||||||||||||P|^;|| lR';li'i:-^!i!i'':i'-i':'^ ■1 '.■M '; ,, ;-!■! i^'i'i;, i: ■ 1- 'liJfi|:.-;p:|;^l:T;!;li''|-|i'i:1;:U^ i '"^''WISM ^ f ■ni!;;:,ii!ii!i":i; \ mm : ^:ii Iff ^iPPipiiiij ;:''' If l:ijii.ii^;| 1^^ |l'ii: |,'ii'l |l|l ;|!|;;;;'|' ;'i^ ■llii|^i:H:i::i:: LIBRARY University of California. ^IFT OF- CTk^. (Fi^/v^.^^ Class . .^...1 'jr ""^ U^^iN-e^f THE UNIVERSAL SYSTEM OF PRACTICAL BOOKKEEPING BY C. SNYDER EXPERT ACCO0NTANT, AND PRINCIPAL OF THE CHICAGO SCHOOL OF BOOKKEEPING ERNEST L. THURSTON HEAD OF DEPARTMENT OF BOOKKEEPING AND BUSINESS PRACTICE WASHINGTON (d.C.) BUSINESS HIGH SCHOOL NEW YOEK .:• CINCINlSrATI .:• CHICAGO AMERICAN BOOK COMPANY PEEFACE This work is designed as a text-book on theoretical and practical Double-entry Book- keeping, and is planned for use in public and private schools and colleges, and for self- instruction. With a view to facilitating the study and mastery of the fundamental principles of the subject, the theoretical part of the work is made as concise as possible, all unnecessary or unimportant matter being omitted. At the same time, subjects of importance to a broad knowledge of the science, but generally neglected in other text-books, are here given the careful treatment their importance warrants. In the short graded exercises and in the detailed business series the principles of book- keeping are applied, as they are mastered, to office practice, to the recording of practical business transactions, and to the ordinary routine of mercantile business. The series gives practice, not only in the use of general and auxiliary books of entry and record, but of many common business forms and papers as well. Thus made fariiiliar with the daily run of office business and with the duties pertaining to positions he may be called upon to fill, the student will be able to meet the requirements of his first situation without the difficulty which so many beginners experience from lack of busi- ness knowledge or actual preliminary office training. ->. ^>_ COPTBIGHT, 1902, BY c. Snyder and' er^xest l. thurston. • ' ' ' '£lH ' AT ^TATIOifERs' HALL, LONDON. TABLE OF CONTENTS PAET I. FUNDAMENTAL PRINCIPLES OF BOOKKEEPING PAGE Section I. — Definitions and Divisions 5 Section II- — Accounts 5-18 Accounts defined and illustrated. Classification of Accounts. Classification of Personal Accounts. Classification of Balances. Section III. — Journalizing 18-24 Debits and Credits — how determined. The Journal. The Daybook. Section IV. — Posting 24:-31 Posting from the Journal. The Ledger. Trial Balance. Section V. — Journalizing Notes and Drafts 32-38 PART II. BUSINESS RECORD Section I. — Books for Bookkeeping 39-60 Classification of Books. Auxiliary Books described. Books of Entry described. Sales Book. Cash Book. Journal. Ledger. Posting the Books of Original Entry. Bank Account — Check- ing. Cash Account — Balancing. Monthly Statements. Section II. — Closing the Books 60-67 Why closed. Inventories. The Books — how closed. Financial and Business Statements. Section III. — Incidental Subjects 67-84 Special Books of Entry named and defined. Indexes. Partnership Books — how opened. Single- entry Bookkeeping. Business of a Capitalist — Exercises. PART III. BUSINESS FORMS Section I. — The Forms — their Use 85-107 Bills and Invoices. Debit and Credit Memoranda. Drafts and Bills of Exchange. Notes. Checks and Certificates of Deposit. Money Orders. Receipts and Vouchers. Statements and Account Sales. Bonds and Stock Certificates. Express C. O. D. Envelope. Freight Bills Sbn(t Receipts. Bank Notices. Power of Attorney. Letters of Credit. BiUs of Sale and Assignments. Section II. — Negotiable Paper 107-109 Indorsements. Forms of Indorsement. Section III. — Disposition op Notes and Drafts 109-110 Collections. Discounts. Protests. Renewals. 3 228739 • • *.♦* • •/• • • TABLE OF CONTENTS PART IV. BUSINESS PRACTICE PAGE Section I. — Wholesale Grocery and Produce Business 111-120 Exercises. Section II. — Commission 121-131 The Books — their Use. Exercises. Section III. — Contracting Business 132-144 The Contract Accounts. The Books — their Use. Exercises. Section IV. — Corporations 144-158 Organization. Corporation Accounts. Stockholders' Books. The Different Kinds of Stock. Corporation Books — how opened. Exercises. Section V. — Banking 159-176 Bank Officers. The Books — their Use. Collections. Exercises. PART V. APPENDIX Section I. — Clearing Houses 177 Section II. — The Voucher System 181 Section III. — The Safeguard Account System 184 Section IV. — The Card Ledger System .. . . . 184 Section V. — The Loose-leaf Ledger 186 Section VI. — Glossary of Business Terms 187 Section VII. — Signs and Abbreviations 189 Index 190 J r ^ THE UNIVERSAL SYSTEM OF PRACTICAL BOOKKEEPINa PART I. FUNDAMENTAL PRINCIPLES OF BOOKKEEPING SECTION I. DEFINITIONS AND DIVISIONS 1. Bookkeeping is the art of recording the transactions of a business in so systematic a manner that its condition can be determined at any time. 2. Double-entry Bookkeeping is a system in which a double entry is made for every trans- action. The entry usually consists of one debit and one credit of equal value. Sometimes there are several debits, or several credits, or both, but in every case the sum of the debits \equals the sum of the credits. ► \ 3. Accounts. An account is a concise record of the business transactions connected with a certain thing or subject, or with a certain person or company. (See, for instance, the Cash account on page 6, and the account of C. G. Field & Co., on page 14.) In every account the debits are entered on the left-hand side and the credits on the right-hand side. The accounts are the most important records in bookkeeping. 4. The Fundamental Processes of bookkeeping consist of Journalizing and Posting. 5. Journalizing is the process of determining the debits and credits involved in business transactions, and of so recording them that they may be easily transferred to the accounts to which they refer. 6. Posting is the process of transferring the debits and credits thus journalized to the Ledger, the book which contains the accounts. SECTION II. ACCOUNTS Definitions 7. Accounts. An account consists of an item, or a collection of items, under a distinct name, so arranged as to indicate the result of business transactions. It has two sides. Debit and Credit. The left-hand side is the debit, and the right-hand side the credit. 8. The Balance is the difference between the two sides of an account. If one side is blank, the balance equals the sum of the items of the other side. An account balances when the two sides are equal. 9. Cash Account, as its name implies, shows what money has been received and has been paid out. 5 6 FUNDAMENTAL PRINCIPLES OF BOOKKEEPING All cash received is entered on the debit side, and all cash paid out is entered on the credit side. The balance, if on the debit side, indicates the cash on hand. Dr. CASH Cb. Received Paid out Investment, 1500 00 Rent of store, 75 00 For 10 bbls. Apples, 50 00 For Desk and Chairs, 35 00 For 100 bbls. Flour, 600 00 Pay Roll, 150 00 For Note of E. A. Frost, 75 00 For 200 bbls. Flour, 800 00 Interest on above note. 7 50 For Note to Lord & Son, 150 00 For Note of C. G. Trude, 175 00 Interest on above note, 9 00 Interest on above note, 3 50 1219 00 1192.00 2411 00 i 10. Merchandise Account indicates the cost of goods purchased. It is used by almost all firms, although a few, owing to the nature of their business, find it of little value and discard it in favor of other accounts. In the dry goods trade, grocery trade, etc., a Merchandise account is essential. It is debited for the cost of goods purchased and credited for goods returned by the firm, or for any shortage or overcharge allowed to the firm. It is credited also, at stated periods, with the balance of Sales account. S Dr. MERCHANDISE Cr. Bought 50 bbls. Apples, 200 bbls. Flour, 25 bags Coffee, 150 800 525 1475 00 00 00 00 11. Sales Account shows the total sales of a business. The account is credited when goods are sold, and it is debited when goods are returned to the firm, or when there is a shortage or overcharge allowed by the firm. At stated periods, in order to ascertain the loss or gain on goods sold, the balance is transferred to Merchandise account by debiting this account and crediting Merchandise account. Dr. SALES Cr. Sold 10 bbls. Apples, 100 bbls. Flour, 15 bbls. Apples, 10 bags Coffee, 50 00 600 00 75 350 1075 00 00 00 12. Expense Account indicates various expenditures incurred in conducting the business. In a small business it is customary to include in Expense account all items which come under such headings as Freight, Express, Fuel, Gas, Stationery, Rent, Labor, Office Salary, etc. In ACCOUNTS a large business a separate account is opened for each of these subjects and for other expenses, such as Cartage, Interest, Discount, Exchange, etc. Expense account is debited when any such expense is incurred by the firm, and is credited if the same produces returns after Expense account is debited for it. Dr. E XPJ EiNSE Cr. Expenditures Rent, Desk and Chairs, Pay Roll, 75 35 150 260 00 00 00 00 13. Interest and Discount Account is debited when interest or discount is paid or allowed by the firm, and is credited when interest or discount is paid or allowed to the firm. Dr. INTEREST AND DISCOUNT Cr. Allowed by us Allowed to us Interest on note to Lord & Son, 9 00 Interest on note of E. A. Frost, Interest on note of C. G. Trude, 2.00 7 3 11 50 50 00 14. Bills Receivable Account shows the amount of notes (page 92) received from other firms, and time drafts (page 89) payable to the firm and accepted by other firms. When these notes are received and the time drafts accepted, the Bills Receivable account is debited, and when they are paid, discounted, or sold the account is credited. If a note is returned to the maker for a new note, the account is credited. In the latter case the account of the maker is debited with the old note, and is also credited with the new note, thus showing the full transaction in both accounts. The amount debited or credited in Bills Receivable account is always the face of the note or draft. The difference between face and payment, if any, is either interest or discount, and is credited or debited in the Interest and Discount account. The face of any note or draft is alwaj^s debited in Bills Receivable account before it is credited. The balance of the account indicates the amount of paper on hand. The account balances whenever all the notes and drafts have been paid or disposed of. Dr. BILLS RECEIVABLE Cr. Received or Accepted Disposed of E. A. Frost, W. B. Murray, C. G. Trude, 175.00 75 175 175 425 00 00 00 00 E. A. Frost, C. G. Trude, 75 175 00 00 15. Bills Payable Account shows the amount of notes given, and drafts accepted, by the firm. When the firm gives a note or accepts a draft, the account is credited, and when the note or draft is paid the account is debited. If a note is returned for renewal, the account 8 FUNDAMENTAL PRINCIPLES OF BOOKKEEPING is debited. In the latter case tlie account of the payee is credited with the old note and also debited with the new note, thus showing the full transaction in both accounts. The amount credited or debited in Bills Payable account is always the face of the note or draft. The difference between face and payment, if any, is either interest or discount, and should be debited or credited in the Interest and Discount account. Bills Payable account is always credited with the face of any note or draft before it is debited. The balance shows the firm's written obligations outstanding. The account balances whenever all the notes and drafts have been redeemed. Dr. BILLS PAYABLE Ck. Redeemed Issued or Accepted Lord and Son, 150 00 Lord and Son, Wood and Co., 525.00 150 525 675 00 00 00 16. Loss and Gain Account receives, at stated periods, all balances of accounts which show losses or gains, for the purpose of determining the net loss or net gain. The losses are debit balances, and are transferred from such accounts as show a decrease in the value of the firm's property, an excess in the cost of production, and the general expenses of conducting the business. The gains (profits) are credit balances, and are transferred from such accounts as show an increase in the value of the firm's property and the excess of sales or returns. Dr. LOSS AND GAIN Cr. Losses GrAINS Expense, 260 00 Merchandise, Interest and Discount, 92.00 350 2 352 00 00 00 17. Stock Account. — The amount invested by the proprietor in a business is always credited to his investment account, which is called his Stock account. The balance of this account represents the Present Worth of the proprietor's business, and is equal to the difference between the Resources (that which is due the proprietor in property, merchandise on hand, notes, and personal accounts) and the Liabilities (that which he owes, such as notes and personal accounts). Dr. JOHN FULLER (Stock) Cr. Withdrew Cash, Gain, Investment 1500 92 1592 00 00 00 To THE Teacher. — Before taking up Exercise 1, the students should be familiar with the common forms of notes and drafts, and should understand the meaning of the term "acceptance." See pages 88-93. ACCOUNTS EXERCISE 1 Rule in a blank book nine skeleton accounts and enter the following items, according to the foregoing illustrations. For illustration of script, see pages 10, 11. Cash. — Amount invested, 81500. Paid for rent, $75. Paid for stationery, fl5. Paid for stock of groceries, $500. Received of John Smith, $75. W. B. Ray & Co. paid their note, $58. Received for cash sales, $175. Paid for services, $75. Paid for gas, $9.50. Received cash for J. B. Miller's note, $162.50. Paid railroad fare, $1.25. Borrowed from the bank on my note, $194.25. Paid for postage stamps, $4.00. Paid freight charges, $2.75. Paid draft of Reid, Smith & Sons, $175.50. Merchandise. — Bought, for cash, stock of groceries valued at $500. Bought 10 barrels apples for '^'db., and gave in payment Mrs. W. B. Warren's note. Bought of Reid, Smith & Sons, on our acceptance, bill of goods amounting to $175.50. Bought of Puller & White, on our note, bill of goods amounting to $ 150. Sales. — Sold John Smith, for cash, bill of goods amounting to $78.75. Sold H. M. Watson & Co., on their note, bill of goods amounting to $165. Sold W. B. Ray & Co., on their note, bill of goods amounting to $55. Sold M. E. Kimball & Co., on account, bill of goods amounting to $200. M. E. Kimball & Co. returned 5 barrels flour, $25. Sold merchandise, for cash, as per cash sales checks, $175. Expense. — Paid for rent, $75. Paid for services, $75. Paid for gas, $9.50. Paid for stationery, $15. Paid for railroad fare, $1.25. Paid for postage stamps, $4. Paid freight charges, $2.75. Interest and Discount. — A\\o\Yedi discount to John Smith on bill of goods, $ 3.75. Received cash for interest on W. B. Ray & Co's. note, $3. The bank discounted our note, deducting 6^ discount, $5.75. Paid discount on J. B. Miller's note, $2.50. Bills Receivable. — In the safe are the following notes: J. B. Miller, $165; Cleveland Supply Co., $155.75 ; Mrs. W. B. Warren, $35. Received of H. M. Watson & Co., to bal- ance account, their note for $165. Received of W. B. Ray & Co., to balance account, their note for $55. Sold J. B. Miller's note, $ . M. E. Kimball & Co's. draft, payable to the proprietor at 15 days' sight for $ 175, to balance account, is accepted by the drawee. W.' B. Ray & Co. paid their note, $ . Gave Mrs. W. B. Warren's note, $ , in payment for a bill of goods. Bills Payable. — Gave Fuller & White our note for $150, in payment for a bill of goods. Accepted five days' sight draft drawn on us by Reid, Smith & Sons, for a bill of groceries amounting to $175.50. Borrowed of the Students' National Bank $200, giving the bank our note for the amount. Paid Reid, Smith & Sons' draft, $ . Stock. The proprietor (the student) invested cash, $ 1500 and three notes, which were placed in the safe, amounting to $355.75. Notp:. — The following process will enable the student to find out whether the sum of all the debits ecjuals the sum of all the credits in the accounts of Exercise 1. First. Add the items on each side of each account, writing the sum in pencil ; and determine the balance of the account. On the greater side write the balance (if the account has items on both sides) in small figures below the written items. (See illustrations on pages 6, 7, 8.) Second. Prepare a page with two money columns at the right-hand side. Name the first column debit and the other credit. Copy the titles and balances, entering each balance in the column in which it appears in its account. When all the balances have been copied, rule and add the columns, whose footings will agree if the accounts have been debited and credited correctly. (See illustration on page 27.) 18. The process described in the above note is called "taking off a trial balance." It is an important test of the bookkeeper's accuracy ; for whenever the footings of the trial balance are unequal, it shows that a mistake has been made. 10 FUNDAMENTAL PRINCIPLES OF BOOKKEEPING Ledger B.C.7ncUujrt(3tkrcA. TSalarruabfPAJLb. uuo'itA} 520/ 2 520/ 25 llljLnxJvGurhdAAjb focblayyhCJb 3000 2000 201 520/ 520/ 00 00 25 25 25 CR. 140 -inAJ). PcrtoJjyib 5-^^6.0^1^1116 3000 U5 25 ■3 07 00 00 00 20'lM6.CipfJjL6 Poj^'RUt 95 75 15 /50 3q 5 00 00 00 00 00 TKlMixJiMjTvdjJiJL CR. JnUMAt. UOO Mrl6. JlcruUh 20Ml6.(lfipA6 boo-in^. PotaZo^ JLxyA6 cuThd. CIxjuutl 2000 15 U50 52/ 30L/b25 00 00 00 2. SqJjl6 /510 /Ulb 30Ub 00 25 25 DR. Sci/jid 7TloixJ\xLrn/£i6JL /51C /510 oc 00 \;i00M-t6.JlcyuA. 5 „ (Jjip/jL6 UO^imJi.PotaZoOi /500 25 ^5 /510 00 00 00 00 Pom. JIM Sci^,£)jL6A y- C/lomu 75 /50 Q5 320 00 00 00^ 00 Lo6J^ curuL Q/cuuTu 320 320 CR. w 00 ACCOUNTS 11 Ledger — Continued IS-Mb TljU:JiAAJX2jj~ijL Q.SucbrujM 9J- Co. ma. LolcL ^ Co. B.C.J^(OXTX£9^CO. 350 500 b50 / 5 00 00 00 13 bill) l^OjUKxIrlL WjM 13mx>6. Go. q.m.SAudcu 200 250 U 5 00 00 DR. £xyAd OjmycL (jaxajH^ cr. TbiZ (Icu/n (D. C. TTZoAori 320^ , 20/ 00 25 iTljinxJuj/rvdiAsL 521 25 521 25 521 25 Note. — If the transactions of Exercise 1 were entered correctly, the trial balance should be the same as the following : Trial Balance Page Debit Credit Cash, Merchandise, Sales, Expense, Interest and Discount, Bills Receivable, Bills Payable, Stock, 1306 860 182 9 495 75 50 50 00 75 648 350 1855 75 00 75 2854 50 2854 50 The student should explain to the teacher, from the trial balance, what is indicated by the balance of each account. 12 FUNDAMENTAL PRINCIPLES OF BOOKKEEPING 19. To Find the Present Worth (Exercise 1). First. — Find out which accounts show a loss or a gain, and transfer the balance of each (representing the loss or the gain) to Loss and Gain account, as follows : — (a) Transfer the balance of Sales account to Merchandise 'account by entering it first in red ink on the debit side of Sales account, and afterward in black ink on the credit side of Merchandise account. (See note below, and see illustration in Sales and Merchandise accounts on page 10.) Since the balance of our Sales account is $648.75, these entries will be as follows : On the debit side of Sales account, " Merchandise 648.75" ; and on the credit side of Merchandise account, " Sales 648.75." Next, in Merchandise account insert in red ink on the credit side the total value of the goods remaining unsold (called "Inventory"), $441.25. (For style of entry, see illustration, page 10.) Next, add and find the balance, which is a gain, as it is on the credit side. Next, transfer this amount to Loss and Gain account by entering it first in red ink on the debit side of Merchandise account and then in black ink on the credit side of Loss and Gain account. (For style of entries, see illustration, pages 10 and 11.) (6) Transfer the balance of Expense account to Loss and Gain account by entering the balance first in red ink on the credit side of Expense account, and then in black ink on the debit side of Loss and Gain accounto (See illustration, pages 10 and 11.) (c) Transfer the balance of Interest and Discount account to Loss and Gain account by entering the balance first in red ink on the credit side of Interest and Discount account, and then in black ink on the debit side of Loss and Gain account. Second. — When all losses and gains have been transferred to Loss and Gain account, determine whether the business has lost or gained. Next, transfer the balance to the Stock account by balancing Loss and Gain account. (See illustration, pages 10 and 11.) Third. — Rule off Merchandise account and bring down the inventory to the debit side, writing it in black ink. Next, rule off with red ink lines Expense account. Interest and Dis- count account. Sales account, and Loss and Gain account. (See note below, and illustration, pages 10 and 11.) Now insert in red ink on the debit side of Stock account its present worth (balance) ; then rule and add. Next, bring down the balance in black ink to the opposite side from that of the red ink entry. (See illustration, page 10.) Finally, report to the teacher the present worth of the business. Note. — When red ink is used in accounts, such as are mentioned above, it signifies that no actual transac- tion is represented by the item, and that no corresponding entry has yet been made. In order to make the entry double, the amount must later be entered (in black ink) either on the opposite side of the same account (after it is ruled) or in some account to which the amount has been transferred, as the case may be. The lines used for ruling off accounts should be made with red ink. The double line drawn under the totals (see pages 10 and 11) signifies a new beginning for the account; when the account is next footed up, the items above the double line are not to be included. Classification of Accounts 20. Accounts are divided into two classes, — Representative and Personal. 21. Representative Accounts are those accounts of a business which represent the firm and designate the character of its transactions. Examples : Cash, Merchandise, Sales, Expense, Furniture and Fixtures, Bills Receivable, etc. A representative account is debited when the firm receives anything of value, and it is credited when the firm gives out anything of value. For example, when cash is received, Cash account is debited ; when merchandise is sold. Sales account is credited ; when postage stamps are bought, Expense account is debited ; when discounts are deducted and allowed by the firm. Discount account is debited. ACCOUNTS 13 22. Personal Accounts are the ones with individuals, firms, and corporations, and show their rehitions with the business. The debit side of a personal account denotes the Debtor — one who owes the firm ; and the credit side the Creditor — one whom the firm owes. A personal account is debited when the person represented receives anything of value from the firm, and is credited when he gives any valuable thing to the firm. For example, when John Seymour & Co. receive merchandise on account, John Seymour & Co.'s account is debited ; when C. B. Lord renders services, his account is credited ; when he is paid for them in cash, his account is debited. ' Classification of Personal Accounts 23. Personal accounts are divided into five or more classes, viz. : The accounts of Partners, Traveling Agents, Consignors or Consignees, Customers, and those from whom the firm buys its goods. 24. The Partners' Accounts. — Each of the partners in a firm has at least two accounts, as follows : — 1. The partner's Stock account is credited with his investment in the business, such as cash, merchandise, bills receivable, etc. It is also credited with his share of the net gain, or debited with his net loss. Dr. M. A. YORK (Stock) Cr. Received Gave Cash, Note, 1500 00 300 00 2. The partner's Private (personal) account is debited with the money drawn out for personal use, and is credited with salary (the fixed amount at which services are valued), at the end of each month. No partner is supposed to draw more than his salary, unless by mutual consent. Dr. M. A. YORK (Private) Or. Received Gave Cash, Cash, 15 75 00 00 Salary {i.e. services), 150 00 25. The Traveling Agents* Accounts. — Each of the traveling agents has two or more accounts : — 1. His Expense account is debited with all mileage books, railroad tickets, and moneys furnished him by the firm for expenses, and is credited, at the end of the month, with the statement of his expenses. "W. A. SEYMOUR (Expense) Received Gave Mileage Book, Cash, 50 100 00 00 Traveling Expense, 135 00 14 FUNDAMENTAL PRINCIPLES OF BOOKKEEPING 2. His Private (salary) account is debited with all money drawn out for private use, and is credited with salary at the end of each month. "W. A. SEYMOUR (Personal) Eeceived Gave Cash, Cash, 50 35 00 00 Salary (i.e. services). 150 00 Note. — A traveling agent may have, besides the two accounts mentioned, a Commission account, a Sample account, and a Collection account. 26. The Consignment Accounts indicate the value of merchandise shipped or received on consignment. The distinction between consignment and other accounts is made to enable one to know what goods are on consignment and what are not on consignment, but to be paid for at a fixed price and at a given time. (Merchandise when shipped or received on consignment is not paid for until sold.) C. G. ROBINSON (Consignment) Eeceived Gave 25 bbls. Flour, 10 bbls. Apples, 125 40 00 00 Cash, 100 00 Note. — When more than one consignment is shipped to a firm, each one should be numbered. A separate account is generally kept of each consignment. 27. The Customers' Accounts are the accounts of the parties to whom goods are sold on credit. C. G. FIELD & CO. Received Gave 10 bbls. Sugar, 5 bbls. Apples, 6 bbls. Apples, 1 bbl. Flour, 162 25 27 5 50 00 00 00 Cash, 2 bbls. Apples ret'd, 100 10 00 00 28. The Purchase Accounts are the accounts of the parties from whom goods are purchased. MURDOCK & CO. Received Gave Cash, Note, 400 202 00 50 50 bbls. Sugar, 25 bbls. Apples, 10 bbls. Flour, 487 75 40 50 00 00 Note. — The distinction between Customers' accounts and Purchase accounts is a matter of convenience in a large business ; but in a small one it might not be made. ACCOUNTS 16 EXERCISE 2 Rule, in proper form, eighteen skeleton accounts, allowing ten lines for Cash account and five lines each for all other accounts, and then debit and credit the necessary accounts in each of the following transactions : (The name of the firm is D. C. Clark & Co. The partners are D. C. Clark and M. A. Carter. The partners invest equally and the net gain or the net loss is to be divided equall3^) 1. D. C. Clark invests cash, $1500. 2. M. A. Carter invests cash, $1500. 3. Bought merchandise of C. M. Hay & Co. on account, as shown by their invoice (see page 86), $268.75. 4. Shipped merchandise to the following firms on account : — C. M. Frost & Co. as per invoice rendered, $ 100. A. B. Rider as per invoice rendered, $275. 5. A. B. Rider returned merchandise as defective, amounting to $27.50. 6. Bought merchandise of W. B. Sanborn, on account, as per his invoice, $250. 7. Gave to C. M. Hay & Co., in full payment of account, our note for $268.75. 8. Received of A. B. Rider, to apply on his account, cash, $47.50. 9. Received of A. B. Rider, to balance his account, his note for $200. 10. Paid our note in favor of C. M. Hay & Co. $ . 11. Gave W. A. Seymour, our traveling agent, for expenses, cash, $100. 12. Paid M. A. Carter (partner) on account, $150. 13. Paid for rent, $ 100. 14. Paid for help in store, $48.50. 15. Shipped to A. B. Rider, on consignment, bill of merchandise amounting to $150. 16. Gave Mrs. W. A. Seymour $75, charging it to Mr. Seymour's account. 17. Accepted W. B. Sanborn's draft on us for $250, to balance account. 18. Gave W. A. Seymour credit for one month's salary, $ 75. 19. Credited the account of each partner with one month's salary, $150. EXERCISE 3 1. Draw off a trial balance. (See page 9.) 2. Ascertain whether the business has gained or lost (merchandise remaining unsold — Inventory — is $300), and transfer the net gain or net loss to the Stock accounts, dividing it between the partners. Classification of Balances 29. Balances are divided into four classes : Resources, Liabilities, Losses, and Gains. 30. The Resources (Assets) indicate what the firm owns. Resources are debit balances of the debtors' accounts, bills receivable, cash on hand, and the inventories of such of the representative accounts as are charged with stock or property on hand. 31. The Liabilities indicate what the firm owes. Liabilities are credit balances of the creditors' accounts and bills payable. 32. When the resources are in excess of the liabilities the firm is solvent (able to pay all debts), but when the liabilities are in excess of the resources it is insolvent (unable to pay all debts). 16 FUNDAMENTAL PRINCIPLES OF BOOKKEEPING 33. The Losses are the debit balances of such representative accounts as show a decrease in the value of the property, an excess in the cost of production, and the general expenses of conducting a business ; also such bills receivable and the balances of such debtors' accounts as are considered worthless. 34. The Gains (Profits) are credit balances of such representative accounts as show increase in the value of the property, and an excess of sales or returns. 35. When the losses are in excess of the gains the business shows a net loss, but when the gains are in excess of the losses it indicates a net gain. EXERCISE 4 Prepare two pages with two columns each at the right-hand side. Name one page Resources and Liabilities, and the other Losses and Gains. Examine the following accounts and copy the resources and the liabilities on their special statement. First, copy the resources, entering their amounts in the debit column. Next, copy the liabilities, entering the amounts in the credit column. Then draw a line and add each column to ascertain whether the business is solvent or insolvent. Next, write the balance of the Stock account in the proper column, and add again, which should make the footings equal. Now take off the losses and gains, making a copy of the Loss and Gain account. First, copy the losses, entering the amounts in the debit column. Next, copy the gains, enter- ing the amounts in the credit column, and write the net loss, with its amount, in red ink. Finally add the columns, whose footings will be the same as those of the Loss and Gain account. Ledger D. C. "WALLACE (Stock) Loss, Balance (Present Worth), 171 7828. )0 8000 50 00 Cash, Merchandise, Real Estate, Balance, 2000 1000 5000 8000 7828 00 00 00 00 50 CASH D. C. Wallace, 2000 00 Pay Eoll, 175 00 W. B. Cook & Co., 200 00 Rent, 150 00 2200 00 Furniture and Fixtures, 75 00 A. M. Gibson, 150 550 00 00 MERCHANDISE D. C. Wallace, Loss and Gain, Inventory, 1000 233 1233 875 00' 50 50 Sales, Inventory, 358 875 50 1233 00 50 ACCOUNTS 17 Ledger — Continued EXPENSE Rent, Pay Roll, Traveling Expense, 150 175 75 400 00 00 00 00 Loss and Gaiu, 400 400 00 00 SALES George Price Co., Merchandise, 7 358 50 00 W. B. Cook & Co., George Price Co., 300 65 00 50 365 50 365 50 FURNITURE AND FIXTURES Desks and Chairs, 75 00 Inventory, Loss and Gain, 70 5 00 00 75 00 75 00 Inventory, 70 00 REAL ESTATE D. C. Wallace, Inventory, 5000 5000 00^ 00 Inventory 5000 00 A. M. GIBSON (Expense) Cash, 150 00 Traveling Expenses, Vo 00 V;^-. B. COOK & CO., St. Louis, Mo. Sales, 300 00 Cash, 200 00 GEORGE PRICE CO., Rockford, 111. Sales, 65 50 Goods Returned, 50 LOSS AND GAIN Expense, Furniture and Fixtures, 400 5 00 00 Merchandise, D. C. Wallace (Net Loss), 233 171 60 50 405 00 405 00 — 18 FUNDAMENTAL PRINCIPLES OF BOOKKEEPING QUESTIONS 1. What is Bookkeeping? 2. What is meant by Double-entry Bookkeeping? 3. Name the funda- mental processes and define each one. 4. What is an account? 5. What is the balance of an account? 6. When does an account balance? 7. What is shown by Cash account? 8. When is it debited and when credited? 9. What account shows the cost of goods purchased? 10. Explain its debit and credit sides. 11. What does Sales account represent? 12. When is its balance transferred to Merchandise account? 13. What is charged to Expense account? 14. Mention some items that are generally charged to Expense account when separate accounts are not desired. 15. When is Interest and Discount account opened? 16. What does Bills Receivable account contain? 17. What is shown by Bills Payable account? 18. In what account are entered at stated periods the losses and gains in a business? 19. Mention some items that would be entered on the debit side of Loss and Gain account. 20. What accounts show gains? 21. Name and explain the accounts which show the investments in a business. 22. How are accounts classified ? 23. Tell what each class represents. 24. Into how many classes are personal accounts divided? Name them. 25. How many accounts should each partner have ? 26. Which account shows the investment ? 27. On which side of the account is the gain entered and on which side the loss ? 28. Define the traveling agents' accounts. 29. When are consignment accounts necessary ? 30. Give a transaction for which a customer's account must be opened. 31. A purchase account. 32. How are balances classified? 33. What are assets? 34. Mention some items that are classed as assets. 35. What are liabilities? 36. How are they distinguished on the Ledger? 37. When is a firm solvent and when insolvent? 38. What accounts show losses and what show gains? 39. When the gains are in excess of the losses what does it indicate ? 40. What is the rule for determining whether a representative account is to be debited or credited? 41. A personal account? 42. What items are entered in red ink, and what does the use of red ink indicate ? SECTION III. JOURNALIZING 36. Journalizing is the process of determining the debits and credits involved in business transactions, and of so recording them that they may be easily transferred to the accounts to which they refer. 37. In journalizing a transaction there are always at least two accounts involved : one is usually a representative and the other a personal account, or both accounts may be representative. Sometimes there are more than two. For example : — Debit. Credit. Dr. Cr. Merchandise 26.75 W. M. Graham 26.75 Invoice, January 5. D. M. Pierce 26.00 Sales 25.00 Sold 5 barrels apples at $5. -. D. C. Clark Stock 1000.00 Merchandise 500.00 Bills Receivable. _____ _ 500.00 Investment as per contract. Merchandise 120.50 F. C. Murdock 95.50 Invoice, February 15 50.00 Invoice, February 18 45.50 . Wheeler & Co. 25.00 Invoice, February 4 25.00 JOURNALIZING Bills Receivable Merchandise Bills Payable C. G. Mills Stock Investment as per contract. 500.00 500.00 19 200.00 800.00 Debits and Credits — How Determined 38. An Original Entry is a record of one or more debits and one or more credits, followed by a sufficient explanation. The sum of the debits must always equal the sum of the credits. 39. General rules for journalizing: — 1. Debit (charge) a representative account with what is received by the firm. Credit a personal account with what the person gives to the firm, or for the firm's use. Ex. — Bought of R. T. Cooper one house and lot for $8000. Real Estate account (representative) is debited because the property is bought (received) by the firm, and R. T. Cooper's account (personal) is credited because R. T. Cooper sells (gives) it to the firm. The entry is thus : — Real Estate - 8000.00 R. T. Cooper Bought one house and lot. 8000.00 2. Debit (charge) a personal account with what the person receives from the firm. Credit a representative account with what the firm gives out. Ex. — Shipped to John Sawyer & Co. 5 barrels apples, $25. John Sawyer & Co.'s account (personal) is debited because John Sawyer & Co. receive the goods, and Sales account (representative) is credited because the firm sells the goods (gives them out). The entry is thus : — John Sawyer & Co Sales Sold 5 barrels apples. 25.00 25.00 3. Debit or charge the account which receives an amount. Credit the account which gives out an amount. This is the general rule ; it includes both the above, and also such transactions as the following : — Ex. — Bought 200 bushels potatoes for f 120 in cash. Merchandise account (representative) is debited because the potatoes are purchased (received) by the firm, and Cash account (representative) is credited because the firm pays the money (gives out the cash). The entry is thus : — Merchandise. 120.00 Cash Bought 200 bushels potatoes. 120.00 The Journal 40. The Journal should contain all the original entries of the transactions of a business, provided it is the only Book of Original Entry. It has two columns on the right-hand side of the page. The left-hand column is the debit and the right-hand column the credit. Large houses and many smaller ones distribute their original entries among several dif- ferent books, which will be explained later. 20 FUNDAMENTAL PRINCIPLES OF BOOKKEEPING 41. "Sundries," in bookkeeping, means more than one. This word is used in making sucii Journal entries as have more than one debit, or more than one credit, or both. It indicates that under it the names of the accounts will appear. Thus : — Sundries Merchandise Sundries 340.00 Expense 40.00 ___. Walter Ellis 300.00 Invoice, March 5. .__.Cash 80.00 Journal '/njjn/ijj. /on/ LEDGER PAGE DEBIT CREDIT DEBIT CREDIT 7 CojJl 2 iTt.JuorJujJxnyxjLStovA JruMjJjmjbnnJt. —3 — ^ iTUUuiJvcLrrvcLuisb IScrbUoJbt /:i50 ihMd. ujAjuxt @$/.00 L/' S(>lcL 250 AbUi.uuAjuzt @S /-/O CajJh C/xjJh Aa2jL6 ol6 pji/L cxza/l AfoTK. — Red ink ruling, for space lines, columns, or underscoring words, is effective on any business paper. The student sliould practice ruling at every opportunity until he can draw clean, sharp lines, either with an ordinary pen or with a bookkeeper's ruling pen. The Daybook 44. The Daybook, sometimes called the Blotter, contains the memoranda of the transac- tions of a business. It is used only in small houses. From this book the bookkeeper journal- izes into the Journal. EXERCISE 5 Rule about six pages for a Journal. (See form on page 20.) Journalize the transactions noted in the Daybook on pages 21-23, in accordance with the following directions. On the first line in the Journal write the month and the year. In the center of the line below write the day of the month. On tlie next line make the first entry. Observe closely the form on page 20. Write titles of debited accounts at the left, and the titles of credited accounts at the right. Leave a blank line after each entry, and insert the date whenever it changes. Use the following representative accounts : Cash, Merchandise, Sales, Expense, Bills Receivable, Bills Payable, Furniture and Fixtures, Horses and Wagons, Interest and Discount, Commission, Traveling Expense, Loss and Gain. Daybook f^^njjnJiJj., IQ— 'cToT' ^ ^ ' ITEMS 2 cLau, lyruMAtorva tAjL ^^McruArru^ AJlAcrUA/2JU> ,^ Cx2jJv 1500 00 A^ JbUvruJMAJL cuTbcL JuxluAjiS 500 00 ^ y^. TUrbu curruyiAynt JnJjJuLbZ oTh oJnnM. GoAM. CL.13. CcMuThb, nniyU PuuMJ/jrua cuoji/nt CajJh-i^yb cb nn^uutsucLgju S-croA cuo'uct Juxfi£/nAJL6 b/250 22 50 120 12 302 00 00 50 3U UOO q^O / 50 00 10 b3 TOTAL /q5 200 00 00 b35 00 U3U q^O 50 /O q^O 10 U3U 50 qS-/ 150 V 00 JOURNALIZING 23 Daybook — Continued ^nnjjn /iAL IQ- JOURNAL CHECK n QiAocrLonnJjbcL aZ tAjL Stux^U/rM /Tx2Jjxxrvci/ 13a/nJt, J.S. Tlujjtorrh 9/- Co6 Tvatz. Q^rrunuxnt Ajujujmj£ i/rv cxxaA. QcdyCcru/nZ CUxjLpJjbcL roAAjJu CaAfut C<>d cUvaJt dAMMJTh Cm mnjL^aZ -luj^ dxujJ^' AIX2J1Z , to -l/xxlxj/rvob cu:xx>uynZ Scrlx£ J.S. TbujAxTrL 9f Co. Otl axxxy-vonnX 300 upAAjit(iLt, m. d. W-alt, 7?ltnm.ta//aotia , THwin. ITllTi'j'vtdfiotl^, THLmTi. Ship via Please ship to Vtb 26 (yUya.. Mo^h 25 UU. Mcmh fOO 6-ooce.^ Jv-ohj ^oa/fh fOO 6-aoa.^ Jvovy cfaafi And charge to account of Give Order Xu«>ier johw ifUwOAjt. on Invoice. Per €. ^. 39 40 BUSINESS RECORD 57. The Order Book (Receiving) is a blank book in which are recorded the orders received from customers, traveling men, etc. The orders are copied from this book on Order Blanks and given to the shipping clerk for filling and shipment. P2ach order is numbered as it is entered in the book. Order Order Book JVo. /Of. Their Order J^o. 360. ' Bate of Order, ^d'TOUdhy 2, 1900. Ship via the (g. ??l ^ ^t. c^. /?. /?. Xame, Sba\.(ft S. THcyThl^at V &a. Terms, 30 cLdJ^. Salesman, S. h. ^. Town, iTliLwCiiiA^^, ZO^l^. 10 M^. dp^t^ 16 (ylyt^. oft. Lau.l'Q^ Stavi'b 6 ^^%&^ f^dvaui'yi^ Order Jfo. 102. Their Order J^o. Ship via the Terms, Salesman, Date of Order, J^Tame, Town, 19 58. The Receiving Book contains a record of the goods received, with the names and addresses of the shippers. From this book the invoices received are checked and O.K.'d as to the quantity. Receiving Book Chicago, January, 1901 50 10 25 100 o George Beecher & Son, City, bbls. Apples, bbls. Flour. 7 M. A. Wait, Minneapolis, Minn, bbls. Flour, boxes Ivory Soap. BOOKS FOR BOOKKEEPING 41 59. The Shipping Book contains a record of the goods shipped and delivered, giving the names and addresses of the customers, and telling how the goods were shipped, etc. Shipping 3ook Chicago, January, 1901 10 15 5 George F. Monroe & Co., Milwaukee, Wis. Oar Order No. 101. Their Order No. 350. Via the C. M. & St. P. K. R. bbls. Apples, bbls. St. Louis Flour, boxes Raisins. 60. The Petty Cash Book contains a record of all currency received by the cash drawer, and of all paid out from it. At the close of each day all items should be transferred from it to the Cash Book, unless they are too numerous. In that case the items should be grouped under their several accounts, and the totals transferred under their proper titles to the Cash Book, with the explanation "Per Petty Cash Book." Receipts should be taken for all money paid out, and should be kept on file, so that they can be produced promptly if called for. Left-hand Page Petty Cash Book Right-hand Page Dr. Cash 1901 Jan. Feb. 2 28 30 1 Cash sales checks, White & May, to bal. acct., W. A. Butler & Co., on acct., Sanford & Weed, on acct., Cash sales checks. Cash sales checks, 125 8 15 25 75 50 00 00 00 00 00 00 298 00 Balance, 274 05 Cash Cr. 1901 Jan. 2 12 Errand boy car fare, 300 2-cent stamps. Freight from C. J. & Co., Balance in draioer, (red ink) ^^^.^ 6 17 (red 10 00 85 05 ink) 298 00 61. The Invoice Book is a book in which invoices are pasted after they have been properly journalized. 62. The Bill Book contains a record of the notes received from other firms and the time drafts accepted by other firms, and of the notes given and drafts accepted by the firm. It shows also how they are disposed of. The book should always agree with the Ledger accounts of Bills Receivable and Bills Payable. Sometimes the Bill Book is divided into two : Bills Receivable Book and Bills Payable Book. m m ■* * s u. z o ? o y I & o ^ u > til > ^ s: s Q ^ D- "1 ^<3 s n a o ^ 42 BOOKS FOR BOOKKEEPING 43 63. The Deposit Book, or Bank Book, is one furnished by the bank, in which the teller enters the total amount deposited each day by the firm. The amount entered agrees with the total of the deposit ticket which is handed in with the checks, currency, etc., presented at his window. The Deposit Book is a book of reference, showing all sums deposited. If nt is left at intervals with the teller, entries are made of the sums withdrawn, and the book is balanced so as to show the net sum on deposit, or the "balance in bank." Deposit Book Left-hand Pagk 1901 Jan. Feb. Feb. Deposits 2 3 5 5 14 21 31 1 Deposit 200.00 dis., 1.10 Balance 375 275 850 78 275 475 198 95000 3478 31 00 80 63 50 00 00 90 83 Right-hand Page Retukned Checks 2 75 785 8 88 50 75 50 9 63 67 80 13 00 275 93 17 80 50 40 255 00 50 00 450 00 150 00 7 50 13 50 50 00 100 00 1200 00 785 88 650 00 3447 ink) SI 31 52 Balance (red 3478 83 64. The Deposit Tickets are blanks which a firm is required to fill out when making de- posits. They give the name of the depositor, the date, and the amounts deposited. If cur- rency or gold is deposited the sum of each is given ; if checks, the amount of each one and the total are given. Deposit Ticket DEPOSITED WITH Stutients* National Bank. By //. e. atay ^ &a. Chicago, Ja/yilAyCilyJ /O jO/ Checks on Other City Banks Coin, Currency, Checks on this Bank, and all Items Payable out of Chicago Dollars Cents Dollars Cents ^5^ 26 00 67 ^00 60 00 i*/^ qs ^67 27^ 60 ^8 737 ^S 44 BUSINESS RECORD 65. The Check Book is a book of blank checks from which all checks are made out (pages 94, 95). From this book transfer to the credit side of the Cash Book the title of the account, the explanation, and the amount on each stub. This may be done once a day, when ready to balance the cash. 66. The Bank Account should be kept in the Check Book. Begin by tearing out the check blanks of the first page, leaving the stubs ; then turn the page of stubs over and rule the reverse side (left-hand page) as shown below. If desired, the fly leaf or cover may be used instead. Check Book Dr. Reverse Side /^^/ j^cin^. s htpa^lt 2000 00 /•/ 3/6 00 7 u 500 00 , 8 u ZOO 00 /O //■ ^7-5 00 3^50 00 // a 225 00 /6 V/ 750 50 Stub Cr. JVo. /. Bate, JoUTU. d, 1^0/ . Order of //. 6. ^W-tvt V^ ^0. Explanation, f^oTl^ foh jdVy. Account, /if. C ^W^^t y^ dla. ■ 250 00 $260.00. JVo. 2. Bate, fci1^. SO, f/0/. Order of Tfl (Z. W^Ciut. Explanation, Q^ Ci^^cyiiwt. Account, ?Tl. (Z'. TA}cilt, 250 00 $260.00. On the first left-hand page (debit) enter the date and amount of the deposits each day,, and from the right-hand pages (credit) make out the checks as they are demanded. Keep adding the amounts of the checks on the stubs, in pencil, bringing forward the footing to the next page, and so on. The balance is ascertained at any time by subtracting, on a slip of paper, the sum of the checks drawn from the sum of the deposits. The balance may then be entered for reference on the next blank stub, in pencil, in the upper left-hand corner. At the end of the month, or the date on which the Bank Book is balanced, enter in the front part of the Check Book the total amount withdrawn as per Check Book, subtract it from the sum of the deposits, and begin anew with the balance. Check Book (Right-hand Page, full width) Bate, fmu dO, f^Of. Order of &. //. UM ^ (^O. Explanation, ^'Tb Ci&(S>t. Account, &. /{. Udt V^ (^O. $60.00. 600 60 00 Chicago, Jan. 30, /^Of. Xo. ^. .Stutfents' National ISanfe of Chicago. Fay to the order of (^. //. Udt ^ (&v $60.00 ^ 7^ Bollars. f. ^. ^mMA ^ & BOOKS FOR BOOKKEEPING 45 67. The Pay Roll Book is an auxiliary book containing a record of the employees' time and salaries. Tliis book is required in almost all lines of business, especially in factories and houses that engage a large force of help. Some firms have printed time cards which the employees fill in when reporting their time to the office, and others have a time register. This is a machine which indicates on cards or a sheet each employee's number and time, giving the hour when he comes in and when he goes out. Each man's time is transferred either daily or weekly from the time cards or register to the Pay Roll Book. If one of the employees is paid on account or in full before pay day, the amount is noted in the Pay Roll Book, and a debit (charge) ticket is held for it in the Cash Drawer, or the amount may be charged direct to Pay Roll account in the Cash Book. Many houses find it necessary to subdivide the Pay Roll, in order to charge parts of it to different representative accounts. Pay Roll Book For the Week ending December 7, 1901 No. NAME. Occnpation. § 1 o !^ 2 3 4 5 t 6 03 7 Time. Bate. Total Am't Am't I'd a ^ P4 O KEMAEKS. 1 P p u Am't. Reo'd. Due. 1 Kerfoot, C. H. 7 10 10 X 10 X 37 40 14 80 14 80 2 Chandler, A. D. 10 10 10 10 10 X 50 30 15 00 15 00 3 Mead, C. C. X X X 2 5 5 12 35 4 20 4 20 4 Knight, H. E. X X X X X 2 2 25 50 50 5 Hurlburt, M. E. X X X 5 5 5 15 15 2 25 2 25 6 Harvey, J. A. X X X 5 5 5 15 20 3 00 3 00 7 Lincoln, D. E. 5 10 10 10 10 12 5 62 40 24 80 5 00 19 80 8 Harrison, J. M. 10 10 12 12 12 12 68 40 27 20 27 20 9 Hoff, E. E. 12 12 12 12 12 12 72 50 36 00 36 00 10 Grant, M. D. 10 10 10 10 10 10 6 65 50 32 50 5 00 27 50 If 160 25 10 00 150 25 12 13 14 15 16 17 18 Q UE ST I0I4 S 1. How are the books in Bookkeeping classified? 2. Define each. 3. Enumerate the set of books used in most business houses. 4. How many kinds of Order Books are there? 5. Define each. 6. What books contain' a record of the goods received and shipped by a house ? 7. Explain the Petty Cash Book. 8. In which book are the invoices pasted after they are journalized? 9. For what purpose is the Bill Book used? 10. Describe the book which is written up by the bank. 11. Describe the Check Book. 12. What account is kept in it? 13. What is the Pay Roll Book? • Note. — The foregoing Auxiliary Books, except the Bill Book, Deposit Book, and Check Book, have not been introduced in any of the exercises for the reason that they are readily understood from their definitions and illustrations, and their rulings may vary in different houses. 46 BUSINESS RECORD Books of Entry Described 68. The Sales Book contains a record of the sales on credit, giving the names and addresses of the purchasers, the amounts and prices of the goods sold, particulars as to how the goods are shipped, etc. It also contains records of cash sales when complete accounts are desired with the customers. The prices are entered opposite the items and the proper extensions are made. From this book invoices are rendered to the different firms, care being taken to insure exact copies of the invoices in the book. When copying make a check opposite each invoice, thus: "v/-" The book may be ruled to suit the firm's convenience. It has usually two money columns at the right-hand side of the page. The left-hand column is used, when there is more than one item, for the entry of the separate amounts, the sum of which is written in the right-hand column. From day to day the latter column is added, in pencil, and at the end of the month it is ruled and footed, and the total amount posted to the credit of Sales account in the Ledger. Thus the credit amount posted from the Sales Book equals the sum of the debits, which are posted to the customers' accounts. Sales Book Aycxin^^ .l^IniAnJiJj.JOni LEDGER PAGE ITEMS TOTAL 5 C.G. VJaJurijUh V- Co. 0AxdjJV*U05. l-ioyrUujLd CaXa^, TTLo. 10 Mid. PMidhjAJ^ JlcruA. @ $^.00 1J/^-13.Bjul%Co. 0AxhM*D,l3. St.Lcnuid, TTlo. 20-Mrh.CLp.pJjL6 @$5.J5 SA^pfuuL Z:, cA. / Zl/AotjL, cclaIi MxjJjl ^-n ff + cAM5sri5 10 cut. axycZ. cUd. ^.63 C. M £unru2/rh cA. CoaA AoJjU) cAjuJtd Citu IScurvk cUA/ocL cruAy 30cLcuu TbotjL Jcrtal fcfh JjJnAAXXAJJ- Q^yS /75 3J5 21/8(^53 I02UU5 q5 00 50 95 WO Ub3 225 500 I02^^5 5/91 00 00 3S\ 00 00 36 Note. — The above entries that concern Bills Receivable, Bills Payable, and Sales accounts, and the account of C. G. Warner & Co., are posted in the specimen Ledger on page 53. Note. — Study the entry of Feb. 27, W. H. Storm & Co. What amount of money did W. H. Storm & Co. actually pay? If the entry had been made for $458.75 instead of $463.38, it would have been necessary to make a Journal entry to credit W. H. Storm & Co., and debit Interest and Discount, with f 4.63. In order to save labor and to record the entire transaction in one book (the Cash Book), W. H. Storm & Co. are credited and Cash is debited with $463.38, and on the opposite page Cash is credited and Interest and Discount is debited with $4.63. EXERCISE 13 Make the entries in the Cash Book and in the Check Book (page 44) for the following transactions (see note, page 47) : — Manager's Instructions to his Bookkeeper January 2. — "I began business this day, investing cash, $2000. " Deposit to-day $2000." (Enter it in the Check Book, and have it entered in the Deposit Book.) "Write out a check for $25, to the order of Currency, for the cash drawer." Note. — A check which is made out to the order of Currency, or to some individual, to be used for the cash drawer, is never entered on the Cash Book. Instead, entries are made as the money is disbursed from the cash BOOKS FOR BOOKKEEPING Cash Book (Right-hand Page) 49 CclaA C^. DATE LEO. PAGE NAME OF ACCOUNT EXPLANATION EXPENSE SUNDRIES /QO/ pmaIia^ rriM Co. On ouoocnAjTLt cA. 300 00 u t/ lUK U/AA^ y- Co. 200 2 '^ J^MJlYbflb CAJ^. ISoul-cucxixyu/nX cA. ^^ Jjvt/^uyrrvPrriMCa' C. G. CuAtiAd cA. mu.s.y-Co.iiooUj,. u 00 2b5 50 15 X] 22 JAJbi^Jbt % CaAtcbOJL 13M6PcufaML JnnJjiAsJity'^hhXiix:.. 3/ JnruMyrxX/yhu 100000 IQOI J/ixiAMJjjnqn. &)CfuyrLhjb OcZ. Tlxrw BbbC. 3/ [30 3/ / 3 9 J550 ^500 105 26625 15 £) iju:^. 3/ JyOt^d y-G. r-- ^ ^; o- cH ^ IT) ■-<:) ^ JO. ^3^ Q T5^ 10 To ^ a 8 o IQ _1Q_ 5 ?^ ■-0 To INCIDENT A L S U EJECTS 69 97. The Sales (Order) Blanks are used by many large houses in place of Sales Book, Order IJook, and Shipping Book. Note. — Sales Blanks are usually printed in quadruplicate. A white sheet is used for the Sales De- partment and receives the extensions. A pink sheet is used for the Order Department. A blue sheet, which some houses fill out to take the place of an invoice, is sent to the consignee. A yellow sheet is retained at the factory or works. The quadruplicate form necessitates the filling out of only one form by the writer, since carbon paper is used between the sheets. Houses which employ traveling men find it advantageous to use these blanks. They are printed and the columns ruled to suit the line of business. The traveling men are supplied with them and are required to fill them out properly when forwarding orders. As soon as the orders are executed the items are checked on the blanks, which are returned to the office and filed in the Binders ^ of the different traveling men. The invoices are then rendered and the amounts on the blanks posted. When the orders are arranged in this manner a firm can readily ascertain each man's sales. At the beginning of each month's sales several ruled sheets should be placed in the binder, headed " Sales for the month " These should be filled out to indicate the number and amount of each order the binder holds for that month, and on them should be noted, daily, the number and amount of each order shipped and posted. At the end of the month the amounts are added and the sum is posted to the credit of Sales account. Wlien using this form care must be taken to see that all the items have been shipped. Where any have been omitted they should be transferred to a new blank, marked " B. O." (back order). Sales Blank Date Sold fam.. ^/Of. H. B. Clay & Company Folio 3. o Our Order JVo. f03. Their Order JVo. 387^. Salesman, W- . a. a/. Terms Date Billed 30 claiM^. Sold to CI. Id. RUL&v V ^an. f(^^^. 2 Jo/. Shipped Town, Ro&k . R. R. Remarks, 26. Quantity Articles Price Salesmen must not use these columns 5 6-6-ta^. S'ci'vA^&Q^6-tova (S^tatov, @ ^.00 20 00 / kkcL. ??^o-ui^Oy&^, fOO qtxt. , @ .60 60 00 o £6 '^coito' €'?ctva, La-%cf& ?}lcx^k,e^v&t, @ 2.60 62 60 20 (m^ RU ^af(&&, £800 16^., @ .26 728 00 860 60 98. In large houses the binders are arranged differently, one binder being used for each day's business. The Sales Blanks are then journalized in a Sales Journal, often called " Sales Register," and filed for reference. 99. The Sales Journal contains a record of the Sales Blanks. It is used only in large houses. 1 A Binder consists of two heavy pasteboard covers with two perpendicular rods at one end. 70 BUSINESS RECORD 100. specially Ruled Cash Book. — Large houses have their Cash Books ruled to suit the business. The chief difference between the special and the ordinary Cash Book is that the former has more columns for special accounts, whose footings are posted daily or monthly. This is done to save work. For the general principle of the special column, review pages 47-49. In the Cash Book illustrated below, however, two features need explanation. 1. The Discount column, used in order to save Journal entries of discounts allowed on sales and purchases, differs from the other special columns in that its items do not represent cash. Therefore, do not include its total in the Cash account represented by the General or Sundries column, but post thus : Post the total amount of the debit side to the debit side of Discount account, and the total amount of the credit side, if any, to the credit side of Discount account. And when posting to a personal account, include the item of discount (if any) in the amount posted {e.g. W. D. Ames is to be credited with $140.25). 2. When more than one Ledger is used, there are generally separate columns in the Cash Book to indicate the Ledger to which each amount is to be posted. For example, the Sales Ledger column contains the amounts to be posted daily to the Sales Ledger, the Purchase Ledger column those for the Purchase Ledger, and the General Ledger columns those for the General Ledger. (See page 71 for explanation of these Ledgers.) The different Ledgers may be treated as merely so many divisions of one Ledger ; or, as is usually the case, the General Ledger may contain an account to represent each of the other Ledgers, so that a trial balance may be taken from the General Ledger alone. The account representing the Sales Ledger is called Sales Accounts. The debit side of this account is the same as the sum of all the debits in the Sales Ledger, and the credit side is the same as the sum of all the credits in the Sales Ledger. Sales Accounts account is debited with the total sales shown on the Sales Book (for this is the total of the items with which the customers' accounts in the Sales Ledger are debited) ; and is credited with the total settle- Dr. Specially Ruled Cash Book (Left-hand Page) Cash Ledger Disconnt Cash Sales Sales Qeneral 1901 Page Ledger Ledger Dec. 30 31 Amounts bro't for W. D. Ames Chas. Good R. T. Lord & Co. Bills Receivable Cash Sales J. J. Ward Monroe & Co. Cash Sales Taylor & White Discount Dr. Cash Sales Cr. (Sales Accounts Cr.) Cash Dr. ward balance acct. on acct. invoice of 11/30 vv. renn (jis. 3.00 per Cash Sales Book on acct. Nov. acct. per Cash Sales Book deposit sight dft. (Sales Accounts Cr.) total receipts 65 2 1 75 75 20 6755 475 750 00 50 00 35785 137 75 66 250 67 75 50 50 00 00 00 55 00 5675 365 7980 36456 23 50 I 69 70 7980 50 50 36456 55 55 50477 78 INCIDENTAL SUBJECTS 71 raents by customers as shown on the Credit Journal and the Cash Book — i.e. with the totals of the Sales Ledger and debit Discount columns, these entries being indicated by the words in parentheses in the specimen Cash Book on page 70 (for these totals, together with those of the Credit Journal, are the same as the sum of the items with which the customers' accounts in the Sales Ledger are credited). In a similar way the Purchase Accounts account repre- sents the Purchase Ledger. Note. — When a firm discounts or pays bills promptly before the last day of the month, the amounts may be charged, on the Cash Book, direct to the representative accounts, provided no accounts are desired with the parties from whom goods are bought, and great care is exercised to avoid paying a bill twice. 101. The Credit Journal is used for journalizing the invoices received, also for all credits to customers on sales. This book is required only in large houses where there are so many credits daily that they occupy the entire attention of one clerk. 102. The Six-column Journal is of great advantage in certain lines of business. It generally takes the place of the Sales Book, Cash Book, and Journal. This makes it the only Book of Original Entry. It has three columns at the left for debits, and three at the right for credits. Similar Journals may have more than three columns on each side. From the illustration on page 72 explain its use. 103. The Sales Ledger contains the accounts of all customers. Instead of one Sales Ledger, some houses have two — the Country Ledger and the City Ledger. 104. The Country Ledger contains the accounts of the customers located out of the city. 105. The City Ledger contains the accounts of the customers in the city. 106. The Purchase Ledger contains the accounts of houses from which goods are purchased. 107. The General Ledger contains the representative accounts, the partners' accounts, and the traveling agents' accounts ; also the purchase accounts, when a Purchase Ledger is not used. , Specially Ruled Cash Book (Right-hand Page) 23 Cash Cb. 1901 Ledger Page Discount Expense Fnrchase Ledger Oeneral Ledger Dec. 30 Amounts bro't for ward 57 50 927 50 18965 00 7995 05 C. R. Cady Expense Expense Bills Payable Discount bal. acct. to Dec. 1 500 2^ stamps 2 boxes of pens C. R. Cady on W. Penn's note 7 55 10 1 00 50 375 00 600 3 00 00 31 Rent Pay Roll Mdse. Gas Stationery L. Troy & Co. Discount Cr. Expense Dr. (Purchase Accounts Cash Cr. Dec. rent per Pay Roll Book Vance & Co. in V. 12/26 Dec. Gas bill Wells & Co. inv. 12/5 invoice 12/27 (Purchase Accts. Dr.) Dr.) total disbursements 45 75 500 950 2 10 6 939 19385 00 00 75 75 75 65 05 939 00 00 19385 75 75 30393 05 » 72 BUSINESS RECORD Six-column Journal Chicago, January, 1901. Mdse. 94 94 42 42 Oasli 75 75 00 00 Sundries 37 34 94 75 243 37 50 42 71 Ledger Debit Credit Bills Receivable A. C. McKay Five days' sight draft accepted to balance acct. 10 Eastland & Son Mdse. 25 lb. Whitefish returned @ 10^ lb. Cash On account B. D. White 31 Mdse. Sundries Eastland & Son Invoice Jan. 2, 21.32 '' 8, 15.60 C. H. Smith Invoice Jan. 8. Eastland & Son Cash Balance acct. Dr. Dr. Mdse. Cash Cr. Cr. Ledger Sundries 37 75 36 57 37 2 34 243 00 92 50 71 Cash 34 34 42 42 Mdse. 50 50 Indexes 108. Each Ledger should have an index, giving the name and page number of each account. This should be either in the front part of the Ledger or in a separate book called " Index Book." It is more convenient when the Ledgers are large to use Index Books, as they save a great deal of time when posting. (See Posting, page 54.) The indexing of accounts is an important matter, and should be done promptly ; that is, the name of each new account should be inserted in the Index immediately after the account is opened in the Ledger. Neglecting to index accounts often causes a delay in posting, and serious trouble may be caused by opening two or more accounts of the same name. Besides the Ledger Indexes, many large houses have special Indexes containing the names of all kinds of articles likely to be purchased or manufactured, and opposite each the name of the representative account to which it is chargeable. This is necessary when invoices are O.K.'d and marked in different departments. , INCIDENTAL SUBJECTS 73 Partnership Books — How Opened 109. Ascertain the partners' investments from the contract, and make the entries accord- ingly. At the end of each entry write the words "Investment as per contract." When a partner invests the resources and liabilities of an old business, whereby the new concern assumes the liabilities, the entry on the Journal should be as follows : — Sundries Sundries Debit the resources and credit the liabilities, including the partner's Stock account. Single-entry Bookkeeping 110. The difference between Single-entry and Double-entry bookkeeping is that Single Entry omits the representative accounts. In Single Entry only personal accounts appear on the Ledger. As with these accounts alone it is impossible to ascertain the different losses and gains in a business. Single Entry is not practical. Also, errors made in Single-entry bookkeeping are often not detected because a trial balance can not be taken off the Ledger. 111. To change from Single Entry to Double Entry. First. — Take an inventory of all property and goods on hand, placing the items under the headings of representative accounts. Second. — Prepare a statement of the resources and liabilities. The resources are the inventories, the cash on hand, the notes on hand (according to the Bill Book), and the accounts (according to the Ledger) due the firm. The liabilities are the notes which the firm has outstanding (according to the Bill Book) and the accounts (according to the Ledger) which it owes. When all the resources and liabilities have been entered on the statement, draw a line and add each column. Write the balance, as the proprietor's stock account, on the state- ment and add again. This corresponds to making a final trial balance. Third. — Open the new books under the Double-entry system by making a Journal entry of the resources and liabilities, thus : — Sundries Sundries Debit the resources and credit the liabilities, including the Stock accounts. Fourth. — Close the personal accounts in the Single-entry Ledger by inserting in red ink, in each account, the date of the transfer, the word " Balance " and its amount, and the page in the new Ledger to which it has been transferred. BUSINESS OF A CAPITALIST — EXERCISES The capitalist is C. G. Pillsbury of New York city. His books have been kept by Single Entry as indicated by the face of the Ledger shown on pages 74-77. As the capitalist realizes that his Ledger does not show what his estate is worth, he requests his bookkeeper to change the set to Double Entry. Pages 74-79 show the face of the Ledger, Bill Book, Stock Record, Bond Record, and a list of inventories of assets that are not on the Ledger. Books required : Bill Book, Stock Record, Bond Record, two Check Books, two Deposit Books, Sales (Rent) Book, Journal, Cash Book, Ledger. The Sales Book for this set should be called " Rent " Book, or " Rent Sales " Book. Thus the total sales would be credited to either Rent account or Rent Sales account, whichever the teacher prefers. Rule separate sheets for the Stock Record, Bond Record, and Bill Book like the specimens on pages 78, 79, after which copy on these sheets and in your books the contents of the capitalist's books as shown on pages 74-79. Then begin to change the books to Double Entry according to the directions given above. Allow for each account in the Ledger a third of a page. 74 BUSINESS RECORD Representative accounts used : Horses and Carriages, Furniture and Bric-a-brac, Library, Diamonds, Stocks and Bonds, Bills Receivable, La Salle Ave. Apartment Bldg., Madison Ave. Residence, Commonwealth Ave. Apartment Bldg., Bills Payable, Suspense, General Expense, Charity, Interest, Insurance, Discount, Rent, Dividend, Mortgages Receivable, Commonwealth Ave. Residence, Commission, Cash, Loss and Gain. Note to the Teacher. — Since the student will use the same Ledger after the books have been changed to Double Entry, the old accounts in the Ledger should be ruled and their balances inserted in red ink but not brought down, because the balances will be posted from the Journal entry which is made for the transfer. Consequently, the old accounts must be balanced and ruled before posting the Journal entry. Ledger SECOND NATIONAL BANK 1 1900 190( 3 New York Oct. 1 Balance, 9500 00 Oct. 31 Checks for October, 77 15760 00 11 31 Deposits for October, 77 25000 00 Nov. 30 " " November, 80 20950 00 Nov. 30 " " November, 80 27850 00 Dec. 31 " " December, 82 25000 00 Dec. 31 " " December, 82 ^0050 92400 00 00 61710 00 FIRST NATIONAL BANK 1900 1900 Chicago Oct. 1 Balance, 10000 00 Oct. 31 Checks for October, 77 5700 00 (( 31 Deposits for October, 77 9050 00 Nov. 30 " " November, 80 10800 00 Nov. 30 « " November, 80 6750 00 Dec. 31 " " December, 82 7800 00 Dec. 31 " " December, 82 12000 37800 00 00 ■ 24300 00 M. D. TUTTLE 1900 New York Oct. Balance, 750 00 RYDER & -WHEELER 1900 Oct. 1 Balance, 2965 00 BUSINESS OF A CAPITALIST— EXERCISES 75 Ledger — Continued C. D. BARON 1900 Philadelphia Oct. Balance, 250 00 C. C. PURDY 1900 1900 New York Oct. 1 Rent, 75 500 00 Nov. 15 Cash, 79 300 00 Nov. 1 (I 78 500 00 Dec. 15 (( 81 600 00 Dec. 1 a 81 500 1500 00 00 900 00 M. G. 'WILLIAMS 1900 1900 ISfew York Nov. 1 Interest, 77 265 00 Dec. 30 Cash, 82 265 00 Dec. 15 Loan, 81 1500 1765 00 00 i D. D. HEYWOOD 1900 1900 Boston Oct. 31 Balance, 200 00 Dec. 15 Cash^ 81 650 00 Nov. 1 Rent, 78 400 00 Dec. 1 u 81 400 1000 00 00 i W. W. ALLEN 1900 1900 Cincinnati Nov. 5 Loan, 79 5000 00 Dec. 24 Cash, 82 7000 00 Dec. 10 (I 81 2500 00 « 31 Interest, 82 450 7950 00 00 ' 76 BUSINESS RECORD 10 Ledger — Continued J. R. CLARK 1900 Neio York Oct. 1 Balance, 300 00 C. M. COLLINS 11 1900 1900 Boston Oct. 31 Balance, 800 00 1 Nov. 15 Cash, 79 650 00 Nov. 1 Kent, 78 125 00 Dec. 1 (( 81 125 1050 00 00 12 H. O. STORM <& CO., Rent Agents 1900 190C ) Chicago Oct. 31 Rents collected, 77 300 00 Oct. 31 Commission, 77 30 00 Nov. 30 (( ii 80 500 00 Nov. 15 Cash, 79 200 00 Dec. 31 t( (e 82 500 00 (( 30 Commission, 80 50 00 1300 00 Dec. 15 Cash, 81 650 00 (( 31 Commission, 82 50 980 00 00 Estate of M. M. MORGAN 13 1900 1900 New York Oct. 31 Attorney fees, 77 700 00 Nov. 30 Repairs on Bldgs., 80 9050 00 Dec. 31 Attorney fees, 82 300 10050 00 00 14 ROUND & MASON, Attorneys 1900 1900 New York Nov. 15 Cash, 79 1000 00 Oct. 31 Bill for services, 77 1600 00 Nov. 30 (I u u 80 270 00 Dec. 31 ii il u 82 480 00 235000 BUSINESS OF A CAPITALIST— EXERCISES 77 Ledger — Continued CRAWFORD & HILL, Attorneys 15 1900 1900 Cldcago Nov. 15 Cash, 79 200 00 Nov. 30 Bill for services, 80 400 00 Dec. 31 (( a u 82 690 1090 00 00 16 INTERIOR DECORATING CO. 1900 1900 New York Dec. 15 Cash, 81 10000 00 Nov. 30 Bill for November, 80 15500 00 15 Note, 81 5000 15000 00 00 Dec. 31 " " December, 82 5900 21400 00 00 Dr. C. C. "WALKER 17 1900 1900 New York Dec. 15 Cash, 81 50 00 Nov. 30 Bill for November, 80 45 00 Dec. 31 " " December, 82 55 100 00 00 18 E. R. AUSTIN 1900 New York Oct. Balance, 250 00 1900 G. M. CHURCHILL 1900 Chicago 19 Dec. 15 Balance, 45 00 Dec. 29 Cash, 82 45 00 78 BUSINESS RECORD 1 II o a> 41 Kg. of Shares Trans- ferred n3 S 1 m o +» •a 1 '•a 1 o o o o. o o o o o o o o o o o o o o O O »0 lO lO o O O ^ 05 c^ o lO t- Oi T-l ;d o Purchase Value per Share o o o o o o o o o o o o lO o o o o o t- O lO CO lO o t- (M CO T-l C^ -, r 1 >^' » i 2 1 c3 . JH .3 ^ '"3 ^ ^ '^ p O Pm No. of Certifi- cate QO lO O t- O CO CO l^ CO »o iCi o t- lO C5 C5 CO o Oi GO Ci CO -^ 1-- M ea a M tH rO >^ d ^ 3 A4 ►-S iH 5 fl 2 ^ l« 1 ^ ^ ►3* P3 CO k:. o o o o 1 o o o o 1 o o lO o iH (N g o o ^ o o o o 'c o o K5 O g lH p c« <» rt o o o S CO iM !z;( jq T-i a iH r-i a Oi 2 tH tH d ^ rH >> >> S P ^-5 l-S t» ;h c3 ^ EH O O 1 '^ O O >> 6 M o ^• _e ^ ? hH 275 00 \«?^ \./ 1 400 00 ^<^. 115 00 3 790 00 O |i 375 00 O CO 55 00 e S^ • '«.«'? 400 00 ;a 1;^ 225 00 •2 S 5» 5 000 00 ■^ •< s « i 1 9 845 00 < «» a, O Charge, SeconD National 23anft Jfew York, fomAOa^l/lf SO, 190/ . 6000 00 1 Banks having counting machines send a voucher slip when returning the checks which have been cashed. January 5/. — Check ^11, $3685.83, is still out. PART III. BUSINESS FORMS SECTION I. THE FORMS -THEIR USE 112. Among the forms used in business are : — Bill, Invoice, Debit Memorandum, Credit Memorandum, Draft, Bill of Exchange, Note, Check, Certificate of Deposit, Money Order, Receipt, Voucher, Statement, Account Sales, Bond, Stock Certificate, Express C.O.D. Envelope, Freight Bill, Freight Receipt, Bill of Lading, Notice of Overdraft, Notice of Note or Draft, Protest for Non-payment, Notice of Protest, Power of Attorney, Letter of Credit, Bill of Sale, Assignment. , - Bills and Invoices 113. A Bill is a written account of services rendered, or charges made, prefaced with the words " To ..^^i fl™l . Dr. " BUI Chicago, hmtm^lybv 2J, 190/ . To REND & PIERCE, Dr. Attorneys at Law. SO /O 00 00 00 66 00 85 86 BUSINESS FORMS 114. An Invoice is a written account of merchandise sold, prefaced with the words " Bought of .(the Arm) _ " or " -it^sA™!. Sold to " 115. Invoices and bills are rendered daily from the Sales Book (or a similar book) to the customers, and are supposed to be exact copies of what appear in the Sales Book. The bills and invoices received during the month are not journalized until the ' last day of the month (unless they are discounted), when they are credited to the accounts of the proper persons and companies by Journal entries, having for explanation the word " Invoice," with the date and amount. In large houses a Credit Journal is used so that the invoices are journalized daily. Each bill and invoice should be O.K.'d as to the price, the extension, etc., before being journalized, and the name of the account to which the amount is to be charged (debited) should be marked on it. Note. — A rubber stamp is generally used for marking on the bills and invoices a blank form containing lines for the date when the goods were received, the signatures of the persons who O. K. the price and the extension, the name of the account to be charged, and the page of the Journal containing the entry. Many houses prefer to paste the bills and invoices in the Invoice Book, and post direct from there, instead of making Journal entries, but this practice is not advisable. Invoice Chicago, ja/yiiLCivy /^, 190/ . Bouglit of H. B. CLAY & CO. 4 /OO 3 6-ooce^ &v&a.'y>v (^k&e^e^, 6000 lA. @ /6^ hMU. W-. (g. ^u(^, 9^0 60.. @ 5^ 800 00 50 8^...x^-.,--.,-^^^'n,^~.^^^-sv-v^-s^^.^^-^v^^^ Thirty ^ ^ Dollars, at Students' National Bank .^,-^^'^..,-,^^~^---..^'-^..^^^.,^-^.^^^^^~.^^^^^^ with interest at 6 per cent per annum after June 30 until paid. And to secure the payment of said amount /hereby authorize irrevocably, any attorney of any Court of Record to appear for me in such Court, in term time or vacation, at any time hereafter, and confess judg- ment without process in favor of the holder of this Note for such amount as may ajipear to be unpaid thereon, together with costs, and ~s..'n„ dollars attorney's fees, and to waive and release all errors which may intervene in any such proceedings, and consent to immediate execution upon such judgment, hereby ratifying and con- firming all that my said attorney may do by virtue hereof. No. 2 WM. WHITE. 132. A Joint Note is one signed by two or more persons, who need not necessarily be part- ners. If the note is made joint and several^ each and every signer is responsible to the payee for the payment of the entire amount in case of default by the makers. Joint and Several Note $500.00 San Francisco, June 15, 1901. Two months after date. we severally and jointly promise to pay to the order of Burton M. Flower. Five hundred^^,^-^/^^..^.,^^,.^^.^,^^^^ .^.^^■.^..^^^.^.^■.^.^..^.^.^^^-.^-^.^-.^^^.^.^.^.^.^.^.^ f^ Dollars, at the San Francisco Bank. Value received. D. R. YORK. GEORGE M. WHITE. 133. Gold Notes (Promissory) are made payable in United States gold coin or its equiva- lent. There have been times in the history of the country when it was advisable to make long time notes payable in gold to prevent their value being affected by possible fluctuation in the value of paper or silver money before maturity. • 134. A Negotiable Note specifies on its face that the money will be paid to the order of a certain person, or to a certain person or order. 135. A Non-negotiable Note omits the "or order" or "the order of," and the note is of no value to any one except the person to whom it is made payable. Non-negotiable notes are sel- dom used and should be avoided. 136. An Accommodation Note is one given without any valuable consideration, the maker lending his name and credit to the payee. The maker of an accommodation note is under no obligation to the payee, but is under obli- gation to any third party holding the note, just as if the note were given for a consideration. 137. A Collateral Note gives its holder power to sell the securities which are mentioned therein, if the note is not paid at maturity. 94 BUSINESS FORMS Collateral Note $5000.00 New York, January 5, 1901. Thirty days after date I promise to pay to the order of John Blennerhasset Five thousand .^^^.-^^^^^r-^.^.^-^^^^^...-^^^-..-'^..^^^^ f^^ Dollars, for value received, with interest at the rate of 6% per annum, having deposited with him, as collateral security. Students' National Bank Stock of the nominal value of Ten Thousand Dollars (with authority to sell the same at the Brokers' Board, or at public or private sale, or otherwise, at his option, on the non-performance of this promise, and without notice). A. M. HYDE. 138. Collateral Security is anything deposited with the holder of a note as a guarantee of payment. If bonds, notes, stock certificates, etc., are offered, they must be indorsed in blank so that the holder can dispose of them if necessary. EXERCISE 27 Draw the notes and make Journal entries, on Journal paper, for the following transactions, and mention the books which should receive the entries : — 1. C. H. Harris & Co. gave to A. M. Lord & Co. their demand note for $85.50, dated February 5, 1901, to balance account. Draw the note. What should be the entries on the books of C. H. Harris & Co., and also of A. M. Lord & Co. ? 2. C. M. Nichols & Co. borrowed of their bank (Students' National Bank) 1500 for 30 days. , The bank demanded a judgment note, which it discounted by entering on the Deposit Book the proceeds of the note, $497.50. Draw the note. What should be the entries on the books of C. M. Nichols & Co. ? 3. Mrs. A. Winter borrowed $75 of C. H. Reel & Co. on a joint note, at 60 days, bearing interest at 3 ^ per month, signed by C. G. Winter and herself. Draw the note. What should be the entry on the books of C. H. Reel & Co. ? 4. H. B. Clay & Co. received of A. B. Rider & Son their note (negotiable) for $400, at 30 days, to balance account. Draw the note. What should be the entries on the books of H. B. Clay & Co. and of A. B. Rider & Son? 5. Mrs. George Lord accepted of E. B. Warren his non-negotiable note for $50, payable in three months, to balance his board to date. Draw the note. What should be the entry on the books of Mrs. George Lord ? .6. H. B. Cooper & Co. borrowed of the Chicago Real Estate Co. $900 for 30 days, with interest at 6^ per annum, giving as collateral security ten shares of City Railroad Stock, valued at $1000. Draw the note. What should be the entry on the books of H. B. Cooper & Co. ? Checks and Certificates of Deposit 139. A Check is an order on a bank to pay a certain sum to a person or company named thereon, called the payee. It is signed by the maker, whose signature is on record at the bank. Checks must be numbered consecutively, and each stub should bear the same number as its check. It is usual to write the stub first. • CHECKS AND CERTIFICATES OF DEPOSIT Check 95 Chicago, TTImJocA. 2q, /qof. m. 3^5 of Cliicago Fay to the Order of ^^XxJtbxrTU , CIoaA %&), $250^ JbU-0 hjyU^rud/UuL CurVcL -M^^ '^/loo . Dollars. EXERCISE 28 Make out checks, dated to-day, for the following firms : — G. A Wait & Co., ... $ 25.00 W. T. Smith & Co., C. M. Drake & Co., . . . 68.75 W. B. Sanborn, . $ 123.50 100.00 140. A Certified Check is a check which has been accepted by the bank on which it is drawn. The Paying Cashier accepts for the bank by stamping the words "Accepted, payable through the Clearing House " on the face of the check, and adding the date, the name (f the bank, and his signature. Sometimes such checks are certified by the Cashier of the bank merely writing the word "Accepted," the name of the bank, and his signature. 141. When a certified check is not used do not destroy it, but indorse the check, the same as any other (page 108), and deposit in the bank. When a certified check is lost or de- stroyed, the bank on which it is drawn compels the maker to give bond for double the amount, in order that it may be protected in case the check should ever be presented for payment. 142. A Certificate of Deposit is issued to a depositor by a bank, certifying to the deposit of the amount mentioned. It is generally issued to a small depositor, or to one who does not wish the credit to show in an open account. Certificate of Deposit CO o Du UJ Q u- O h- o Ul) o Chicago, JannAxii/if f^, 1902. This is to Certify that (S. 7H. iTlcidi^uyyt has deposited in this Bank SlfttbTl k'UincituL .-^^..^^..^^^^-..^^.^^^^-^..^^.^^^^^^-^^^^^^^-^ j^ Dollars, Payable to the Order of (^tdVCU 8l'>V on return of this Certificate, properly indorsed. ~ Cashier. 96 BUSINESS FORMS Money OitDERS 143. A Money Order is an order (somewhat like a bank draft) for the payment of a specified sum of money to a person named therein or to his order. These orders may be 'purchased for tlieir face value, plus a slight fee, at any important post office, or at the offices of standard express companies. 144. Post Office money orders are either Domestic or International. The former are pay- able at post offices in the United States ; the latter at certain specified offices abroad. 145. Express money orders, such as the American, Wells Fargo, United States, etc., are payable at all branch offices or agencies of the companies at home and abroad. Receipts and Vouchers 146. A Receipt is generally an acknowledgment of a remittance or payment which may have been made in cash, or by note. Receipts are also given for other purposes, such as for merchandise delivered, etc. 147. Acknowledgments of payments are sometimes made by letter, by receipt forms, or by writing on the statement, note, or invoice the word " Paid," signing the firm's name, per , giving the date on which it is paid. 148. When an account is settled by note, receipt the statement thus : " Settled by day note per ." Receipt. — To Apply on Account $20.00 Chicago, (Zl^C^'H'^t 3, WO / . Received of^.^.^..^.^^^.^.^.,^..^.^^ ?. li^kitb 2^ &a., _^ 3^Wblvtif ~^.-..,^-.^~^--..^-..^.^.^^.^...^.,.^^ tS Dollars, to apply on account. (g. oc. mood. Receipt. — In Full of all Demand $35.75 Boston, January 28, 1901. Received of -^.-^..^..^-.^-^.^-.^.-..^^^^^-..^s.,-,.,^^^ Fuller & White ,-^^.^^-^,>^.-^,,^,>.,..^,.-^^^,>,^^.x-n..^ Thirty-five ^-.^-.^.^^^^^.-.^^^.^...^.^-.....^^^^^.^^ ^ Dollars, in full of all demand to date. John G. Brown. Receipt. — In Full for Invoice $50.00 New York, May 6,, 1901. Received of ,^,,.,^,..^,-..^,^.,,-^^,,,^,-,.^.^^ Smith & Son^.-^^^^^-^^.-^-^-v.-^-s.^.'N..^.^ Fifty ../-.^..-...-..^..^^^^-^^^^^ S I^ollars, in full for invoice January 28. Baldwin & Murray. RECEIPTS AND VOUCHERS 97 $400.00 Received of. Four hundred, in full of account to date. Receipt. — In Full of Account St. Louis, September 7, 1901. A. B. Rider & Son ..^...^..,^.^^.^^^^.,..,^ Yq^ Dollars, H. B. Ferry & Co. EXERCISE 29 Mail receipts for remittances received from the following firms: — Febntary 6 C. B. Frost & Co., G. M. Williams & Co. A. B. Rider & Son Carter & Brown On account On account To balance account On account $50.00 675.10 132.62 46.62 149. A Voucher is usually in the form of a statement with a receipt attached. It is used as a receipt. Vouchers are numbered consecutively and filed for reference. Voucher J^o. 20/ C. G. WHITE FURNITURE CO. Voucher. Chicago, j^lLj 6, 190/. Address JtbW- VaiA. h 6 'Irv dM^awrit 3000 00 Account examined and found correct, 10. //. c^. Approved for payment, Received jul/lf 6, 190/ . From the C. O. WHITE FURNITURE CO. 3^A/u&& tAau.'oUi/nzC . In settlement for the above account. $3000'^^ . j^ Dollars. ^ftdi^a/ut y^ &(>. 150. Corporations use vouchers to account and receipt all money disbursed. Some large corporations have their vouchers so arranged and printed that they take the place of their checks as well as receipts. When such combined checks and vouchers are received they should be entered as Cash, and then signed and deposited. 98 BUSINESS FORMS Statements and Account Sales 151. A Statement is a copy of an account, with the dates and amounts, as it appears on the Ledger. It is not necessary every time a statement is made to show each month's dates and amounts, but begin bj^ writing the date of the last statement and inserting the word " Balance " with the amount, and then proceed with the current month's business. For the form of a statement see pages 59, 60. EXERCISE 30 Mail statements to the following customers, according to the Ledger on March 1, 1902, assuming that statements had previously been sent on February 1 : D. M. ROBINSON & CO., Detroit, Mich. 1902 1902 Jan. 2 Mdse. 25 00 Jan. 6 10 125 00 15 13 75 00 Feb. 3 Feb. 3 35 00 16 15 85 90 24 75 00 28 " 100 00 Overcharge Cash BURRY & SWIFT, Boston, Mass. 1902 1902 Jan. Feb. Mdse. 750 125 135 450 Feb. Cash 30 day note Cash 500 250 100 SHEA, SMITH & Co., New York 1902 1902 Jan. 7 Mdse. 75 00 Jan. 31 10 (( 35 50 Feb. 5 16 (( 95 75 10 Feb. 8 u 27 95 28 (( 105 00 Mdse. Inv. 1/6 Cash 50 55 100 RUSSELL & WHITE, New Orleans, La. 1902 1902 Jan. 6 Mdse. 250 00 Jan. 10 7 " 100 00 15 10 u 79 50 30 Feb. 10 16 (1 76 65 00 70 Feb. 20 Shortage Freight Cash GOODRICH & BEST, Memphis, Tenn. 1902 1902 Jan. 7 Mdse. 175 00 Jan. 10 10 (( 25 00 Feb. 3 15 (( 35 00 25 Feb. 16 u 16 00 28 u 65 00 Cash BOND, ROYAL & CO., New York 1902 1902 Jan. Mdse. 85 76 100 Feb. Cash Mdse. Inv. 2/3 12 5 332 100 200 35 25 50 100 152. An Account Sales is a statement from a commission merchant issued after the sale of a consignment, giving the name of the consignor, the items, and gross amount, the charges incurred in making the sale, the ■ commission, and the net proceeds. Many commission merchants use a specially ruled form, but others use common statement blanks. BONDS AND STOCK CERTIFICATES 99 153. A Consignment is a shipment of merchandise from a person or persons, to be sold on their account and usijally at their risk. 154. The Consignor is the shipper. 155. The Gross Amount (Sales) is the sum realized on the consignment. 156. The Net Proceeds is the result obtained after the commission and the charges have been deducted from the gross amount. Account Sales Wholesale Produce Commission Lot JVo. d. Chicago, ^(stah^bV 22, 190/. Account Sales by A. M. CHASE ^ CO. Of 20 h-dWbt^ Oy/Qyplb^ For (^. 6. W-iltLanfiQ., Received Qotal^fb /8, 190/ . ol'h^lymcfci'yb , W-i^. 6 8 3 3 ^^^£^ @ 3.00 " a^ijitm. @ 2.60 '' COfi,js.U^ @ 2.00 Charges, Freight, 6.30. Cartage, 60 ., ^cyVlV-tV^t Station, 6 J /5 WO / , Fro. J\'o. 206 Destination via To The Pittsburg, Cincinnati, Chicago ^ St. Louis Railway Co., Dr. For Charges on articles way-billed from /J^ChvLo-Tb via No. of Pkg. Articles and Marks Weight Eate Freight Advances Date of "Way-bill 61/2 Series and Number of Way-bill 2 <^m'. ^OMZtn-a ffO 60 i/./q Car Initial and Number Consignor Connecting Line 1 1 1 Reference Original Car „ , , _. , Total to collect lieceived Fayment Original Way-bill No. Freight Agent. Brayage Original Point of 19 . Shipment Original paid Freight BiUa should accompany all claims for overcharge, loss, or damage. 162. Freight Receipts are of two kinds ; one is a receipt from a transportation company for goods to be shipped (as illustrated below), and the other is a receipt for charges paid on goods either received or shipped. Freight Receipt FITTSBURG, CUTCIJ^JfATI, CHICAGO ^ ST. LOUIS R.R. CO. Original. iTicuilaru, J^vui., 6 J /2, 190/. Received from ??J(IVW-9V Sv&y Juyyu &a. In apparent good order, the articles named below, to he delivered in like good order, without unnecessary delay. To /Oil ^ Bu>W^ gtttt &9t(f. ^a. At Sarbv-s.'b^^, Joixi. Marks As per Conditions of Company'' s Bill of Lading. No. Description of Packages Weight, Subject to Cor- rection Rate of Freight per 100 lb. s Jr. ??Uav&, Agent. f/0 25 BANK NOTICES 103 163. A Bill of Lading is a written instrument from a railroad or transportation company, acknowledging the receipt of certain goods, which it promises to ship to destination, in good order, under the conditions named in the instrument. Bill of Lading PENNSYLVANIA COMPANY Bill of Lading J^o. dltUlTlQ^, 6'fbla, Station, ju.'PVb f f , WO / . Received from dm^tUA^Cb'Tb cft&eL (^ota^. &0: BY PENNSYLVANIA COMPANY, The property described below, in apparent good order, except as noted (contents and condition of contents of packages unknown), marked, consigned, and destined as indicated below, whicli the said company agrees to carry to the said destination, if on the roads operated by it, otherwise to deliver to another carrier on the route to said destination. It is mutually agreed, in consideration of the rate of freight hereinafter named, as to each carrier of all or any of said property over all or any portion of said route to destination, and as to each party at any time interested in all or any of said property, that every service to be performed hereunder shall be subject to all the conditions, whether printed or written, herein contained, and which are hereby agreed to by the shipper, and by him accepted for himself and his assigns as just and reasonable. Upon all the conditions, whether printed or written, herein contained, it is mutually agreed that the rate of freight from (Xttia,'K(^& to c/a, (P^kle^aOf Jtt., is to be, in cents per 100 lb. If... Times First Class If First Class If Second Class If Third Class If Fourth Class /si If Fifth Class If Sixth Class If Special Class Rate And advanced charges at Marks, Consignee, and Destination Description of Articles / /Owue.k.te' / K iyyv / fdu/}icit& Weight (subject to correction) 72 CONDITIONS L. //. ieet, Agent. Bank Notices 164. Notice of Overdraft is a form used to notify a depositor that his bank account is overdrawn. Notice of Overdraft Stut)cnt0* National Banli Chicago, jdnudvy 20, 1902. Mr. Jah/yu ^uw-cubt, Your a/icount appears to he overdrawn $SS .00 . Please bring in your book to be written up, and deposit the amount of overdraft. Can/iier. 104 BUSINESS FORMS 165. Notice of Note, or Notice of Draft, is a notice from a bank, informing the person or company whose name is mentioned of a note or draft due at the bank on the date mentioned. Notice of Note Stubente' motional Banli Chicago, Jd'VbUyCi'by d, 1902. Your Paper for $6000 Matures on JcL'H/iiCb'by' 6. (&. S. Suyuyyv, Caxhier. Checks presented in payment must he certified. Banking hours, 10 a.m. to 3 p.m. Saturdays, 9 a.m. to 12 m. 166. Protest for Non-payment is a notice sent to the maker of a note or check, or acceptor of a draft, informing him that his note, check, or acceptance was not paid at the time of bank closing and was protested in consequence. Protest for Non-payment State of Illinois ^ ^^ ^^ known that on this SlqktttwtA Cook County \ss. ^ / City of Chicago J ^^V ^f /(^^'^Cl'l^y/ in, the year of our Lord one thousand nine hundred and vW-O, I, Ju. CC. joTbtQ^^ a J^otary Public, duly commissioned and sworn, and residing in the City of Chicago, in said County and State, at the request of Students' National Bank of Chicago, went with the original '}tOv& which is above attached, to the office of /J'h Jo. futVcC (f' ^lo. 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 said Instrument, 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 instrument. And I, the said Notary, do hereby certify that within forty-eight hours of the day and year above written, due notice of the foregoing Protest was put in the Post Office of Chicago, 111., as follows: — Notice for ?n. A Biui V ^., ^kUoucfa. Notice for jak'vu ^t&w-cLvt, ^kie^oMo-. Notice for Each of the above-named places being the reputed place of residence or business 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 above written. L. (Z. ^'wt^, Notary Public. 167. Notice of Protest is sent to indorsers of a note or draft, and to the drawer of a draft, informing them that the note or draft has not been paid, and that the bank looks to them for the immediate payment of it. POWER OF ATTORNEY 106 Notice of Protest State of Illinois i r SS County of Cook i ' Chicago. III., fcunVUdlAf /8, 1902. Sir: A cJratb for $/00 _,^_. Payable ^tmA^TbtoJ JtcitLarLaL SanA, Signed hy TH. h. SluC ^ ^O. Indorsed by uOii^f has been this day by me protested for non-payment, and I hereby notify you that the payment thereof has been duly demanded, and that the holders look to you for payment, damages, interest, and cost. Done at the request of the Students' National Bank of Chicago, 111. L. (Z. f(yyit^, To Jafwi ^tbW-dvt Please forward inclosed notices. / Notary Public. Power of Attorney 168. A Power of Attorney is a written instrument in which the first party named gives to the second party legal authority to act for him as may be specified therein. Power of Attorney Know all Men by these Presents that c/ ^, ^. Ro^Q. a^ cA&vv- Zlavh ^itif have made, constituted, and appointed, and by these Presents do make, constitute, and appoint j/d'nv&a' ZO-. €ttly^ at Cit{>'a,'yvu, cyf, Zi., 'nvu true and lawful Attorney for vn^e^ and in 'm.u name, place, and stead lav tke> jn^uvja^o^e^ ot naaatCatCna ayncL &ii&&tina tk& a^cit& at ^, ^. Ram^ I/' (^o/a- ^'u>&-eA.'i^ ^t^v& las^t&cC at oAo. ^062 BvaculAAWAt, c/l's/W' llavk^ giving and granting unto ■>;ixy said Attorney full power and authority to do and perform all and every act and thing whatsoever requisite and necessary to be done in and about the premises, as fully to all intents and purposes, as c/ might or could do if personally present, with full power of substitution and revocation hereby ratifying and confirming all that yyvu said Attorney or /tt^ substitute shall lawfully do or cause to be done by virtue hereof. In Witness Whereof -u^fi- have hereunto set a^ov liand and seal the tkivcL day of jwK&, one thousand 'yivyve^ hundred and an&. Signed, sealed, and delivered in presence oi\ ^ Ra PsealT fa/vyv&Qy W^. Sttio' [seal] 106 BUSINESS FORMS Letters of Credit 169. A Letter of Credit is a letter, usually from a bank, authorizing a foreign banker to give the holder credit for the amount stated therein. Letters of Credit are used especially by persons traveling in foreign countries. Letter of Credit Circular Letter of Credit Ei|e Nortfjern Eruist Compattg Chicago, III., jamii'a.vy, 6, 1902. To the Bankers, Correspondents of the JS'orthem Trust Com- pany named in the annexed list. Gentlemen : — We heg to inform you that ^. ^. /flit the hearer of this letter is authorized to draw on the Bank of Scotland, Lothhury, London, England, for £/000, say an& tkcyu^oAvcC _-x.,.-^.^-^-^.-x.-v^ pounds sterling, to which extent this Bank engages to honor /vuu drafts drawn at sight. It is understood that this Credit shall remain in force until Tna.%&h /, /^02. All drafts negotiated under this Credit must state on their face the number {Jfo. 60f) and date of this letter, and the amount thereof must be in- dorsed hereon, your charges being deducted from the proceeds. A specimen of ^. ^. /fvtt'ay signature is append- ed to the letter of introduction of which he is the bearer. This letter must be returned with the last draft drawn against it. Countersigned: Your obedient servants. President. Cashier. N. B. —The bearer is advised to keep the Letter of Introduction apart from the Letter of Credit to prevent their being lost or stolen together, also to affix immediately his usual signature at the place indicated in the Letter of Introduction as a precaution against forgery in the event of the Letter of Introduction or Letter of Credit falling into improper hands. The Northern Trust Company will not be responsible for the consequences arising from an omission by bearer to observe these precautions. JYo. 6oq Wi^z Wortj^Etn SErust Compang Chicago, jcMvu^a/iy, 6, 1902. To the Bankers, Correspond- ents of the Korthem Trust Company. Gentlemen : — This serves to intro- duce to you Mr. ^. #, ffilt of (Q^ki(M.(fa, Jtt. , the bearer of our Circular Letter of Credit J^o. SO'^, a specimen of whose signature is at foot hereof. Yours truly, Signature: ^. #. f-filt. N.B. — The bearer is advised to keep the Letter of Introduction apart from the Letter of Credit to prevent their being lost or stolen together, also to afhx immediately his usual signature at the place indicated in the Letter of Introduction as a pre- caution against forgery in the event of the Letter of Introduction or Let- ter of Credit falling into improper hands. The Northern Trust Company will not be responsible for the conse- quences arising from an omission by bearer to observe these precautions. Bills of Sale and Assignments 170. A Bill of Sale is a written instrument in which the party of the first part grants and conveys to the second party, for a consideration of money, all his right, title, etc., to the per- NEGOTIABLE PAPER 107 sonal property mentioned. In many states this instrument, to be valid, must be placed on record with the County Recorder or some other official. Bill of Sale Know all Men by these Presents, that c/, f. ^. ??l&vvitt of the &Cti^ a^ ^kl&Axcfo- in the County of (^aak, and State of JtLinoioy, party of the first part, for and in consideration of the sum of t^v-o kuncL'L&cL ..^-^^^^-^^-^q dollars, lawful money of the United States of America to m.^ in hand paid, at or before the ensealing and delivery of these Presents by c/. ^. dvrvatd oj- t/t& ^Itu at (^kie^aa, jn-oivtu of the second part, the receipt whereof is hereby acknowledged, have granted, bargained, sold, and delivered, and by these Presents do grant, bargain, sell, and deliver unto the said party of the second part, all the following goods, chattels, and property, to wit: (yfo. iO JLch ^aLt& oft.; (>-&to-ruiUnq to 'vyv& g^'kcL now- i^n yyuu '^aa^e.Q.Q^vo-'yv at tke ys^ta^ey tixoX. clIov&o-ciCcI To have and to hold the said goods, chattels, and property unto the said party of the second part kCa^ heirs, executors, administrators, and assigns, to and for kia^ own proper vise and behoof, forever. And I the said party of the first part do vouch kiAn. to be the true and lawful owner of the said goods, chattels, and property, and have in full power, good right, and lawful authority, to dispose of the said goods, chattels, and property, in manner as aforesaid : And I do for my heirs, executors, and administrators, covenant and agree to and with the said party of the second part to warrant and defend the said goods, chattels, and property to the said party of the second part kt^ executors, administrators, and assigns against the lawful claims and demands of all and every person and persons whomsoever. In Witness Whereof w-a have hereunto set ativ hands and seals, the j,vi day of /^-fo-y in the year one thousand nine hundred and two. Sealed and delivered in the presence of "i n ^ in^ 'ts r -■ ^ / ' f. ^. me^'bvvCC [seal] ^ c/. ^, CLvnatd [seal] 171. An Assignment is an instrument by which certain property or rights are transferred to another party for a consideration. There are different forms of assignments. Frequently an assignment is written on the back of another instrument to transfer the property or rights represented by that instrument. A party may make a general assignment of all his property. This is done in case of failure in business, for the purpose of securing to the creditors a fair division of the remaining assets. SECTION II. NEGOTIABLE PAPER 172. Negotiable Paper consists of notes, drafts, checks, and similar papers of value, which are made payable " to bearer," or " to order," and are therefore salable on delivery or by indorsement. In the latter case the signature of the owner or payee is required on the back of the instrument, and constitutes a brief form of assignment. 108 BUSINESS FORMS Indorsements 173. An Indorsement is a signature, with or without other words, written on the back of a check, note, or draft. The indorsement should be written across the back of the left-hand end of the paper, the top of the writing being toward the end of the paper. There are seven forms of indorsement, — In Blank, In Full, Without Recourse, Non- negotiable, For Collection, For Signature, and For Deposit. 174. In Blank. — This is the simple indorsement of the payee's name on the back of a clieck, note, or draft, making it payable to bearer and transferable by delivery to a third party. 175. In Full. — A note, check, or draft is indorsed in full when the payee makes it pay- able to the order of some other person or persons by writing on the back of it, " Pay to the order of ," and signing his name. 176. Without Recourse. — If the words " without recourse " precede the indorser's name, they release him from all responsibility for the payment of the paper. Consequently it is seldom that such an indorsement is accepted. 177. Non-negotiable. — Non-negotiable or restrictive indorsements limit the payment to a particular person. The indorsement is written : " Pay to " or " Pay to only." 178. For Collection. — These words should appear above the indorser's name on such notes or drafts as are given to a bank for collection. 179. For Signature. — When a check is given to a person who is not known at the bank and who has no facilities for getting it cashed, the payee should indorse the check in blank, and then have the maker indorse below him, after which the bank will cash it without further identification. 180. For Deposit. — Wlien checks are deposited they must be indorsed before they will be accepted by the bank. The indorsement may be as follows : " For deposit to the account of ." Such an indorsement is no longer accepted by the Chicago and New York Clearing Houses, which now require that all indorsements on checks or other paper for deposit shall be in blank, or, " Pay to bank or order," without qualification. Forms of Indorsement (In Blank) (Non-negotiable) /. /f. Roa^e. V €a. ^^V ^^ ^- ^- ^^i^t^^V only. /. /if. Ra^e. V ^. (In Full) (For Collection) Pay to the order of W. G. Goodrich. Pay to the order of Students' Bank, I ff. Ro^e. V ^a. f""^ collection. Pay to W. G. Goodrich or order. f. If. Raa^e. V ^. (Without Eecourse) (For Signature) Pay to the order of W. B. Whitney, (For Deposit) without recourse. p^j^y t^ Students' Bank or order, f. If. Ro^e. V €o. ' f. f-f. Ra^e. V €a. DISPOSITION OF NOTES AND DRAFTS 109 181. An Indorser of a note is a person who writes his name on the back of a note, or across its face. 182. A Guarantor is one who indorses a note to secure its payment, thus lending his credit to the note. He may do this as an accommodation, or for a consideration, and may demand collateral to secure himself. 183. An Indorsed Note is any note bearing a signature other than the original signature of the maker on the face of the note. 184. If the payee disposes of his note he must indorse it. Then his interest in the note ceases, except that he is still responsible to any subsequent indorsers or holders of the note for its payment. In case of non-payment an indorser who is obliged to pay has a right of action against the maker or any of those who indorsed before him, unless the words " without recourse " precede the signtiture. Similar rules apply to drafts. SECTION III. DISPOSITION OP NOTES AND DRAFTS Collections 185. Notes may be held or carried by the payee until they become due and then be pre- sented for payment. It is better, if a note is carried, to give it to the bank for collection a few days before maturity. Especially is this the case when the maker resides in another city. 186. Drafts. — When the collection of drafts is not made through the firm's bank, then the drafts should be drawn payable to the most reliable banks in the different cities where the customers reside. In the latter case the bookkeeper should write to each cashier and inclose the drafts with a request to collect them and return proceeds. Discounts 187. Notes and drafts may be discounted or sold. A person who does business with a bank usually expects to dispose of a reasonable amount of his customers' paper there. • 188. In discounting paper at a bank the person so doing must indorse it in blank, thus- guaranteeing its payment. The bank then gives him credit for the face of the note (or for the face plus the interest if it be an interest-bearing note) less the discount on this amount at the rate agreed upon for the time the note still has to run. Some banks give credit for the face of interest-bearing notes. 189. Notes may be used as collateral. In such cases a receipt should always be taken describing them accurately, and stating for what purpose they were delivered. Protests 190. A note or time draft must be protested if it is not paid on the day of maturity. If it is not paid by the time the bank closes, it is given to a notary public, who formally demands payment of the maker of the note or acceptor of the draft, and sends him a protest (page 104). Notice of protest is sent to every indorser, and in case of drafts to the drawer as well. It is imperative that notices of protest be sent to drawer and indorsers, for if they are not so noti- fied their responsibility ceases. If the paper has been discounted, or given to a bank for col- lection, the bank attends to this. Note. — If the ordinary date of maturity falls on Sunday or a holiday, payment is legally due either the day before or the day following, according to the laws of the state in which the note or draft is made payable. 110 BUSINESS FORMS Renewals 191. It sometimes happens that the maker of a note can not pay it when it becomes due. In order to avoid having his note protested he must arrange for a renewal. This generally results in his giving a new note for the amount, in exchange for the old one. It sometimes happens that the payee is willing to renew the note, but can not do so, it having passed out of his possession. He may in such a case take the new note of the maker and give him a check for the amount, with which the maker can pay the note when it is pre- sented. A part renewal is accomplished in the same manner. QUESTIONS FOR DISCUSSION 1. Explain all the steps in the life of a note which is given in payment for merchandise, indorsed to other parties, discounted at a bank, and paid at maturity. 2. Repeat, assuming that the note is protested for non- payment. 3. What are the possible Journal entries ? 4. Trace the steps in the life of a time and of a sight draft, and give possible Journal entries. 5. What papers considered in this part of the book may, under any circumstances, be treated as cash ? 6. Discuss different ways of Journalizing sales of merchandise, C.O.D. PART IV. BUSINESS PRACTICE General Instructions. — The first four sets of books record the transactions of as many- different kinds of business, and are to be made up from the " Manager's Instructions to his Bookkeeper"; the fifth set comprises the work of bank clerks. The student is supposed to be the bookkeeper and to have charge of the books of the different departments. The various entries made in the different sets will enable the student without difficulty to take charge of almost any set of books ; provided, of course, that he uses judgment in reference to the books which are required, and to those accounts which are peculiar to each particular business. The student should carefully note all the instructions given in the different sets. In many cases they are given more fully than they would be in actual business practice. In some business houses the -managers have very little, if any, knowledge of bookkeeping, so that the student must learn to rely on himself. The student may act as his own Bank Teller, by recording in his Deposit Book the total amount of deposits as mentioned in the exercises, and also the amounts of all notes discounted at the bank. The total amount of the " cash sales " each day should be entered immediately in the Cash Book, from the exercises. The "orders received" are to be entered immediately in the Sales Book on the date of receipt, instead of being copied from the Shipping Book (see page 41), as the latter is not introduced in the exercises. The prices are mentioned on the orders to avoid price lists, as the handling of them would be cumbersome for the student; but in actual business the prices might be taken from price lists or determined in some other way. " Invoices received during the month," in each set, are to be copied on blank invoices and then journalized, with the exception of those that have been paid and charged directly to representative accounts. The year should be indicated on all papers and in each of the books. The posting may be done daily or at the end of each lesson assigned by the teacher. SECTION I. WHOLESALE GROCERY AND PRODUCE BUSINESS SET I. —EXERCISES General Instructions. — Books required : Deposit Book, Check Book, Bill Book, Sales Book, Cash Book, Journal, Ledger. The money columns in the Cash Book may be named as follows : debit side — " Sales " and "Sundries"; credit side — "Expense" and "Sundries." Representative accounts used : Bills Payable, Bills Receivable, Cash, Expense, Furniture and Fixtures, Horses and Wagons, Insurance, Interest and Discount, Loss and Gain, Merchandise, Mileage, Pay Roll, Postage, Rent, Salary, Sales, Suspense, Traveling Expense, Michigan Central R.R. Shares. The name of the firm is H. B. Clay & Company. The partners are H. B. Clay, John C. Goodrich, and W. C. Ray. H. B. Clay is to be the manager and to have charge of the financial part of the business, while John C. Goodrich and W. C. Ray are to work up 111 112 BUSINESS PRACTICE trade outside. Each partner is to receive a salary of $200 a month, for services. The partners invest equally, and the net profit or loss is to be divided equally. Manager's Instructions to his Bookkeeper Chicago, January/ 3, 19 — — " As shown by the contract, we partners invest as follows : H. B. Clay invests cash, $1500, and merchandise (per inventory), $2000. John C. Goodrich invests cash, $ 2000, and furniture and fixtures (per inventory), $ 1500. W. C. Ray invests cash, $2000, and horses and wagons (per inventory), $1500. " Deposit to-day $ 5500. " Write out a check for $ 25, to the order of currenc}^, for the cash drawer. Take it with you when you go to the bank and have it cashed. " Give John C. Goodrich a check for $ 50, and W. C. Ray one for $ 35. "Send a check for $300 to C. H. Miller & Co., rent for January. " Orders received : " — Order No. 787. Springfield, III., January 3, 19.... H. B. Clay & Co., Chicago. Please ship to us via fast freight : 10 bbls. Pillsbury flour, @ $ 4 ; 3 bbls. granulated sugar, 325 lb. each, @ 5^; and charge to the account of C. B. Frost & Co. Order No. 75. Chicago, January 3, 19.... H. B. Clay & Co., Chicago. Please deliver to our teamster: 25 bbls. Pillsbury flour, @ $4; 10 chests Oolong tea, 40 lb. each, @ 47^; 5 bbls. apples, @ $4.50; and charge to the account of W. A. Crocker & Co. Order No. 3875. Rock Island, III., January 3, 19.... Messrs. H. B. Clay & Co., Chicago. Please ship to us : 5 bbls. Pillsbury flour, @ $4; 1 hhd. molasses, 100 gal., @ 50^; 25 pails extra large mackerel, @ $2.50; 20 bags Rio coffee, 140 lb. each, @ 26^; and charge to the account of ^^^^^^^^^^^ j^ ^ ^^^^^^^ ^ ^^^^ " W. A. Crocker & Co. telephoned for 9 bbls. English currants, 350 lb. each, @ 5^." Note. — In the above and all similar cases it is assumed that the orders ai'e filled. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $225.) January 4. — " Give me a check for $ 50 and charge it to my account. "Send a check for $350 to Ducat, Lyon & Co., premium on insurance. " Give Wm. A. Seymour, our traveling agent, $ 125 in currency for a mileage book and expenses. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $150.) January 5. — " Orders received : " — Order No. 43. Kansas City, Mo., January 3, 19.... H. B. Clay & Co., Chicago. Please ship to us: 1 chest Young Hyson tea, 75 lb., @ 55^ ; 30 mats Java coffee, 100 lb. each, @ 32^; and charge to the account of W H Clark & Co. WHOLESALE GROCERY AND PRODUCE BUSINESS 113 Order No. 47. Kansas City, Mo., January 3, 19.... H. B. Clay & Co., Chicago. Please ship to us: 25 bbls. St. Louis extra flour, @ f 4; 5 bbls. oatmeal, @ $6.25; and charge to the account of W. H. Clark & Co. Order No. 973. Chicago, January 4, 19. .. . H. B. Clay & Co., City. Please deliver to us: 5 cases Royal Baking Powder, @ $5.28; 2 casks Turkish prunes, 1500 lb. each, @ 8 ^ ; deduct 15 ^ from price of each, and charge to the account of MuEDOCK Beos. Co. January/ 6. — " Give the errand boy 10 cents for car fare. "Enter these remittances and acknowledge them: A. B. Rider & Son's check for $125; C. B. Frost & Co's. check for $80. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $ 75.) January 7. — " Deposit to-day $ 480. " (Cks. $ 205, Cy . $ 275. ) " Pay this bill, 75 ^, for cartage on goods delivered to Murdock Bros. Co. The cartage we shall have to allow. " What is the total amount of the cash sales to-day?" (Per cash sales checks, $135.25.) January 8. — " Mrs. W. A. Seymour is here and wishes a check for $ 25, which you may give her and charge to Mr. Seymour's account. " A. B. Rider & Son want a duplicate invoice of January 3. " W. H. Clark & Co. complain that we have overcharged them 25^ per barrel on oat- meal shipped them January 5. Look back on the Sales Book and see what we charged them. You say $6.25? It should have been $6 according to the price list. Make the correction and send them a credit memorandum. " What is the total amount of the cash sales to-day?" (Per cash sales checks, $95.80.) "Send out for 200 two-cent stamps." January 10. — "This letter from W. A. Crocker & Co. states that they have returned 5 chests Oolong tea, 40 lb. each, as defective. Investigate and see if they have been returned. You say they have ? Send them a credit memorandum. "What is the total amount of the cash sales to-day? " (Per cash sales checks, $151.63.) January 13. — "A. B. Rider & Son mailed us this check for $35.50 and also their note for $700, dated January 13, for 30 days, with interest at the rate of 7 ^ per annum, payable at the Rock Island Bank, to balance their account to date. "Mail to W. A. Seymour a check for $50 to apply on his salary. " Order received : " — Order No. 825. Springfield, III., January 11, 19.... H. B. Clay & Co., Chicago. Please ship via fast freight : 100 boxes Cream cheese, 50 lb. each @ 16 ^ ; and charge to the account of q ^ pj^^g^ & q^^ "Deposit to-day $450." (Cks. $35.50, Cy. $414.50.) "What is the total amount of the cash sales to-day?" (Per cash sales checks, $103.50.) " What is the total amount of the sales up to date ? " ($4512.37.) January 20. — " What is the balance in bank ? "Write out a check for $4000 to the order of James H. Johnson, New York, as a loan. Here is his judgment note for same, dated January 25, at 30 days, with interest at 10 ^ per annum, payable at his office. 114 BUSINESS PRACTICE " Did you give W. A. Crocker & Co. credit for the tea they returned January 10 ? Very well. The other day I was examining the contents of the different chests returned and found that coffee beans had been mixed with the tea. This is probably the packer's fault. I will write to Reid, Smith & Sons about it. The tea was purchased from them some time ago. I will request the shipping clerk to see that the five chests are returned to-day. Send them a debit memorandum, charging 35^ a pound, which is the cost price. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $502.80.) January 25. — " Deposit to-day % 625 in currency. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, I 325.80.) Jariuary 29. — " Order received : " — Order No. 75. Kansas City, Mo., January 26, 19.... H. B. Clay & Co., Chicago. Please ship via fast freight: 10 bbls. molasses, 50 gal. each, @ 49^; 5 bbls. Pillsbury flour, @ $4; 25 boxes Ivory soap, @ $4.50; 10 boxes Cream cheese, 54 lb. each, @ IQ^ ; and charge to the account of W H Clakk & Co " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $ 373.60.) January '^1. — "I have been corresponding with A. B. Rider & Son, Rock Island, in reference to accepting some of our goods on consignment. They reply that they are quite confident the articles will sell readily. Have the shipping clerk ship to A. B. Rider & Son, on consignment, 100 boxes Ivory soap, @ $4.50, and 100 chests Oolong tea, 40 lb. each, @47 ^. The agreement is that the goods are not to be sold on commission, but to be billed at our regular prices as though bought outright. But they are not to be paid for till A. B. Rider & Son have sold them. "Mr. Seymour writes that he will need a mileage book in a few days. Send him a check for $50. "What is the total amount of the pay roll? $525? See that you have money enough in the drawer to pay off with. How much currency is there now in the drawer? $719.03? Very well, pay off the help. " Give W. A. Seymour credit for salary at the rate of $ 125 a month, beginning January 1. We partners each receive a salary of $200 a month. " As this is the last day of the month, begin to take off statements so as to have them ready to mail this evening. Make a list of them before mailing. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $175.50.) Note. — Journalize the invoices which were received during the month. (See note on page 50.) Take off a trial balance. Invoices received during the Month Chicago, January 4, 19.... H. B. Clay & Co., Chicago. To Ducat, Lyon & Co. Dr. Por premium on insurance as per policies :j|5^ 96758, ^78276, #6478, #4678, $350.00 Paid, . Ducat, Lyon & Co. Minneapolis, Minn., January 5, 19.... H. B. Clay & Co., Chicago. Order No. 1. Bought of Pillsbury Mill Co. 300 bbls. Pillsbury flour, @ $ 3.50 $ 1050.00 WHOLESALE GROCERY AND PRODUCE BUSINESS 115 New Yokk, January 5, 19 H. B. Clay & Co., Chicago. Order No. 2. Bought of C. Johnson & Co. Terms 30 days. 25 bbls. W. C. sugar, 8250 lb., @ 4 )Z* f 330.00 30 bbls. N. 0. molasses, 1500 gal., @ 38^ 570.00 $ 900.00 Minneapolis, January 29, 19 H. B. Clay & Co., Chicago. Order No. Bought of Pillsbury Mill Co. Terms 30 days. 250 bbls. Pillsbury flour, @ f 3.50 $875.00 Chicago, January 29, 19.... H. B. Clay & Co., Chicago. Terms Cash. Bought of Reid, Smith & Sons. 20 bbls. vinegar, 1000 gal., @ 10^ $100.00 20 chests Oolong tea, 800 lb., @ 35^ 280.00 $380.00 Chicago, January 26, 19.... H. B. Clay & Co., Chicago. Bought of Reid, Smith & Sons. • 200 boxes Ivory soap, @ $3.50 $700.00 100 bbls. Y. C. sugar, 30000 lb., @ .04 1200.00 $ 1900.00 Chicago, January 26, 19.... H. B. Clay & Co., Chicago. Order No. 7. Bought of C. H. Odell & Co. 2 Curtain Top desks, @ $25.00 $50.00 2 chairs, @ 10.00 20.00 $70.00 Chicago, January 26, 19.... H. B. Clay & Co., Chicago. To Chicago Gas Lt. & Coke Co. Dr. Gas from January 1 to January 26 $ 48.50 Less 20% 9.70 $38.80 Chicago, January 1, 19.... H. B. Clay & Co., Chicago. To The Chicago Telephone Co. Dr. Rent of telephone No. from January 1 to April 1, $37.50 Manager's Instructions to his Bookkeeper February 1. — " What is the balance in bank ? "Mail the Pillsbury Mill Co. a check for $500 to apply on account. "Send a check for $70 to C. H. Odell & Co. to balance our account. " What is the balance we owe Reid, Smith & Sons according to our books ? $ 2210 ? Give them a check for 8410, and two notes for $900 each; one for 15 days and the other for 30 days. Date them to-day and have them payable at our office. 116 BUSINESS PRACTICE "Mr. Seymour returned this afternoon and left his expense book for January. Give him credit for it." (Explanation) Sundry items $ 75.50 Mileage No. 33375, 2000 miles, @ 2^ 40.00 Mileage No. 36287, 350 miles, @ 2^ 7.00 Total expenses for January 122.50 "What is the total amount of the cash sales to-day ? " (Per cash sales checks, I 237.50.) February/ 3. — " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $133.95.) February 5. — " Let me see the cash balance sheet. You say you had not finished because the cash is short $13.50? Then do not lose any more time, but charge the amount to Suspense account. Should you find it you can credit this account. " Deposit to-day $ 550 in currency. " Order received : " — Order No. 855. Springfield, III., February 4, 19.... H. B. Clay & Co., Chicago. Please ship via the C. & A. R.R. : 10 bbls. St. Louis flour, @ $4, and charge to the ^^c«^°^ «^ C. B. Frost & Co. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $102.50.) " Have you paid the gas bill ? No ? Then do it to-day by check." February 7. — " These remittances came in this morning : A. B. Rider & Son's check for $100; C. B. Frost & Co's. check for $325; W. A. Crocker & Co's. check for $57.50, and also their note for $ 100, dated February 5, for 30 days, at 7 ^ interest, payable at the Third National Bank, to balance invoice of January 3. Before entering remittances always examine the accounts to see if their amounts correspond. "Do not forget to make a deposit to-day. Deposit all the currency but $25." (Cks. $482.50, Cy. $254.98.) " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $96.35.) February 8. — "Pay this bill of S. E. Sweet & Co., horseshoeing, $9.75; write out a check for the amount. " Mail a check to-day for the telephone bill. " Give the errand boy 50 cents for car fare. " Let me have $5 for five tickets for the Letter Carriers' Ball. " What is the balance in bank ? Did you leave the Deposit Book at the bank last month to be balanced ? No? Then do it to-day." (See page 120.) "Telephone to W. A. Crocker & Co. to ship, via fast freight, 20 bbls. apples to C. B. Frost & Co., Springfield, 111., and charge to our account. Tell them to be sure to ship to-day. Charge the apples to C. B. Frost & Co., at $5.75 a barrel. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $ 107.50.) February 10. — " This letter and statement are from A. B, Rider & Son, stating that they have sold 100 boxes Ivory soap and 100 chests of Oolong tea, closing out the consignment shipped them January 31. Make entry for same. (Credit the consignment account and debit A. B. Rider & Son's regular account.) " Give Mr. Seymour credit for the remaining number of miles on this mileage book. No. 36287, C. M. & St. P. R.R.; then place the book in the safe until needed." (Explanation) Mileage book No. 36287 returned 1650 miles, @2^ $33.00 Rebate cover, 10.00 1 43.00 WHOLESALE GROCERY AND PRODUCE BUSINESS 117 " Is there $ 150 in currency in the cash drawer ? Yes ? Then give Mr. Seymour $ 60 for a mileage book on the C. R. I. & P. R.R., and $100 for expenses. " Let me see the trial balance. What about C. H. Miller & Go's, account ? Are they owing us i 300 ? Turn to the Ledger and let me see their account. This account does not show all that it should ; please ascertain what is wrong, and make the proper entry. Always study every account before taking a trial balance, and see that each one shows its correct balance. Always make all the entries that are required for any transaction. "How much was the cash short the other day? $13.50? Charge $10 of it to my account. I recollect taking it from the cash drawer while you were out at luncheon, but failed to make a ticket for it. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $ 385. 90.) February 11. — -"Enter this check, $214.34. It is from W. A. Crocker & Co., to balance account; less If) for cash, $2.16. Give them credit for amount of check, and write that we can not allow them 1 f) discount, as the account is long past due. " Have you checked the bank account ? Let me see the memorandum. " Orders received : " — Order No. 200. Chicago, February 11, 19.... H. B. Clay & Co. Please deliver to our teamster : 15 bbls, Pillsbury flour, @ $ 4 ; 10 boxes Ivory soap, @$4.50; and charge to the account of ^y_ j^ Ckocker & Co. Order No. 865. Springfield, III., February 10, 19.... H. B. Clay & Co., Chicago. Please ship via the C. & A. R.R. : 3 bbls. molasses, 50 gal. each, @ 50 ^ ; 5 bbls. Pillsbury flour, @. $ 4 ; and charge to the account of C B Frost & Co " Here is A. B. Rider & Son's check for $700 with which to pay their note due to-morrow. Was their note interest-bearing ? Yes ? Then charge their account with the interest ($ 4.08) and send them a bill. At the same time write them that the interest has been omitted. '^Deposit to-day $1714.34." (Cks. $914.34, Cy. $800.) "What is the total amount of the cash sales to-day ? " (Per cash sales checks, $350.75.) February 14. — " Let me see the list of the statements you sent out the first of the month. I see that you have not been checking the names and amounts as they are paid. Hereafter please see that this is attended to every morning. " Deposit to-day $ 225 in currency. " The firm has purchased to-day from C. H. Harris & Co. 36 shares Michigan Central Railroad stock, at $115 a share. Write out a check for the amount ($4140) to the order of C. H. Harris & Co. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $600.69.) February 15. — " Give the errand boy $ 60 in currency, and have him purchase 500 two- cent stamps, and also 5000 one-cent stamps for the circulars. To which account have you been charging postage stamps ? Expense account ? That is correct ; however, I want a Postage account, so as to enable us to know how much we pay a year for stamps. Transfer to Postage account what you have already charged to Expense account. " Write out a check for $26.50 in favor of the Michigan Central Railroad Co. for freight charges on shipment from C. Johnson & Co. Hand this check with the freight notice to the teamster, and have him deliver the goods to us. " Enter this check from W. H. Clark & Co. in settlement of invoice January 29, as stated in their letter." (Check amount, $459.27 ; 1^ discount, $4.63 ; invoice amount, $463.90.) 118 BUSINESS PRACTICE " When did this notice come in ? " THIRD NATIONAL BANK Dearborn Street. Chicago , Feb. 13, 19__-. H. B. CLAY & Co. Your Paper for $900.00 matures on February 16. C. B. Harrison, Cashier. Checks Presented in Payment must be certified. Banking hours : Saturdays, 10 A.M 9 A.M to 3 P.M. to 12 M. " I see it is from the Third National Bank to take up our note for -$ 900 which we gave to Reid, Smith & Sons. " What is the balance in bank ? " ($ 114.27.) " Do not fail to deposit to-day W. H. Clark & Go's, check and $238.50 in currency. "What is the total amount of the cash sales to-day?" (Per cash sales checks, $96.75.) February 16. — " What bank is holding our note, $900, which is due to-day ? Write out a check for the amount to the order of that bank, and I will sign it. Should the bank mes- senger come in while I am out you may pay the note. " Has the bank messenger been in ? No ? That is strange ! It is now 2:30, so you had better take the check with the notice to the bank and pay the note. By the way, do not for- get to have the check certified. "What is the total amount of the cash sales to-day?" (Per cash sales checks, $131.50.) February 17. — " What is the balance in bank ? Overdrawn $87.96 ? And did the bank certify our check yesterday for $ 900 ? Yes ? Well, some checks must still be out. " Deposit this morning $100 in currency to cover the overdraft of yesterday." February 23. — " While you were at luncheon the messenger from the Students' National Bank called and presented for acceptance a draft for $ 292.50 drawn on us by C. Johnson & Co. in favor of the New York National Bank. I have accepted it, so make the entry for it. The draft was at five days' sight. "Enter this check, $33.32, of James H. Johnson in settlement of the interest on his note, due to-morrow. He wishes the note renewed and has inclosed to us this judgment note, $4000, dated February 21, at 30 days, with interest at 10% per annum, payable at the Fifth National Bank, New York. Give hiin credit for the new note and return the old one. "Send Mrs. W. A. Seymour a check for $150. " What is the total amount of the cash sales to-day ? " (Per cash sales checks, $249.50.) February 28. — " What paper do we have to meet to-day ? What is the balance in bank? Overdrawn $137.96? Since when? Why did you not call my attention to the matter at the time ? It brings us ' pretty close to shore,' having to meet to-day a pay roll of about $ 1000 and a draft for $ 292.50. How do you expect me to make arrangements to pay all that to-day ? " Let me have the collector's book. Give the collector a statement of Murdock Bros. Co.'s account and have him collect it. Hereafter do not wait for me to ask you what notes are becoming due, but keep me informed from day to day. Look over the Bill Book every morning, and about ten days before a note falls due tell me about it, and again two WHOLESALE GROCERY AND PRODUCE BUSINESS 119 days previous to its maturity. I want you to take as much interest in this business as if it were your own, and you were managing it for yourself. Whenever you see that I over- look or neglect certain transactions or accounts, or that I fail to ask you questions of impor- tance, I want you to come and tell me about them. " Has the collector returned ? How much did he collect ? $ 200 ? Very well. Give Murdock Bros. Co. credit for the amount of the check, and then prepare the deposit. De- posit all the checks you have in the safe ($233.32), leaving the currency for the pay roll. What is the total amount of the pay roll ? f 750 ? How much currency have you in the cash drawer? $464.94? Use $450 of it for the pay roll. Now what amount will you still require to pay the help and take up the draft? $497.14? Then wait until 11:30 before making a deposit. In the meantime I will go to the bank and see if they will discount our note for $ 1000 payable in 30 days. While I am gone you may write out the check to pay the draft, $292.50, and also write out one for 'Currency' ($300) to cover the pay roll. " I called at the bank and they discounted our note, $ 1000, payable in 30 days, charging 7 % discount ($5.83). You may now go to the bank, and when you have deposited, ask the discount clerk to enter on our Deposit Book the proceeds of the note I had discounted about an hour ago. Then stop at the note teller's window, pay the draft, and have the check cashed at the paying teller's window. " Pay off the help about 4 o'clock. "What is the total amount of the cash sales to-day?" (Per cash sales checks, $102.68.) " This is Mr, Seymour's expense book for February : " — (Explanation) Sundry items $55.60 Mileage book No. C 3546, Used 1500 miles, @ 2 ^ 30.00 Total expenses for February $ 85.50 "As this is the last day of the month, see that all the invoices are O. K.'d. and then enter them. Leave the Deposit Book at the bank to be balanced." (See page 120.) Note. — Make entries for the salaries, rent, etc. Take off trial balance. " This is the month for closing our books. Have the men in the different departments stay and take an inventory." (See inventories on the next page.) Invoices received during the Month Chicago, February 5, 19.... H. B. Clay & Co., City. To S. E. Sweet & Co. Dr. For horseshoeing $9.75 Paid, S. E. Sweet & Co. New York, February 17, 19.... H. B. Clay & Co., Chicago. Bought of C. Johnson & Co. 20 bbls. Standard A sugar, 6500 lb. @ .04^ $292.50 Chicago, February 28, 19.... H. B. Clay & Co., City. To Chicago Gas Lt. & Coke Co. Dr. Gas from January 26 to February 26, $47.65 Less 20% 9.53 $38.12 120 BUSINESS PRACTICE 19. Jan. Feb. Feb. New York, January 17, 19.... H. B. Clay & Co., Chicago. Bought of C. Johnson & Co. 12 hhds. N. 0. molasses, 1200 gallons, @ 38^ $456.00 H. B. Clay & Co., City. Bought of W. A. Crocker & Co. 20 bbls. apples, @ $3.85 Shipped to C. B. Frost & Co., Springfield, 111. Chicago, February 8, 19.... f 77.00 H. B. Clay & Co., City. Chicago, February 10, 19.. Bought of PiLLSBURY MiLL Co. 20 bbls. Pillsbury flour, Merchandise .... Mileage Postage ..... Horses and Wagons . ... Furniture and Fixtures . Insurance (unexpired premium) Interest accumulated on notes . Michigan Central R.E. Stock . @ $3.50 Inventories $ 70.00 $ 5575.50 43.00 15.00 1450.00 1500.00 291.70 8.23 4140.00 Deposit Book Balanced Deposits 3 7 13 25 5 7 Deposit, 9 Balance, 11 Deposit, 14 15 17 28 28 1000.00 fi.83 5500 480 450 625 550 737 8342 2421 1714 225 697 100 233 994 6385 00 00 00 00 00 48 48 18 34 00 77 00 32 17 78 Returnkd Checks 50 00 25 00 35 00 4000 00 25 00 50 00 300 00 50 00 350 00 500 00 50 00 38 80 410 00 37 50 5921 30 Balan 4140 ce 00 2421 18 (red ink) 8342 48 26 50 900 00 150 00 292 50 300 00 70 00 5879 00 506 78 Balan ce (red ink) 6385 78 Note. — See direction to the teacher on page 55. February 9, checks, #12, — $70.00, #15, — f February 28, check, #15, — $9.75, still out. ).75, still out. COMMISSION 121 QUESTIONS FOR DISCUSSION 1. In what accounts will the falling off of a business first be likely to manifest itself? 2. What accounts would you study in order to gain an idea of the prosperity of a business? What books of record would you consult? 3. How from Ledger accounts could you gain an idea as to a customer's business character? 4. Can a Merchandise account show no sales during the year and yet close with a gain? 5. Of what value is a Book- keeping account? What use can a business man make of it? 6. A merchant, keeping separate purchase accounts for diffei'ent classes of goods, returns to the manufacturer an invoice of one class, and exchanges for another class. What are the possible entries? 7. How can you calculate the rate of gain or loss on a Merchandise or other representative account ? 8. How can you decide — from any record books or papers — as to which of two classes of merchandise is producing the greater per cent of profit? 9. What is meant by the good will of a firm or corporation? Under what classification would its balance be entered if the account were on the Ledger? When is the account of no value? 10. A piano house sells a piano for $500, to be paid for in installments of $50 per month, with six per cent interest. Give all the entries for the transaction, including the payments. 11. Define an inventory. 12. How would you obey an order to "take an inventory" of a certain stock? 13. If you know the quantity of an article bought, and the quantity sold, is it safe to take the difference as the quantity in inventory ? Can you make a true inventory from your books alone ? 14. Can you give any reasons against taking the " cost " of certain articles — as shown by the record books — as the inventory value? 15. What determines inventory values? 16. Suggest methods of using the Ledger system for keeping a continuous inventory record of certaiii articles of merchandise. 17. After inventories have been entered, and the books closed and reopened, a discovery is made of certain merchandise which, by mistake, was not inventoried. What should be done? SECTION II. COMMISSION 192. A Commission Merchant is one who sells goods for another, and receives for his serv- ices a certain per cent of the selling price, or a certain sum per unit of quantity, called " com- mission." (See Account Sales, page 99.) 193. The following set of books can be used in almost apy produce commission house : — Auxiliary Books : Order Book, Receiving Book, Shipping Book, Invoice Book, Petty Cash Book, Deposit Book, Check Books, Bill Book, Checking Book, Account Sales Book. Books of Entry : Account Sales Journal, Sales Book, Cash Book, Journal, Ledger. , 194. The Checking Book is written up from the Receiving Book and Sales tickets, so as to show when a consignment is "closed out." Checking Book Lot JYo. /. Received, /O 6-6-tay, ^^a/^a^ oAtcl Freight, f3./6. Cartage, ^0^. Consignor, 4)-tay. (^'boM' @ 3.26 Note. — The Lot number is the number given a consignment when it is entered in the Receiving Book. 122 BUSINESS PRACTICE 196. The Account Sales Book is written up from the Checking Book, and constitutes a record of each consignment after it is closed out. Its leaves are usually perforated so that the account sales on the right-hand side of the page can be easily torn out and sent to the consignors. Every account sales rendered should be an exact copy of the stub in this book. The book consists simply of a number of forms for account sales (page 99) printed on the right-hand pages. Account Sales Book A. M. CHASE & CO. A. M. CHASE & CO. Sales No. 1. Chicago, Oct. 22, 1901. Sales No. 1. Chicago, Oct. 22, 1901. Lot No. 1. Lot No. 1. Account Sales Account Sales Of 10 bbls. Crabs and Apples Of 10 bbls. Crabs and Apples For Frank & Son, For Frank & Son, Sheboygan, Wis. Sheboygan, Wis. Received Oct. 19, 1901. Received Oct. 19, 1901. 9 bbls. Crab Apples, $4.00 36 00 9 bbls. Crab Apples, $4.00 36 00 1 " Apples, 3.25 3 25 39 25 1 " Apples, 3.26 3 25 39 25 Charges, Charges, Freight, 3.15. Ctg., .40 3 55 Freight, 3.15. Ctg.,. 40 3 55 Commission, 10% Net Proceeds, 3 93 7 48 Commission, 10% Net Proceeds, 3 93 7 48 31 77 31 77 A. M. CHASE & CO. A. M. CHASE & CO. Sales No. Chicago, Sales No. Chicago, Lot No. Lot No. Account Sales Account Sales Of Of For For Received Received Charges, Charges, Freight, ' Ctg., Freight, Ctg., Commission, Net Proceeds, Commission, Net Proceeds, ' 1 196. When an account sales is rendered with no check for the net proceeds accompany- ing it, the account sales should be journalized in the regular Journal by debiting Merchandise account with the gross amount, crediting Freight and Cartage account and Commission account with their respective amounts, and crediting the consignor's account with the net proceeds. COMMISSION 123 197. The Account Sales Journal is used only for journalizing such account sales as have checks for the net proceeds sent with them. This journal differs materially from the regular Journal, and its object is to save work. Accounts are opened with the banks on which checks have been drawn, for the net proceeds, instead of with each consignor, and instead of the usual order of entries, the entries are distributed among as many pages as there are different banks drawn on. This book is ruled with columns as follows : Date (of account sales), Sales No. (number in Account Sales Book), Account of (name of consignor), Check No. (on bank), Mdse. (Gross Amount), Freight and Cartage, Commission, Net Proceeds, and Deposits. The Deposit col- umn is for convenience only. The Mdse., Freight and Cartage, Commission, and Net Proceeds columns are added up and posted once a month from an entry in this journal. Debit Merchandise account with the gross sales, credit Freight and Cartage and Commission with their respective amounts, and credit the net proceeds to the bank whose name is at the head of the page. Note. — Merchandise account is debited from the Account Sales Journal because the value of the goods received to be sold on commission is ascertained only as the consignments are sold out. Merchandise and Sales accounts show no profit or loss, as their balances offset each other. Account Sales Journal New Haven City Bank, New Haven, Mich. Account Sales No. Account of Check No. Mdse. Freight Bank 1902 Gross Sales and Cartage Commission Net Proceeds (red Ink) Sept. 1 2 2 4 4 4 579 580 583 599 605 610 W. D. Brown, New Haven Shea & Wells, New Haven M. B. Wayne, Grand Haven C. C. Phillip.s, Grand Haven M. B. Baker, New Haven G. L. Kent, New Haven 85 86 87 88 89 90 75 65 37 45 39 24 92 08 55 55 33 75 7 8 5 4 3 3 50 90 75 40 75 00 7 59 6 50 60 49 29 36 31 20 83 68 92 59 65 52 276 200 50 00 1 4 3 1 88 56 93 23 476 229 50 Mdse. Sundries Freight and Cartage Commission New Haven City Bank 288 18 45i 33 30 671 25 69 951 229 19 19 1251 247 SI (red ink) SET II. EXERCISES General Instructions. — Books required : Deposit Book, Check Books (Chicago and Sheboygan), Bill Book, Account Sales Book, Sales Book, Cash Book, Journal, Account Sales Journal, Ledger. The student may rule his own Account Sales Book and Account Sales Journal according to the specimen pages (see page 122 and above). The Account Sales Book requires six pages, and the Account Sales Journal two pages. The money columns in the Cash Book are to be headed as follows : Debit side — " Sales " and " Sundries." Credit side — ■" Freight and Cartage" and "Sundries." Representative accounts used: Bills Payable, Bills Receivable, Cash, Commission, Expense, 1 Ledger page. 124 BUSINESS PRACTICE Freight and Cartage, Furniture and Fixtures, Horses and Wagons, Interest and Discount, Loss and Gain, Merchandise, Mileage, Rent, Salary, Sales, Traveling Expense, Wheat. The Check Book of the Sheboygan Bank is used only for remitting net proceeds to con- signors. On the stub write the date, name of consignor, address, sales number, and the amount. The Petty Cash Book entries in the exercises are to be transferred immediately to the Cash Book. The "Balance $10.00" is not to be entered, as that amount is to remain in the cash drawer. The Account Sales Book should be written up from the Checking Book shown in the exercises. The name of the firm is A. M. Chase & Co. There are two partners, A. M. Chase and E. E. Fish. A. M. Chase is to be the manager and receive a salary of f 250 a month, and E. E. Fish, who is to devote only a portion of his time to the business, is to receive a salary of $100 a month. A. M. Chase is to have 75^ of the net profit or loss, and E. E. Fish is to have 25 f). Manager's Instructions to his Bookkeeper Chicago, October 15, 19 — "As shown by the contract, we partners invest as follows: A. M. Chase invests cash, $2500; horses and wagons (per inventory), $1500; and furni- ture and fixtures (per inventory), $500. E. E. Fish invests cash, $500, and his promissory note for $1000, dated October 15, at 3 months, payable at the Sixth National Bank. "Deposit to-day $3000. " Write out a check for $ 50 to the order of currency for the cash drawer. Give the cashier $10 of it for her cash drawer, and charge it to her." October 17. — " Pay this bill for stencils,^ $15, in currency. "Give Wm. H. Bennett, our traveling agent, $150 in currency; $50 of it is for a mileage book, and $ 100 for expenses. As there is not money sufficient in the drawer, write out a check for the amount, and have it cashed at the bank. Mr. Bennett will go out on the road to-night. "Pay this bill of $13.50, by check, to Wells, Smith & Co. for stationery. " Send a check for $ 65 to the Diebold Safe Co. for a safe we bought yesterday. "Pay this carpenter's bill, $4.50, in currency. " Let me have a check for $ 75 and charge it to my account." October 19. — " Give me $3 ; it is for the Newsboys' Home. " Send a check for $ 125 to H. O. Sweet & Co. for October rent. " Mail a check for $ 1000 to the Sheboygan Bank, Sheboygan, Wis., to be deposited to our account. " Here is the cashier's cash book and the money. Copy her cash book and then return it to her." (See general instruction, above.) Petty Cash Book Dr. Cr. Exp. Frt. Ctg. Oct. 19, Balance lO'.OO Oct. 19, Frank & Son 3.15 .40 Oct. 19, Cash sales 93.50 Oct. 19, Kent & Smith 3.71 .74 • Oct. 19, C. B. Williams 6.30 .50 Oct. 19, Car fare .50 Oct. 19, Two suppers 1.20 1 Stencil. — A piece of brass, given to a shipper, used in painting on his boxes and barrels the number which is cut in the stencil. This is done so that the merchant can identify the goods as they are received. COMMISSION 125 "Orders received: Auditorium Hotel, City, 5 bbls. apples; charge $4.50 a barrel. D. W. Kayhill, Oak Park, 111., 9 bbls. apples @ 14. " What is the balance in bank ? " October 22, — " Send for the Checking Book and render account sales to those whose consign- ments are closed out. Charge 10^ commission on apples. Mail checks with the account sales." Checking Book October 19, 19.-. FRANK & SON Lot No. 1. Frt. 3.15. Ctg. 40^. Sheboygan, Wis. 10 barrels Crabs and Apples 9 barrels Crab Apples @$4.00 36.00 1 barrel Apples @ 3.25 3.25 10 39.25 KENT & SMITH Lot No. 2 Frt. 3.71. Ctg. 74^ Sheboygan, Wis. 13 barrels Apples 5 barrels Apples @ f 4.50 22.50 1 barrel Apples @ 4.00 4.00 4 barrels Apples @ 3.75 15.00 3 barrels Apples @ 3.25 9.75 13 51.25 C. B. WILLIAMS Lot No. 3 Frt. 6.30. Ctg. 50^ Sheboygan, Wis. 20 barrels Apples 6 barrels Apples @ $4.00 24.00 8 barrels Apples @ 3.00 24.00 3 barrels Apples @ 2.50 7.50 3 barrels Apples @ 2.00 6.00 20 61.50 Petty Cash Book Dr. Frt. Ck. Ctg. Oct. 22. Oct. 22. Balance, Cash Sales, 10.00 88.85 Oct. 22. F. W. Harvey, Oct. 22. Morgan Bros., Oct. 22. • M. B. Parker, 6.16 7.44 .75 1.00 .50 October 24. — "Give A. M. Lawson, our traveling agent, $ it to him. It is for a mileage book and expenses. " The Hotel Richelieu telephoned for 2 dozen partridges, at at $4.50. Auditorium Hotel, 7 barrels apples, at $3.00." 100 in currency and charge $6.00, and 3 barrels apples, 126 BUSINESS PRACTICE October 25. — " What is the balance in bank ? "Write out a check for $500 to the order of Farnum & Co., as a margin to cover the purchase of 10,000 bushels of wheat for us on the Board of Trade." Note. — A margin is a cash deposit required by a broker to insure himself against loss in buying and selling for a customer. If the price of the commodity changes sufficiently to use up the margin, the broker calls upon his customer for additional margin ; and if the new margin is not deposited promptly, the broker may close out his customers' trades in order to protect himself. "Mr. E. E. Fish wishes a check for $50 made to the order of George B. Fish. Write out the check now and I will sign it. " Have you rendered account sales for the consignments that are closed out ? No ? About time you did — it is after 3 o'clock. Send for the Checking Book at once. Charge 5^ commission on poultry and game." Checking Book October 22, 19-. . Lot No. 4. F. W. HARVEY Frt. $5.16. .Ctg. 75^ Sheboygan, Wis. 14 barrels Apples. 2 kegs Cral Apples. 5 barrels Apples @ $ 4.00 20.00 3 barrels Apples @ 4.50 13.50 2 barrels Apples @ 4.00 8.00 2 barrels Apples @ 3.75 7.50 2 barrels Apples ' @ 3.50 7.00 1 keg Crab Apples @ 1.75 1.75 Ikeg Crab Apples @ 1.60 1.60 16 59.35 Lot No. 5. MORGAN BROS. Frt. $7.44. Ctg. $ 1.00. Sheboygan, Wis. 20 barrels Apples. 7 barrels Apples @ $ 3.00 21.00 3 barrels Apples @ 4.00 12.00 10 barrels Apples @ 3.00 30.00 20 63.00 Lot No. 6. M. B. PARKER Frt. Gtg. 50«zf Sheboygan, Wis. 1 box 26 Partridges. 2 dozen Partridges @ $ 6.00 12.00 2 only Partridges @ .50 1.00 26 13.00 October 31. — "What is the balance in bank?" ($971.50.) "What is the balance in the Sheboygan Bank?" ($770.40.) " Mail Mr. Bennett a check for $ 50 ; it is for a mileage book. " This is a memorandum of the employees and their salaries : shipping clerk, $ 50 a month; two salesmen, each $65; errand boy, $15; stenographer, $85; cashier, $40 ; teamster. COMMISSION 127 $40; and yourself, $100. You may pay them to-day. How much currency do you require ? .f 230 ? Draw a check for the amount to the order of currency. " Make the entry for the salaries of the partners and traveling agents. Mr. Bennett and Mr. Lawson receive each a salary of $100 a month. They both began work on Octo- ber 15th." Note. — As this is the last day of the month, make the entries for the rent and the invoices received. Take off a trial balance. Invoices received during the Month Chicago, October 17, 19.... Bought of Wells, Smith & Co. A. M. Chase & Co. 2000 Letter heads, 2000 Bill heads, 5000 Envelopes, 1000 Business cards, $4.00 4.00 4.00 1.50 $ 13.60 Paid Wells, Smith & Co. Chicago, October 15, 19.... A. M. Chase & Co., Chicago. To The Chicago Telephone Co. Dr. Rent of telephone No. from Oct. 15, 19.... to Jan. 15, 19.... $37.50 Chicago, October 15, 19.... A. M. Chase & Co., Chicago. Bought of DiEBOLD Safe Co. 1 Diebold safe No. , $ 65.00 Chicago, October 31, 19 — A. M. Chase & Co., City. To The Chicago Gas Lt. & Coke Co. Dr. Gas from October 15 to October 31, Less 20% Manager's Instructions to his Bookkeeper $ 13.50 2.70 $10.80 November 1. — "Orders received by telephone: Hotel Richelieu, 100 lb. Canvas-back duck, @ 11^; 5 bbls. apples, @ $4.50. Auditorium Hotel, 222 lb. chicken, @ 8^^; 13 bbls. apples, @ $4.50." November 2. — "Write out a check for $500, and mail it to the Sheboygan Bank. Petty Cash Book Dr. Frt. Cr. Ctg. Nov. 1. Nov. ]. Nov. 2. Balance, Cash Sales, Cash Sales, $ 10.00 69.92 31.56 Nov. 1. Nov. 1. Nov. 1. Frank & Son, M. D. Bright, Pulley & Co. f 9.34 2.48 4.97 $1.25 128 BUSINESS PRACTICE "M. D. Bright writes that he has drawn a draft on us for $40 to the order of George Swift, so do not send check for his consignment, as we will pay the draft." November 5. — "Write out a check for last month's gas bill." Checking Book Lot No. 7. Frt. $9.34. Ctg. $1.25. 25 barrels November i, FRANK & Apples. 19—. SON, Sheboygan, Wis. 13 barrels 7 barrels 5 barrels 25 Apples Apples Apples @. f 4.50 @ 3.00 @ 4.50 58.50 21.00 22.50 102.00 Lot No. 8. Frt. 1 2.48. Ctg. 2 barrels M. D. BRIGHT, Poultry 415 lb. Fort Howard, Wis. 371 lb. 44 1b. 415 Poultry- Poultry @12^ @10^ 44.52 4.40 48.92 Lot No. 9. Frt. $4.97. Ctg. 363 lb. Duck PULLEY 222 lb. Chicken. & CO. Fort Howard, Wis. 263 lb. 100 lb. 222 lb. 585 Duck Duck Chicken @12^ 31.56 11.00 18.87 61.43 November 7. — " Mail a check to the Chicago Telephone Co. for the balance of their account. " Deposit to-day $ 75 in currency. " Mail to Mr. Bennett a check for $ 150, and charge it to his expense account. " Mrs. A. M. Lawson is here, and she wishes a check for $ 100 ; give it to her and charge it to Mr. Lawson 's account. " What is the balance in bank ? Bank account overdrawn $ 31.80 ? Well, we shall have to make good that amount by November 10, as all the checks will have been presented for payment at the bank by that date." November 10. — " The messenger from the Third National Bank was here with M. D. Bright's draft, drawn on us for $ 40 at five days' sight. I have accepted the draft. "I called this morning on M. A. Cook & Co. in reference to exchanging checks with us for a few days. They expressed regret, but they could not accommodate us, as they were short of funds themselves. However, they said if their note would be an accommodation to us, they would be pleased to favor us with it, so that we could have it discounted, and thereby obta,in what money we require. This is their note, $ 200 at 20 days, payable at COMMISSION 129 the Third National Bank. Enter it, and 1 will take it to the bank and see if 1 can get it discounted. Note. — A note by means of which one lends his credit in this way is called accommodation paper. Had M. A. Cook & Co. agreed instead to the exchange of checks, A. M. Chase & Co. would have deposited the former's check at once in order to make use of the money, while Cook & Co. would have delayed depositing Chase & Co.'s check for a day or so in order to give the latter time to raise the money to meet it. "The bank discounted M. A. Cook & Co.'s note, charging 7 % discount. (20 days, 78^.) When you go to the bank, see that the proceeds are entered in the Deposit Book." November 15. — "These are W. H. Bennett's Expense books:" — October Expense Book, — Sundry items. Mileage book #22768, 2000 miles, @ 2^ Total expenses, November Expense Book, — Sundry items. Mileage book #24356, 1500 miles, @ 2^ Total expenses, $ 63.50 40.00 f 103.50 f 78.45 30.00 $ 108.45 " How about Mr. Bright's draft ; is it due to-day ? Yes ? Then write out a check for the amount, and when the bank messenger comes in you may pay the draft. The Third National Bank has it. " By the way, I failed to tell you, Mrs. W. H. Bennett called on November 10, and I gave her a check for $ 50 from my private Check Book, but signed the firm's name to it. Now while you think of it, you had better fill in a stub for the amount and have it posted to Mr. Bennett's account. ^ Also give Mr. Bennett credit for the remaining number of miles in this mileage book: mileage book number 24356, 500 miles at 2^, ilO, rebate cover, $10, total, $ 20. "Mr. Bennett informed me this morning that he is going to leave us to-day. Write up his accounts to date and transfer the balance of his Expense account to his private account, a,nd then let me know what the balance is." November 23. — "Orders received by telephone: Lake Shore Hotel, 52 lb. culls, @ 7^. Hotel Richelieu, 111 lb. chicken, @ 8^; 563 lb. turkey, @ 12^." Petty Cash Book Dr. Cr. Frt. Ctg. Nov. 22. Balance, $ 10.00 Nov. 22. Cash sales, 55.50 Nov. 22. John W. Smith, f 10.18 .75 Nov. 22. G. M. Goodrich, 2.94 .50 Nov. 22. M. D. Bright, 7.34 .50 November 28. — " What is the balance in bank ? " Petty Cash Book Dr. Cr. Frt. Ctg. Nov. 28. Balance, $ 10.00 Nov. 28. Cash sales, 255.72 ^ The bookkeeper is supposed to destroy the check when writing the stub, but the student should fill it in and place it with the others in his envelope, to represent the check given by the manager. ' 130 BUSINESS PRACTICE Checking Book November 22, 19.... JOHN W. SMITH Lot No. 10. Frt., $10.18. Ctg., 75^. Sheboygan, Wis. 7 barrels Poultry 1767 lb. 52 1b. Culls @ 7^ 3.64 1477 lb. Turkey @ 12^ 177.24 238 lb. Canvas-back Duck @11^ 26.18 1767 207.06 GEORGE M. GOODRICH Lot Ko. 11. Frt., 12.94. Ctg., 50^. EoRT Howard, Wis. 1 box 2 barrels Poultry 566 lb. 112 lb. Turkey @ 12i^ 14.00 195 lb. Chicken @ 8^ 15.60 259 lb. Canvas-back Duck @ 10^ 25.90 566 55.50 M. D. BRIGHT Lot No. 12. Frt., $ 7.34. Ctg., 50 ^. Fort Howard, Wis. 6 barrels Poultry 1197 lb. 1111b. Chicken @ 8^ 8.88 563 lb. Turkey @ 12^ 67.66 523 lb. Chicken @ 10^ 52.30 1197 128.74 November 30. — " Deposit to-day $350 in currency. " What is the balance in the Sheboygan Bank ? " ($ 786.28.) " As this month closes our business with consignors in Wisconsin, you may draw a draft at sight on the Sheboygan Bank for our balance. Draw through our bank here, and have the draft deposited to our credit when you go to the bank. " When must M. A. Cook & Co. take up their note ? To-day ? You should have spoken of it before now. Write out a check immediately for the amount and have the errand boy take it to their office. " Farnum & Co. have sold out our purchase of 10,000 bushels of w^heat. This is their check for the net proceeds, $199.28. " Has Mr. Lawson sent in his expense book for October ? No ? Then write to him, and say that we must have his expense book promptly the first of every month. " Write out a check for the employees' salaries and I will sign it, for I must leave the office in a few minutes and shall not be here again to-day. What will be the amount of the check?" ($460.) " Do not fail to leave the Deposit Book at the bank to be balanced^ as that matter was overlooked last month. "Close the books this month and let me have the statements by December 5." (See inventories, page 131.) COMMISSION 131 Invoices received during the Month Chicago, November 24, 19... A. M. Chase & Co., City. To The Chicago Gas Lt. & Coke Co. Dr. Gas from October 31 to November 24, Less 20% $15.00 3.00 $ 12.00 Chicago, November 1, 19.... A. M. Chase & Co., City. To H. 0. Sweet & Co. Dr. Rent for No. South Water St. for month of November $250.00 Inventories Furniture and Fixtures Horses and Wagons . Mileage $ 550.00 1000.00 20.00 Note. — Although the consignments in this set are all sold out at the time of closing the books, it often occurs in the commission business that there are consignments on hand which are only partly closed out at this period. In such a case the extensions should be made for what has been sold, according to the Checking Book, and the total amount inserted in Merchandise account as a liability inventory, because it represents the debts which the firm owes the shippers. In Freight and Cartage account insert the total charges paid out on these con- signments and in Commission account the total commission on what has been sold. These two amounts should be inserted as resource inventories because they represent debts which the shippers owe the firm. Monthly Bank Statement 19 Vouchers Returned. A. M. CHASE & CO. In Account Current with the STUDENTS' NATIONAL BANK of Chicago. Checks Checks Checks Checks Checks 19.... Deposits 50 00 230 00 ■ Oct. 15 3000 00 150 00 50 00 Nov. 7 75 00 13 50 500 00 u 10 199 22 125 00 10 80 u 30 350 00 65 75 1000 00 00 00 37 100 40 50 00 00 u 30 786 28 4410 50 50 00 50 00 500 00 460 150 00 00 3656 80 Bal ance, 753 70 (red Ink) 4410 50 November 30, check #19, — 1 200, still out. Note. — A statement, such as given above, is rendered by most banking houses to depositors, instead of showing the process of balancing in the Deposit Book each month. The student, however, may copy it in his Deposit Book as before. 132 BUSINESS PRACTICE QUESTIONS FOR DISCUSSION 1. In how many different ways may a personal account close ? Name them. 2. If placed in charge of a set of books of slightly unusual form, how would you familiarize yourself with them ? 3. Your employer wishes to know the full amount of his dealings with a customer who always pays cash. Is it possible to prepare a state- ment? What books or papers might be consulted? 4. Write out a note in payment for merchandise. Trace by entries in your books, in books of merchant, etc. 5. Explain in detail how you would prove that the following classes of personal accounts in the Ledger are correct : purchase accounts, salary accounts, commission accounts, customers' accounts. 6. If no trial balance has been drawn off from a set of books for three months or more, explain how to proceed with the work, and state how many trial balances you would take off. 7. Explain how you would audit a Cash Book, Journal, Sales Book, etc. 8. What statement does a bank require of some depositors before it decides to make them loans? 9. Why should the dates of entries in the Books of Original Entry and the Ledger be in regular order ? In "what part of the entries should the exact dates of transactions occurring previous to the entry be noted ? 10. If a personal account or a bill receivable has been charged off to Loss and Gain account, what account should receive the credit if the amount is paid later? 11. Give several reasons why a business may show a large profit or surplus and yet have a small cash balance on hand. SECTION III. CONTRACTING BUSINESS 198. A Contract is a written agreement between two or more persons stating in detail the obligation of each party. It is usually an agreement by one party to furnish certain goods, or to perform certain work, for a certain price ; and by another party to pay this price at a certain time, in a specified manner. 199. A contractor has two accounts for each contract, — Construction and Personal. 200. The Construction Account shows the cost of fulfilling the contract and also the profit or loss on it. When the contract is received, this account is credited with the amount stipulated in the contract, and it is debited with labor, materials used, etc., at cost price. The excess of the credit side is a liability until the work is completed ; when the work is completed, the difference between the two sides shows the amount of profit or loss, which is transferred to Loss and Gain account by Journal entry. Note. — The name of this account varies with the nature of the business carried on. For example: Con- tractors who build or construct, would use the word " Construction," while electric light contractors would employ the word " Installation," decorators the word " Decoration," etc. ; for instance, Smith House Construc- tion, Smith House Installation, etc. 201. The Personal Account is an account with the person who pays for the contract. This account is debited with the amount of the bill rendered, and credited with the remittances. 202. Contract Account shows the amount of contracts received and completed. It is debited with the amounts of contracts received, and credited as the contracts are finished. The balance of this account is an asset (corresponding to the liabilities shown in the construc- tion accounts). The account balances when all contracts are completed. 203. The following set of books can be applied to any line of business in which the firm undertakes to perform work, furnish supplies, etc., for a consideration according to contract : — Auxiliary Books : Order Book (blanks). Receiving Book, Shipping Book, Petty Cash Book, Invoice Book, Deposit Book, Check Book, Bill Book, Construction (Cost) Book. Books of Entry : Contract Book, Contract Sales Book, Cash Book, Journal, Ledger. 204. The Construction (Cost) Book shows the itemized cost of materials, labor, etc., used in fulfilling each contract. The items are obtained from requisitions, vouchers, invoices, etc. The columns have different headings according to the nature of the business. CONTRA C riNG B U SI NESS 133 All credits (such as for unused material returned or resold) should be written in red ink and their totals entered in the credit column until the contract is completed, when the amounts should be deducted from their respective columns. Construction Book o be o o ^ i-H d o cd u -p d o O «5 .2 §1 ^ 2, ^ 1 Incidentals Hotel Bills E. E. Fare lO o OS .-1 I— 1 iM IM Freight Express Cartage O t^ iM (M (M Engines and Boilers , Piping and Foundation C 1 Dynamos and Wiring § 8 § 8§ s ?0 I-H l-H IM c. Lamps and Sockets 8 8 o 1 o o I— 1 o 1—1 '3 o H o 8 8 g g 1-H 1—1 1 1— i o >-o >o O t^ t^ 88 o o O O i lO iM C5 o o 00 .-H g M S P Chicago Electric Co., invoice, May 10 1 200-Lt. Dynamo 1 Rheostat 1 Iron Base New York Electric Co., invoice, May 10 Wire, Conduit, Cut Outs, and Switches C. C. Evans, statement_, May 15 Labor Cartage Incidentals Sawyer-Man Electric Co., invoice. May 25 200 Sockets and Inc. Lamps 2 Arc Lamps Electric Supply Co., invoice, May 12 1 Switch Board and Instruments Steamer "^ Boland,''^ May 31 . (red Scrap Wire returned ink) C. C. Evans, statement. May 31 Labor Incidentals 1 Recapitulation Contract $1800.00 Cost Labor 155.00 Lamps 110.00 Dynamo and Wiring 912.50 Cartage 2.75 Incidentals 21.25 1 1 s i -1-3 o Pi. "S S 2 »0 »0 O .-H r-( »H i-H 1 1-1 1-1 (M eo to SO CO 8 ^ - ' ^ - - ' 134 BUSINESS PRACTICE 205. The Contract Book contains a record of all contracts. Under the name of the con- tract is given the location, the name of the party who is to pay for the contract, a synopsis of the principal features therein, the terms, and the amount. From this book the amount of each contract is posted to the credit of its Construction account, and the sum of the contracts received each month is posted to the debit of Contract account. Contract Book April, 1901. Bate Billed 1901 June Ledger Page 75 22 Contract No. 176 Date, April 20, 1901. Contract Name Steamer "Roland" (Installation). Town, Chicago, 111. Contract for 200 Lt. Electric Lighting Plant. For Wright Transportation Co. Terms, f 900 payable May 15, balance when plant is started. Description, 1 200 Lt. Dynamo, 1 Rheostat, 1 Iron Base, 1 Switch Board and Instruments, 200 Sockets and Inc. Lamps, 2 Arc Lamps, Including material and wiring. Contract Amount Contract No. 177. Contract Name Contract for For Terms, Description, Date Town 19 Contract Amount Contract % Debit Amount Total 1800 00 206. The Contract Sales Book contains a record of the bill for each contract. When a contract is about completed, an entry is made in this book, giving the name of the party that is to pay for the contract, the terms, the items in the contract, and the amount. An exact CONTRA C TING B U SI NESS 135 copy of the bill which appears in this book is then sent to the proper person. The book is posted the same as the Sales Book, except that its total is posted at the end of the month to the credit of Contract account, instead of to Sales account. Contract Sales Book June, 1901. 125 Wright Transportation Co., Chicago, 111. Contract No. 176. For a 200 Lt. Electric Lighting plant installed on the steamer " Roland." Consisting of : 1 200 Lt. Dynamo, 1 Rheostat, 1 Iron Base, 1 Switch Board and Instruments, 200 Sockets and Inc. Lamps, 2 Arc Lamps, Including material and wiring as per contract, 1800 00 Terms, $ 900 payable May 15, balance when plant is started. SET III. EXERCISES General Instructions. — Books required : Deposit Book, Check Book, Bill Book, Construc- tion Book, Cash Book, Journal, Contract Book, Contract Sales Book, Ledger. The student may rule his own Construction Book, Contract Book, and Contract Sales Book according to the specimen pages. (See pages 133, 134, and above.) The Construction Book will require about four pages, and the Contract Book and Contract Sales Book each two pages. Representative accounts used : Bills Payable, Bills Receivable, Cash, Commission, Con- tract, Entertainment, Expense, Furniture and Fixtures, Interest and Discount, Loss and Gain. Machinery, Michigan Flats Construction, Palace Hotel Construction, Rent, Salary, Stationery. Tools. The name of the firm is C. H. Smith & Co. The partners are C. H. Smith and George A. Day. C. H. Smith is to be the manager and receive a salary of $300 a month. George A. Day is to receive a salary of f 150 a month and 6 ^ interest per annum on his net investment. The net profit or loss is to be divided as follows: C. H. Smith is to receive 40^, and George A. Day 60^. Manager's Instructions to his Bookkeeper Chicago, March 1, 19 — "As shown by the contract, we partners invest as follows : C. H. Smith invests cash, $5000, and machinery (per inventory), $5000. George A. Day invests cash, $5000, and two promissory notes indorsed by him to this firm, as follows: Note, $2500, signed by D. A. Jones & Co., Boston, dated January 5 of last year, at 14 months, payable at the Boston Bank. Note, $2500, signed by G. D. Wait & Co., Chicago, dated January 5 of last year, at 18 months, payable at the Sixth National Bank. 136 BUSINESS PRACTICE "Deposit to-day $10,000. " Write out a check for $ 100 to the order of currency for the cash drawer. " Give to C. M. Frost, our city man, a check for $150 for expenses. " Send a check for $ 75 to Wyckoff, Seaman & Co. to apply on account. "Enter this contract received from the Golden Gate Electric Light Co., San Francisco, Cal., to install in the Palace Hotel, San Francisco, a complete steam plant consisting of Two 200 Horse Power Engines, Four 100 Horse Power Boilers, One Pump, One Injector, One Heater, and pipiiig, all set up complete, and started, for the sum of $ 20,000. "Terms, $5000 when engines are delivered, and the balance subject to a sight draft 15 days after plant is started." March 5. — "We received a letter from D. A. Jones & Co., asking us to favor them by renewing $ 1500 of their note due March 5. They inclosed this check for $ 1000 and note for $ 1500, dated March 5, at 3 months, with interest at 7 ^, payable at the Sixth National Bank. Our firm has considered the matter and decided to favor D. A. Jones & Co. Make the proper entries and return the old note to D. A. Jones & Co. " Give me G. D. Wait & Co.'s note, and I will have it discounted. "The United States Engine Co. promised to ship the engines for the hotel in San Francisco in two weeks, and it will take as much longer for them to reach San Francisco. As soon as we receive notice of shipment we shall send our erecting man,^ John Henry, to San Fran- cisco, with the drawings, so that he can have the foundation ready when the machinery arrives. "C. G. Ware & Co. have discounted G. D. Wait & Co.'s note, charging us 7^ discount. This check for $2441.67 is the proceeds of the note. "Deposit the checks which are in the safe." ($3441.67.) March 15. — "Have this list of tools packed and ready for shipment, and give the teamster a letter to the Engineers' Supply Co., requesting that these tools be shipped in the same car with our order number six for San Francisco : — 1 Pipe Cutter $ 90.00 1 Stone Jack . 55.00 6 Common Jacks . 36.00 12 Pairs Pipe Tongs . ' 28.00 2 Pairs Chain Tongs 24.00 12 Wooden Pulleys . 12.00 500 lb. 1" Manila Rope 75.00 1 Crab . 60.00 2 Chain Blocks 70.00 2 Crowbars 8.00 2 Sledges 11.00 1 Saw . 1.00 $470.00 " Do not fail to make a charge for these tools." March 17. — " To-day I shall require $ 75. If you have this amount in the drawer, I will take it. " Give this man $1.50 for carting the tools over to the Engineers' Supply Co. " Here is the invoice and bill of lading for the engines from the United States Engine Co. You will see from the bill of lading that the engines are on cars ^3142 of the A. T. & S. F. R.R. and :ji5^1430 of the N. P. R.R. Make a memorandum of the numbers and in ten days have the United States Engine Co. trace them. ; " Go out and buy a first-class ticket via the Northern Pacific R. R. for San Francisco, as 1 An erecting man is one whose duty it is, to superintend the erection of engines, boilers, and other machinery. CONTRACTING BUSINESS 137 Mr. Henry prefers that route. Also secure a berth for him. 1 think about •$ 85 will cover the cost. Give Mr. Henry the ticket and $100 in currency. Draw the check for $185, and I will sign it at once. " Go to our bank (Students' National Bank) and purchase a San Francisco bank draft for $1000 in our name, and charge it -to John Henry. Ask the cashier of the bank to give Mr. Henry a letter of introduction to their San Francisco correspondent, and we shall have him open an account there while the construction is going on. Be sure to explain to Mr. Henry before he goes exactly how we want his reports made out, and how frequently they are to be submitted. Make your explanation clear and simple ; remember that he is an engineer, not a bookkeeper. Impress upon him that we I'equire a receipt or voucher for every dollar he expends, and that we shall hold him responsible if he fails to get it." March 21. — "How much currency did you give me Saturday? You say $75? Let me see the receipt. What ! You did not have me sign a receipt ? Hereafter never give money to any one out of the cash drawer without taking a receipt. It does not matter whether he is a partner or not, always ask for a receipt, so that there will be no reflection upon yourself should there be any dispute. This particular transaction places you in a very embarrassing position, because on returning home Saturday I counted the money and found that you had given me only $ 60. Does the cash balance ? Yes ? Then I shall have to be the loser, as I failed to count the money when you gave it to me. Mareh 31. — " G. A. Day wishes a check for $ 200, and I wish one for $75. " If you will now write out a check for the necessary amount ($183) to pay the office help, I will sign it, as I shall not be here again to-day. (Stenographer, $65 a month; errand boy, $18; bookkeeper, $100.) "Enter this contract from A. Breese & Co., Chicago, to install in the Michigan Flats, one 50 Horse Power Engine, one 500 Light Dynamo; we to build the foundation and do the piping to connect the engine with their present boilers and heaters, and also to connect the wires from the dynamo to the switchboard : all for the sum of $ 3500. Terms, $ 1000 when engine is delivered, $1000 when dynamo is delivered, and the balance thirty days after plant is started. " Before bidding on this contract, we had an estimate from the Dynamic Construction Co. to furnish and install the dynamo and the necessary wiring for $1100. And we had a bid from Abraham Small to do all the piping for $ 325. We shall place both of these orders at once, and make a contract with Hiram Abiff to build the foundation for $150. As to the engine, we shall use one of those 50 H. P. we have in stock. " Here is Mr. Henry's statement. Give him credit for it." San Francisco, March 24, 19—. March 17. R.R. Ticket $ 85.00 17. Cash . 100.00 17. Bank draft 1000.00 f 1185.00 March 24. Credit Will. Adams & Co. on acct. 400.00 24. Labor to date 137.00 24. Incidentals 15.00 24. Hotel Bills 20.00 24. R.R. Ticket 85.00 657.00 Balance on For the Palace Hotel hand $528.00 " Here is a telegram from Mr. Henry, saying that the engines have arrived, but that he has not enough money to pay the freight, $ 800. Write out a check to the order of the 138 BUSINESS PRACTICE Atchison, Topeka & Santa Fe K.R. Co., have it certified, and go to the general freight office with the check and the bill of lading and ask them to accept payment here, and wire their San Francisco agent to deliver the engines. Charge this $800 to the United States Engine Co., as their price was f.o.b. cars San Francisco. " Mr. Henry . writes that he has vouchers for all the items in his statement and that he will turn them in with his Deposit Book and canceled checks when he has finished the work. He has sublet the contract for the foundation and masonry to Wm. Adams & Co. for $ 2200 and has paid them $ 400 on account. We will send a bank draft for the balance when he notifies us that the work is completed. " Have the Construction Book written up to date." Note. — Make entries for the partners' salaries and the invoices received during the month. Take off a trial balance. Invoices received during the Month Chicago, March 1, 19.... C. H. Smith & Co., City, Bought of Wyckoff, Seaman & Co. 1 #2 Remington typewriter # , $100.00 Chicago, March 1, 19 C. H. Smith & Co., City, In account with Chicago Telephone Co. Rent of telephone ^ , from March 1 to Jmie 1, 19...., f 37.50 Chicago, March 2, 19.... C. H. Smith & Co., City, Order No. 2 Bought of C. H. Odell & Co. 3 Curtain Top Desks, @ f 25.00 .$75.00 3 Armchairs, @ 5.00 . 15.00 1 Bookkeeper's Desk, 12.00 1 Stool, 5.00 1 Letter File, 7.50 5 Common Chairs, 10.00 1 Letter-press, 4.00 $128.50 Chicago, March 1, 19.... C. H. Smith & Co., City, To C. H. Sweet & Co. Dr. Rent of office room No. for the month of March, $50.00 Chicago, March 31, 19.... C. H. Smith & Co., City, Bought of Chicago Stationery Co. 1000 Letter heads, $8.50 1000 Envelopes, 5.00 1 box Pens, .85 1 set of Books, 12.00 500 Billheads, _4.00 $30.35 Erie, Pa., March 15, 19.... C. H. Smith & Co., Chicago, Bought of The United States Engine Co. 2 200 H. P. Engines, #177, #178, @ $2600 $5200 f.o.b. cars San Francisco. Shipped to the Palace Hotel, San Francisco. CONTRACTING BUSINESS 139 C. H. Smith & Co., City, Order No. 1 1 Pipe Cutter, 1 Stone Jack, 6 Common Jacks, 12 pairs Pipe Tongs, 2 Pairs Chain Tongs 12 Wooden Pulleys, 500 lb. 1" Manila Rope, Bought of Orr & Smith C. H. Smith & Co., City, 1 Crab, 2 Chain Blocks, 2 Crowbars, 2 Sledges, 1 Saw, 5 Alcohol Lamps, 5 Pickaxes, Bought of Orr & Smith Chicago, March 2, 19.. $ 90.00 55.00 36.00 28.00 24.00 12.00 75.00 $ 320.00 Chicago, March 2, 19.... 60.00 70.00 8.00 11.00 1.00 5.00 12.50 f 167.50 Manager's Instructions to his Bookkeeper April 2. — "Here is the invoice (see page 143) of the Chicago Steel Boiler Co. and the hill of lading of the cars on which the boilers were shipped. We were to have 60 days on this account, but they seem to need money and offer us 5 % discount if we will pay cash inside of ten days. What is the balance in bank ? Very well, we have not money sufficient to spare in order to take advantage of their offer. Draw a sight draft on the Golden Gate Electric Light Co. for $ 5000 which is now due, as the engines have been delivered. Draw through our bank, and I will present the draft to the bank and see if they will discount it. "Do not fail to pay the Telephone Company to-day. Send them a check. "This is C. M. Frost's statement for the month of March." Chicago, March 31, 19.... March 1. Check on account, $150.00 Cr. March 31. Entertainment expenses per vouchers. 63.00 Balance on hand 87.00 f 150.00 $ 150.00 "Mr. Frost began work March 1, and his salary is f 125 a month, and John Henry began work March 15, at a salary of $ 75 a month. "The bank would not discount our draft drawn on the Golden Gate Electric Light Co., and I left it for collection, with instruction to wire payment or non-payment. If it is paid, the bank will allow us to draw against it. We should hear from it in five days, which will enable us to take advantage of the offer of the Chicago Steel Boiler Co. " Here is the invoice of the Engineers' Supply Co. (See page 142.) These goods were purchased on 30 days' time, but they ask us to give them a note for the amount, and I have agreed that if they will extend the time to 90 days, we will give them our note without interest. I expect to hear from them in a few days." 140 B USINESS PR AC TICE April 5. -^ " The Engineers' Supply Co. accepts our offer. Make out a 90-day note for $1615, dating it the day of the invoice, March 21, and have it payable at our office. I want to send it to-day. "Let me have D. A. Jones & Co.'s note. I will write to the United States Engine Co. to-day and inclose the note to apply on our account. Make the entry. Note, $ 1500 ; interest,. $26.25." April 11. — "The bank notifies us that the Golden Gate Electric Light Co. has paid the draft. You may now write out a check to the Chicago Steel Boiler Co. for $ 2400, less 5 f) discount. (When you go to the bank, see that we are given credit on our Deposit Book for the amount of the draft, $5000, less \fo exchange ($12.50) for collection. "What do we owe C. H. Odell & Co.? Send them a check for $28.50 and a 30 day note for the balance. If you will write out the check and note now I will sign them, as I shall go out presently and not return to-day. Write to C. H. Odell & Co. and inclose the check and note. "Do not forget to send a check for the gas bill, $3.50." (Chicago Gas Light & Coke Co.) April 14l. — "Write out a check for $85 in favor of Mrs. C. H. Smith and charge it to me. She will be in about 11 o'clock, but as I shall not be here you may give her the check. "Make the entry for the credits on Mr. Henry's statement." San Francisco, April 9, 19 March 24. Balance on hand, $ 528.00 Cr. April 9. Hotel bill to date, $ 20.00 9. Incidentals, 8.50 9. Cartage on engines, 125.00 9. Labor to date, 235.00 388.50 Balance on hand, f 139.50 "We have delivered to the Michigan Flats to-day, from stock, one 50 H. P. engine, #87,. inventoried at $ 1050. Charge it, at that price, to the Michigan Flats Construction account." April 18. — " Enter this check for $ 1000 of A. Breese & Co. It is to apply on the contract. "Pay this man, F. H. Pennoyer, $4 for cartage on engine to the Michigan Flats. Give him a check. "Deposit the check received of A. Breese & Co." April 25. — " This bill for $18.10 from the United States Engine Co. is for the discount (61 days at 7%) on D. A. Jones & Co.'s note, which we indorsed to them a while ago. Give them credit for this amount. " We have sold a 250 H. P. engine to Wm. Heim, St. Louis, Mo., for account of the United States Engine Co., for $3100. This engine is to be shipped and billed to Wm. Heim by the United States Engine Co., and our commission, $465, is to be charged to them. We have nothing further to do with it. Make out our bill for the commission, charging the United States Engine Co. with the same, and send it with the order." April 28.— " Send Mrs. C. M. Frost a check for $ 75. " Write me a check for $ 75. " Mr. Henry has just returned from San Francisco. Here is his final statement*" (See next page.) CONTRACTING BUSINESS 141 San Francisco, April 23, 19 April 9. Balance on hand, f 139.50 15. Golden Gate E. Lt. Co. on acct., Cr. 2000.00 f 2139.50 April 15. Freight on boilers, f 1100.00 9. Freight on supplies, etc., 450.00 11. Cartage on above. 80.00 23. Labor to date, 230.00 23. Hotel bill to date, 35.00 23. R.R. fai'e on return, 65.00 23. John Henry (personal), Balance on hand, 65.00 2025.00 $ 114.50 "The statement from the San Francisco Bank shows that there is $79.50 to our credit. Draw a sight draft on them for the amount to the order of our bank, and have it deposited to our credit when you go to the bank. "Enter this bill which Mr. Henry received from Wm. Adams & Co." San Fkancisco, April 5, 19 C. H. Smith & Co., Chicago. To Wm. Adams & Co., Dr. Building engine foundation complete in the Palace Hotel, according to contract, . $ 2200.00 Cr. March 24. Check on account, 400.00 Balance due, $ 1800.00 " Mr. Henry promised Wm. Adams & Co. a check for the balance as soon as he arrived here. To save exchange I will send them an order on the Golden Gate Electric Light Co. for the amount. (Do not make any entry until the Golden Gate Electric Light Co. notifies us.)'' April 30. — "Make out the bill for the Golden Gate Electric Light Co.'s contract, and about May 5 you may draw a sight draft on them for the balance. " Mail a check for $100 to C. H. Sweet & Co., office rent for March and April. "Send the bill for A. Breese & Co.'s contract. " This is C. M. Frost's statement for the month of April." C] aiCAGo, April 30, 19 March 31. April 9. Balance on hand, Check, Cr. $87.00 100.00 $187.00 April 20. 30. Labor for erecting and starting engine in the Michigan Flats, Entertainment expenses as shown by vouchers. Balance on hand. $60.00 88.50 148.50 $38.50 142 BUSINESS PRACTICE " You say that Mr. Frost's statement reads, April 9, check $ 100, and that there is no such stub on the Check Book ? I recollect the circumstance. Having met Mr. Frost up town that day, he told me he had not money sufficient to pay for labor at the Michigan Flats, so I stepped into an office and made him out a check for $100, but failed to tell you. It is all right, make a stub of it, charging him with same.^ " This is a memorandum of the tools that Mr. Henry shipped to Chicago. Let the errand boy check them before you credit the Construction account." Returned from the Palace Hotel : — San Francisco, April 23, 19. 1 Pipe Cutter $90.00 4 Common Jacks . 24.00 12 pairs Pipe Tongs 28.00 2 pairs Chain Tongs 24.00 10 Wooden Pulleys 10.00 500 lb. Manila Rope 75.00 1 Crab . 60.00 2 Chain Blocks . 70.00 1 Crowbar 4.00 2 Sledges 11.00 $396.00 " Write out a check for il83 to pay the office help. " Show me the Construction Book and the memorandum of the tools returned. I see there are tools missing. When Mr. Henry calls again inform him that according to his memo- randum and the Construction Book there are several tools missing, and that you wish to know what has become of them. " I have seen Mr. Henry myself, and he said that the day he left San Francisco he sold the stone jack for $75 to the Golden Gate Electric Light Co., but the other tools must have been stolen, as he could not find them. Charge the Golden Gate Electric Light Co. with the stone jack, and mail them a bill for it. " Have the Construction Book written up to date and rule it off. "Leave the Deposit Book at the bank to be balanced." Note. — Make the entries for the invoices, salaries, etc. Take off a trial balance. ■ "Close the books and let me have the statements in a few days." (See inventories, page 143.) Invoices received during the Month Chicago, April 14, 19. C. H. Smith & Co., City. Bought of Hiram Abiff. Building engine foundation in the Michigan Flats as per contract, $ 150.00 Chicago, March 21, 19.... C. H. Smith & Co., City. Bought of Engineers' Supply Co. 1 400 H. P. Heater, $800.00 16x4x6 Duplex Steam Pump, 225.00 1 #10 Injector, 45.00 1 lot of Cut Pipe and Fittings, 455.00 1 lot of Pipe Covering, 90.00 $1615.00 Shipped to the Palace Hotel, San Francisco. 1 The student should fill in the check when writing the stub and place it with the others in his envelope. CONTRACTING BUSINESS 143 Chicago, April 20, 19..., C. H. Smith & Co., City. Bought of Dynamic Construction Co. 1 500 Lt. Dynamo, 1 Rheostat, 1 Iron Base and wiring the Michigan Flats as per contract, $1100.00 Chicago, April 16, 19 C. H. Smith & Co., City. Bought of Abraham Small. Piping the Michigan Flats as per contract, $325.00 Chicago, March 31, 19 C. H. Smith & Co., City. Bought of Chicago Steel Boiler Co. 4 100 H. P. Boilers @ $600.00 $2400.00 Shipped to San Francisco. Chicago, April 2, 19.. C. H. Smith & Co., To The Chicago Gas Lt. & Coke Co., Dr. For gas consumed from March 2 to April 2, 19... Index at this reading, 3530 Index at last reading, 00 To consumption of 3530 cubic feet gas @ $1.10 per M., Less 10% if paid on or before April 12, $3.88 .38 Paid April 12, 19....' Machinery Furniture and Fixtures Tools. $3.50 Chicago Gas Lt. & Coke Co. J. B. WIOLLS, Collector. Inventories $ 3700.00 225.00 350.00 Monthly Bank Statement 20 Vouchers Returned. C. H. SMITH & CO. In Account Current with the STUDENTS' NATIONAL BANK of Chicago. Checks Checks Checks Checks Checks 19 Deposits 100 00 4 00 100 00 March 1 10000 00 150 75 185 1000 4 2280 00 00 00 00 00 00 75 75 200 75 183 800 00 00 00 00 00 00 183 00 5643 13865 50 17 (red ink) April 5 11 18 28 3441 4987 1000 79 67 50 00 50 Bal ance 19508 67 19508 67 3 50 37 50 85 00 28 50 144 BUSINESS PRACTICE Debit Memorandum ^tuHmts' National Banft Debit Chicago, March 17, 19 _ C. H. SMITH & CO. Exchange on San Francisco draft 4 00 Note. — Copies of the above ticket may be made and distributed to the students with the returned checks. April 30^ check # 18, — f 100, still out. QUESTIONS FOR DISCUSSION 1. At time of closing the books, in the contracting business, what accounts must remain open until a late date before they can be transferred into Loss and Gain account? 2. Mention several kinds of contracting busi- nesses in which the Sales Book is necessary. 3. A coal dealer makes contracts with several customers to furnish a certain amount of coal to them at a specified rate. Would such contracts be treated the same as those in the business of a contractor who constructs buildings, railroads, etc. ? If not, how would you note the contracts on the Ledger of the coal dealer ? 4. A gives B an order for five cars, f 10,000, to be delivered when called for, not later than six months from date. B immediately demands of A an advance of 10 '/o of the value of the cars, which A pays. How should the transaction be recorded on the books of A and B respectively, and when should the invoice be rendered ? SECTION IV. CORPORATIONS 207. A Corporation is a company of persons recognized by law as an individual. 208. Organization. — In forming a corporation, the following steps are taken: — 1. An application for a license to incorporate, signed by three or more persons called Commissioners, is forwarded to the Secretary of State. Legal advice is necessary in regard to this matter. 2. Upon receipt of the license, a subscription list is arranged thus : — We, the undersigned, hereby severally subscribe for the number of shares set opposite our respective names to the Capital Stock of the Company, and we severally agree to pay the said company for each share the sum of dollars, on such terms and conditions as may be determined by the Board of Directors of said company. Names Shares Amount C. G. White, John E. Andrews, A. B. White, W. H. Pierce, 300 150 49 1 f 30000 15000 4900 100 00 00 00 00 500 f 50000 00 CORPORA riONS 145 3. After the expiration of at least ten days from date of license, the subscription list is forwarded to the Secretary of State, who issues the charter which completes the organiza- tion of the company. NoTK. — The laws of the different states in regard to corporations vary greatly; and the organization of a corporation requires a very thorough knowledge of the statutes of the state in which the organization is effected. It is essential that all legal requirements should be fully met before there is any attempt to begin business. 209. The Charter is a document detailing the organization and purpose of the corporation, as follows : the name of the corporation, the amount of authorized capital stock, par value per share, names of the original stockholders, the line of business to be pursued, etc. In most states the charter must be recorded in the office of the County Recorder ; failing to do so, a company is not recognized in court when filing a suit. 210. A Share is a fractional part of the capital stock of a corporation. 211. A Stockholder is a person who owns one or more shares in a corporation. 212. A corporation is managed by a Board of Directors, which acts through the officers. The officers are usually the President, Vice President, Secretary, and Treasurer. 213. A corporation is governed by its charter and by-laws. In case of failure to adhere to them it is liable to litigation, through the dissatisfaction of one or more stockholders. Such action is likely to result in the appointment of a receiver or in the surrender of the charter. Corporation Accounts 214. The accounts required in a corporation set of books are the same as those in a partnership set, with the addition of the following, and possibly a few others : Capital Stock, Subscription, Treasury Stock, Trustee, Surplus, Dividend, Stock Dividend, Sinking Fund, Bond Payable, Interest Payable. 215. The Capital Stock Account shows the amount of stock authorized by the Secretary of State. This is the first account to be credited, and its amount should be neither increased nor decreased unless the change is authorized by the Secretary of State. 216. The Subscription Account is debited with the authorized amount of capital stock, and' is credited as the stock is charged, or paid in, according to the subscription list filed with the Secretary of State. 217. The Treasury Stock Account is debited with the unsold stock of a corporation. When the unsold stock is placed in trust with some responsible person, called a Trustee, the Treasury Stock account is credited and the Trustee's account is debited. 218. The Trustee Account. The trustee who holds the unsold stock in trust to be sold is charged with it; and he is credited with it when it is sold. 219. The Surplus Account receives the balance of Loss and Gain account at each period of closing the books. The debit side receives the net loss, and the credit side the net gain. There is no transfer made from this account until there is a surplus from which a dividend or a stock dividend is declared. The amount decided upon to be divided should be transferred (by Journal entry) from this account to Dividend account or Stock Dividend account, as the Directors may determine. 220. The Dividend Account shows the amount, transferred from Surplus account, which is to be paid to the different stockholders in currency or by check. The account is credited with the amount taken from Surplus account, and it is debited from the Cash Book when the money is disbursed. The account balances when all stockholders have received their dividends. This routine is observed every time a dividend is declared. Every dividend declared is numbered. 146 BUSINESS PRACTICE 221. The Stock Dividend Account shows the amount transferred from Surplus account to be paid to the stockholders by issuing stock to them. Permission to increase the capital stock must be secured from tlie Secretary of State. Capital Stock account is credited and Treasury Stock account is debited with the increase. As the stock of the dividend is issued to the stockholders, Stock Dividend account is debited and Treasury Stock is credited. 222. Sinking Fund Account contains a record of a reserve fund which may be used for various purposes, but which is usually employed for the liquidation or reduction of a corpora- tion's debt. The balance usually represents cash deposited in a special bank. When deposits are made Sinking Fund account is debited and Cash credited. 223. The Bond Payable Account is opened when a corporation places a mortgage on its real estate or other property by issuing bonds. When a bond is sold, the account is credited from the Cash Book, and when a bond is paid, the account is debited. 224. The Interest Payable Account is debited with all interest paid on bonds. Stockholders' Books 225. The corporation books which pertain to the stockholders are : Minute Book, Stock Certificate Book, Stock Register, Transfer Record, Dividend Book, Stockholders' Ledger. 226. The Minute Book contains the license, charter, by-laws, and the record of the minutes of all the meetings lield by the corporation. 227. The Stock Certificate Book contains the blank certiiicates. F'rom tlie stubs the Stock Register is written up. Stock Certificate Book Certificate JVo. J. For 25 Shares Issued to. Bated fun& /, 190 f. From whom transferred^ Bated ....19 No. Original Certificate No. of Shares Transferred Received Certificate J^o. 3 for 25 Shares this /at day of June, 190/ . Incorporated under the Laws of the State of Illinois. JVa 8. Shares 2o. (s^ a>??) C. G. WHITE FURJ^ITURE CO (iS^ «\go) Capital Stock $50,000.00. This Certifies that ^. ^. li}-kit& is the owner of 25 shares of One Hundred Bollars each of the Capital Stock of C. G. White Furniture Company, fully paid and non-assessable, transfer- able only on the boohs of the Corporation by the holder hereof in person or by Attorney, upon surrender of this Certificate properly indorsed. In witness whereof, the said Corporation has caused this Certificate to be signed by its duly [ SEAL I authorized officers and to be sealed with the seal of the Corporation at Chicago, Illinois, this jCvat day of fti,n&, A.B. 190/. Secretary. President. ■ SHARES $ 100 EACH. 1 This part of the stub is filled in when the issued certificate is the reissue of a transfer. CORPORA TIONS The followincf is the bhink form on the back of Certificate of Stock : — 147 For Value Received hereby sell, assign, and transfer unto. Shares of the Capital Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney, to transfer the said Stock on the books of the within named Corporation, with full power of substitution in the premises. Dated , 19 In presence of r 2 3.- § ? o 2 -► -= ns Hi o: o otq' (|15 C ^»- e^ CD * ^ 5* '^^ O ^ Sr « & - p" (S CB » E:* S. 3 s c S" « r+ r; p p ►? a ^ <> rf5- Notes. — 1. Never issue the original stock certificates until after the charter has been received and recorded, for a company is not a corporation until it receives its charter. 2. Always, before canceling a certificate, see that the one or more in its place have been reissued. When a certificate transfers only part of the shares mentioned therein, new certificates must be issued for both persons concerned. 3. When a stock certificate is issued for fully paid-up stock, it should contain on its face the words " fully paid and non-assessable." If these words are omitted on a certificate, it is supposed to be understood that the stock is not fully paid, and consequently is assessable. 4. In issuing certificates do not destroy any on account of an error, but mark the erroneous certificate " Void," and let it remain attached to the stub, or file it with the canceled certificates. 228. The Stock Register contains a record of all the stock certificates issued and canceled. This register is divided into three sections, as follows : — 1. Register of Original Stock Certificates Issued. — In this section are recorded only the stock certificates which are issued for the subscription to the original capital stock or for any increase of capital stock thereafter. The record on these pages shows who are the original stockholders, and whether certificates have been issued for the full amount of the capital stock. The latter is ascertained by footing the column called " Shares in each certificate " and comparing its total with the number of shares authorized by the charter, plus the number of shares for the increase of capital stock (if any) according to the certificate of increase. Register of Original Stock Certificates Issued By the C. G. white FURNITURE CO. Date Stockholder's Name Address Stock Ledger Folio No. of Certifi- cate Shares in each .a Share Nnmbers Inclnsive ' Month Day Tear Certificate From To June 1 1 1 1901 1901 1901 C. G. White, C. G. White, C. G. White, Chicago, 1 1 1 1 2 3 2 2 5 2 5 5 Copyrighted, 1893, by A. £. Rlngo. 1 This column is used only in states where the old common law method of shares and capital stock still exists. The old common law required that the shares be numbered in numerical order, to wit : 1000 shares numbered from 1 to 1000 inclusive, each share taking and keeping a fixed number ; the object being to make it possible to trace the certificates (if any) whose par value has not been fully paid in. 148 BUSINESS PRACTICE 2. Register of Stock Certificates Reissued. — In this part of the register are recorded the stock certificates reissued, beginning with the first reissue of an original stock certificate. It includes only left-hand pages of the Stock Register. Register of Stock Certificates Reissued (Left-hand page) Date of Eeissne To Whom Certificate is Beissued Stock Ledger Folio Number of Certifi- cate Shares in each Share Numbers Inclusive ^ Signature of Person or "Memo." of Attorney asking Hontli Day Tear uenmcaie From To that Transfer be Made July (I 6 6 1901 1901 George P. Black, C. G. White, 5 1 11 12 1 1 5 1 C. G. White. Copyirlghted, 1893, by A. Zi. Mingo. 3. Register of Stock Certificates Surrendered and Canceled. — In this section is recorded the cancellation of stock for reissue. It embraces the right-hand (credit) pages facing the Register of Stock Certificates Reissued. And of Stock Certificates Surrendered and Canceled (Right-hand page) ^P" Never cancel a certificate until one or more in its place have been reissued. No. of Transfer Date of Certificate To Whom Certificate now canceled was Issued Stock Ledger Folio No. of Certificate Shares in Each o Share Nos. Inclusive • Month Day Tear Certificate From To 2 June 1 1901 C. G. White 1 3 2 5 Copyrighted, 1893, by A. X. Mingo. 229. The Transfer Record is in the form of authorizations for transferring stock. These are filled in and signed whenever certificates of stock are surrendered for cancellation and re- issue. Transfer Record of the C. G. White Furniture Co. Surrendered Transfer No. 2 entered on Stock Register page 1. For value received I hereby surrender to the C. G. White Furniture Co. certificate No. 3 for 25 shares of the capital stock of the aforesaid corpora- tion, and I hereby authorize the cancellation of said certificate and the issue of new certificates therefor to the following persons: Geo. P. Black, 10 shares, C. G. White (myself), 15 shares. Signed, C. G. WHITE, [seal] Date, July 6, 1901. . Reissued No. of Certificate No. of Shares • No. of Certificate No. of Shares 3 25 11 12 10 15 Copyrighted, 1893, by A. i. Mingo. 1 See footnote on preceding page. .CORPORA TIONS 149 230. The Dividend Book contains a record of all the dividends declared by the corporation. Dividend Book (Left-hand Page) Dividend No....of.__per cent or $ per share, declared 19..., at Meeting No. Oertificate Name Address Number of Shares Amonnt of Stock Amount Divi- dend per Share Dividend Book (Right-hand Page) of the \ Total Dividend, .Dollars. No. of Dividend Check Amount Dividend Paid Date of Payment Eeceived the Amount of Dividend set opposite my Name on the Date thereon Written Stockholder's Address How Eeceipted for when not in Person Copyrighted, 1893, by A. L. Ringo. 231. The stockholders' Ledger is frequently divided into two divisions, viz. Original Stockholders' Ledger and Reissue Stockholders' Ledger. 1. The Original Stockholders' Ledger contains only the accounts of the stockholders who subscribed for the capital stock or for any increase of capital stock. The entries for this ledger are obtained from the Register of Original Stock Certificates Issued, the General Ledger, the Transfer Record, and sometimes the Reissue Register (see illustration, page 148). Original Stockholders' Ledger C. G. WHITE When Issued No. Certificate Page Eeg. No. of Shares of Stock Debits Credits Credits ' Date of Transfer 1901 No. in Transfer Becord Surrendered Certificate When Paid 1901 Original Beissne Par Value of Stock Amt. paid in Cash.) Mdse.) or Notes Amount in Dividends Month Day No. No. of Shares June a July 1 1 1 6 1 2 3 12 1 1 1 2 225 50 25 15 22500 5000 2500 00 00 00 22500 5000 2500 00 00 00 July 6 2 3 25 Copyrighted, 1893, by A. T,. Ringo. 1 This column is used when a stockholder allows his dividends to apply in part payment of his stock. 150 BUSINESS PRACTICE 2. The Reissue Stockholders' Ledger contains the accounts of the shareholders who have become stockholders by transfer. The entries for this ledger are obtained from the Register of Stock Certiticates Reissued and of Stock Certificates Surrendered and Canceled, and the Transfer Record. Reissue Stockholders' Ledger GEORGE P. BLACK When Issued No, of Certificates Prom Whom Eeceived Initials Only Page S. B. No. of Shares ■ Balance Shares When Canceled No. of Certificates Transferred to Initials Only Page T.E, No. of Shares 1901 Old New Old New July 6 3 11 C. G. White 2 10 Copyrighted, 1893, hy A. Jj. Jtingo. Note. — The forms given above have been approved by the Listing Committees of the Associated Stock Exchanges of the United States, and are good in any state or territory (except in those states whose statute laws prescribe a form for special purposes). 232. In canceling a certificate on the books of a corporation the following method should be observed : — 1. When a stockholder presents his own certificate to be changed into more certificates for himself, the bookkeeper or secretary should (1) Issue the new certificates and mark on the stubs the words "In lieu of No " (2) Record the certificates in the Reissue Register. (3) Cancel the old certificate, marking it "Canceled in lieu of Nos ," and paste it on the edge of its original stub, or file it with the canceled certificates. In the latter case, rule two red lines diagonally through the stub so as to indicate that the corresponding certificate is no longer outstanding. (4) Record the cancellation in the Stock Register immediately opposite the reissue record just made. 2. When a stockholder presents his certificate for transfer, the bookkeeper or secretary should see that the stockholder has signed his name on the back of the certificate ; then he may fill in the power of attorney and proceed to make the transfer on the books as follows : — (1) Issue new certificates, to equal the shares in the canceled one, in the name of one or more persons. (2) Record the certificates in the Reissue Register. (3) Have the original stockholder sign his name in the signature column of the Reissue Register. (4) Have the original stockholder sign the Transfer Record. (5) Cancel the certificate by marking in red ink across its face the word " Canceled," the date, and the number of the transfer. Then paste the returned certificate to the edge of its original stub, or file it and rule off the stub. (6) Record the cancellation in the Register immediately opposite the reissue record just made. 3. When a certificate is presented to the corporation for transfer by the person to whom it is transferred, the assignment and power of attorney on the back of the certificate must CORPORATIONS 151 have been properly made out to him ; that is, the instrument must have been signed and dated in the presence of another person. The name of this witness should, therefore, be signed under the words " In the presence of." If the certificate is thus properly indorsed, the bookkeeper or secretary should make the transfer on the books as explained in case 2 above, except that the signature column in the Reissue Register and the Transfer Record must each be signed in the name of the original owner per the transferee as attorney. 233. The Private (General) Ledger. — Large corporations prefer to have all the entries relating to the opening and closing of books, and also all representative accounts, kept in a private set of books. This set may be composed of a Journal, Cash Book, and Ledger. Each book has usually a lock attached to it in order that the financial affairs of the business may be kept strictly secret. These books are placed under the charge of the confidential bookkeeper. The original entries for this set consist mostly of the footings of the Books of Original Entry in the different departments. The total footings are rendered to the confidential book- keeper on report tickets which are received daily from the various departments, and from the cashier. The Different Kinds op Stock 234. Guaranteed Stock is stock on which the stipulated dividend is credited annually. If not earned by the corporation, the dividends are carried over from year to year until earned, and then paid to the stockholders. 235. Preferred Stock is stock on which a fixed dividend is to be paid before any dividends on the Common Stock. 236. Common Stock is stock on which dividends are paid when the net earnings of the company justify the dividends and the Directors choose to declare them. 237. Watered Stock is an expression sometimes used in referring to the stock of corpora- tions which have issued stock in addition to the original amount, and sold it for a nominal con- sideration to the old stockholders. This is done for various purposes, but generally with the intention of avoiding some state tax or assessment on the percentage of profits, or of conceal- ing from the' public the real rate of profit. Note. — There are other classes of stock, but those named above are the most important. Corporation Books — how Opened 238. Process of opening a Corporation Set of Books. — From the charter obtain the amount of authorized capital stock, the date of tlie charter, the date of record, together with the num- ber and page of the book, the names of the subscribers, and the number of shares of each. Then, from the Minute Book, ascertain how each subscriber pays for his stock, by referring to the minutes of the first formal meeting of the Directors. After the items are obtained, proceed to open the books as follows : — First. — Make a Journal entry, debiting Subscription account and crediting Capital Stock account with the authorized amount of capital stock, thus : — Subscription Capital Stock Being the amount of authorized capital stock as granted by the Secretary of State of ._, consisting of shares, at $ a share. 162 BUSINESS PRACTICE Second. — Make a Journal entry, debiting the original stockholders' Stock accounts and crediting Subscription account with the amounts subscribed, as shown by the charter, thus : — Sundries Subscription Stock, shares, @ $ Stocli, shares, (a) it^.: As shown by the company's subscription list, filed with the Secretary of State under date of , 19 , the charter for said company having been recorded , 19 , on page in book of Corporation Records of the County of , State of . Third. — If there is unsold stock on hand, debit Treasury Stock account and credit Sub- scription account with the amount, tlius : — Treasury Stock Subscription shares at $ to be sold. Fourth. — Make entries, crediting each stockholder's Stock account with the payment for stock as given in the minutes of the first formal meeting of the Directors. This may require Journal and Cash Book entries, all depending upon what is given in payment for the stock. When these entries are posted the entries for the current business should follow. SET IV. —EXERCISES General Instructions. — Books required : Check Book, Deposit Book, Bill Book, Stock Certificate Book, Stock Register, Dividend Book, Sales Book, Cash Book, Journal, Ledger, Stockholders' Ledger, and 25 Voucher blanks for cash disbursements. The pupil may rule his own Stock Register, Stockholders' Ledger, and Dividend Book according to the specimen pages, allowing two pages for each book. The Stock Certificate Book may be omitted, if desired, as the student can write up tlie Stock Register from the certificate memorandum on page 153. Representative accounts used : Bills Receivable, Bills Payable, Capital Stock, Cash, Divi- dend, Expense, Insurance, Interest and Discount, Loss and Gain, Merchandise, Mileage, Office Furniture, Rent, Salary, Sales, Surplus, Subscription, Teaming, Traveling Expense. The name of the corporation is the C. G. White Furniture Company. The officers are : President and Treasurer, C. G. White ; Vice President, J. F. Andrews ; Secretary, W. H. Pierce. Board of Directors: C. G. White, J. F. Andrews, A. B. White, W. H. Pierce. C. G. White, the manager, is to receive a salary of $500 a month, and W. H. Pierce, the secretary % 150 a month. Manager's Instructions to his Bookkeeper Chicago, June 1, 19. .. . — "The furniture business of C. G. White & Co. was incorporated May 4, 19. . ., as the C. G. White Furniture Company, capital stock, $50000, consisting of 500 shares at $100 per share, charter dated May 21, 19. . ., and recorded May 31, 19. . ., on page 93 in book number 27 of Corporation Records of the County of Cook, State of Illinois. " Subscribers are : — C. G. White, 300 shares $ 30000.00 John F. Andrews, 150 shares 15000.00 A. B. White, 49 shares 4900.00 W. H. Pierce, 1 share 100.00 500 shares f 50000.00 CORPORA TIONS 153 "As decided at the meeting of the directors held May 31, the subscribers pay for their stock as follows: C. G. White receives 100 shares for $10000 cash, and 200 shares for the resources of the old firm of C. G. White & Co. as follows : — Merchandise, (Per inventory) $ 10000.00 Office Furniture, (Per inventory) 300.00 People's Furniture Co., (Balance) 3500.00 C. T. Wirts Furniture Co., (Balance) 2500.00 Mrs. G. B. Black, (Balance) 500.00 Monroe & Co., (Balance) 3200.00 $ 20000.00 " John F. Andrews receives 100 shares for $ 10000 cash, and 50 shares for a promissory note, $5000, of F. H. Sherwood & Co., Chicago, in favor of John F. Andrews but indorsed to this company by him; dated May 3, 19..., at 60 days, payable at the Third National Bank. A. B. White receives 49 shares for $4900 cash. W. H- Pierce receives 1 share for $100 cash. " This is the memorandum showing how the certificates are to be filled out. Date them June 1, 19. ... " C. G. White, 1 certificate for 225 shares, 1 certificate for 50 shares, 1 certificate for 25 shares. John F. Andrews, 1 certificate for 125 shares, 1 certificate for 25 shares. A. B. White, 1 certificate for 49 shares. W. H. Pierce, 1 certificate for 1 share. " Deposit to-day $ 25000. " Write out a check for $100 to the order of Currency, for the cash drawer." June 2. — " Orders received : " — Order No. 3782. St. Paul, Minn., June 1, 19.... C. G. White Furniture Co., Chicago. Please ship at once: 1 Carved Wood Bureau, @$95; 1 Bird's-eye Maple Chamber Set, @ $125 ; and charge to the account of George A. Taylor. Order No. 9675. St. Louis, Mo., June 1, 19.... C. G. White Furniture Co., Chicago. Please ship to George A. Fellows, Springfield, 111. : 10 Combination Bookcases #617, @$2S; 10 Oak Tables #53, @$25; and charge to our account. Wheeler & Moore. "Send a check for $350 to H. O. Sweet & Co., rent for June. "Let me have a check for $100 to the order of the Diebold Safe Co., to apply on the safe we bought yesterday." June 4:. — "Telephone orders received: A. H. Bell & Co., Chicago, 30 Rosewood Arm Chairs at $10 to be delivered without fail to-day. Erie Furniture Co., City, 10 Parlor Room Sets #784. I offered them a special price on this lot of furniture, so bill them at $90 a set." June 8. — " What is the balance in bank? " Write out a check for $ 350 to the order of Moore Bros, and mark on the stub 'Exchanged checks.' Do not enter such a transaction in the Cash Book, as it is only an accommodation. This is their check for the same amount. Do not deposit it until to-morrow, as they do not have money sufficient in bank to meet it. This exchanging of checks is something I dislike very much to do. It is assuming a great risk, for the firm might make an assignment or go into the hands of a receiver before paying their check." 154 BUSINESS PRACTICE June 9. — "Has George- A. Taylor, of St. Paul, remitted for the bill of furniture shipped him June 2? If he has not, make a sight draft on him for the amount and draw through our bank. "Deposit the check received from Moore Bros. "Have this order shipped C.O.D." Austin, III., June 6, 19.... C. G. White Furniture Co., Chicago. Please ship, via the American Express : 1 Mahogany Settee, @ $ 50 ; and oblige, James B. Wood, No. 33 Austin Ave. "Mail a check for i75 to the Chicago Gas Lt. & Coke Co., as a deposit for gas meters." June 15. — "These orders were received to-day :" — Order No. 39. Chicago, June 14, 19.... C. G. White Furniture Co., Chicago. Please deliver to us : 25 White Enameled Bedroom Suits, @ $ 125 ; 25 Hair Mattresses, @ $15; and charge to the account of L^j^^ Shore Hotel. Order No. 345. Chicago, June 14, 19.... C. G. White Furniture Co., City. Please deliver to our teamster : 10 White Enameled Bedroom Suits, @ -1 115 ; 10 Hair Mattresses, @ i 15 ; and charge to the account of Moore Bros "Stewart & Co. of New York write that they have drawn on us for $5000 at five days' sight through the Third National Bank of Chicago. When the draft is presented let me know, as our company will accept it. " What is the balance in bank ? " Write out a check for $200 to the order of John C. Bird, our traveling agent, and charge it to his Expense account. " Let me have $ 25. Make a ticket of it and I will report later." June 18. — "What did the Third National Bank messenger present to you just now? You say it is that five days' sight draft for $5000 from Stewart & Co.? Very well, I will accept it. "Has the bank collected the draft we drew on George A. Taylor? Yes? For how much did the bank give us credit? You say for $219.65, deducting 35 cents exchange? Do not fail to make the proper entries. "Give A. B. White a check for $200 and charge it to my account. "While you were at luncheon, the American Express Company delivered this C.O.D. envelope for $50 and I signed for it. It is the money collected from James B. Wood for the furniture shipped C.O.D. on June 9. I paid the 25 cents express charges from the cash drawer." June 23. — "Enter these two notes received from the People's Furniture Co. to balance their account to June 1; one for $1750, dated June 3, at 30 days, and another for $1750, dated June 22, at 8 days, both notes bearing 7% interest, and made payable at the St. Louis National Bank. CORPORA TIONS 156 "Is there money enough in bank to pay Stewart & Co.'s't5000 draft? Then write out a check for the amount, to the order of the Third National Bank, which holds it, and when the bank messenger calls take up the draft." June 28. — ''John F. Andrews has returned this certificate number 5, on the back of which he states that he has transferred twenty shares to A. G. Blake. Mr. Andrews writes that A. G. Blake wishes the twenty shares divided into two certificates, ten shares each, and that he desires one certificate for himself for the remaining five shares." June 29. — "Take F. H. Sherwood & Co.'s note to the bank and have it discounted, but let me indorse it first. " What was the amount of the discount on F. H. Sherwood & Co.'s note? $2.92? Then make the proper entries." June 30. — "Have you that cash ticket of mine? Charge me with il5. Here is the remaining $10. Be sure you destroy the ticket. " Have this order shipped to-day : " — Order No. 9796. St. Louis, Mo., June 28, 19.... C. G. White Furniture Co., Chicago. Please ship via the C. & A. R.R. : 50 white enameled bedroom suits, @ $150; 50 hair mattresses, @ $25; and charge to the account of Wheeler & Moore. "Pay the stenographer $75 a month, errand boy $15, two salesmen $65 each, and your- self $100. Have them sign vouchers. If you have not money enough in the drawer write out a check for what you require and I will sign it now. What will be the amount of the check?" ($245.) " This check for $ 1752.71 is from the People's Furniture Co. to pay their note due torday. Enter it, and then receipt the note and mail it to them. " Make a memorandum of the salaries I shall give you so that you can make entries for them: C. G. White $500 a month, W. H. Pierce $150 a month, and John C. Bird $125 a month. Mr. Bird began work June 15. " Mr. John C. Bird returned to-day. Here is his Expense Book for June : Sundry items $65.85, 1500 miles at 2j^, $30, total expenses for June, $95.85. "Give Mr. Bird credit for the remaining number of miles (500 @ 2^, — $10) on this mileage book No. A 45367, rebate cover $ 10. Keep the book in the safe until he needs it again. " Leave the Deposit Book at the bank to-day to be balanced. " Close the books this month and let me have the statements on July 5." Invoices received during the Month Chicago, June 6, 19. C. G. Whitk Furniture Co., City. Bought of Erie Furniture Co. Terms 30 days. Our order #3568. 5 Folding Beds, @ f 35.00 $ 175.00 10 Hair Mattresses, @ 15.00 150.00 $325.00 Chicago, June 6. 19.... C. G. White Furniture Co., City. Bought of C. H. Odell & Co. 6 Curtain Top Desks #370, @ $15.00 $75.00 6 Chairs #87, @ 3.00 15.00 $90.00 166 BUSINESS PRACTICE New YoKK, June 11, 19.... C. G. White Furniture Co., Chicago. Bought of C. H. Brown Furniture Co. 60 Cane Kockers #205, @ $3.00 $150.00 Chicago, June 27, 19..., C. G. White Furniture Co., Chicago. To C. M. EoGERs, Gen'l. Agent, Dr. Company Amount Rate Premium Eoyal Ins. Co. $2500.00 $1.50 $37.50 Germania Ins. Co. 2500.00 1.50 37.50 New Hampshire Ins. Co. 2500.00 1.50 37.50 Hartford Ins. Co. 2500.00 1.50 37.50 $ 150.00 Chicago, June 25, 19.... C. G. White Furniture Co., City. To Chicago Gas Light & Coke Co. Dr. Gas from June 2 to June 25, $47.50 Less 20%, 9.50 $38.00 Date Policy No. June 2 79975 June 4 75692 June 25 48073 June 27 42995 Chicago, June 30, 19.... G G. White Furniture Co., City. To J. C. Pennoyer & Co. Dr. 1 Wagon and 1 Horse, 26 days, @ $2.00 $52.00 1 Truck and 2 Horses, 26 days, @ 3.00 78.00 $ 130.00 Chicago, June 10, 19.... C. G. White Furniture Co., City. Order No. 4. Bought of George Smyth & Co. 3 Bookkeeper Desks, @ $12.50 $37.50 10 Sideboards #83, @ 10.00 100.00 $137.60 Grand Rapids, Mich., June 11, 19.... C. G. White Furniture Co., Chicago. Bought of Phcenix Furniture Co. 10 Turkish Parlor Suits #411, @ $85.00 $850.00 Chicago, June 2, 19.... C. G. White Furniture Co., City. Bought of DiEBOLD Safe Co. 1 Safe #976, $125.00 New York, June 11, 19.... G. White Furniture Co., Chicago. Bought of Stewart & Co. 100 White Enameled Bedroom Suits, @ $ 90.00 $ 9000.00 100 Hair Mattresses, @ 10.00 1000. 00 $10000.00 Inventories Merchandise $11225.00 Office Furniture 400.00 Mileage 20.00 , Interest accumulated on Note ••••••. 9.19 CORPORA TIONS 157 Monthly Bank Statement 8 Vouchers Returned. C. G. White Furniture Co. In Account Current with the Students' National Bank of Chicago. Checks Checks Checks Checks Checks 19.... Depcsits 100 350 100 350 200 75 5000 245 00 00 00 00 00 00 00 00 6420 24146 00 73 (red ink) June 1 9 18 29 25000 350 219 4997 00 00 65 08 30566 73 Bal ance 30566 73 June 18, check #7, — )g2()().O0, still out. Manager's Instructions to his Bookkeeper July 1. — " Here is a letter and a note from F. H, Sherwood & Co. They will not be able to meet their note which becomes due on July 2, and ask us to accept the inclosed note, $5000, as a renewal, dated July 2, at 30 days, with interest at 7% per annum. We shall do it. You may give them credit for the new note and I will write them. Let me have the old note. You say it has been discounted? Then how can we accommodate Sherwood & Co., if the old note has gone through the bank and will be presented to them for payment on July 2 ? What should be done in a transaction of this kind ? Look back on the books and see what entry your predecessor made for such a transaction. " Give John C. Bird a check for i50. It is for a mileage book. " These orders have been received : " — Chicago, July 1, 19.... C. G. White Furniture Co., Chicago. Please deliver to us : 25 Enameled Bedroom Suits, @ $125; 25 Hair Mattresses, @ $20; and charge to the account of Lake Shore Hotel. St. Louis, Mo., June 30, 19.... G. White Furniture Co., Chicago. Please ship to us : 10 Folding Beds #480, @ $50 ; 10 Hair Mattresses, @ $20 ; 5 Combina- The Southern Hotel Co. C. tion Bookcases, @ $ 23 ; and charge to the account of July 5. — " What is the balance in bank? "Mail Stewart & Co. a check for $3000 to apply on account. "Mail J. C. Pennoyer & Co. a check for the balance of our account. 158 BUSINESS PRACTICE " Check the statement of the Phoenix Furniture Co., and tell me the balance. Grand Rapids, Mich., July 1, 19.... C. G. White Furniture Co., Chicago. In account with The PntEisrix Furkiture Co. 19. . . . June 11 15 Mdse., 865 33 00 50 898 50 Note. • account. The pupil should copy the above statement on a statement blank and then check it with the "Have you checked the statement of the Phoenix Furniture Co.? You say we owe them $850 according to our books? Then write out a note for the amount, dating it to-day, at 60 days, and make it payable at our office. " Give John C. Bird tlie mileage book. No. A 45367, which is in the safe. " Mail C. M. Rogers a check for the balance of our account. " At the meeting of the directors to-day a stockholders' dividend of five (5) per cent ($ 2500) was declared. Make the transfer to Dividend account and write up the Dividend Book according to the Stockholders' Ledger. I will notify the stockholders to-day, by letter, to call on July 6 and receive their dividends." Jul^ 6. — "Enter this check for $2000, and this note for $500, received from the C. T. Wirts Furniture Co., note dated July 6, at 30 days, with interest at If), payable at the Students' Bank of Detroit. They write that the check and note will balance the account. Before entering them investigate and see if the account will balance. " You may now write out the checks for the dividends, as the stockholders Avill call this afternoon. "Do not forget to deposit to-day the checks ($3752.71) in the safe. " Make transfer for this certificate number 3, on the back of which you will see that I have transferred ten shares to George P. Black. Mr. Black desires one certificate. I wish one, also, for the remaining fifteen shares. " John F. Andrews wishes two certificates of 50 shares each, and another for 25 shares, making a total of 125 shares. These certificates are to be issued in lieu of this certificate number 4 which he has already indorsed. " Make transfer for this certificate number 2, which I have transferred to C. C. Campbell.'* Jult/ 7. — "Upon arriving at the office this morning I discovered that our store was partly destro3'ed by fire. The first thing to be done is to notify the different insurance companies. The store will be closed for a few days until the insurance companies investigate the matter." QUESTIONS FOR DISCUSSION 1. In transferring a certificate of stock, when does a stockholder's liability cease? 2. When does an original stockholder's liability cease? 3. Why has the common stock of some corporations a greater value than the preferred stock? 4. How can the books of a corporation be made to show a surplus from which dividends are declared, when in reality the corporation is losing at the time ? Out of what are such dividends being paid ? 5. A corporation makes an assignment, whereupon the assignee immediately demands an approximate statement of the company's assets and liabilities. Tell what accounts should be considered. 6. What would be the first entry for increasing capital stock with 200 shares at f 100 per share ? Give the entries for selling 100 shares of it to certain stockholders at 75% of its par value. How does such a sale affect the other stock- BANKING 159 holders? 7. What is the difference between Capital account and Capital Stock account? 8. If a corporation is incorporated for $ 10,0U0 and only 75% is paid in, what can it do in order to issue "full paid and non- assessable " certificates without having any more cash paid in ? Give entries. 9. A corporation with a capital stock of !$ 10,000 fully paid in wishes to reduce its authorized capital, and secures a certificate of decrease from the Secretary of State. What entry should be made for the decrease? 10. Do all corporations require that their directors be stockholders of the company? 11. IIow may a holder of stock of a corporation receive dividends and not have his name appear on the books?' 12. Can a cash dividend be declared if the cash balance on hand is not equal to the amount 'to be paid? 13. If a partnership business is sold out for cash to a corporation or firm, how does this transaction affect the books? Explain in full the steps taken to ascertain the worth of the business. What new account must be opened to receive the transfers? From what statement are the transfer entries made, and what account receives the totals? Give the Journal entries for the transfer of all the accounts on the statement. Give the entry for closing the Stock accounts, if the partners transfer their interest to the corporation in payment of shares of stock. 14. A corporation is organized for $500,000 to work a gold mine in Alaska. A, who holds the deed to the mine, transfers it to the company, in payment of 45,000 shares at $ 10 a share, f 450,000. Upon the delivery of the certificates, A decides to give the company 2000 shares in consideration of one dollar, to assist in working the mine. Give entry for the transfer. What account should be credited, if any of this stock is sold ? And in what way wou.ld the sale of this stock att'ect the profits of the company ? SECTION V. BANKING 239. The business of banking consists mostly in receiving deposits of money, loaning money by discounting notes and drafts, and collecting commercial paper. It is also a channel through which money is transmitted. The profits of a bank are generally shown in the following accounts : Interest, Discount, Collection, and Exchange. Banks are of three kinds : National, State, and Private Banks. National and state banks are incorporated institutions, while private banks are not. 240. National Banks are organized under a special act of Congress and under the laws of the United States. 241. State Banks are organized under the laws of the state in which they are located. They are known as State or Trust and Savings Banks. Note. — Mutual savings banks are incorporated institutions but have no stock. They are organized for the benefit of the depositors. Their money is supposed to be invested judiciously by the bank in accordance with the laws of the state. The depositors receive no interest, but dividends based upon the net profits of the bank. 242. Private Banks are not organized under any law, and are operated by individuals. Bank Officers 243. A regularly organized bank has a Board of Directors, a President, and a Cashier. 244. The Board of Directors is composed of stockholders of the bank (except in mutual savings banks) who oversee it and are held responsible for its general management. 245. The President is the supreme officer and should be a man of the highest integrity. He presides at all the meetings of the Directors and assumes sole authority during the recess. He is supposed to devote his entire time to the interest of the bank. 246. The Cashier, with the exception of the president, holds the most responsible position in a bank, and is required to furnish a bond for the faithful performance of his duties. He is the first person to be interviewed when one wishes to open an account, to borrow money, or to have notes and drafts discounted. 247. The Office Staff in a regularly organized bank is usually composed of a Paying Teller, Receiving Teller, Discount Clerk, Collection and Note Teller, Foreign Exchange 160 BUSINESS PRACTICE Clerk, Draft Clerk, Individual Bookkeeper, General Bookkeeper, and Messenger. The number of employees is regulated by the size of the bank. 248. The Paying Teller pays all moneys, certifies checks, and keeps a Cash Book ruled only with columns for balancing his cash. He is responsible for all moneys paid out, and is therefore supposed to be familiar with the signatures of the depositors, which are on record in the bank. 249. The Receiving Teller receives the deposits and enters in each depositor's Pass Book the total amount deposited. He keeps a Cash Book ruled only with columns for balancing his cash. 250. The Discount Clerk discounts all notes and drafts, writes up the Discount Register and Tickler, and also enters the proceeds in depositors' Pass Books. 251. The Collection and Note Teller has charge of the collection of all notes and drafts, which are entered in the Collection Register and Tickler. He writes up both of these books and keeps a Cash Book ruled only with columns for balancing his cash. 252. The Foreign Exchange Clerk attends to all foreign business. He issues letters of credit, buys and sells exchange, and is responsible for all balances held in foreign countries to the bank's credit. 253. The Draft Clerk issues the bank drafts and the certificates of deposit, and also keeps the registers containing the records of them. 254. The Individual Bookkeeper has charge of the Deposit Ledger and sometimes writes up the Pass Books. 255. The General Bookkeeper has the General Journal and the General Ledger in charge. He is the only clerk in a bank who requires a thorough knowledge of bookkeeping, as all the other books are elementary and readily understood. He is the last clerk in a bank to finish the day's work, and he is not supposed to leave the office until a trial balance has been obtained and a statement rendered to the cashier. 256. The Messenger (Collector) is the person who presents the time drafts for acceptance and the. notes and drafts for collection, etc. The Books — Their Use 257. The books ordinarily used in a bank are : — Auxiliary Books: Discount Register, Discount Tickler, Collection Register, Collection Tickler, Draft Register, Certificate of Deposit Register, Signature Book, Depositors' Daily Balance Book, Paying Teller's Cash Book, Receiving Teller's Cash Book, Note Teller's Cash Book. Books of Entry : General Journal, Deposit Ledger, General Ledger. 258. The Discount Register contains a record of all the notes and drafts discounted, known as "Bills Discounted" or " Loans and Discounts." The Amount, Discount, Exchange, and Proceeds columns are footed daily. These totals are transferred to the Journal by debiting (on the credit side) Bills Discounted with the Amount total, and crediting (on the debit side) Discount and Exchange accounts with their respective amounts and the Depositors' accounts with the items in the Proceeds column. From this book all notes and drafts are transferred to the Discount Tickler according to the date of maturity. BANKING If.l Discount Register (Left-hand Page) No. Wlieii Discounted For whom Disconnted Payer Address Discount Register (Right-hand Page) Bate Date Time Dne Date Amount Disconnt Exchange Proceeds 259. The Discount Tickler contains a record of all the notes and drafts discounted, arranged according to the date of maturity. Each page may be divided into two parts, the upper half being reserved for the domestic paper and the lower half for the foreign paper. Discount Tickler Monday , 19_ No. For whom Discounted Payer Address Amount When Paid 260. The Collection Register contains a record of all notes and drafts left at the bank or received through the mail for collection. Transfers are made daily from this book to the Collection Tickler. Collection Register (Left-hand Page) No. When Received Payee or Indorser Drawee or Maker Where Payable Collection Register (Right-hand Page) Date Time Bate of Interest When Due Amount Interest To whom Sent 162 BUSINESS PRACTICE 261. The Collection Tickler contains a record of all the notes and drafts for collection, arranged according to the date of maturity. Collection Tickler Monday , 19- No. For whom Collected Payer Address Amount When Paid 262. The Draft Register contains a record of the drafts drawn by the bank on its correspondents. At the close of each day's business the register is ruled and footed and the amounts trans- ferred to the debit side of the Journal, crediting the correspondents' accounts and Ex- change account with their respective amounts. Draft Register New York National Bank Date No. In Favor of For Whom Amount Exchange When Paid 263. The Certificate of Deposit Register. — In this book are recorded all certificates of deposit issued by the bank. The total amount issued daily is transferred to the debit side ot the Journal and credited to Certificate of Deposit account. Certificate of Deposit Register Date Deposited by- Order of No. Amount Total When Paid 264. The Signature Book or Card Index has the signatures of all depositors. It is usually in the possession of the paying teller. 265. The Depositors' Daily Balance Book. — In this book is entered daily each depositor's balance. It is a reference book for the cashier and paying teller. 266. The General Journal in the banking business corresponds to the Cash Book in a mercantile business. In some large banks the Journal is divided into two books as follows : — 1. 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CjI o> Oi 0-1 <» s r« ^ 00 Ox Oi 01 164 BUSINESS PRACTICE Deposit Ledger s § S 8 1 s g S »o o 3 ri o tr~ ^ ^ 0^ CO CO 1 g C3 Oi tr- o 1 »o io o cq o t- ■s o P o !^ l-s 3-3 1 M „ r^ c3 03 11 ^ P "^-S cc o <=> 1 s OS »o o 1 >o «o o o CD n £3 c3 (>J t~ « m (N 00 o Oh 5 P 1 n, U Fh M 5 |P 1 ".g CO o ^ 1 Oi >o o lO ^n o o o CO IM 3 en CO 2- <^ P c^ CO p ^ -i ►J. CD ^ o hj 3 o p 3^ M CD l-( o ^ 1— ' CO 00 •M OS o» »^ 00 re Gash II o Voucher No. i-« Journal Voucher No. S-l p " " " " " " B ■■& DateBecorded CO CO CO CO CO CO 1—1 ^^ ^.^ 1— ' 1— « 05 OS ox to to < O !25 hS •tJ rt hcj t> "^ W 1^ o 3 o cr CD ^ t i^ 3 O p ?D O p 3 P . 8» cT 1-1 3^ cT ■S CD o ■-« IS •-( pi CD 1 1-1 CD w 5 O o p- jn td ■-« o 3 g o 5 3 cr o 2. s 1— 1 3 < 2. o' CD hi r-^ P o ^ P O o P CO o 1—1 < 2. o' CD 1— 1 3 1. o CD 3 W O 1— 1 i o CD 1— I 3 1. 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The Safeguard Account System consists of a complete set of books, of which the Journal, Cash Book, and Ledger are patented and copyrighted as to their rulings, etc. The theory of the system is the same as that explained in this text-book, the distinctive feature consisting of some of the rulings, which are designed to do away with the monthly trial balance. The rulings of one of the Ledgers are arranged so that the name of the account, instead of being at the top of the page, is at the left-hand side. The Deposit Ledger on page 164 is somewhat similar to a Safeguard Ledger, except that the days of the month, instead of being printed at the top of the page, are usually next to the debits and credits in the space above each account. The space allowed for an account is only for one month's business, as indicated by the name of the month at the top of the page. The books can be proved to balance the last day of each month by footing the columns of the Books of Entry and making the summary in a private ledger, ruled for that purpose. SECTION IV. THE CARD LEDGER SYSTEM 286. The Cards in the Card Ledger System take the place of a book ledger. They are printed and ruled to order, and can be filed alphabetically, geographically, or numerically. Name Address Eating Eemarks Account No. Card No. Date Description Fol. >/ Debit Date DeBcription Fol. V Credit o THE CARD LKDGEli SYSTEM 185 287. The Files vary in size, usually holding from 500 to 1000 cards. The numerical sys- tem of filing is used most extensively. In this system the accounts are numbered, and when an account requires more than one card, new ones are placed next to the original, and marked " Card No. 2," etc. 288. The Guide Cards in a file project above the others at the left end, and are of a color different from that of the Ledger Cards. In the numerical system the guide cards show the hundred series and the ten series, while the Ledger Cards designate the unit series. When the cards are arranged geographically, the guide cards designate the states and towns, and when tlie arrangement is alphabetical, the guide cards show the letters of the alphabet. 289. The Index. — In the numerical system a Card Index is used to show the number of each account. No card index is required in either tlie geographical or the alphabetical system. 186 APPENDIX 290. Posting. — Posting to the Ledger Cards is done in the same way as to a bound book* The cards to which entries are to be posted are taken from the file by the bookkeeper, or in large houses by a filing clerk. Great care must be exercised in properly filing the cards. A disarrangement of cards in the numerical system is easily detected because the last figure (unit series) of each number is printed on a projecting part of the Ledger Card. (See illustration on page 184.) 291. The accounts may be divided among two or more files. In large houses the accounts are divided into numerous files, thereby facilitating the work whenever statements and trial balances are drawn off. The accounts may be classified as follows : Customers' Accounts, Pur- chase Accounts, Doubtful Accounts, Closed Accounts, and General Accounts. The General Accounts are usually the representative, partners', and traveling agents' accounts. Note. — The card system is used for various records besides the Ledger. It is well adapted to keeping record of the stock, cost of goods manufactured, quotations, subscriptions, catalogues, circulai's, contracts, etc. The best method of filing depends upon the class of cards and the line of business engaged in. SECTION V. THE LOOSE-LEAF LEDGER 292. The Loose-leaf Ledger is used by some large houses in place of a bound book. 293. The Sheets may be ruled to order suitable for the business. The sheets of the General Ledger are usually ruled with two money columns, " Charges " and " Credits," while those of the Customers' and Purchase Ledgers may have three columns, called " Charges," "Credits," and "Balance." The Balance column is generally ruled in the center of the page between the debit and credit columns. In this special column the balance of an account can be noted after each entry, if desired, or at the end of each month. 294. Whenever a balance in the Customers' Ledger happens to be a credit, it is indicated in red ink instead of black ink. A similar rule obtains in the Purchase Ledger when an account shows a debit balance. General Ledger Sheet No. Account No. Name Terms Address Date Folio Ok. Oharges Date Folio Ok. Oredits o o o o Customers' or Purchase Ledger Sheet No. Account No. Name Terms Address Date Tolio Ok. Charges Balance Oredits Ok. Folio Date O O O O GLOSSARY OF BUSINESS TERMS 187 295. The Binders. Each Ledger has usually two binders, one called "Current Binder" and the other "Transfer Binder.'' The latter contains all the sheets of the accounts that are closed. A key is furnished with each binder to fasten the sheets securely. 296. The Filing. The sheets, as they are filled out, are filed alphabetically in their special binders. Each binder has a finger index. SECTION VI. GLOSSARY OP BUSINESS TERMS Acceptance. — The act of the drawee writing his signa- ture on the face of a draft or bill of exchange, and thus promising to pay; the paper itself when thus indorsed. Accommodation Paper. — A note signed or a draft accepted to enable the payee or drawer to raise money by discounting it; the maker or drawee receives none of the proceeds and there is in reality no "value received." Account Current. — An open account, not balanced. Account Sales. — A written statement from a com- mission merchant giving the results of the sale of a consignment. Accountant. — One who is skilled in bookkeeping. Acknowledgment. — A receipt; formal admission. Appraisal. — The act of estimating a value. Assets. — The property of an individual or company, including all the real and personal property, debts, and obligations due him or it. Assignment. — A transfer of the title to property. Sometimes used in the sense of the general assign- ment made by a bankrupt for the benefit of his creditors. Attachment. — A written instrument by which a de- fendant's property is brought into custody of the law. Auditor. — One who examines accounts and ascertains their correctness. Balance. — The difference between the two sides of an account. Balance Sheet. — A specially ruled sheet which when filled in shows the exact condition of a business. Bank Book. — Deposit Book ; Pass Book ; a book con- taining a record of one's deposits in a bank, the entries being made by the bank, but the book being kept by the depositor. Bankrupt. — A person who has failed in busines.s ; insolvent. Bill. — A written statement of goods sold or of services rendered. Bill of Exchange. — A draft. Bill of Sale. — A written instrument showing the trans- fer of personal property, such as furniture and mer- chandise. Board of Trade. — An association of merchants organ- ized for the mutual benefit of certain commercial interests. Bond. — A document by which a person binds himself conditionally or unconditionally to pay a certain sum of money ; often given as security for the perform- ance of a contract. A corporation bond is generally a fractional part of its interest-bearing obligations, secured by mortgage. Bonded Goods. — Goods kept for a time in. a custom- house or bonded warehouse, and subject to duty, the payment of which is secured by bonds. Bonus. — An extra amount paid in addition to the stated price. Capital Stock. — The amount for which a corporation is incorporated. Capitalist. — One who makes a business of loaning and investing his money. Cartage. — Charges for local transportation of goods. Charge. — To debit an account; to fix as a price. Check. — An order on a bank for money, made by a depositor. Collateral. — Property placed in the possession of a creditor as security for the payment of a debt. Commerce. — The exchange of commodities between different countries or between different parts of the same country. Commercial Paper. — Paper that is used in commerce in 188 APPENDIX place of money, as notes, drafts, and bills of ex- change. Commission. — A charge made by an agent, stock broker, or a commission merchant as his compensation for selling or buying certain property — reckoned either as a percentage of the price or as a fixed charge per unit of quantity. Company. — Several persons associated in the transac- tion of business ; a corporation or firm. Consignee. — One to whom goods are consigned. Consignment. — (ioods sent to an agent or a commis- sion merchant to be sold at the shipper's risk. Consignor. — One who sends a consignment. Corporation. — A company of persons organized, in accordance with a special law of the state, under a charter granted by the constituted authority. Creditor. — One to whom a debt is owed. Customhouse. — A government office where duties are collected on goods imported. Customhouse Broker. — A person who represents im- porters at the customhouse. Days of Grace. — A period of three days added by law in some states to the time specified in a note or draft. Debtor. — One who is indebted to another person. Demand (notes). — Due when presented. Deposit Book. — Bank Book. Dividend. — Part of the profits of a corporation dis- tributed among its stockholders. Draft. — A written order drawn by one party on a second to pay a certain sum to a specified person or company (the payee). Drawee. — The person on whom a draft is drawn. Drawer. — The person who di-aws a draft. DuebUl. — A written acknowledgment of a debt that is due. Duty. — A tax laid on foreign goods entering the country. Equity. — An owner's interest in mortgaged property. Exchange. — Bank charges for collection on checks and drafts. A general term for bills of exchange, drafts, checks, etc. Exporter. — One who ships goods to another country. Express Charges. — Charges made by an express com- pany for transportation. Free Trade. — Trade unrestricted by duties. Freight Charges. — Charges made by a railroad or other carrier for transportation. Firm. — A partnership. Fiscal. — Pertaining to a treasury, as the fiscal (finan- cial) year. F.O.B. — Free on board; that is, with no charges for transportation to the place mentioned. Fund. — A sum or sums of money set aside for a special purpose, as Surplus Fund or Sinking Fund. Goods. — F'urniture, groceries, textiles, and other mer- chandise bought and sold in trade. Goodwill. — The established trade of a business; the tendency of its customers to continue to buy of the same firm. The good will of an old and prosperous business is sometimes a large asset. Gross Sales. — In the commission business, the amount for which a consignment is sold. Guaranty. — A warrant that a debt will be paid or a duty performed ; an agreement by a third party that he will himself be responsible for the debt or per- formance in case of default by the original debtor or contractor. Importer. — One who has goods brought in from a foreign country. Indemnity. — A reimbursement for loss or damage. Infringement. — Act of violating the right of another, as in a patent or copyright. Insolvency. — The condition of a person or company whose assets are less than the liabilities. Installment. — A part payment of a debt. Inventory. — An itemized record of property on hand valued at its present or cost price. Sometimes applied likewise to a statement of expenses incurred and not yet paid or charged on the books. Invoice. — An itemized statement of goods sold to a customer. Jobber. — A merchant who buys from importers, whole- salers, or manufacturers, and sells to retailers. Joint Stock Company. — An unincorporated stock com- pany, the stockholders of which are individually liable as in a partnership. Judgment. — The decision of a court; a document by which the court declares a certain sum to be due from one litigant to the other. Lease. — A contract granting the use of real estate for a specified time. Letter of Credit. — A letter authorizing certain banks to allow a person credit for the amount specified therein, and to charge the payments to the account of the bank issuing the letter. Liabilities. — The debts of a business. License. — Permission to sell, or to engage in a certain line of business. Lien. — A legal claim for which a person's property may be held until the claim is settled. Manifest. — Itemized statement of a ship's cargo. Mercantile Agency. ^- A firm or corporation engaged in ascertaining for its subscribers the financial status of business houses. Merchandise. — A collective term for the articles which a merchant buys or manufactures for sale. Money Order. — An order for the payment of money by a post office or an express company. Mortgage. — A written document pledging certain property as a guaranty for the payment of a debt. National Banks. — Banks governed under acts of Con- gress and controlled by thefedei-al govei'nment. Negotiable. — Transferable by delivery or indorsement. Notary Public. — An officer authorized to take a per- son's acknowledgment of his signature to certain documents, and to protest commercial paper. Overdraft. — The balance overdrawn at a bank. Partnership. — Two or more persons associated in a business enterprise on terms arranged by contract. Par Value. — Face value ; the value specified. SIGNS AND ABBREVIATIONS 189 Pass Book. — Bank Book. Premium. — The amount above par value ; the per- centage paid for insurance. Pro Rata. — In proportion ; according to the interest of each. Protest. — A legal notice of nonpayment of a note, draft, or clieck. Protective Tariff. — Duties arranged to give home manufacturers an advantage over foreign manufac- turers in the markets of a country. Rebate. — Money refunded. Receiver. — A person appointed by the court to take charge of the affaii's of an insolvent person or com- pany, and to make settlement in accordance with the court's suggestion. Remittance. — Money sent from one place to another. Requisition. — A demand made on the main office of a business house by a department for goods or ma- terial that it requires. Salvage. — An allowance made for the saving of wreck- age. Sinking Fund. — A fund established and usually in- creased regularly in such manner tliat it will be large enough to meet a certain bond or other • indebtedness when it becomes due. Solvency. — Ability to pay all debts. Statement. — A copy of a personal account. Stock Account. — The investment account of a partner or original stockliolder in a business. Stock Book. — An auxiliary book showing a complete record of all the stock or merchandise on hand. Stock Broker. — One who deals in stocks and bonds on a commission. Stock Exchange. — An association of brokers and others who deal in stocks and bonds. Sjrndicate. — A company of capitalists organized to conduct a special business enterprise. Tariff. — A list of duties. Teller. — A bank clerk who receives or pays out money. Trial Balance. — A statement of the debit and credit balances of a Ledger; Usury. — A charge for interest in excess of the \egdl rate. Voucher. — A specially printed form of receipt used by a corporation ; any receipt, note, check, or other paper which gives evidence of the payment of money, or authority for an entry. Waybill. — A bill used by transportation companies to describe goods in transit. SECTION VII. SIGNS AND ABBREVIATIONS @ # ■• • ■ # . . . % ov acct. Acct. Cur. Agt. . Amt. . . Ans. . . App. . Asst. . . Bal. . . bbls. . . bdls. . . bgs. . . bkts. . . bis. . . B/L . . B.O. . . Bot. . . B/S . . bus. . . bzs. . . C. . . . Cash. . . C.B. . . At; To. Cent; Cents. Dollars. Per cent. after a figure, Feet. after a figure, Inches. after a figure. Pounds. before a figure, Number. Account. Account current. Agent. Amount. Answer. Appendix. Assistant. Balance. Barrels. Bundles. Bags. Baskets. Bales. Bill of lading. Back order. Bought. Bill of sale. Bushel; Bushels. Boxes. Cash Book. Cashier. Cash Book. C.H. . . . Courthouse; Custom- ck Check. [house. c/o .... In care of. Co Company. C.O.D. . . . Cash on deliveiy. Com. . . . Commission. Const. . . . Consignment. Cr Credit; Creditor. cs Cases. Cts Cents. cwt. . . . Hundredweight. cy Currency. Dept. . . . Department. dft Draft. do Ditto; the same. doz Dozen ; Dozens. Dr Debit; Debtor. ea Each. E.E. . . . Errors excepted. E. & 0. E. Errors and omissions excepted . Esquire. et cetera; and so Exchange. [forth. Expense; Express. Free on board. Esq. . . etc. . . . Exch. . . Exp. . . F.O.B. . . fol Folio. Frt Freight. ft Foot; Feet. gal Gallon; Gallons. hf. . hhds. in. . Ins.. Inst. Int.. Inv. Invt. I.O.U. J. lb. . L.F. Mdse. Memo. No. . N.O. oz. . Payt. P.C. pes., pkgs. Reed. R.R. Shipt. Sund. Ult.. W.C. Y.C. yds. Half. Hogsheads. Inch ; Inches. Insurance. Present month. Interest. Invoice. Inventory. I owe you. Journal. Pound ; Pounds. Ledger folio. Merchandise. Memorandum. Number. New Orleans. Ounce; Ounces. Payment. Posting check. Pieces- Packages. Received. Railroad. Sales Book. Shipment. Sundries. Last month. White C. Yellow C. Yards. INDEX Accommodation note, 93, 129. Account, 5. Account sales, 98, 99, 122. Account Sales Book, 122. Account Sales Journal, 123. Accounts, described, 5-14. classified, 12-14. Accounts payable, 30. Accounts receivable, 30. Asset, 15. Asset (resource) inventory, 61, 64, 131. Assignment, 107. Auxiliary Books, 39-45. B Balance, 5. Balance sheet, 67, 68. Balancing the cash, 56, 57. Bank account, 44, 55. method of checking, 55, 56. monthly memorandum, 56. Bank (Deposit) Book, 43. Bank draft, 91. passage of, 180. Bank notices, 103, 104, 105. Bank statement, 131. Banks, 159. board of directors, 159. books, described, 160-165. cashier, 159. clearing house, 177. office staff, 159. president, 159. Bill (invoice), 50, 85, 86, 182. stamp, 86. Bill Book, 41, 42. Bill of exchange, 91. Bill of lading, 103. Bill of sale, 106, 107. Bills Discounted account, 160. Bills Payable account, 7. Bills Receivable account, 7. Binder, 69, 187. Blotter (Daybook), 21. Bond, 99. Bond Payable account, 146. Bond Record, 78. Bookkeeping, 5. Double-entry, 5. Single-entry, 73. Books, closing of, 60, 61-66. Books of Entry, 39, 67. described, 46-54. Books of Original Entry, 39, 67. Business statements, 67. "By," 21. C • Capital Stock account, 145. Card Ledger system, 184. cards, 184, 186. files, 185. guide cards, 185. index, 185. posting, 186. Cash account, 5, 6. balancing, 56. Cash Book, 47, 48, 49, 54, 181. specially ruled, 70, 71. Cashier account, 163. Cashier checks, 163. Certificate of deposit, 95. Certificate of Deposit Register, 162. Certified check, 95, 163. Certified Checks account, 163. Check, 94, 95. passage of, 180. Check Book, 44. Checking a statement, 59, 60. Checking Book, 121. Checking the Bank account, 55, 56. City Ledger, 71. City Sales Book, 67. Classification, of accounts, 12, 13. of balances, 15-18. of books, 39. of personal accounts, 13-15. Clearing house (bank), 177. balance ticket, 179. clerk's statement, 177. credit ticket, 178. proof, 179. settling clerk, 177. settling clerk's statement, 178. Closing the books, 60. method of, 61-66. 190 Collateral note, 93, 94. Collateral security, 94. Collection and note teller, 160. Collection Register, 161. Collection Tickler, 162. Collections, 109, 165. Commercial (negotiable) paper, 107, 165, 187. Commission merchant, 121. books, 121. Common stock, 151. Consignment, 99. Consignment accounts, 14. Consignor, 99. Construction Book, 132, 133. Contract, 132. Contract account, 132. Contract accounts, 132. Contract Book, 134. Contract Sales Book, 134, 135. Contractor's books, 132. Corporation, 144. accounts, 145, 146. books — how opened, 151, 152. charter, 145. how governed, 145. laws, 145. organization, 144, 145. subscription list, 144. Country Ledger, 71. Country Sales Book, 67. Coupon bond, 99, 100. Credit, 5, 19. Credit Journal, 71, 162, 163. Credit memorandum, 88. Creditor, 13. Currency check, 48. Customers' accounts, 14. D Daily cash balance sheet. 57. Daily report tickets, 151, 165, Day of maturity, 89, 109. Daybook (Blotter), 21. Days of grace, 92. Debit, 5, 19. Debit Journal, 162, 163, Debit memorandum, 87. INDEX 191 Debits and Credits — how deter- mined, 19. Debtor, 13. Demand note, 92. Deposit Book, 43. Deposit Ledger, 164, 165. Deposit tickets, 43. Depositors' Daily Balance Book, 162. Detection of errors (trial balance), 26. Discount clerk, 161). Discount Register, 160, 161. Discount Tickler, 161. Discounting bills or invoices, 71. Discounts of notes and drafts, 109. Dividend account, 145. Dividend Book, 149. Domestic paper, 165. Double-entry bookkeeping, 5. Draft, 88, 90. bank, 91. sight, 88, 90. time, 89, 90. Draft clerk, 160. Draft Register, 162. Drafts, collection of, 109. journalizing, 34. Drawer, 88. Drawee, 88. E " Earnings," 61. Errors, detection of, 26. Expense account, 6, 7. " Expenses," 61. Express C.O.D. envelope, 101. Express money order, 96. Face, 92. Financial and business statements, 66, 67. Foreign bill of exchange, 91. Foreign exchange clerk, 160. Foreign paper, 165. Freight bill, 101, 102. Freight receipt, 102. Fundamental processes of bookkeep- ing, 5. G Gains, 8, 16, 67. General bookkeeper, 160. General Ledger, 71, 165. Glossary of business terms, 187, 188, 189. Gold notes (promissory), 93. Gross sales (amount), 99. Guaranteed stock, 151. Guarantor, 109. Indexes, 72. Individual bookkeeper, 160. Individual Ledger, 165. Indorsed note, 109. Indorsement, forms of, 108. Indorser, 109. Inland bill of exchange, 91. Insolvent, 15. Interest and Discount account, 7. Interest Payable account, 146. Inventory, 60, 61, 64. resource, 61, 64, 131. liability, 61, 64, 131. Invoice (bill), 50, 86, 182. Invoice Book, 41. Invoice stamp, 86. Joint note, 93. Journal, 19, 50, 51, 54. Account Sales, 123. Credit, 71, 162, 163. Debit, 162, 163. General, 162. Sales, 69. Six-column, 71. Journalizing, 5, 18. general rules for, 19. Journalizing drafts, 34. entries for the drawer, 34, 35. entries for the drawee, 35. entries for the payee, 35, 36. Journalizing notes, 32. entries for the maker, 33. entries for the payee, 32, 33. Judgment note, 92, 93. Ledger, 24, 53, 54. City, 71. Country, 71. Deposit, 165. General, 71, 151, 165. Individual, 165. Private, 151. Purchase, 71. Sales, 71. Ledger index, 72. Letter of credit, 106. Liabilities, 15, 66. Liability inventory, 61, 64, 131. Loans and Discounts account, 160. Loose-leaf Ledger, 186. binders, 187. sheets, 186. Loss and Gain account, 8. Losses, 8, 16, 67. Lot number, 121. M Maker, 92. Margin, 126. Maturity, 89, 109. Merchandise account, 6, 123. Messenger (bank), 160. Minute Book, 146. Money orders, 96. Monthly bank account memoran- dum, 56. Monthly bank statement, 131. Monthly statements, 58, 59, 60. Mutual savings banks, 159. N National banks, 159. Negotiable paper, 107. Net gain, 16. Net loss, 16. Net proceeds, 99. Note (promissory), 92. accommodation, 93. collateral, 93, 94. demand, 92. gold, 93. joint, 93. judgment, 92. negotiable, 93. non-negotiable, 93. Notes, collection of, 109. journalizing, 32. Notice, of draft, 104. of note, 104. of overdraft, 103. of protest, 104, 105. O Order (sales) blanks, 69. Order Book, 39. Order Book (receiving), 40. Original entry, 19. Overdrafts, 31, 163. Partners' accounts, 13. Partnership books — how opened, 73. Pass (Deposit) Book, 43. Pay Roll Book, 45. Payee, 88, 92, 109. Paying teller, 160. Personal accounts, 13. Petty Cash Book, 41. Post office money order, 96. Posting, 5, 24, 54. guide for, 25. Posting the books of original entry, 54, 55. Power of attorney, 105. Preferred stock, 151. 192 INDEX Present worth, 8. Private banks, 159. Private Ledger, 151. Profits, 16, 67. Protest for non-payment, 104, 109. Purchase Accounts (Purchase Ledg- er) account, 71. Purchase Ledger, 71. Q Questions, 18, 24, 27, 45. Questions for discussion, 28, 58, 110, 121, 132, 144, 158, 159. R Receipt, 96, 97. Receiving Book, 40. Receiving teller, 160. Red ink, when used, 12, 21, 61. Registered bond, 99. Renewals of notes and drafts, 110. Representative accounts, 12. Resource inventory, 61, 64, 131. Resources, 15, 66. Rulings, 12, 21. S Safeguard Account system, 184. Sales account, 6, 123. . Sales Accounts (Sales Ledger) ac- count, 70. Sales (order) blanks, 69. Sales Book, 46, 54, 69. Sales Journal, 69. Sales Ledger, 71. Sales Register, 69. Scratcher, 165. Settling clerk, 177. Share, 145. Shipping Book, 41. Sight draft, 88, 90. Signature Book, 162. Signs and abbreAdations, 189. Single-entry bookkeeping, 73. Sinking Fund account, 146. Six-column Journal, 71. Solvent, 15. Special Books of Entry named and defined, 67-71. Specially Ruled Cash Book, 70, 71. State banks, 159. Statement, 58, 59, 98. monthly, 58. of losses and gains, 67. of resources and liabilities, 66. of trial balance, 30. Stencil, 124. Stock, kinds of, 151. Stock account, 8. Stock certificate, 99, 100, 147. assessable, 147. method of canceling, 150, 151. non-assessable, 147. Stock Certificate Book, 146. Stock Dividend account, 146. Stock Record, 78. Stock Register, 147. Stockholder, 145. Stockholders' books, 146. Stockholders' Ledger, 149, 150. Subscription account, 145. Sundries, 20. Surplus account, 145. Suspense account, 79. Suspense Ledger, 80. Taking off a statement, 58. Time draft, 89, 90. "To," 21. Transfer Record, 148. Traveling agents' accounts, 13, 14. Treasury Stock account, 145. Trial balance, 9, 26, 27. detection of errors, 26. Trustee account, 145. Voucher, 97, 181. Voucher account, 183. Voucher Register, 182, 183. Voucher slip, 84. Voucher system, 181, 182, 183. W Watered stock, 151. tSI ^^^*^!^'>^T'P!:' DEPARTMENT JO^'^ 202 Ma m Library LUAN PERIOD 1 ■ HOME USE ALL BOOKS AAAY BE RECALLED AFTER 7 DAYS I -mon h bans may be renewed by collmq 642-3405 DUE AS STAMPED RFi nvu K,m NO. 006. «,.. -.Ti^^TR^|,^™r,„BERKELEV / YE 02752 % '^Z 228739 r"-^'-^^' UNIVERSITY OF CALIFORNIA LIBRARY BERKELEY .sc. 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 dav overdue, increasiuE to $1.00 per volume after the sixth dav. Books not in deniand may be renewed if application is made before expiration of loan period. DEC 11 1916 APR 16 1S42 4uL 28 ^.. 50m-7,'16 ,! I'i 111 i I ! 'it 'I 1 • ^'"^^^B 1 ■ m I iiii mli ! 1 , ) f illiiJi 1 i I ill li] irlitr'irllrjir'ttti'ii m B i^'jli Ijl! iril^t.l tli 11'^ If 1 ,1]!!^ ^ J. " 11 !' iiiti ' ii ij ] '