HV 5633 1849 RY RAND HATFIELD 5 Le Conte Avenue rkeley. California ALVMNVS BOOK FVNO BOO K-KEEPIN6 AND ACCOUNTANTSHIP, ELEMENTARY AND PRACTICAL. IN TWO PARTS. WITH A KEY FOR TEACHERS. THE ELEMENTARY PART PRESENTING ITS PRINCIPLES IN AN EASY, CLEAR, AND DEMONSTRATIVE ORDER, IN STRICT CONFORMITY TO THE RECOGNISED PRINCIPLES OF TEACHING, AS MANIFESTED IN OUR MOST POPULAR SCHOOL BOOKS. THE WHOLE BEING ADAPTED TO SCHOOLS, SELF-INSTRUCTION, OR COUNTING-HOUSE REFERENCE. BY THOMAS JONES, ACCOUNTANT, principal of ttje Initiators Counting -Hooms, 247 jBroabtoafi. PART I. NEW YORK: JOHN WILEY, 161 BROADWAY. 1849. Entered, according to Act of Congress, in the year 1849, by THOMAS JONES, In the Clerk's Office of the District Court for the Southern District of New York I Cft&IQHBAD, HU i IFB) 1 li M I I . MW YORK. HF 5"6S3 P E E F A C E. The design of the present work is to teach, by the shortest possible process, such parts of the subject of Book-keeping and Accountantship as are difficult to be mastered without a regular course of study, as Grammar, Arithmetic, or any other science. Great care has been taken to avoid wasting the pupil's energies on mere matters of detail, which require no teaching; every part of the process involves something important for the man of business to know, and which it would be almost impossible to acquire without previous study. It is generally conceded that the best school-book is the one which presents the exercises of the student according to the most logical arrangement of its elementary principles. When the first exercise prepares the learner to understand the second, and the first and second are required to understand the third, and so on, until the subject is exhausted, teaching can go no further — the rest is the legitimate work of the student. There are, in fact, two very distinct methods of treating a subject: the one by taking a certain amount of detail, and explaining it by reference to such principles as may happen to be involved ; the other, by analysing the whole subject, and giving such detail as is necessary to illustrate and enforce every principle. In the one case, principles are given to meet only part of the detail ; in the other, the detail is selected to enforce all the principles. The superiority of the latter method need not be insisted upon, — the experienced teacher will recognise it as the great feature of those improvements which distinguish our school-books from those of the last century. The value of an exercise is not to be estimated by the probability of the question arising in exactly the same form in practice, but in proportion as it serves to render familiar some principle of general value that applies as well to a thousand cases. We thus educate the intellect instead of encumbering the mind with useless lumber of detail, which is too often mistaken for knowledge. The course of instruction here laid down is in all its main features the same as appears in " The Principles and Practice of Book-keeping," a former work of the author. Those who have watched the progress of other school-books will not be surprised at the alterations experience has suggested. A change so radical could scarcely be expected to be carried out at once in all its details — the very assumption of such self-sufficiency on the part of an author ought to destroy his claim to confidence. The advancement of every branch has been progressive; and long as the author has laboured to produce something as perfect as possible, he is 73 warned by pasl experience to expect that much may yel remain to be .1 When he firsl proposed to begin by teaching the*principles of the Ledger, he treated like man) others who have dared to point out a gross popular error; but ;i Bhorl period only elapsed, however, before books on this Bubjecl began to multiply. Since the "Principles and Practice of Book-keeping" was published, there have been more new books on the Bubject than had previously appeared in half a century, and the whole, have insisted more or less on the propriety of teaching the principles of the Ledger as a groundwork ; hut not one of these authors except Mr. I! F. Foster had the candour to acknowledge with whom the plan originated Had they used more judiciously what they bo unceremoniously appropriated, other notice mighl have been deemed requisite; but associating them, as they have done, with a hodge-podge of incongi uous and conflicting matter, any more particular o< which may recognise the claim of such books to .any rivalry with this could have no other tendency than to destroy both. The too prevalenl s) Btem of Book-making impilation makes it dangerous for any author to claim his own. lot the public should attribute tb him more than he would feel honoured m owning. Book-keeping appears to have been much overlooked as a branch of education Few teachers, even among those best acquainted with the theory of teaching, to take sufficient interest in the Bubject to inquire whether the text-book offered for their use has been prepared with any design of teaching the subject progressively. An arithmetic that presented the exercises in the order in which questions would be likely to arise in business would be pronounced at once the extren 1 absurdity ; tho>e leasl experienced in teaching would sec the necessity of reducing it to oider before the pupil could take it up with any prospect of success, and yet the subject of Book-keeping is given to the pupil without an} arrangement of the He is plunged at once into the Journal, and expected to take it up though he had been twenty years in practice. In every step of his progress the teacher must be at his elbow to explain. The pupil is. in fact, only attempting to '_ r, -t cramm d with a certain amount of entries which he scarcely hopes to understand, but vainly expects that the variety he has dealt with will furnish sufficient examplei for future reference. The same process applied to an) other common branch of education would receive qo countenance whatever. To obviate these deft cts, and render even step <>( the pupil's progress easy and crtain. is the aim of this work. It has grOWD out of fifteen years' constant study and practice Iii this particular branch of teaching! has been uniformly successful in its results, and the autlior offers it in the most perfect confidence that the student who performs faithfully the exercises given, will acquire a knowledge of the subject inch a- is seldom attain ■(! even by the experienced accountant Few Fork, July -' acknowledge with whom the plan oi Had they used more judiciously what they so unceremoniously appropriated, other notice might have been deemed requisite; hut associating them, as they have done, with a h<>d'_ r <'-i"'d'_ r e of incongruous ami conflicting matter, any more particular o< which may recognise the claim of such books to any rivalry with this could ' no other tendency than to destroy both. The t"" prevalent system of Book-making by compilation makes it dangerous for any author to claim his own, lest the public sh«»uld attribute to him more than he would feel honoured in owning. Book-keeping appears to have been much overlooked as a branch of education Few teacher-, even among those best acquainted with the theory of teaching, - to take sufficient interest in the subject to inquire whether the text-book offered for their use has been prepared with any design of teaohing the subject progressively. An arithmetic that presented the exercises in the order in which questions would be likely to arise in business would he pronounced at once the extreme oi absurdity ; those leasl experienced in teaching would see the necessity of reducing it to - order before the pupil could take it up with any prospect of BUCCess, and yet the subject of Book-keeping is given to the pupil without any arrangement of the exercises. He is plunged at once into the Journal, and expected to take it up -elv as though he had been twenty years in practice. In every step of his progress the teacher must he at his elbow to explain. The pupil is. in fact, only attempting to gel cramm d with a certain amount of entries which he sea hopes to understand, hut vainly expects that the variety he has dealt with will furnish sufficient e: for future reference. The same process applied to other common branch of< ducation would receive do countenance whatever. To obviate these defects, and render even step of the pupil's progress easy and m, i> the aim of this work. It has grown out of fifteen years' con-taut study and practice in this particular branch of teaching! has been uniformly successful in . -nit., anil the author offers it in the most confidence that the student who performs faithfully the exercises given, will acquire a knowledge of the Bubject such as is seldom attained even by the experienced accountant. JTm }'„//. July •■', is 19. CONTENTS. Account Current Account Sales . Analysis . Annuities . Bill of Exchange Blank Books . Business Transactions for Cash Boo Journal Cash Book Closing Entries Commission Business Contingent Fund Compilation Compound Equation by Interest " " by Products Day Book (specimen of) Detection of Errors . Discount ..... Equation of Payments by Interest " " by Products Exchange on Amsterdam " " Bremen " " France " " Hamburgh " " London Exemplification Foreign Accounts General Routine Interest . Interest 7 per cent. k and 1-3, PAGE page 84 Invoice Book ...... 14 60 Journalizing 48 27 Journalizing Cash Book 66 95 Ledger . 23 87 Ledger Analysed . 28 to 33 108 Ledger Exercises . 34 to 38 Monthly Journalizing 67 184 Opening Books 41 13, 63 Par of Exchange 86 22 Per Centages . 71 56 Partnership Changes 100 190 Part II. . 183 40 Profits & Losses 190 79 Potting from Journal 49 80 Protracted Settlements 69 11 Posting from Sales Book , Invoice Book 55 and Day Book . 41 82 Questions on Equation of Payments 81 77 " " Per Centages 72 78 " " Discount 83 91 " " Exchange and Remittances 92 91 " " Annuities, Legacies, and 90 Stocks ... 96 90 " " Settlements 99 87 Settlements 98 9 Single Entry . • 104 85 Suspense Account . 192 68 Speculations in Co. . 196 73 Stock Accounts 190 75 Trial Balance . 32 KEY TO PART I. Answers to Exercises in Sec. II. 108 " " IV. 114 to 124 " " V. 128 to 131 " " VI. 131 " " VII. 131 " " VIII. 132 « (C " IX. 132 " . " X. 132 Answers to Exercises to Sec. XI Cash Book. Sec. V. Examination on Balancing Journal of James Strong . Journal Entries of Cash. Sec Ledger Balances Trial Balances, James Strong XI. 134 XII. 134 to 136 129 110 115 to 124 . V. 130 110 125 K E Y TO P \ li T II. PA(lt r n;r A 1 • 17:.— 177 Joan lined . • 168 1" 17.'J . i i:i ■ '' — . 158 r-liip . r t Qu -i ."ii i < i ■k . 162 to 167 i 1 '" 138 to 156 PLAN OF THE WOKK. PART I. is divided into 12 sections for convenience of reference, each section except the first embracing an appropriate series of questions for exercise, such as, when performed, must furnish satisfactory proof that the student thoroughly understands the principles involved. A great feature of the work is, that the student has no access to anything from which he can copy his exercise. All Journal entries and answers are given in the Key only. Sec. I. is an exemplification of a full set of accounts, embracing in very brief space the Day Book, Cash Book, Invoice Book, Sales Book, Journal, and Ledger. Sec. II. is an analysis of the arrangement exhibited in Sec. I., showing the design and object of all the different accounts, and enabling the student to draw up a full statement of the position of affairs from any set of books whatever. Sec III. is designed to teach the compilation or reconstruction of what has been previously analysed and mastered as a plan of arrangement, in which the student posts up a set of books from the Cash Book, Invoice Book, Sales Book, and Day Book, without journalizing, thereby giving full proof of his knowledge of the objects of the different accounts, and at the same time mastering a system in very general practice. Sec IV. introduces the Journal, Trial Balances, Posting, Balancing and Re-opening, with Commission business, divided into a series of exercises. Sec V. introduces the Cash Book, with the process of Journalizing the Cash monthly. Sec. VI. to XI. embrace a course of Commercial Arithmetic, comprising such instruction as is generally useful in connexion with the business transactions of this work. Short methods are given of computing Interest and Exchange, of Equating Payments, and drawing up foreign Accounts Current, of calculating Compound Interest and Annuities.* Sec XII. explains the Settlement and Liquidation of Partnerships, and the manner of carrying on Old and New Books in connexion, with exercises and a short explanation of Single Entry. PART II. embraces the more complicated operations of Foreign Shipping and Commission Business, with the Accounts Current, and all calculations connected therewith. In addition to the Journal given in the Key are explanations of the most difficult Journal Entries, for the use of those who attempt self-instruction. The first and second parts, with the Key, are bound together in one volume, for the use of Teachers or those who desire to instruct themselves. The Ledgers of the different sets given for exercise have been considered useless. As the Teacher's Key contains the Journal and Trial Balances, every exercise can be tested with the utmost facility, and what would otherwise have formed some twenty or more pages of entirely useless Ledger work, is filled with important matter. 0^7~ Blank Books may also be had with the work, properly prepared for the several exercises, and comprising the necessary directions. * The author had no design of miking a substitute for any of the Arithmetics in use, but to offer only such instruction as he has commonly found it necessary to give. D I. Y I N 1 1 I N \«"TES AND ACCEPTANCES When business is transacted on credit, merchants for the most part circulate what is I their own paper, for example : — If I buy goods from A. at two months' credit, or in any other way become indebted to aim, A., instead of allowing me to remain his debt the term of credit agreed upon, talus my note for the amount, as follows : — $200.00 NEW STORK, Jan-vary 1st, I Two months after date, I promise to pay to A. or order the sum of two hundred dollars, fur value received. Thomas Jones. Or, which is the same thing in effect but different in form, he may take my Acceptance, in which case he writi B the document himself, and addresses it to me, thus : — o.oo NEW STORE, .1 mary 1st, 1849. Two months after date, pay to my order the sum of two hundred dollars, for value received. To Mb. Thou A. .New York. Or, if A. reside at a distance, the draft may be presented to me for acceptance by a third party, to whom A. is himself indebted, and then A. would write, " Pay to B. or order." In this oase, an ft id to be in B.'s favour. In order to render the draft negotiable, it is now necessary thai I accept it by writing - it- face the word ■• Accepted," and affixing my signature. 1 then resign it to the in whose favour it is drawn. Hence, the difference of th ■ firms is, thai when I give my note, I in effect voluntarily say I will pay ; and when 1 give mj acceptance, I ■•• an affirmative answer to the drawer, who Mys, will you paj \ My Notes and Accept e called Bills Payable, as I musl provide for them at maturity. And, as other men's Notes and Acceptances uiu-t pass through my hands in the course of business, I distinguish them by the term " Hills Receivable," i their amount at maturity. 'J' 1 " and Ace,- ,\ i,y merchants in the place of money, but subject ■ inn in proportion to the time they have to run. Thus, suppose I take A.'s i 1,000 to the City Bank, the said Note having thirty days to run, provided the responsibility of A. and myaeff h l *hall,om up the .Note, pe. ive in C . . . .* . 117 Allowing a discount of 5.88 11,000.00 PART I SECTION I. EXEMPLIFICATION. Book-keeping implies a systematic arrangement of mercantile transactions, the purpose of which is to afford at all times ready access to the Resources and Liabilities of the party whose operations are recorded, thus : Resources. Liabilities. Cash Bills Receivable George Irving owes Ira Per ego " 5,850 3,800 1,000 500 Bills Payable, outstanding 7 orce James Blackwell Total Resources, 11,150 " Liabilities, 4,000 3,000 1,000 My present worth is 7,150 $11,150 $11,150 Each particular item of the above forms the subject of an "account" (see definitions); thus there is one account of Cash, another account of Bills Receivable, another of Bills Payable, another for James Blackwell ; so that the statement of Resources and Liabilities can at any time be drawn up by reference to the book of accounts called the Ledger, and the whole art of Book-keeping is merged in the peculiar arrangement of this book. There are but two methods of Book-keeping in use, the one called Single, and the other Double Entry. Single Entry affords only the above statement ; but when accounts have been arranged by Double Entry,' they enable us, by additional accounts, to draw up another statement, viz. of the Profits and Losses resulting from the same operations, for example : — Losses. Profits. On Railroad Stock 850 Business Expenses 579 Total Gain 2,579 Total Loss 1,429 On a n Merchandise Bank Stock Exchange Net Profit 1,150 $2,579 • Capital at commencement Net Profit • Present worth • < 5 1,950 500 129 $2,579 6,000 1,150 $7,150 SEC. ^EXEMPLIFICATION. Hence Douhle Entry embraces particular account! of " Rail R. B to furnish each item in the latter statement, thus developing the present worth iting the other, and constituting what U balance of the I The grand pr ibli m then presented in B ok-keeping f >r our analysis is its plan of arrange- ment; and this plan, so far s nerd features are considered in the sj mained unaltered since its 6.r%t promulgation as the Italian met! The manner of recording tr is before they are arranged in the Ledger varies in almost every different business, but this variation presents no difficulty whatever when the different accounts of the Ledger are understood, inasmuch as they are mere time, which comm to to all who understand what they are aiming to iplish, — for example: Everj Ledger imposes upon us the nee ler all Cash receipts, so as to show the total imount received during the year. were firs! recorded on a Day Book indiscriminately with other transactions, they must he separated again, and copied (ported) into the Ledger singly, perhaps making thirty or more items • d i v< ry day — but let all tin se Cash receipts be omitted on the and recorded only <>n a book called the Cadi Book, the total amount received can every month, and passed to the Ledger in one sum, making only twelve sums to carry into the Ledger instead of several thousands. The Ledger, then, h I and unalterable plan ; the subordinate books are varied in every business with especial reference to that plan. With a Cull knowledge of t! . the suhordinate modifications will be appreciated in proportion as they save time and labor ; but, to those ignorant of tin; L appears a different system. In modem practice it is common to have four principal books, into which the original entries distributed, viz: — 'Idie Cash Book, on which are < ntered all transactions of receiving or paying Cash. The Invoice Book, on which are entered all transactions of buying Merchandise. The Sales Book, <>n which are entered all transactions of sidling Merchandil The Bay Book, on which are entered all transactions for which no particular book is i led. Prom tl: the Journal and Ledger are compiled, and it is this process of compila- tion or arrangement that constitutes the art and science of Book-keeping. The .Jiiitritu/ is used to digi st and prepare the matter ne month, v. nil the cnmmi no meni ol the next It \\'\\\ be understood by the student when he h^ arrived at Exercise l. Section 111. Mr. Thomas Jones, INVOICE BOOK. New Xork, Jan. 2, L848. Boh of William Brown. ps. Poult do Soie « Blk. Silk Velvet boxes Ribbons ps. Printed Silk Handkerchiefs B46J yds. 65 180J " 200 120 ps. 1124 10th f727 Albert R. Raymond, One case 25 ps. Super. Blk. Cloth, 561} yds. @ $3.60 Settled by note 8 nios. due Sept. 13th. Carried forward * No. ou cuch ploce. 12 22 1 360 185 30 T !:; 9i: I i 00 •i 52 1,00 M..-..-.7 13 00 759 08 2,020 50 CASH BOOK. UUJNTK.A. Cr. Jan. o O 10 12 18 20 25 31 250 200 200 73 100 50 20 23 25 24 5 By Charges Paid for fuel " Merchandise Bo't of Houghton & Arnold " Charges Paid Cartage " Bills Payable " Note of Dec. 15th " Merchandise Bo't of Htn. & Ard. " Charges Paid for labour " Balance Carried down $ 54 996 32 874 1,576 25 6,998 00 74 43 20 50 18 08 10,557 13 • 112 250 450 182 1 50 00 00 50 74 74 00 00 00 01) 01) 00 00 50 50 2,779 1,690 458 1354 1355 1870 INVOICE BOOK. Jan'y 10th. Bro't forward Houghton & Arnold, Gross Twist Vest Buttons, 18 lines 45 " " Coat " 34 " 125 " « " " 36 " 225 " " Overcoat " 45 " 250 Box and Cartage Paid in Cash (see above) . 58 990 1,000 450 240 575 600 280 120 1 Albert R. Raymond, Bales Blk. Wadding each 40 dz., 4,000 dz. 25 " White " 40 " 2,000 « 22^ " " " 600 yds., 12,000 yds. 2 Settled by note 8 mos. due 16th Sept. 00 64 214 875 876 Houghton Sf Arnold, Gross Fancy Back Combs 25.00 " " " " 24.00 Doz. Shell " « 20.00 " " " " 24.00 Box and Cartage Paid in Cash ..... 1,576 4,469 58 13 SEC . I. I'M HI • IFN ITION, INVOH E BOOK. i i s a . 8 . < 61 j • \ 2Sth S. N i • l •• | •• 3.13J 64 1 •• 88 •• • C :i. •' " ' " M 81. .] «.K>l»it to Merchandise Ml ;; ] - 125 11 • 71 • 006 IB nth : * - > • ■ 1 ' the . much its form and management. Its - plain r the quantities, qualities, and pr aight, \ inge an invoice jud v different line il»it in relation to the articles dealt in ; but the the form of \n\ uad the ;rr in its objects, that one example is sufficient. The ; but it is generally i .titer th particulars <>f the articles and Those i in the outer column, as the trans Dtered i is intended t.> remind the Book-keeper thai such \-vv.si to the 1. there bj another channel, vi Ca> - will be fully understood after performing the Bj S otton 111. 1 > I . [.-EXEMPLIFICATION. SALES BOOK. NEW YORK, J, 14 ' 570 :>'* i ./•■'.a ir. H" M ~> cts. note 4 mo., doe 9tb " Oil-. 3.10 3.50 4.05 ! ed in Cash. 12th Charles Fl ps. f Linen B - f Ir: . L 15 11 his note 6 mo., due Jul 15:?i " :OJl. half chests You tan 13 • : W7, Prints ■■■■ Bl'k & \Vht. " I .' 3 2304 :: 6£ / ." ■ 7 ' in Cash. 20th : — Thomas Frc \ere 10 .ncy 185 • 1.75 J his note 8 mo., due July 23d. Carried forward ' : 15 -.- - ■ a 15 SEC. [.—EXEMPLIFICATION. SALES BOOK. m:\\ v P IT 11 i::;: iu 10 - 2*th r i M Gros d R . tie •ived his note 3 m- 1 . Total Cr Tb* hum r^trnrk. npr' t The - 111. 1'. • I J" SEC. I.-EXEMPLIFICATIOX. BILL BOOK. BILLS RECEIVABLE. When Deceived. Jan 5 u 12 It 18 M 20 << •24 « 28 Ou Account of John W. Whalley Charles Fletcher Jno. Wilson Thomas Franklin James Johnston William F. Sands On Whom Drawn. Himself Date. Term. Jan. 5 4 mo. " 12 6 " <« 15 2 « " 20 6 - •• 24 4 " " 28 3 " When Due. .May 8 July 1^ Mar.lri July 23 May 27 May 1 Amount. 10(32.50 1961.15 800.00 U7*.35 2023.51 1252.73 When and How Disposed of. BILLS PAYABLE. When When No. Accepted. On Account of Payable To. Date. Term. Due. Amount When and How Redeemed. 1 Jan. 10 WilliamBrown His Order Jan. 8 30 days Feb. 10 500.00 2 " 10 A.R.Raymond it l. " 10 8 mo. Sep. 13 2020.50 3 " 13 U (( (( It It " 13 8 " " 16 1690.00 4 " 25 it it a It It " 25 3 « Apr. 2 8 951.32 5 « 28 Daniel O. Gibb It It " 28 2 " Mar.31 1162.50 There are other forms of Bill Book. A very general one is to haye twelve additional columns, one for each month in the year, to show when each note matures ; so that every date appearing in the column for March, for example, would indicate at a glance what notes matured that month. Forms for Bill Books may be found at any stationer's, and their respective advantages compared ; the above will suffice to show their general purpose. Note — At each period of balancing, or as often as convenient, it is common to compare the Notes Receivable on hand with those shown in the Bill Book : but the author of the "North American Accountant" bases the greater part of bis pretensions on an improved Bill Book, in which he h is a money column for the notes received, and another tor those disposed of; and sever il times in the year he proposes to re enter all the notes on hind anew, and balance the old account. Now there can In' no doubt that the notes on hand, added to those disposed of. will balance the account, and render an error in Bills Receivable account almost impossible : indeed, we can scarcely imagine what the next adventurer can ofier in the way of improvement, short of koepins: two sets of books and two book-keepers We only wonder he should omit to suggest this at unco, since accuracy may be purchased at the trifling expense of makine the same entry three or four times over, (or this must be the case with merchants who take eight months' piper, and not a few have three or four hundred notes constantly on band. The same author, oblivious we must suppose of the law of copyright, claims to have exemplified all modem improvements in the science ; to which he adds certain of his own, viz re-writing the Bill Book three or four times, putting no cyphers in the cent columns where they represent nothing, and contracting debts in London at 8 per cent, premium and paying them at par. as we shall show hereafter. The author of the " North American Accountant" must be a philosopher. He must surely be deemed a lover of truth who appropriates all he can find in "modern improvements," no matter with whom they originated, and who takes three or four times the ordinary trouble to arrive at it. 17 SEC. I.— EXEMPLIFICATION. NEW FORK, J i ,1848. Drs. Crs. MI Sundries to Sundrit r, For opening the following accounts aa per statement of ro) trees and Liabilities entered on Day B Cash for this amount on hand .... Bills Receivable " " . John Wilson owes me on account . Bank Stock, for this amount at present value . .1/- rchandise ....... To Hills Payable, my own notes outstanding •■ William Brown, I owe him ■• stark, for my net ' iapital William Brovm For my note at 30 days. To ft/7/.v Payable, 2?i7Zs Rcccivablr . To John Wilson Received his note at two months. John Wilson .... To Charge* For Cartage, Labour, and Postages. Cash to Sundries ...... Por the following amounts reed, this month, as per Cash Book. To John Wilson, on account ..... Mi rt hnii'lisr, cash sales ..... " /y///.v Receivable, matured .... '•••'■'' thaofhi bet» r to oral) pwtteuhu datei in tbii BmnpUflnHon u well u -.„„■ other mutton of minor detail, n tfecl belnf to iu the attention on polnti ,626 05 24 82 74 00 00 00 00 00 58 19 SEC. I.-EXEMPLIFICATION. \i;\V FORK, l'KKKIARY, 1848. Drs. Crs. hiinilisr to Sundries For purchases this month as f} Invoice Book. To Bills Payable, t ; >>' my notes given . " Joint Wilson, on account Sundries to Merchandise .... sold this month, as '{■> S. B. B i /.'■■• table, this amount of notes received William Bmu-n. sold him on account . ii/7/.v llrrrivable .... '/'<< William Brown For his acceptance of my draft of this aim unit. John Wilson ...... To Bills Payable For my acceptance of his draft for this amount. John Wilson To Charges for cartage . 5.20 " labour . 3.50 " " " cooperage . 4.23 William Brown . Cash to Sundries For n ceipts tins n th, as )t < !ash Book To Bills Receivable, notes matured " " " » discounted " Merchandise, oath sales " S, M. Richardson^ on account To Charges for labour L5.20 " " " postages . 1.58 March. 7.1I!» 7,340 1,150 1,581 791 22 .-).-, (Ml l'J 93 10 78 12,702 I- 8,845.20 5,354.00 20 6,124 .".7 1,325 32 11,490 46 1,581 791 09 12 93 in 78 9,19 :. 2,158 •.'I i 28 no JOURNAL. NEW YORK, March, 1848. Drs. Crs. Sundries to Cash .... For payments this month, as

- -- | 90 1,730 •")'.» 1848 Jan. Feb. ic Mar. By John Wilson . (i •• William Brown •• Profit &■ Lou . 8 12 16 1,692 00 09 78 38 Dr. S. M. men IRDSON. Cr. i-i- Mar. To Merchandise 00 i-l- Mar. By Cash . . . •■ Bills R iceh able " Merchandise 1,85 1,50 Dr. i-i- M.ir. To Cash . . •■ Bills Payable 34 G. L. MORG W. 1,800 00 i- I- Mar. i: . Mi rohandise Cr. 3,584 20 Dr. LEDGER. JOHN WILSON. Cr. 1848 Jan. Feb. To Sundries . " Charges " Merchandise " Bills Payable " Charges 1848 1,875 80 Jan. 8 00 11 587 50 Feb. 791 09 a 12 93 32 $3,275 By Bills Receivable " Cash . . . " Merchandise 800 00 850 00 00 32 800 1,325 $3,275 32 Dr. INTEREST. Cr. 1848 Mar. To Cash . . . " Bills Receivable 23 52 54 40 94 1848 Feb. Mar. $75 By Cash . . " Profit Sf Loss 30 45 $75 00 94 94 Dr. BANK STOCK. Cr. 1848 Jan. Mar. To Sundries " Profit $f Loss To Old Acct. . 7,000 356 7,356 $7,231 1848 Feb. Mar. By Cash . " New Acct. 125 7,231 $7,356 00 75 75 25 SECTION II. ANALYSIS. The Journal and Ledger, as exemplified, will be found obscured by much technicality ; for Book-keeping, like most other sciences, has adopted a language of its own, to avoid circumlocution ; and this conventional phraseology often produces in the mind of the tyro, in his attempt to analyse the process, ideas entirely remote from those the same phrases would convey to the accountant. For example : we find " Cash to Sundries," or " Cash Dr. to Sundries," which, to an ordinary reader, would seem to intimate that cash, in some way, must owe sundry things. Now the word sundries means several ledger accounts, and the whole meaning of the phrase is, that one debit item belonging to the cash account equals several credit items belonging to other accounts. The Ledger, as before intimated, is the principal book of a system of accounts. It is a well contrived series of classified items, affording ready access to the sum total of each important class of facts. For example : if we would know what amount of notes we have issued we have only to turn to the account headed " Bills Payable " and add the right hand column, or for the amount redeemed add the left hand column, and it is obvious that a comparison of these two totals shows what amount is unredeemed or outstanding. Each account in the Ledger has a settled plan of arrangement, which cannot be deviated from. The left hand column of an account is called the Debtor (Dr.) column, and the right the Creditor (Cr.) column; but the technical manner of using these terms is apt to occasion the learner much perplexity. It may appear to a beginner that Bills Payable ought to be credited when a note is redeemed, or that Cash ought to be credited when it is received ; but he must be content for the present to hear and learn what is done, and so qualify himself to appreciate why it ought to be done. It is very easy to learn what is to be recorded as Dr. or Cr. in any account, and when the whole plan of the accounts is seen and appreciated all will appear harmonious and consistent. Every business transaction requires us to pass two or more items to different accounts in the Ledger. To enter these items then into the Ledger at once would lead to inconvenience and difficulty, as in case of mistake we could not review the entries of any one transaction ; they would be in several parts of the Ledger, and we should have no direct means of finding them all again, and testing their accuracy. To obviate this defect a Journal is kept of the Debit and Credit items assigned to the Ledger for each transaction, in the order of its date. Thus if we bought, Jan. 5th, a quantity of merchandise, for which we paid cash $500, our Ledger requires . that we should credit cash account with the cash paid, and debit merchandise account with the cost of merchandise, and we record on the Journal, Jan. 5, Merchandise ..... 500 To Cash 500 Thus for this transaction we assign two items to the Ledger, which are copied (posted) into their proper accounts ; and consequently the Journal is a record of all entries passed to the Ledger, each transaction under its proper date. Journalizing, then, is the art of assigning its proper place in the Ledger to each item in a transaction. To know the pi'oper place is to know the laws, principles, and objects of each account, and a false journal entry can only be proved false by showing its want of conformity to some principle of the Ledger. We therefore proceed to explain the preceding Ledger, in such a manner as will render its laws and principles manifest and simple; but we must divest it of all technical references, and direct attention only to its prominent featui^s of utility, so that it may be clearly demonstrated what accounts are required, and in what cases they are to be debited or credited. 27 LEDGER. — Primary Accounts. Receipts. CASH. Payments On hand commencing 1 ■! since Total r< • 4. Till) 4,875 12,702 13 00 IN) 46 3,556 10,626 10,506 05 Prom ■nut received it. duct p .iJ out Balance on Imnil This Balance is Resources . •-'- KU.nl . 24.i : •3,441 43 108,134 61 Received. BILLS RECEIVABLE. 1 ;d of On hand commencii 1 Bd -~ince >g Mill 3,000 7,340 1,531 6,120 1 ,500 3D 00 94 22 00 00 37 Disposed of Total received . disposed ni' 31,097.37 18,275.73 ■J'HMI 2,570 3,379 574 INI 00 90 411 Total received Balance on hand . 112.821 64 This lialancc is Resources. REDEEiMED. BILLS PAYABLE. Issued 5.:i:.4 20 00 00 Outstanding at commencement Subsequently Issued Total issued .... :.,-i:i 500 5,824 6,124 791 4.2:io [,800 34 32 Total issued " redeemed Balance unredeemed .2.-1.113.22 . 13 -n 90 ..7 Oil 00 (Ml This Balance it Liabilities. . Dr. .Hi TIN WILSON. Cr 1,875 8 5-7 791 12 80 IK) 5(1 09 93 32 My accountability to him This Account is Sittlnl. 800 350 .-1,11 00 00 11(1 32 His accountability to me *:!,--•';.-. .>::.•_•:;, 32 Dr. WILLIAM BROWN. Cr. Dr. 4,150 16 S4,ti07 This Jlecount is also 8tttl*d. S. M. IlirilAlinsON. tcconntable to me 1 1 am accountable n> him . -j . 1 Balance owing mo . . . 91,403.70 4,2GO This Balance is Resources. 1,575 1,560 1,531 Cr. 1,350 De. This Balance it Liabilities. 28 C. I,. MolHSAN. I. -nil Mi acconntablllty to him Hu accountanilit] 1 iiai hut due bim . . 3,053 21 5. Ml '.Mi (',;. 3,534 LEDGER. — Secondary Accounts. STOCK. Capital commencing To Capital Add Net Gain 14,641.82 5,202.40 My present worth is $19,844.22 Outlay. MERCHANDISE. Returns. Value of goods commenc Cost of goods purchased From total returns . Deduct total outlay ing 3.500 2,573 7,384 1,500 7,449 037 11,144 6 00 24 56 00 89 00 00 24 Value of goods unsold, or This anticipated returns sources. anticipated is also Re- 1,850 7,565 1.350 11,490 2,153 10,380 00 74 00 46 28 00 50 34,194.93 41,518 98 Profit 1,324.05 ICf 5 *" See Profit Sr Loss. Outlay. CHARGES. Returns. Business Expenses 111 744 874 Collected back or charged to others Total outlay " returns . 1,73059 37.71 . $1,092 88 Outlay. INTEREST. Returns. Interest paid or payable , 23 52 54 40 94 75 Interest received or receivable From outlay Deduct returns Outlay. BANK STOCK. Returns Value at commencement Total returns . . 7.356.75 . 7,000.00 . $356.75 7,000 00 Value of Stock ending, or anticipated Total returns The anticipated returns are Resources. 125 7,231 .$7,356 00 75 " outlay 75 Profit . Losses. PROFIT & LOSS. Profits Sundry Losses and Expenditures . 28 136 574 1,692 45 50 75 33 88 94 Profit by Merchandise " Bank Stock Total gain . From total gain Deduct total loss . 7.6S0.H0 . 2,478.40 7,324 356 05 75 $7,680 80 " Interest " ... Net gain . $5,202.40 £3^" See Stock Account. 29 I II.— ANALYSIS. \ \ A L\ sis OF Til E LEDG l.\l CASH U3COI NT. In | | nit are collected together, <>n the left hand or debit side, the amount isfa oo band, ooromeociog, together with every subsequent receipt, and in the right hand or credit column, the amount at payment : The total debits ..... 28,1 • l "-1 Ami the total credits or payments ..... 24,694.06 main on hand .... Hence the * A 'lint slwaj the amount of 8 » in Cash. BILLS RECEIVABLE S P. In this account arc collected together, on the debit side, the amount of other mi i'sN ami Acceptances on hand commencing, and all subsequently received ; and. on the credit Bide, all disposed of: The total amount received b ..... 81,00737 And the total amount disposed of ..... l->. 7">.7:* There must be on hand mj.--ji.! NTS. the debit side of John Wilson's account are collected all sums for which be has h. . accountable or indebted to me; and on the credit side, all sums for which I have become tuntable or indebted to biro ; and, as both sides are equal, the acoount is settled. William Brown's account is also settled. s. M. Richardson's account shows, on the debit side, that he is accountable to in,. 4,260.00 And, on the Credit aide, that I am accountable to him . . . . . Consequently he owes me ........ *i.io:t.7(i <;. L. M i shows, on the oredil aide, that I am accountable to him 8,58 I And, 00 the debit side, tliat be is lien mutable to me ..... quently I <>"<• him . . . . . . . . $480 ler this arrangement, the balance of a personal account always shows whether he us or we owe bun and the balance is B ir Liabilitii . as the i see ma} be. SEC. II -ANALYSIS. Accounts with Banks, Firms, or Corporate Institutions, with whom we may do business, are all to be understood as included in the term Persona] Accounts; for example — the nature of the account is the same whether E. 8. Houghton, or Houghton & Arnold, or North River Bank owes us. The accounts already explained, viz. Cash, Bills Receivable, Bills Payable, and Personal Accounts, constitute one entire set, which we denominate Pbimabv Accounts. These, together with the estimated value of property unsold, enable u.s to make a full statement 01 Resources and Liabilities'; and, consequently, to determine the present worth of the parties whose operations they record. We must now explain a distinct kind of accounts, which show how much the business commenced with, and how much it has gained since ; the sum of the two being its present worth. Thus, if the business commenced with t 14,041 ,82 And gained in its subsequent operations .... 5,202.40 Its present worth must be $19,844.22 But the accounts already examined show its present worth, viz: — Total Resources 31,027.20 " Liabilities 11,782.98 Present worth 819,844.22 Double Entry, then, embraces these two distinct kinds of accounts, from each of which we can deduce the present worth ; and when both agree the books are said to balance. The first set we have already denominated Primary Accounts. Those we now proceed to explain we denominate Secondary Accounts. The Stock Account show's on the Credit side what the business commenced with. Note. — Any capital withdrawn would appear on the Debit side of Stock. The Merchandise Account shows on the Debit side the value of goods on hand commenc- ing, and the cost of all subsequent purchs The Credit side shows all returns or sales of said goods, to which is added the value of goods on hand at the end. Thus the Sales amount to Anticipated Returns of goods unsold Total Returns " Cost ... Profit on Merchandise Account 34,789.48 0,7 29.50 41,518.98 34,194.93 87,324.05 Hence we can always find the Profit or Loss on the Merchandise Account by valuing goods unsold, adding that value to the Credit side, and taking the difference. If the Debit side be the greater it is Loss ; if the Credit, Profit. The Charges Account shows on the Debit side all the ordinary business expenses ; such as Clerks' Salaries, Rent, Postages, Fuel, Cartage, Labour, &c. ; and the Credit side shows the returns this expenditure has made by our collecting the said Postages, Labour, or Cartage, &c, back from customers. The Expenditures amount to ..... 1,730.59 " Returns " . " 37.71 And the Loss 81,092.88 The Interest Account shows on the Debit side all sums paid or payable for Interest, and the Credit side all sums received or receivable. Hence the balance is our Gain or Loss by Interest. 31 SEC. II.-ANALYSIS. The Outlay is " Returns And the Loss 75.94 30.00 845.94 The Bank Stock Account shows on the Debit side all Bank Stock has cost us, and on tlie Credit side all the returns, to which we add the present value, or anticipated returns. The Returns are " Anticipated Returns Total Returns Cost . The Profit is 125.no 7,231.75 7,356.75 7,0 00.00 56.76 The Profit & Loss Account shows on the Debit side all miscellaneous expenditures or losses occurring in the course of the business, for which no particular account has been provided ; and at the end of the business we bring in all the Losses shown on other accounts. The Credit side shows all miscellaneous returns or Gains accruing in the course of the business, for which we have provided no particular account, and at the end we bring in all Gains shown on other accounts. The balance of this account, therefore, shows our net Gain in business. The total Gains are .... " " Losses " " net Gain is Which if added to our first capital Gives our present worth . 7,680.80 2,4 78.40 5,202.40 14,641.82 $19,844.22 Hence the Secondary Accounts (Stock excepted) are arranged to show our Gains or Losses; the debits showing our expenditure, outlay, or losses, — and the credits, returns or gains; and as many of such accounts may be kept as the nature of the business requires, any article we do not wish to exhibit the gain or loss on separately we may include in the title Merchandise ; but if we operate largely in tobacco, for example, and wish to see the result, we show the outlay and returns in an account headed " Tobacco." When we wish to give a brief representation of the state of each ledger account we adopt the form of what accountants call a trial balance, which consists of the title of each account, with the sum total of each side. For example, the following gives a concise view of the foregoing ledger : TRIAL BALANCE. •j-.i:u.(il 81,007.37 13,811.20 4,200.00 3,053.24 34,l!M.o:< 1,780.50 07.-». !U 7,000.00 7 80. 58 $124,097.46* Cash Bills Receivable Bills Payable . S. M. Richardson ( ;. L. Morgan Stock Merchandise . ( lharges . Interest . Bunk Stock Profil A Loss . 2 1.0111.00 18,275.78 25, 113.22 2,856.24 8,584.20 1 L,641.82 84,788. 18 87.71 80.00 125.00 8124,007. io ♦ Th.- total i »'i'H Him 1. 1 ..I. Hi.- I., daw alwayi . quail tba tola] Oradlt matter, tha raaaon <>i which mil appeal in Boo. in SEC. II -ANALYSIS. Now the Merchandise unsold being valued at $6,729.50, and the Bank Stock at $7,231.75, we are prepared to draw up the following Analysis, or Balance Sheet : ANALYSIS OF FOREGOING LEDGER. Resources. Liabilities. Cash ...... receipts 28,134.61 tt ...... payments 24,694.06 k ... on hand 3,440.55 .Bills Receivable .... received 31,097.37 it " it disposed of 18,275.73 tt a on hand 12,821.64 Bills Fay able ...... issued 25,113.22 (< << redeemec unredeer I 13,811.20 « tt ned 11,302.02 S. M. Richardson is accountable to us 4,260.00 We are accountable to him 2,856.24 " " " He owes us 1,403.76 G. L. Morgan. We are accountable to him 3,534.20 " " " He is accountable to us . 3,053.24 " " " We owe him . 480.96 Merchandise on hand valued at . . 6,729.50 Bank Stock " " " « . . 7,231.75 Our original capital was *14,641.82 " subsequent gain is 5,202.40 " present worth is . . *$ 19,844.22 31,627,20 31,627.20 Losses. Gains. Merchandise . . . . . sales 34,789.48 « on hand 6,729.50 • 41,518.98 Cost 34,194.93 7,324.05 Charges ...... outlay 1,730.59 cc returns Loss 37.71 1,692.88 Liter est ...... outlay 75.94 tt returns Loss 30.00 45.94 Bank Stock ..... returns 125.00 ic .« .... on hand 7,231.75 7,356.75 Cost Gain 7,000.00 356.75 Profit fy Loss ..... debit pos Total ga tings in 7,680.80 739.58 " los Net gain s 2,478.40 5,202.40 $ 7,680,80 7,680.^0 * This Is a neat way of showing briefly that the sum of the original capital and gains equals the difference between the resources and liabilities. It require!, however, to be carefully noticed and understood. It must be obvious that the difference between the resources and liabilities, if added to the liabilities, must make an amount equal to the resources; for it is only the smaller sum added to the ditierence which must make the greater. Now in place of the difference we substitute the capital added to the gain, and as we find it answer the same purpose by making it balance, it must be one and the same sum. 5 33 SEC. II.-ANALYSIS. The student would do well to pause here, and reflect a little on the simplicity of tlie account presented by the Book-keeper in the preceding Analysis. He has been recording, we will suppose, the business of twelve months, embracing perhaps five thousand transactions or changes that have been effected in the state of affairs from day to day ; and what story does he come with to convince us that he has faithfully performed his trust ? He can say, in presenting his statement to you — You put me in charge of your Cash ; here is an account of every dollar put into my hands, and of every dollar I paid out : if you would test it, examine the transactions, and see that each receipt and payment is included. The balance remaining in my hands is in the Resources ; count the Cash in your Till and in Bank, and you will find it agree. Here is also an account of all the Notes Receivable that have passed through my hands, the amount received and the amount disposed of. The balance on hand is in your Resources ; tell over the Notes on hand, and you will find tliem agree. And so on with each separate account. From what would appear in detail a confused and conglomerated mass of interminable chaffering and changing, he presents a statement so clear and so readily substantiated, that it must at once defy all cavil. Human ingenuity could devise nothing more simple, and the arrangement of Double Entry can only appear a complicated process to those who have never been at the pains to examine its general features, or had the good fortune to be placed on the right track of investigation ; who plunge into a fog and involve themselves in a labyrinth of detail, unprovided with chart or compass by which they may fix upon a single point ; all is confusion, because nothing has been previously generalized, and no plan of operations considered. EXERCISE I. My Book-keeper presents me the following statement of my Ledger accounts at this time ; that is, each side of the several accounts has been added, and the totals copied down. 25,280 12,500 2,000 3,000 1,000 Cash . Bills Receivable Bills Payable . L. B. Binsse & Co. Geo. Tredwell 13,575 7,500 7,000 3,500 10,840 7,850 Stock . Merchandise Ship Jane 18,000 10,630 1,640 1,835 976 Charges . Interest . Profit & Loss* 500 2,500 436 $65,281 $65,28 1 I have taken an inventory of Merchandise on hand, and value it at $1,000. I also value the Ship Jane at 87.(1011. Required an Analysis of the above, showing my Resources, Liabilities, Cains, Losses and at Worth. i Mi if -in In Profit fc Loh la lone reform of tha bndnan r..r uiii.-h no paiftariu htaiHni ot ■moobI baa i n nmvMad. for example: we may receive i Idebt which wai considered loat, or « n abate nl from Rome mini', account ™" "'•'■'"»» m*5 'i "hay. del fa i i,r nature for example: we roaj U m ij by broken bank notes or depreciated papar, duiiia earapromlaed, abatemenu on account! rendered, and ntriou other »m\- 34 SEC. II.-ANALYSIS. ANALYSIS OF EXERCISE I. Primary Accounts. Cash, c< <( Bills Receivable. k « u tt Bills Payable. U «( « (( L.B. Binsse fy Co Geo. Tredwell. Merchandise. Ship Jane. Amount of my receipts . " " payments . " remaining on hand Amount of other men's notes received " " " disposed of " remaining on hand Amount of my own notes issued " " " redeemed " remaining to be paid 1 am accountable to them They are accountable to me I owe them . . . Is accountable to me On hand valued at . My original Capital was " Net gain is " Present Worth is 25,280 13,575 12,500 7,500 7,000 2,000 3,500 3,000 18,000 5,205 Resources. Liabilities. 11,705 5.000 5,000 1,000 4,000 7,000 500 23,205 $28,705 $28,705 Secondary Accounts. Merchandise. u Amount of returns or sales " anticipated returns Total returns Cost Ship Jane. Profit on Merchandise Amount of returns . " anticipated returns Total returns Cost Charges. Profit on Ship Outlay .... Returns .... Interest. Profit Sf Loss. Loss Returns .... Outlay .... Gain . Miscellaneous items Total Gains " Losses Net Gain . 10,630 4,000 Losses. 1,335 5,205 Gains. . 14,630 . 10,840 1,640 . 7,000 3,790 8,640 7,850 1,835 500 790 . 2,500 976 . 6,540 . 1,335 1,524 436 . $6,540 $6,540 35 SEC. DL— ANALYSIS. In the following exercises the student must distinguish Primary Accounts from Secondary. The Primary Accounts are Cash, Bills Receivable, Bills Payable, and Personal Accounts ; all others are Secondary. Debits. 25,800 88,250 7. r.ini 7,630 25,000 5,180 3-. (inn 3,963 327 17,530 5,850 8,000 $183,030 EXERCISE II. Value of Property Unsold. Cash Merchandise Williat!) Van Allen . Shipment to London Bills Payable . Cotton Bills Receivable Charges . Profit & Loss . Ship Re* r Stock Thomas F. Clarkson David Clarkson Required the Analysis. 11,357 l-.llllll Credits. 12,500 82,485 3,847 ' 548 3-2,nnn 6,234 24,000 1,436 3,840 44,270 9,875 5,000 $183,03n EXLT1CISE III. 14,840 Bills Receivable . 4,000 7,800 Shipment to Cadiz . . 6,840 John B. Dash . . 4,860 6,000 Ship Ann 7,500 2,000 24,975 Cash . . 9,000 5,000 Cotton . . 4,000 Francis Van Rensselaer . . • 1,000 14,000 Merchandise 3,357 17,000 4,000 Bills Payable . > . • 12,500 Stock • • • 11,500 25 Profit & Loss . • . . William M. Vail . • • • 4,000 $76,640 $76,640 EXERCISE IV. 6,000 Jno. Wiley . • . • 5,000 10,000 Merchandise 3,970 13,250 10,000 Bills Receivable . 6,000 7,800 Ship Sarah 7,500 1,850 3,000 Samuel Randal • • • 2,210 8,000 Shipment to Canton . . 8,685 14,500 Cash • • . 12, •l-n Profit & Loss . . . • 840 3,000 Bills Payable . . . 8,645 4,000 Etobt D. Weeks . . • 1,000 Stock 12,800 $66,780 $66,780 86 SEC. II.-ANALYSIS. Debits. 11,200 15,000 50,800 14,000 7,885 12,000 600 80 1,950 9,800 1,000 1,600 1,800 $127,715 EXERCISE V. Value of Property Unsold. Credits Bills Payable . . 15,000 Merchandise 3,000 14,980 Casn , . 29,800 Evert D. Long . 10,000 Ship Star 7,000 1,735 Bills Receivable . 8,000 Charges . . Stock .... . 26,000 Profit & Loss . . James Levy . . 2,100 Shipment to Canton . . 14,500 Bininger & Cozens . . 2,000 Shipment to Baltimore . 1,200 Coman, Hopkins & Co. • 2,400 Required the Analysis. $127,715 EXERCISE VI. « Stock % 32,200 80,840 Cash . 45,000 • 45,890 Merchandise 21,500 34,230 16,485 Bills Payable . . 60,985 10,700 Ship Sirius 10,000 3,600 2,800. Marshall Lefferts . 3,750 14,000 Tallow . . 12,030 20,390 Bills Receivable . 10,800 12,000 Real Estate 13,000 4,000 2,300 Chas. F. Stagg . 1,500 Interest . . 3,700 Effingham Lawrence . . 2,900 11,000 Shipment to Havre . . 14,750 4,550 Henry Long . . 5,900 890 Charges . . . 5,800 Austens & Spicer . . '. 6,500 7,600 John Van Bergen . 3,800 $240,445 Remn'rfid thp Analvsi«s. $240,445 37 148.69 11.-46.66 62,197.90 7,846.84 4,795.33 17,451.90 889 5,911.:»!) 9,076.97 768.04 26,889.86 2,1 14.80 1,864.88 1,749.01 B,( .00 39,8(111.(10 5,811.(17 UK). 00 5,187.24 -12.83 SEC. II.-ANALYSIS. EXERCISE VII. Debits. Value of rropertx unsold. 1 Credits. 49.000 Cash . 85,1 13 18,190 Merchandise 6,000 11. -.in . !i Ilutcliinson 8,700 :...-.oo Real Estate - 16,1 Bills Receivable B,020 l.:iS5 Shipment to London . 1.-7.'. William Hoeber . 1,850 6,742 Shipment to Cadiz ......00 9,856 Alfred Seton . 11,000 Cotton l(t.7:<0 3,000 Bills Payable . 15,000 Stock . 24,470 4,800 David C. Ilalsted 11,000 Ship Helen 10,000 1,987 104 Interest . 650 Charges . . 200 Profit & Loss . . . 5,304 Shipment to Dublin *■ 5,890 8137,725 81 37.7 25 Required the Analysis. EXERCISE VIII. Cornell Brothers Shipment to Havre . Cash Hops John N. Brinkerhoff Bank Stock 2,000 Interest . William Adrain Bills Payable . Stock A. W. Spies & Co. . Merchandise 11,947.50 Charges . Tallow . Halsted & Dash Real Estate I .ills Receivable Shipment to Charleston Profit & Loss . Sugar 1,000 (lost) 3,99.-.. OS 15,381.12 48,350.86 10.-J-J6.80 3,000.00 6,728.56 500.00 CMOS. 19 23,941.70 40,000.(10 2,548.30 18,785.36 297.80 6,655.11 1,905.64 .-..ooo.oo 20,860.00 7,167.97 .12.83 Required the Anal 38 SEC. II -ANALYSIS. EXAMINATION. The student should on no account proceed to Section III. until he can answer satisfactorily and promptly the following questions : — What do the Debits of Cash Account show 7 — the Credits 7 What are called Bills Receivable 7 What are called Bills Payable 7 Wh:it do the Debits of Bills Receivable Account show ? — the Credits 1 — the face of the Notes, or the money produced 7 Whit do the Debits of Bills Payable Account show ?— the Credits 7— the face of the Notes, or the money 1 Whnt do the Debits of a Personal Account show 7 — the Credits 7 What does the Balance of Cash Account show 7 What does the Balance of Bills Receivable Account show 7 Why 7 What does the Balance of Bills Payable Account show 7 Why 7 What does the Balance of a Personal Account show 7 What accounts are called Primary Accounts ? Why are they called Primary Accounts 1 Wherein do Primary Accounts differ from Secondary 7 Which are Secondary Accounts 7 What does the Credit side of Stock Account show ? What does the Debit side of Merchandise Account show 7 — the Credits 7 How do you find the value of Merchandise unsold 7 Is not the value of Merchandise unsold put down as Resources 7 Why, then, is not Merchandise a Primary Account 7 Annoer. — The value of goods on hand is not shown by the Account of Merchandise, but by an inventory taken of the goods. What, then, is the use of. the Merchandise Account, since it does not show the goods unsold 7 How do you find the Profit or Loss on Merchandise. What is meant by Charges Account 7 How is it arranged 7 How can Charges make returns 7 What does the Balance of this account show 7 What does the Credit side of Profit & Loss Account show 7— the Debit side 7 What does the Balance show 7 What does the Credit side of Stock Account show 7 What do you add to the Capital to find your present worth 7 Is there any other way of finding your present worth 7 Do the Primary Accounts show all your Resources 7 What more information is wanted 7 Are the valuations necessary to find your Gains or Losses 7 What are the valuations called in finding your Gains or Losses 7 39 SECTION III. COMPILATION. The student who has mastered the preceding section has now surmounted the greatest apparent difficulty presented in accounts ; he is in possession of a general plan of arm him-. in* -lit. which, if carried out, must lead to the desired point; viz. a clear view of the position of the business transacted. He has, in fact, a well defined theory of operations, and it only remains to be considered what difficulties will present themselves in applying this theory to the daily routine in detail. Receiving cash, paying cash, buying merchandise, and selling merchandise, in most cases, form nine-tenths of the business transacted. Let us then take these in succession, and see how our theory could be carried out : — 1st. Suppose we make it a rule to record all transactions of receiving cash in one book (see Cash Book); it will then be very easy to dispose of these transactions in the Ledger, for we may add together all cash received daily or monthly, and enter (post) the amount on the Debit side of the Ledger Account of Cash ; and at the same time, and from the same source, we post each sum in detail to the credit of some other account. For example : the first item received is from John Wilson, on account, and consequently we must post the amount to the Credit side of Wilson's account, to show that we are accountable to him ; the next sum received is for merchandise sold, and we post the amount to the Credit side of Merchandise account ; the next is received for a note we disposed of, and we post it to the credit of Bills Receivable account ; from which it is evident that every sum con- stituting those receipts must become a credit item of some Ledger account, and the aggri being entered on the Debit side of Cash account, the debit item posted for these transactions to the Ledger will be the same in amount as the aggregate of the credit matter. 2d. The transactions of paying cash are all to be posted to the Debit side of their respective Ledger accounts ; for when we pay for charges, the Charges account must show on the Debit side our outlay ; if we pay for merchandise, the Debit side of that account must show its cost ; if we pay for our note, the Debit side of Bills Payable account must show the note redeemed ; and so the aggregate of the debit postings will in amount be the same as the total payments posted to the Credit side of Cash. So far then the recording of cash transac- tions and posting them to the Ledger, in conformity to our theory, seems to offer no difficulty. Sd. The merchandise bought being all entered on the Invoice Book, we post each separate purchase to the Credit side of the person's account of whom we bought it, if on credit ; but if on our note, we put it to the Credit side of the Bills Payable account, which is to Bhow what notes we issued; and the total amount purchased we post to the Debit side of Merchan- dise account, which, according to our theory, must show its cost. 4th. Merchandise sold being all entered on the Sales Hook, we post each separate sale to the debit of the party's account who owes for it ; or if we took notes, to the I >< 1>it of Bills Receivable account; and the aggregate sabs, to the credit of Merchandise acoount Now there remain to be considered only the few transactions that are not included in the above 1 1 pie : — If we found that there was interesl due on John Brown's account, we could not make the entry on any of the above-named books ; we should therefore enter it on the Day Book, and post the amount to the Debit side of John Brown's account, and Credit of Interest account Or, il John Brown gave us bis note v, pay his account, we must, for the same reason, cuter it on the Day Book, and put it to the Debil of Bills Receivable, and Credit of John Brown. But if he gave us his note for goods that had not been debited to his account, then we could enter the note ,,n the Bales Hook (see s. |{. 12th January) ; in whid, case John Brown would neither be debited with the goods, nor oredited with the note, from this it will appear that every transaction entered on the Day Book oauses two i><>Mhi"s to the Ledcer: but it is 4H OPENING BOOKS. not so with the other books. In the receipts of cash for the first month we have to post only one debit item for five credit items, because the whole five receipts are posted in one sum ; whereas had we entered all these transactions on the Day Book every sum must have been posted twice, making five entries of cash where one would suffice. It is now a very general practice to post from the books named, without making any Journal, and it must.be evident that an acquaintance with the accounts in the Ledger is all that is required to enable the learner to perform this duty with facility. We have not, however, introduced this mode of keeping books for the purpose of recommending it to universal practice ; we have chosen it only as the best method of initiating the learner. The Journal will be introduced here- after, in connexion with such business as requires its use. EXERCISE I. (January.) • Posting from Sales Book, Invoice Book, Cash Book, and Day Book, without using a Journal. The state of my affairs this day, January 1st, 1848, is as follows : — I have in cash $5,857.13; I have in other men's notes $3,^27.33; I owe on my own notes outstanding $5,843.24 ; John Wilson owes me on account $1,875.80 ; I owe William Brown on account 81,575.23 ; my merchandise on hand is valued at $3,500 ; I have bank stock worth $7,000. Required a proper disposal of the above in Ledger accounts. (See blank Ledger at the end of this Section.) The Ledger accounts will now stand thus : — Debits Credits. 5,857.13 Cash 3,827.36 Bills Receivable. Bills Payable 5,843.24 1,875.80 John Wilson. William Brown 1,575.23 3,500.00 Merchandise. 7,000.00 Bank Stock. Stock 14,641.82 $22,060.29 $22,060.29 The Capital commencing is found by deducting Liabilities from Resources. The above obviously represents the state of the whole business at present, and therefore the task before us is simply to note the changes produced by each transaction on each separate account. The balance of Cash account will continue to show the cash on hand, if we keep recording each receipt on the Debit side, and each payment on the Credit side. The balance of Bills Receivable account will show the amount of notes on hand, if we record all notes we receive from this time on the Debit side, and all we dispose of on the Credit. The balance of Bills Payable account will continue to show the amount of notes out- standino-, if we record all issued in future on the Credit side, and all redeemed on the Debit. The balance of Personal accounts will be kept correct if we debit them when they become accountable to us, and credit them when we become accountable to them. Thus we may regard each account as a pair of scales, in which we record the exact weight we keep adding to the one or the other side ; so that at any time we know how much must be added to the lighter side to make it balance. The Merchandise account cannot be made to show at all times the amount of merchandise on hand, but if we keep recording on the Debit side the amount of each purchase, and on the Credit side the amount of each sale, we can always estimate our profits thereon by adding to the sales or credits the value of what remains unsold, and then deducting the cost. The Bank Stock, and all other such accounts of property bought and sold, are subject to the same principles. 6 41 K-*^ SEC. III. -COMPILATION. The Stock account will remain unaltered until the end of the period of busiii'<<. when ire shall estimate our profits, and add them to the original capital. The entries already made would be termed in Book-keeping ph rung the accounts ;" the process that follows, viz. conducting them, or recording the continual changes in the state of each, has a remarkable feature, which cannot too soon be U'.ticd and impressed upon the mind, viz. that there can be no transaction which does ii'>t disturb at least two ace and whatever we enter to the Debit e.f one account must also be entered to the Credit ol one or more other accounts; in other words, every transaction supplies to the i. accounts as much debit as credit matter, it is doubly entered. For example : merchandise is sold for $3,000 ; half to remain on account with John Doe, and half f>r a note. It is obvious that we must pul $3,000 to the Credit side of Merchandise account, $1,500 on the Debit side of John Doe's account, and $1,500 on the Debit side of Bills Receivable account — the two debit entries being equal to the one credit. Let the student go on to imagine any number of transactions, and he will find this rule hold good j in fact, it can be theoretically demonstrated, thus — the whole returns of the business must appear on the Credit side of the lary Accounts, and these returns being necessarily either cash, notes, or pt r indebtedness, become debits of the Primary Accounts ; and, on the other hand, all outlay in the business must appear on the Debit side of the Secondary Accounts, and this outlay being jsarily either cash paid, notes given, or debts contracted, becomes credit matter for the Primary Accounts. Hence at the opening of the accounts the debits on the Ledger equal the credits, and as equal debits and credits are supplied by each successive transaction we add equals to equals, and. consequently, the whole debit matter on the Ledger must at all times equal the whole credit matter ; if it do not it is certainly erroneous. Hence the utility of taking a Trial Balance, which is commonly done every month, t<> test the accuracy of the Ledger. The exercises given for analysis in the preceding section are all ; - Trial Balarj CONTINUATION OP EXERCISE I. The student is required to post the entries of the month of January into the prop r 1. accounts (see blank Ledger), and .show a Trial Balance. Transactions from Day Book. I find the following transactions recorded on my Day I! ok during the month : 1. 1 have .riven my note to Win. Brown, payable in" thirty days, tin- noOU. 2. 1 have received John Wilson's note at two months for $300. 3. I charge John Wilson for cartage, labour, and postage JANUARY 81st. Transactions from Cash Bot On reference to my Cash Book, I find I have received cash during the month as f.ll >ws, viz. from John Wilson on account, $350 ; for merchandise Bold, $1,450] for notes that have become due, $2,500. Total ca h received, $4,700. I have paid cash during the same period as follows, viz. for fuel, $54; can - 1.43; labour, $25.18 ; for merchandise bought, $2,573.24 j for my own notes become du ,20. Total payment - >.05. Transactions from Invoice Book. On reference t" my Invoice Book, I find I have purchased during the month merchandise as follows, viz. from Wm. Brown on book account, $1,560.24; From Bundrj persons, for which I gave my a i 324.32. Total purch I 384.58. Transactions from Sales Book. On reference to my Sales Book, I find thai I have sold merchandise during the month as follows, viz. to John Wil account, $587.50 ; to Bundr) pen »ns, for which 1 have taken their notes, $0,078.24. 1 ,.1 i. 12 BUSINESS TRANSACTIONS. EXERCISE II.— February. The student is required to post the following month's transactions into the Ledger Accounts, and show a Trial Balance. Transactions from Cash Book. I have received from John Wilson, on account, $800. For Merchandise Cash Sales, 81,350. For Interest on Notes discounted, $30. For dividend on Bank Stock, $125. For Notes that I have disposed of, $2,570. Total Cash received, $4,875. My payments of Cash this month have been as follows : — Paid for Merchandise, $1,500. For other men's Notes which I discounted, $3,000. For discount on uncurrent money, $3.50. For Rent of these premises, $500. For Stationer's bill, $136. For loss on broken bank notes, $25. For Carpenter's bill, $32.78. For Cartage, $25.30. For Labour, $50. For my own Notes become due, $5,354. Total Cash paid, $10,626.58. Transactions from Invoice Book. I have purchased this month, from sundry persons, goods for which I gave my Notes, $6,124.57 ; and from John Wilson, on Book Account, $1,325.32. Total purchased, $7,449.89. Transactions from Sales Book. I have sold goods to sundry persons, for which I have received their Notes, $7,340.22 ; and to Wm. Brown, on Book Account, $4,150.24. Total sold, $11,490.46. Transactions from Bay Book. Received from Wm. Brown his acceptance of our draft for this amount, $1,531.55. Accepted John Wilson's draft on me for this amount, $791.09. John Wilson's account is chargeable with the following — Cartage, $5.20 ; Labour, $3.50 ; Cooperage, $4.23. Total, $12.93. William Brown's account is chargeable with Labour, $15.20 ; Postages, $1.58. Total, $16.78. EXERCISE III.— March. Post the following transactions, and show a Trial Balance. Transactions from Cash Book. I have received Cash this month as follows : For other men's Notes due, $3,845.20. For the same discounted, $5,354. For Merchandise sold, $2,153.28. From S. M. Richardson, on account, $1,350. Total received, $12,702.48. I have paid Cash this month as follows, viz. — For my own Notes due, $7,583. For Clerk's salaries, $300. For Merchandise bought, $584. For duties on Merchandise, $53. For Insurance, $135. For Labour, $29.35. For Cartage, $15.27. To G. L. Morgan, on account, $1,253.24. Bill for Desks and Fixtures, $530.28. Protest on Note, $1.75. Discount on Notes, $23.54. Total Cash paid, $10,508.43. Transactions from Invoice Book. I find on my Invoice Book the following entries of Merchandise purchased, viz. — Bought of sundry persons on my own Notes, $4,230. From Haggerty, Draper & Jones, who received sundry other men's Notes in payment, amounting, after deducting discount, to $3,379.80. From G. L. Morgan, on account, $3,534.20. Total purchased, $11,144.00. 43 SEC. IIL-COMPILATION. Transactions from Sales B S IS. M. Richardson, on aocoo nindry persons on their ' \-:<>!;. Received S. M. Richardson's Note for $1,500. Allowed discount on Bills Receivable _■ rty, Draper & .lours, for Merchandise bought at auction, #52.40. Gave my note to : the (tall Ihce at them. Bill* Receivable will be credited also with 952.40 Br the entry on the Day Book, which, added lo$3J19J80, makes the lull amonnl of 1 1 1«* notes • t « tposed of In the compr Ise with William Brown the Cash pirt i< already entered In the Cash transactions, consequently we have only to debit Profit ft Norn and credit Bills H ivable with $574 33. It will I (nerved we entered ii>r Notes due ; this Included ..'iT-j i. ceived on Brown's note, which was l^r §1531^5. EXERCISE IV. The Merchandise on hand is this day valued ai - : 1,729.50. Bank Stock at present quotations, $7,231.75. Required a statement of Resources, Liabilities, Profits, Losses, &c. Balancing the Accounts. At the end of the year, or as often as it is customary to balance the books of a business, all the secondary accounts arc balanced ; thus, if we have lost by an account, we credit that account with the loss which balances it. ami debit Profit & Loss account the same amount, the etl'eet being to transfer the result of the former account to the Profit & Loss account. Fur example : the Charges account stands thus — Charges. 500 250 250 300 Here we have lost by Charges $300, and to balance it wc credit Charges account and debit Profit & Loss account thus : Cliarges. BOO 250 250 .... By Profit & Loss mhi 800 #1,0")0 si.o.-.d The Profit <5c Loss account will also be debited thus: Profit Sf Loss, To Charges, $800, showing whal we losl by charges. Accounts showing a gain will require to be debited, and Profit a Lo i oredited; and m this way all gains and losses of the business are finally collected in tin- Profit iV |,oss account. In oase of property being unsold, however, we have to enter its value on the Credit aide of the account, at wi 11 a the profit on the Debit, to make it balance thus : ii Outlay . CI To Profit & Loss 3,000 2,000 1,000 1,500 BALANCING. Merchandise. By New Account (unsold) Sales 4,000 " 1,000 " 2,500 $7,500 $7,500 To Old Acct. $2,500 The amount unsold is brought down to begin the next account with, but if all is sold there is nothing to carry to the next account. Finally, when all gains and losses are brought into Profit & Loss account, that account is debited, and Stock account credited for the net gain, which entry closes or balances the Profit & Loss and all the Secondary Accounts, except Stock, which account will then stand thus : Stock. Original Capital . . . 10,000 Profit & Loss .... 2,500 $12,500 We therefore write on the Debit side, To New Account $12,500, making it balance, and on the Credit side, underneath the footing, By Old Account, the same amount ; which is the capital for the succeeding period. All Primary Accounts are balanced to or by New accounts for their balances, but Per- sonal accounts should never be balanced, except when settlements take place. EXERCISE V. (Balancing.) Balance all accounts except Personal, and bring down the balances, as exemplified, state of the accounts if now taken off will be thus: The Debits. Cash . Bills Receivable . S. M. Richardson Merchandise Bank Stock Credits. 3,440.55 12,821.64 1,403.76 6,729.50 7,231.75 &31, 627. 20 Bills Payable G. L. Morgan Stock . 11,302.02 480.96 19,844.22 $31,627.20 This is precisely the position in which we should place them if we now wished to com- mence a new set of books, and the effect of balancing has been to bring all the profits into the Stock account, and keeg all the others showing the different Resources and Liabilities. (See Opening.) Note. The form of balancing is most easily acquired from the board, but where that is not used the teacher will supply its place by exhibiting the form given in Teacher's Part. 45 IPTS. SEC. HI.— LEDGER FORM. CASH. Payments. Received. HILLS IlLCLIYABLK. Disposed of. iiy New Account . EMED. RILLS I'W MILL. Issued. Dr. JOHN WILSON. Ck. Dr. WILLIAM r.UnWX. 40 Da. S. M. RICHARDSON. Cr. Dr. G. L. m«>u<;an. Cr. FOR EXERCISES I., II., III., IV. & V. STOCK. Capital. Outlay. MERCHANDISE. Returns. Outlay. CHARGES. Returns. Outlay. INTEREST. Returns. Outlay. BANK STOCK. Returns. Losses. PROFIT & LOSS. Profits. 47 SECTION IV. JOURNALIZING. The compilation of the Journal is the most responsible and difficult task of the book-keeper. To be able to write up the Journal implies not only a thorough knowledge of the whole Ledger, but also of all the subsidiary books from which the Journal is compiled. The Journal is in reality neither more nor less than a book of directions, stating how every transaction is to be disposed of in the Ledger; that is, what accounts, ought to be debited and credited in each case. The first entry on the Journal (see Journal, section I.) is to direct what accounts ought to be debited* and credited at the outset or opening, and as there are several accounts to be debited, the aggregate debit matter of which equals the aggregate of credit matter to be passed to other accounts, the entry is headed "Sundries to Sundries," or sundry accounts to sundry accounts. 1st. From a statement of Resources and Liabilities, it appears there i- Cash 00 hand, which, for reasons that need not now be repeated, is set down as a debit, to be carried to Cash account. The notes on hand are set down as a debit to Bills Receivable account, and so on with each item of Resources and Liabilities ; and when on completing the entry it is found to comprise a plurality both of debits and credits, it is headed " Sundries to Sundries." The nezl transaction is that we have given our note to William Brown. (See section III., Day Book for January.) The Journal entry, therefore, directs that William Brown's account shall be debited, and Bills Payable account credited, which is written : William Brown .... 500,00 To Bills Payable 500,00 The only difficulty that can now present itself to the careful student is the form and phraseology of the Journal entries; what accounts ought to be debited and credited he has already determined in bis exercises in compiling the Ledger. The Journal entries then assume four different forms, determined by the number of debits and credits they comprise. For example : l.s7 Form. — A transaction or entry requiring one debil and one credit. 2d Form. — A transaction or entry requiring one debit and a plurality of credits. ;W Form. — A transaction or entry requiring a plurality of debits and one credit. \lh Form. — A transaction or entry requiring a plurality of debits and a plurality of cn dits. The first business before making the Journal entry is to analyse the transaction; that is, to determine whal accounts should be debited and credited, and see that the debit matter equals the credit matter. Then by the number of debits or credits required to be made, the title and form of the entry is seen at onoe. For an example of the first form, Bee second entry of Journal, viz. William Brown, To Bills Payable. For the 2d form Bee "Cashto Sundries;" for 8d see " Sundries to Cash ;" for Ith see " Sundries to Sundries," at the beginning. Observe, that the oredil entries in the Journal have always the word " To " prefixed ; but the debits begin without an) preposition. It is also necessary to writ., the names of Ledger titles on the Journal in a larger hand than the explanations attached. ■IN JOURNALIZING THE BALANCES. After making out an Analysis or Balance Sheet from the Ledger, previous to balancing the accounts, it is necessary to make journal entries of all the Profits & Losses. For. example, the Balance Sheet shows a profit on merchandise of $7,324.05, which is journalized : Merchandise . . . . 7,324.05 To Profit & Loss . . . 7,324.05 Charges account shows a loss of $1,692.88, and is journalized : Profit & Loss .... 1,692.88 To Charges .... 1,692.88 The student, as an exercise, would do well to journalize the closing entries of all the exercises in Section II. POSTING FROM THE JOURNAL. Transferring the different debits and credits to the proper accounts in the Ledger is called Posting. The operation of posting will be best explained by a few examples. The first entry on the Journal to be posted is Cash debit $5,857.13 ; this amount is there- fore entered on the Ledger in the Debit column of Cash account. On the left is a column for the date, and next the dollar column is a small column to enter the journal page, and in the space between is written " To Sundries," indicating that there are several credits in the same journal entry. The folio or page of the Cash account is then written in the small column on the left of the Journal, opposite the word cash. This serves to show that the item is posted, and what page in the Ledger it appears on. We will next take one of the credits of the same entry, viz. "Bills Payable." We turn to the account headed Bills Payable, and enter on the Credit column $5,843.24, " By Sundries," with the date and journal page, then the Ledger page being placed on the journal, it is posted. All other items of this entry are posted in the same way. But in the next entry, when we debit William Brown's account, we write " To Bills Payable," because there is only one balancing credit; and in crediting Bills Payable we write " By William Brown," for the same reason. EXAMINATION. If I would make an entry on my Journal to debit Bills Receivable and credit Merchandise, how should I word it ? Answer. — Bills Receivable to Merchandise. If 1 would debit Merchandise, credit John Brown, and credit James Austen, how should I state it? Answer. — Merchandise to Sundries. To John Brown, " James Austen. Is there any equ ility necessary between the Debit and Credits? Answer — The Debit must equal in amount the sum of the two Credits. Suppose after m kins.' a Jour 1 a! entry you hid the Debit and Credit unequal, what is your conclusion ? Answet That there is an error. ll they do equal does it prove the entry correct ? Answer. — No. Why ? Answer. — The wrong accounts may be debited or credited without affecting their amounts. If we would debit Michael Snow and E. .Nelson's accounts, and credit Merchandise account, how should we word the entry? Answei Sundries to Merchandise. Michael Snow, E Nel-on. Which form of entry would this be ? Answer. — Third form. Why ! Answer. — Because it has a plurality of debits, and only one credit. It we would debit several accounts,' and credit several accounts, how should we head the entry ? Answer.— Sundries to Sundries. ^Jf" Particular transactions proposed to a class in journalizing should be performed on the black-board. 7 49 SEC. IV.-JOlR\ AUZING. EXERCISE I. Journalize (he January transactions of the preceding section. EXERCISE II. Posl the transactions of January, and take a Trial Balance. Note. In heading the accounts in the Ledger the teacher will direct how many lines each account will require. EXERCISE III. Journalize and Post the transactions of February, ami take a Trial Balance. EXERCISE IV. Journalize and post the transactions of March, and take a Trial Balance. Note. In taking a Trial Balance the whole of the previous month or months must be included, unless the account has been balanced and ruled off. EXERCISE V. Make out the Analysis or Balance Sheet, journalize your profits and losses, and balance all accounts, except personal. EXERCISE VI. In this exercise the transactions are given in the order of dates, each to be separately journalized ; but in practice the journal is more frequently compiled from several books, viz. Invoice Book, Sales Book, Cash Book, and Day Book, there bein^ no one book from which the Journal could be compiled. There are nevertheless some kinds of business in which it answers very well to enter briefly every transaction on the Day Book, and on the other books before mentioned the details in full are entered in addition ; but this makes more writing in Day Book, Journal, and Ledger, as will be understood from subsequent exercises. The object in view here, however, is to exercise the student thoroughly in the analysis of mixed and complicated transactions, and the phraseology peculiar to the Journal. It must also be remarked, that these are strictly exercises for the pupil, not examples of business entries in any book. Transactions are related here in such manner as seemed best calculated to insure to the student a thorough understanding of the nature of the business transacted. EXERCISE VI. James Strong has put into my hands the following memoranda, from which is required a Journal, Ledger, and Trial Balance for the first month.* .1 ANT \!!Y 1st, 1848. I commence business this day as follows : I have Cash on hand .... 20,000 " " Bills Receivable .... 1 1,000 John A. ( runn owes me .... <><>() M> Capita] being .... 834,600 •id. Bought of L. B. Binsse & Co. goods as per Invoice Book, for whioh 1 paid In cash 15,000. 4th. Sold Houghton & Arnold on book account sundry goods, as per Sales Book, >s :<.."< i k » . • Where recltntlon of thi i )onrnallgln| It to be mvle il the bowd In lcI»m. the itadenl thnuld prepire hlmtelf by itndylng cneh tr n n«l) nnd we no objection to havlnf the i»ihh.i entries m4 on • tUle. A pflpll may in. i ii i » i \ do linn . ii ii Lii i when thi iniwer U heatUjr required 50 BUSLNESS TRANSACTIONS. January 5th, 1848. Bought one third of the ship Europe, for which I paid cash $12,000. 6th. Bought of Marsh & Compton goods as per Invoice Book, for which I paid in cash $4,000. 7th. Bought of Houghton & Arnold on book account goods as per Invoice Book $1,500. 9th. Received of Houghton & Arnold cash on account $1,500. 11th. Bought of Greenways, Henry & Smith goods as per Invoice Book, for which I gave my note payable in ninety days $300. 12th. Sold John Wilmarth for cash goods as per I. B. $1,200. 13th. Sold Houghton & Arnold on book account, goods as per I. B. $1,800. Received of Houghton & Arnold cash on account $2,000. 14th. Sold Ira Perego goods as per I. B., for which he has granted me his acceptance, payable in sixty days, $4,800. 17th. Received in cash for freight of ship Europe $2,500. 19th. Bought of Houghton & Arnold on account as per I. B. $10,600. 20th. Accepted Houghton & Arnold's draft on me at ninety days for this amount $5,000. 22d. Bought of A. W. Spies & Co. goods as per I. B. $4,500, for which I gave in payment my note at three months $3,000, and paid the balance in cash $1,500. 23d. Paid for repairs of the ship Europe in cash $800. 24th. The North River Bank has discounted for me Ira Perego's acceptance, for which they gave me in cash $4,756.80, keeping back for the discount $43.20. Amount of the note $4,800. 25th. Sold Houghton & Arnold a quantity of merchandise as per Sales Book $8,000, for which they gave me in part payment Austen & Spicer's note at three months for $5,000; the balance to remain on account. 28th. Shipped per Geo. Washington for London, and consigned to Johnson & Co., to be sold for my account a quantity of merchandise per " Invoice Book Outward " amounting to ..... 6,000 Passed my Note for Insurance . . . 100 Paid Shipping Expenses in Cash . . 30 $6,130 Cash drawn for my Private Expenses . . . 600 51 =^ SEC. IV.— JOURNALIZING. Jancaky 29th, 1849. Sold Houghton & Arnold goods as $ S. B. §2,900, and received from them Ada; Co.'s acceptance, due 5th April, for 83,000, on which they allowed me a discount of 83.50, the balance, $00.50, to be placed to their credit. EXERCISE VII. The Merchandise on hand this day is valued at si. 500. The Ship Europe is valued al 112,000. The Shipment to London is valued at cost. The student is required to exhibit an Analysis or Balance sheet of the business, Journalize and post the Profits and Losses, balance all the accounts except the Personal, and bring down the balances to continue the business. EXERCISE VIII. Journalize and post the following month's transactions, and show a trial balance. February 1st. Sold for Cash to Peter Hawes goods as $ S. B. 8*00. 3d. Sold John A. Gunn, on Book account, sundry goods as ^ S. B. 8680. 6th. Bought of Marsh & Compton sundry goods as <{p I. B., for which I gave my note at thirty days, 82,000. 8th. Bought of Charles F. Stagg 20 lots on Third Avenue, for 819,000, for which I have paid as follows : — Haggerty, Draper & Jones's note for . . . 5,000 S. T. Jones & Co.'s " ... 6,000 My own two notes, each at 2 mos., 84,000 . . 8,000 819,000 12th. Bought of Tracy, Irwin & Co. sundry goods as ^ I. B., for which I gave my note, 83,000. 13th. Sold Thomas Carpenter sundry goods as *$ S. B., for which I received his note, 83,000. 14th. Received of John A. Gunn Cash in full, 81,280. 16th. Sold Houghton & Arnold, on account, goods as ^ S. B. 8780. 17th. Bought of S. T. Jones &. Co. a quantity of Merchandise as ^ I. B., for which I gave my note, (8,000. 18th. Sold J. Ramsay goods as <$} S. 1!. 81,000, and received in payment his note at thirty for -J,000 Cash for the balance 2,000 8,4000. 20th. Shipped '{> Brig Nancy to Haiti morr, and consigned to Adams & Co. to be sold on my BCOOUBt, a quantity <»f Merchandise as |J " Invoice Hook < Mit ward" . . 81.000 The expenses thereon, for Insurance, Cartage, and Labour, amounted to . 00.00 52 BUSINESS TRANSACTIONS. February 21st, 1848. Paid sundry Charges as ^ petty Cash ....... $180.00 22d. I have discounted the following notes at 7 per cent. — My own note to C. F. Stagg, due April 11th . . 4.000 S. T. Jones & Co.'s note, " 1st . 6,000 Discount on $4,000 for 48 days . 36.82 10,000 " 6,000 " 38 " . 43.72 8 0.54 Paid in Cash. . " T . - $9,919^46 28th. Bought, through W. & J. O'Brien, 20 shares American Exchange Bank Stock at $90 f share 1,800 His charge for Brokerage, \ per cent. ..... 4.50 Paid in Cash .... $1,804.50 Cash drawn for private expenses, $250. EXERCISE IX. Journalize and post the following month's transactions, and take a Trial Balance. March 1st. Paid taxes on lots in Third avenue in Cash, $375.00. 3d. Sold Henry Long, for Cash, Merchandise as $ S. B. $2,000. 4th. Sold Willet McCord goods as ^ S. B., for which he gave me his acceptance, $4,000, at 30 days, due 6th April. 6th. Paid sundry Charges $ petty Cash, $70.00. 8th. Sold John Wilwarth 10 lots on Third avenue at $1,350 $) lot. Received in payment my note to Chas. F. Stagg . . . 4,000 On which I am allowed 33 days' discount @ 6 per cent. . . 22 Received John Austin's note at 60 days for " Cash for the balance ..... 10th. Bought at Auction a quantity of dry goods amounting to $4,500. For which I gave in payment J. Ramsay's note of . On which I allowed a discount of . Gave my note for . Paid the balance in Cash ...... 11th. Paid at the North River Bank for my note of 6th Feb., due this day, $2,000. 53 3,978 6,000 3,522 $13,500 2,000 4.25 1,995.75 1,500.00 1,004.25 $4,500 1 vMwm^"" 'i ujw* . SEC. IV.-JOURXAL1ZLNG. March 12th, 1848. I have discounted Houghton & Arnold's note at 30 days for $650 at 6 per cent., and paid in cash . . . . . . . . . . 646.45 Discount ...... 3.55 8050.00 14th. Received ^ Great Western from James Kelly, London, pursuant to my order, and for my account, a quantity of merchandise, amounting ^ invoice to JE416 10s. 3$, at 8 per cent. premium, 2,000 Paid Freight and Charges in Cash . . 200 $2,200 10th. Thomas Carpenter having failed offers 25 per cent, on his note of $3,000, on condition that I relinquish further claim ; considering it the only alternative of a total loss 1 have acceded. I have given up his note, and received in cash . 750 My loss being 2,250 $3,000 20th. Sold Marsh & Compton @ 6 per cent, premium my draft at sight on Johnson & Co., London, for my account of JE900 sterling. Amount at par n l.| ll p £ . . . 4,000 Premium .... 240 *I therefore credit Johnson & Co $4,240 Received in payment my note in favor of Tracey, Irwin & Co. 3,000 On which they allowed me 20 days' discount ... 13 2,987 Received in Cash ..... 1,253 $4,240 22d. Paid for Insurance on ship Europe ..... $360 23d. J. Ramsay's note of 18th February due this day has been protested. Amount of Note ..... 2,000 Protest 1.75 82,001.75 I have received his new endorsed note for $2,011.75, interest included. 23d. Sold Henry Long for cash merchandise as per S. B. $1,800. 24th. Received from Adams & Co., Baltimore, account sales of shipment 39 Nancv, the net proceeds being $5,y47.H;i. * A d. iii tine cootnu b .i ■ hould slwayi ba recorded .a arhal h will owl in dm u Johnson ehaigM sir..m; wall a''mhi Blrong must beud AlMAi j uud if il .should cost more or lots to buy .CiHW ihuu 84,--'*0, iho dill'.'roiicu Is gain or loa 3 to Slrons. ' 54 DETECTION OF ERRORS. 26th. Paid for Rent of Store (three months) " " Clerks' Salaries .... " " Stationer's Bill 127.33 $1,677.33 750 800 127.33 ',847.33, and 5,818.10 29.23 28th. I have negotiated my draft on Adams & Co., Baltimore, for Received in Cash ..... Discount . . . 29.23 $5,847.33 31st. Cash drawn from private expense ..... $700 Made up Houghton & Arnold's account current, and find there is due them for Interest to date $67.50. DETECTION OF ERRORS. The student having had some experience in taking trial balances, will now appreciate a few hints with regard to the detection of errors. The presumptuous may rely for awhile on their infallibility, but I have always found the most accurate and experienced accountant among those who have the least to say of their infallibility, and who are most impressed with the necessity of taking every step to check and corroborate, or, if possible, prove their work as they proceed. Let it, then, be understood that a trial balance affords no proof of the correctness of books; if the debits and credits do not equal there is certainly error, but if they do equal there is no certainty that the accounts are correct. Charges Account may be debited instead of John Doe's, the book-keeper, and still the accounts would be balanced, and conceal the fact that John Doe was accountable. Before taking a trial balance, every entry should be called off by one person from the Journal, and checked on the Ledger by another. All debits should be called off throughout the books first, then all credits. Many may rely sufficiently on their accuracy to obtain a balance without this, but that does not obviate the necessity, as will appear more clearly from the following. — I have on my Ledger two accounts, both the individuals named Smith — one is named Benj. F. Smith, and the other Benj. T. Smith. My trial balances had come out even every month without the extra labour of checking, and I congratulated myself on my accuracy, on the faith of which I settled accounts with B. F. Smith, and received the balance claimed. Two months subsequently B. T. Smith called to settle, and at once pointed out an error of $3,000, with which he was overcharged. Reference being made to the original entries, the matter was cleared up. B. T. Smith was charged instead of B. F. Smith. The T on a hasty glance may pass for an F. Now B. F. had easily overlooked an omission of $3,000 among the numerous large items at the debit of his account, but he admits the error, and is willing to rectify so far as he can. He therefore notifies me that he is endeavouring to make arrangements with his creditors for a discharge from his liabilities on payment of twenty-five cents on the dollar ! This loss would have been saved by checking. The T and the F sound entirely different, and as they were not sufficiently alike to be confounded by a person reading off, the error could not have escaped detection. It frequently happens that, even after checking and calling off, a trial balance is not obtained ; it is therefore necessary lo fix upon some part of the process where it may have been overlooked — 1st. — Ascertain the amount of error, or the difference between debits and credits. Divide this amount by 9, and if nothing remains check all your accounts over again, and look particularly for some amount transposed ; that is, 5,840 on the Journal may be posted 5,480, or 787 made 778 : errors of this kind often escape detection several times. It is, therefore, 55 5TV? SEC. IV. -COMMISSION BUSINESS. useful to know that the same figures written in any different order of succession will give a difference which is a multiple of 9, for example — 5.784 I 578 9)1,206 i:U 2d. Look through the Journal fir an amount corresponding with your error. a,l. Look for an amount corresponding with half the error; an amount may be twice i or omitted.'or placed to the wrong Bide. It' twice posted or omitted, it will be of the amount as the difference on your trial balance, if posted to the wrong Bide it will be half that sum. . 4,1,. [fyour Journal is arranged with Debit ami Credit columns, compare the total debits and credits, with the footings of the trial balance; if not, examine all extensions on the Journal, entry by entry, and see that the debits and credits equal ; and last, but not least, never trust your addition without adding both up and down. Pupils who have had but little experience in adding and transcribing amounts, have generally a good deal of trouble in obtaining a trial balance, and an- prone to lean upon the teacher for assistance, under the impression that if the error is merely an oversight they would gain time and save trouble by having their work corrected. My own experience warrants me in Baying that the teacher who gives way to this argument will never make accountants. The" search tor errors drives the student back upon the investigation of his theory, and is the most important part of his course. He has never accomplished his object until he has obtained a complete reliance on his plan of operations ; any inquiry as to what may have produced errors will afford the teacher opportunity of giving instruction at the very time when it will be appreciated and retained. COMMISSION BUSINESS. A large amount of business is done by merchants on commission ; that is. the owner consigns his goods to an agent, called a Commission Merchant, whose duties are to sell such goods to the best advantage, and account to his employer (the consignor) for the proceeds* he (the consignee) being allowed to deduct from the total sales all necessary expenses, such as Cartage, labour, freight, &C, together with a certain per centage on the gross amount ot . called his commission. For example, we have sold goods for A., The gross sales being ........ 5,845.80 We Charge for Labour ........ 15.00 " * " Cartage 18.50 " " " Postages 25 " " " our Commission r> per cent, on $5,845.50 . . 202.20 826.04 Net proceeds due A $5,510.76 This, with a little modification in firm, is the document called an " Account Sabs.*" which it is the ,1111V of the consignee to render to tie- owner or consignor (sec Account S lies), after all the goods are sold. It is necessarv, therefore, to determine how busim ss ot this nature may be disp ised of on the | ,, . ■ 1st. W ii i.n wk ai:i: Consignors. — [f we consign L ri " »ls 1. 1 V. to sell for our account, we of course send A. an invoice of 1 Is; but it must be borne in mind that they are not sold to A., and therefore \. must qo! be debited ; he only becomes indebted to us when he lias realized from the Sabs. We therefore debit an aooount headed "Consignment t" v .. 56 COMMISSION BUSINESS. or, if sent by sea, "Shipment to London," or elsewhere; and when we receive A.'s Account sales we credit said consignment or shipment, and debit A. with the net proceeds in his hands. The shipment then shows what it cost and what it sold for, and A.'s account shows that he owes us the proceeds. 2d. When we are Consignees. — If A. sends us an invoice of goods to sell for his account and risk, we do not credit his account with the amount of such invoice, for the very obvious reason that we have not bought the goods ; we have not contracted any debt, nor is such invoice in any way concerned with any Ledger account ; hence we make no Journal entry of the invoice price of goods consigned to us. We simply either copy the invoice into a book kept especially for that purpose, or into our general Invoice Book, short-extended, like cash. We must provide, however, for making out an Account Sales when all are sold, or when such account may be required ; and to do this nothing more is necessary than to open an account with A.'s sales, or A.'s consignment, and when we sell A.'s goods credit his Sales account instead of crediting Merchandise account, which is an account of our own goods. By this process, A.'s Sales account always shows on the Credit side the amount of his goods sold, the Debit being blank, except when the practice is followed of charging expenses to the Sales account at the time such expenses are paid ; but it is much more general and more convenient in commission houses to make no debit to a Sales account, except large amounts of duties, freight, &c, until the Account sales is prepared, when a full estimate of all petty charges is made at once ; hence in paying for labour, cartage, or insurance on A.'s sales the entry would be Charges or Insurance to Cash, as though they were paid for our own business. This presents no difficulty in practice. The amounts charged the owner are not necessarily the amounts actually paid by the agent, but such as are usually charged, and can in most instances be estimated without reference to previous entries. We will suppose then that A.'s goods are all sold, and the Credit side of his Sales account is $5,845.80 ; Debit blank. We charge for Labour " " " Cartage " " " Postages Our Commission, 5 per cent., Net proceeds due A. Gross proceeds 15.00 18.50 25 33.75 . 292.29 • 5,519.76 • $5,845.80 We are now authorized to make the following entries on the Journal 33.75 A.'s Sales . To Charges For Labour " Cartage " Postages 15.00 18 50 25 33.75 A.'s Sales .... To Commission . For our Commission on Sales. 292.29 292.29 A.'s Sales . To A. For net Proceeds due him. 5,519.76 5,519.76 The above three debits being carried to A.'s Sales account will obviously balance it. The Charges account will show returns for what has previously been debited to it for expenses on these goods. Commission account will show our gain by commission, and A.'s account will 8 57 SEC. IV.-COMMISSION BUSINESS. show what we must pay him. Hut the three entries are much more concisely stated in one, thus : A. 's Sales to Sundries .... ■>:>.M.~».-u For closiii" this account as per Account sales. Tb Charges 33.7:. •• Commission. ....... 202.29 " A. for his net proceeds ...... 5,519.76 So far ire have treated of what may he considered the general routine of business pursued by shipping and oommissioi) merchants. Hut there is s great variety of business done on commission on a small scale, to which it would be absurd to apply all these formalities. For example : suppose we were to put into the hands of a Bookseller 500 copies of Join b*S '■ keeping, allowing him a certain commission on the sabs; the bookseller need not open such account as Jones s Sales. It would be quite sufficient to open u account with Thomas Jones, and pass to his credit the proceeds of each sale, and charge him with expenses and commission, keeping copies of invoices, and comparing quantity remaining on hand and quantity sold, with quantity received. The same course may be pursued in numerous cases where it is not necessary to render Account sales of each particular parcel separately, and where settlements are made periodically for all sold during three, six, or twelve months. After the general arrangement and objects of accounts is once thoroughly mastered, the book- keeper must expect no other guide than his own judgment to meet these minor points ; and if he only study simplicity, and adopt whatever course appears most brief and easily understood, he will not go far astray. EXERCISE IX. Journalize and post the following month's transactions, and take a Trial Balance. New York, April 1st, 1-I-. Received ^ Patrick Henry, to be sold for account of Janus Kelly, London, 20 cases Linen Diaper, Linen, and Demi Linen, ^ I. B. Paid cash for Duties .... 474.32 ii ii Freight .... 14.40 EXAMINATION. What is lli.' person rilled who consigns goods to lie sold on Commission 7 - —The i ioaatgnnf What is tin- person c tiled "ho receives them for that purpose 7 jiiMicer. — The Consignee, OBstga | Ii to In- -old in I Ion on \ «>nr account, what account do you OfM ! r —Shipment to London London consigns goods, to \ou tor sale on his account, w hat account would vou open for the sale 7 .'Insurer.— \ '$ Bales. How would you arrange your Ledger aeeoont of A.'bmImI Jlwa m sr . — Credit it with nil the pmreedi. Wh it do you enter on the Debit tide ' Jlnateer.— In MOM eases nothing, until the gOOdl are all told; in others, Duties, Freight, ic. wiiit do j on then .• n t.-r I .sa*w*r.— The expense* not before charged, and net nroeeedi fai the owner. What then doM the balance ol the aeconnl show | i he ocoiint shows no bal inee . the net p r oeeedi and expeneei moal i>e equal to the gross proceeds. \\ hen you nay petty expenses on A.'s goods, srhat account do you debit ! jinswrr — Charges. I> *•> not tin. i ui k.> the Charges account thou BON than the arm d exiienses on your ov. n business ' Antxttr llow is tin- ractttV ,| | Amwrr ,i to Charges when the sales an closed. II >oii receive S..IXMI worth Of foods (O sell lor A . « hat Journal entry do ran make • N..MI- Where do \ on i nti t the ir: . Anlirrr In III. I OmmisslOfl liuoii-r Hook. It >..ii pay fun ii- \ - goods, wrhal entries si Antietr.—- Charges In C uh." Whj do yon not debii \.- - ties at ones « Ith the expanses | .intver.— it Is gsssrallj rmuhJ mors soavsalsnt looV bit all |»-u> axpeaaat ai one. »i„.n tho sales are closed. COMMISSION BUSINESS. April 2d, 1848. Sold Houghton & Arnold, at 8 mos., 80 pieces Linen Birdseye Diaper, as ^ Commission Sales Book, $253.84. Sold James H. Elliott, 60 ps. Linen Diaper "$ Patrick Henry, amounting to $280.01, and received in payment his note @ 6 mos. Sold William F. Sands, 20 ps. Linen $ Patrick Henry, @ 8 mos. $234.45 ; also mer- chandise, $ Sales Book, @ 2 mos. $253.20. Received his note in payment for . . 500.00 " the balance in cash . . $317.65 3d. Sold Daniel O. Gibb for cash, Linens $ Patrick Henry $277.89. 5th. Sold James Mason, Linens ^ Patrick Henry, @ 8 mos. from 25th, $124.70 ; also a quantity of merchandise, ^ S. B. $342.84. Received in payment Jno. Brown's note for 250.00 Also his note for balance . . . $217.54 Sold William Thompson, Linens

i Account nlea renderi d, the latu ■ bj the emiaenl houM » hoe* name It bean, 00 ACCOUNT SALES. Account Sales by James Strong on account of Mr. James Kelly {London), $ " Patrick Henry," 1 @ 20. 1848 April 18 April 8 mos. 1 it 5 6 mos. 2 « 6 8 mos. 12 Cash 16 u 20 8 mos. 25th 3 (i 4 a (t 30th 13 14 « 17 9 mos. 19 « 7 10 mos. 8 8 mos. 10 8 mos. 25th 9 « K 18 Cash 11 « 15 3 Lin. Birdseye Diaper 4- Linen -*- Demi Linen . U it f Lin. Birdseye Diaper \ Linen •f- Demi Linen .. -^ Linen -$■ Demi Linen -J- Linen 1001-1005 1011-1015 1001-1005 26-30 66-70 101-105 121-125 1001-1005 1001-1005 76-80 u 101-105 111-115 36-40 46-50 36-40 111-115 56-60 76-80 40 622£ 19 40 645^ 21 40 639^ 17 20 525 33 20 521 45 40 5184 26 40 520£ 27i 40 639.1 191 40 648^ 19 20 521 50 20 521 50 40 517| 28 40 522| 29 20 527 40 20 530 42h 20 527 40 20 530 40 40 518 29 20 527 49 20 520 45 Charges. Cash paid Duties ....... " " Freight Marine Insurance on £470 14s. Od. $5 fl $ £@l£ ^ cent Interest to 26th Oct. 1848 Entry Bond and Permit ..... Cartage, Receiving, and Delivering Storage, Labour, and Fire Insurance Commission and Guarantee 1\ per cent. Net proceeds due 23-26 Oct., 1848. E. E. New York, 20th April, 1848. 118 135 108 173 134 143 260 144 151 210 212 150 258 234 474 14 38 21 2 12 63 271 23 61 76 •J 5 75 14 50 9- 60 80 00 2-2 21 00 32 40 83 34 50 00 26 12 253 282 234 277 124 123 260 405 84 01 15 S9 70 22 50 17 362 40 225 210 362 492 3,614 25 80 22 23 93 897 2,717 77 21 61 SEC. IV.-ACCOUNT SALES. 3239 Account Sale of 108 Bales Cotton, received ^ "Siddons," Cobb, Master, from New York, and sold by order of C. H. Marshall, Esq., of New York, for account of M. Crotty, Esq., or whom it may concern. 1-17 Nov. 24 25 Bules. Gross. Cl. qr. lbs. HL 23 = 77-2- 5 DD 15 = 62.0.27 $ 24 = 70*2-23 JL 23 = 67-2-27 JE 3= 8-2-20 TT 10 = 28-3 15 WL10 = 34-2-26 Dft Cl. qr. Ibi. ' 23 ' 15 ' 24 ■ 23 1 3 1 10 : 10 Tare. Cl. qr. Ibf. 2-3- 1 2-0-24 2-2 • 2 2118 01- 7 1-0- 3 10-27 74-2- 9 Net or 8,353 lb 59-3*16 " 6,708 67-3*25 " 7,613 65.0.14 " 7,294 8-1-10 " 934 27-3- 2 " 3,110 83*1*17 " 3,741 Charges. Dock, Town, &c, dues Freight on 37,216 lbs. @ £d. per lb. Primage 5 per cent. Cartage, porterage, canvas, twine, and postages Insurance from Fire ..... Warehouse Rent ...... Interest on Charges ..... Bank Commission, 4; per cent. Brokerage, \ per cent. 4} 4* 5 5 5 •Mi -Hi $ft> 108=350-2-3 "3-24 12-1-26 337-0- 9 Net or 37,753 tb. 165 6 . £ £19 7s. 8d. £0 19s. 4d Commission and Delcredere, 1\ per cent. Net proceeds to the credit of Chas. H. Marshall, Esq. For account of whom it may concern, in account current. Pr. 8th March, 184S. Errors Excepted. Liverpool, 27th Nov., 1*47, PPn. BARING BROTHERS & Co., L. PINE. in 16 L3215 158 12 151 1!) 19 62 75 765 64 £ 700 62 SECTION V. CASH BOOK. The Cash Book, as its name implies, is a record of only cash transactions ; the left hand, or Dr. side, being appropriated to cash receipts, and the Cr. side to cash payments ; the two sides making one folio. Where the business is of such a nature that the transactions are partly for cash, as exemplified in the last month's transactions, the Journal is compiled from the Day Book, and the Cash Book is kept only as a memorandum, to show the daily balance of cash on hand. But in most cases the cash transactions are not entered on the Day Book at all, but journalized daily or monthly from the Cash Book, thus : Dr. CASH. Cr. Jan. 1 *To Balance on hand . ' Merchandise sales . ' Jno. Brown on account ' Wm. Price " " " Balance 5,000 650 500 300 6,450 $4,150 00 00 Jan. 1 rood; By Merchandise, bought " Houghton & Arnold, on account . " Charges, petty cash . " James Allen, on act. " Balance 1,500 500 50 •250 4,150 S6,450 00 00 00 00 00 00 Journal Entries resulting from the above. Cash to Sundries. Receipts this day 1,450 To Merchandise. " Jno. Brown. " Wm. Price. Sales On account Sundries to Cash. Payments this day Merchandise. Goods bought Houghton & Arnold. On Account . Charges. Petty Cash James Allen. On Account . ; 500 • 300 2,300 1,500 500 50 250 It must be borne in mind, therefore, that in making entries on the Cash Book every entry is double. For example : we receive cash $650, and enter it on the Debit side of the Cash Book ; but we cannot carry this same amount into the Journal, without knowing what account in the Ledger must be credited with that sum. Hence to provide for this we write " To Merchandise," which not only explains the transaction of selling merchandise for cash, but shows also that the Merchandise account must be credited. In addition to the name of The Balance is never journalized. 63 SEC. V.-CASH BOOK. the account to be credited, with each receipt is usually added, in a smaller hand, a few words, explanatory of the transaction. (Sue Cash Book, sec. I.) EXERCISE I. Enter the following transactions in a Cash Book, taking a whole page for the debit, and its opposite for the credit.* March 1st, 1848. Cash on hand this day . 4,840.27 2d. Bought for cash a quantity of goods, as per I. B. . . . 780.50 3d. Paid charges, as per Petty Cash Book 150.00 4th. Paid for my note, due this day ...... 1,000.00 5th. Sold merchandise for cash ....... 2,560.42 6th. Paid for my own note of $1,800, due 26th, and reed, the discount 4.50 Hire it must be remarked, that if we entered on the Credit side of the Cash Book only the net amount actually paid, viz. 1,795.50, and wrote "By Bills Payable 1,795.50," the Bills Payable account would require an additional debit of $4.50, to write off the note redeemed ; and the Interest account would require a credit to show the gain by interest $4.50 ; and we should have to enter on the Journal, Interest to Bills Payable for discount on note $4.50, making an entry of one transaction on two different books. The same thing is accomplished in a more simple way, by entering on the Credit of Cash Book " By Bills Payable $1,800 ; this puts the Bills Payable account right, but the Cash is over credited ; we therefore enter on the Debit of Cash " To Interest $4.50," and the Cash is rectified, the Interest account credited, and all is made right. It will frequently happen that such devices have to be resorted to, and the student can only prepare himself to meet such cases by con- sidering what accounts are disturbed by a transaction, and how he may provide entries that will rectify them. 7th. Received from Jno. Adams, on account ..... 1 ,258.24 8th. Paid Frederick Smith, on account ...... 584.29 9th. Bold for o ish goods as follows : 'I'm James Brown 587.48 « Edwd. Price 105.82 " Jno. King 884.29 11,467.04 •These tnanettoni have no reference to Uu btulneu of JunM Btrong; Iheti objocl li ilmplj to toaau the proa nmkiriL' entriM hi toe Oub Book. lil CASH TRANSACTIONS. March 10th, 1848. The North River Bank has discounted Jno. King's note for Discount .......... 11th. Paid my note due this day at the North River Bank 12th. Received the amount of Henry Wheeler's note due this day " for Cash sales . . . 13th. Received of Jno. Adams, on account 14th. Received for Cash sales of goods this day 15th. Paid for Stationer's bill . " « Coals Paid for merchandise bought . Received for Cash sales . 16th. 17th. Received from John Adams, on account " for Cash sales 18th. Received for the following notes : George Ingersoll's W. Seymour's " for Cash sales . 19th. Received for renewal of William Goodwin's note " " Cash sales .... Paid for goods bought . . . . 21st. Paid for my note due this day 22d. 3,000.00 35.43 587.53 970 325.24 257.00 1,750.82 157.28 35.29 192.57 . 297.23 1,230.29 • 200.00 530.28 . 1,200 . 1,000 2,200.00 • 857.90 • 11.42 231.24 520.64 Received for Cash sales ....... Paid for goods bought at auction ...... " Frederick Smith, on account ...... 23d. I have accommodated James Brown by discounting William Price's note of $753.50. Discount Received for Cash sales ....... 24th. Paid Henry Brown, on account of Frederick Smith . 9 500.00 589.24 120.32 100.00 12.84 324.25 58.42 65 — SEC. V.-CASII BOOK. March 26th, 1848. Received for Cash sales Paid for pass it to the Journal, and the bill is copied into the Cash Sales Book, as a memorandum having nothing to do with the Journal. It may. however, be employed as a verv useful Check, as the total (.'ash sahs lor the month OUghl to agree with the credit passed to the Ledger in the monthly entry from the Cash Book. If no Cash Sales Book be kept, it is a good arrangement to have a separate column in the general Sahs Book for Cash sal. s see. [.Sales Book), and in journalizing the sales, of course all carried into the cash column is omitted. We now buy a hill of goods for cash, and, as before, make the principal entry on ill'- ( lash Book ; bul here it is al o necessary to copy the invoice into the Invoice Book, and a separate column here fin- cash purchases will he equally useful, to avoid the chan< journalizing these transactions twice, viz. once from the Cash Hook, and again from the Invoice Hook. We now sell merchandise on credit, and enter the sale on the Sales Book; this entry is sufficient, as at the end of the n th we shall enter on the Journal a credit to merchandise for the t..tal sahs, and a debit to the several persons 1 aooounts w ho owe for them. If they notes at the time of sale, or during the mouth, it is just as easj to enter on the Sales Book "Settled by N ■ md debil Bills Receivable, instead of the person, and thus avoid opening his account on the I. .deer. We now suppose a customer cornea in with whom we have an acoounl opened on the his note. This transaction we enter on the Daj B i k. ns the principal entry. But we must also enter the Q te on a Bill Book, which is merely used as a memorandum of SEC. V. -PROTRACTED SETTLEMENTS. the date when due, and other circumstances connected (see Bill Book), but which has nothing to do with the Journal and Ledger. We now buy goods on credit, and make the principal entry on the Invoice Book, which is sufficient ; but if we at the same time give our note, and do not wish to open an account with the party, we enter " Settled by Note," and enter the note on the Bill Book. We now give our note to a person with whom we keep an account. This entry we make on the Day Book as the principal entry, and the memorandum on the Bill Book. All entries of transactions, except those specified, would be made on the Day Book. The transactions are now all distributed in four books, and the contents of each are entered on the Journal daily or monthly, as the nature of the business may seem to require. No precise period can be insisted upon. It is the attempt to lay down arbitrary rules in these matters, and call them systems, that has dons so much to destroy the confidence of practical men in printed book-keeping. The journal entries of these four books are sufficiently exemplified in sec. I., which shquld be reviewed until the routine is understood. The outline of the plan, if well fixed on the mind, will readily guide the tyro in the details. 1st. All transactions of receiving or paying cash are entered on the Cash Book, and con- veyed to the Ledger by a daily or monthly entry on the Journal". 2d. All transactions of selling merchandise on credit are entered on the Sales Book, and conveyed to the Ledger daily or monthly through the Journal. 3d. All transactions of buying merchandise other- wise than for cash are entered on the Invoice Book, and conveyed to the Ledger daily or monthly through the Journal. 4th. All transactions, other than those named, are entered on the Day Book, and journalized as occasion offers. Those who may prefer dispensing with a Journal, and posting from subsidiary books, have only to follow the process adopted in sec. PROTRACTED SETTLEMENTS It is- very usual to sell several invoices of goods at different times, over a period of a month or more, without taking a note until the buyer has completed all his purchases, and is about to return to a distant part of the country. His account is then made out, and the time of the several purchases averaged, and one note taken for the whole. Now in journalizing the sales, it must happen that many will be found unsettled, where no notes have been taken, and where it is not desirable to open accounts with the buyers on the Ledger. For example : we find on the Sales Book that we have sold John Brown during the month three separate parcels of goods, which we know he will settle by note in a few days, and we do not wish to open an account with him by entering " Jno. Brown to Merchandise." We therefore determine to carry all this unsettled business of a temporary character to the debit of one account, which wp may with propriety term " Protracted Settlements." We therefore enter " Protracted Settlements to Merchandise " for goods sold Jno. Brown, and when Brown gives his note in settlement we enter " Bills Receivable to Protracted Settle- ments," for his note in settlement of his account. When all such business is settled up the account will balance ; but if it shows a balance at the end of the year, it of course goes on the balance sheet as resources.* * One objection may be offered to this course, on the ground that when the buyer calls to settle, and gives his note, there is no account on the Ledger from which the statement required can be obtained, and, consequently, it must be picked out from the Sales and other books, at the risk of item< being overlooked. But this is easily obviated, by keeping a book expressly for these temporary accounts, in which an account current is opened for each buyer, and an entry made whenever a transaction occurs in relation to " Protracted Settlements." Every account may then be ready when called for. For example : if we enter on the Journal or Day Book, Protracted Settlements to merchandise for goods sold John Brown, we at the same time open John Brown's account on the hook f >r protracted settlements, and enter on the Debit side of his account, To Merchandise. 10 cases Prints . . $. . . . 69 SEC. V.-GENERAL ROUTINE. I.\ wil\ 1TTOM. Pupp wo we compile our Journal from Hal fash Book, Sales Book, Invoice Book, and Day Book, where do we lint enter i Inc. r ,>ii ' -.,i paying cub ' . i t.r.-.t on the Day H> « »k ? ii .,., . « hen do you wlef II ' .Imirrr.— be in ni>- also on the Bale* H"k. end again through the Bales lt.».k I i he r tab sale* m ij be c trried Into an Inner column In 1 1 • « • Bales I! "k. and omitted in journali/inc : have an account opened on your Ledger « • i it John Broe/n, be owing you s-'.uoo, and you r. te lor it, what book do yon m >ke tin principal eatf) on T Book. In \\ Ii it I". .rn> I jlmtn-cr.— Bills Receivable .... 'J.mm To J. .tut Brown .... 2,000 Received his note for h dance due. What other record of the note i< required and where ? •r.— An >ntr\ of it must i>e mole in tin- Hiii Book, lo show when it beco m e* doe, end other nartimlafi Would the Bill Hook in inch cases in- u^.-.i In journalizing ! i n jer. Wo. Ii .loiin Brown gave hi* note for g la bought, end you did not wish to keep any account with bin on your Ledger, how would win in ike ih' entry ' fsv— Enter opposite his hill oafthe Bale* Book " Bottled by Not ." and m ike no l» i\ Hook entry. Bow would the transaction !•<• passed In the Ledger ' s«r.— Merchandise would be credited with the sale* in the monthly entry, ami Bills Receivable debited. Under wh t bead would this entry appear on the Journal • ,*7as*Mr.— Sundries to Merchandise Ii you had this ante disc inn ted, and 9d0 were deducted for discount, and si.'.'-'O paid to you in cash, how and where would you record the i) in cash, how weald you record the tr inflection ? Answer On the Cash Book " Cash to John Brown," in settlement by compromise 9BS0; ami on the Day Book "Profit fc Loss to John Brown," for lost on hi* Bcconnl compromised Tol H due 1,.", Ill i 'ash received .... B50 Los* 650 II .u would V ti po t the entry? Debit of Profit ft Loss, and 1650 to Credit of John Brown. Wh i |i done » Ith the other ■ nts in the entry ? i -r They .r.- merely ezpl inatory, and not to be posted. W in: i- underatuod bj an accouiil of Protracted Bettlementi ' \' . mnts ill a are Intended to be settled b> note u Ithln ■ very short period, w I. ii i the u ■■ of such an account ! opening > i. ... i account, which woulr 1 be closed again In a fon d II i I lllple. I s ( .|i joh i ii.-- good* on three mo .th-. and make the entry to day, bat he doe* not give his note for perhep* ■ weal , my entry would bo therefore .1 in Da in Merchandise, and when 1 got his note, "Bill* Receivable lo John Doe. ' Thus John . mint would be closed immodlatelj after opening It, By ii tvlng inch account as Protracted Settlement* 1 could • ■ that account, and iims throw numerous account* Into one, \\ h I W< .ii .1 III it ... r.ilinl how ' for which we had not taken notes, as agroed Bot* \\. ill I it lie Ii i lam -ell ' ii would balance when all had given their note* Butsl Id that not be the case, wben yon are making oul your Anal) sis, or Hiiame Sheet, how would you dispose of the jtnivt r Bet It down as Resources. 70 COMMERCIAL ARITHMETIC. SECTION VI PER CENT AGES. The student is expected to be well acquainted ivit/i decimal and vulgar fractions . Profits, losses, commissions, interest, premiums, discounts, and various other mercantile estimates, are rated as so much per cent. Thus if I lay out $100, and receive back $150, I gain fifty per cent (written 50 %). If I pay $105 for stock, which is responsible for $100, I pay five per cent, premium. The money on which the per centage is to be taken may be called the principal. The principal added to the per centage may be called the amount. Case 1. — The principal and rate per cent, given to find the per centage. For example : required the commission on $5,000 at 3 per cent. Case 2. — The amount and rate per cent, given to find the principal. For example : how much with 3 per cent, added will make $5,150? Case 3. — To find an amount which after deducting a certain per centage will leave a given amount. Case 4. — The per centage and amount given to find the rate. For example : I have $5,150, of which $150 is gain, what is the gain per cent, on the principal ? Solution of Case 1. $100 principal gives $3.00, consequently the per centage is T £, of the principal ; or, expressed in decimals, .03. Then, principal $5,000 x .03, gives $150. Hence the rule. Multiply the principal by the rate per cent, expressed as a decimal fraction. If 3£ per cent., .035 ; if ' r cent., 3)-0100 •0033 QUEST I ( >XS.* 1. What is my commission on (3,750. 13 al 2\ per cent. ? The student who is familiar with fractions will often be able to abbreviate, thus 2h is ^ of 100 ; hence divide principal by 40, or 5 per cent, is the ^V principal, &c. 2. Boughl merchandise for (5,648.20, how much must I sell it for to gain S\ per cent. ?f •''.. Sold merchandise for $8,440.52, and gained B^ percent., what did it cost? 4. Bought goods for (2,350.84, which I Bold for (2,897.32, what was my gain per cent. ? 5. Bought 584 yards of broadcloth f>r .Sl.T.vj. 25, paid charges, freight, & 3, and duties 36 per cent., at how much per yard must 1 sell it to gain 1"> per cent. ? 6. Sold goods at (4.62 per yard which cost (4.02, how much per cent, did I gain I 7 Sold cloth at 65 cents per yard which cost B3 cents, how much per cent, did 1 lose? 8. I owe Richard Roe, of New Orleans, $2,000, which he desires me to pay by buying a bill on that place, and remitting. 1 am to charge £ per cent, commission on the amount I pay for the bill. How much do 1 pay. and what is my commission I '.). John Doe, of Mobile, owes me (3,154.20, payable in New York funds. He instructs me to draw mi him to settle the debt, when bills on that place sell at l£ per cent, discount. How much must 1 draw for to give me the amount in full ? 10. I owe Charles Macgregur, Vera Cruz, $3,500, which I am desirous of remitting when tnge on thai place is 1 per cent, discount. I am to charge £ per cent, commission on the amount I pay for the bill, and my remittance must settle the account. What is the face of the bill, how much the commission, and how much cash do I lay out ? * it w ill \i-ry innch i"i«-iiit.'ii<- many of thi peratioiui » ben the student i< Informed, that it';i fraction oecnr la bii diritor be amy reduce both dividend and divisor to the tame relative value. Thai divide 346 i>\ Mj 346 4 A >r the] give the -:n inotient, * Iways estimated on the amount laid out 72 _ = SECTION VII. INTEREST Interest is a per centage allowed for the use of money according to the time for which it is retained : it is negotiated and quoted as so much per cent, per annum. Thus, if we borrow $100, and pay every year $6.00 for the use of it, we pay 6 per cent. ; but for any portion of a year we should pay a similar portion of the per centage — thus, for half a year we must pay half of 6 per cent., or for two-thirds we pay two-thirds of 6 per cent. Suppose, then, we borrowed $5,000 for nine months, we may first find the interest for a year, which is $300, and then deduct a quarter for the three months, wanting=$225. Or we may say one year gives 6 per cent. ; hence three-quarters of a year gives three-quarters of 6 per cent., or 4^ per cent., and 4J per cent, on $5,000 is $225. Hence, in calculating interest for part of a year, we may take the requisite part of the year's per centage, or the same part of the rate ; or in other words, we may either proportion the rate or the per centage to the time as best suits our convenience. Parts of a year are sometimes computed in days, and sometimes as months and days, for example — the time from January 12th to March 17th is, counting the days — January .... 19 February .... 28 March 17 64 but it is often called 2 mos. 5 days; that is, to Feb. 12th, 1 month ; March 12th, 2 months ; to 17th, 5 days more=2 months 5 days. Now a month, being the twelfth part of' a year, is 30 T S 2 days ; consequently 2 months 5 days=65|£ days, whereas the actual number of days between the two dates is 64, as above. We will now, however, compare two other dates, say from June 12th to August 17th — Actual days .... 66 2 months 5 days = . . 65-}-f so that in this case the months and days give a less portion of a year than the actual days intervening. Hence the computation by months and days gives more than the actual. days for February, April, June, September, and November, all these months having less days than SOy'j ; but all other months having more days than 30 T 5 j , to compute them by months and days, gives less than the actual time. It follows, then, from these premises, that Interest accounts made up in months and days will vary a little from those made up in days. Computing each day as g-J-j of a year, the method of months and days gives more or less than the days, but they can never be equal unless by a very singular coincidence. But days are often computed as the ^ of a month or '3 6 °f a y ear > a °d then the difference between the two methods of computation is considerable, as the latter gives T 'g more than the actual time. The most correct computation of time for parts of a year is the actual number of days ; but when days are computed as g J-^ of a year, as is commonly done for 6 per cent., then months and days give nearer the truth. For example : A makes out an account against me for interest at 6 per cent., in which he computes the actual number of days, and then charges each day as 3^ of a year ; but 1 may 10 73 COMMERCIAL ARITHMETIC. verv properly require him to compute months and days, for then I get 30^ ^ or eacn mont h instead of 30 days, or at least it will average that nearly. In this way I BhaU pay very little more or less than the actual interest, at :^>"> days to the year, but on the former method I pay y 7 too mjph. Interest 6 per cent. Interest at 6 per cent., for parts of a year, is most readily computed by taking parts of the rate, thus — 12 months gives 6 per cent., hence 2 months gives 4, of 6 per cent., or 1 per cent Two months is called sixty days, hence for every sixty days we may take 1 per cent, of principal. To take 1 per cent, we have only to point off two places from the dollars of principal, and consequently we have always the interest for sixty days on any amount at Bight. Thus, the interest for sixty days on n:{.1 12.24 is §31.42 ; and again, the interest for six days is T V of the amount for sixty days, or $3.14 — so we have always the interest for bix days by pointing off three places from the principal. Required the interest of $5,234.24 for 99 days ? Solution. 52,342 . . Interest for 60 davs £ of 60 days 26,171 . << " 30 " 5,234 . a " 6 " 2,617 . u M 3 u 86,364 . «« " 99 " Now, as we have always the interest for sixty or six days by inspection of the principal, we can make from these any amount of days, thus — 24 days=4 times 6 days — for 120 days twice 60— and for 22 days £ of 60=20, and T V of 20=2, thus— 3)5,23 4.24 1,744.74 20 174.47 2 $19,19 Ans. Observe, if you have 20 days, and want 2, it is T V> and T ' 7 is always obtained by writing the same figures one place further to the right. Much practice is needed to become expert in this proc As this computation is based on 360 days to the year, it is of course J- more than (i per cent., bill custom appears to have established it, although we think it should be restricted to parts of one month. For months and days interest at 6 per cent., the months are computed by multiplying 100th of the principal i>> half the Dumber of months, thus : Required the Interest for 5 months 7 day-; at <; per cent, on §8,854.29. Principal + 100 = 88,5429 24 half number of months. 77,0858 19,27 96,356 5 months, 8,854 6 days, (i I -J ,' of »> days. siiio.h,-, Answer. 74 COMMERCIAL ARITHMETIC. EXERCISE I. Required the total amount of interest on the following account to July 1st, at 6 per cent., in days, computing 360 days to the year. Jany. u Feby. 4th 19" 6" 10" March 2d " 10th March 18th April 6 " May u June u July 18" 12" 24" 10" 14" 1st Amount* 538.24 1,342.29 978.24 1,432.50 847.29 1,236.84 876.29 576.23 1,650.00 765.00 1,750.24 978.29 1,875.28 157.89 Days. Interest. 178 = 15.967 Mo. 5 Days. 27 Interest. 15.84 EXERCISE II. Compute interest on the above for months and days. INTEREST AT SEVEN PER CENT. Interest at 7 per cent, must be computed for 365 days to the year, hence it is usual to compute first 6 per cent. 360 days, add £, and deduct ^, thus : Required the interest of $538.24 for 178 days, @ 7 per cent. Interest of $538.24 for 178 days @ 6 per cent, is 15,967 i 2,661 73 18,628 255 18,373 Answer. But this operation is tedious, and is much more easily performed thus : Short method of computing 7 per cent, interest for days. Obtain the interest at 6 per cent.

^laces to the right for fourth line, and its half for fifth line. The sum of t^-~~ t terest required. 15.967 1.5967 7983 79 39 Interest at 6 per ce u a i_ cc " " \° of do. " " T i 7 oflast " ' " i of T i 7 $18,3738 Answer. 75 "■» x :t- SEC. VII.- INTEREST. Note. If the interest at 6 per cent. ^ 360 days be 1, the interest at 7 per cent. "$ 365 days will be 1,1507. Hence the above process is only a short method of obtaining the product by 1,1507. INTEREST AT SEVEN PER CENT. FOR MONTHS AND DAYS. When accounts are made up in months and days at 7 per cent., the months are computed as 12ths of a year, and the days as 365ths. For Months. — Compute the interest for a year, and take fractional parts, thus : Required the interest on $538.24 @ 7 per cent, for 5 mos. 27 days. 538.24 .07 or this way : 2)37,676 Interest 1 year. 37,67.68 Interest for 1 year. 5 12)188,380 l-.-:i- 3,139 $15,699 " 6 mos. " 1 mo. " 5 mos. $15,698 T s j of 1 yr. or 5 mos. Then for the days 5,382 60 days 2,691 269 = 30 " 3 " 2,422 242 121 1 27 " 6 per cent. 2,786 15,698 " " 7 per cent. 5 months. $16,484 Answer. The computation for months and days @ 7 per cent, is tedious, and it is not uncommon to compute the whole at 6 per cent. 360 days, and add ^ ; but that method, so far as days are concerned, gives J» too much interest. It is therefore usurious, 7 per cent, being the limited rate in this state. Note. To compute interest or per centages on sterling, or any foreign currency, first reduce the currency to a decimal expression, and then proceed as with dollars and cents. EXERCISE I. Compute the interest on the foregoing account in days @ 7 per cent. EXERCISE II. Compute the interest on the foregoing account in months and days @ 7 per cent. 76 SECTION VIII EQUATION OF PAYMENTS The object to be attained in equating payments is to find the proper time for paying a whole sum, the several parts of which are due at different dates. For example : I owe $300, which is due as follows $100 due this day, 100 " in one month, 100 " " two months. When may the whole be paid together without loss of interest to either party ? The proper time is an intermediate date, when the interest on the money paid after it is due is equal to the interest on the money paid before it is due.* In this case it is obviously at the end of the first month, for on that day I pay 100 when it is due, 100 a month before it is due, and 100 a month after it is due. We now compare the two modes of settlement, supposing that in each case the receiver put out his money at interest. 100 interest 2 months 1.00 300 interest 1 month 1.50 100 " 1 " 50 100 " " — 300 Interest. 1.50 So that in either case the interest by the time the last payment becomes due amounts to $1.50. From the above it is obvious, that to find an equated time we have only to inquire how long it will take the sum of all the debts to produce as much interest as the several debts would produce separately. For example : I owe Jno. King as follows — Jan. 10th .... $500.00 "20 .... 850.00 "25 .... 784.20 Feb. 12 .... 1,650.00 When can the whole be paid together without loss of interest to either party ? Solution. Interest. Jan. 10 500.00, from Jan. 10 to Feb. 12 = 33 days. 2.75 " 20 850.00, " 20 " " " = 23 " 3.26 " 25 784.20, " 25 " " " = 18 " 2.35 Feb. 12 1,650.00, $3,784.20 $8.36 j * ^'n 1 accu , ra !; y would require, when the payments are in prospective, that the interest on the sums paid after they are due shall equal the present worth of the sums paid before thev are duo : but t v * computation would be too tedious, and the error is disregarded in practice. 77 COMMERCIAL ARITHMETIC. Now, the intorr-st on the sums separately would on the 12th Feb. amount to $8.30. How long will it take 13,784.20 to give $8.36 interest ? Six days on 83,784 is . . $3.7S4 One day .03 $8.36 -f- .63 = 13 days. Hence, as we find 13 days' interest on $3,784.20 is (8.36, we have only to date 13 days hack from Feb. 12th, which gives Jan. 30th as the equated time; we therefore deduce the following Rule. — Compute the interest on the several debts to the last date, and find the amount of interest on all the debts. Divide this amount by one day's interest on the amount of debts, and the quotient is the equated time to count back from last date. It very commonly happens that goods are sold at different times and different terms of credit, thus : Jan. 10th, at 2 mos. . . 1,500 785 1,750 As a general rule, for all cases, it is better to affix to each amount the date when it is due in cash in a column ruled for the purpose. Then compute from these dates, instead of the date of the sale. EQUATING BY PRODUCTS. Those who do not use Interest Tables, and are not very expert at computing interest, will prefer equating by products, which is simply multiplying the time and money together, then dividing the sum of the products by the sum of the debts, thus: Products. Jan. 10 500.00 X 33 = . . . 16,500 10th, at 2 mos 18th, " 3 " 21st, a 6 « Feb. 10 500.00 x 33 = 20 850.00 X 23 = 25 784.20 x 18 = 12 1,650.00 x $3,784.20 19,550 14,115 )50,165(13 days back is 37 84 Jan. 30. 12,325 11,352 973 COMPOUND EQUATION OF PAYMENTS. The object of a compound equation is to find when the balance of an account shall take date, so as to cancel the balance due for interest. The impression made upon those unacquainted with practical accounting by the manner in which the subject is commonly treated, \i/.. that the object is to substitute one payment in prospective for Beveral payments in prospective, is entirely erroneous ; in perhaps half the cases to which equation is applied all the debts arc past due. How, then, it will be asked, can we pay the whole at the average date when that date is past ? The idea is an absurdity, but we can find « ben the Whole shall take date, for example: 1 have sold goods for John Brown 100 different times through the \ ear, and wish to find \\ ben | ran pass to his credit tin- whole amount so as to do linn JUSU06. The time will obviously be sufficiently back to give as muoh interest as the interest on the Ingly. Suppose ib,. total amount sold to be |2,000, and the in' to amount to .sjl) more, by making the $2,(KI0 take date four months back, 1 do what is equivalent to passing to his credit §2,0 1' 1 . w hereai If I p ■ |2,0 10 to his credit this date, 78 SEC. VIII.-EQUATION OF PAYMENTS. and the account were allowed to run on, I should be giving him compound interest, which the law would not sustain. The student must therefore learn to look upon dates as all- important, and the altering dates back or forward as the same thing with giving or taking interest. Let us now suppose I copy from my Ledger John Brown's account, examining all minutely, and dating each item when it was due in cash. We will also suppose that the day on which we do this is 25th January, and we propose to make up his account to this date. We therefore compute the interest on every sum, both debit and credit, up to this date, and insert it in a column opposite its amount and number of days, thus: CASE I. (Balance dated bachoard.) Dr. John Brown in account current with Thomas Jones. (To Jan. 25th.) Cr. 18481 d'ys '«. rest , 1848 d ys in'..:- rest - ■ -y Jan. 1 To Merchandise 24 4 00 1,000 00 Jan. 6 By Merchandise 19 6 33 2,000 00 u 5 « a 21) 5 00 1,500 >o (C 8 a 17 2 83 1,000 00 (C 15 a a 10 o 00 1,200 i.l * Balances 3 34 3,500 00 (( 20 a a 5 1 50 1,800 00 a 25 a u $ 12 50 1,000 00 $ 12 50 6,500 6,500 00 Now the balance due for interest is $3.34, and the balance due on the account is 83,500 ; the question, therefore, is how far back must we date $3,500 to give $3.34 interest. One day's interest on $3,500 is $0,583, and this is contained in $3.34 5 T 7 „\ times, which we call six days, and six days back from 25th Jan. is 19th Jan., the date required. Insert this date then opposite the balance, and 5 T 7 /o days in the column of days, and the account speaks for itself, as no other date would make the interest on both sides balance. If then the account is settled 25th January, John Brown must pay $3,503.34 ; but if the account runs on, then the new account is charged $3,500, dated 19th January. CASE II. It will often happen that the balance of an account has to be dated forward. For example : John Brown owes me $1,000, and $10.00 in addition for out his account I buy goods from him amounting to $2,000 January 25th, stands thus : interest, and on the day I make the account, therefore, this day, Dr. Nov. 25. To Merchandise 2 mos. int. $10.00 JOHN BROWN. 1,000 Jan. 25. Cr. By Merchandise . 2,000 Now I obviously owe John Brown $1,000, but he owes me interest $10.00, and as I prefer holding the balance to receiving the $10.00, it is evident that I have a right to keep the balance due, viz. $1,000, just as long as he kept my $1,000, viz. two months, and the balance will then be payable two months forward, or March 25th. The account, if then made out, will stand thus : Dr. Nov. 25. Mar. 25. To Merchandise 4 mos. int. $20.00 To Cash Balance JOHN BROWN. . 1,000 Jan. 25. . 1,000 Cr. By Merchandise . 2,000 2 mos. int. $20.00 $2,000 $2,000 79 SEC. VIII.-COMPOUND EQUATION BY PRODUCTS. It will now be perceived that there are two cases, the one requiring the balance to be dated buck, and the other requiring it to be held over; the ground on which they differ being that in the "iii the balance of interest and balance of account are either both payable or both receivable, that is, they are both on the same side of the account ; but in the other case, they are on opposite sides of the account, that is. the balance is to be received, while the balance of interest is to be paid, or vice versa. To exemplify still more fully we give the following account, where the balance is dated forward. Dr. CASE II. (Balance dated forward.) John Brown in account current with Thomas Jones. (To Jan. 25th.) Cr. 1-1- i 1M-1H Jan. 1 To Merchandise 24 4 on 1,000 00 Dec. 7 By Merchandise 10 16 S3 2,000 00 « 5 (( u 20 5 on 1,500 00 1849 (i 15 .<< H 10 2 00 1,200(00 Jan. 8 (( u 17 2 83 1,000 (Ml c< •jo <« CI 5 1 50 l,800]00 " Bal. of Acct. 3,500 00 tt 25 K (t 1,000 (id " Bal. of Int. To Balance $ o 19 1 — r 66 16 By Interest $ 19 16 6,500 00 6,500 00 3,500 6 66 Here it appears John Brown owes me $3,500, but I owe him $6.66 interest. Now it is evident that he may hold back this $3,500 until the interest comes to $6.66 ; then $6.66 -f- .583, or one day's interest, gives 11.4 days, and eleven days forward from 25th Jan. gives Feb. 5th, the date required. If John Brown settles the account 25th Jan. he pays $3,500, less $6.66, but if he takes the equated time he pays $3,500, Feb. 5th. From the foregoing we therefore deduce the following rule for finding when the balance of an account takes date : Rule. — Compute the interest on both sides to the day of making up the account. Insert the balance of interest and balance of account, making all the columns balance. Divide the balance of interest by one day's interest on the balance of account, and the quotient is the number of days to be counted back or forward. If the balances of interest and amounts are on the same side of the account count backward, if otherwise count forward. COMPOUND EQUATION BY PRODUCTS. The process is merely substituting the product of the money and time for the interest, as before exemplified, and dividing the balance of products by the balance of the account. The quotient is the equated time. Thus : Dr. John Brown in account current with Thomas Jones. Cr. ]-l- 1-ls Jan. I To Merchdise. 24 24,000 1.000 00 Jan. (i By Cash L9 38,000 •.•.000 00 u 5 <« <( 20 80,000 1.500 00 * ■i K 17 17.000 1.000 1)11 U 15 a << 10 12,000 1,200 00 " Balances •Jli. (Kill 3,500 11(1 " . 20 << u 5 9,000 1,800 00 20,000+3,500= " ■i:> u c< * 1.000 0(1 •V,r„ days Or 8 davs hack = Jan.' 19th 1 75,000 0,50(1 00 75,000 6,500 (1(1 "~l If the balance of products and bal mice ofthe account arc Oil different Bidea count forward. 80 SEC. VIII.-EQUATION OF PAYMENTS. EXERCISES. 1. The Debit side of an account made up to July 1st is $2,500, interest $24.62, the Credit side $3,200, interest $29.38, when shall the balance take date ? 2. I have sold goods for John Doe, amounting ^ Sales Book to $5,843.22. The interest computed on each sale to January 1st is $150.24. The expenses chargeable on said goods for duties, freight, commission, labour, &c, are $856.24 ; and interest to date January 1st $39.56. When do the net proceeds take date ? 3. Sold Richard Roe the following merchandise: Jan. 10th at 3 mos. $1,350; Jan. 15th at 4 mos. $1,875.20 ; Jan. 14th at 3 mos. $1,824. He calls to settle Jan. 20th, and pays in cash $500, and gives his note for the balance. When must that note fall due ? Note. It will often happen in equating an Account Sales that the whole can be reduced to a simple equation by cancelling from the sales enough to cover the charges, where there happens to be a sale on same date that the charges are due. 11 81 SECTION IX DISCOUNT. If we pay a debt a year before it is due we ought, in strict equity, to pay a sum which, with a year's interest added, will amount to the debt. For example: we owe $106, due in one year from this time, interest at 6 per cent. Now it is obvious that $100 paid now discharges the whole debt, for that $100 placed at interest one year amounts to $106. The present worth then is ■]-££ of the debt for a year at 6 per cent., for half a year ■{-£$, or for two months }£f , and so on. Then the present worth of $100 due a year hence at 6 per cent, is not $94, for that would be making the present worth J^- of the debt, whereas it is }££, or $94.34, which with 6 per cent, added, gives $100. To find the present worth, then, of a sum due at a future time we adopt the following Rule. Divide the debt by $l,-plus tfie interest of $1 for the time, and the quotient is the present worth. •The correctness of this rule may be thus demonstrated : Suppose we require the present worth of $1,000, due in one year at 6 per cent. Now we have in hand $1,000, from which we lay down $1 as present worth, and apart we set down .06 (six cents) as interest of the same for one year; it is obvious that the $1 discharges $1.06 of the debt. Now we lav down another dollar as principal, and six cents as interest, and so proceed until we have told out the whole ; we shall then have the money divided into two parts — the one being discount, the other the present worth — and the present worth is obviously $1 for every $1.06 we counted out, and ,0 T °o our Invoice of goods shipped to " H -il.-ince due me payable in Lon- " Balance due me payable in New £1,234 18s. 6d. $3,500.00 jt'1,-234 lHs. 6d. $3,500.00 To Balance due In London . . . £1,110 0s. 8d. " " " " ... 500.00 Now, the value in dollars of the balance due me in London depends upon the present rate of Exchange. The above is not given in exact mercantile phrase, as the object was to explain the nature of the account as clearly as possible. PAR OF EXCHANGE Par signifies the expression of an equivalent between two different currencies. For example : the quantity of fine gold contained in a sovereign is fai nearlv of that contained in a half eagle, consequently the sovereign is worth $4.87, which is the true par. Exchange on London, however, is quoted on a merely nominal par ; that is, the dollar is assumed to be equal to 4s. 6d. sterling, and when exchange is quoted at $1.08, or $1. 09$, &c, it means so much per unit of 4s. 6d., and is called 8 per cent, or 9£ per cent, premium, whereas in reality exchange is at par when quoted at 9£ per cent, premium. For example : 4s. 6d., or nine sixpences, costs .$1,095, and as forty sixpences make £l, we must pay for the pound V of $1,090, or $4.87 nearly. The rate of exchange between two places is regarded as indicating from which of the two the balance of trade is due. If exchange on London is above par, it indicates that this country lias imported more than it exported, and lias to pay the balance in specie ; if at par, the imports and exports are regarded as equal ; and if below par, it is inferred that the exports have been greater than the imports, and that the balance is to be received here in specie. This may be illustrated as follows: Dr. Lonoon in Account Current with New York. Cr. Due New York Cotton Merchants Due London Merchants from the for cotton shipped . . . 130,000 New York Importers . . 50,000 Balance of trade due New York . 80,000 £130,000 £130,000 Here London owes New York £130,000, and New York owes London £50,000. Hence it' London shipped £180,000 in specie to pay her debt, New York must ship £.".0,000 of it back, which would be an obvioiM loss of freight* insurance, and inn-rest, h would be much easier to order the parties in London who held the proceeds of cotton to pay over the £50,000 to the creditors of the import,. rs, and thus savo its transit hack and forth." We give 86 SEC. X.-FOREIGN ACCOUNTS. an individual example of the way this is effected. A., one of the cotton merchants, has £5,000 due him in London in the hands of Y., and B., an importer, owes Z., in London, £5,000. Hence A. wants to bring money from London, whilst B. wants to send it there. Now a broker brings A. and B. together to effect this arrangement. A. pays B. the equivalent of £5,000, for which A. gives him an order on Y. in London. B. then incloses this order on Y., and sends it to Z. to pay his debt, so Z. goes to Y. in London, presents A.'s order, and receives his money due from B., and Y., instead of shipping £5,000, has only to pay it over to Z. This order, then, is the document called a Bill of Exchange, and is written thus : BILL OF EXCHANGE. £5,000 0s. Od. New York, January 1st, 1849. At sixty days' sight of this my first of Exchange (second and third unpaid*), pay to the order of B. five thousand pounds, for value received. To Y., A. Merchant, London. It may assist the uninitiated to take the following view of the operation of a Bill of Exchange. If he has £1,000 to receive from A., in London, and £1,000 to pay to B., in London, he has only to order A. to pay B. Now when he buys a bill it is only because he has no debtor in London, and therefore in buying a bill he buvs a debt from some one else. Now assuming that the account between London and New York stood as exemplified, the cotton merchants, or sellers of bills, would be in the market with £130,000, and the buyers, or importers, would want but £50,000. Thus the supply being greater than the demand, the price of bills must fall below par; the cotton merchant would rather sell his bill at 1J or 2 per cent, below par than import the specie at the cost of 24. per cent., and thus the price must fall, until the cotton merchants prefer importing specie, and when they have imported the whole balance due the rate must again rise to par. It can remain at par only as long as the supply of bills is equal to the demand, and when the supply becomes less, then it rises above par. These must be regarded only as the general laws which govern the subject of foreign exchange, when drawing and remitting are confined to the legitimate purposes of commerce. Bills of Exchange are, however, like stocks, frequently speculated upon ; and thus the market may rise or fall without affording any positive evidence of the state of the balance of trade ; even a general want of confidence may cause bills to fall. For example : I may owe £1,000 in London when bills are selling at $4.70

' nuiiiiTiilor, tmj divide by the dennimnutiir. 88 SEC. X -FOREIGN ACCOUNTS. To convert pounds into dollars at a premium or discount. Example. — What will £184 10s. 9£d. amount to when exchange on London is 8| premium ? The price paid for 4s. 6d. Sterling at par is 1 dollar, at 8$ per cent, premium it is 1.08|. In dollars at par as above .... $820,173 Price paid for 4s. 6d 108$ 6561384 820173 41008 | of 82017 20504 -A of last Ans. $891,938 Rule. — Reduce the pounds to dollars at par, and multiply by the price paid for 4s. 6d. To convert dollars into pounds at a premium. Example. — What amount of Exchange can I buy on London for $891.94, at 8| premium ? 4s. 6d. sterling, if bought at par, would cost $1.00, but I am to give $1.08f for 4s. 6d ; therefore how many times is $1.08$ contained in $891.94, for just so many times can I buy 4s. 6d. 1,0875) 891.9400 (820,174 times 4s. 6d. 87000 9 .21940 21750 40)738,1566 Ans. £184 10s. 184,5391 20 . .19000 10875 10,7820 12 Q*d .81250 76125 9,3840 4 •51250 43500 1,5360 Rule. — Divide the dollars by the price of 4s. 6d., and multiply the quotient by T 9 ^. It is very usual to sell imported goods by the pound sterling, for example — I import goods the invoice of which amounts to £470 14s. Od. Exchange 9 per cent, premium, which in dollars is . $2,280.28 I pay here for duties and other charges .' 527.55 Making their total cost $2,807.83 How much do I pay in dollars for an article charged in the invoice £l ? How much for one shilling ? Operation.— 470.7) 2807.830 (5.96 23535 •45433 42363 20)5.96 .298 •30700 28242 pound $5.96, "$ shilling 12 30 cts. Ans. 89 ■M SEC. X.-FOREIGN ACCOUNTS. Rule. — Convert the pounds into dollars at the ourrenl rate of exchange, and add expenses on this sid*'. Then divide by ihe Dumber of pounds for the price per pound, and that I for the price per shilling. EXCHANGE ON FRANCE is quoted as so many francs and centimes ( r ,' lT ) for the dollar of the United States. This quotation is apt to perplex the uninitiated when they hear that exchange on Havre has gone down from 85.27 to 85.29, but a moment's reflection will show that the more francs we get for a dollar the cheaper or lower is the rate of exchange. On London the pound is the certain and the dollar the variable money; but on France the dollar is the certain and the franc the variable. The intrinsic par of exchange on France is 5,34535 francs for one dollar, silver for silver, but the commercial par is nearer f.5,2625, that being the amount an United States dollar will pay in France, in consequence of a seignorage oi 1'. percent, being charged for coil The par, however, is disregarded in keeping accounts, as the quotations are so many francs for the dollar, and not as on London, so much per cent, above or below par. To convert francs to dollars. Example. — How many dollars must I pay for a bill on France for 5824,32 francs when Exchange is f 5.28J ? f.5.284, cost one dollar — then how many times f.5.284, in 5824.32 ? for so many times must 1 pay one dollar. 5.2825) 5824.3200 (1102.568 Ans. Rule. — Divide by the number of francs per dollar. To convert dollars into francs. Example. — In $1,102.56 how many francs and centimes at f.5.28| — one dollar is f5.28£. 1102.568 is so many times 5.284;, thus : • 1102.568 5.28J Ans. f.5824,31546 Rule. — Multiply the dollars by the rate in francs. EXCHANGE ON HAMBURG is quoted as so many cents per Marc Banco, worth intrinsically 35 f-*tf- cents. The denominations of money in Hamburg are the Marc Banco of 16 schillings, and the schilling is divided into 12 pfennings. To convert Marcs Banco into dollars of United States. EXAMPLE. — A of Hamburg semis me imods amounting ji Invoice to (i,123m. 12s. lOpf. when exchange is at 84 oents per Marc Banoo. What amount of dollars shall I pass to his credit ? *-J#)l0.00 pfennii 16)12.833 decimal parts of schillings. 6. 123,802 marcs banco. 84 24405208 1881 1 106 Am. 82082.09268 • Tin- •.in. i. hi wh ten ih.u i.. i, i require to have Itali pro© I 0,193m, l'.v lOpfl Pint we take 10 pfenning, which U lO-lSthi ol ... riien we prolix I'Js.. whirl ■chllllngi, which, divided li r the decimal expression s. 7d. What shall I realize for the debt in fedi ral money, wh< n exchange is at .!» s . John Brown, London, owe. M ,e $2,280.26, which he desires me to collect by a draft on him when exchange is at Ml. I wish to know what amount of sterling 1 must draw a bill for ilize the debt with '. per cent, commission ! 9, I owe John Brown $2,280.26 for goods sold here, which I am directed to pay by remittance. What amount of Sterling must 1 buy so as to charge .1 per cent, commission 00 the amount invested, exchange al .i ( 7. • I munt charge Jnnii-s Brown tn •J'.. Ctuh for amount Invi itad In Hill oJ g " >t> »f " < ■ •! II II 1 1 nnloll , \ |m ! , . nl lO, *V*<7.50 92 SEC. X.-FOREIGN ACCOUNTS. 10. Sold goods for A., of Havre, net proceeds $3,435.27, which I am to invest in a bill ot exchange, at 5.27 francs per dollar. What amount of francs can I buy, taking \ per cent, commission on the amount invested ? What would be my entry ? 11. I owe B., of Hamburg, 8342 Marcs Banco, 12 schillings, 10 pfennings. What must I pay for a bill on Hamburg of that amount, when exchange is 32^ cents per Marc Banco ? What would be my entry ? 12. C, of Amsterdam, owes me 10,842 T \ 6 „ florins, when exchange is 40^ cents per florin. What amount of dollars shall I receive for a bill of that amount, and what entry shall I make ? 13. D., of Bremen, owes me $3,578.29 for goods, which I shipped to his order ; I am to charge \ per cent, commission" for negotiating the draft, exchange at 76'^ per rix dollar. What amount must the bill be drawn for, and what will my entry be ? 14. D., of Bremen, shipped to my order goods amounting per invoice to 8,342 rix dollars, 25 grotes, 3 swares, for which I paid duties and charges on this side, $879.24. How much must I charge for an article invoiced at one rix dollar, so as to gain 12£ per cent., exchange at 78i cents ? 15. United States 6 per cents sell in London at 102. What is the equivalent rate in Tsevv York, when exchange is $1,094, ? $100 -payable in United States sell in London for 102, by which is meant $102, each dollar being ¥ \ of one pound, or 4s. 6d. ; and As. 6d. payable in London is worth $1.09^ in New York. 16. United States 6 per cents, with two months' dividend on, sell in New York at $lllf. What is their equivalent in London, exchange on that place at $1.07i? What are they worth there with dividend off? They are worth that sum, which with l^per cent, added, gives $111.75. With dividend off, they are worth the sum which at the same premium would produce $111.75, less the dividend. 93 K_ SECTION XI. COMPOUND INTEREST. The computation of compound interest is tedious, and as it is often required in the settling up of old accounts, as well as in other financial operations, we ofTer the following abridgmi Multiply the principal by the number standing opposite the number of years required, the product is the amount required. These sums are the compound interest of one dollar for the several numbers of years. In some arithmetics the table ;s extended to thirty years. The object of introducing it here is to show its convenience. I. IMPLE. Required the compound interest of $5,000 @ 7 per cent, for 7 years. -Si at compound interest 7 years gives as above $1.6057^ 5.000 Years. 6 per cent. 1 per cent 1 1.06 1.07 2 1.1236 1.1449 3 1.19101 1.32504 4 1.26247 1.31079 5 1.33822 1.40255 6 1.41851 1.5(1073 7 1.50363 1.60578 8 1.59384 1.71818 9 1.68947 1.83845 10 1.79084 1.96715 $5,000 gives 5,000 times as much, or $8,028.90 When more years than ten are required the number corresponding is easily found. Thus for 15 years we take 10 and 5. The number opposite 5 is for 7 per cent. 1.40256 u (i « jo " " " " " 1.96715 15 The product of these two numbers, or 2.75902 is the number answering for 15 years. For 18 years multiply the numbers opposite 10 and 8, or the number opposite 9 multiplied by itself. The object here is merely to show the use of such tables ; they will be found extended sufficiently for all purposes in M'Culloch's Commercial Dictionary, under the head of '• Interest ami Annuities." COMPOUND DISCOUNT It is sometimes required to find the presenl worth of a certain sum due after a certain number of years have expired. Por example: in ten years I shall be entitled to receive (16,000, whal is its prtsenl worth, interest being at 7 per cent. I Bj table, one dollar paid now Would in ten years amount to Nl.079 13.81644 Now if we require to know the amount produced at the end of seven years at 6 per cent., by an annuity of $500, we find by the table that a $1 annuity for that time produces $8.39383, which X 500 == $4,196.91. Or, if we want to know the present worth of the same annuity, we must find what sum at interest for seven years would amount to $4196.91. By the table of compound interest, we find that $1 in seven years at 6 per cent, amounts to $1.50363, then 4196.91 -J- 1.50363 = $2791.18. The proof is obvious. $2,791.18 improved at 6 per cent, interest would in seven years amount to $4,196.91, and so would an annuity of $500, consequently their values must be equal. * This table is made from the previous one, as follows : — The first term of the previous table is the amount of $1, 1 year ■ 2d, the amount of $1, 2 years ; 3d, amount of $1, 3 years. Now, an annuity of one dollar, three years, is the sum of these previous terms with one dollar added. 95 SEC. XL-ANNUITIES. QUESTIONS. 1. A youth had a legacy bequeathed to him by his uncle of $2,000, which has been improved at 6 per cent per annum since he was twelve years old. What will it amount to when he attains the age of twenty-one, if it continues to improve at the same rate ? 2. A gentleman is entitled to a legacy of $4,000 at the death of a relative, whose* expectancy of life is seven years. What is its present worth, interest 6 per cent. 1 3. A father wishes his son, who is now twelve years old, to have $10,000 on his attaining the age of twenty-one. What sum must he now invest, so that improved at 6 per cent, it will amount to the sum require? ? 4. A gentleman finds that he can save annually from his income 8200, which he can improve at 6 per cent. What will his family receive at his death, should he live ten yi 5. A gentleman has 82,036.16 to pay at the end often years, without interest, and wishes to appropriate annually from his income sufficient to pay the whole debt when it becomes due. How much must he pay annually, interest at 6 per cent. ? He must pay annually the annuity that will produce in ten years the sum required. 6. A gentleman is in receipt of an annuity of §200, to cease at the death of a relative whose expectancy of life is ten years ; he wishes to sell his claim to it for its present value, what sum ought he to receive interest at 6 per cent. ! 7. A gentleman coming to possession of an estate, finds it encumbered with a debt of $20,00<>, which he determines to pay off in seven years, interest 7 per cent. What sum must he annually apply to this purpose, so as to effect his object ? 8. A father offers to invest $500 at 6 per cent, interest, and permit his son to take the whole on these conditions, viz. the son is to draw out annually an equal sum, and to exhaust the whole in five years. How much may he draw annually ? * For (able* of Expectancies see McC'ulloch's Commercial Dictionary, in which may be found the average duration of life for every age from 1 to 100. ne may !»• coriotu t<> know how 1 1 1 ■ - --« ■ expectancies are obtained, and as the subject is generally considered acomplicated one, we ofler the following as a simple method of arriving at the result. NORTHAMPTON TABLE. Tulilc of Mortality, showing the Number of Persons alive at the end of every Year, from 1 to 100 Years of .'igc, out of 1,000 born 1 ox ether. Ages \o. Of Ages. No of \-< No. of Ages. No. of No. of V'.'es. No. of Ages. No. of Persons. Persons Persons. Persons, Persons. Persons. Persons l 74:t 16 401 31 :s7n i 45 'J7'.l 5U 18-2 73 85 87 9 3 825 n 1 . 32 364 40 J7-J (ill 175 74 78 7 3 582 u 4.VJ :i:t :i:>7 47 265 III JO- 7.-. 71 80 5 4 553 in 446 34 351 4ri 259 &i IT. 1 76 65 '.in 4 5 536 20 ill :r> 344 4'J 359 63 154 77 58 Bl 3 a 52] 21 434 36 338 .,ii 345 64 117 78 99 9 7 SOU 22 4-'H :i? 331 51 938 65 III! 79 46 93 1 8 499 23 4JI 38 335 .V2 33J 66 133 80 411 94 1 !» 4'.IJ 24 4l. r > :iii 318 53 33 1 67 196 81 :i:. Ml 400 •in 312 54 •J 17 119 39 30 06 11 l-:i 105 ■ii 305 310 li!l US B3 97 19 178 27 ._.„, 50 903 7(1 106 -l •-•ii B6 i:i i;i 28 380 4.1 57 196 71 99 BS 10 99 ii r,» :i-:i 44 985 58 189 72 09 80 19 100 13 469 30 1 376 The lota] number of years ol life to I"- enjoyed by the 1,000 born amounts to 25,678, consequently each would !»• entitled t>> i the number that died each year all died ai tl ud of the >e.,r. Assuming (what is not strictly correct, however) thai the deaths of any one yeat would average the middle of the year, we should have i" deduct half a \ < ir for every ili raiii that occurred. Then — Total Dumber of yean to i><- lived Half of l.OOd deaths i cur , 500 True number of years lived .... 95,178+1000=85.18 y< ucyofa healthy riiiM »t iiirih. Tie n •'. 257 have ilieil. leaving 743 living, an. I the niiinl.er ..I' years of life 10 thl Tiien i.ihhi 95] ii kves 1 1:1 deaths to occur, for which deduct half as before S71J 96 Expectancy at the age of one vmi SEC. XI -ANNUITIES. 9. A gentleman without family or relations, possessing $10,000, desires to purchase an annuity for life. His expectancy of life is nine years. What annuity should he receive, the rate of interest being 7 per cent. ? 10. A gentleman, whose expectancy of life is nine years, wishes to secure to his family at his death the sum of $10,000. How much should he pay annually during his life, interest at 7 per cent. ? 11. A gentleman has property valued at 810,000, which he secures at his death to his nephew, on condition that the nephew pays him annually $500 during his lifetime. His expectancy of life is nine years. What annuity is the legacy worth, interest 7 per cent., and what is the annual profit to the nephew if the uncle live exactly nine years ? What is the present worth of the legacy ? 12. The debt of the city of New York, January 1st, 1849, was $11,621,232, but as an offset they owned $479,820. How much must be appropriated annually to pay off the debt and interest in ten years, interest at 6 per cent. ? 13. A company of two hundred persons subscribe $20,000, in shares of $100 each, which they invest in real estate. Their property has so improved, that it now produces 10i per cent, per annum interest on the amount invested. What must now be given for a share, so as to realize 7 per cent, per annum 1 14. I. have bought the bonds of a company at such a rate that they produce me 10i per cent, per annum on my investment. The bonds are payable in ten years from this time. How much may be given for $100, invested so as to realize 7 per cent, per annum ?* 15. I pay $70 for a bond of $100, payable in ten years, and bearing interest at 6 per cent., payable annually. What profit shall I make per cent, per annum, provided I hire money for the operation at 7 per cent. ? 16. A Railroad Company issues its bonds for $250,000, payable at the end of twelve years, and bearing interest 6 per cent., payable annually. Jacob Turnpenny, having lodged securities with a bank, and opened a credit for the entire operation, has purchased said bonds for 70 per cent, oi their face, and given his check on the bank for the whole amount of their cost. He has given his note to the bank for the amount thus borrowed, which is to bear interest at 7 per cent. ; and he proposes at the end of each year, after receiving his dividends, to deduct his profits, and apply the rest to the liquidation of his indebtedness. For the balance then due the bank he gives a new note in place of the old one, and so on from year to year. But the first year having nearly elapsed, he desires to know how much per cent, on his investment he is to receive for his profit. 17. How much per cent, of their face may Turupenny sell the above bonds for, so as to retain all his profits on the above operation ? * This will, no doubt, appear to the student a mere repetition of the previous question, but a little reflection will lead to a very different conclusion. According to question 13, $]00 produced $10i per annum for ever, or, as it is termed for distinction, in perpetuity ; but f$100 invested according to question 14 produces J-ilO^ per annum for ten years only. It is true that if we give §150 for $100 at $10£, we should receive 7 per cent, for the $150 during the ten ye^irs ; but at the end we should receive back only two thirds of our principal! and the sum we ought to give over 100 is the present wurth of a ten years' annuity of $3.50 (worth $124. 5b). The present worth of this bond will everv year diminish until the last, when it is 103.27. 13 97 SECTION XII SETTLEMENTS. It is the usual practice when partners do business on unequal advances of capital, to credit each partner with his capital advanced ; and at the end of each year, before closing the Interest account, to credit each with interest on whatever amount may have stood at his credit when the books were balanced. For example : A. and B. are partners; A. having three times as much capital as B. each has a yearly credit passed to his account for interest, thus : Dk. A. Cr. 1837. Jan. 1. By capital advanced . 860,000 Dec. 31. " interest current year . 4,200 " " " profits " " . 10,000 1838. Jan. 1. " interest on $74,200 . 5,194 Dk. B. Cr. 1837. Jan. 1. By capital advanced |20,000 Dec. 31. " interest current year . 1,400 " « " profits " " . 10,000 1838. Jan. 1. " interest on $31,400 . 2,198 Now had A. drawn out at the end- of the first year $2,800, and caused the entry to be made on the books, " Paid A. one year's interest on his surplus capital," he may have lent it back to the firm. B. has in this way no room for objection to A. drawing interesl annually on his surplus capital. But let us suppose the account were left open for twelve yeffis, \. neglecting to draw the interest on his surplus as it became due, and each partner, in the Usual way of keeping the accounts, having been annually credited with interest on the amount standing at his credil when the hunks were balanced. Each in this way draws compound interest, and, SO far as their capital is equal, it is the same fur one as the other. But it makes essential difference to B. whether A. draws simple or compound interest on his surplus, for if the compound interest on the surplus is 4,000 And the simple interest . . . 8,000 Difference . . 1,000 B. would gain half this difference, 8500, by a settlement at simple interest, and the law being on Ins side he could enforce such settlement. \. therefore loses this (500, by merely nf glecting to draw the interest on his surplus, even though the money w»re wanted for the business, and must have been in diately returned as a new kfen. Partners thus trading on unequal advances of capital would do well t" bear in mind, that in case of death their executors would he compelled to adjust their aooounts at simple interest, and that all difficulty is obviated by drawing out annually the interest on the surplus. 98 SEC. XII— SETTLEMENTS. QUESTIONS. 1. William Pay well and Jno. Swift have done business as partners. William Pay well advanced on account of the business $5,342.29, which being averaged takes date May 14th, 1849, and he received from the business $1,224.30, averaging July 12th. John Swift advanced on account of the business $3,824.32, averaging July 4th, and received from the business $7,832.37, averaging August 1st. They divide profits equally, each being allowed interest on money employed. The above facts are fully agreed upon by both parties, but they are unable to make a settlement. How do accounts stand between them, or what must Swift pay Paywell, January 1st, 1849, interest 6 per cent. ? 2. James Paton and Charles Collins are about to dissolve partnership, January 1st, 1849. Their affairs stand as follows : They have cash in bank $5,679.84, bills receivable $6,430.22, averaging due April 1st, 1849. Merchandise valued at $14,000. They owe on their own notes $0,000, averaging due Mar.ch 1st, 1849. James Paton has advanced into the business $12,000, taking date by average September 1st, 1848, and has drawn out $3,840.24, taking date July 1st, 1848. Charles Collins has advanced $4,000, taking date March 1st, 1848, and drawn out $2,000 taking date August 1st, 1848. How much is Charles Collins entitled to receive in retiring from the business, interest computed at 6 per cent. ? 5,679.84 Cash 6,430.22 Bills Receivable 14,000.00 Merchandise 3,840.24 James Paton . . 12,000.00 Bills Payable . . 6,000.00 2,000.00 Charles Collins . 4,000.00 Profits . . . 9,950.30 $31,950.30 $31,950.30 3. John and Peter bought a farm, the profits or losses arising from which they propose to divide equally, after allowing each one interest 6 per cent, on his money employed. They have sold off a part in small lots. The rest John has farmed, and they have expended money for improvements and buildings thereon. They stipulated that John's services were to be valued at $200 per annum more than Peter's. They have been thus engaged one year, commencing January 1st, 1848. They kept no regular set of books ; but each kept an accurate account of what he paid out and received, and with each other's account they are entirely satisfied. John has paid out $5,834.22, taking date by average July 1st, and received $2,584.20, taking date September 1st. Peter has paid out $3,000, February 1st, and received $284.25, taking date May 1st. They now propose to dissolve partnership, and John agrees to take the farm and improvements for $7,500. What amount must John pay Peter in settlement ? They think this can be ascertained without writing up a new set of books. 4. A banking institution having stopped payment, offers the following statement of the condition of its affairs : Cash on hand . . . 59,342.34 Capital .... 250,000.00 Bills of Exchange . 30,000.00 Notes in circulation 487,340.00 Notes of other banks . 150,000.00 Due depositors . . 250,000.00 Bills Receivable . . 720,854.23 Reserved fund . . 75,000.00 Due from other banks 12,500.00 Expense account . . 11,846.24 Profit & Loss . . . 77,797.19 $1,062,340.00 $1,062,340.00 It is estimated that the probable loss on collecting assets, and the expenses of liquidation, will be $62,000. What then will it pay on the dollar to its stockholders ? 99 SEC. XII.-SETTLEMENTS. PARTNERSHIP CHANGES. There is perhaps no department of book-keopini: where ingenuity and forethought are of more value than in laying oul a plan for liquidating an old business through the books of the new one. Although the circumstances under which these changes occur vary a good deal* the following embodies sufficient to meet all the real difficulty, in nine-tenths of such CM the author has been consulted upon. Let us suppose A. and B. have done business as partners, and are abou*. to dissolve, the following being the state of their accounts : Cash . . . . . 3,7o0.84 Hills Payable . . . 11,849.00 Bills Receivable . . 15,399.00 Personal Accounts . 5,124J30 Personal Accounts . 4,584.52 A 19,290 £6 Merchandise valued at 24,509.50 B \ 12,500.00 $48,263.86 $48,263.88 B. now proposes to retire, A. continuing the business, and liquidating the old partnership. It may be proper to remark, that in this stage of the proceeding the partners themselves, when not familiar with accounts, are almost sure to clog the matter with unnecessary or unmeaning agreements. For example: B. proposes that A. shall give his note for one half the goods, that B. shall receive half the debts as they come in, and pay half the notes as they become due. Now if the agreement of partnership originally provided that each should draw interest on his account current with the firm, and take half the profits, that agreement covers the whole ground, and renders all such provisions as the above as absurd as paying a bill by telling out separately the money for each article. If A. takes merchandise he is charged with it. as any other person would be, and the concern benefits or loses by the sale, according to the price estimated. If A. gives his note to B., then B. is charged with that note, taking date when it matures. B.'s claim, as above, is $16,500, assuming that all profits have been posted up, and the accounts balanced; and B. must either receive from A. $12,500 out of the present assets, with interest on his account while open, or it must be shown by A. that any deficiency resulted from a loss in which he participated. B. has no claim after the $12,500 due at this time has been accounted for, either by money or loss. It may be very important to A. to avoid pacing B. in advance, but it must be borne in mind that B.'s account is kept open until all is liquidated; and even should he be paid at once the whole -Si 2, 500, he would at the end be called upon to refund the interest. Now for the entries on the old books. A. takes to account only the cash and merchandise, and the entry on old Journal is : New Firm to Sundries. To Cash for this amount taken to account .... 3,750.84 " Merchandise for this amount on hand 24,569.50 $28,320.34 So the Old Firm have now for assets the same amount as before, bul the New Firm appear as debtors, instead of Cash and Merchandise. And as all notes of the < Hd Firm must be liquidated, the New Firm may at once assume them; ami the < >ld Firm next enters on its Journal : Bill* Payable to New Firm. For Balance of this Account *ii,:ho Now the books of the Old Finn maybe left in the Haiti they tie, except charging or 100 SEC. XII.-PARTNERSHIP CHANGES. crediting an account with interest or loss, until the New Firm, say at the year's end, makes out its account current with the old. The New Firm has on its books, then, the following entries : Sundries to A. fy B. (Old Firm). Merchandise for goods taken to account Cash ...... A. <$• B. to Bills Payable. For Notes of Old Firm . 24,569.50 3,750.84 11,349.00 Let us now suppose a year to have elapsed, and the New Firm, which we will call A. & Co., makes out for the Old Firm the following account current : Dr. A. & B. ii? Account Current and Interest Account with A. & Co. Cr. 1848. Jan. 19. To your notes averag- ing due this date . Feb. 15. To amount paid on Personal accounts with int. thereon . June 1. To Amount paid B. on acct. by our note, due this date Dec. 31. To Interest to date on debit " " To New Account . 11,349.00 5,311.54 10,000.00 1,268.49 21,865.08 1848. Jan. 1. By Cash .... 3,750.84 " " " Merchandise . . 24,569.50 Feb. 28. " Notes collected aver'g this date . 15,369.00 May 1. " Accts. collected 3,500.00 Dec.31. " Int. to date on Cr. 2,614.77 794.11 Personal Accounts paid . . . 5,124.30 Interest thereon . . . 187.24 Amount charged as above . . . $5,311,54 Personal Accounts received . . 4,584.52 Interest thereon . . . 150.00 4,734.52 Loss 1,234.52 Amount received and credited above . 83,500.00 Now we make from this document the proper entries in the old books : Sundries to New Firm. Personal Accounts for this amount paid 5,311.54 B. for amount paid him on account . 10,000.00 Interest for this amount due them on above payments .... 1,268.49 $16,580.03 ,794.11 Interest to Personal Accounts. For this amount due on sundry accounts at settlement $187.24 101 SEC. XII.-PARTNERSH1P CHANGES. New Firm to Sundries. To Bills Receivable, notes collected " Personal Accounts, amount collected " Interest . . ... 15,359.00 3,500.00 2,61 1.77 |21,473*.77 Personal Accounts to Interest. For interest due at settlement ..... Profit fy Loss to Personal Accounts. For this amount lost ....... The accounts of Old Firm on old books now stand thus : — 10,000.00 21,865.08 1,455.73 1,234.52 $34,555.33 Cash . Bills Receivable " Payable . Personal Accounts . B A New Firm . Interest Profit and Loss balanced. $150.00 11,234.52 12,500.00 19,290.5(3 2,764.77 $34,555.33 We now add the following Journal entries — Interest to Profit fy Loss. For balance of this account . Profit Sf Loss to Sundries. To A " B $1,309.04 37.26 $74.52 And now the open accounts are — 21,805.08 . . New Firm 10,000.00 B A 131,865.08 12,537.26 19,327.82 n:U.s(35.08 B now draws out the balance of his account, which the new firm pays and enters on its books. A Sr B to Cash. Paid B his claim on Old Firm in full We also enter on old books — B to New Firm. For balance of his account . 102 $2,537.26 *^37.26 SEC. XII.-PARTNERSHIP CHANGES. To close the old Ledger we have only to enter — A to New Firm. For his interest transferred to New Books .... $19,327.82 On New Books the account with Old Firm stands thus — A $ B. To Cash paid B . . . 2,537.26 By Bal. of* old account . 21,865.08 " Bal. to A's credit . 19,327.82 $21,865.08 $21,865.08 On the Journal of the New Books — A Sf B to A. For bal. transferred to his credit, being his capital brought from Old Firm, $19,327.82 Thus the whole is liquidated, and interest has been adjusted on all matters of account with the Old Firm, and A. stands credited in the New Books with his claim on the concern. So far we have given only an outline ; we will add a few entries to exemplify the process of carrying it out in the New Books. The New Firm pay a note of the Old Firm .... $1,000 Entry. — Bills Payable to Cash. For John Doe's note to Old Firm due this day .... $1,000 Note. — The Bills Payable were taken to account, and are therefore treated in every respect as their own Notes. They receive Cash for a Note due Old Firm, $2,500. Entry.— Cash to A 8? B (Old Firm). For Richard Roe's note $2,500 Note. — The Notes Receivable were not taken to account, and are therefore credited to Old Firm. They receive $800 in compromise of a note of Old Firm. Entry. — Cash to A 8f B. For Thomas Carpenter's Note of $1,500 Less loss ......... 700 Note. — This loss may at any time be entered on books of Old Firm, thus : Profit 8f Loss to Bills Receivable. They receive a debt from G, $1,526.50. Entry. — Cash to A 8f B. For Balance due from G. on old books ..... 1500.00 Interest to date ......... 26.50 $1,526.50 Note. — An entry would now be made on Old Books. G. to Interest $26.50 103 SEC. XII.-SINGLi: ENTRY. The New Firm has obtained money by having sold some of the Old Firm's notes. Cash received ..... 6,350 Discount . • • • 80.J> $5,480.25 Entry. — Cash to A 8f B. For Notes of the Old Firm discounted, averaging due April 12th . §5,430.25 Interest to Cash. For 3 mos. discount on Old Firm's notes ' •'-•> They pay expenses for business of Old Firm. Entry. — A Sf B to Cash. For expenses on, &c. ........ These will be found to comprehend most of the entries required, and to one who has mastered the subject properly there cannot be the least difficulty in carrying out the plan ; but to such as have not studied accounts, ami have merely picked up a little of the routine of someone set of books, we can only say, if this explanation appears complicated and unintelligible, it will become perfectly plain by studying the book from the beginning. This is a part°of the subject that can only be made clear and simple to those properly instructed. SINGLE ENTRY ACCOUNTS. As the question will doubtless be asked why we have introduced Single Entry after Double, it will be proper to give our reason for it. We admit that books may !><• kept by single entry by those unacquainted with the principles of double entry, but the mere keeping of accounts is not all that is required. The simplest settlement of Partnership accounts involves the principles of double entry, and when the commonest English education includes a knowledge of Arithmetic, Mensuration, and often Algebra and Geometry, it surely ought to include a knowledge of accounts sufficient to make a partnership settlement between two mechanics. Is it not a pitiful position for a youth who can compute to a fraction the value of a life annuity, or perhaps even the orbit of a comet, to be compelled to acknowledge his entire incompetency to effect a settlement between John Doe, the farmer, and Richard Roe, tli- miller, in a matter of some lew hundreds of dollars ? We think it will soon be deemed as essential that a youth should understand accounts as that he should have studied Grammar or Geography, or any other useful branch of know- ledge, and that Arithmetic with single entry to help it does not suffice to secure this know- ledge', will be readily admitted on reference* to the few simple questions under the head ■TTLEMBHTS." If these reasons, then, justify us in assuming that the principles of double entry should be taught to all, the time spenl in'u riting up single entry accounts is wasted ; it is something like learning architecture by beginning with a hog-pen. Single entry can he adopted at once by one acquainted with the principles ofdouble. Single entry, according tome popular understanding of it, is a mere record of personal indebtedness, but it may also include the accounts of Cash, Bills Receivable, and Bills Payable. The three latter accounts, however, are seldom posted to the Ledger. 'I'll' I is 'entered on a Cash Book, and is thus a BUOStitUte for the Ledger account, and a Bit] Book answers the same purpose as Bills Receivahle and Hills Payable accounts, hut tin- secondary accounts are all dispensed with. Single entry is practised under as great a variety of forms as double. \ professional man would be satisfied with having accounts thai would simply show who was indebted to him. and whom be owed. A Ledger would therefore be the only book he would need. It should have an alphabetical index, so that he oould turn to anj person's account, and charge or credit him as the case may require. The best size is a small octavo volume} the left hand 104 SEC. XII.— SINGLE ENTRY. page being taken for the Debit side of the Account, and the right for the Credit, so as to give room for entering particulars. Those who are more methodical will keep also a small Cash Book, in which they will record every sum of cash received and paid. It shows how money is gone out, and for what purpose ; and if necessary or desirable, an inside column on the Credit side may be made to show any particular class of expenses. A small retail dealer, or tradesman, would find it requisite to keep a Day Book, in which he would make his entries before passing them to the Ledger. For example : New York, January 1st, 1849. Ledger fol. John Franklin, Dr. For 1 pair pants " 1 coat 7.00 22.00 2d. James Coleman, Cr., For 12 yards Super. Black Cassimere @ $2 24.00 " 20 " " " Cloth (cb, $5 100.00 29 124 00 00 These are posted to their proper accounts in the Ledger, and the cash received or paid on account is either posted from the Cash Book or first entered on the Day Book. A farmer should keep accounts of some kind. Few, however, would be at the trouble of keeping more than a Cash account and Ledger ; but one who has acquired at school as much knowledge of the principles of accounts as is comprised in the previous exercises in this book, will have no difficulty in adopting such a course as answers his purposes ; he cannot fail to see the advantage of sometimes introducing on his Ledger an account of some particular class of expenditures, with the proceeds, so that he may arrive at the result, whether profit or loss. He may cultivate a field, for example, on some particular plan, and would therefore introduce on his Ledger an account of that field, with the outlay on the Debit side and sales on the Credit. 105 14 I ■r^i UNIVERSITY OF CALIFORNIA LIBRARY BERKELEY Return to desk from which borrowed. This book is DUE on the last date stamped below. 7Nov'55PW 0CT2 4l95r 21Nov'60RT LD 21-100wt-9,'47(A5702sl6)476 r & M