Simplified Bookkeeping Simplified Bookkeeping BY G. LAWRENCE HOFFMAN ACCOUNTANT AND HEAD OF COMMERCIAL DEPARTMENT OF McKEESPORT HIGH SCHOOL Script Work by H. A. Roush G. LAWRENCE HOFFMAN CO., Publishers COPYRIGHT, 1916, BY G. LAWRENCE HOFFMAN COPYRIGHT, CANADA, 1916. BY G. LAWRENCE HOFFMAN PREFACE It has been my opportunity as a teacher and accountant for the past ten years, to make a personal study of the bookkeeping situation in general, to observe the defects in prepara- tion shown by the average bookkeeper, to investigate the causes of these defects, and lastly to seek to remedy them. As a rule I have found the student, after pursuing the study of bookkeeping for from five to six months and in hundreds of cases a much longer period, im- mature in his knowledge, with no definite information on the subject and so crammed with a conglomeration of rules and theories and ambiguous explanations that he is unable to make practical use of them. He is quite unprepared to meet the every day transactions of actual business and must undergo a protracted period of what might well be termed appren- tices'hip before he actually becomes a competent bookkeeper. The cause of this condition as evidenced by the statements of commercial teachers and former students and corroborated in my own experience, lies in the bookkeeping texts them- selves. The main trouble with these texts lies in the fact that the student is not taught to think for himself. No attempt is made to explain logically the disposition of the various kinds of transactions and the student is expected to master the subject merely by memoriz- ing and imitating the work set forth in the text. It is little wonder, considering how com- plicated and how filled with superfluous matter these works are, that the average mind is unable to grasp and retain those points which are truly essential. Dissatisfied with existing bookkeeping texts, I wrote Simplified Bookkeeping in order to meet the needs of my classes. Originally, my intention was to write merely for use in my own work but so successful have my methods proved, that I have been induced to put them in book form. The ideas embodied in Simplified Bookkeeping are thus not experimental but the proved results of my experience both as a teacher and an accountant. SOME OF THE SALIENT FEATURES OF SIMPLIFIED BOOKKEEPING 1. One simple rule of not more than fifteen words, which can be learned in ten min- utes, decides and disposes of every different kind of transaction. This eliminates weeks and months of useless memorizing and at the same time gives the student something of in- finitely greater value; for by means of this rule he is prepared for any kind of transaction w'hich may arise. 2. It can be mastered by any person of average intelligence in forty hours, without any assistance and in such a practical manner that the student can actually and intelligently keep books. 3. All books including the Journal, Purchase, Sales, Cash, Notes Payable and Notes Receivable books are used from the very beginning. They are scientifically explained, thoroughly illustrated, and their use clearly defined. 4. Drafts receive an entirely new and distinct method of treatment which enables the student to master the subject in from one to two hours. 5. Notes, like drafts, are specially treated making them easily understood. 6. Interest, Discount and Merchandise Discount are defined and treated under new and simple methods. 343629 7. Absolutely every different point is individually illustrated, giving- the student the opportunity of visualizing every detail of the work in addition to his knowledge received through the written explanations. Individual illustrations remove every chance of ambiguity and make an easy and handy reference for entries, etc. 8. Posting for the first time is given an important place. It is thoroughly explained from an entirely new angle and in such a way that posting becomes a matter of absolute ac- curacy instead of a doubtful procedure. 9. The trial balance is clearly and progressively treated from its simplest form. A short cut trial balance is introduced which retains all of the information of other trial balances but consumes less time in constructing. 10. The balance sheet is logically and scientifically developed. Each step is pointed out and carefully expounded. 11. Every different kind of account is thoroughly explained so that the student is able to decide instantly under what class an account should be placed. 12. The subject of account closing receives special attention so that there will be no doubt as to how to close accounts having no inventory (both financial and working ac- counts) ; how to close accounts 'having a resource inventory ; how to close accounts hav- ing a liability inventory; how to close accounts having both resource and liability inven- tories. 13. The creating, developing and disposing of the loss and gain account, a subject never thoroughly presented or understood, is scientifically handled. 14. The several different rulings are illustrated and explanations concerning their use set forth. 15. The different transactions have been taken from actual business, so that the stud- ent is prepared to meet the problems which will confront him in the business world. 16. The book is so arranged that it makes a handy reference in cases of immediate need. 17. A complete and accurate set of books may be constructed by taking the transactions from any text or work and applying to them the rule, instructions, etc., set forth in Simpli- fied Bookkeeping. THE AUTHOR. SIMPLIFIED BOOKKEEPING 1. Bookkeeping: — The recording of business transactions according to prescribed rules and principles. 2. Business Transaction: — The exchanging of values between two or more parties. 3. Kinds of Business Transactions: — (a) Complete — where the values are exchanged by both parties at the same time, (b) Incomplete — where the value is given by one party and its equivalent value not received until some future time. 4. Object : — To show the cost of purchases, the return from sales, the loss or gain, the resources and liabilities, and the present worth of the business. 5. Kinds: — (a) Single Entry — the keeping of personal accounts only. (b) Double Entry — the keeping of personal, property, and expense accounts. 6. A Debtor: — One who has received value, and has made no equivalent return. 7- A Creditor: — One who has given value, and has received no equivalent return. 8. A Debit: — ^The value or debt which is owed by the debtor. 9. A Credit: — The value or credit which is owed to the creditor. 10. An Account: — The grouping together of all debits and all credits which affect a particular person, firm, corporation or thing, and placing them under their proper title. 11. Kinds of Accounts: — (a) Personal — one which affects a person, firm or corporation. (b) Property — one which aflfccts that which is purchased to be sold. (c) Expense — one which aflFects that which is purchased to be used in carrying on the business, and not for the purpose of selling. Note: — The property account will be known as Merchandise. This account may be subdivided. Example of Subdivided Merchandise Account: — A firm may be dealing in feed and coal. It would be more convenient under such conditions to keep separate merchandise accounts known as Feed account and Coal account. The Merchandise account may be further divid- ed into a Purchase account and into a Sale account. This further division is made for the purpose of showing the True amount of Net Purchases and Net Sales. Note: — The Expense account affects such things as rent, stamps, fuel, light, heat, clerk hire, etc. This account may be subdivided. Example of Subdivided Expense Account: — It is preferable, where more detailed work is required, to open special accounts with such items as rent, light, fuel, etc. These special accounts will be known as Rent account. Light and Fuel account, etc. 12. RULE FOR DETERMINING WHETHER AN ITEM SHALL BE DEBITED OR CREDITED:— THE RESULT OF A SERVICE IS DEBITED AND THE SERV- ICE ITSELF IS CREDITED. Note: — Every transaction consists of a service and a result. Important. Always apply the rule from the point of view of the Business in which you are engaged or in which you are about to engage. Important. Before applying the rule for debit and credit, ascertain what the thing which is received and the thing which is given, are, that is, whether they come under the headings of merchandise, expense, cash, or personal accounts, etc. After this has been ascertained, apply the rule calling these things by their proper names. Application of the Rule for Debiting and Crediting 13. I begin business by investing the following: — Merchandise, Cash, Horse and Wagon, and Real Estate. I perform the service for the business in that I bring into it the merchandise, cash, horse and wagon, and real estate; therefore the merchandise, cash, horse and wagon, and real estate are the results to the business. According to the rule, the service is credited. Since the service is credited and since I performed the service, it must follow that I must be credited. Again, according to the rule, the result is debited. Since the result is debited and since merchandise, cash, horse and wagon, and real estate are the results, it must follow that they must be debited. For entries see illustration No. 1. Illustration No. 1. Journal C'Pc'C-^. L. F. -MJ2^- Cash DEBIT SIDE C^^C.^£^^-^^ /_ ^g^g.^ / L. F i:^ &i?i:<^:23;Z-&< ^Zi=.^^tf*!4i«<^«4^a!i£^l^ /.^^/g 14. I buy merchandise on account from Adam Wise. Note : — On account means that the equivalent value was not given for the merchandise at the time of purchase. Adam Wise performs the service in that he brings into my business merchandise, therefore the merchandise is the result. According to the rule, the service is credited. Since the service is credited and since Adam Wise performed the service, it must follow that Adam Wise must be credited. Again, according to the rule, the result is debited. Since the result is debited, and since merchandise is the result, it must follow that merchan- dise must be debited. For entry see illustration No. 2. Illustration No. 2. Purchase Book ^:3l j^ Cc!t:^<-tf'**e'^^g^^^.,^»i^ f^^.^Cy ^Ll^yt^ e--^^--*^* ^ • ^ ■ ^ ' <^^<* r ^ ^ i :^ . ^ < ^^^ /ei'-^L^^'^ . (^^^ / — ea^^^^S-gg^ ^ ^ at:^ ^, ^^^^>t^/ (^ z^ /L .^4A^ jlm a / Cash Cf!!^!^€^ ^ Cr"^ ^ y j/^^ ^^l^^ -r'-Kt^t^^^y^f-f^^ Y- ^.. ,^^ DEBIT SIDE U^ a / 19. I sell merchandise for a note. Note : — The note in this case is a Note Receivable as it comes into my business. Also, I can collect the money on this note and will not have to eventually pay the note. The merchandise performs the service in that it brings a Note Receivable into my busi- ness, therefore the Note Receivable is the result. According to the rule, the service is credited. Since the service is credited, and since the merchandise has performed the service, it must follow that merchandise must be credited. Again, according to the rule, the result is debited. Since the result is debited, and since Note Receivable is the result, it must follow that Note Receivable must be debited. For entry see illustration No. 8. Illustration No. 8. Sales Book ^J^;^^7 ^ yi4r,^:^-^^J'^^, J^ y^/^^^^-t^^. — 1^'/,-r^^rfVi*g-i»^^i-?*^>?'v<'P^^i)a^^^ '^.^n.,*^ ^Ar // f '^^-*-'^>^-^-'-— j^^J^^XX»^ Receivable DATE TIME WHEN DUE L F. AMOUNT DISPOSITION VEAH MONTH OAV TEIR Jan. Feb. Mar. Apr. M»J Jane Jaly iag.|sept Oct. Hot. Dee. AMOUNT DATE REMARKS /■f- (^t,3./f- First transaction. I pay my note. (For a similar transaction, see paragraph 26, First transaction.) Second transaction. I pay the interest due on my note. Definition of Interest from the BORROWER'S or PAYER'S view point:— A certain sum which must be paid by one who has borrowed money for the use of the amount bor- rowed. Note: — The borrower is also the payer. Important. Interest is an obligation which can be liquidated by payment only. In this case, cash performs the service in that it liquidates or closes my obligation known as Interest, therefore, Interest is the result. According to the rule, the service is credited. Since the service is credited, and since cash has performed the service, it must follow that cash must be credited. Again, according to the rule, the result is debited. Since the re- sult is debited, and since Interest is the result, it must follow that Interest must be debited. Third transaction. I receive the amount of the discount in cash. (For a similar trans- action, see paragraph 26, Second transaction.) Foi- the three entries in this case see illu- stration No. 22. Illustration No. 22. Cash CREDIT SIDE -.ci^-J^ -2^ -Z^ .ZJ.. ^^.£^*^=i>^^^^^^i^^ kr^ ^^dtOitL'- «-•? /<^ ^=:^^:^^^»H*^^V!!^»^.,»-z^rf. yji. t=;y^^^Ztc^^^w>>^ /^j^^ ^ ^^ti'^rf^ajCr /f%r ^^ Cash CREDIT SIDE ^^U«^ ^,^^.<^yi^^.^..,*^^^ ^^^ 30. I buy stamps for cash. Remember to ascertain what the thing is which you buy, before you analyze the trans- action. Stamps are an expense. (See paragraph 11 (C)). (See Note under paragraph 11.) Cash performs the service in that it brings into my business stamps, which come un- der the heading of expense, therefore Expense will be the result. According to the rule, the service is credited. Since the service is credited, and since cash has performed the service, it must follow that cash must be credited. Again, according to the rule, the result is debited. Since the result is debited, and since Expense is the result, it must follow that Expense must be debited. For entry see illustration No. 24. Illustration No. 24. Cash CREDIT SIDE ^ ^=*^ .^^ z^,.^^ — -c:^-^'^!^8^■<»^»^<^ ir -<^ 13 31. I pay cash for one month's rent of store room. Rent is an expense. (See paragraph 11 (C)) (See Note under paragraph 11.) Cash performs the service in that it brings into my business the use of a store room, which is known as rent, and which, in turn, is known as expense, therefore Expense is the result. According to the rule, the service is credited. Since the service is credited, and since cash has performed the service, it must follow that cash must be credited. Again, accord- ing to the rule, the result is debited. Since the result is debited, and since Expense is the result, it must follow that Expense must be debited. For entry see illustration No. 25. Illustration No. 25. Cash CREDIT SIDE Note: — A separate account may be kept for rent. In this event, instead of calling the use of the store room expense, call it Rent. In applying the rule, the thing that will be debited, in this case, will be Rent instead of Expense. (See "Example of Subdivided Ex- pense Account," paragraph 11.) DRAFTS 32. A Draft: — A written request drawn by a first party, on a second party, ordering the second party to pay a certain sum of money to a third party. Note: — The first party is known as the Drawer, the second party. Drawee, and the third party, Payee. Kinds of Drafts: — Sight and Time. Sight Draft : — A draft payable on demand. For form see illustration No. 26. Illustration No. 26. DRAFT AT SIGHT ^y^..zAL Baltimore, Md., j::;^^^^. ^r^lO (^^^^^^-^^■(/^.^^f^^ ^ ^^^.^^.^,^,.... i '^cya/u ^o tne %. 1 14 Time Draft:— A draft payable so many days "after date" or "after sight." For forms see illustrations No. 27 a b c. Illustration NO. 27a. DRAFT AFTER DATE /.M.AC^ Philadelphia, Pa., ...{^;^^^..^..^.^..19. »4« M. ff^^^er o /:1^.A C ^ .M-^-^ J a/ft f yf'cpi'if4'f/, afitl enetd^v /he ^cftne /o aceott'n/ cd J#J ?gyr? -o^^y^^ z. ^^ r^. Illustration No. 27b. DRAFT AFTER SIGHT I i ^Ji./2..A:?rrr.. Wellsboro, Pa., J., v^ i ^^-^.-^^.-^^?::^gg^^»^^^::^:::...^..jL 19. I ^'2^^■<£■<^i■■g-^f^^..■^'^^^^^.(^»-./u^ ^y^Af. Zf^!ffH^y. 'Ya^ . RECEIVABLE DATE TIME WHEN DUE L.F. AMOUNT DISPOSITION YEAR MONTH DAY TEiR Jul Feb. Har. Apr. May Jane July Aug. Sept. Oct. Not. Deo. AMOUNT DATE REMARKS yf- /^^«'e-l7. y(^ ZiL£mA /^~ ?^r a //-l ^/? -t-'l . y. V 7 36. I draw a sight draft on Oliver Myers in favor of Edw. Martin. Remember a sight draft is payable on demand. Oliver Myers performs the service in that he liquidates my indebtedness with Edw. Martin, therefore the liquidation of Martin's account is the result. ( On my books Martin is credited. Myers' payment of this draft, on demand, offsets this credit.) For application of the rule, see paragraph 32. For entry see illustration No. 32. lUustration No. 32. JOURNAL L^Ct^t^ .AJ^ ^fZ- £^*^y^^^4it..'iyfii,<»r'j^^Z'Y^e^^^^ /:i^/L€t.e>e^-^t^^^*t^2^ ^ ,£^L^ Icd^ ^ /-^ ^ ^ a / ^^ \r 6 37. Howard Ort draws a sight draft on Me in favor of Wm. Wentz. The draft is pre- sented to Me for payment. Cash performs the service in that it liquidates my indebtedness with Howard Ort, therefore the liquidation or closing of Howard Ort's account is the result. Note: — The sight draft is not accepted but is paid on demand. Since it is not accept- ed it does not become a note. Since it is paid on demand, it has the same affect as a check. Important. The sight draft is handled the same as a check. According to the rule the service is credited. Since the service is credited, and since cash has performed the service, it must follow that cash must be credited. Again, accord- 18 ing to the rule, the result is debited. Since the result is debited, and since the liquidation or closing of Howard Ort's account is the result, it must follow that Howard Ort's ac- count must be debited. For entry see illustration No. 33. Illustration No. 33. Cash CREDIT SIDE C^^^. aA. A/L,.t.^ ^wCy. L.F. ^£^^<£-^-^^^ -.^Cf^^CAj^ b/^ ^ ^^//. 2^: /U2.A. pTf? 40. Important, (a) K. time draft becomes a Note Payable to the party who ac- cepts it. (b) A time draft becomes a Note Receivable to the party who holds it after acceptance. 19 Payment and Collection of Time Drafts Maturity means that the time given in which to fulfill a promise, has expired, and that the promise, represented in the instrument (Note or Accepted Draft), must now be fulfilled. 41. I pay a time draft (Note Payable), which was drawn on Me by William Simpson in favor of Samuel Keller. Note: — When it is stated, "I pay a time draft", etc., it will be understood that the in- strument has been accepted sometime previous to the payment. Cash performs the service in that it brings into my business my cancelled or receipted note or Note Payable, therefore Note Payable is the result. For application of the rule see paragraph 21. For a similar entry see illustration No. 10. 42. I discount a time draft (Note Payable), which was drawn on Me by John Hoe in favor of William Johnson. First transaction. I pay my note (accepted draft.) Cash performs the service in that it brings into my business my Note Payable (the draft which I accepted), cancelled or receipted, therefore Note Payable is the result. For application of the rule see paragraph 26. For a similar entry see illustration No. 17. Second transaction. I receive the amount of the discount in cash. Discount performs the service in that it brings into my business cash. (Had it not been for Discount we would not have received this cash), therefore cash is the result. For application of the rule see paragraph 26. For a similar entry see illustration No. 18. 43. I collect the money for a time draft (Note Receivable), which was drawn by Carl Short on Clyde Hoke in favor of Me. Note: — When it is stated, "I collect the money," etc., it will be understood that the in- strument has been accepted sometime previous to the collection. The Note Receivable performs the service in that it brings into my business cash, therefore cash is the result. (My cancelling or receipting the note and returning it to the payer, has been instrumental in bringing into my business the cash.) For application of the rule see paragraph 23. For a similar entry see illustration No. 12. 44. I discount a time draft (Note Receivable), which was drawn by H. B. Scott on E. C. Eckles in favor of Me. First transaction. I collect the money on a note. (Accepted draft.) Note Receivable (accepted draft) performs the service in that it brings into my busi- ness cash, therefore cash is the result. For application of the rule see paragraph 27. For a similar entry see illustration No. 19. Second transaction. I pay the amount of the discount in cash- Cash performs the serv- ice in that it discharges my obligation known as Discount, therefore Discount is the re- sult. For application of the rule see paragraph 27. For a similar entry see illustration No. 20. Important. Drafts are never interest bearing. 45. I buy merchandise on account from Adam Wise. See paragraph 14. I return this merchandise to Adam Wise as being unsatisfactory. Note: — When merchandise is returned by you, consider it the same as if it were sold. 20 Merchandise performs the service in that it liquidates or closes my former indebtedness to Adam Wise, therefore the liquidation or closing of Adam Wise's account is the result. According to the rule the service is credited. Since the service is credited, and since merchandise has performed the service, it must follov^ that merchandise must be credited. Again, according to the rule the result is debited. Since the result is debited and since the liquidation or closing of Adam Wise's account is the result, it must follow that Adam Wise's account must be debited. For entry see illustration No. 36. Illustration No. 36. JOURNAL ^^c^- AjL .ZA. .AJ^ ^^i^ r^-«^^»»g<^ .^^ly^^^^y^jyc***-^-' ^-»/> y/^^^^ r^^..*t .^^^^t£~g^ , ^/^i.t . ar u f^^ ^ ^^ /'^^^it,^ ^ztU^ru^*^ / ^' J / f y^^^^^''^::^'i'^:ie.'e^^''»-t^.A^ >-*^fctJ*> ^ ^^^ •^/^^^.^/s, y. /4>tJi,0Ljud. ^f ^a ;^ -^.^^^^- -/-j^ 21 Important. Shortages, damages, overcharges, etc., may be kept under the same head- ing, that is. Merchandise Returned account. It will be helpful to remember that in the case of merchandise returned, refunds or rebates, if a special account is not kept, an entry exactly opposite to the original entry is always made. For example see illustration No. 39 a b c d. Illustration No. 39a. PURCHASE Book ^ ^^V ^g^^^^-^^ ^^^f^^^"^*^^ ^^Z*^^i/^ ^.±i^^^:^»"^^ M^ a r -4^ (p r T^ Illustration No. 39c. Sales Book ^^^ Yf- y^ zAr^^/^ (g, Ms^-^ y£l ff ^2. (g^x ^3 a /^ i/i ^ ^ ^7^ ^ X r-^ Illustration No. 39d. Journal C^^< ^ ^-<^c^. L. F. ^^^^t-^^*^:;<^lag-»g-«iz::^-«^ v^ y^^^ ^jZ^^^J>/y^ _^^;!!^^22^^=A<^)^2*<^ ^^' <^^..^tt^ .,e^t^yt.^£^lt.£e.^^^ayej6t4. <_ / :! ^1^ .A^ .ajL 47. I buy merchandise for cash from Ralph Peterson. For application of the rule see paragraph 15. For entry see illustration No. 3. (a) Note: — If it is desired to keep a record of this transaction in the personal ac- count, that is in Ralph Peterson's account, it will be necessary to divide the case into two transactions. First transaction. I buy merchandise from Ralph Peterson. Note: — The presumption is that you buy it on account. For application of the rule see paragraph 14. For a similar entry see illustration No. 2. Second transaction. I pay Ralph Peterson. (For the merchandise purchased from him in the first transaction). For application of rule see paragraph 20. For a similar entry see illustration No. 9. 22 (b) Note: — A transaction is disposed of in this manner for the purpose of ascertain- ing at any time the entire amount of business done with a person, firm or corporation. It will be noticed that while two transactions are made out of this case, as shown in this paragraph, and only one transaction as shown in paragraph 15, the ultimate result will be the same. The personal account will have the same amount on each side thus liquidating or closing it. This leaves a debit in the merchandise account and a credit in the cash account. The method of handling this case, as shown in paragraph 15, only pro- duces a debit in the merchandise account and a credit in the cash account. For compara- tive illustrations of these methods and for the purpose of showing the similar ultimate re- sults, see illustration No. 40. Also illustration No. 3. Important. In buying merchandise for a note from a person, firm or corporation, pro- ceed in the same way as shown in paragraph 47, providing you wish to keep a record of the transaction in the personal account. If the record in the personal account is not de- sired, proceed as in paragraph 16. Illustration No. 40. PURCHASE Book ^*^ 7 ^ a,^t!^i-^' ^k ^:c-ti^<^' rt ^ (/± 'x//f- / ^ f / ff Cash CREDIT SIDE C'^-* ''^'^~ ^^=^ C.F. 2 ^ / ^P f^ ^^- ;^ ^ ^/^^/.^^^^xg^.>i^>^ ^^ ^ a (^^.ry^^^x!:^ ji. /Z^.^*.^ /x aCf^. (g. /c?^y ^5^ -Z^ ^^Z^L<.^ -^^^feg^<^ ^i' ^-r a M3- ':r?^>^ rlr^^ly^^.l^' Y^^ T -A^ .z^ ;^ ^ ^r:^ ^^ ^ ^Jf ^^^^ ^/''/^f- .±j^ ^^^ (^^X' y^4l»^f>c.^^^^^ ^/^/ ^^-. Z^ .^^^.£-^«.^<^j^^^^*^^..^£::^2_t^i^.^^kz^ >•? ^ f /^3 Z^ ^^^^^Jh^ ^:.^J^ V^^Ar M^ ^^vTj" y^ j^^ X/s^/// r^ ys- a "/ a ^£^ 54. Exercises for making entries into the cash book. Instructions: — Obtain a number of sheets of Journal paper. Use the two inside pages of one sheet for a cash book. The left-hand page will be the Debit side and the right- hand page will be the Credit side. 27 Note: — Journal and ledger paper is very cheap, but if you do not care to invest in it you may draw a form of the cash book on blank paper using one of the illustrations as a model. May 1, 1915. A. B. Fowler pays you his bill in full to date $468.20. May 2, 1915. C. H. Carroll pays you his bill of April 20, 1915 for $268.75. May 3, 1915. You have in your possession a note for $721.80 which is due today. You collect the amount. May 5, 1915. A. R. Free pays you his account in full to date $209.70. May 7, 1915. D. B. Hill pays you his bill of May 1, 1915 for $176.00. May 8, 1915. Dean & Co. give you $925.00 in part payment of their account. May 9, 1915. P. M. Trainer gives you $260.00 in part payment of his account. May 2, 1915. You pay for stamps, etc. $10.00. Note: — See paragraph 11 before making this entry. May 2, 1915. You give M. A. Ellis $210.00 in payment of your invoice of May 4, 1915. May 4, 1915. You give to A. M. Dennis $295.00 in part payment of your account. May 6, 1915. You give to L. C. Merrit $644.00 in payment of your account to date. May 7, 1915. You pay your note, which is due today, for $420.00. May 9, 1915. You pay $13.00 freight on goods which you purchased sometime ago. Note: — Call this account Freight- When you make the entry for the $13.00, in the cash book, place the word Freight directly opposite the amount. Find the cash balance and rule the cash book as per illustration No. 50. 55. Additional entries for the cash book. May 12, 1915. John Grover pays you his bill in full to date $110.50. May 12, 1915. Wm. Jones pays you his bill of $463.18 and you allow him a 2 per cent, discount. See paragraph 25. May 13, 1915. Edward Green pays you his bill of $1219.15 and you allow him a 5 per cent, discount. May 14, 1915. You have in your possession a note dated April 14, 1915, for $400.00. This note is given for 60 days. You discount the note today. May 15, 1915. You have in your possession a note dated March 26, 1915 for $318.45. This note is given for 120 days and is interest bearing at the rate of 6 per cent. You dis- count it today. May 12, 1915. You owe Edward Marks $43.17. You pay him this amount. May 13, 1915. You owe John Wise $392.16. You pay him this amount and he al- lows you a 3 per cent, discount. May 14, 1915. You owe James Marsh $463.00. You pay him this amount and he al- lows you a 2 per cent, discount. May 15, 1915. You discount your note which you issued for $375.25 for 30 days. This note is dated May 11, 1915. May 16, 1915. You discount your note which you issued for $416.19 for 90 days. This note is interest bearing at the rate of 6 per cent., and is dated April 23, 1915. Note: — If in doubt as to the application of the rule for these transactions or as to the disposition of the items in cash book, refer to the paragraph in which they are fully ex- plained and illustrated. Find the cash balance and rule the cash book as per illustration No. 50. 56. Purchase Book. In this book is kept the amount of merchandise purchased, for the purpose of selling, together with any merchandise invested in the business by the pro- prietor or proprietors. Directly opposite the amount is placed the name of the person, firm or corporation from whom the merchandise has been purchased. The term of purchase is indicated after the name of the person, firm or corporation. This book is ruled only at the end of the month. Note: — The different items of merchandise which have been purchased do not appear in the Purchase Book, as they may be readily obtained from the invoices which you are supposed to keep filed. For illustration of Purchase Book showing entries see illustration No. 51. 28 Illustration No. 51. PURCHASE Book -t:^^^ L. F. ^^^<£ a ^^^ ^^::^^^^^^ ^/yg —^.f^t.^^ .9 /^ ^3 ILJL -r^ ^;^j^^ x^ ^^,.«^^ ^ /: ;^^^y^. i^^^>^i^ ^2. y^ _2_ ^-.^^^ ^^.A^ 2.^:^^jL^..t..^/Z.^Zi^,A . ^a .gz^^^g^^t^/^- 3^ - Z^ Cy^^-A^^ ^^*^ / X >^^24.^:AtL^g!^^,/^A,^z^,^ ^^^^jL. (y:^y^,»^..^<^ >^^ e^^::^^^'»g^^ -Vx/gy -^^t^^U- /i, o t^^f ::^ M ^..^^ .-.^ i' C i,^, "V>-^ -^>t^/t^ ^ a. / f r /^r" ^ ^-g-^ ^<';^ '>»*^& ^^-^ fLy J2 j;/a ^^^x^L^.^.^^^ 2/^^,^^)^ ^>^:^!>^<»»y..rf> -^//^ ~>^^^£^ si ^ . f ^tf^.^f^ 9(^ / £.^.^..^ ^y JLS-^ / i- ¥^ J- «^/ //^: JL .A^ .^/^ aftfc <^ -:/^i^^;^!^^^ @/ ^j^ / V .Z- .zA^ ^.£Li'aJ^^a^.^iL^^;^€^ /k^,.*^^^ j^f^C^e^ ^ a ^ A (fa^it ^ : ^ i^M (^ X?^y^K/ji^ J^ Ar^ -AJ^ r _ut^ (g. /y^^ J. ^ .^5^:z_ ,^^/ £f^^f^^^ ®^C y,/ ._ Z^^^- ^^ .@.4<<2 ^ .zl ^ ^ ^^^:i ^Z£^^fi^ L (^^J^iH. JL/ . .J^ :^.=^^ = ^=^ 30 59. Exercises for making entries into the Sales Book. Instructions: — Use one side of a sheet of Journal paper or rule a blank paper similar to the rulings shown in illustration No. 52. May 6, 1915. You sell to B. W. Keene, 200 barrels B. C. Flour at $4.10 per barrel. Terms note at 2 months. May 7, 1915. You sell to Garland & Co., 100 barrels of S. Flour at $4.00 per barrel, and 300 bushels of Rye at 57c per bushel. Terms on account. May 8, 1915. You sell to H. Dennis, 50 barrels C. Flour at $4.75 per barrel, and 200 bushels of Rye at 60c per bushel. Terms cash. May 9, 1915. You sell to A. B. Frey, 50 barrels of D. Flour at $4.60 per barrel, and 300 bushels of Oats at 36c per bushel. Terms note at 20 days. May 10, 1915. You sell to S. C. Rose, 75 bushels Rye at 57c per bushel. Terms 2 per cent 10 days, net 30 days. 60. Notes Receivable Book. All notes received and all drafts accepted by others in your favor will be placed into this book. See illustrations Nos. 8, 30, 31. 61. Notes Payable Book. All notes which you issue and all drafts which you ac- cept will be placed into this book. See illustrations Nos. 5, 29. 62. Journal. This book receives only such entries which are excluded from the other books. See illustrations Nos, 1, 28, 32, 36, 37, 38, 39. 63. Exercises for entering drafts. Note: — You will make only such entries which effect your books. Instructions: — Use page one of a sheet of Journal paper for a Journal, pages 2 and 3 for a Cash Book. You will be able to buy a combination Notes Receivable and Notes Payable Book for a few cents ; if you do not care to make this investment rule on blank paper a Notes Receivable Book similar to illustration No. 8 and a Notes Payable Book similar to illustration No. 5. Important. Be sure to draw up forms of these drafts on blank paper, and write the acceptance across the face in red ink where such acceptances are indicated as having been made. May 6, 1915. William C. Hecker of Pittsburg, Pa., has accepted your draft dated May 5, 1915, at ?ight, in favor of R. Hoe & Co., for $260.00. May 7, 1915. Edward E. Wells of Baltimore, Md., has drawn on you a draft dated May 5, 1915, at sight, in favor of James Gordan & Co., for $450.00. Note: — While a sight draft does not necessarily have to be accepted, you will accept this one. May 8, 1915. You have received a sight draft drawn by A. Wharton & Co., of Boy- ton, N. J., on Samuel Nester, of York, Pa., in favor of Yourself. The draft is dated May 6, 1915, and is for $175.00. May 9, 1915. You draw a sight draft on Alvin Nolles, of Bayonne, N. J., in favor of Yourself, for $400.00. The draft is dated May 7, 1915. May 10, 1915. H. B. Calvin, of Orange, N. J., draws a sight draft on you in favor of himself for $150.00. The draft is dated May 8, 1915. Note:— You will accept this draft. May 12, 1915. You owe D. P. Dalton $420.00 and in payment you give him a draft drawn on H. C. Shultz, Harrisburg, Pa., at 10 days after date. Shultz accepts the draft. It is dated May 10, 1915. May 13, 1915. E. D. Monroe, Wrightsville, Pa., draws a draft on you at 30 days after date. The draft is in favor of Simpson Bros. You accept the draft which is for $650.00. It is dated May 12, 1915. May 13, 1915. You receive from C. P. Roe, York Haven, Pa., a draft dated May 12, 1915, at 20 days after date. The draft. is drawn on John Kirk, Syracuse, N. Y., who has accepted it. 31 May 14, 1915. James Donlay draws a draft on you in favor of himself at 30 days sight for $200.00. The draft is dated May 13, 1915. You accept the draft May 14, 1915. May 15, 1915. You draw a draft on B. A. Wells, Passaic, N. J., for $150.00. The draft is drawn for 20 days sight. It is in favor of Yourself and is dated May 14, 1915. May 16, 1915. You owe James Martin on account. You give him the draft of B. A. Wells. (This draft was drawn by you on Wells May 15, 1915). Martin gives you cred- it for the face value of the draft. Note: — When Wells accepted this- draft it became a Note Receivable to you. When you give it to Martin Remember that it still remains a Note Receivable to you. Work for the Student 64. Instructions : — Provide yourself with six sheets of Journal paper. Place them in- side of each other so that they will resemble a book. Beginning with the outside page, number them consecutively from one up to twelve. At the top of page one write Journal; page two. Cash; page three, Cash; pages four, five and six, Purchase Book; pages seven, eight and nine Sales Book. Where the single column appears on the left of each page you will draw another line beside it at the right thus forming another column. Use red ink in making this line. For a very few cents you will be able to purchase a combination Notes Receivable and Notes Payable book. If this investment is not desired, you will rule a Notes Receivable Book as per illustration No. 8 making about ten cross lines. You will also rule a Notes Payable Book as per illustration No. 29, making about ten cross lines. Provide yourself with a check book. Provide yourself with seven sheets of Ledger paper. Place them inside of each other so that they will resemble a book. Beginning with the outside page, number them consecutively from one up to fourteen. September 1, 19 — 65. You begin business today. The kind in which you will engage is the Produce business. You will handle such goods as eggs, butter, fruits, poultry, etc. You will keep your own books. You invest in this business the following : — Cash $5000 ; Real Estate $3000; Horse and Wagon $400. See paragraph 13 and illustration No. 1. Note: — The $5000 are already in the Student's Bank. The Receiving Teller has en- tered this amount in your Bank Pass Book. See illustration No. 53. You will place the $5000 on the stub of your Check Book. See illustration No. 54. Illustration No. 53. Bank Pass Book BANK IN ACCOUNT WITH ;^.^. :^_^. y DEPOSITS ^ CHECKS ''^- ^^^U^^^ / / a /I. u *^ r.4 / /^ ■r ^ i./ ^ y i. ^y y^ " X7 .. /u it / / X II /ti '1 r.^ ^ / It/7 // ±f ^4, ,t2.2. /y 1?/^ /.^ 32 Illustration No. 54. CHECK Book Stub c^ No. / Date — x::;^l■■^,^^^ .EL 19. Favor of '-^^^^^sX^ L^ii^Lt. FOR >^/Z,.t^^ «g^ y>.^~ Amount of Bill Discount ^ % Amount of Check %J-a 66. You buy from A. R. Black, 45 Market St., York, Pa., the following merchandise: —1 tub C. Butter 100 lb. @ 30c ; 1 crate No. 1 Eggs, 12 doz. @ 40c ; 1 crate No. 2 Eggs, 12 doz. @ 23c; 1 tub R. Lard 50 lb. @ 12>4c. Terms 2/10— net 30. Note: — The symbol (#) placed after a number indicates pounds. Placed before a number, it indicates number. Terms 2/10 — net 30 means 2 per cent, discount if paid within 10 days or the full amount if not paid until after 10 days but within 30 days. See paragraph 14 and illustration No. 2. September 2, 19 — 67. You buy from R. U. Wise, 16 A Street, N. E., Washington, D. C, the following merchandise: — 75 pairs # 1 Squabs @ 45c; 30 pairs # 2 Squabs @ 30c. Terms cash. See paragraph 47. You buy from S. G. Cella, 2 Richland Ave., York, Pa.,— 15 bunches Bananas @ $1.40; 5 boxes Oranges @ $2.10; 1 box Grape Fruit @ $4.25. Terms note. You buy from O. T. House, 120 Philadelphia St., New Oxford, Pa.:— 150 crates # 1 Eggs @ 20>^c. Terms 1/10— net 60. You buy from W. Wright & Co., Hanover, Pa. :— 120 bu. New Potatoes @ $1.10; 90 bu. Old Potatoes @ 73>^c. Terms 2/15— net 30. You buy from A. J. Lynn. La Bott, Pa. :— 30 crates # 2 Eggs, 12 doz. @ 13i4c; 3 tubs C. Butter 360# @ 18c. Terms 3/ 10— net 30. 68. You will make out a check in favor of R. U. Wise, for his invoice of September 2, 1915. Deduct this amount from the stub of the check book. See illustration No. 54. Make an entry for this transaction from the Check Book Stub into the Cash Book. See paragraph 20 and illustration No. 9. Do not forget to deduct this amount on the stub of the Check Book. September 3, 19 — 69- You sell to A. C. Gregg, 240 Market St., York, Pa., the following merchandise : — 8 doz. # 1 Eggs @ 25c; 12 doz. # 2 Eggs @ 18c; 50# C. Butter @ 28c. Terms 2/10— net 30. See paragraph 17 and illustration No. 6. 70. You sell to James Hecker, 382 Market St., Lancaster, Pa. :— 60 # C. Butter @ 28c; 112 doz. # 1 Eggs @ 25c; 72 doz. # 2 Eggs @ 19c; 30 bu. Old Potatoes @ 8814c; 22 bu. New Potatoes (a) $1.143/4c; 15 pairs # 1 Squabs @ 63c; 7 pairs # 2 Squabs @ 48c; 5 bunches Bananas @ $1.65; 1 box Oranges @ $3.12; 8 Grape Fruits @ 13 l-3c. Terms draft at 20 days after date. 33 You sell to Stough & Musser, Front St., Harrisburg, Pa. : — 2 boxes Oranges @ $3.09. Terms cash. You sell to D. Barrett, 19 King St., Lancaster St., Lancaster, Pa. : — 3 bunches Banan- as @ $1.70; 12 Grape Fruit @ 12c; 5 crates # 1 Eggs @ $3.00. Terms 2/10— net 30. You sell to S. B. Wentz, 206 Frederick St., Hanover, Pa. : — 20 pairs # 1 Squabs @ 60c ; 3 pairs # 2 Squabs @ 45c. Terms 2/10 — note 30. You sell to Edw. T. Lippy, 1260 Chestnut St., Philadelphia, Pa. :— 75 # C. Butter @ 28c. Terms 2/10— net 30. , 7L You give to S. D. Cella your note in payment of the invoice of goods purchased from him September 2, 19 — . Your note is dated September 3, 19 — , and is given at 30 days. For form of note see illustration No. 4. Explanation: — In this case Note Payable performs the service in that it liquidates your indebtedness to S. D. Cella, therefore the liquidation of S. D. Cella's account is the result. According to the rule the service is credited. Since the service is credited and since Note Payable has performed the service, it must follow that Note Payable must be credit- ed. Again, according to the rule, the result is debited. Since the result is debited and since the liquidation of Cella's account is the result, it must follow that S. D. Cella's ac- count must be debited. Note: — It will be noticed that in this case the personal account is kept. While in the case cited in paragraph 16 the personal account is not kept. No other entry is required for this transaction except one in the Note Payable Book for the note. See illustration No. 5. September 4, 19 — 72. You will make out a check for $75 to cover three month's rent. This rent is in advance, and is on the building in which you are carrying on the Produce Business. Make out this check to Joseph Jenkins. Note: — In applying the rule and making the entry, you will have nothing to do with Joseph Jenkins, as you do not wish to keep an account with him. Read paragraph 11-c, also note concerning Expense and Example of Subdivided Expense Account, Read paragraph 31. For entry see illustration No. 25. Remember this item could be called Rent as it is a subheading of Expense. Do not forget to deduct this amount on the stub of the check book. 73- Important. All entries into the cash book, for cash paid out by check, are made from the stubs of the check book. Each check issued is deducted from the balance of cash as shown on the check book stub. 74. You will make a check for the following items which you bought today : — 1 Desk $40; 3 Chairs $8.50; 1 Clock $5.00; 1 set Files $5.00. Make out this check to Wm. Dougherty. Note: — In applying the rule and making the entry, you will have nothing to do with Wm. Dougherty, as you do not wish to keep an account with him. Note: — These items will be known as Furniture and Fixtures which is a subheading of Expense. Remember in applying the rule, to say that Furniture and Fixtures is the re- sult instead of Expense. ' ''^''^ This transaction necessitates the writing of a check and making an entry into the Cash Book. Be sure to place this transaction on the proper side of the Cash Book. See illustration No. 25. 75. You will issue a check for the freight and drayage on the Desk, Chairs, etc. The amount of this check is $9.27. (a) Note: — This item will be known as Freight and Drayage which is a subheading of Expense. 34 Remember in applying the rule, to say that Freight and Drayage is the result instead of Expense. Make out this check to The Hutton Transfer Co. (b) Note : — In applying the rule and making the entry, you will have nothing to do with The Hutton Transfer Co., as you do not wish to keep an account with them. September 5, 19 — 76. You receive from C. A. Gregg a check in payment of the merchandise sold him September 3, 19 — . Read paragraph 25. See illustration Nos. 15-16. Be sure to read Definition for Mer- chandise Discount in paragraph 24. September 6, 19 — 77. You receive from Stough and Musser a check in payment of the merchandise sold them September 3, 19 — . 78. You will issue a check to O. T. House in payment of the merchandise bought from him September 2, 19 — . Read paragraph 24. See illustrations Nos. 13-14. 79. You receive from Samuel B. Wentz his note to cover the amount of the mer- chandise which you sold him September. 3, 19 — . The note is dated September 4, 19 — ^ and is issued at thirty days. For form of note see illustration No. 4. Explanation: — In this case Samuel B. Wentz performs the service in that he brings into my business a Note Receivable, therefore Note Receivable is the result. According to the rule the service is credited. Since the service is credited and since Samuel B. Wentz has performed the service, it must follow that Samuel B. Wentz must be credited. Again according to the rule, the result is debited. Since the result is debited and since Note Receivable is the result, it must follow that Note Receivable must be debited. Note: — It will be noticed that in this case the personal account is kept. While in the case cited in paragraph 19 the personal account is not kept. No other entry is required for this transaction except one in the Note Receivable Book for the note. See illustration No. 8a. 80. You receive from Edw. T. Lippy a check in payment of the merchandise sold him September 3, 19 — . Do not forget the Merchandise Discount. You receive from D. Barrett a check in payment of the merchandise sold him Septem- ber 3, 19—. Do not forget the Merchandise Discount. Note: — Whenever you receive a check for merchandise sold, always refer to the Sales Book in order to ascertain the terms of the sale for which the money is received. Com- pute the amount of Merchandise Discount (if any), deduct this amount from the gross amount of the bill as shown in the Sales Book. Compare this result with the amount of the check. 81. You will draw (make out) a draft for the merchandise sold to James Hecker on September 3, 19 — . Use the following data in making out this draft : Twenty days after date (see terms) ; payable to the order of Myself (payee) ; amount same as given in Sales Book; drawer (your name); drawee James Hecker. Be sure to refer to illustration No. 27b before you draw this draft. Note : — No entry will be made for this draft at this time, except a memorandum in the Journal showing that the draft was drawn. This memorandum is never "Posted." The Amount is not extended into the money column. See illustration No. 61. Important. No entry should be made by any party to a time draft except a memor- andum by the Drawer, until the instrument is accepted, which makes it a note, and then an entry should be made by each party. In the case of a sight draft, only the memorandum 35 will be made by the Drawer, until the instrument is "honored" (paid) by the Drawee, at which time an entry should be made by each party. Remember: — The sight draft need not be accepted. 82. You receive from D. Barrett a check in payment of the merchandise sold him September 3, 19 — . Do not forget to deduct the Merchandise Discount. Proceed as in paragraph 76. 83. You will now deposit all cash on hand, that is you will put it into the Student's Bank where you have already deposited $5000. Rule a deposit slip similar to illustration No. 55. Following are the checks which you have received: C. A. Gregg, $17.80; Stough and Musser, $6.18; Edw. T. Lippy, $20.58; D. Barrett, $21.11. Total checks, $65.67. Important. In actual business, these checks would be endorsed by you by writing your name across the back of each. See illustration No. 43. You would then take these checks and the deposit slip together with your Bank Pass Book to the bank where the Re- ceiving Teller would take the deposit and place the amount of it in the Pass Book, return- ing the Bank Pass Book to you again. For illustration of Bank Pass Book and entry made in it by Receiving Teller see illustration No. 53, From the Bank Pass Book you would make an entry of the deposit to the stub of yoyr check book, adding the amount to the bank balance. For illustration showing the deposit entered on stub of check book and added to bank balance see illustration No. 54. You will now enter the amount of your deposit ($65.67) on the stub of your check book and add it to your bank balance. Illustration No. 55. Deposit Slip DEPOSITED IN STUDENT'S Bank By McKeesport, Pa. <^^^ ^^ /f- Currency Checks 36 84. You will now balance, rule and prove the Cash Book. Find the sum of the fig- ures on the debit side and the credit side. .Subtract the sum of the figures on the credit side from the sum of the figures on the debit side. The result of this subtraction will equal the Cash on Hand or the Balance. Be sure to read paragraph 53. Proof of Cash Balance: — Find the balance of cash in bank (check book balance). Add to this amount all cash not deposited (up to this point all cash has been deposited). The sum of these items should equal the Cash on Hand or Balance of the Cash Book. If your cash book is correct, it will be the same as illustration No. 56. Illustration No. 56 will also show the rulings. Note: — All rulings are generally made in red ink. Illustration No. 56. Cash DEBIT SIDE -vi:: ^ =£:^2^^2^lJ^^^^it-^i=6?^ -j^^^»^^-»-..^l^ C^z^xy-z^^^.^ Cf^. C ^. -^^.^L^r^f^^a^ ^^=J<^*t^.^r<^-f^^r^ '-?^^::SL^-^#- '3 / /f - ^2:t:.S^^^^-:^.4^ ^^ a ^ / f ju:»^ JLJL -<£^^^ C^^:^..*£,^^~-'i^■^!^,.'rLA ■ -T/^ r/7 ^r ^/^^/^ J^. Cash CREDIT SIDE zf ^^^ MJL 7^-^ ^ / 2. -P^ A^ / X r^^;.^^^:^^Ke^^ ^f ^'T a M:. MS. "^z:^^ rl^^yt-r-^-'^ K^xZ^ T -^ .A_Z -jjC M^ ^^ ^^ €^k^^^^ ^ ( 7^ . ^ -< ^ '^^^^ V. t Af ' A-£^ ^^^ C}^\ r /^- P /i'^f^^^.-^^ '^/-i,/ z^- ■•? <^ f ^^f^.„^U^^^.^..o^^,^^t^'- ^:/ff. U2^^^ ^/^A^ ^a ^a;:^ gig:«^^ -^ .:3^L?^i^ C y^ ^' : 4'i!^^-t,^..^L^^ / X ^'^g.t^^z^ea^^^^k^^^l^^z.-.^^^ ^^^^^ ^-^ frz/^^t^L^*^^.^^ '^/yg -T^^-^t^ /^ a t^^>^2..A^ ;^ c 2^^ ^/lo^^fS'^t^^^,^'-^^^ fe<:^<^<>gi g<^!^^-V>>r" -v<»<-^-^>;^^^3?4>-£fe^ ^~/a^ §^ ^yyg -, t^^. / / ±. ^^ / £JL. ^^/ dA. If your Sales Book is correct it will be the same as illustration No. 58. Illustration No. 58 will also show the rulings. 38 Illustration No. 58. Sales Book — -r:^^^L ^1_ ^^. ^^^.^ ^ 2 x/^..^.»^^^.^ ^^^^^ >^>^ ■^ /y^^ -..a^g-^g^^ s^ «gy ■ ^^<^ (^/ / i^ vli^ .^/7 .^ <^ -/^^.^^^tR^^^ (@ / ^ ^ / ^ ..^^^ ..^^ y J^^.^.^^.^^'rA^^^^^^j'x.^'^^^ .,^^ ;^ ..^c^A^.^Zk^'^, / ^^ /^ ^..sf^.^ /^ tt:t<^ (g>. ^^.^ vLjI _Z_^ ^j^X-^sC^ ??^/ (Cy-^t^^ (g- ^^ -^L^, v?^ -?»i^^ -^ ^^^ _ZX .^1^ ■^>^-.^^:L^/2:^gL^. ^^:^^gU.g<^ (3 /y^^ _-^^ .^£Z_ /^ ^.^^tSC-^..,^ ^^ ^rz/!^.,^.*^ 6. ^x:^^^^^^^^^^^^^^^^^ /^;^^^^y-<^ ^s* ^^ ^^^ ^^ / /y ( ^.yjL^ */¥ (g-^C AcT cTV _^ a-^;^*^at.*^ ^^^ / —^^tm^^-tr-^-^ (^-/jaeJ- / ^ ^ •?»^^ ^^^^^ -^ ^crT" />^ ^ t^ -X ;r>ir>^ ^ XE wt -^ :^^.^^ ^_(^jlj:^ \lj0jt^'^ JL/ -X^ ^ /^ 4=^ 39 If your Notes Payable Book is correct it will be the same as illustration No. 59. Illustration No. 69. NOTES NO. WHEN GIVEN DRAWER (draft) OR ENDORSER (note) IN WHOSE FAVOR (payee) FOR WHAT GIVEN WHERE PAYABLE -x^. ^L.^^ .<^2^*.^^**^^i>^ PAYABLE DATE TIME WHEN DUE L.F. AMOUNT DISPOSITION WAR MONTH DAY TUB Jan. Feb. Mar. Apr. M»y Jon* July Aug. Sept Oct Not. Dee. AMOUNT DATE REMARKS ^^ ..^^^lo^ ' ,^ .^^^ ^yf- s? 2. .^^•Tc^ — '-ar- S ^j^r-r - I f your N( 5tes r 'ecei va )le B( )ok is CO rre Ct it A A^il b t t le i same as II II illustration No. 60. Illustration No. 60. NOTES NO. WHEN RECEIVED DRAWER (draft) OR ENDORSER (note) IN WHOSE FAVOR (payee) DRAWEE (draft) OR MAKER (note) FOR WHAT RECEIVED WHERE PAYABLE /^ ■ ^^.c^ '^^at^^rt^ -'.,>-.^^yJ^>6jig. 1 RECEIVABLE DATE 1 TIME WHEN DUE L.F. AMOUNT DISPOSITION YEAR month DAY TEiR Jan. Feb. Mar. Apr. May Jane July Auft- Sept Oct K07. Sec. AMOUNT DATE REMARKS y^- Jr^ v ,iA4£t, V 2. X.4 •34. , ^ /^ JS J If your Journal is correct it will be the same as illustration No. 61. Illustration No. 61. JOURNAL // -JjL ~^X-^f-^ e^ ..^^^^..f^ 7^ ^..^ f^P^ 3 4^ O y/ ao \^ y/a o 40 ^f- L. F. x^^-.^^^ uL. .jLZ. JOURNAL J <7 a a ^^g^g>^>'^^ •'^!fag<»<»g-. /::Z^.A^£^ T -r:4^ Vf- ^ JF X^ Remember that all Notes Payable Book items are posted to their respective Ledger accounts in the manner indicated in this paragraph. You will now post the remaning Notes Payable Book items. Posting of Total of Notes Payable Book. Find the total of the Amount column of the Notes Payable Book. (See illustration No. 59.) Post the amount to the credit side of Notes Payable account in the Ledger. (See illustration No. 71.) Illustration No. 71. -fiL^^ ' J. 7^ 94. Cash Book Postings. Debit or Left Side. Turn to the first item on this side. (Your name invested $5000.) Write your name in the Ledger. (See illustration No. 72.) On the credit side of the Ledger account, in the Date columns, write Sept. 1, 19 — . (See illustration No. 72.) (This is the date of the transaction as it appears in the Cash Book.) In the Folio column (see illu- 44 stration No. 62) in the Ledger account, write the number of the Cash Book page from which the item is taken. (See illustration No. 72.) Place the amount ($5000) in the Credit money column of the Ledger account. (See illustration No. 72.) In the Folio column of the Cash Book place the.number of the Ledger page on which you have put your account. (See illustration No. 56.) Remember that all items appearing oh the Debit side of the Cash Book are posted to their respective Ledger accounts in the manner indicated in this paragraph. Credit or Right Side. Turn to the first item on this side. Write R. U. Wise's name in the Ledger. (See illustration No. 73-) On the debit side of the Ledger account, in the Date columns, write Sept. 2, 19 — . (See illustration No. 73.) (This is the date of the transaction as it appears in the Cash Book.) In the Folio column (see illustration No. 62) in the Ledger account, write the number of the Cash Book page from which the item is taken. (See illustration No. 73.) Place the amount ($42.75) in the Debit money column of the Ledger account. (See illustration No. 73.) In the Folio column of the Cash Book place the number of the Ledger page on which you have put R. U. Wise's account. (See illustration No. 56.) Remember that all items appearing on the Credit side of the Cash Book are posted to their respective Ledger accounts in the manner indicated in this paragraph. You will now post the remaining Cash Book items. Illustration No. 72. ^ s£^ Illustration No. 73. ^ ^ ^^ ;^^ J=. ^ 2=. .2^ "/^^^....^^. .^^^^ ift-^^ ( ^ 95. Trial Balance. Every transaction in Double Entry bookkeeping has a debit and a credit which must be equal. Since the debit and credit of each transaction are equal, it must follow that the sum of the debits of all transactions must equal the sum of the credits of all transactions. As all debit transactions are posted to the debit side of their respective accounts in the Ledger and all credit transactions are posted to the credit side of their re- spective accounts in the Ledger, it must follow that the sum of the debit sides of all ac- counts in the Ledger must equal the sum of the credit sides of all accounts in the Ledger. Since the sum of the debit sides of all accounts equals the sum of the credit sides of all accounts, it must follow that the sum of the differences between the debit and credit side of each account, appearing on the debit side, must equal the sum of the differences between the debit and credit side of each account appearing on the credit side. These differences are carried from their respective accounts in the Ledger to the Trial Balance. If an account shows a debit difference, it is placed in the debit column of the Trial Balance, if a credit difference, it is placed in the credit column. Since the debit differences of all accounts in the Ledger equals the credit differences of all accounts in the Ledger, and since these are the same differences which are transfer- red to the Trial Balance, it must follow that the debit and credit columns of the Trial Bal- ance must be equal. 45 Why a Trial Balance is Taken. A Trial Balance is taken for the purpose of showing the equality of debits and credits as posted to the different accounts in the Ledger- It also serves as initial data for the Balance Sheet. 96. How to Take a Trial Balance. Turn to your Ledger. Write the name of each account that has one side greater than the other. (Debit side greater than the credit, or credit side greater than the debit.) Write these names on a separate Piece of Journal Paper. Noter^Do not put down the name of any account whose debit and credit sides are equal. For an example we will take the Merchandise Discount account. (See illustration No. 74.) Total the debit and credit sides of this account in small pencil figures, then place the difference on the larger side, also in small pencil figures. (See illustration No. 74.) Transfer this amount to the Trial Balance opposite the name Merchandise Discount and in the credit or right-hand money column. (See illustration No. 75.) Illustration No. 74. ^^^i^^^::-^"^;:^^^^^^:;^ ■x£M %- ^^ -<^^^^ J..^ f ^ ^'T y r. 7r' -/.^ %^r-i^«-r. ^ P- V^ / X / You will now find the differences of the remaining accounts in the same manner and transfer these differences to their proper columns in the Trial Balance. Note: — If your Trial Balance has been correctly taken, it will correspond with illu- stration No. 75. Rule Trial Balance same as shown in illustration No. 75, Illustration No. 75. ^^ TRIAL BALANCE^,,,^^^^ ,^_ f'^ ..*iL^'^;:?/ ^^^f ^::^^:t.< ^f^ ^ M'S-^^JlL ^^'^ £L T f^ r^^ ^^ K^ ^■J*^' .^^ dua^ ^3'^6 /^g^g^C«ag^ ^4^0 .^ ao /'^3a6 ^^.^^^...^^'7-^.,^ ^^ ..^^^^/'^^ — fg-^i^f^n //^y 1/ ^zj^. -2^ ^ '^^■£^ y^C/y^^^^^-t^-r^^i^ ^(^O .AA >^''^ig'^;'^^S.a:-^^?^^> >^^>-^^>^X> -^^ /f,3 .iKi -^ /Li^ J^^L£:^J2. ':-y!^^^ (Z^-^ ^.^...^.^ ^'^^Z^t-^ / f >^1^ 6^^ f^ <^fa /f^ ^1^ *£; ^ Zs± / C/^S o.i -3J^ £^ ^ Z^ 7.3 ^ ^^ ^'j ■ /s =iaf ^ <^^^g^ ^^^^^^^ ^^; ^2^ C^,a^^^^(y^a^ . a^^ytL ^JJ.y/.ds /Lf ;>-7^^ £^. . /// 7J^(^d£ /// 72^ 2Z^^'€. /LJ£ // .2- /.?y .^ fo p-^*r Z^- 7^ r-. ^ . ( .^\^^ L ^ /r^-^^'UL ^^S'C .£7- X^S 7^^ £AAL Z^ //^oT^V/ //a.r^ // 49 121. Resource Inventory: — A notation of any merchandise and other property on hand which has not been sold at the time of making the balance sheet. Examples of resource inventories are: — Merchandise on hand listed at its cost price; Real Estate listed at its present value; any property on hand, besides that already cited, listed at its present value. Resource inventories also include such things as unexpired insurance, unpaid rent due the business, etc. 122. Liability Inventory: — An amount owed which has not been placed on the books at the time of making a balance sheet. Examples of liability inventories are : — Interest accrued on notes payable or outstand- ing accounts, unpaid freight, rent, salaries, insurance, etc. owed by the business. How to Make Out a Balance Sheet 123. Rule a sheet of blank paper similar to Illustration No. 76. Write the names of all accounts, appearing in the last trial balance, on the balance sheet. Write the amounts which represent these accounts in the first two columns, using the first column for the debits and the second column for the credits, 124- You will have the following inventories : — Real Estate, $6300 ; Horse & Wagon, $390; Furniture and Fixtures, $55.57; Merchandise, $1309.63. Note: — Unless otherwise mentioned, all inventories given will be resource inventories. Place these inventories to their respective accounts in the balance sheet. They will be written to the left of the first column. Use red ink. See illustration No. 76. 125. Real Estate, Horse and Wagon, Expense, Furniture and Fixtures, Freight, In- terest, Discount, Merchandise, and similar accounts will show a loss or a gain. We will call all accounts which show a loss or a gain Working Accounts, in order to distinguish them from the accounts which do not show a loss or a gain. 126. How to find the Loss or Gain when a Resource Inventory is given. Add the in- ventory to the credit side of the account. If, after making this addition, the credit side is greater than the debit, the difference is a gain. If the credit side is smaller, the difference is a loss. 127. How to find the Loss or Gain when a Liability Inventory is given. Add the in- ventory to the debit side of the account. If, after making this addition, the credit side is greater than the debit, the difference is a gain. If the credit side is smaller, the differ- ence is a loss. 128. How to find the Loss or Gain when both Resource and Liability inventories are given. Add the resource inventory to the credit side; add the liability inventory to the debit side. If, after making these additions, the credit side is greater than the debit, the difference is a gain. If the credit side is smaller, the difference is a loss. 129. How to find the Loss or Gain of a Working Account when no inventory is given. Add the credit side and the debit side. If the credit side is greater, the difference is a gain. If the credit side is smaller, the difference is a loss. 130. You will now proceed to find the losses or gains of the different Working Ac- counts that appear in your balance sheet. (See illustration No. 76.) Be sure to work out each one of the losses and gains. 131. If the sum of the Gain column is greater than the sum of the Loss column, the difference is a Net Gain. If the Loss column is greater the difference is a Net Loss. 132. Accounts which do not come under the heading of Working Accounts are known as Financial Accounts. A Financial Account which does not balance (have its debit side equal to its credit side), will show either a resource or a liability. 50 133. A Resource : — Property of any kind on 'hand. Note: — The names of the accounts generally indicate the kinds of property. Examples: — Cash, Notes Receivable, Personal Accounts due the business. The re- source inventories from any accounts are also classified as Resources. 134. A Liability: — Debts owed by the business. Examples: — Personal Accounts owed by the business and Notes Payable, ity inventories from any account are also classified as Liabilities. The liabil- 135. When the debit side of a Financial Account is larger than the credit, the diff- erence is a Resource, and must be placed in the Resource column. 136. When the credit side of a Financial Account is larger than the debit, the differ- ence is a Liability, and must be placed in the Liabilities column. 137. You will now extend into the Resource and Liability columns the different amounts which affect them. Note: — Be careful to place the amounts directly opposite the accounts which they affect. 138. The proprietor's account is a Financial Account, and since the credit side is al- ways greater than the debit, it will show a Liability. The balance from the proprietor's account is never extended into the Liability column until the Net Gain or Net Loss has been ascertained. After this net gain is added to or the net loss subtracted from the pro- prietor's account, it is placed in the Liability column, and represents the Present Worth of the business. After the Present Worth has been placed in the Liability column, the sum total of this column must equal the sum total of the Resource column. Be sure that your Balance Sheet corresponds in figures and rulings to the Balance Sheet shown in illustration No. 76 as this is taken from your book Sept. 13, 19 — . Closing Accounts in the Ledger 139. How to close Accounts showing a Loss or a Gain and not having an Inventory. Find the difference between the two sides and place it on the smaller side in red ink.- If the debit side is smaller, place the difference on this side together with the word Gain. See illustration No. 77a. If the credit side is smaller, place the difference on this side to- gether with the word Loss. See illustration No. 77b. Rule the account in red ink and bring down the totals of t!he debit and credit sides. These totals will be equal. See illu- strations Nos. 77a and 77b. Illustration No. 77a. C^£c z. Zuf: .3ji. A. ZA -\<^ie^ g>;^^--^ / > >4^ f J. .£JL X. zu. j^ cT -^ ^ ZJl jL^ jk z -2= -ZJL 51 Illustration No. 77b. / '^^^^ C^^C-i^^g^^^^-i^^^^-r;^^^:^ ^ .^^ ^ .^_^ ^ z^ j2_^ Zi^ _Z^ -4.^ ZJl ^-^ \^^- ^ AS AAA r^ A^ ^ ,^ O Z^ i^ z^ 3. / ^ c^.r .^^ z r^ 2 X^ If the difference is a Loss, carry this amount in black ink to the debit side of Loss and Gain account which you will create in the Ledger. See illustration No. 77c. If the dif- ference is a Gain, it should be carried to the credit side of Loss and Gain account. Illustration No. 77c. }^^-^^f^^^ri:Z^^ ^^tst^^^^^^^ ^ A^ A^ /^.^i~¥i^t^i^f*.,,A^ - -4^ ^^ J-f T 140. How to close Accounts showing a Loss or Gain and having an Inventory. If the inventory is a Resource Inventory, place it on the credit side in red ink. Find the dif- ference between the two sides and place it on the smaller side in red ink. If the debit side is smaller, place the difference on this side together with the word Gain. See illustra- tion No. 78a. If the credit side is smaller, place the difference on this side together with the word Loss. See illustration No. 78b. Rule the account in red ink and bring down the totals of the debit and credit sides. These totals will be equal. See illustrations Nos. 78a and 78b. Important. Bring the Inventory below the rulings on the opposite side from that on which it already appears. See illustrations Nos. 78a and 78b. Illustration No. 78a. ^ A^ J^ --t^^^iZ^^!^<*-T/'T(V»^ ^ ^ r f Illustration No. 78b. ^^^^^^-^^i^^^^Cgz^^^^^^, 1..^^;^^ yj^^iy .' ^^ ^^ 4L a\ji.>S' j^ iJL^ x^Z ii:4^u2 ^^^ JLZ ^:z: ^ ^*t/'-^^tZ^^ M.^£.^L .?^ X-^ ^i.^ ii:^ i- f 7^=r £.J2. I.^ ^ f' i^^ ^ ^ f M'- / y^J^xz^fX^^'X.-tz^^ / / 7 ^3 1 142. How to close the Loss and Gain account. Find the difference between the two sides and place it on the smaller side in red ink. If the debit side is smaller, place the dif- ference on this side together with the words Net Gain. See illustration No. 80a. If the credit side is smaller, place the difference on this side together with the words Net Loss. See illustration No. 80b. Rule the account in red ink and bring down the totals of the debit and credit sides. These totals will be equal. (See illustrations Nos. 80a and 80b.) 53 Illustration No. 80a. ^^^^^<^ ^^^^^ C^^^L^^ yy^tst^zx .JLZ /^^Jt-ii^9-T^^^ a4 x^'^-.^i:'^^^ ^ z.^^ /u:. ^^ ^^e.^.^^ s^^^^^^J;^^^^ ,^t^id^t^cc^^ jJL Z ^ jLA. .U. £^faKj^^i^_X r^ .AJ. ^^j- y - ^ ^ *^L^ ^^ ^SJ. y^^^ ySC7^.<^^ ^z ^ x^ A ^£^ Illustration No. 80b. ^P^^^^^^t^ r^,-J&^€z^.'^^^ />^st^. •3^ i^Z f^-^ K~^^^.ff^yA^ ^^ /u. .'7^£4^<^.,ti>fi<C& ^ ^ ^ ./-X. i^Z PU^^:^'-^^'^ ^ J-2:. ^ :^^ JZ^ JAuL f ^ 143. How to close the Proprietor's (your name) Account. If the Loss and Gain ac- count shows a Net Gain, carry this amount from the Loss and Gain account into the Pro- prietor's (your name) account and place it on the credit side. See illustration No. 81a. Find the difference between the two sides, and place it on the smaller side in red ink. If the debit side is smaller, place the difference on this side together with the words Present Capital. See illustration No. 81a. Illustration No. 81a. ^ y- fV^r ^ ^ y AJ. >^-^>*^r .^tJa^. ^ ^&^t ^ ^ j^ ^7^ £A ^X. ^ ^^^ 54 Note: — Should the credit side ever be smaller, place the difference on this side to- gether with the words Net Insolvency. If the Loss and Gain account shows a Net Loss, carry this amount from the Loss and Gain account into the Proprietor's (your name) account and place it on the debit side. See illustration No. 81b. Illustration No. 81b. y^^ y^- ^3^*^ jL^ ^^^"^ 77= ^ JU- 2^^^^^ JLM ^.4LA. ^/>^^'^^^^:i^sy> Z- JL. ^^ Ld. JZ^ J- -ul I.A. *£^ ,^ /^-^^i^C^^J^^. '■ ZA A 4L ,2 ^ 4c; 5 crates # 2 Eggs, 12 doz. @ 223^c; 25 pairs # 1 Squabs @ 45l^c. Terms 1/10 — note 30. You buy from Wm. T. Hummer, Harney, Pa., the following merchandise : — 75 crates # 1 Eggs, 12 doz. @ 20c; 100 crates # 2 Eggs, 12 doz. @ 17c; 98 bu. Old Potatoes @ 72^c. Terms note 30 days. September 17, 19 — . 147. You sell to C. A. Gregg, 240 Market St., York, Pa. :— 8 doz. # 1 Eggs @ 25c ; 12 doz. # 2 Eggs @ 18c ; 50 # C. Butter @ 28c. Terms 2/10— net 30. You sell to Mann & Mann, Cly, Pa. :— 14 crates # 2 Eggs @ 18c. Terms 2/10— net 30. September 18, 19 — . 148- You buy from W. Wright & Co., Hanover, Pa., the following merchandise: — ■ 900 # Lard @ 9 2/3c. Terms cash. You buy from R. U. Wise, 16 A Street, N. E., Washington, D. C, the following mer- dhandise: — 176 bu. Old Potatoes @ 71c; 46 bu. New Potatoes @ 1.07; 72 pairs # 1 Squabs @ 44c ; 100 pairs # 2 Squabs @ 33i4c. Terms net 30. 149. You will discount, today, the note received Sept. 11, 19 — , from H. J. Root. (See paragraph 109 for data. Be sure to read paragraph 29. September 19, 19—. 150. You will make out a note in favor of Wm. T. Hummer for his invoice of Sept. 16, 19 — . Date the note Sept. 16, 19 — , and make it for 30 days. 151. You sell to H. J. Root, 21 Piatt St., Baltimore, Md. :— 96 pairs # 1 Squabs @ 64c; 55 pairs # 2 Squabs @ 49c. Terms 2/10 — net 30. You sell to H. J. Root, 21 Piatt St., Baltimore, Md. :— 25 # Lard @ 18c; 75 doz. # 1 Eggs @ 25c; 25 bu. Old Potatoes @ 89c. Terms draft at 30 days sight. September 22, 19 — 152. You sell to O. T. House, 120 Philadelphia St., New Oxford, Pa., 2 boxes Oranges @ $3.1014. Terms 2/10— net 30. You sell to O. A. Messenger, 32 Filbert St., Washington, D. C, 16 crates # 1 Eggs @ 25c. Terms sight draft. You sell to W. Wright & Co., Hanover, Pa., 30 Grape Fruits @ 13 2/3c. Terms cash. 153. You discount, today, the note which you issued, in favor of S. G. Cella. The amount of this note is $35.75. See paragraph 71 for other data. Be sure to read paragraph 26. September 23, 19 — . 154. You buy from A. C. Lutz, Melrose, Md., 2375 # Lard @ 9 2/5c. Terms sight draft. You buy from S. B. Tenner, 48 High St., Columbia, Pa., 3 tubs R. Lard, 500 # @ 10c. Terms draft at 30 days after date. 155. You receive from Mann & Mann a check in payment of the merchandise sold them September 17, 19 — . Do not forget to deduct the Merchandise Discount. You receive from C. A. Gregg a check in payment of the Merchandise sold him Sep- tember 17, 19 — . Do not forget to deduct the Merchandise Discount. 56 156. You will draw a sight draft on O. A. Messenger for the merchandise sold him Sep- tember 22, 19 — . For form of sight draft see illustration No. 27a. Note: — In actual business this draft must be presented to O. A. Messenger. No entry will be made for this draft until O. A. Messenger pays it. September 24, 19—. 157. You sell to James Hecker, 382 Market St., Lancaster, Pa. : — 50 bu. Old Potatoes @ 90c; 10 bu. New Potatoes @ $1.15. Terms note. You sell to R. A. Gates & Sons, 106 Maine St., McSherrystown, Pa. :— 900 # Lard @ 1834c; 20 bunches Bananas @ 71>4c. Terms 3/10—2/30. 158. You receive from W. Wright & Co., a check in payment of the merchandise sold them September 22, 19 — . September 25, 19 — . 159. You have been notified by your bank that A. C. Lutz has drawn a sight draft on you for $223.25. This draft was drawn in payment of the merchandise which you bought from Lutz September 23, 19 — . You will now issue a check in favor of your bank (Student's Bank), in payment of this draft. As the bank is acting as your agent, they will pay this amount to Lutz for you. Be sure to read paragraph 37. For entry see illustration No. 33. September 26, 19 — 160. You buy from J. H. Love & Co., Meriden, Pa., the following inercliandise : — 84 bunches Bananas @ $1.39>4 ; 946 pairs # 1 Squabs @ 43%c; 235 pairs # 2 Squabs @ 34c; 100 bu. New Potatoes @ $1.08. Terms 2/10— note 30. 161. You receive from James Hecker, a note, for the merchandise sold him Septem- ber 24, 19 — . This note is dated September 24, 19 — , and is given for 30 days. The amount is $56.50. Be sure to read paragraph 79. 162. You will make out a check in favor of the Hanover Fire Insurance Co., for $25.00. ]NJote:-^You have had your merchandise insured and the $25.00 is given in payment of the premium. Statement: — Cash performs the service in that it brings into your business Insurance, therefore Insurance is the result. You will apply the rule to this statement in order to ascertain your entry. Remember to keep an account for Insurance. September 27, 19 — . 163- You receive the money on the Hecker draft which is due today. The amount of this draft is $135.46. Read paragraph 23. 164. Your bank collected the amount of the Hecker draft for you, and for doing so has charged you 25c. Note: — The collecting of the money on notes, drafts, etc., is known as Collection and Exchange. Statement: — Cash performs the service in that it secures for me Collection and Ex- change, therefore Collection and Exchange is the result. You will apply the rule to this statement in order to ascertain your entry. September 29, 19 — 165- You sell to Mann & Mann, Cly, Pa. :— 160 # C. Butter @ 29c; 312 doz. # 1 Eggs @ 25c ; 22 doz. # 2 Eggs @ 19c. Terms draft 30 days after date. 166. S. B. Tenner has drawn a draft on you which you have accepted today. The draft is dated September 29, 19 — , and is given for thirty days after date. It is payable to the order of S. B. Tenner and is issued for $150.00. You will make the entry for this draft. Note: — After you accept the draft, it becomes a Note Payable to you. 57 Statement: — Note Payable performs a service for you in that it liquidates your in- debtedness to S. B. Tenner, therefore the liquidation of S. B. Tenner's account is the result. Read paragraph 71 for application of rule and apply it to this statement. 167' You will now deposit all cash on hand. Following are the checks which you have received :— Mann and Mann, $29.64; C. A. Gregg, $17.80; W. Wright & Co., $4.10. Note: — Before making this deposit be sure to read paragraph 83. 168. You will now balance, rule and prove the Cash Book. Read paragraph 84. If your cash book is correct, it will show a balance of $2721.84. 169. If your check book is correct it will contain the following: — Balance Sept. 13, 19 — , $2760.85; Proceeds from H. J. Root note, $58.17; Proceeds from James Hecker draft, $135.21; Deposit $51.54. Checks issued: — A. C. Lutz, $223.25; Hanover Fire Insurance Co.. $25.00; Proceeds of note issued to S. G. Cella, deducted, $35.68. Note: — The Check Book balance will be the same as the Cash Book balance. 170. These are the correct balances for the following books: — Purchase, $2625.19; Sales, $686.02; Notes Payable, $604.81; Notes Receivable, $56.50. Note: — Be sure to rule the different books mentioned in this paragraph. 171. Post all items from the different books into the Ledger. (This includes all items from Sept. 13, 19— to Sept. 30, 19—.) Be sure to post all totals. 172. You will now take a Trial Balance, and make out a Balance Sheet. The inventories for the Balance Sheet are as follows: Real Estate, $6615.00; Horse and Wagon, $385.00; Furniture and Fixtures, $54.00; Merchandise, $3436.05; Insurance $24.00. Note : — If your Balance Sheet is correct, it will show the following results : Total of Loss column, $8.78 ; Total of Gain column, $502.39 ; Net Gain $493.61 ; Total of Resource column, $13914.91.; Total of Liability column, before Present Worth is added, $4752.56; Present Worth, $9162.35. 173. You will now close all accounts in the Ledger. In General 174. The rule for determining whether an item shall be debited or credited, together with the instructions, etc., set forth in this work, are applicable to every different kind of transaction. It is therefore possible to take the transactions from any other work and, by ap- plying the methods used in Simplified Bookkeeping, construct a set of books correctly. 58 INDEX Page Accounts, Definition 3 Classified 3 Closing of 51-54 Illustrations 51-54 Financial 50 Rulings of 55 Illustrations 55 Working 50 B Balance Sheet, Definition 49 Explanation 50, 51 Illustration 49 Bank Pass Book, Illustration 32 Bookkeeping, Definition 3 Object 3 Classified 3 Business Transactions, Definition 3 Classified 3 c Cash Balance, Proof of 37 Cash Book 26, 27 Exercises 27, 28 Illustration 27 Postings 44 Illustrations 45 Check, Illustration 24 Check Book Stub , 33 Creditor, A 3 Credit, A 3 D Debit, A 3 Debtor, A 3 Deposit Slip, Illustration 36 Discount, Definition from Payer's viewpoint 10 Definition from Receiver's viewpoint....! 1 Drafts, Definition 14 Acceptance 15, 16 Classified 14, 15 Exercises 31, 32 Illustrations 14-16 Negotiable 24 Payment and Collection 20 E Endorsement, Definition 24 Classified 24, 25 Illustrations ; 25 I Interest, Definition from Payer's viewpoint 12 Definition from Receiver's view- point .....13 J Journal 31 Illustrations 4, 16, 18, 21, 22 Postings 41, 42 Illustrations 42 Page Ledger, Definition 41 Illustration 41 Liability, A 51 Liability Inventory 50 M Maturity 20 Merchandise Discount, Definition 9 N Note, Definition 5 Classified 5 Illustrations 5, 12 Negotiable 24 Notes Payable Book 31 Illustrations 6, 17 Postings 44 Illustrations 44 Notes Receivable Book 31 Illustrations 7, 8, 17, 18 Postings 43 Illustrations 43, 44 P Posting, Definition 41 Cash Book 44 Illustrations 45 Journal 41, 42 Illustrations 42 Notes Payable Book 44 Illustrations 44 Notes Receivable Book 43 Illustrations 43, 44 Purchase Book 42 Illustrations 42, 43 Sales Book 43 Illustrations 43 Purchase Book 28 Exercises 29 Illustration 29 Postings 42 Illustrations 42, 43 R Resource, A 51 Resource Inventory 50 Rule for Debiting and Crediting 3 s Sales Book 29 Exercises 31 Illustration 30 Postings 43 Illustrations 43 T Trial Balance ...45, 46 Illustrations 46 W Work for the Student 32-58 INDEX OF ILLUSTRATIVE TRANSACTIONS Page Merchandise bought on account 4 Merchandise bought for spot cash 4 Merchandise bought for a note 5 Merchandise sold on account 6 Merchandise sold for spot cash 6 Merchandise sold for a note 7 I pay outstanding debt in cas'h 8 I pay outstanding debt by note 8 Outstanding debt paid in cash to me.... 8 I collect money on note 9 I pay outstanding debt in cash, dis- count allowed 9 Outstanding debt paid in cash to me, discount allowed 10 I discount my note 10 I discount note received by me 11 I discount my interest bearing note... .12 I discount interest bearing note received by me 13 Stamps bought for cash 13 Cash paid for rent 14 Drafts. I draw a time draft on Samuel Marks in favor of Wm. Mason. Samuel Marks accepts the draft 16 H. B. Wright draws a time draft on Me in favor of John Wood. I ac- cept the draft .• 16 Wm. Oliver draws a time draft on John Perry in favor of Me. John Perry accepts the draft ' 17 I draw a time draft on Jacob Klein in favor of Myself. Klein accepts the draft 18 I draw a sight draft on Oliver Myers in favor of Edw. Martin 18 Page Howard Ort draws a sight draft on Me in favor of Wm. Wentz. The draft is presented to Me for pay- ment 18 Edward Park draws a sight draft on Morris Town in favor of Me. The draft is presented by Me for pay- ment 19 I draw a sight draft on E. R. Burr in favor of Myself. The draft is pre- sented by Me for payment 19 Payment and Collection of Time Drafts. I pay a time draft, which was drawn on Me by Wm. Simpson in favor of Samuel Keller 20 I discount a time draft, which was drawn on Me by John Hoe in fav- or of Wm. Johnson 20 I collect the money for a time draft, which was drawn by Carl Short on Clyde Hoke in favor of Me 20 I discount a time draft, which was drawn by H. B. Scott on E. C. Eckles in favor of Me 20 Merchandise Returned. I return merchandise bought on account 20 Merchandise sold on account return- ed to me 21 Personal Account Kept. Merchandise bought for cash 22 Merchandise sold for cash 23 Payment by Notes Received from other Parties. Merchandise bought for a note 25 Merchandise sold for a note 26 L>W^ THIS BOOK S^&J^^le« «,„^S^^^^^^ ^° ^ r,A may V i •nerioQ- ___^====^ AUG 22 193( i\0^ \Q \^ 201"- -11, 3^:^ UNIVERSITY OF CAUFORNIA UBRARY