger, except that a column is added, next to the folio column, for the number of shares transferred in each transaction recorded. The entries in the stock ledger are made from the installment lists and from the stubs of the certificate book. A stockholder who pays an installment on his subscription of .stock should have credit in the stock ledger for the amount of the installment only, and not for the par value of the stock. If shares of stock are transferred before their par value is fully paid, the paid value should be recorded in the amount columns, the party disposing of the stock being debited, and the party purchasing the stock being credited. If paid up stock is transferred, the stockholder disposing of it is debited for its par value, and the party purchasing it is credited for the same amount, the number of shares transferred being recorded in the share column. The certficates of stock are numbered as they are issued, and these numbers are entered in the folio column of the accounts in the stock ledger, while the folios of the ledger accounts are entered in the stub of the certificate, to show that the transfer is recorded in the stock ledger. The following transactions relate to the stock ledger, the general transactions of the same company being given in the real estate business represented in Set Thirteen. TRANSACTIONS. For the first transaction see Installment List No. i. Mar. 10 — The directors order a second call of sixty per cent of the capital stock of the Union Real Estate Company, of which A. Learner pays ^1,800 Mar. 12, John Morgan pays $1,500 Mar. 13, Henry Thomas pays $1,200 March 13, and Aaron Brown pays $1.-500 Mar. 14. Mar. 15. — A. Learner transfers his stock, 30 shares to H. C. Warden. Mar. 20. — John Morgan transfers 10 shares of his stock to A. Learner. Mar. 21. — Henry Thomas transfers 10 shares of his stock to A. Learner. Mar. 24. — Aaron Brown transfers 2 shares of his stock to H, C. Warden. Mar. 27. — Aaron Brown transfers 5 shares of his stock to G. V. Bentley. April 2. — Henry Thomas transfers 3 shares of his stock to Henry Pierson. April 4. — John Morgan transfers 5 shares of his stock to Martin Towner. April 5. — John Morgan transfers 2 shares of his stock to Henry Pierson. April 12. — Aaron Brown transfers 3 shares of his stock to G. V. Bentley. April 30. — A dividend of $3,000 is declared; how much should each stockholder draw? What two stockholders can combine to control the election at their next time of voting? The stock ledger is a book of great importance when the stockholders hold tlieir annual meeting, as it gives the basis of their voting in electing officers or passing any measures of importance. Each stockholder is entitled to one vote for each share that stands to his credit, and if he can control a majority of the shares of capital stock, he can control the majority of votes on any question that may come before the corporation. If the business of the corporation is prosperous and the books show a considerable gain, a part of this is set aside in a reserve fund entitled "Reserve Profits," and the balance is divided among the stockholders according to the capital stock belonging to each. The part that is distributed to the stockholders is called a dividend, and such distributions are usually made once a year. The distribution and payment of dividends does not require entry in the stock ledger, as this book is kept merely to show at any time the invested capital, and the proportion of the same belonging to each stockholder. We illustrate on the following page five accounts from the stock ledger, showing all entries that are required in the first five transactions. 144 HIGHER ACCOUNTING. A PAGE OF THE STOCK LEDGER. 1 A, LEARNER. i8q- Mar. 15 H. C. Warden No. Shares. 189- I 30 3000 Mar. 5 12 20 3CXX) 21 Installment No. i . " 2 John Morgan Henry Thomas No. Shares. 2 30 10 1200 1800 3000 1000 3 10 1000 JOHN MORGAN. Mar. A. Learner Balance l?9- 10 1000 Mar, S J-J 1500 ^3 20 2500 Installment No. i Balance down 25 1000 1500 2500 15 1500 AARON BROWN Mar. Installment No. i " 2 25 lOOO 1500 HENRY THOMAS. i«g- Mar. 21 A. Learner Balance 189- 3 10 1000 Mar. 6 10 lOOO 13 21 2000 Installment No. i « « 2 Balance down 20 10 800 1200 2000 1000 H. C. WARDEN, 189- Mar. IS 1 A. Learner 30 3000 Bookkeeping for manufacturers. 145 Set Ten. BOOKKEEPING FOR MANUFACTURERS. This set has been prepared to illustrate a system of bookkeeping, that, with slight modifi- cations, would be adapted to any wholesaling or manufacturing business. In manufacturing, it is desirable to know the relative cost of the various elements that enter into the manufactured product, and hence an account with each leading eiement would give more satisfactory information to the proprietors than if all were grouped together into one property account. Titles adapted to the business can be chosen to represent these elements, each of which is debited witli its own cost, and the manufactured product, when disposed of, can be credited to Merchandise. These several accounts being debited and Merchandise being credited, the profit or loss in manufacturing can be determined by closing the debits into Merchandise. In the present set we have chosen Fuel, Wages, Materials, and Commission to represent the debits or cost of the product, and Merchandise for the credits of the product when disposed of. The columnar journal represents the tendency of modern bookkeeping to condense rec- ords, and group the essential facts relating to any business into such space that the proprietor can survey all at a glance, and make a fair estimate as to the progress of his business. Special columns are assigned to each title that is likely to have frequent entries, and the titles that combine to show the progress and standing of the business are grouped on the same page, so that a glance may determine their relation to one another and to the business. If the aggregate of the cash receipts and payments, the bills receivable received and dis- posed of, the charges to customers and the amounts paid by them, the expense and discount items, and the cost and proceeds of merchandise are all grouped in the journal daily, and the footings of the several columns are forwarded from page to page, the proprietor can have all of the essential facts relating to the business at any given date by turning to the journal for that date. THE BOOKS USED. The journal is the main historical book, and all debits and credits are posted to the gen- eral ledger from it. The amounts in the special columns would not be posted to the ledger more frequently than once a month or once a year, in business, as the footings of these col- umns, forwarded from page to page, would enable the proprietor to survey the business with greater ease and rapidity than he could by turning to the ledger accounts. We have required the student to post the footings of the special columns to the ledger twice in this set, in order to afford him drill in balancing the journal, and in posting these special columns. All transactions, except sales, receipts, and payments, are entered directly in the journal with proper descriptive memoranda. Sales are recorded in the sales book, and cash items in the cash book, and the entries are carried from these books in condensed form to the journal, daily Q,r weekly, according to the extent and the requirements of the business. 146 HIGHER ACCOUNTING. The journal is proven in balance at any time, by bringing the footings of all special col- umns into the general debit and credit columns, which should then have the same totals. These can be entered in the general columns and the journal tested at any time, without post- ing the special column footings to the ledger, if it is so desired. In such case the total of each special column is forwarded in its own colum, the same as it was before the test was made in the general columns. In the journal represented in this set, Commission, Fuel, Wages and Materials are the four titles representing the direct cost of the manufacture and sale of merchandise, and the Merchandise column to the right of these shows the credits resulting from the sale. A survey of the totals in these five columns will show the essential facts relating to the merchandise account; while a survey of the other columns will show the cash on hand, the balance due from dealers, the amount of bills receivable on hand, the amount paid for expenses, and the amount received for interest and discount. The cash book is kept as a petty cash book, the cash items being entered and described in the order of their occurrence, and the results being combined by titles, for entry Jn the journal, instead of being posted directly to the ledger. Cash and cash items received on account from dealers are posted directly from this cash book to an auxiliary ledger with dealers, while the total of the amounts received from the dealers is credited in the journal to Dealers' account. The cash book should be balanced daily, and, as all cash is deposited and all payments are made by check, this balance should agree with the cash in bank, and also with the excess of the debit over the credit column of cash in the journal. For convenience in combining the items for the journal, a special column may be wsed on the received page for amounts received from dealers on account, and a corresponding column on the paid page for commissions deducted by these dealers. The entries for the day should be grouped on a slip of paper and the footings tested, before they are transferred to the journal. When goods are sent to dealers, which they are to sell on commission at a listed price, it is customary to charge the dealers at the listed price, crediting them with the same amount and debiting Commission when they remit the proceeds after deducting commission. These entries will occupy less journal space if they are entered in the cash book and are carried to the journal in the grouping of cash entries at the close of the day. The entire amount to the dealers' credit is entered in the cash book as received, and the commission deducted is entered as cash paid for commission, the difference between the amounts entered as received and paid being the cash items actually remitted by the dealer. If the dealer remits notes to apply on his account, the same can be entered in the cash book to his credit as cash received, and to the debit of Bills Receivable as cash paid. This will bring the proper debits and credits in the journal columns, without taking any extra journal space. The dealer's credits are posted directly from the cash book to his account in the dealers' ledger, while the total of such credits is carried to the credit of Dealers in the journal. The sales book in this set should have a special column, for such amounts as require posting to the dealers' ledger. The amounts of merchandise sent on sale and the sales on ac- count are posted to the debit of consignees and purchasers in the dealers' ledger, and the amounts of this column in the sales book are forwarded from page to page, and the total carried to the journal, as often as desired, to the debit of Dealers and credit of Merchandise. Sales for cash are entered in the sales book without being extended to the special column, after which the entries are checked and the net amounts received are carried to the cash book, to the credit of Merchandise. There is another method of keeping the sales book, which is used by many wholesalers and manufacturers because of its convenience. The invoices or bill heads are printed in dupli- cate and are bound into books. Duplicates of each bill are made either by copying or by car- bon transfer. One of the bills is torn out and sent to the purchaser, the duplicate remains as a stub in the book. The stub bills take the place of a sales book, and if several are printed on a page, the columns can be added and forwarded, the same as the sales book described above. Three ledgers are required in this set. the general ledger for all accounts that belong to the business, except those of dealers or customers, the dealers' ledger for customers' accounts, and the stock ledger for stockholders' accounts. noOKKEEPING FOR MANUFACTURERS. 14; The general ledger has an account with Dealers, in which is posted the aggregate of all debits and credits that are posted to the dealers' ledger. The general ledger is thus kept in balance, while the dealers' ledger is proven correct at any time by comparing a proof of its accounts with the Dealers' account in the general ledger. The excess of the total debits or credits in the proof of the dealers' ledger should equal the excess of the debit or credit side of Dealers' account in the general ledger. The dealers' ledger should contain all facts of importance relating to each account. If, as in this set, a part of the charges are for merchandise sent on sale subject to deductions for commission, and other charges are for net amounts not subject to such deductions, the fact should be recorded in the explanation column when each entry is made in the ledger. Merchandise sent on sale should be entered "Mdse.on Sale," and merchandise sold and properly discounted from the list prices should be entered "Mdse. net." If a dealer, having merchandise on commission, remits the proceeds of a sale and deducts his commission, he should have credit for the amount of remittance and commission. In the transactions, under date of April 4, Henry A. Cushman remits cash ;^400 and deducts commis- sion ;^ioo on a sale of ;$5oo, and he should have credit in the money column of the ledger for ^500, itemized in the explanation column "Cash ;^400, Com. ;^ioo." The stock ledger is kept in the same manner as in Set Nine, and has no connection with the other books of the company. The time book is illustrated among the script forms, and needs no explanations. The writing of the bill book and the computing of interest on notes are not required in this set, because other sets in the text afford ample drill in these processes. THE SCRIPT FORMS. Four pages of the journal are given to illustrate the opening entries, other original entries, condensed entries from the cash book, the method of forwarding the columns to new pages, and the method of balancing the journal, preparatory to posting special accounts to the ledger. Two days of the petty cash book are given, and below these on the left page are given the tickets combining the cash entries for transfer to the journal. The check marks are writen in the folio column of the cash book when the entries are transferred to the daily cash tickets. A portion of the time book is given, illustrating fully the method of recording each workman's time and also his earnings for each week. TRANSACTIONS. MONDAY, APRIL 1, 189... A stock company has be:;n incorporated this day under the name of The Brown & Sher- man Wagon Company, with a capital stock of ^80,000 divided into shares of ^$100 each. The following persons have signed the subscription list for capital stock: Henry Brown ;^25,ooo, Roger Sherman ^20,000, Martin Townsend ^10,000, Cyrus Adams ;^5,ooo, John Carter ^5,000, Peter Foster ^5,000 Aaron Trent ;^5,ooo, Oliver Jones $5,000. [A subscription list should be written like the one illustrated in the preceding set, but no entries should be made in the stock ledger until the subscriptions are paid and certificates of stock are taken.] TUESDAY, APKIL 2. Bought of Brown & Sherman their entire manufacturing plant and material, including other resources and liabilities as per following the statement : Resources. — Factory and machinery 1^35,000; lumber and other wagon material, includ- ing finished wagons and carriages, $12,250 ; bills receivable $5,000; accounts of dealers who hold wagons and carriages for sale on commission, Henry A. Cushman, Corning, $750.25 ; Cyrus E. French, Fulton, $692.25 ; Geo. A. Truman, Trenton, $1,250.50; Benjamin Brown, Brunswick, $1 ,526.75; Emerson Gardner, Georgetown, $619.20; David Horton, Hudson, $910.85. 1 48 HIGHER A ceo UN TING. A discount of 5 per cent has been deducted from the face value of bills receivable to allow for uncollectible notes, and a commission of 20 cer cent has been deducted from the amount due from dealers, as they are authorized to deduct that amount when they settle their accounts. Liabilities. — Balance of account, favor the Kent Lumber Co., Bentonville, ;^2,8io.70; favor The Union Iron Co., Iron City, ^2, 749. 34; favor the Western Paint Co., Chicago, $775.55; favor Fisk & Jones, Boston, $264.25. The new company have allowed Brown & Sherman the net worth of the plant as shown in above statement, giving Henry Brown 250 shares of stock fully paid up for his one-half interest, and Roger Sherman 200 shares of stock fully paid up, and credit on account for the remaining $5,000, for his one-half interest. [These two names should have accounts in the stock Ledger.] The workmen formerly employed by Brown & Sherman have been retained at following wages: Charles Martin, foreman in wood work, at $2.75 per day; and other workmen, numbered 2 to 10 inclusive (names to be supplied by the student), in same department at $2 per day. Henry Spencer, foreman in blacksmith shop, at $2.50 per day; and other workmen, numbered 12 to 20 inclusive, in same department, at $1.75 per day. John Thomas, foreman in trimming department, at $3 per day; and other workmen numbered 22 to 30 inclusive, in same depart- ment, at $2.25 per day. Frank Reynolds, foreman in paint shop, at $2.75 per day; and other workmen, numbered 32 to 40 inclusive, in same department, at $2 per day. Eight hours is considered a day's work in each department. In reporting work, if any of the men lose time, the number of hours they work will be reported. Workmen's Report for Monday. — No. 2 si.x hours, No. 12 six hours, No. 15 five hours. No. 24 six hours, No, 32 six hours, and all others full time. Workmen's Report for Tuesday. — No. 3 six hours. No. 15 four hours. No. 22 five hours, No. 33 six hours, and all others full time. WE,DNESDAY. APRIL 3. Oliver Jones, Aaron Trent, and Peter Foster have paid cash for the amount of their sub- scriptions to the capital stock, and have taken certificates of stock for the same. Paid for coal for engine room $75. [All payments in this set are made by check, and all money received is deposited in bank at the close of each day's transactions.] Paid for invoice of paints for use in the paint shop $55.50. The Brown & Sherman Wagon Company have adopted the following LIST OF PRICES ON WAGONS AND CAR.RIAGE,S. Phaetons $130,00 Spring Wagons ." . . .$95.00 Surreys 125.00 Lumber Wagons 90.00 • Top Buggies 11 0.00 Road Carts 25 .00 Sent Myron Young, Youngstown, on sale at list prices, 3 Lumber Wagons, 2 Road Carts, I Top Buggy. These are to be kept on sale by Myron Young, and when sold he will deduct 20 per cent commission for his services and expenses and will remit to the company for the balance. Paid for postage and stationery $5.75. Workmen's Report. — No. 5 seven hours. No. 11 five hours. No. 23 six hour.'^, No. 35 four hours, Nos. 7, 17 and 27 absent all day. Others have worked full time. THURSDAY, APRIL 4. Sent our check to the Kent Lumber Co. to balance their account, less a discount of 2^/2 per cent which they have allowed. BOOKKEEPING FOR MANUFACTURERS. 149 Received an invoice of iron and sttel from the Union Iron Co., amounting to 1^275.75, billed on account. [Materials.] Paid for freight on the last invoice ^55.75. Henry A. Cushman has reported sales amounting to ;^500, and has sent cash for same less his commission of 20 per cent. Sent to Cyrus E. French, on sale at list prices, 2 Spring Wagons, 2 Surreys, 3 Road Carts, Sold S. A. Jackson, Elgin, 3 Top Buggies, 2 Surreys, 4 Road Carts. Gave him a list dis- count of 20 per cent, and a cash discount of ^ per cent on the net amount after the list discount (described briefly as discounts 20 and 5 per cent), and received cash in payment of the bill. Paid for coal for use in blacksmith shop $\'j.'^0. [Fuel.] Cyrus E. French has sent cash to balance his account, after deducting his commission of 20 per cent. Workmen's Report. — No. i six hours, No. 12 seven hours, No. 19 five hours, No. 31 four hours, Nos. 9, 29 and 39 absent all day. Others have worked full time. FRIDAY, APRIL 5. John Carter and Cyrus Adams have paid cash for the amount of their subscription to the capital stock, and have taken certificates of stock for the same. Paid Roger Sherman to apply on account $2,500. Received an invoice of leather and trimming material from Fiske & Jones, amounting to ;$i 75.25, billed on account. Paid for freight on this invoice $15.25. Paid for new engine and machinery for use in factory $7,550. Received cash of R. A. Howard to pay his note indorsed to us $555, and for interest on same $25.50. Sent to Geo. A. Truman, on sale at list prices, 6 Lumber Wagons, 3 Spring Wagons, 4 Road Carts. Paid for advertising $27.25. Received cash of Henry Truman to pay his note indorsed to us $150, and for interest on same $3.75. Henry Brown has transferred 10 shares of his stock to Oliver Jones. [Stock Ledger.] Sent to Benjamin Brown, on sale at list prices, 3 Surreys, i Phaeton, 4 Road Carts, 2 Spring Wagons. Emerson Gardner has settled his account in full, paying us cash for the amount due after deducting his commission at the usual rate. Paid for office books $27.50. Cyrus E. French has sent us cash to apply on his account $200, reserving his report o^ commission until he completes his sales. David Horton has sent us cash to apply on his account $100, without reporting commission. Sold to retail buyers at the factory for cash, at the list prices, i Surrey, i Phaeton, 2 Spring Wagons. Workmen's Report. — No. 6 six hours. No. 26 five hours, No. 30 seven hours. No. 34 four hours. Nos. 4, 8, 18 and 25 absent all day. Others have worked full time. SATURDAY, APRIL 6. Received an invoice of lumber and wagon material from the Kent Lumber Co., amounting to $1,516.25, billed on account. Paid for freight on last invoice $115.75. Martin Townsend has taken 50 shares of the stock for which he subscribed, paying cash for the same, and receiving a certificate for that amount. ISO HIGHER ACCOUNTUSiG. (yJfiyCJL-f, rrf- ^—^>(—^.JLf^ ■ ev auCZ^e-r^J foo< 5> 3S~oao ^A^ a—9-c/U ^-'■Mje>\,-v--i.'«-<»,'vt^ ^ vi-v— »_.^ «^ A-tai/ J^.»-»-v^ -^c^-^J^ ^2-.-Wt yooc 7° 7vr 'V-, f?«. ■31 ^t- 25* V^o BOOKKEEPING FOR MANUFACTURERS. 151 odln- ^< "^ C^ vf/Vf S°oo lifx s 7S .fi '7 / s.a.So 6'J- J-o rsj^ ss / 1 4 J 7 7^' vT/fe 70 li i I ;2 HIGHER ACCOUNTING. COjoyi^JL \r /^f — -^. ? " /■i'Jo^.js-j O y--l'-CC\yi~JLJL^ ti~ '--H. 6 yi^ aaJy'l...-5-» r V-" '6.i7r V'.'yi 1^ 2 » BOOKKEEPING FOR MANUFACTURERS. 153 SJ'fl y J- 1 J- -J-o . < 3.37S -To /IS- 'iyto 9SXf fo i/^STi is- Yio fiy. ^7 %i ^-o,^ /*>- ;V-->'(^*~' ^. ^trryt/ \CuCdJr' (9 Vn.. /o, C>-»-v>.-*- / >•■ J 3/ 7^ r>r i*' .?^, ^.fi^ / / // to / / / s. // 2. 2. / 3 <5<. J»at <5l/iA^. /O 156 HIGHER ACCOUNTING. Geo. A. Truman has settled his account, not including yesterday's debit, deducting his commission and paying balance by 5 notes amounting to ^500, indorsed to us and accepted at their face value, and cash for the remainder. [Enter all in the cash book.] Sent Emerson Gardner, on sale at list prices, i Surrey, i Phaeton, 2 Road Carts, 2 Lum- ber Wagons. Sent our check to the Union Iron Co. for ;^i ,500, to apply on account. Received an invoice of paints and oils from the Western Paint Co., amounting to 1^265.25, billed on account with a cash discount offer of 5 per cent if paid in 10 days. Paid for freight on last invoice $\'j .y^. Benjamin Brown has reported sales of our wagons and carriages amounting to ;^ 1,1 25, which he has paid in cash less his commission of 20 per cent. Sent Thomas Kent, Kingston, on sale at list prices, 3 Lumber Wagons, 4 Road Carts, 2 Phaetons. Sold for cash at the factory at list price 2 Surreys. Paid for electric light in office and factory ^27.50. Received cash of Howard Sumner to pay his note indorsed to us $115, and for interest on satne $2.})0. Workmen's Report. — No. 6 six hours, No. 9 six hours. No. 10 five hours, No. 16 four hours. No. 20 seven hours, No. 28 three hours. Others have worked full time. Drew check for the total amount and paid workmen's wages for the week, per time book. DIRECTIONS FOR POSTING AND PROVING. Carry the footings of the special columns to the general columns in the journal. Add the general columns to see if your journal is in balance. Post all titles to the general ledger and take a proof of same. The cash balance in the petty cash book should agree with the balance shown in the ledger account with cash. The proof of the ledger should be recorded in the trial balance book. The dealers' ledger should be posted from the sales book and petty cash book, and a proof of same should be taken. The excess of the debits in the proof of the dealers' ledger should be the same as the debit excess in "Dealers" account in the general ledger. The proof of the dealers' ledger should be recorded in the trial balance book, on the same page below the proof of the general ledger. MONDAY, APRIL 8. Henry Morgan has been engaged as traveling salesman for the company at a salary of $50 per week and expenses, and we have advanced $2<) to apply on his expense account, [Debit him for all money paid him on expense or salary account, and credit him with expenses reported and salary earned.] Paid for a mileage book, to be used on the railway by our traveling salesman ^$20. [Expense.] Henry A. Cushman has sent a bank draft for the balance of his account less his commis- sion on same; and we have sent him, on sale at list price, 2 Lumber Wagons, 2 Phaetons, 3 Road Carts, i Surrey. Benjamin Brown has paid cash for his notes in our hands now due 1^700, and for interest on same ;$ 14.70. He has also paid the balance of his old account, not including his debit on the 5th inst., after deducting his commission on same at the usual rate. Sent Geo. A. Truman, on sale at list prices, 3 Spring Wagons, 2 Top Buggies, i Surrey. Martin Townsend has paid cash for the remainder of his subscription to the capital stock and has taken a certificate for the same. Sent David Horton, on sale at list prites, 3 Road Carts, 2 Lumber Wagons, i Spring Wagon. Sold the old boiler and engine which we purchased with the factory, and which we have replaced with a larger outfit, to Roger Shernmn for ;^ 1,75c to apply on his account. BbOKKEEPING FOR MANUFACTURERS. 157 Received an invoice of iron and steel, to be be used irt the factory, fron the Union Iron Co. amounting to ^452.60, billed on account. Paid freight on this invoice ^52.25. Sent a bank draft to the Western Paint Co. for .$750, to apply on accdunt. Gave our check for this draft, and also for exchange 50 cents. David Horton has deducted commission on his entire balance of Apr. ist, and has sent us a bank draft for the remainder less the amount he remitted on the 5th inst. Received cash from Clement Brown to pay his note indorsed to us ;^400, and interest on same ^8. Paid for postage for office use ;^5. Sold to Howard Benton, Bentonville, 3 Phaetons, 2 Top Buggies, i Spring Wagon, at list prices less discounts of 20 and 5 per cent, receiving cash. Sent Myron Young, on sale at list prices, 3 Lumber Wagons, 3 Spring Wagons, i Road Cart. Sold to retail buyers at 5 per cent discount from list prices for cash, i Surrey, i Top Buggy, I Phceton, 3 Road Carts. Workmen's Report. — No. 3 six hours, No. 10 five hours. No. 13 four hours, No. 20 seven hours, No. 36 six hours. Nos. 5, 15 and 28 absent all day. Others have worked full time. TUE,SDAY, APRIL 9. Sent a bank draft to the Kent Lumber Co. for ;^ 1,000, to apply on account, giving a check to pay for the draft and for exchange $\. Gave our check for ^12,500, to pay for a lot and building adjoining the factory grounds, to be used for warehouse and salesroom for wagons and carriages. [Factory.] Paid for repairing machinery in factory $27.50. [If an investment is made adding to the permanent value of the machinery. Factory account should be debited; if merely to repair machinery. Expense should be debited.] C. E. French has deducted commission on his invoice of 4th inst., and has sent us cash for the balance less his remittance of the 5th inst. Sent C. E. French, on sale at list prices, 2 Phaetons, 2 Surreys, 2 Top Buggies, 5 Lumber Wagons, 4 Road Carts. Received an invoice of Leather and Trimmings, for use in the factory, from Fisk & Jones amounting to $452.25, billed on account, with a discount offer of 5 per cent if paid in 10 days. Paid for freight on last invoice $16.25. Benjamin Brown has deducted commission on his invoice of 5th inst., and has paid the balance, indorsing notes to us amounting to $450 and giving us cash for the remainder. Sent Benjamin Brown, on sale at list prices, 3 Lumber Wagons, 4 Road Carts, 2 Phaetons, I Top Buggy. Paid for 3 car loads coal for use in the factory $ 1 20. Sold John Terry, Trenton, 4 Surreys, 2 Phaitons, i Spring Wagon, 3 Road Carts, at list prices less discounts of 20 and 5 per cent, receiving cash. Received cash from Myron Young for his invoice of 3d inst., less his commission. Sent Emerson Gardner, on sale at list prices, 3 Spring Wagons, 4 Lumber Wagons, 2 Road Carts. Sold Morris & Neff, Madison, 2 Surreys, 3 Lumber Wagons, 4 Road Carts, at list prices less 20 per cent discount, billing on account. [If regular discount is deducted when goods are billed, the debit entry in the ledger should have "Mdse. net" in the explanation column, to indicate that it is not subject to a deduction for commission.] Sold to retail buyers, at 5 per cent discount from list prices for cash, 2 Phaetons, 2 Spring Wagons, I Surrey. Workmen's Report. — No. i five hours, No. 9 six hours. No. 15 seven hours, No. 24 four hours. No. 38. four hours. Nos. 12, 20 and 30 absent. Others have worked full time. 158 HlGHEk ACCOUNTING. WEDNE.SDAY, APRIL 10. Paid cash for insurincr factory, machinery and materials for ;$4O,O0O at i J/( per cent. Received cash of James Martin in payment of his notes in our hands %12^, and for interest on same ;^9.75. Henry Morgan has sent orders which we have filled and shipped to-day, as follows : Henry Dalton, Dixon, i Surrey, i Phaeton, 2 Road Carts, i Top Buggy, at list prices less 20 and 5 per cent discount, subject to our sight draft. We have drawn on Dalton at sight for the net amount of the bill, and have sent the draft to the Commercial Bank of Dixon for collection. [Make memorandum of the draft in the sales book, and debit Dalton until the draft is paid.] George Carter, Canton, 2 Surreys, 3 Lumber Wagons, 2 Spring Wagons, at list prices less 20 per cent on account. Fisk & Jones have drawn on us for ^264.25, to apply on account, and we have paid same including exchange 25 cents. George A. Truman has sent us cash for his invoice of 5th inst., less his commission on same. Paid for salaries of employes in the ofSce $120. [Expense.] Received an invoice of wagon material from the Kent Lumber Co., amounting to $2,216.25, billed on account. Paid for freight on last invoice $175.50. Sent to Thomas Kent, on sale at list prices, 3 Phaetons, 6 Lumber Wagons, 2 Spring Wagons, 6 Road Carts. Emerson Gardner has sent us cash to pay his invoice of 6th inst., less his commission on same. Sent a bank draft to the Union Iron Co. for $1,250. to appl\' on account. Gave our check to pay for the draft and for exchange $1. Sold to retail buyers for cash at list prices, i Surrey, i Top Buggy, 3 Road Carts. Workmen's Report. — No. 3 five hours. No. 14 six hours, No. 26 four hours. Nos. 6, 16, 24 and 36 absent. Others have worked full time. THURSDAY, APRIL 11. Aaron Trent has transferred i 5 sliarcs of his .stock to Oliver Jones. Received cash from Morris & Neff to apply on account $200. Sold them 3 Lumber Wagons, 2 Spring Wagons, at 20 per cent discount from list prices, billing on account. The Kent Lumber Co. have drawn on us for $5 16.25, to apply on account, and v^e have paid the draft and exchange on the same 50 cents. George O. Cushman has paid cash for his notes indorsed to us $390, and for interest on same $7.80. Henry Morgan has sent us a statement of his traveling expenses to date, amounting to $22.25, which we have credited, and we have sent him a check for $30 for expense money. Sent Henry A. Cushman, on sale at list prices, 2 Top Buggies, i Phaiton. 2 Spring Wagons. Received an invoice of paints and oils, for use in the factory, from the Western Paint Co., amounting to $315.15, billed on account, with a discount offer of 4 per cent if paid in 15 days. Paid freight on the last invoice $1 5.45. Received cash from Thomas Kent for his invoice of the 6th inst., less his commission on same. Sent David Horton, on sale at list prices, 4 Roac Carts, 3 Spring Wagons, 2 Phaetons. Paid teamsters for their services to date $29.25. [Expense.] Send a check to the Western Paint Co. for $25.55, to apply on account. Sold to retail buyers for cash at list prices, 2 Surreys, i Phaeton, 2 Spring Wagons. Gave Roger Sherman a check to balance his account; BOOKKEEPING FOR MANUFACTURERS. 159' Workmen's Report. — No. 21 five hours, No. 37 six hours, No. 38 four hours, No. 40 three hours. Nos. i, 10, 19 and 26 absent. Others have worked full time. FRIDAY. APRIL 12. Received a draft from the Commercial Bank of Dixon, to pay for our draft on Henry Dalton collected by them less their collection fee of ;^i. Sent a check to the Western Paint Co. to pay their invoice of the 6th inst., less the dis- count they offered. Received cash of C. I. Lane in payment of his note indorsed to us ;^385, and for interest on same $3.85. Settled in full with The Union Iron Co., receiving a discount of 5 per cent on the amount now due them, and giving them a check for the balance. Received cash from George Carter ;^2 50, to apply on account. Sent to Myron Young, on sale at list prices, 2 Spring Wagons, 3 Road Carts, i Surrey. Paid bookkeeper's salary to the 15th inst., ;^50. David Horton has settled for his invoice of the 8th inst., deducting his commission and sending us notes indorsed in our favor for ;^250 and cash for the balance. Paid for coal for use in the factory ;^50. Sold P. A. Bentley, Bluffton, 3 Top Buggies, 2 Surreys, 4 Lumber Wagons, at list prices less discounts 20 and 5 per cent, receiving cash. Henry A. Cushman has sent cash for his invoice of the 8th inst., less his commission on same. Workmen's Report. — No. 2 four hours, No. 7 six hours, No. 11 seven hours, No. 18 five hours, Nos. 29 six hours. No. 17, 22, 23 and 31 absent all day. Others have worked full time. SATUKDAY, APKIL 13. Received cash from Myron Young to pay his invoice of the 8th inst., le.ss his commission on same. Sent a, check to The Western Paint Co. to pay their invoice of the i ith inst., less the dis- count they offered. John Thomas has paid us cash for his note indorsed to us $2"/^, and for interest on the same ;^5.50. Gave a check for ^1,250 to pay for new machinery for use in the factory. Fiske & Jones have drawn on us for the amount of their invoice of the 5th inst., and we have given our check to pay for same including exchange 50 cents. E^merson Gardner has settled for his invoice of the 9th inst., deducting his commission and remitting notes indorsed to us for .^450, and cash for the balance. Sold to retail buyers for cash at list prices, 2 Lumber Wagons, 3 Road Carts, i Surrey. Paid for coal for the engine room ;^40. George A. Truman has paid cash for his invoice of the 8th inst., after deducting his com- mission. Henry Morgan has returned and reported the balance of his expenses for the week $1 5.75, and we have paid him in full of account to date after giving him credit for his wages for one week. Workmen's Report. — No. 8 four hours, No. 35 four hours, No. 7 five hours, No. 33 five hours, No. 4 six hours, No. 25 seven hours. No. 27 seven hours, No. 31 seven hours. Others have worked full time. Paid the workmen's wages for the week per time book. Roger Sherman has transferred 50 shares of his capital stock to Oliver Jones. 160 HIGHER ACCOUNTING. Prove the Journal, and post and prove the ledgers, in the same manner as directed on the 6th inst., recording the proofs of the general ledger and dealers' ledger in the trial balance book. The stock ledger should have an excess on the credit side equal to the amount of the capital stock. DECLARING A DIVIDE,ND AND CLOSING THE LEDGE.R. Preparatory to declaring a dividend, make a balance sheet, showing resources, liabilities, gains and losses, using the following inventories and estimates of ledger accounts: Factory and machinery ^55,000, insurance prepaid and unexpired ;^490, office books and stationery ;^20, due to officers for salaries $2^^, due to Electric Light Co. for lighting office and factory ^12.75, fuel on hand ^22.50, materials on hand and finished stock ready for sale ^7,562.40. All bills receivable are considered collectible. Accrued interest on bills receivable amounts to ^65.20. The accounts in the dealers' ledger are all considered good, but commissions must be estimated and deducted on all balances from dealers who hold goods on sale. The directors of the company, after examining the balance sheet, have declared a dividend of five per cent on the capital stock. [This transaction requires a journal entry, "Loss and Gain Dr., Dividend Cr."] The dividends have been paid to the stockholders. [As there are no other cash entries today, these payments may be entered in the journal, "Dividends Dr., Cash Cr.," followed by a list of the payments as an explanatory entry.] After posting the above journal entries, the inventories should be entered in the ledger and all accounts should be closed. Loss and Gain account should be closed, $4,000 being carried to the credit of Dividends and the balance of the gain to the credit of Reserve Profits. All resources and liabilities, including inventories, should be brought down in their respective accounts, after which a trial balance should be taken to show the ledger in balance after closing. BOOKKEEPING FOR COMMISSION MERCHANTS. i6i Set E^leven. COMMISSION AND FORWARDING. An agent is called a Commission Merchant when he has the merchandise consigned to him in his possession, and sells it in his own name. If he sells any of the merchandise on account, he assumes the responsibility of collecting the same. The compensation which he receives, which usually includes pay for his services and a small guaranty to insure him against loss on bad accounts, is called Commission. The property sent for sale is called a Consignment, the firm sending the property a Con- signor, the agent to whom sent a Consignee. The agent's statement of sales and expenses is called an Account Sales. The consignor's interest, or the amount left after deducting commission, expenses and other payments, is called the Net Proceeds. The commission is usually estimated upon the amount of the sale or purchase, being a per cent of the money value; but in some kinds of merchandise, especially grain and produce, the commission is a certain amount per pound, or bushel, etc , according to the standard used in estimating the article. THE. BOOKS USED. In making the records of the following transactions the student will require a general sales book, commission sales book, journal, cash book, and ledger. Provision has been made for omitting the bill book, as it would be kept in the same manner as in Set Seven. Bills Receivable and Payable debits and credits will be posted to the ledger from the journal, cash book, and sales book. A commission merchant generally finds it necessary to buy and sell some articles as his own merchandise, besides the goods consigned to him for sale, and it frequently happens that a single order from a customer will include articles from several different consignments, as well as other articles belonging to the merchant himself. These goods are all billed to the purchaser in one invoice as bought of the commission merchant, without reference to the real ownership. The items sold are listed in the general sales book as they are on the invoice, indeed, many dealers make out their invoices with copying ink, and take letter press copies, so that their sales book consists of facsimile copies of the invoices they have sent out. On the left margin of this book can be written the ownership of the different items in each sale, after which the sales of commission goods can be carried to the commission sales book as explained below. If a special column is kept for the amounts of merchandise sales, these can be forwarded from page to page, and the total for the month posted in one entry to the credit of Merchandise. The commission sales book contains a separate account with each consignment sent to the merchant for sale. It is kept in various forms, but the simplest, and the one most commonly used, consists of a double page of journal ruling, the left page being used for debits and the right for credits. When the (Consignment is first received, a title is written in the commission sales book, consisting of the number of the consignment (numbers from i upward being given to these consignments in the order of their arrival), the name and address of the consignor, together with the date when the consignment was received, and a memorandum of the items in the con- signment; but no amounts are extended to the money columns unless the consignment has caused us some item of expense. 162 HIGHER ACCOUNTING. All claims that we have against a consignment for money advanced, expenses paid or assumed by us, or charges made by us, are entered on the left page as debits. All proceeds arising from the sale of a consignment are entered on the right page as credits, no distinction being made between cash sales and time sales, as these do not affect the consignor, the com- mission merchant assuming all risks in case of time sales. The difference between the debits and credits is the consignor's net proceeds, and tho same is entered on the debit side of the consignment to balance the account. If the net proceeds are remitted to the consignor, a corresponding credit will appear in the cash book; if they are not remitted, the consignor should have credit on the ledger. Since there is a debit for every credit in a business transaction, it follows that every entry on the debit side of a consignment must have an equal amount credited either in cash or in some ledger account. Care should be exercised in making entries in the consignment account, to write in the first part of the explanation column the opposite title or titles affected by each entry. Since a consignment has debits. and credits, like a ledger account, it follows, that when a consignment account is not in balance, its total debits and credits, or the difference between them, should appear on our proof sheet. Consignments for sale on joint account, called Merchandise Companies, are entered in the commission sales book the same as consignments, except that the joint risk requires the commission merchant to estimate the profit or loss of each firm interested before finding the consignor's net proceeds. Sometimes it becomes necessary for the commission merchant to remit to the consignor, or to give him credit for his share of the invoice of a joint consignment before it is sold. In such case the amount allowed should be entered as a debit to the consignment in the com- mission sales book. It would be well to reserve the first .set of money columns on the debtor page of the com- mission sales book for the charges pertaining to each consignment, reserving the other set of columns for remittances, total charges, and net proceeds at closing. The entries on the debit side of the commission sales book are usually either debits from the cash book, or original entries consisting of charges. A check mark should be placed opposite the cash entries in the folio column, and the other entries should be postmarked with the folios of the ledger accounts to which the corresponding credits are carried. If the journal is kept as in Set Six, with a special column for merchandise debits, we can reduce the posting of merchandise debits and credits to one entry each in the ledger. In a compound transaction, such as the joint shipment to Dowles & Long, we should enter all items pertaining to the invoice in our general sales book, which will credit merchandise for the entire amount, and to make the merchandise account correct, we must debit it in the journal for both the freight and the drayage. The cash book may be kept by any of the methods already illustrated. If no other method is preferred, we would suggest the use of special cash and bank columns, the same as in Set Four. In recording the transactions, the student will enter cash receipts and payments at once in the cash book, all sales in the general sales book, charges on consignments in the com- mission sales book, and other debits and credits in the journal, being careful to give every title that requires debit or credit from the several books, and checking every entry that does not require posting to the ledger. All sales of commission goods are afterward carried to the commission sales book, and the same checked in the folio column of the general sales book. The work of posting from four different books, each of which contains some original entries, calls for very careful attention on the part of the accountant, and we recommend the same to the student as most excellent drill in the concentration of his mind upon his work. As the credit entries in the commission sales book have their corresponding debits posted to cash book or ledger from the general sales book, the student can make it a rule in this sys- tem to post no debits from the creditor page of the commission sales book. There may be an occasional loss entry required as a closing credit in a joint consignment, as in Mdse. Co. A, BOOKKEEPING FOR COMMISSION MERCHANTS. 163 which will be posted to the debit of Loss and Gain in the ledger direct from the commission sales book, such entries being made with red ink in the commission sales book, thus insuring their entry in the ledger. To insure uniformit)' in ledger results, the student should make it a rule to post the ledger at the close of each date, after all transactions are recorded for the day, posting from the journal, cash book, general sales book, and commission sales book in the order named. In the forms we illustrate a method of keeping a number of one line accounts under the title Sundry Accounts. This method is used by accountants when they have persons to debit or credit who are not likely to require regular accounts. A single line is given to each of these persons, and if he is to be credited, his name is written in the explanation column of the credit side, with the date and page of the book from which the account is posted. The Ime on the debit side is left vacant until such time as we wish to debit the same firm. If such a firm is to be debited first, his name will be written in the debit side, and the credit side will be left vacant until his account requires a credit. By looking over this sundry page, we can readily find the unsettled accounts. In the account illustrated, C. C. Smith has an unsettled credit, which the student will balance with a debit found in one of the closing transactions. Occasionally one of these transient accounts will not be closed by a single transaction, as in the case of R. M. Gaston. We have paid him in two installments, and we must enter two debits on the line. In such case we can enter the date of settlement in the date column, and extend the total of the installments in the amount column, thus showing the account in balance. TRANSACTIONS. DECE.MBE,R 10, 189 Began the commission and forwarding business with the following resources and liabilities: Resources. — Balance of account from James Lee ^64.01, cash on hand ^$45. 22, cash in bank ;^i. 852.47, bills receivable ^77.48, rent and other expense items prepaid ^123.25, merchan- dise on hand ;$3,i5i.20 Liabilities. — Balances of account favor H. Perkins ^4.08, favor Mead & Spencer $467.96, favor H. R.Baker $377.60, bills payable $575, due on bookkeeper's salary and advertising (expense items not yet paid) $26.75. [We will give the amount and maturity of all notes, as they are collected or paid, in order that the bill book may be omitted in this set.] Sold our entire stock of merchandise to H, Eastman for $3,275. Eastman has assigned to us in part payment the following accounts due him: Henry Martin $300, M. Edwards, $150, C. Brown $19, H. Horton $198, James Wiley $13.50. He has also given us a note for $16.50, signed by George Strand and indorsed by H. Eastman; cash $500; 250 cwt. flour @ $3; and we have charged the balance to his account. [As Martin, Edwards, Brown, Horton, and Wiley are not regular customers,- the student may carry these names to Sundry Accounts in the ledger, instead of giving each of them a separate title.] Received per B. C. Railway, from Barrett & Smith, Oxford, to sell on their account and risk, 500 bu. wheat. . . .Paid cash for freight on the wheat $40. Received per Com. Railway, from H. A. Morey, Collegeville, 40 tubs butter, 2,250 lbs., to sell oti his account and risk. . . , Paid cash for freight on the butter, $5.65 . . . .Advanced cash to H. A. Morey, to apply on his consignment, $200. Paid cash for postage and stationery for office use, $12.75. Received cash in full of C. Brown's account. Deposited cash in bank $250. Bought of H. S. Parton 3,000 lbs. wool ©25 cents, giving our check for the same. I I We were offered $3.10 per cwt. for the 250 cwt. flour which we bought of Eastman yes- terday, but thinking v;e could find a better market, we have this day shipped the entire amount to Raymond & Co., St. Louis, to sell on our account and risk. jDesirmg to know the gain on 1 64 HIGHER A ceo UNTING. this special shipment, the student may open an account with "Shipt. R. & Co.," debiting the same with the flour at ;^3.io per cwt., and also with all other expenses pertaining to the ship- ment.]. . . .Paid freight on the flour by check tj^. Received per Commercial Railway a consignment of Flour from Crescent Mills, Akron, to be sold on their account and ri'Sk, 600 sacks, with instructions to sell at not less than ;$i.5 5 per sack, . . .Paid cash for freight on flour ;^i8. Received cash in payment of Geo. Strand's note ;^ 16.50. Sent Mead & Spencer, a bank draft to apply on account, $350. . . .Gave check for the draft, and for exchange 75 c. Gave a check to pay our note favor Mead & Spencer, due this day, and left at our bank for collection, ;$200. Bought of R. M. Gaston 6,000 lbs. wool @ 25,^ cts., giving our check for ^500, balance on account. . . .[Post Gaston's credit in Sundry Accounts.] Bought of Howard & Parks, 2,000 lbs. wool C«^ 25 cts., giving them our check for $400, and our order on H. Eastman for the balance. Received from J. Lane, Union City, per Commercial Railway, to be sold on his account and risk, 1,000 doz. Eggs, 50 boxes cheese. . . .Paid freight by check ^17.50. Bought of C. C. Smith, on account, 50 bbls. cranberries @ ;^5.50. . . .Gave our check for freight on the cranberries, ^25. [Post Smith in Sundry Accounts.] Received from P. R. Sanford, Creston, per Air LineR. R., freight prepaid, to sell on his account and risk, 900 bu. shelled corn, invoiced at 33 cents. Shipped to Dowles & Long, Chicago, to be sold on their and our joint account, each ^, 11,000 lbs. wool, invoiced at 26c. We also included in the invoice freight $30, which we have prepaid by check, and drayage, which we have credited to Drayage account, 1^2.50. [Debit Shipment Co. i with our y^, and Dowles & Long with their )^.] Drew on Dowles & Long at 3 days' sight draft for the amount of their ^ invoice of wool shipped them this day. (This does not become a transaction until they pay or accept the draft, or we dispose of it to a third party; hence we need no record except a memorandum for reference in the journal.) Sold Union Mills for cash 300 bu. wheat (B. & S.'s const.) @ 95c., 200 bu. corn (P. R. S. const.) @ 42c Sold A. M. Preston 25 tubs butter (H. A. M.'s const.) 1,400 lbs. @ iS}4c., 5 boxes cheese (Lane's const.) 205 lbs. @ I2^c,, 2 bbls. cranberries (Mdse.) @ ;^8; receiving cash $17 S> ^"d his note at one day for the balance. Deposited cash in bank. ;^500. 12 Sold Lee & Somers, for cash, 200 bu. wheat (B. & S.'s const.) (a) 96c Sold R. E. Wilson, on account, 150 sks. flour (Cres. M.'s const.) @ $1.60; 100 doz. eggs (Lane's const.) @ i8c. Sold C. E. Rogers, for cash, 5 tubs butter (H. A. M.'s const.) 260 lbs. (ni 19c.; 5 bbls. cran- berries (Mdse.) @ $S; 150 doz. eggs (Lane's const.) @ iS^^c. Dowles & Long have returned our draft on them accepted, the acceptance being for ;^ 1, 446.2 5, and dated iith inst. Accepted H. R. Baker's draft on us at 3 days, payable at College Bank, for $2QO, to apply on account. Received cash of H. Eastman to apply on his account, ^800. Paid cash for i month's rent of warehouse for storing merchandise and produce, $75. [Debit this outlay to Storage, as a part of the outlay for rent will be received back from the consignors in our charges for storing their property, which will be credited to Storage.] Paid cash for gas bill ^3.75. Closed Barrett & Smith's consignment, sending them an account sales. Charged them for commission ;^5, drayage ^2.50, storage ;^i.25. Remitted net proceeds per certified check. Received per B. C. Railway from Howard Thompson, Jacksonville, to be sold on his account and risk, 200 bbls. apples Paid cash for freight on the apples $50. Received cash of Henry Martin on account ^300, of H. Horton 1^198, and James Wiley ;^i3-5o. BOKKEEPING FOB COMMISSION MEBCHANTS. 165 Gave a check to pay our note favor of C. Curtis, due this day, ^350. Bought of A. E. Thomas 7,000 lbs. butter @ iq^c, giving him our check for ;^500, an order on M. Edwards for $150, and our note at 5 days for the balance. Bought of John Newton for cash 2,000 lbs. butter @ 19c. Deposited cash in bank ^$1,100. . . .Cash on hand amounts to ;^i 10.22. . . .Balance of cash in bank is $T^.^'J. The student may prove and balance his cash book. 13 Bought of James Lee, of Vinton, on account, 1,000 lbs. butter @ 20c. Bought of Geo. Norton, on account, 200 boxes cheese, 10,800 lbs. @ \o]A,c. . . .Paid cash for freight on cheese ^36. Paid College Insurance Co. cash for premium for insuring any merchandise that may be in our possession in our warehouse, to the amount of ;?$3,ooo at lyi percent. [Debit Insurance, as part of this outlay will be received. back in our charges for insurance.} Sold R. E. Wilson, on account, 400 doz. eggs (J. L.'s const.)(6/; 19c., 10 boxes cheese (J. L.'s const.) 412 lbs. @ I2j4c., 10 tubs butter (H. A. M.'s const.) 590 lbs. @ i83/(c Sold H. Perkins 100 bbls. apples (H. T.'s const.) @ ;^2.6o, 15 bbls. cranberries (Mdse.) @ $7.90, 20 boxes cheese (J. L.'s const.) 840 lbs. (?/) I2)_(c.; receiving cash ^lOO, balance on account, . . . Sold C. A. Carter, for cash, 15 boxes cheese (J. L.'s const.) 620 lbs. (a] 12c., 5 bbls. cranberries (Mdse.) @ ^8. Shipped 10,000 lbs. butter to Raymond & Co., St. Louis, to sell on their and our joint account and risk, each }4, invoiced ^ 2ic. [Debit Shipt. Co. 2 with our )4 , and Raymond & Co. with their ^ of this invoice.] Received per B, C. Railway from A. Leonard & Co., Goldfield, 1,000 bu. potatoes, invoiced at 25c., v/hich we have arranged to sell on joint account and risk, they ^ and we }4 - ■ ■ -Gave our check for freight on the potatoes ;^50. Raymond & Co. have sent us a bank draft for ^500, as part proceeds of the flour shipped to them for sale on the i ith inst. Closed H. A. Morey's consignment, sending him an account sales, and charging him for storage ;^i.50, drayage $1, commission ;^i 1.25, and placing net proceeds to his credit. Drew on Raymond & Co. for ^1,000 to apply on their }4 invoice of the joint shipment of butter made today. Sold the draft for cash ^994, discounting the balance. Deposited cash in bank ;^ 1,600. 15 Received advice from Dowles & Long, of the sale of wool shipped them i ith inst.; our ^ net proceeds being ;^ 1,720, of which they sent us cash ;^ 1,420, leaving the balance to our credit. Sold H. R. Baker, Blairstown, on account, 20 boxes cheese (Mdse.) 1,080 lbs. @ 13c., 10 bbls. cranberries (Mdse.) (6/) ^8.10, 50 bbls. apples (H. T.'s const.) @ $2.65 ... .Sold James Murray for cash, 30 boxes cheese (Mdse.) 1,620 lbs. @ I2}^c., 200 sacks flour (Cres. M.'s. const.) @ ;^i.5 5, 300 bu. corn (P. R. S.'s const.) @ 42c. . . .Sold Charles Carey 400 bu. potatoes (Mdse. Co. A.) ^ 33c., 7 bbls. cranberries (Mdse.) @ ^^8.05, receiving cash ;^50, and his note at 10 days for the balance. Accepted draft at 3 days drawn on us by the Crescent Mills, in favor of M. A. Parsons, for ^400 to apply on their consignment. Sent A. Leonard & Co. a draft in payment of our ^ invoice of potatoes, $\2^. . . .Gave check for the draft, and for exchange on the draft 25c. i66 HIGHER ACCOUNTING. LEFT FOLIO OF THE COnniSSION SALES BOOK. No. 2 H. A. MO REV. 189- Dec. 10 13 Per Commercial Railway. 40 tubs Butter, 2250 lbs., not invoiced 5 I I II C5 25 2CO IQQ 419 Cash— Paid Freight Cash — Advanced on proceeds Storage Drayage Commission H. A. Morey — Net proceeds on account 40 (>3 03 No. y. 189- Dec. MDSE. CO. A.— A. LEONARD &- CO. Leonard & Co. Yi, and ourselves Yz. Per Business College Railway. 1000 bu. P otatoes, invoiced .25. Cash — Paid Freight Cash — Paid our %. of invoice Storage Drayage Commission Cash— Check for Net Proceeds $250 50 125 15 5 2S 95 120 50 340_ 50 THE GENERAL SALES BOOK. Dec. 10, 189- Whose Consign- ment. B. & S. P. R. S. H. A. M. J. L. Folio, c. c. 19 Sold H. Eastman all merchandise on hand — See Tournal. II i_ Sent Raymond & Co., St. Louis, to sell on our acct. and risk, 250 cwt. Flour, invoiced ^ $-> 10 Acct. Shipt. R. & Co. Shipped to Dowles & Long, Chicago, to sell on their and our joint account, each Yi, 11,000 lbs. Wool, invoiced @ .26 Freight on same Drayage " Shipment Co. i $1446.25 Dowles & Long 1446.25; Sold Union Mills. City. 300 bu. Wheat 200 " Corn Received Cash Sold A. M. Preston, City, 25 tubs Butter, 1400 lbs. 5 boxes Cheese, 205 " 2 bbls. Cranberries Received Cash Note I day for bal. i8>^ 8.00 $175-00 125.63 Consign- I'.l'.MU. 285 84 259 25 653 Merchan- dise, 3275 775 63 63 16 Totals 3275 775 2860 30 2 50 2892 50 369 300 6958 50 !i 7612 63 13 BOOKKEEPING FOR COMMISSION MERCHANTS. 167 RIGHT FOLIO OF THE COHHISSION SALES BOOK. COLLEGE VILLE, ( 1 'our State.) i8q- Uec. 11 12 13 25 tubs Butter, 1400 lbs., 5 " " 260 " 10 " " 590 " •19 .18^ 1 259 '49 IIO 10 '^3 419 <33 189- Dec. GOLDEIELD, {Your State. 400 bu. Potatoes, 350 " 250 " Loss and Gain — Our ',< Net Loss •33 •34 •34 TWO ACCOUNTS FROM THE GENERAL LEDGER. SUNDRY ACCOUNTS. "3^ lU) 8S 4 340 50 50 iSq- Dec. 10 10 10 10 10 Dec. 17 Henry Martin, J. M. E. Edwards, J. C, Brown, J. H. Horton, J. James Wiley, |. C}iS530. CH§Soo i8q-- 300 Dec. 12 150 12 . ^9 10 198 12 13 50 12 7 1030 II II Cash Journal Cash Cash Cash R, M. Gaston, J. C. C. Smith, J. 6 300 4 150 6 19 6 198 8 13 I 1030 4 275 50 STORA GE. l8q- i8g- Dec. 12 Rent of Warehouse, C 5 75 Uec. 10 Const. N 0. I 2 I 25 18 Loss and Gain ■ 30 25 25 13 16 16 17 17 18 Journal * ' 3 ' 4 ' 5 ' 6 ' 7 • 8 2 2 4 4 4 6 6 8 I 6 2 4 12 15 1 55 50 25 75 50 75 25 100 * 25 100 25 ^ 1 68 HIGHER ACCOUNTING. Cashed Moray's sight draft on us to apply on his account, $50. Paid for advertising to date $17,50. [Debit Expense.] Paid drayage bill to date ^12.75. [Debit Drayage.J Received Raymond & Co.'s account sales of the flour shipped to them on the nth inst. Our entire net proceeds were ^990, of which they remitted ;$500 on the 13th inst., leaving the balance to our credit. Gave R. M. Gaston our check to apply on his account, $530. Deposited cash in bank ;^2,ioo. Cash on hand this evening amounts to $69.92, and in bank, $3,070.72. [Make a proof sheet before advancing further, using the cash balance, bank balance, and the unbalanced consignments and ledger accounts.] 16 Sold R. A. Martin on his note at 3 days, 1 50 sacks flour (Cres M.'s const.) @, $1.60, 400 bu. corn (P. R. S.'s const.) @ 42^c. . . .Sold H. Perkins, on account, 100 sacks flour (Cres. M.'s const.) @ $1.55; 25 boxes cheese (Mdse.) 1,350 lbs. @ 13c Sold Meade & Spencer, on account, 50 bbls. apples (H. T.'s const.) @ $2.70; 7 bbls. cranberries (Mdse.) @ $8.20. Received cash for the proceeds of Dowles & Long's acceptance, $1,444, the bank charg- ing $2.25 for collecting the same. Paid Howard Thompson's draft on us for $150 by check, to apply on the proceeds of his consignment. Received cash in payment of A. M. Preston's note, given i ith inst., $125.63. Closed Crescent Mills' consignment, and rendered an account sales, charging them for storage $6.25, drayage $3.25, insurance one-tenth per cent of entire amount of sales, commis- sion 2 cents per sack; sending their net proceeds by check. Paid cash for bookkeeper's salary to date $25. Paid cash for stationery $5.75. Received per Commercial Railway from Fowler & Co.. Muscatine, 200 baskets grapes, to be sold on their and our joint account, theirs ^ and ours 3^, invoiced 2,500 lbs. @ 6c. . . .Gave check for their sight draft on us for our V-x^ invoice, $50. . . .Paid cash for express charges on the grapes, $12.50. [Enter as Mdse. Co. B.] Closed J. Lane's consignment and rendered an account sales; 350 doz. eggs were unsal- able. Charged him for storage $2.75, drayage $[.25, insurance 63c., commission $18.80; send- ing him our check for net proceeds. Drew on Raymond & Co. at sight for the balance due us on the proceeds of flour, and sold the draft for cash $480. Received cash of H. Eastman to apply on account $100. Deposited cash in bank $2,000. 17 Sold H. R. Baker, on account, 50 boxes cheese (Mdse.) 2,700 lbs. @ I2j4c-'y 20 baskets grapes (Mdse. Co. B.) 250 lbs. ^) ioc....Sold James Turner, for cash, 350 bu. potatoes (Mdse Co. A.) @ 34c.; 50 baskets grapes (Mdse. Co. B.) 625 lbs. @ 9c. .. .Sold James Lee, of Vinton) 25 boxes cheese (Mdse.) i,350*lbs. @ 13c; 5 bbls. cranberries (Mdse.) @ $7.90; 80 baskets grapes (Mdse. Co. B.) 1,000 lbs. @ 8j^c.; receiving cash $150, balance on account. Closed H. Thompson's consignment, sending him an account sales. Charged for storage $12.75, drayage $3.75, insurance )^ per cent of entire sales, commission 7^c. per bbl....Sent him our check for his proceeds. Received advice from Raymond & Co., of the sale of our shipment of butter, our share of the net proceeds being placed to our credit, $1,125. Received cash of Dowles & Long on account $200. Gave R. M. Gaston our check for balance of his account, $500, Deposited cash in bank, $650. Closed P. R. Sanford's consignment, sending him an account sales. Charged for storage $4.50, insurance 95c., commission 3c. per bu., and sent him our check for his net proceeds. BOOKKEEPING FOR COMMISSION MERCHANTS. 169 Sold A. C. Sprague & Co., for cash, i bbl. cranberries (Mdse.) @ ;^8.io; 250 bu. potatoes (Mdse. Co. A) @ 34c. . . .Sold J. A. Long, for cash, 50 baskets grapes (Mdse. Co. B) 625 lbs. @ 4c.; 50 boxes cheese (Mdse.) 2,700 lbs. @ I2^c. H. Eastman has agreed to allow us ;^50 for the unexpired rent on the store room, which he has occupied since he bought our stock of merchandise, and also ;$37.50 for unexpired insurance on the merchandise, the policy having been transferred to him at the time of the sale. [Debit Eastman.] Closed Mdse. Co. A, sending an account sales. Charged for storage ^15. drayage ;^5, com- mission 2^c. per bu., sending our check for the consignor's net proceeds after recording our share of the loss or gain. Settled in full with Geo. Norton, receiving a discount of ^35.56, and giving him a siyht draft on H. Perkins for the amount due us from Perkins, and our check for the balance. The drafts we drew on Raymond & Co., 13th and i6th inst., have each been returned protested for non-payment, and we have given our check to pay the amount of the face of these drafts and protest charges, ;^2.2 5 on each. Telegraphing to learn the cause of these protests we received a return message stating that Raymond & Co. had closed insolvent, and that pre- ferred creditors had claims for the amount of all available resources. The two drafts are now worthless and should be debited accordingly. . . .Paid cash for the message and reply i^i-SO. Closed Mdse. Co. B, sending an account sales. Charged for labor of clerks sorting grapes ^3-75) commission 2)^ per cent of the sales, storage $\.2^, and sent them our check for their net proceeds after entering our share of the loss or gain. Received cash from James Lee to balance his account. Drew out cash for personal expenses ;^37.3i. Deposited in bank all cash on hand. Gave C. C. Smith our sight draft on Dowles & Long for ^100, and our check for ;^ 1.7 5, to close his account. H. A. Morey has drawn on us for ^149.63, and we have given our check to pay the d-aft, and exchange on same 25 cents. We have paid our notes payable outstanding, giving a check for each, as follows : H. Per- kins $2^, H. R. Baker ^200, A. E. Thomas ;^7I5, M. A. Parsons ;^400. Bought of R. V. Warden 15 acres of land near the city limits for ;^2,700, paying for the same by transferring to him our business, estimating the reputation and good will at ^250, unexpired rent ^55, unexpired insurance ;^27.50, books and stationery ^13.25, office furniture ^25.75, balance of notes receivable due us ^625.83, all personal accounts due us at their face value, and our check for the remainder of the consideration. The proprietor withdraws the balance of cash and the real estate from the business, esti- mating the latter at the same as he paid for it. The student may close the ledger, estimating Raymond & Co.'s account as worthless. I70 HIGHER ACCOUNTING. Set Twelve. KEEPING ABSTRACTS OF TITLE. Keeping records of real estate transfers is a subject that properly claims more space than we can give in this short chapter, and we have been induced to illustrate it very briefly, not for the benefit of those who are familiar with the subject, but rather as a matter of general information to the young accountant, who, we trust, will be stimulated to further research and examination of the system of abstracting used in his own county. .When any piece of real estate is transferred by deed or mortgage, or when any lien is filed upon such property, the instrument of transfer or lien is copied in the recorder's book at the county seat, and a memorandum is sent by the recorder to each office in the same county where abstracts of title are kept, naming the date of the paper recorded, the names of the parties interested, and the descrip- tion of the property. If a mortgage or lien is afterward satisfied and canceled, such fact is also re- corded, and the same reported to the abstract offices; so that anyone desiring can get a complete history of the ownership and title of any real estate, either land or town lot, by consulting the ab- stract books- of the county in which the property is located. Since 1802 the United States surveyors have surveyed land into tracts six miles square, called Government Townships. Each township is subdivided into tracts one mile square, called Sections. Each section is subdivided into tracts one-half mile square, called Quarter Sections For convenience in abstracting, these quarter sections are subdivided into quarter-quarters of forty acres each. These and the quarter sections are described by the points of the compass, as the N. E. quarter of the N. E- quarter of a certain section. The thirty-six sections in each township are designated by the numbers from 1 to 36. A base line, or starting point, has been chosen for each general survey of land, and townships in a tier north or south of this line are nunbered 1, 2, 3, 4, etc. Each tier of townships is called a Range and these langes are numbered 1, 2, 3, 4, etc., East or West of Nferidians of Longitude established by the surveyors and designated as Principal Meridians. Thus, the 40 acres of land given in our ab- stract of title register, is the northeast quarter of the northeast quarter of Section 1, Township 83 North, in Range 7 west of a Principal Meridian; and these principal meridians are numbered 1, 2, 3, 4, 5, and 6, for the states between the western boundary of Ohio and the western boundary of Dakota and Nebraska. There are in all twenty-three principal meridians in the United States, the others be- ing named from some geographical point with which they are connected. Towns are usually surveyed into blocks with streets intervening, and the blocks are subdivided into lots usually 60 feet wide, ten in a block. Each block is numbered, and each lot in the block is also numbered. As single store rooms usually have a frontage of 20 feet, they are designated by suc- cessive numbers on each street without regard to any particular lot or block. If a town grow beyond the original survey of lots, additions are surveyed into blocks and lots in the same manner, and these are designated by the names of the additions to which they belong. Page 171 represents 40 blocks of an ideal town. College City, illustrating the block numbers, lot num- bers, and street numbers. The daily register of transfers on pages 180 and 181, represents the record of transfers like a day book in the order of their occurence without being classified. The abstract register above illustrates one method of grouping all the records pertaining to a particular piece of property, large books being used and prepared so as to contain a special place for every forty- acre tract of land and every town lot in the county. From this abstract register a complete history of all transfers pertaining to a given piece of property (called an Abstract of Title) can be copied in a very short time. The index to transfers, given at the bottom of these pages, illustrates a more condensed method of grouping the transfers pertaining to a given piece of property. This consists of two horizontal lines assigned to each piece of property, these lines being subdivided into small spaces. In the upper line is entered merely the page of the daily register in which a transfer is recorded pertaining to the given property, and on the line below is entered the number of the line in which this record may be found in the register. In writing an abstract of title from the index book, we would be cornpelled to trace up each transfer from index to daily register, and make our abstract from these entries. The index system requires less time and space in classifying or grouping the transfers than the abstract register; but the latter requires much less time for drawing off an abstract of title. KEEPING ABSTRACTS OF TITLE. 171 m^ m^ fe ¥0 ■m ^M ■in 331 M L W 3JA O- ^ ^1 ti^ -^"i^. ^ 2J1 ^ ^\x-s\ ^\v^ 10 5 ^ S. K 10 5 Lot 3 • Lot 4 • Lot 5 10 10 1 2 KBEPiNG ABSTRACTS OF TITLE. 173 TITLE REGISTER. ESTATE TRANSFERS. Where Recorded. Town. Description. Folio. Book I2Q Page 37 College City Lot 5, Block 26, Central Park Addition 52 " 129 " 38 College City Lot 5, Block 26, Central Park Addition 52 " 129 " 39 College City N K & C K of Lot I, Block 26, C. P. Addition 52 " 129 " 41 College City N >^ of Lot I, Block 26. C. P. Addition 52 " 129 " 50 College City All of Lot 2, Block 26, C. P. Addition 52 " 129 " 55 College City N >^ of Lot 2, Block 26, C. P. Addition. 52 Township 83 North Range 7 West LAND INDEX TO REGISTER OF TRANSFERS. N.E.X I 120 I « I 1) S. E. % C/0 -^ s.w. X W 55 N. W. X N. E. % „• ^ a>c. }Mi^J>.,'uU (?'^-'^-^^^ yvxoAj. hoU 'ho-a. 4}.yh aJXnAy ,\^-Ctv-tJUf_ II /I- COT^I^BCTION (^< <«_*<_t,-A^ iiZ-ttt^V.^^ (/^0_»^ »..*-C«^ c?. 6i^-^>: / <£^.-^ >?f vT v3 / 7 (R.H Ljcc "^ ytC* £€S««.«^wo' /^— i^. >7. /3. UJaXX^U.,-,^ ^~j3*^.j^ ■^cOjU^ CASH •..,-G> 0^0^ ^3-v~e oC2*-c£*-4^ it£o..-v....«>c* ^Lo. UJ-kjui^i-uj^ oSLut-c^M^/n/- ^«^c^ 4^ 6x'H--C.N^ ^, /g-f- i^ii c«.^Ji^ ?>; a>\^ vj , / ^/— (7 ' ■ ■ 7-r J-f J2.fe^ 4o //7 7-5 ■i? I If f¥- j.zr 3J- IH-Ts- i I S' >/o. >r/. fa s 7a Y<.tv I. c?^. oiU4-U^ 6 oo i-S-lf 3(cfo Cv^»6U- ■i-1-iy 7° ^7 7^ 7«/^7 x3~8'<'7 ^7 PRACTICAL BANKING. 189 I^BDGBR. H; o.y 4 / g-y Ht,o^>-/; y, / j-f C^A..«-^T »j^. j-, / iy — J-^i^, Cl^,^ .i^ tt-a^Jii^ "^IJi&Z" }. e. ?7, V. ^J7^^- <£:^c£,-tJcJ jc,^_ Q.:,..^'G. RBMlTTANCE RBGISTBR. Remitted to t2io Central Bank for Credit. ^S-iJ^ iu-w^ c^.U^ '^ o&^^ ek OL-C^ . / rf- f2f -fa /^'-a?- ?7. ;?. >?. 4'. >J^. 9^1 ^. ?■ (, /o o DRAFr REGISTER. Oratts Drawn on tb.e Central Bank. ^-ta.»»vv. . . ??o ^o Of^-..-,..^ ,i--^ X, O'S&^.r^.^ (Pci^.M. die J-^-Ciji. ^. €k^ V ^ X^ '^X» 3,00 J (,x y 7^ 3? CERrtlElCATES OF DEPOSIT. oS~ajC^Safi>, ^f^, (J, 159 — ]S[o. 39 f^ay to tl)^ opdep of ^ij^a- ^^^i-^i^m | ^z,^ j^PH^u^, ^^^, q, 15^ IvTc. ^^ ^ay to tlj^ opdep of /i^^^ S^^^i^t^^ 25 100 dollars, Tiimf-i^ Tflf "Ut^Jcm^ BANK DRAFTS. Banks assist business firms in sending and receiving remittances of money, by issuing bank drafts and by cashing drafts drawn by other banks. Every bank selects a banking correspondent in some commercial center, sending a sum of money or an amount in drafts drawn by other banks, for credit on deposit at the banking center. The bank then sells drafts on this banking center to firms who want to remit money, charging a slight advance above- the face of the draft for ex- change. Regular depositors who have a large balance on deposit in the bank are not always required to pay exchange. The firm purchasing the draft can have it made payable to the firm who is to receive it, or they can have it made payable to their own order and indorse it to the firm who is to receive it. If A. Learner wanted two drafts, one payable to the firm who is to receive it, and the other payable to his own order, which he could indorse to the firm who is to receive it, he would fill out a request for drafts except the amount of exchange and the total, which would be inserted by the banker when the drafts were filled out. [Drafts Wanted.] Chicago, Jan, g, 189 7 Wanted by A. Learner Drafts on I^e-w York TO THE ORDER OP AnOUNTS. 1 Brown and Bentley 100 200 A. Learner Exchange, Total, 50 300 50 200 HIGHER ACCOUNTING. The first of these drafts would be filled out by the cashier of the bank, as follows : First National Collegfe Bank f^ay to ti;c opder of B^t^pu^p # Bf^Uf^f % foo, dollars, Ufp^ Wi-^di^t-d TO THE CENTRAL NATIONAL BANK, NBW YORK. Cashier. DISCOUNTS. If a depositor takes notes or drafts to the bank for discount, he should fill out a discount ticket, giving a list of the papers left for discount, the face of each, the interest to maturity, and the amount of each, the total of the amounts, the discount and proceeds. The teller can then verify these amounts, and pay the proceeds or give credit for the same on deposit. If A. Learner discounted a note bearing interest, signed by C. A. Martin, and a araft drawn on R. E. Parker, he would fill out a discount ticket, as follows: Chicago, Jan. 16, '897 Notes and Drafts Left for Discount. By A. Learner Note or Draft MAKER OR DRAWEE. Face. Int. to Maturity. AMOUNT. Note C. A. Martin 200 I 75 201 75 Draft R. E. Parker 150 150 -- -- Total, 351 75 Discount, - - - - 5 25 Proceeds, = - - - - 346 50 PRACTICAL BANKING. 20 1 COLLECTIONS. If a firm leaves a number of notes and drafts at bank for collection, he should have a mem- orandum receipt from the teller of the bank. Business men do not always require such re- ceipts, but the more careful firms have such receipts filled out ready for the teller's signature when the papers are left at bank for collection. In business practice, if the student has only a few papers to leave for collection, he can list them in the last two pages of his pass book, and the teller can check these entries when the papers are left at bank and sign for them in the pass book, merely writing his name as teller and the number of papers he is receipting for. In the office training course the number of collections will be greater than in business practice, and the receipt form should then be used. If A. Learner left three collections at bank he would list them in the last folio of his pass book, giving the date left, the payer's name, and the amount of each collection. The teller would sign for the number left, on the next Ijne below the last collection, so that other collec- tions could be listed below his signature at a later date. (Receipt for Collections in the Pass Book.) This Bank in receivine collections, acts only as your agent, and does not assume any responsibility beyond due diligence on its part, the same as on its own paper. COLLECTIONS. 1897 Jan. 15 H. C. Manning 150 E. H. Drummond 50 50 M. B. PatterFon 75 25 (3) E. C. Watson, Teller. (Memorandum Receipt for Collections.) Chicago, Jan. jj, 1897 Received of Williams & Co. the following paper for collection: DATE OF PAPER. NO. Note or Draft. PAYER. 1 WHERE PAYABLE. AMOUNT. 1897 Jan. 9 I Note E. A. Horton Salina, Kans. 150 80 — 2 Draft C. M. Pembroke St. Paul, Minn. R. A. Martin i Creston, Iowa. 256 35 3 i Note 119 29 . First National ColJege Bank, E. C. Watson , Tell«r. BANK CORRESPONDENCE. Correspondence between banks usually relates to remittances or collections. Each bank selects one or more banks in commercial centers as its regular correspondents, and all bank drafts or checks drawn on banks in the same city, or in cities near the corresoondent, are sent there for collection and credit. The following represents a remittance from the First National College Bank of Chicago to its New York correspondent. 202 HIGHER ACCOUNTIJVG. [Remittance Sheet.] First National College Bank. Cashier Central National Bank Chicago, Jan. g, 1897 Nezu York Dear Sir: Epelosed pleaje fipd tl?e folIou;lp($ paper for eoll^etiop apd (;redit: NO. DRAWEE. AMOUNT. 2426 4th Nat. Bk., New York 1000 ! 1652 Mer. Nat. Bk., Boston 850 992 Traders' Nat. Bk. . New York 1200 3050 The following represents the indorsement on the back of each draft in above remittance: Papers sent to other banks for collection should be endorsed as follows : PRACTICAL BANKING. 203 If the First National College Bank sends notes, drafts, or checks to another bank for collec- tion, directing them to remit the proceeds as soon as collected, the cashier would use the follow- ing form: BANK. Chicago, Jan. 16, 1 897 THE ^^^^^ National College Cashier Com. Bank of Tfenion, Trenton, Mo. Dear Sir: We enclose for collection and returns, items listed below: OUR NO. KIND OF PAPER. IF PROTRST MARK X. PAYER. AMOUNT. 91 Note G. C. Harmon 127 50 93 Draft E. A. Carter 125 95 Note 0. E. Swinton 92 25 Please give the above your prompt attention, and oblige Yours truly, Charles Sumner, Cashier. If the Commercial Bank of Trenton collected the two notes, and remitted for proceeds, returning the draft unpaid, they would send the following report of collection: THE Commercial BANK. Trenton, Mo., Jan. 20, 1897 Cashier First Nat. Col. Bank, Chicago DEAR SIR: Het e^vith please find draft Mo , 2gj. On New York Am''t $2ig.2j ,, returns for collections: Yoiir No gi $12^.^0 Your No 95 _ S g2 2^ Your No $ Your No. S Total $2ig.'j^ Exchange, $ jo. $ 2ig 2^ We return herezvith unfaid, with reasons for non-fayment if any endorsed, col- lections your No. gj, . . ..Refused fayment, Yours truly, G. A. NEVINS, Cashier. 204 HIGHER ACCOUNTING. If the First National College Bank had sent above papers for "collection and credit," instead of "collection and returns," the Commercial Bank would have sent the following reply, instead of the one last given. "J" HE. Commercial BANK Trenton, Mo., Jan. 20, iSgy Cashier, First Nat. Col. Bank, Chicago. DEAR SIR: We have this day placed to your credit $2ig.25 proceeds of collections: \our No . . . .gi $12^.^0 Your No . . . .gs $ g2.25 Yom No $ ^ Total, - . - f2ig.y^ Exchange, $ jo $2ig.25 REMARKS: We let urn your collection A^o. gj, payment refused. Youis tiuly, G. A. NEVINS, Cashier. NOTICE OF NOTE DUE. When a bank has a note for collection, the cashier should send a notice of the same to the maker of the note, a day or two before its maturity. The following form is commonly used : Commercial Hanli, Indianola, la., Jan. ig, J 897 Mr. P. fi. fienlley, City. T>ear Sir: I Hold your note for $I^fS and interest $3-75 Bated_I^^ejj,J^^^^ Due J^^,:J,^^J^91 Payable to !f.^^.^!!^...^...!^!^.:.:...^.^.^£".€'^.:. C. p. Crandall, Cashier. PRACTICAL BANKING. 205 PROTESTS. If a note having one or more indorsers is in the hands of a bank as owner or collection agent, and the same is not paid when due, it is customary for the bank to have the note protested for non-payment. A protest is a formal declaration by a notary public, referring to the note attached or giving a copy of the same, and stating that payment had been demanded and refused, giving the reason for the refusal, if any, and stating the object of the protest. The notary also sends a notice of non-payment to each indorser, whose name is on the protested paper. Henry Thompson, of Cedar Rapids, Iowa, gave a note for one hundred dollars, dated Sept. 30, 1896, and due Feb. i, 1897, payable at his office in Cedar Rapids. The note was made payable to J. T. Johnson, of Big Rapids, Mich., who indorsed it to Charles Graham, of Minne- apolis, Minn. Graham indorsed the note to the College National Bank, of Minneapolis, who sent it to the Cedar Rapids Bank for collection. The note was not paid when due. In such a case, the following protest would be drawn by a notary public in Cedar Rapids: CERTIFICATE OF PROTEST. STf\TB O^--i0WA ) r SS. LINN COUNTY. ) BE IT KNOWN, That on this First day of February ..in the year of our Lord, one Thousand Eight Hundred and Ninety seven. I, Thomas Grant, a Notary Public, duly commissioned and sworn, and residing in Cedar Rapids, in said County and State, at the request of The Business College Bank of Cedar Rafids, went with the original note which is attached, to the Office of Henry Thompson and demanded payment thereon, which was refused , Whereupon, I, the said Notary, at the request aforesaid, did PROTEST, and by these Presents do Solemnly Protest, as well against the maker of the said note the indorsers thereof, as all others whom it may or doth concern, for exchange, re exchange, and all costs, charges, damages, and interest already incurred by reason of the non- payment of the said note , And I, the said Notary, do hereby certify that on the same day and year above written, due notice of the fore- going Protest was put in the Postoffice at Cedar Rapids, lovja, as follows: Notice for /. T. Johnson, Big Rapids, Mich Notice for .Charles Graham, Minneapolis, Minn Notice for College National Bank, Minneapolis, Minn Each of the above, named places being the reputed place of residence of the person to whom this notice was directed. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my Official Seal, the day and year first above written . Thomas Grant, Notary Public. FEES— Noting for Protest.. 25 cents; Protest 75 cents; Noting Protest 25 cents; Notices .3ocenti Certificate and Seal 25 cents; Postage ; Vol q ; Page 72 ; %-.i.8o 2o6 HIGHER ACCOUNTING. Elach indorser should receive a notice of protest like the following: NOTICE OF PROTEST. STflTE OF •/<»««» ] Vss. COUNTY OF....Z»«i» ) C^dar Rapidi, la. , Feb. i, iSgj Sir: A note for {%roo) One Hundred DoUars » Dated September jo, i8g6 Payable Felrmmry i, iSgrj Signed by Henry T%ompstm Endorsed by you Being this day due and unpaid, and by me PROTESTED for non-pa} roent. I hereby notify you that the pay ment thereof has been duly demanded, and that the holders look to you for payment, damages, interest and costs. Done at the request of TTte Business College Bank of Cedar Rapids Thomas Grant NoUry Public. To /. T. Johnson Big Rapids. Mich UNIVEESITY OF CALIFORNIA LIBRARY BERKELEY THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW Books not returned on time are subject to a fine of 50c per volume after the third day overdue, increasing to $1.00 per volume after the sixth day. Books not in demand may be renewed if application is made before expiration of loan period. OCT 16 1917 SEP 27 1918 JUL 311929 MMV %> 50m- 7,* 16 b.-^ >LJc^ VE 02748 j---