X7 UC-NRLF $B 55 bEfl RAUGHON'S PRACnCALi "Sz "k Bookkeeping Illustratek & ^^ o LO o Digitized by the Internet Archive in 2007 with funding from Microsoft Corporation http://www.archive.org/details/draughtonspractiOOdraurich COPYRIGHTED, 1897-1908, By JnO. F. DRAUaHON. All righte reserved ^ ^^Mi . pj m '^^ ■*>— i-a DRAUGHON'S PRACTICAL BOOKKEEPING ELLUSTRATEP : FOR Self-Instruction BY=H07VVE STTUDY AND FOR USE IN Literary Schools and Business Colleges BY — JNO. F. DRAUQHON CONSULTING ACCOUNTANT and AUTHOR OF DRAUGHON'S New System of BOOKKEEPING, DOUBLE ENTRY MADE EASY DRAUGHON'S Progressive Bookkeeping and Legal Adviser DRAUGHON'S Primary Bookkeeping DRAUGHON'S Printed Memorandum Entries DRAUGHON'S Illustrations and General Instructions on Closing Entries DRAUGHON'S Home-Study Course of Book- keeping TEXT -BOOKS AND COURSES OF INSTRUCTION THAT HELPED TO MAKE Draughon's Practical Business Colleges R/\A\OUS ^TRirr ttoTE.— After reading ail of this page, read articie elsewliere (see index), *niie Course Outlined." PREFACE. A TEXT-BOOK on Bookkeeping that is itself an instructor for home study, one that can be used successfully in literary schools by teachers who have not the advantage of a good business education, one that can be used suc- cessfully without consuming too much of the teacher's valuable time, and yet one which is practical, has long been needed, but it seems that such a book has never heretofore been issued. The author feels that this book will fill long-felt wants, and that it will meet the requirements above mentioned. While it is prepared mostly for primary and intermediate work, the author feels that it may be justly considered advanced Bookkeeping, if compared with some publications on the subject of Bookkeeping, whose authors claim that their publications contain a complete Course of Bookkeeping. As above stated, the author has devoted special attention to primary and in- termediate work ; still, he believes that by the use of the peculiarly practical metliods employed in presenting the subject-matter, assisted by accurate illustra- tions, diagrams, etc., the more complicated part of this book — that part pertaining to advanced Bookkeeping — is presented in such a manner that a person can, even without experience, grasp the ideas with much less trouble than the simplest part of the primary work of similar publications. While he believes that any person who masters tlie contents of this book will be better prepared to keep books than many full graduates of some of our so-called •'business colleges," he has prepared other books for those who desire to reach the top of the profession. One of the faults common to other publications on Bookkeeping that have come under the author's observation — and he has had the pleasure of examining dozens of such publications — is that in that which they claim to be i)rimary work they hardly touch upon the real subject of Bookkeeping; hence, many students have spent months studying some of these books, being under the impression that they were making good headway in acquiring knowledge of Bookkeeping, when they had made hardly a start. Nevertheless, their efforts and the results obtained were, in some cases, entirely satisfactory to their teachers, because the teachers labored under the same difficulty that the students had experienced, not knowing where the trouble was. - While the size of the type used in this book is not objectionably small, it is small enough, assisted by the arrang3ment of the subject-matter, to enable the author to get on the number of pages as much matter as is usually put in books double the size of this one. Author. INDEX, JNO. F. DRAUQHON SET. A B Bills Beceivable 3 Bills Payable 3 Boyd Bros. < By Cash^,,l??!>k^ 1.000 00) 4.484 45 4,484 45 19 . July 1 >1.000 00 19 . July 1 7 1,000 00 k Vt" K 1 v — ^^ — \ ' PROFIT AND LOSS 19... July To Expense... " Freight.... " Stock* (*red ink.) 1,996 13 I By Merchandise l,p.2 1,992 46 Int. and Pis. I..P.2 1,996 13 EXPENSE. 19... Jon. S-eb. Har. Apr. May Jane To Cash 19 . 6 6 25 2 00 00 July \ 6 I 00 6 25 00 6 25 00 6 2 26 6 25 00 6 3 00 7 2n 00 7 6 00 7 26 00 7 3 00 26 ' 167 By\andL.* J i..v.2 (l67 26) (\ed ink 167 25 FREIGHT. y \ 19... Jan. 14 8 6 30 30 To Cash 6 6 6 6 7 20 15 15 20 21 00 00 00 00 19.. July X By P. andL.*. . (♦red Inky;^^ L.P.2 ^ fe) Feb. ZZJ Mar. 4< «( Apr. « It Mky It «• 91 91 QQ V 1 INTEREST AND DISCOUNT 19... Apr. 1 1 ToM. A H 8 L.P.2 H w 1 19... ' Apr. 12 By O., J. & Co 8 4 4 00 July " P. andL.* '•red Ink.) 4 00 00 Ledger, JNO. F. DRAUCHON SET. Dr. BILLS RECEIVABLE. Cr. 19 Ai.r. 10 To W. B. C i 8 21 00 19 Mny 10 By Cash (W. B.C.)... t 21 00 BILLS PAYABLE. 19 Mav 10 To Cash (O., J. & Co.) 7 1 100 00 19 Anr. 30 By O., J. & Co 8 100 00 1 HOUSTON, MEEKS & CO., ST. LOUIS, MO. 19 Feb. 1 1 10 1 To Cash.. 6 6 6 7 m 100 CO 1,075 00 0) 00 00 19 Jan. Feb. Mar. Apr. 1 2 2 2 Bv Mdse. 8 8 8 8 200 100 60 1,075 00 Mar. ii a 00 Apr. OQ 00 July hi (( 1,4:55 00 1.435 00 WICKHAM & PENDLETON, ST . LOUIS, MO, 19 Feb. 1 1 10 To Cash 6 6 6 300 200 100 00 00 00 19 Jan. F.-b. Mar. 6 6 2 By Mdse 8 8 8 300 200 ito 00 Mar. u u 00 Apr. It n _ 't n 00 COO 00 1,00 00 ORR, JACKSON & CO „ NASHVILLE, TENN. 19 Feb. 1 1 10 30 To Cash.„. 6 6 6 8 8 100 50 196 4 100 00 00 00 00 00 19 Jan. Feb. Mar. Apr, 3 6 ByMdse.,..» 8 8 8 8 100 50 200 100 00 Mar. Apr. "• Int. and Dis 00 00 00 " Bills Payable 450 00 450 00 1 1 1 GRANT & GRANT, GUTHRIE, KY. 19 14 28 10 15 1 To Mdse 9 9 9 10 10 23 60 25 5 50 70 00 50 20 00 19 Feb. Mar. Ai)r, June July 1 10 1 1 1 By Cash 6 6 6 7 7 23 60 25 5 50 70 Feb. 11, it 00 Mar. Mav i4 il 60 20 June u u 00 161 40 164 40 1 A, B. POPE, 167 WOODLAND STREET, CITY. 19 Jan. Mai\ May 31 To Mdse. 19 9 360 00 Feb. 2 9 80 O:) Apr. 1 10 16 40 June 1 456 40 By Cash.., 456 40 CLAY & BASS. (You should give P. O. here.) 19 Feb. 15 To Mdse 9 60 50 19 Mar. 10 By Cash 6 60 50 ~~ DR. DORTCH. 19 Feb. 15 To Mdse 3 21 00 19 Mar. 10 By Cash _6^ 21 00 ~~ f Column for page of book posted from. Star (*) and black-face type on pages 2, 6, and 12 indicate that red ink is to be used for full line. Ledger, JNO. F. DRAUCHON SET. Dh. MATTHEWS & HOOD. Ck. 19 Mar. June To Mrlse. f 19 9 32 50 Apr. 1 10 61 25 July 1 93 75 By Cash " Int. and Dis. " Cash 61 BOYD BROS. & SMITH. 19 Apr. 1 ToMdse 9 60 00 19 Jn1v 1 By Cash 7 60 00 W. B. COOK. Apr. May To Mdse (. lb 9 10 10 21 101 101 00 50 00 19 Apr. June July 10 1 1 223 50 B7 Bills Re( " Casli 21 101 101 228 SULPHUR LUMBER COMPANY. 19 Apr. 30 ToMdse 9 100 90 19 July 1 By Cash 7 100 90 J. H. STEPHENS, KENNEDY, KY. 10 Mtr. 31 ToMdse 9 50 00 19 Apr. 1 By Cash 6 50 00 1 HOW AND WHY WE TAKE A TRIAL BALANCE. To take a Trial Balance is to see if the Ledger is on balance. First, go to the left-hand side, the receiv- ing side, of your Cash Book, and foot up the column. Then foot up the column on the right-hand side of your Cash Book, which represents the Cash you paid out. Subtract this from the amount of your left-hand col- umn, which column represents the Cash you receive. The difference between the two col- umns will represent the amount of Cash on hand. Enter the difference on the left-hand side, the debit side, of your Trial Balance. (See January Trial Balance, page 5.) Sec- ond, foot up the accounts in the Ledger, debit and credit sides, in small pencil figures, using a sharp-pointed pencil. Place the footings close to and directly under the respective ac- counts. After footing up each account, write in the Trial Balance Book the name of each account in the Ledger, except those that bal- ance — that is, when both debit and credit sides agree. Take the difference between the debit and credit of each account. If the dif- ference shows a debit, place the difference in the debit column on your Trial Balance op- posite the names of the respective accounts you had previously written in your Trial Bal- ance Book. (See Trial Balance, page 5, for form.) If the difference in these ac- counts shows a credit, then you would write the difference in the credit column of your Trial Balance. Proceed this way through your Ledger. When through, add your total debits, left-hand side of your Trial Balance ; then add your total credits, right-hand side of your Trial Balance. (See footings of Jan- uary Trial Balance, page 5.) Your footings should agree. Should they not agree, then you know that you have an error in some part of your work. A Trial Balance does not absolutely prove that your work is correct. It proves only that each debit has had a corresponding credit, and each credit has had a correspond- ing debit. The Trial Balance does not de- tect such errors as posting to the wrong ac- count. You might intend to credit Jones with $50, but you might, by mistake, credit Smith with this amount. This Would not throw you off in your Trial Balance at all. Then there is another mistake you might make which would not affect your Trial Balance. For instance, you might, in adding a credit column, make an error of $10. You might, also, in adding your debit column, make an error of $10. Hence, you see, one would offset the other. In taking Trial Balance always give Ledger page on Trial Balance preceding each account. TRIAL BALANCE Jno. F. Draughon Set, January 31, 19 Dk. Ck. Cash (get cash from Casli Book) 2,177 2S 20 23 3G0 00 00 00 70 00 Jno. F. Dranghon's Stock 2,000 00 8 70 200 00 300 00 Expense MdsG.... Freight Houston, M. & Co Wickham & P.. Grant & Gri*nt A. B. Poi>e. Orr, J. & Co 100 00 2.60 -i 70 2.608 70 TRIAL BALANCE, JNO. F. DRAUGHON SET, MARCH 31, 19. TRIAL BALANCE, JNO. F. DRAUGHON SET, MAY 31, 19.. Cash Expense Freight Grant & Grant A. B. Pope W.B.Cook , Boyd Bros. & Smi h, Sulphur Lumber Co. 3,044 63 139 25 91 00 6 20 16 40 202 50 60 00 100 90 3,659 88 Jno. F. Draughon's Stock Mflse Interest and Discount H., M. & Co TRIAL BALANCE, JNO. F. DRAUGHON SET, FEBRUARY 28, 19. Cash 1,997 122 53 35 60 21 60 70 80 00 CO 00 CO 50 Jno. F. Draughon's Stock 2,000 100 200 50 (K,- Mdse II., M. & Co 00 W. & P 00 Frcisrlit Orr, J. & Co 00 Gi'ant & (jrunt • Dr. Dor tell Clay & Bass 2,3.-.0 00 2,350 00 ■ Cash 2,331 80 50 25 80 32 50 2,6r)0 0.') .25 00 5-) 00 50 00 20 Jno. F. Draughon's Stock 2,000 290 60 100 200 00 Expense Mdse 20 H., M. & Co... 00 00 Grant & Grant W. & P A. B. Pope Orr, J. & Co 00 Matthews & Hood J. H. Stephens 2,650 20 TRIAL BALANCE, JNO. F. DRAUGHON SET, APRIL 30, 19.... Cash 2,673 144 108 70 21 60 100 63 90 25 00 00 00 90 2,000 3 100 1,075 00 68 00 Mdse Interest and Discount Expense Bills Payable Freiglit H., M. & Co 00 Bills Ileceivablo Bovd IJros. & Smith .. 3,178 68 3.178 68 TRIAL BALANCE, JNO. F. DRAUGHON SET, JUNE 30, 19.... Cash 3,439 107 91 50 101 60 100 61 4,071 73 25 00 OO 00 00 90 25 13 fTno. T*^- T)i*aTiffhon'ft fttn^t 2,000 992 3 1,076 00 45 68 00 Mdse Freiglit Gi'ant & (iirant H., M. «& Co W. B. Cook Bov< 2 X '^2 5 wSi^oS^ o 2Eq S<1 8gS I- :': O O O O ooooooooo i-ooooicooo C000CM»nOC0C0j OOOlO'-l 5^ l-H Sq . ^-fi HO H.r^ ^^^^ ea O a © rtj © 01 OjO f^ C ® 2J OD CO 03 >iZl CC to ■o-r-o Ci: S-o-s o ■< 5 •-? S S 1^ S S^ : c; 2^ 3i«:5 88SSS o -s a 88! o o r^ £ U O C 5? " o ;-< c X ^ u; -"^ 5 s a as* 2^ 58888 58^5288 5'^ f28^8.88S MiOCDO S8S SSJocoSso I CO CO -* (M !N CO -^-^ -^ -^ ^ d t*. o ^ t ni ^ rt 2 4) j= .2 g % bo c s 0) Z E Tl UJ oj 'U ^ « ^ hT O ^ 9 ■c ■J if fl j= S u r « .S •: 5 g S x3 5P 1 "^ 2 s ;^ S >>- » - ^ 5 "S TJ t^ ti >> 03 o § S S -^ .2 « fl f3 = -t; W S ci S - O C S P. 2 « "^ -c ^ « O e8 _ «u 03 03 -. ^ -C EH t-> ^ := £ ^ tc '-' ^ ^ O « 03 c a .2 ** "-I «- . ^ tl! . 'C CS = - c r. s 5 ^ 02 .2 2 2 bo 2 -5 93 -r o ;; — .'- ^ S c o . :- W ^ § ^ P^ ^ s * PQ .2 « 03 5 ® S lit O CO _, OSS « 4j q) X Sg o 03 «* r, C ^!^ "^ O CO £ O ci i M O 2 a 03 a ^ = o-^ 03 o s 2 "^ * o S w is .2 -M ^ ^ c ^ q :^ =S =3 s § g « - S O -^ c -r 2 "5" 13 c fl o c 5 S P Tr, 2 > S ^ I ^fl5 •bo o I » 2 I ^ 03 C S ;= "T; -^ 03 .-J C o c V- ^ pq g *^ ^ 1 1 ^ -s -s § I ^ t^ ' CO .9 03 OQ a •1—1 ^^ 03 a a >i o o & I o (0 03 .9 Journal, JNO. F. DRAUCHON SET. JANUARY, 19.... /5 EXPLANATORV CoLUMN. i' Dr. Cr. 1 6 Mdse To: Houston, Mecks & Ct Wickhani & Penaielou... Orr, Jackson & Co Sundries 2 3 3 3 603 00 200 800 100 9. Their bill datod 23d iilt 00 8 '• '^ " 6th inst 00 4 " '• " 6th " . .. f*0 60) 00 600 00 FEBRUARY, 19. 5 8 M' 6th "• 00 8 " " " 8t.i " 00 3-.0 00 350 00 1 1 APRIL, 19.... MARCH, 19 ... 9 81 M se T.»: Houston, Me* ks & Co Wickh.ini & Peidlftoii... Orr, Jackson & Co 2 8 3 3 ' 363 00 60 100 200 10 Their bill dated 2d inst 00 11 ••• '* 2d " 1 > " K " 3d " 00 1 360 00 360 00 1 13 1 10 10 80 80 Int. and Dis To: Matthews & Hoo. 1 I'per cent discount on $82 50. 4 2 8 2 3 4 2 8 3 8 3 4 21 1,175 100 82 00 00 00 00 , 4 21 1.075 100 100 32 00 14 Orr, Jackcon & Co ... To: Interest and discount r,ills Receivable To: W. B. Cook 15 (Received his 30-ilay note on account)... Sun<1ries 00 16 Mdse To: Houston, Mecks & Co Orr, Jackson & Co Their bill dated 2d inst 00 "■ '" " 6th " 00 17 Oir, Jackson & Co To: Bills payable (Gave them our 30-day note on account) 00 1,800 33 1-300 32 Note. — As st ited el>ewhcre, we have numbered each entry in order to assist tiie student in trac'n^ the entries from Memoran<'unj Book to Cash Book, J.>urnal, and Sales Book. The student should spend one or two days in tracinj? entries in tlie JNO. F. DUAUGHON SET before he attempts to do any writing, carefully studying the form for making tlie entries, explanations, etc. EXPLANATION. In order to make the student's work as practical as possible, it is best that he do his work dating it the year in which the work is being done, and for this reason where the year should be, for instance, 1908 or 1910 or 1915, as the case may be, we simply insert 19 5 but the student should insert on his own books the current year. 8 Sales Book, JNO. F. DRAUCHON SET. JANUARY, 19. 1 3 3 2 [ Day of the Month.] [14 J Grant & Grant, Guthrie, Ky.— 1 bid. G. sugar, 300 lbs,, @ 7\4c 22 1 60 300 3S3 30 20 00 00 70 23 360 70 3M. W. P. Caps® 60c 2 [31 J A. "B. Popo, 167 Woodland Stree' — 10 l)bls. flour. 3 X, (?ft ii^G.OO 00 100 bbls. meal,® $3.00 3 Mdse. Cr. : Total sales this month (Cr. mdse. with this) 3S3 70 4 3 3 3 2 [15] Clav & Bass, Paris, Tenn.— 2 lbs. che >e, (a) i5o 10 bbls. flour, ©.i 6.00 60 3 18 60 141 50 00 00 (.0 00 50 60 21 60 50 5 [16] Dr. T)ortoh, Hill 'born, Tenn.— 1 bam, 20 1 is., @ 15 • 00 6 bb.s. m a,@ $3.00... 6 [20] Gr-nt & Grant. Gut^^rie, Ky.- 10 bbls. flour, @ .^6.00 .>. 00 Mdse. Cr. it Avith total time sales this month 7 141 r»n FEBRUARY, 19. [151 [16] [20] 8 this month MARCH, 19. 6] 10] 31] ixas — APRIL, 19. [1] Boyd Bros. & Smith, Citv— 20 bbls. meal, (g) tiM [10] W. B. Cook, Dallas, Texas— 6 doz. brooms, No. 2, @ $1.50 6 " " No. l,@$i.00 [30] Sninhur Lumber Co., Sulnhur, Texas— 20 l)l)ls. flour, XXX, @ $U)0 1 caae tomatoes, 1 lb Mdse. Cr ______ _ s 3 3 4 4 2 [6] X. B.Pope 50 30 22 3 50 30 2 00 00 50 00 00 00 50 00 80 25 50 32 00 10 bbls. flour, 3 X. @ $5.00 10 bbls. meal,@ $3.00 9 [10] Grant & Grant— 1 bbl. G. sugar, 300 lbs, @7^c 50 1 bbl. mi'al 10 [31] J. H. Stephens, Kennedv, Ky. — 10 bbls flour, 3 X, ® fS.OO 00 11 Mttthew- & Hof>d. Que-'U City, Texas— 10 bbls. meal, @ $3.00 50 3^ C. tomatoes, 3 lbs., (S, Si. 00 2 0. lomat es, 2 lbs. (5) $1 00. Mdse. Cr 12 188 00 188 00 13 4 14 4 15 4 iL 2 60 100 00 Sales Book, JNO. F. DRAUGHON SET. MAY, 19. o c 17 i 18 4 19 3 20 3 21 2 [IJ W. B. Cook— 20 bbls. flour, XXX, @ $5.00 1 doz. brooms []0] W. B. Cook— 20 bbls. flour, XXX, @ |5.00 1 case blackberries [15] Grant & Grant— 4 cases gooseberries, @ 80c 2 " strawberries, @ $1.00 [30] A. B. Pope— 4 cases salmon,® $3.50 2 " oysters, 1 lb., @ «1.20 Mdse. Cr.. JUNE, 19.... [1] Grant & Grant — 10 bbls. flour, XXX, @ «5.00 [30] Matthews & Hood— 20 bbls. meal,® $3.00 1 case corn, No. 1 Mdse. Cr 100 1 100 1 224 101 101 50 00 20 22 50 60 1 00 00 25 50 01 111 25 Jll 00 Note. — See explanation on page 8 as to why we number each eDti}-. N. B.— It is not objectionable to reverse extension in "Dr." and "Cr." columns of Sales Book. Fo/ instance, take W. B. Cook, May 1st, vou couM extend to right-hand column $100.00 and 51.50 ami place total 8101.50 in left-hantl column on line with W. B. Cook's name. A Few Rules for Detecting Errors in Trial Balance. 1st. Go over the addition of the Trial Balance, assuring yourself that it is correct. 2d. Ascertain the exact difference and look cautiously through the books of original entry for all amounts similar to the amount of error, seeing that they have been posted on both Dr. and Cr. sides of Ledger. 3d. Examine the addition of the outside columns in Sales Book, satisfying yourself that the footing has been posted to the Gr. side of IVlerchanc^ise account. 4th. Examine the Journal entries to see that each entry balances. 5th. See whether you have transferred the amounts correctly from Ledger to Trial Balance, going carefully over the footing of each account in Ledger and taking the difference. 6th. Check the posting — that is, see whether all the amounts have been transferred correctly from each of the books of original entry to the Ledger. 7th. Go over the Ledger accounts again, and see that each amount, on both Dr. and Cr. sides, has been checked. If any have not been checked, they have been posted erroneously, and will doubtless prove to be the amount of difference in your Trial Balance. 8th. If the error is $18, $27, $36, or any other amount divisible by 9 without a 10 remainder, then it is possible that it is by reason of a transposition. Say you have posted $63 as $36, the difference would be $27. 9th. Divide the difference by 2, then go over the books of original entry for the amount, and see if you have not posted to wrong side of Ledger account. 10th. If the error is not found after going over the 9th rule, begin with rule No. 1, and go over them again and again until the error is found. COMMERCIAL PAPER=Use Current Date. (See page 67 for forms of notes, duebills, etc.) After the student has completed the Jno. F. Draughon Set, he should draw up the following papers, number them, and submit them for inspec- tion. To schools that adopt this book, Draughon's Practical Business College Co. will, ui)on request, send these papers correctly drawn up, to be used as a guide by the teachers of such schools, in case they are not familiar with the forms of notes, duebills, etc. The student is supposed to be working for tlie firm of Jno. Doe & Co., Nashville, Tenn. (1) Draw a three-day siglit draft for your firm, Jno. Doe & Co., Nashville, Tenn , the firm for whom you are supposed to be working, on A. C. Jones, Atlagta, Ga., in favor of the Bank of Atlanta; amount, $74.25 with exchange. (2) Draw for your firm, Jno. Doe & Co., Nashville, Tenn., a thirty-day time draft on A. C. Jones, Dal- las, Tex., in favor of Jno. Doe & Co., Nashville, Tenn.— amount, $136.75 — and have A. C. Jones ac- cept this draft payable at Gaston National Bank, Dallas, Tex. (3) Suppose your firm, Jno. Doe & Co., Nashville, Tenn., owe Houston, Meeks & Co., St. Louis, Mo., $99.82. The Sulphur Lumber Co., Sulphur, Tex., owes your firm, Jno. Doe & Co., $99.82. Your firm, Jno. Doe & Co., draw on Sulphur Lumber Co., in favor of Houston, Meeks & Co., a three-day sight draft, $99.82, inclosing same with letter from Jno. Doe & Co. to Houston, Meeks & Co., St. Louis, Mo. Write the letter and submit with draft to your teacher for approval. (4) Have J. S. Brown, Winchester, Tenn., give Jno. Doe & Co., Nashville, Tenn., a thirty-day note —amount, $10.20— payable at First National Bank, Nashville, Tenn., with interest at 6% from date. You draw the paper for Brown. (5) Have Ed Lambert and Henry Little, Texai- kana, Tex., give Jno. Doe & Co., Nashville, Tenn., a joint and several note for one month; amount, $150.75. You draw the paper for Lambert, the same as if you were his bookkeeper. (6) Have J. H. Draughon give Jno. Doe & Co. a four-month note; amount, $500.00. (7) Have Sulphur Lumber Co., Sulphur, Tex., give Jno. Doe & Co. a ono-day note payable at Jno. Doe & Co.'s ofiice; amount, $200.50, to be credited on ac- count. Inclose same with a letter supposed to be written by Sulphur Lumber Co. to Jno. Doe & Co. (8) Transfer the above note to Houston, Meeks & Co. " without recourse," Avhich means that you will not be responsible for the collection of the note. (9) Suppose that your firm, Jno. Doe & Co., owe Grover Cleveland, Princeton, N, J., $120.00, and you give him a three-day sight draft on T.Roosevelt, Big Stick, Va., who owes you, Jno. Doe & Co. You draw the paper and inclose same with a letter to Cleveland, requesting him to credit your account. (10) Send Simmons Hardware Co., St. Louis, Mo., Jno. Doe & Co.'s thirty-day acceptance, payable at Draughon's Practical Business College Bank, St. Louis, Mo. ; amount, 8130.65, to be applied on account. Write Simmons Hardware Co. a letter inclosing the acceptance. (See comment, page 26, "A Note or an Acceptance.") (11) Have R. 0. Jones, Hope, Ark., send you his sixty-day acceptance, favor Jno. Doe & Co., payable at Jno. Doe & Co.'s office; amount, $679.42. You draw the draft as if you were representing R. C. Jones. (12) Transfer the above Jones's acceptance to the First National Bank, Nashville, Tenn. (13) Receipt J. F. Smith for $25.00 on account. (USE PLAIN WHITE PAPER TO DRAW RE- CEIPTS. In business you should use printed form for writing receipts.) (14) Receipt W. H. Cullom, $75.00 in full of account. (15) Give R. D. James order on W. H. Cullom for Mdse.— amount $20.00; also order for cash, $5.00. (16) Give your check to J. S. Brown & Co., New York, on Draughon's Practical Business College Bank, Washington, D. C; amount, $82.50. NOTE.— Always make checks payable "To Or- der" unless for some special reason you do not wish to do so. (17) Draw a thirty-day .note for Smith & Co. in favor of Jno. Doe & Co. for $25.00, and transfer it to Jones & Co. " without recourse." (18) Have Jno. Doo & Co., Nashville, Tenn., give Jones & Co., Memphis, Tenn., duebills, $25.00 each, as follows: One a thirty-day time duebill, payable in cash, one for cash on demand, and one for mer- chandise on demand. N. B.— If ten cents In stamps is sent to Draughon's Practical Business College Company, Nashville, Tenn., additional blank notes, drafts, and checks (ten of each) will be mailed to the sender. Jp^'Student must arrange his papers acoording to numbers before submitting fhem for inspection. '^^ SKELETON LEDGER. DR. JNO. F. DRAUGHON STOCK. Cr, Feb. 28 To Balance* ...,....., 2.137.25 Jan. 1 Feb. 28 By Cash 2,000.00 " P. & L.... ." ..^137.25 2,137.25 2,I.S7.25 Feb. 28 By Balance (present worth) . . . 2,137.25 Bought. ^MERCHANDISE ACCOUNT. SOLD. Jan. 4 To Sundries . / 1,000.00 Jan. 31 Feb. 15 s,^^ 28 By Sundries 600.00 Feb. 1 " Sundries " P. a L.* ./, 500.00 " Sundries 125.00 28 f (^00.25" " Inv. (Mdse. on htnd)*.^^^ .,—{975.25) To Inventory 1.700.25 1,700.25 Feb. 28 - <^»7fi.2.«i < 1 ^ \ ' "1 .7^^200.25 2.00 .10.00 ,5.00 Feb. 28 28 To Expense. " Freight. " Fixtures. ** Jno. F. 0. Stock* Jan, 31 Feb, 1 To Sundries , " Cash. Feb. 1 28 To Sundries. " P. 4L. Jan. l! To Sundries .....\ Jan. 15 Feb. 28 To 2 Sh. 1st Nat. Bk. " P. & L. (net gainr Feb. 28 To Inventory 220.00 Jan. 1 Feb. 28 To 2 Acrs. In D. Co. (per deed) •• P.&L. (netoain)* (M Feb. 1 Feb. 28 By 1 Acr. In D. Co. (sold).... '• Inv. 1 Acr. (not sold)*.^^^;^ — (pJ^ 45.00 45.00 Feb. 28 To Inv J 20.00 nXTURES. Jan. 1 Feb. 28 To Office Furniture , To Inventory. 75.00 70.00 Star (*) and black>face type mean that the whole line, including dates, etc., shoold be written in red ink. 12 SKELETON LEDGER. WE call special attention to the diagram on the opposite page, which we term "Skeleton Ledger." We believe that one with no knowledge of Book- keeping other than that obtained from this book, can learn to close any set of books from a careful study of this diagram. To close books is one of the most difficult parts of Bookkeeping, and, we might say, three bookkeepers out of every five who are to-day drawing a bookkeeper's salary can- not correctly close a set of books. 1. We call attention to the general instruction on closing books found on page 26. 2. See "Merchandise Account" on opposite page (debit side), which shows that you have bought $1,500 worth of merchandise. The right-hand side (credit side) shows that you have sold $725 of this merchandise. In order to correctly declare profits it is necessary to go through your stock of goods and take an inventory, as directed elsewhere. We will suppose in this case that you have on hand merchandise, cost value of which is $975.25; this you call your "Inventory," which you credit to Merchandise account, thus, "February 28. By Inventory, $975.25" (all in red ink). Next, take the difference between the debit and the credit of Merchandise account, including the inventory, and you will find the difference, in favor of the credit, to be $200.25. Then you enter, in red ink, to the debit of Merchandise account thus, "Feb- ruary 28. To Profit and Loss, $200.25," which will make the credit and debit sides of Merchandise account balance. You at once place this $200.25, which is your gross gain, to the credit of Profit and Loss account, as indicated by the arrows in Skeleton Ledger. Next, rule up Merchandise account, as per diagram, and bring Inventory down on the debit side, in black ink. 3. Expense Account. — By referring to Expense account, on opposite page, you will find that it shows a debit of $55. Enter on the credit side of Expense account, in red ink, "By Profit and Loss, $55," giving dates, etc., as shown in diagram; then transfer this amount to the debit of Profit and Loss account, as indicated by arrows in diagram. Note. — As to when you should use red ink, see page 25. 4. Freight Account. — Go to your Freight account and close that into Profit and Loss on the same principle you closed Expense account. You can trace the amounts from Freight to Profit and Loss by following the arrows in diagram. 5. Stocks and Bonds Account. — Go to your Stocks and Bonds account. The debit side will show that you have bought two shares of Bank Stock, $210. The credit side will show that you have sold one share at $115. Now you are ready to declare profits, and you will take Inventory of Stocks and Bonds account. This account shows that you have on hand one share of Bank Stock. This constitutes your "In- ventory," which we value at $105, being the amount we paid for the Bank Stock. We credit Stocks and Bonds account, in red ink, "By Inventory, $105," as shown in the diagram. Now, take the difference between the first cost of this Bank Stock and the amount you sold the one share for, including the amount of the present value of the one share not sold, and Stocks and Bonds account will show a gain of $10. You can look at this matter from a mathematical standpoint and readily figure out the gain, and you will see that Double-Entry Bookkeeping is Bookkeeping in its true light. As before stated, you have gained $10 on your Stocks and Bonds. Is it not a fact that we close Expense account, or any other account on which we lose, to the debit of Profit and Loss account? Then does it not look reasonable that Profit and Loss account should be entitled to all gains, if it has to stand all losses? Now carry, as 13 Indicated by arrow in diagram, this $10 from the credit of Stocks and Bonds account to the credit of Profit and Loss account. Then rule up Stocks and Bonds account, bringing Inventory down on debit side, as shown in diagram. 6. Real Estate Account. — By referring to Real Estate account, on page 12 (debit side), you will see that you bought two acres of land for $40, and the credit side will show that you sold one acre for $25, which is a gain of $5. Now close this gain into Profit and Loss account, according to the rules of Double-Entry Bookkeeping. Con- sider the one acre on hand, which we will suppose has not increased or decreased in value, your inventory, the amount of which is $20. Credit Real Estate account, in red ink, "By Inventory, $20,'* as shown in diagram; then take the difference between the first cost of the real estate, which is $40, and the amount for which you have sold the real estate, including the present value of the real estate on hand, and you will find the difference is $5, and that the present value of the real estate, including amount for which you have sold the one acre, is $5 greater than the cost price. You must, then, admit that you have gained $5. If the selling price had been less than the cost price, then you would have lost money, and that loss would have been closed to debit of Profit and Loss. Now close this difference, $5, into Profit and Loss account, as per diagram on page 12. 7. Fixtures. — By referring to Fixtures account, on page 12, you wall find that you paid (see debit side) $75 for office furniture. Now, suppose that you are ready to declare profits, and that you consider that this furniture has depreciated in value $5; then you must consider the Inventory of fixtures to be $70. Credit Fixtures account "By Inventory, $70," and close the difference, which is $5, in.o Profit and Loss. (See arrows in diagram.) Note. — You will find some special instructions elsewhere in this book as to how to close Expense, Stocks and Bonds, Fixtures, Profit and Loss, Merchandise, and Stock accounts. 8. Jno. F. Braughon's Stock Account. — Now, we will suppose that you have closed all the losses and gains into Profit and Loss account. You have debited Profit and Loss account with all the losses, and you have credited it with all the gains. Now, does it not look reasonable that if the debit side is the larger, you have lost, but if the credit side is the larger, you have gained? By adding the two sides you find that the credit side of Profit and Loss is the larger by $137.25, which amount is your net profit. This you close into Stock account, as follows: Enter on the debit side of Profit and Loss, in red ink, "To Jno„ P. Draughon's Stock account, $137.25;" then credit Jno. F. Draughon's Stock account, in black ink, "By Profit and Loss, $137.25." (See trans- fer entry as indicated by arrow in diagram.) Next, you will find that Jno. F. Draughon's Stock account now shows a credit of $2,137.25, which is Jno. F. Draughon's present worth. In order to draw a balance and to make a clean start for the next six months' business, enter on the debit side of Jno. F. Draughon's Stock account, in red ink, "To balance, $2,137.25." In other words, force a balance. (But never force a balance in a Trial Balance. A person who will force a balance in a Trial Balance without the firm's consent, or force one in college while a student, will not always do to trust with cash.) 9. Rule up both sides of Jno. F, Draughon's Stock account, as indicated in diagram, and bring balance, $2,137.25, down on credit side. Also see page 12, where we have brought down on debit side the Inventory of Stocks and Bonds, Real Estate, and Fix- tures accounts. ONE THING AT A TIME. You should avoid trying to do too much at a time; in other words, you should read and dispose of one entry before you advance to the next Take them as they com& 14 GENERAL INFORMATION. BOOKKEEPING. BOOKKEEPING is the science of accounts. There are two methods of Book- keeping, Double Entry and Single Entry. The fundamental principle of Double Entry is that every time you debit one account you must credit one or more accounts with even amount; in other words, every debit must have a corresponding credit, and every credit must have a corre- sponding debit. In Single Entry only one entry is made of each transaction. For further instruc- tion on Single Entry, see article headed "Single Entry/* page 24. This article also gives some valuable advice on Double Entry. RESOURCES (OR ASSETS). Resources are things of value belonging to us (the firm), such as open accounts due us (the firm), cash, merchandise, real estate, fixtures, notes (notes payable to us), etc., on hand. LIABILITIES. Liabilities are notes and other obligations due others by us. ADVICE TO BEGINNERS. Debit what you receive and credit what goes out of the house. When you place any article in care of a certain account, you debit that account with the value of such article; and then when you call on said account for that article, you must credit said account. For instance, we buy merchandise; we place merchandise in the care of Merchandise account, charging it with the amount. When we transfer merchandise from Merchandise account, does it not look reasonable to you that Merchandise ac- count should be credited with the amount of merchandise taken from it? STOCK ACCOUNT (COPARTNERSHIP). Debit it at the beginning of business with the amount we owe others on open ac- count, notes, etc. Debit it also with the net private loss or the general loss if there be any loss. Stock account should be opened with each member of the firm. As a rule, joint-stock companies or corporations do not transfer the loss to Capital Stock account; at the close of business they let it stand to the debit of Profit and Loss, hoping that their gain will soon offset the loss. Credit it with amount invested at the beginning of business and with all additional investments (if there be any), also with the net gains, unless the firm desires to draw the gains out of the business instead of increasing capital stock or to have the gains placed to the credit of Private account subject to check. Credit it, also, at the begin- ning of business with all open accounts due the business, merchandise, fixtures, notes (notes due us), etc., on hand. PROPRIETOR'S PRIVATE ACCOUNT. Debit it with all cash and merchandise drawn out for private use and with orders given others on the business for merchandise or cash. Credit it with all salary allowed the proprietor and with cash he may deposit with the firm. CASH ACCOUNT. Debit it (we recommend the Cash Book as a Cash account, as explained elsewhere) with all cash received and with cash on hand at the beginning of business; also with all checks, money orders, etc., we receive, provided we do not keep a Bank account in our Ledger; even then we could consider checks as cash till deposited. . 15 We Also also Mj^nciMifDfss Accouirr. liillffVACTURIllO ACCOUMT. f m Mmm w§ wmm er§m U **9f fm^mt^r wuk dw r^om ^ wf»rfttj «Mds we §im 1m¥4f m lMm4, €l§m Urn ii Mmm e § tel# rnH tmd Lom, Tboi nde 19 die ac- #9Mv MMI VrnP WwWmKt&wj w9wm 6W MOTS' flMMr nXTU]»B» ACCOUNT. OfMi M «i ^ UHin*HH to which this rule also applies, INTEREST. DISCOUNT, AND EXCHANGE. Debit it with all cash we pay out as interest on notes or open accounts, also with exchange on drafts, checks, etc., and with discount we allow a person for paying his account before it is due. Also debit it at the regular time of closing books with the accrued lrit"r'.<^t riue to date on notes we are due others (provided there are any such notes). Credit it. with all cash we receive as interest on accounts and notes due us and with discount allowed us by others when we pay our notes and open accounts before they are due. Credit It also at the close of business with the accrued interest due to date on notes bearing Interest (If there be any due us). Remember that, unless so specified in their face, notes do not bear Interest until maturity. Note. — The above account Is closed into Profit and Loss at the close of business (time we declare profits). If the debit side is the greater, we credit it, In red Ink, "By Profit and Loss," and charge Profit and I^oss In black ink. If the credit side is the greater, we debit It to Profit and Loss In red ink, and credit Profit and T^oss in black ink with the difference. A full explanation of "How to Declare Profits" will be found on page 26. TRAVELING EXPENSE ACCOUNT. Debit it with all traveling exi)enseH of persons traveling in the interest of the business Credit it with all cash returned by any of our agents to whom we have given cash 17 for traveling expenses. Credit it also at the close of the year "By Profit and Loss:" or, if traveling in the interest of any special department of our business, that special department should be charged with the amount. Note. — Another plan is to charge the traveling salesman's Private account with money- advanced him for traveling expenses, and v^^hen he turns in his vouchers credit his Private account and charge the amount to Traveling Expense. SALES ACCOUNT. Credit it (provided you keep Sales account) with all sales made. Debit it at the time you declare profits, and credit Merchandise with the amount. Note. — Some large business concerns keep Sales account and credit it with both cash and time sales. By this means a mere glance at the Sales account will tell the total sales up to date. The total should be transferred to the credit of Merchandise when we declare profits. SALARY ACCOUNT. Debit it (provided you keep a Salary account) with all salaries paid. Credit it at the close of business "By Profit and Loss." Note. — Some firms prefer a Salary account, and charge salaries to this account instead of charging them to Expense or to Merchandise. FEED ACCOUNT. Debit it with all hay, corn, etc., we buy to feed stock. Credit it at the close of business, "By Inventory," with the amount of feed on hand, also "By Profit and Loss," or "By Live Stock account," with the balance. ADVERTISING ACCOUNT. Many large firms spend considerable sums of money in advertisifig — thpusands and hundreds of thousands of dollars each year. Even in a small business it is very satisfactory to keep an Advertising account, which we charge with all advertising. At the close of business (time we declare profits) we should credit it "By Inventory" with unexpired advertising contracts and close the difference into Profit and Loss account. REAL ESTATE ACCOUNT. Debit it at the commencement of business with the Inventory of real estate; also debit it with the real estate we buy. Credit it with all real estate we sell. Note. — To close above account at time we declare profits, we would estimate the value of the real estate on hand, and credit "By Inventory" in red ink. The difference would be debited or credited, as the case may be, to Profit and Loss. Always rule up and bring Inventory down, in black ink, on debit side of all accounts we have credited "By Inventory." (See Real Estate account, "Skeleton Ledger," page 12; also article 6, page 14.) BUILDING account! Debit it at the commencement of business with value of buildings on hand; debit it also with cost of new buildings, repairs, etc. Credit it witb all rents we receive and buildings we sell. A Rent account might be opened, and we favor .doing so. The above account is closed the same as Real Estate. BILLS RECEIVABLE ACCOUNT (NOTES DUE US). Debit it at the commencement of business with all acceptances (time drafts) and notes we have on hand, given to us or accepted by others. Also debit it with all additional notes received, and with time drafts we draw on others, provided such drafts are accepted. Credit it with all notes, acceptances, etc., as paid. Also credit it with all notes we transfer to others, which may be done in payment of accounts, notes, etc. Note. — No part of the above account is ever closed into Profit and Loss unless we fail to collect some of the notes or acceptances and we in course of time consider them worthless. 18 NOTES SHOULD AGREE. The difference between the "debit" and the "credit" of Bills Receivable accouni should agree with the total amount of the unpaid notes found in Bills Receivable Register (in case you keep a Bills Receivable Register, which you should do). It should also agree with the total value of notes that you have on hand. The book- keeper should occasionally take his notes, put down the face value of each on a slip of paper, and see that the total amount agrees with the difference between the "debit" and "credit" of Bills Receivable account. It is as necessary that the bookkeeper's notes agree with Bills Receivable account as that his Cash account agree with the amount of cash on hand« BILLS PAYABLE ACCOUNT. Credit it at the commencement of business with all notes we owe and time drafts we have accepted. Credit it also with all notes we give to others and with time drafts we accept. Debit it when we pay notes we owe, also when we pay time drafts we have ac- cepted. (A draft accepted becomes a note.) Note. — At the close of business we would simply rule Bills Payable account as we would all accounts that do not balance, and bring the balance down, as explained elsewhere in this Book of Instructions, unless it is a small business ; in that event we recom- aend that Bills Receivable and Bills Payable be itemized in Ledger. In a large business a Note Register should be kept, and in posting to Ledger give only the number of the note, which will refer to the Register for explanation. BILLS RECEIVABLE AND BILLS PAYABLE. Remember, there is a great difference between Bills Receivable and Bills Payable accounts. There is as much difference in handling Bills Receivable and Bills Payable accounts as there is in handling Merchandise and Cash accounts, or any other two accounts. LIVE STOCK ACCOUNT. Debit it at the commencement of business with all horses, mules, cows, hogs, etc., on hand and those hereafter purchased. Credit it with all horses, cows, hogs, sheep, etc., sold. Note. — At the close of business we would count the sheep, cows, etc., on hand ; then credit the Live Stock account "By Inventory," which represents the value of the live stock on hand. The difference would be closed into Profit and Loss. The balance (Inventory) would be brought down on the debit side, as in dosing Merchandise, Real Estate, etc. MOVABLE PROPERTY ACCOUNT. Debit it with all wagons, drays, etc., you buy for firm's use, not with the view of selling. Some firms would open a Wagon and Team account, and not have any Mova- ble Property or Live Stock account. The bookkeeper should be governed in this case by the amount of live stock and movable property needed. Credit it with all articles we transfer which had previously been charged to this account. It is closed the same as Live Stock account. OVER AND SHORT ACCOUNT. Debit it with amount cash short at night. Credit it v/ith amount cash over at night. For a full explanation of this account, see "Over and Short" account in "Draughon's Progressive Bookkeeping and Legal Adviser." Note. — Your Cash account, however, should never be over or short, and will not be if yo:; follow the rules given in "Draughon's Progressive Bookkeeping and Legal Adviser." BANK ACCOUNT (ON DEPOSIT). Debit it with all cash, money orders, checks, etc., deposited (provided we keep a Bank account). As explained elsewhere, we could consider cash in bank as part cash 19 on hanri. Where firms keep accounts with more than one bank, some favor opening account in Ledger with each bank. In such cases we recommend special Bank column in Cash Book. Credit it with all checks or drafts we draw on it. Note. — At the close of business (time to declare profits) we would take the difference be- tween the debit and credit sides of Bank account and credit it "By Balance," rule up the account and bring balance down as we would in balancing all other accounts in our Ledger that did not balance at the time we closed our books. Thus, you see, we would have a new start on this account for the next fiscal year's business. The footings of each side of this ac- count would show the amount of business done with the bank. COTTON ACCOUNT. Debit it at the beginning of business with the amount of cotton on hand; debit it also with all cotton we buy. Credit it with amount of cotton we sell or transfer to others. It is, also credited, at the time we declare profits, with the amount of cotton on hand, the same as in declaring profits on merchandise. Credit it "By Inventory," and close the difference into Profit and Loss. OUR DEBTORS (PERSONS WHO OWE US). Debit them at the commencement of business with the amounts they owe us; also with merchandise we sell them, the cash we loan them, and anything of value we give them. Credit them with all cash, checks, money orders, etc., received of them on account and with merchandise they returned to us. Credit them also with all sight drafts we draw on them when paid, with time drafts they accept, and with notes they give us. In other words, credit them with anything of value we receive of them. Note. — We recon^mend that all accounts of our debtors, at the close of business, be ruled up, and if they do not balance, they should be credited or debited, as the case may be, "By Balance," or "To Balance," and the balancfe should be brought down in order to give us a clean start on the next six or twelve months' business. Some bookkeepers favor the plan of ruling up customers' accounts at the end of each month and bringing the balance down. This does very well if the bookkeeper has nothing else to do, but we consider it loss of time and that it gives chances for additional errors ; and, in addition to this, it takes extra space in the Ledger. Another advantage we have in leaving the account open until the close of business is that the debit side represents the total goods we sold (provided we did not make any loans on this account) ; the credit side represents the total amount of payments received. OUR CREDITORS (PERSONS WHOM WE OWE). Credit them at the commencement of business with amount we owe them; also credit them with all merchandise we buy of them on account and cash we borrow of them; in other words, we credit them with any articles of value received of them. Debit them with all cash, checks, and money orders we pay to them, goods we return to them, overcharges, etc.; debit them, also, with notes we give them and time drafts they draw on us. Note. — For closing the above account at the end of business, see explanation following "Our Debtors," above. A CONSIGNMENT. A consignment is merchandise received by us of others to be sold on their account and at their risk. The consignee does not himself buy such property, but receives it to sell for the consignor. Suppose we receive of John Thompson a shipment to be sold on his account and at his risk. On receiving the goods, if the freight has not been prepaid, we debit "Consignment, .John Thompson," with the freight. We enter in our special Consign- ment Book, the same as in recording notes, a complete record of the goods. We charge, in our regular book, "Consignment, John Thompson," with the expense of handling thifc 20 account. When we make a sale of John Thompson's consignment, we credit it with the full amount received. Unless we were doing considerable business with John Thomp- son, and, therefore, keeping a regular account with him, we would send him a check for his net proceeds at once. We first figure out the amount due him, then send a check, charge "John Thompson, consignment," and credit Cash or Bank account; also debit "Consignihent, John Thompson," with our commission, and credit either Com- mission account or Profit and Loss. When this is done, "Consignment, John Thomp- son," will balance. A SHIPMENT. A shipment is merchandise or any other kind of property we send to others to be sold on our account and at our risk. The name of the account usually combines the word "shipment" and the name of the person or persons to whom sent. Thus: "Ship- ♦ment. Jack Wilson & Co., Memphis." We debit Shipment account with the invoice price of the property we send them, including shipping charges, if prepaid by us. When we receive an account of sales, with check, from Jack Wilson & Co., we debit Cash and credit "Jack Wilson, shipment." The gain or loss, as the case may be, could be closed into Profit and Loss account. Another plan would be to have a special Shipping Book in which to register the shipment, and consider it, till sold, merchandise on hand. THINK OF IT. From the different explanations given of the foregoing accounts, it will be seen that we can open an account with any branch of business and keep track of our gains or losses, as the case may be, in any department. Should any of the departments, after a fair trial, not prove a profitable investment, it would be best to discontinue it. WHEN DO WE CLOSE OUR BOOKS? Some firms close their books quarterly, others close them semiannually, and still others close them annually. We term it "the close of business." The object in closing the books is to find whether we are making or losing money. HOW TO JOURNALIZE. As stated elsewhere, we recommend posting time sales directly from the Sales Book to the Ledger. However, for the benefit of those who are not familiar with journalizing sales, we give some explanations. By referring to page 9 you will find that you sold merchandise to Grant & Grant, on the 14th of January, $23.70. First open your Journal and make heading. Dr. Cr. Sundries, To Mercliandise $383 70 Grant & Grant, Sales Book, page 9 $ 23 70 A. B. Pope, Sales Book, page 9 360 00 Of course, in the above we have given only two sales. The bookkeeper should leave the heading open in the Journal, and insert the name and total amount from the Sales Book throughout the month's business. At the end of the month add the total debit column and place the amount in the credit column opposite "Sundries to Merchandise." Some might think that this would conflict with other entries to be made in the Journal. On the first of the month the bookkeeper can form an idea as to how much space will be required for the monthly sales and leave that much space for journal- izing sales; or he can estimate the amount of space required for making other entries in the Journal, leave such amount of space each month as he deems necessary, and begin to journalize sales on the second or third blank page, as the case may be. When transferring sales to the Journal, the bookkeeper should insert in Sales Book, just to the left of each name, "J — ," giving the Journal page. He should also insert in the Journal the number of Sales Book page. 21 THE LEDGER. AS will be seen from the following diagram, the Ledger is the "rendezvous" of all accounts. At any time we desire to know the condition of an account we refer to the Ledger; but, of course, we must satisfy ourselves that all entries that affect that account have been posted. See article on page 29, "How to Tell the Condition of an Account." DIAGRAM. tf?/A£. BALANCE THE TRIAL BALANCE. As stated elsewhere, the fundamental rule in Double-Entry Bookkeeping is: "Every time you debit one account you must credit one or more accounts with an equal amount; in other words, every debit must have a corresponding credit, and every credit must have a corresponding debit." As you will note from the above diagram, the left-hand side of a Ledger page is the debit side, and the right-hand side is the credit side. Note, as an illustration, the scales in the above diagram. They are now balanced. Suppose we place five silver dollars on" the left-hand side of the scales and four silver dollars on the right-hand side; is it not reasonable to suppose that the left-hand side will come down and the right-hand side go up? In other words, the scales will be thrown out of balance, and we shall know that something is wrong. Now, we will suppose that we debit one Ledger account (left-hand side) with $15, credit another Ledger account (right-hand side) with $20. You will readily see, in taking a trial balance, fhat when you place $15 on the left-hand side of your trial balance and $20 on the right-hand side, your Ledger will be out of balance just $5, supposing that no other errors have occurred. As explained elsewhere, in taking a trial balance, you begin with the first account in the Ledger. If you do not keep Cash account in the Ledger, first get cash from the Cash Book (amount on hand comes on the debit side of trial balance) ; proceed through your Ledger, placing all debits on the debit side and all credits on the credit side of your trial balance; then add both debit and credit columns. The totals should agree. Of course, you will understand that when you find an account that shows both debits and credits, you take the difference between the two sides and place it on the trial balance. For instance, John Jones's account is debited with $75 and credited with $50. You take the difference between the debit and the credit, which shows a balance of $25; this amount you place on the debit side of your trial balance. In case the account shows a credit, the difference will come on the credit side of your trial balance. Include all debits and credits of a Ledger account when figuring the differences between debits and credits, regardless of dates. 22 THE CASH BOOK. THE Cash Book is a book of original entry, and we consider it the Ledger account for the cash. For instance, you receive of John Jones, cash on account, $50. You enter the amount on the left-hand side of the Cash Book (debit side) ; then and there you consider Cash debited with $5U. This must be posted to the credit of some account, for two reasons: First, John Jones is entitled to credit, because he paid you the rash; second, you must find a credit to offset the debit, in order to comply with the rules of Double-Entry Bookkeeping. Now, if you will refer to the diagram on opposite page, noting the arrows, you can trace an entry from the debit side of your Cash Book to the credit side of your Ledger. The same rule applies to cash paid out. For instance, you remit Simmons Hardware Company, St. Louis, Mo., $50; you enter the amount on the credit side (right-hand) of the Cash Book and post it to the debit side of the Ledger, as indicated by the arrows in the diagram. This gives a credit to Cash account and a debit to Simmons Hardware Company's account, complying with the rules of Double-Entry Bookkeeping. In thinking of the Cash Book as your Cash account, view the matter from the same standpoint that you would Merchandise account in your Ledger. You charge Mer- chandise account with all the merchandise received, and credit Merchandise account with all merchandise that goes out of the house. The difference between the debits and credits of merchandise would show you the amount of merchandise on hand, were it not for the fact that you are supposed to receive more for the merchandise when sold than you paid for it. This will, however, give a good illustration for your cash; but the cash does not change in value. On the left-hand side of your Cash Book you enter all cash that comes into the house; on the right-hand side, all cash that you pay out. Now, does it not look reasonable that if you subtract the footing of the right-hand page of the Cash Book (credit side) from that of the left-hand page (the debit side), it will show you the actual amount of cash you should have on hand, and that if your cash on hand does not agree with this amount, you have either paid out or received cash for which you have made no entry or have made an error in paying out or receiving cash? It is a very difficult matter for the student to learn how to balance his Cash account. In order, therefore, to make him see the point more plainly, we give a further illustration: Suppose you place fifteen cocoanuts in one end of a box and take ten out at the other end; how many cocoanuts will be left in the box? The same rule will apply to your Cash Book. Suppose you receive on the debit side (left- hand) $15, and you pay out on the credit side (right-hand) $10; how many dollars should you have on hand, and how could you balance your cash? Why shouldn't your cash on hand agree with the difference between the debit and credit columns of your Cash Book? THE JOURNAL. In the Journal we enter all such items as goods we buy on time, goods returned to us, goods we return to others, cross entries, etc. From the Journal the entries are carried to the Ledger. This we call "posting." (See diagram on page 22.) In making entries in the Journal, they should be so arranged as to give a debit and a credit for each entry. You may have a debit of $100 to one account and credits to several ac- counts that would aggregate $100. E^stend these credits into the right-hand column — the credit column — of the Journal, ad^ the amounts, and place lotal in the left-hand column — the credit column — opposite fne one account to be debited in one entry; or, if you have several debits to one credit, arrange them in your Journal, vice versa. As stated elsewhere, the bookkeeper shoulJ give a full explanation in the "explanatory columns" of the Cash Book, Journal, and Sales Book. SALES BOOK. The Sales Book is also a book of original entry, but ra eno^ mt'if for entering time sales. We post the total amount of each purchase directly to the debit of our Ledger, 23 and at the end of the month credit Merchandise with the total time sales for the month. Some bookkeepers journalize sales — that is, they transfer from the Sales Book to the Journal the name of each person, with the total amount of his bill. Prom the Journal the account is posted to the Ledger. We see no reason for this extra work. The additional work gives chances for additional mistakes. Extra work always in- creases liability to mistakes. The best way to do anything is to do it directly and with as little unnecessary work as possible. Suppose we start from Louisville, Ky., to New York, going by way of Chicago, where we spend a few days, or we might take a direct route. The shorter distance we travel, the less likely we are to be the victims of rail- road accidents. So in making entries, the less work, the fewer chances for mistakes. MEMORANDUM BOOK. In different parts of this book we frequently refer to a memorandum book. We wish to explain this more fully by saying that this memorandum book is used merely to make a memorandum of the entry, and from this the entry should be transferred by the student to the Cash, Journal, or Sales Book, as the case, may be. In teaching Bookkeeping we use memorandum book to give you an opportunity to test your knowledge. If we did not give full explanations of the different entries as they come, and require the student to make them in good style in the proper books, his knowledge could not be successfully tested. Were we to make all the entries directly in the Cash, Journal, or Sales Book, as the case might be — which should be done in the proper style in regular business — the student would have nothing to do but copy our work, and in doing this he would increase his knowledge very little. The most difficult part of Bookkeeping is to get the entries in the proper forms in the books of original entry. Any person of ordinary intelligence can be taught, if the instructions are given as they should be, to post, take trial balance, etc., in a very few days (and we might say in a very few hours) ; but it requires time and full explanations, backed by application, to learn to make the entries properly in the books of original entry. After the plans for building a house have been drawn and the framework constructed, it is but little trouble for even a "jackleg" carpenter to finish it. In actual business, in most cases, a bookkeeper has no use for what we call a "memorandum book" (some term it a "Day Book"). However, it is still used by some bookkeepers. We recommend the use of a memorandum book in actual business only where the bookkeeper is required to act as salesman part of the time, and in such case he should, during the day, make a memorandum of entries; then, at night or at his leisure, transfer the entries to the proper books. A memorandum book may be kept for clerks and others to record entries. SHOULD ITEMIZE. A bookkeeper should give full explanation of each entry in "explanatory column" Of the Cash, Journal, or Sales Book, or in any other book of original entry. We have known some bookkeepers to get into serious trouble by making only a few explanations. CLASSIFYING ACCOUNTS. Stock, Profit and Loss, Merchandise, Interest and Discount, etc. — in fact, all ac- counts except Customers' and Creditors' — should come in the first part of the Ledger. Then you should give the second part of the Ledger to either Customers or Creditors, and the third part to the others. As to the number of pages required for each account, the bookkeeper should exercise good judgment. SINGLE-ENTRY BOOKKEEPING. Almost any person can keep books by Single Entry. In Single Entry, personal accounts only are kept in the Ledger. In short, Single Entry is a loose way of keeping accounts — no system whatever. Many bookkeepers and business firms do not even credit a person with amount received of him on account. When paid, they simply turn 24 ■ to the account, if they have opened an account, and mark it, in red or black ink, "Paid." Many persons who keep books, who call themselves "bookkeepers," would not know what a Trial Balance is if they should see one. Some will tell you that they keep books Double-Entry, because they use a Ledger which has a debit and a credit side. They charge a customer with what he buys and credit him with what he pays. They call that "Double Entry" because they do not know what Double Entry is. If you ask them whether or not they take a Trial Balance each month, they will tell you "yes," but as soon as you are gone, will look into a dictionary to find out what a Trial Balance is. By Single Entry, should you sell John Smith merchandise on time, and enter the sale in your Sales Book, but never post it to your Ledger, the amount would be lost, unless John Smith voluntarily stated to you the facts regarding his purchase. While most people are honest, there are few who can remember the different articles bought, dates, etc. By Single Entry, if you should by mistake post to the credit of John Smith's account, when you should have posted to his debit, you are loser just double the amount posted, as you have no method of detecting the error. By Single Entry you may intend to credit John Jones with fifty cents, but credit him with fifty dollars. You have no way of detecting your error. Of course, you might accidentally stumble upon a few errors of this kind, but in many cases it might be too late to rectify. Double-Entry Bookkeeping is somewhat similar to clockwork. If a wheel of any importance be removed or misplaced in it, the clock will not run, because the balance of its mechanism has been destroyed. The same is true of Double-Entry Bookkeeping: if you post the wrong amount to your Ledger or post to the wrong side or make an error in addition, the Ledger will not balance. The Trial Balance will detect all such errors. WHEN WE USE RED INK. It is not absolutely necessary to use red ink in Bookkeeping. Good taste, however, suggests that it be used in making all closing entries through the Ledger, in trans- ferring accounts in the Ledger, and in ruling up accounts. In transferring accounts in Ledger red ink denotes that the entry is carried elsewhere; in other words, any entry inserted in the Ledger in red ink indicates that the amount is carried to another place and entered in black ink. '* EXPLANATORY COLUMN "—COMMENTS. While making entries in Journal or Cash Book, keep your explanations in "ex- planatory columns." Never run over the ruled lines to the right, and never let your explanations come closer than two inches of left margin. See our printed Cash Book and Journal elsewhere in this book. If your Cash Book and Journal are not ruled for "explanatory columns," you should rule them according to paragraphs 9, 10, page 34. HOW^ TO MARK THE COST AND SELLING PRICES OF GOODS. Firms, who do not want the public to know their cost or selling price of goods, use words containing ten letters or characters, each representing a figure. Take the word "Vanderbilt," for instance. Now suppose we buy shoes at $36 per dozen. Business firms generally add 10 per cent to the cost price for freight, drayage, etc. Example: Shoes at $36 per dozen, with 10 per cent added — total cost price, $39.60 per dozen. The cost of each pair of shoes would be $3.30. We will suppose that we mark this grade of shoes to sell at $4.25 per pair, as below: Vanderbilt 1 38 4567890 Nnt — cost. Example Dae — selling price. An extra letter, called a "repeater," can be used to prevent the repetition of any letter. 25 CASH ACCOUNT IN THE LEDGER. This account is used when you run the cash through the Journal and do not use a Cash Book for the Cash account. It is handled on the same principle as any other account. You debit it with the amount of cash you receive, and credit it with the amount of cash you pay out. The difference between debit and credit should agree with the amount of cash on hand. DATES. Bookkeepers should be careful to date their books of original entry each day, pro- vided they have occasion to use them each day. Many bookkeepers often allow their books to run several days without entering the date of each day's transactions. This is liable to give them trouble, especially so if any disputes as to accounts should ever arise necessitating the books being carried into court. A NOTE OR AN ACCEPTANCE. Many intelligent persons do not know what an acceptance is. Legally speaking, it is the same as an ordinary note. Suppose you draw a draft on Smith & Co. at thirty days' sight. If they accept the draft, they write across its face (using red ink) the word "Accepted," giving date accepted, and sign "Smith & Co." This draft, after being accepted by Smith & Co., has the sanie effect in law as to Smith & Co. as a note exe- cuted by them. It is different only in form. Such paper is called "an acceptance" instead of "a note," but the same entries are made in your books as if you received a note regularly executed by Smith & Co. GENERAL RULES FOR DECLARING PROFITS (When Making Closing Entries Directly Through Ledger). First. — Post up. Second. — Take Trial Balance. Third. — Take Stock (amount merchandise on hand). Fourth. — Credit Merchandise account in red ink "By Inventory." Fifth. — Take difference between Dr. and Cr. of Merchandise account, including Inventory. Sixth. — If Merchandise account shows a credit, debit it in red ink, "To Profit and Loss," and credit Profit and Loss, in black ink, "By Merchandise" with the difference. Seventh. — If Merchandise account shows a debit, credit it "By Profit and Loss" in red inli, and debit Profit and Loss, in black ink, "To Merchandise," giving each Ledger folio. Eighth. — Credit Expense, Freight, Insurance, or any other account on whicli you lose, In red ink. "By Profit and Loss." Debit Profit and Loss "To Expense," "To Freight," or "To Insurance," in black ink, always giving each Ledger folio carried to or brought from. Ninth. — If any of your accounts show gain, such as Interest, Discount, Commission, etc., debit these accounts, in red ink, "To Profit and Loss," and credit Profit and Loss with same in black ink. Tenth. — Have Stock accounts to pay off Private accounts unless it be a Stock Company. Eleventh. — Rule up Merchandise account and bring down Inventory on debit side. (See Merchandise account, page 12, debit side, February 28; Inventory, 975.25.) Twelfth. — Take Trial Balance. Thirteenth. — Make out a Statement of Business. Fourteenth. — As to what you should do with Profit and Loss, should it show a gain, will be for the proprietor or the stockholders to decide. Some would have the gain placed to the credit of their respective Stock accounts, while others would draw the net earnings out of the business — that is, have them placed to the credit of their respective Private accounts, subject to their checks. Fifteenth. — After making a Statement of the Business, you would, in regular business, be ready to continue your bookkeeping, but, in order for the student to work the set over, he should close out all accounts as directed below. POINTS ON CLOSING BOOKS WHEN GOING OUT OF BUSINESS. First. — Have every person who owes you to pay you on open accounts, notes, etc. Second. — Pay off all accounts, notes, etc., you owe. Third. — Sell merchandise, fixtures, etc. (as per instructions). Fourth. — Take another Trial Balance and rule up all Ledger accounts that will balance. Fifth. — Divide your Profit and Loss according to amount each partner has invested. Sixth. — After closing out all accounts, except Cash and Stock, rule up your Cash Book and bring the balance down on debit side. It should agree with Stock account. Seventh. — Pay off Stock account, which will take all your cash. Then all your accounts will balance. 26 MEMORANDUM ENTRIES. Note. JNO. F. DRAUGHON SET. -The student, in working this set, should use the current year. T N this set the student may substitute ■*' his name for that of Jno. F. Draughon, or he may continue the business in the name of Jno. F. Draughon, supposing that he (the student) is the bookkeeper and that Jno. F. Draughon has this day started in the grocery business. JANUARY 1, 19—. Jno. F. Draughon invests cash, $2,000. Note. — Debit Cash account and credit Jno. F. Draughon's Stoclc account. Enter in Cash Book. For form of making entry, see printed Cash Book (left hand), page 6, entry No. 1. For instructions on Stock account and Cash account, see page 15. N. B. — Before you make the entry, read the instructions to which we refer you ; also see entries to which we refer you, which will give you the correct form for making entries. In this set we have made in good style each en- try for you to use as a guide. Should we fail to refer you to an explanation regarding any entry you are required to make, read and fol- low the instructions on page 58, headed, re- spectively, "How to Catch the Ideas" and "Search for Information." The student will also note that we have not only made the en- tries in the books of original entry, but have posted each month's business and taken a Trial Balance, also closed out the set — all of which work may be used as a guide. After the student works this set once or twice, he should make his entries without referring to our printed books. This is fully explained else- where, under heading, "The Course Outlined." THE FOUR PRINCIPAL BOOKS. Turn to pages 22, 23, and read the instruc- tions and make a careful study of the dia- gram given therein of the different books. The student should study this diagram, and read the explanations often while making entries in this set. After he makes some of the entries he can then better appreciate the instructions we have given on these books and the advan- tages of studying diagram of the different books. Making the entries as above stated assists in understanding the diagram and in- structions ; and studying the diagram and carefully reading the instructions assist the student in understanding how to make the entries in this set. One aids the student to understand the other. ENTRIES CONTINUED. Paid cash for store rent, $25; paid cash for coal for office use, $2. Note. — Debit Expense account with the above en.tries (or you could make the two en- tries in one) and credit Cash. For form of making these entries, see our printed Cash Book (right-hand side), page 6, entries Nos. 4 and 5. For instructions when to debit and credit Expense account, see page 17 ; also see instructions on Cash account, page 15. IMPORTANT RULE. Commit to memory paragraph 2 of article "Bookkeeping," page 15. If the student can- not readily commit to memory this rule, it would be well for him to copy it on a piece of paper. Jan. 6. Bought on time as follows: Houston, Meeks & Co., bill 23d ult, $200; Wickham & Pendleton, bill 6th inst, $300; Orr, Jackson & Co., bill 6th inst, $100. Note. — Journal entry for above : Debit Mer- chandise and credit the different firms. For form of making entries, see our printed Journal, page 8, entries Nos. 1 to 4 ; also see instructions on Merchandise account, page 16, and instructions on Creditors' account, page 20. Just before and just after you make each entry, read instructions to which we refer you. Jan. 14. Mdse. Cash sales this day, $25 (debit Cash and credit Mdse.); paid cash for freight from St. Louis, $20 (debit Freight and credit Cash) ; paid cash for stamps for office use, $1 (debit Expense and credit Cash). Note. — Enter the above in Cash Book. For form, see our printed Cash Book, page 6, en- tries Nos. 2, 6, 7. Also see instructions on Merchandise account, page 16 ; Cash account, page 15; Freight account, page 17; Expense account, page 17. The explanations will as- sist you in making the entry. Jan. 14. Sold on time as follows: Grant & Grant, Guthrie, Ky., 1 bbl. G. sugar, 300 lbs., at 71/.C. per lb.; 2 M. W. P. caps, at 60c. per M. Jan. 31. Sold to A. B. Pope, on acct., 10 bbls. flour, XXX, at $6 per bbl.; 100 bbls. meal, at $3 per bbl. Note. — Debit Grant & Grant and A. B. Pope in Sales Book and credit Merchandise. For form, see printed Sales Book, page 9, en- tries Nos. 1, 2. Also see instructions on "Our Debtors," page 20 ; "Merchandise," page 16. Mdse. Cash sales, $200. Note. — Debit Cash and credit Merchandise. See form in printed Cash Book, page 6. entry 27 No. 3. In business cash sales should be en- tered in Cash Book each day. Also see in- structions on "Merchandise," page 16 ; "Cash," page 15. JANUARY 31, 19—. Balance your Cash Book. See explanations on page 29, "How to Balance Cash Book;" also see form in Cash Book, page 6. 1. Your Cash Book should show $2,177 cash on hand. 2. Your Journal footings should be $600. 3. Your Sales Book footings should be $383.70. Read the following, then post: HOW TO POST. Posting is the transferring of accounts from books of original entry to Ledger, as follows : CASH BOOK. By referring to your Cash Book, page 6, you find that you have debited Cash and cred- ited Jno. F. Draughon's Stock account with $2,000. Open account in your Ledger on page 1. For form, see Jno. F. Draughon's Stock account in our printed Ledger, page 2. Write "Jno. F. Draughon's Stock Account" in heavy script, then enter on the credit (right-hand) side of his account, the year, the month, and the day, and in the explanatory column, "By Cash," extending the $2,000 into the money column (see page 2). Insert the number of your Ledger page in your Cash Book, and in- sert the Cash Book page in your Ledger. Thus you proceed to post all the accounts you have entered on the left-hand side of your Cash Book to the respective accounts (credit or right-hand side) in the Ledger, on the principle given above. By referring to the right-hand side (credit side) of your Cash Book, you find the iirst item, "Expense account, $25." Go to your Ledger and open an Expense account (see "Expense Account" in our Ledger, page 2), and post, on the same principle you posted your Stock account, except you en- ter the amount, etc., on the debit side (left- hand-side) of Expense account, instead of on the credit side (for form, see "Expense Ac- count," page 2). You continue to post all the items from the right-hand side of your Cash Book to the debit side (left side) of your Ledger for the month of January, until you have posted the entire month. JOURNAL. By referring to your Journal, page 8, you find that you have bought merchandise of different firms. Open ah account in the Ledger with each firm. Index each account you open in the Ledger (see our Index, page 1), and credit each firm with its amount, giving date, etc. First account, Houston, Meeks & Co., $200. Open an ac- count with them on Ledger (see H., M.- & Co. account, page 3). Enter on the credit side (right-hand) of their account $200, giving dates, etc. Post Wickham & Pendleton, also Orr, Jackson & Co., by same plan. After you have credited each with its amount, you debit Merchandise in one entry with the total amount of goods bought during the month, which is $600. (For form, see "Merchan- dise Account," page 2, debit side.) Be sure to give the date, and insert Journal page in the Ledger and Ledger page in the Journal. For form and explanation to be given when posting, see "Merchandise Account," page 2 of this book ; see also Houston, Meeks & Co.'s account in Ledger, page 3. After posting from the Journal, you will go to your Sales Book. SALES BOOK. By referring to your Sales Book, you find that you have sold to Grant & Grant, on account, total merchandise, $23.70. Open an account in your Ledger with the above firm. Insert on the debit side "To Merchandise, $23.70," giving the year, month, and day; also give Sales Book page in Ledger and Ledger page in Sales Book. For form, see Grant & Grant's account in this book, page 3. Post A. B. Pope's account on the same prin- ciple as above. Then credit Merchandise ac- count with the total goods sold on time dur- ing the month, which is, as shown by the footings of your Sales Book, $383.70. Insert the Ledger page in Sales Book and Sales Book page in the Ledger. For form of how to post this amount to Merchandise account, see "Merchandise Account" in this book. Ledger page 2 and Sales Book page 9. TAKE TRIAL BALANCE. After you post Cash Book, Journal, and Sales Book each month, you take Trial Bal- ance, which should agree with printed Jan- uary Trial Balance on page 5 of this book. HOW TO TAKE A TRIAL BALANCE. Read several times the general instructions on "How to Take a Trial Balance," page 4 ; but in this, the first set, we will give you some special instructions in taking the first Trial Balance : 1. Go to your Cash Book and you will find that the debit side will foot up (provided you have your Cash Book correct) $2,225, and the credit side (right-hand side) will foot up $48. As we have instructed you elsewhere, the Cash Book is considered the Casli account for your Ledger, and you will find that the difference between the debit and credit sides is $2,177, which you enter on the debit side of your Trial Balance, as per form of Trial Balance on page 5 of this book, "Jno. F. Draughon Set," January business. 2. Begin with the first account in your Ledger, as instructed on page 4, under the heading, "General Rules for Taking a Trial Balance," and you will find that Jno. F. Draughon's Stock account shows a credit of $2,000 ; enter this on the credit side of your Trial Balance, as per page 5, January Trial Balance, "Jno. F. Draughon Set." 3. You will find that the next account in your Ledger (provided you have arranged your Ledger accounts as we have them ar- 28 ranged in our printed book) is Merchandise account, and tliat tlie debit side of Merchan- dise account is $600, and that the credit side will foot up $608.70. Now, you can readily see that the difference is $8.70, and that the credit side is $8.70 larger than the debit side ; then you must enter this differ- ence on the credit side of your Trial Balance, as per January Trial Balance, "Jno. F. Draughon Set," page 5. If the debit side of your Merchandise account had been the larger, then you would have put that differ- ence on the debit side of your Trial Balance. 4. Now, proceed through your Ledger, as instructed on page 4, under the heading "Gen- eral Rules for Taking a Trial Balance," writ- ing on the debit side of your Trial Balance all the accounts that show a debit and on the credit side of your Trial Balance all the ac- counts that show a credit, giving the amount of the credit or debit, as the case may be, just to the right or left of each account, as per printed Trial Balance, "Jno. F. Draughon Set," Jan. 31, page 5. 5. After going through your Ledger as above directed, add both debit and credit sides of your Trial Balance. If they do not agree, compare them with our printed Trial Balance, page 5, January ; then if you cannot readily find your error, comply with the rules for locating errors in Trial Balance, page 10. 6. If your January Trial Balance agrees with our printed Trial Balance for January, page 5, proceed to make your entries for the month of February. Then post that month, and on Feb. 28 take another Trial Balance, which should agree with our February Trial Balance, "Jno. F. Draughon Set," page 5. If it does not agree, make the comparison as instructed in the foregoing article. WHEN YOU FAIL. When you cannot get your Trial Balance, read and fully comply with instructions in ar- ticle, page 10, "A Few Rul^s for Detecting Errors in Trial Balance." In taking your February Trial Balance, bear in mind that you include, in making your Ledger footings, January business ; in fact, you include the previous business each month. Now proceed, following instructions closely. HOW TO BALANCE CASH BOOK. The left-hand side of your Cash Book shows the amount of cash received, which in this set is $2,22 5; the right-hand side shows the cash paid out, which is $48. (See our Cash Book, January business, page 6.) It looks reasonable that the difference between the two sides should agree with the amount of casli on hand. In this case the difference is $2,177. After this is proved, you enter the difference, in red ink, on the right-hand side, "By balance on hand, $2,177," which makes the two sides agree. Then rule up the two sides and bring the balance down, in black ink, on the left-hand side, under the ruling. (See printed Cash Book, page 6, left-hand side; balance brought down, $2,177.) After the first time you balance Cash Book, you must include the amount you had on hand the last time you balanced it. NEXT MONTH'S BUSINESS. If your January Trial Balance agrees with the one given on page 5 of this book, and you have complied with all the foregoing rules, you are ready to take up February business. FEB. 1, 19—. Paid ca-sh for store rent, $25. Note. — Debit Expense and credit Cash. For form, see our printed Cash Book, page 6, en- try No. 13, right-hand side. For instructions on "Expense Account," see page 17 ; "Cash Account," page 15. Remitted the following cash on account to balance January account: Houston, Meeks & Co., check No. 1; Wickham & Pendleton, check No. 2; Orr, Jackson & Co., check No. 3. Note. — For amount you owe them, see their accounts in Ledger. Read instructions below on "How to Tell the Condition of an Ac- count." We will, in this case, consider checks cash. Debit each of the above firms and credit Cash. See form in Cash Book, page 6, entries Nos. 14, 15, and 16. Also see comments on "Creditors' Accounts," page 20; "Cash Account," page 15. TO TELL CONDITION OF AN ACCOUNT. On the left-hand side of an account you enter all debits ; on the right-hand side, all credits. If Jones asks you the condition of his account, you turn to his Ledger account ; and if you find, for instance, that he is debited with $75 and credited with $25, you say: "Mr. Jones, your account shows that you owe us $50." But first assure yourself that all the entries which would affect this account have been posted. Suppose his ac- count is debited with $25 and credited with $75, then the account will show that you owe Mr. Jones $50. Received of Grant & Grant, cash in full of account. Note. — Debit Cash and credit Grant & Grant. For amount they are due you, see Grant & Grant's account in your Ledger. For form of making entry, see our printed Cash Book, page 6, entry No. 8. Also see com- ments on "Our Debtors' Accounts," page 20 ; "Cash Account," page 15. Mdse. Cash sales this day, $50. Note. — Debit Cash and credit Merchan- dise. For form, see Casla Book, page 6, en- try No. 9, Also see comments on "Cash Ac- count," page 15; "Merchandise Account," page 16. (Watch for errors.) Feb. 8. Bought on time as follows Houston, Meeks & Co., bill 2d inst, $100 Wickham & Pendleton, bill 6th inst., $200 Orr, Jackson & Co., bill 8th inst, $50. Note. — Debit Merchandise and credit each 29 firm. For form, see Journal, page 8, entries Nos. 5 to 8 ; also see comments on "Our Creditors' Accounts," page 20 ; "Merchan- dise Account," page 16. (1) Mdse. Cash sales, $10. (2) Paid cash for produce (butter, eggs, etc., which we expect to sell again), $3. (3) Paid freight on mdse. from St. Louis, $15. Note. — The above entries go In the Cash Book. (1). Credit Merchandise, and debit Cash; (2) credit Cash and debit Merchan- dise; (3) debit Freight and credit Cash. For form, see printed Cash Book, page 6, entries Nos. 10, 17, 18. See also comments on "Cash Account," page 15 ; "Merchandise Account," page 16 ; "Freight Account," page 17. Received cash of A. B. Pope, by L. Book- er, in full of account. Note. — For amount, see Pope's Ledger ac- count. For form for making entry, see Cash Book, page 6, ent/y No. 11; also see com- ments on "Our Debtors' Accounts," page 20 ; "Cash Account," page 15. Feb. 15. Sold on time to Clay & Bass, Paris, Tenn., 2 lbs. cheese, at 25c. per lb.; 10 bbls. flour, at $6 per bbl. Feb. 16. Sold on time to Dr. Dortch, Hillsboro, Tenn., 1 ham, 20 lbs., at 15c. per lb.; 6 bbls. meal, at $3 per bbl. Feb. 20. Sold on time to Grant & Grant, Guthrie, Ky., 10 bbls. flour, at $6 per bbl. Note. — The above sales should be entered In the Sales Book. For form, see Sales Book, page 9, entries Nos. 4, 5, and 6. Also see comments on "Our Debtors' Accounts," page 20 ; "Metchandlse Account," page 16. Feb. 28. Mdse. Cash sales, $20. Note. — Debit Cash and credit Merchan- dise, Cash Book entry. For form, see Cash Book, page 6, entry No. 12. BALANCE. Balance your Cash Book. See instructions on page 29, "How to Balance Cash Book." For form, see printed Cash Book, page 6. Cash on hand to-day should be $1,997.70; Journal footings, $350 ; Sales Book footings (credit Merchandise with this), $141.50. POST AND TAKE A TRIAL BALANCE. Your Trial Balance for February should agree with February Trial Balance on page 5 of this book. See instructions on "Taking a Trial Balance," pages 4 and 28. NEXT MONTH'S BUSINESS. If you have fully complied with the fore- going, proceed with next month's business. March 1. (1) Paid cash for store rent, $25. (2) Paid cash for gas, $2.25. (3) Cash sales to-day, $200. Note. — Enter the above in your Cash Book. For (1) and (2) debit Expense, credit Cash; (3) debit Cash, credit Mer- chandise. For form, see printed Cash Book, page 6, entries Nos. 27, 28, and 19. See comments on when to debit or credit above accounts by referring to Index to this book. Do this each time before making entry. Remitted the following cash on ac- count: Houston, Meeks &* Co., check No. 4; Wickham & Pendleton, check No. 5; Orr, Jackson & Co., check No. 6. Note. — For amounts we are due them, see their accounts in Ledger. Debit each of the above firms and credit Cash. For form, see printed Cash Book, page 6, entries Nos. 29, 30, and 31. Also see comments on "Our Creditors' Accounts," page 20 ; "Cash Ac- count," page 15. March 6. Mdse. Cash sales, $20. Note. — Debit Cash and credit Merchan- dise. For form, see our printed Cash Book, page 6, entry No. 20. Also see comments on "Merchandise Account," page 16; "Cash Ac- count," page 15. Sold on time to A. B. Pope, 10 bbls. flour, XXX, at $5 per bbl.; 10 bbls. meal, at $3 per bbl. March 10. Sold on time to Grant & Grant, Guthrie, Ky., 1 bbl. sugar, 300 lbs., at 1V2C. per lb.; 1 bbl. meal, at $3. Note. — Enter the above in Sales Book. For form, see printed Sales Book, page 9, entries Nos. 8 and 9. Also see comments on "Our Debtors' Accounts," page 20 ; "Mer- chandise Account," page 16. Mdse. Cash sales, $10. Note. — Debit Cash and credit Merchan- dise. For form, see printed Cash Book, page 6, entry No. 21. Also see comments on "Mer- chandise and Cash Accounts," pages 15, 16. Bought on time as follows: Houston, Meeks & Co., bill 2d inst, $60; Wickham & Pendleton, bill 2d inst., $100; Orr, Jack- son & Co., bill 3d inst., $200. Note. — Debit Merchandise and credit each firm. For form, see printed Journal, page 8, entries Nos. 9 to 12. Also see comments on "Our Creditors' Accounts," page 20 ; "Mer- chandise Account," page 16. Paid freight on goods bought of Hous- ton, Meeks & Co., $15. Note. — Debit Freight and credit Cash. For form, see printed Cash Book, page 6, entry No. 32. Also see comments on "Freight Ac- count," page 17 ; "Cash Account," page 15. March 10. Received of the following, in full of accounts: Dr. Dortch, Clay & Bass. March 12. Paid in full Grant & Grant. Note. — For amounts, see their accounts in Ledger. Debit Cash and credit each. For form, see our printed Cash Book, page 6, en- tries Nos. 22, 23, and 24. Also see comments on "Our Debtors' Accounts," page 20 ; "Cash Account," page 15. 30 Mdse. Cash sales, $25. Note. — Debit Cash and credit Merchan- dise. For form, see printed Cash Book, page 6, entry No. 25. March 31. Sold on time to J. H. Ste- phens, Kennedy, Ky., 10 bbls. flour, XXX, at $5 per bbl. Sold on time to Matthews & Hood, Queen City, Texas, 10 bbls. meal at $3 per bbl.; % case tomatoes, 3-lb. cans, at $1 per case; 2 cases tomatoes, 2-lb. cans, at $1 per case. Note. — Enter in Sales Book. See printed Sales Book, page 9, entries Nos. 10 and 11. Each of the above is debited and Merchan- dise credited. Mdse. Cash sales, $330. Note. — Debit Cash and credit Merchan- dise. See printed Cash Book, page 6, entry No. 26. POST AND TAKE TRIAL BALANCE. 1. Balance Cash Book, Journal, and Sales Book. 2. Your Cash on Hand to-day should be $2,331.95. 3. Your Journal footings for this month should be $360. 4. Your Sales Book footings for this month should be $188. (Credit Merchandise ac- count with time sales.) 5. Post Cash Book, Journal, and Sales Book for March. 6. Take Trial Balance, which should agree with March Trial Balance on page 5 of this book. If it does not balance, see instruc- tions on page 10. WE REPEAT THAT: In making entries in Journal or Cash Book you should keep your explanatior^s in "explanatory columns ;" you should never run over the ruled lines to the right in ex- plaining an entry, and never let your ex- planations come closer than two inches to the left margin. (See paragraph 9, page 34.) EXPLANATIONS. We stress the importance of giving full explanations in the "exp"'anatory columns" of the Cash Book and Journal. The explana- tions should be so plain that anybody who has any knowledge of Bookkeeping at all, as well as an inexperienced person, could, by looking at the entries, understand them. In entering an article in Sales Book, give full description of it — price per pound, per dozen, per case, per barrel, etc. ; the brand of the article, the date, etc. The entry should be so plain that if the customer should or- der the bill duplicated it could be done with- out asking any question as to the brand of goods, etc. Another advantage is, if any trouble should arise as to the different arti- cles (price, grade of goods, dates, etc.), the Sales Book would give a full description. NEXT MONTH'S BUSINESS. If everything is correct up to date, take up another month's business. April 1. Received cash of the following in full of account for March: A. B. Pope, Grant & Grant, J. H. Stephens. Note. — For amounts, see their accounts in your l5edger. Debit Cash and credit each of the above. For form of making the entries, see printed Cash Book, page 6, entries Nos. 33, 34, and 35. Mdse. Cash sales this day, $200. Note. — Debit Cash and credit Merchandise. See Cash Book, page 6, entry No. 36. Paid cash for store rent, $25. Note. — Debit Expense and credit Cash. See printed Cash Book, page 6, entry No. 40. Paid cash for stationery for office, $3. Note. — Debit Expense and credit Cash. See printed Cash Book, page 6, entry No. 41. Received of Matthews & Hood, by B. Cook, cash on account, $32.50, less 1 per cent discount. Note. — First debit Cash and credit Mat- thews & Hood with net amount cash you re- ceived of them ; then go to your Journal and debit Interest and Discount and credit Mat- thews & Hood with the discount. For form, see printed Cash Book, page 6, entry No. 37, and Journal, page 8, entry No. 13, April business. Also see instructions on "Interest and Discount Account," page 17; "Our Debt- ors* Accounts," page 20 ; "Cash Account," page 15. Sold on time to Boyd Bros. & Smith, city, 20 bbls. meal, at $3 per bbl. Note. — Enter in Sales Book. For form, see printed Sales Book, page 9, entry No. 13, April business. April 10. Remitted cash on account as follows: Houston, Meeks & Co., $60; Wick- ham & Pendleton, $100; Orr, Jackson & Co., $200, less 2 per cent discount. Note. — For Orr, Jackson & Co.'s entry, debit them in your Cash Book with amount of cash sent them ; then go to Journal and debit them with the discount, and credit In- terest and Discount. For form, see printed Cash Book, page 6, entry No. 44, and Jour- nal, page 8, entry No. 14, April business. Also see instructions on "Interest and Dis- count Account," page 17; "Our Creditors' Accounts," page 20 ; "Cash Account," page 15. Also see Cash Book, page 6, entries Nos. 42 and 43, for Houston, Meeks & Co. and Wickham & Pendleton. They are debited and Cash credited. Mdse. Cash sales this day, $336. Note. — Debit Cash and credit Merchan- dise. For form, see printed Cash Book, page 6, entry No. 38. 31 Paid cash for produce, $4. Note. — "Produce" means butter, eggs, etc., which we buy (usually from people living in the country) to sell again. Debit Merchan- dise and credit Cash. For form, see printed Cash Book, page 6, entry No. 45. Sold on time to W. B. Cook, Dallas, Texas, 6 dozen brooms, No. 2, at $1.50 per dozen; 6 dozen brooms, No. 1, at $2 per dozen. Note. — Enter in Sales Book. For form, see printed Sales Book, page 9, entry No. 14. Received of W. B. Cook, his note, No. 1, at 30 days, to be applied on account, $21. Note. — Debit Bills Receivable and credit Cook. For form, see printed Journal, page S, entry No. 15. Read carefully instructions on "Bills Receivable Account," page 18 ; "Our Debtors' Accounts," page 20. April 30. Bought on time: Houston, Meeks & Co., bill 2d inst, $1,075; Orr, Jackson & Co., bill 6th inst., $100. Note. — Debit Merchandise and credit the above firms. For form, see printed Journal, page 8, entry No. 16. Sent Orr, Jackson & Co. our note. No. 1, at 30 days, to be applied on account, $100. Note. — Debit Orr, Jackson & Co. and cred- it Bills Payable. See form in printed Jour- nal, page 8, entry No. 17. Read and study instructions on "Bills Payable Account," page 19; "Our Creditors' Accounts," page 20. Sold on time: Sulphur Lumber Co., Sul- phur, Texas, 20 bbls. flour, XXX, at $5 per bbl.; 1 case tomatoes, 1-lb. cans, at 90c. Note. — Debit Sulphur Lumber Co. and credit Merchandise. Enter in Sales Book. For form, see printed Sales Book, page 9, entry No. 15. Mdse. Cash sales to-day, $26. jsjOTE. — Debit Cash and credit Merchan- dise. For form, see printed Cash Book, page 6, entry No. 39. Paid cash, freight from St. Louis, $20. Note. — Credit Cash and debit Freight. For form, see Cash Book, page 6, entry No. 46. BALANCE UP. 1. Balance Cash account. For form, see printed Cash Book, page 6, April business. 2. Your Cash Book should show $2,673.63 cash on hand. 3. Your Journal footings for April should be $1,300.32. 4. Your Sales Book footings for April should be $181.90. (Credit Merchandise ac- count. ) 5. After you get the above to agree, post Cash, Journal, and Sales Books for April. 6. Take April Trial Balance, which should agree with the printed Trial Balance, page 5: If it does not balance, comply with in- structions on page 10. NEXT MONTH'S BUSINESS. If you have succeeded in getting all your footings. Trial Balance, etc., to agree with ours for the month of April, proceed with May business. May 1. Mdse. Cash sales, $220. Xote. — Debit Cash and credit Merchandise. For form, see Cash Book, page 7, entry 48. Paid cash for store rent, $25. Note. — Debit Expense and credit Cash. For form, see printed Cash Book, page 7, entry No. 52, May business. Sold on lime to W. B. Cook, 20 bbls. flour, XXX, at $5 per bbl.; 1 dozen brooms. No. 2, at $1.50 per dozen. Note. — Enter in Sales Book. For form, see printed Sales Book, page 10, entry No. 17. May 10. Received of W. B. Cook, cash to pay his note. No. 1, $21. Note, — Debit Cash and credit Bills Re- ceivable. For form, see printed Cash Book, page 7, entry No. 49. Also see instructions on "Bills Receivable Account," page 18 ; comments on "Cash Account," page 15. Remitted Orr, Jackson & Co., cash to pay our note. No. 1, $100. Note. — Debit Bills Payable and Credit Cash. For form, see printed Cash Book, page 7, entry No. 53, May business. Also see instructions on "Bills Payable Account," page 19 ; "Cash Account," page 15. Sold on time to W. B. Cook, Dallas, Tex- as, 20 bjls. flour, XXX, at $5 per bbl.; 1 case blackberries at $1 per case. May 15. Sold on time to Grant & Grant, Guthrie, Ky., 4 cases of gooseberries, at 80c. per case; 2 cases strawberries, at $1 per case. Note. — Enter the above in Sales Book. For form, see printed Sales Book, page 10, en- tries Nos. 18 and 19. Mdse. Cash sales, $260. Note. — Debit Cash and credit Merchan- dise. For form, see printed Cash Book, page 7, entry No. 50. Paid cash for coal for office use, $6. Note. — Debit Expense and credit Cash. For form, see printed Cash Book, page 7, entry No. 54. Also see instructions on "Ex- pense Account," page 17; "Cash Account," page 15. May 30. Sold on time to A. B. Pope, 4 cases salmon, at $3.50 per case; 2 cases oysters, 1-lb cans, at $1.20 per case. Note. — Enter the above time sales in Sales Book. For form, see printed Sales Book, page 10, entry No. 20. Paid cash for freight from St. Louis, $21. Mdse. Cash sales, $22. Note. — Enter the above entries in Cash 32 Book. For form, see Cash Book, page 7, en- tries Nos. 55 and 51. BALANCE UP. Balance Cash Book for May. In business, bookkeepers often balance and rule up the Cash Book every day. Cash should be proved daily, even if you do not rule up Cash Book daily. 1. Your Cash Book for May should show cash on hand, $3,044.63. 2. Your Sales Book footings should be $224.10. (Credit Merchandise account.) 3. After you get your books to agree with the above, post Cash Book and Sales Book for May. (No Journal entries May or June.) 4. Take May Trial Balance, which should agree with May Trial Balance on page 5. NEXT MONTH'S BUSINESS. If you have fully complied with instruc- tions, proceed with June business. June 1. Sold on time to Grant & Grant, 10 bbls. flour, XXX, at $5 per bbl. Note. — Enter in Sales Book. For form, see printed Sales Book, page 10, entry 22. Mdse. Cash sales, $10. Note. — Debit Cash and credit Merchandise. For form, see Cash Book, page 7, entry 56. Paid cash for store rent, $25. Note. — Debit Expense and credit Cash. For form, see Cash Book, page 7, entry 62. Received cash on account: Grant & Grant, by J. E. Bell, $5.20; A. B. Pope, expressed currency, $16.40; W. B. Cook, post-office order, $101.50, Note. — Debit Cash and credit each of the above. For form, see Cash Book, page 7, entries Nos. 57, 58, and 59. Also see com- ments on "Our Debtors' Accounts," page 20 ; "Cash Account," page 15. June 10. Mdse. Cash sales, $260. Note. — Debit Cash and credit Merchan- dise. See Cash Book, page 7, entry No. 60. June 30. Sold on time to Matthews & Hood, Queen City, Texas, 20 bbls. meal, at $3 per bbl.; 1 case corn, No. 1, at $1.25. Note. — Enter in Sales Book. For form, see printed Sales Book, page 10, entry 23. Paid cash for coal for office use, $3. Note. — Debit Expense and credit Cash. For form, see printed Cash Book, page 7, en- try No. 63. Mdse. Cash sales, $30. Note. — Debit Cash and credit Merchan- dise. For form, see printed Cash Book, page 7, entry No. 61. BALANCE UP. 1. Balance your Cash Book. For form, see printed Cash Book, page 7. 2. Your Cash Book should show $3,439.73 cash on hand. 3. Your Sales Book footings should be $111.25. (Credit Merchandise account.) 4. Post. >. Take June Trial Balance, which should agree with printed Trial Balance, page 5. 6. Rule up, in Ledger, all accounts that balance. For form of Vuling, see printed Ledger, pages 2 and 3. All rulings should be done in red ink, with bevel edge of ruler up. DECLARE PROFITS. By referring to page 26, you find "General Rules for Declaring Profits;" but in order to assist you in closing this set, we will give special Instructions for closing each account : 1. In business, to declare profits, you will find it necessary to take inventory of mer- chandise, which, of course, includes all mer- chandise bought with the view of selling. In this case, we will simply estimate the mer- chandise at $1,000. 2. Credit Merchandise account, in red ink, "By Inventory, $1,000." See "Merchandise Account," pages 2, 12. 3. Take the difference between the debit and credit sides of Merchandise account, in- cluding your inventory on credit side, and the difference in favor of credit side should be $1,992.45. 4. Debit Merchandise account, in red ink, with this difference, $1,992.45, and credit Profit and Loss account, "By Merchandise, $1,992.45," in black ink. Trace the transfer of this amount, $1,992.45, from Merchandise account to Profit and Loss account, as indi- cated by the arrow on page 2. 5. Rule up Merchandise account, and bring inventory down on the debit side. Amount of inventory, as shown by your Merchandise account, is $1,000. For form, see "Merchan- dise Account," page 2 of this book. 6. By referring to your June Trial Balance, you find that Expense account shows a debit of $167.25. This amount you close into Profit and Loss account, as follows : Enter on the credit side of Expense account, in red ink, "By Profit and Loss, $167.25;" then go to your Profit and Loss account and enter on debit side, in black ink, "To Expense, $167.- 25," giving the Ledger pages carried to and brought from. For form, see "Expense Ac- count" in Ledger, page 2, and "Profit and Loss Account" in Ledger, page 2, this book. Trace the transfer by arrow, as on page 2. 7. By referring to your Trial Balance, you find that Freight account is debited with $91. Transfer Freight account to Profit and Loss account, on the same principle you trans- ferred Expense account to Profit and Loss account. Trace transfer by arrow, page 2. 8. By again referring to your Trial Bal- ance, you find that Interest and Discount account shows a gain of $3.68. Enter on the debit side of your Interest and Discount ac- count, in red ink, "To Profit and Loss, $3.68 ;" then go to your Profit and Loss ac- count and enter, in black ink, "By Interest and Discount, $3.68." Trace the transfer by arrows found on page 2. 9. Again rule up all accounts in your Ledg- 33 er that balance, then take another Trial Bal- ance, which should agree with the follow- ing Trial Balance : o»oo o 00 ; OQOO 00 1 O t- JO «M o O CO t- tH tH O !>. O 00 T-T (yT-MT-T ^'' H 2 ^'^ S be ^ oi m Ji" t25 O Q ^ § W f^'S^ C5 do g <1 2 t^^ P5 CO O O lO o o o 00 1>00 C^O 005 00 fi^ Oi O O -rH O •^ O c^ d CO O lO o o o o tH ^ O T-l T-l 00 ^ CO'tH '^^ *^ w '- o '.^ '. o ^ «• ,^ -^^ 'P < Q b o a :-^ Steffi* :^ h3 Cash on hi Mdse. (IiiT Grant & G Matthews Boyd Bros W. B. Coo Sulphur L d g READY TO CONTINUE BUSINESS. In actual business, you would now be ready- to continue business ; but as we desire to explain fully how to close all accounts, and in order that you may work this set over several times, we will have you proceed to close out all accounts in your books. 1. By referring to your Trial Balance, you find that Grant & Grant owe you $50. You will suppose that they hand you this amount in cash. Go to the receiving side of the Cash Book and credit Grant & Grant with the amount. For form, see Cash Book, page 7, entry No. 64. Dispose of the accounts of W. B. Cook, Boyd Bros. & Smith, Sulphur Lumber Co., and Matthews & Hood on the same principle you disposed of Grant & Grant's account. See entries Nos. 65 to 68. 2. By again referring to your Trial Bal- ance, you find that you owe Houston, Meeks & Co. $1,075, and you will suppose that you pay them this amount in cash. Enter on the credit side (right-hand side) of the Cash Book, "Houston, Meeks & Co., $1,075." See Cash Book, page 7, entry No. 70. 3. By again referring to your Trial Bal- ance you find that Jno. F. Draughon's net gain (see "Profit and Loss") is $1,737.88, which you will transfer to the credit side of his Stock account. Enter on the debit side of Profit and Loss account, in red ink, "To Jno. F. Draughon's Stock, $1,737.88;" then go to his Stock account and enter, in black ink, "By Profit and Loss, $1,737.88." See his Stock account, page 2 ; also Profit and Loss account, page 2. Trace transfer by arrow. 4. You will suppose that you sell the amount of merchandise on hand to Phillips, Bailey & Co. for $1,000 'in cash. Go to the receiving side of the Cash Book and enter, "Merchandise, $1,000." For form of making the entry, see printed Cash Book, page 7, entry No. 69. By referring to "Jno. F. Draughon's Stock Account" in Ledger, you find that his net capital is $3,737.88, and you also find that you have just enough cash to pay this account. - Go to the paying-out side of Cash Book and make this entry : "Jno. F. Draughon's stock handed him, $3,737.88." See Cash Book, page 7, entry No. 71. Post your Cash Book entries, and all ac- counts in your Ledger should balance. Post the debit side of your Cash Book to the credit side of your Ledger, and the credit side of Cash Book to debit side of your Ledger. Start at the first of this set and work it through again and again, until you can work it without referring to the instructions given for each entry. NOTE CAREFULLY. Before you submit your work on set for inspection, see that you have complied with all the following rules : 1. See that the dates are correct in the Ledger and books of original entry. 2. At the end of each Journal page ance up and carry your Journal footings for- ward, if the month's business requires more than one page. 3. After declaring Profits, take Trial Bal. 4. See that each entry has been paged while posting, and that all accounts are ruled in good style. 5. See that footings of each Ledger account that has been balanced are brought down be- tween red lines. (All ruled lines are made in red ink.) 6. See that the Trial Balance each month is dated, that the style of firm is written at the top of Trial Balance, and that the Ledger page precedes each account on Trial Balance. 7. Take Trial Balance after you sell out, before you close Profit and Loss account and Stock account. 8. See that footings of Journal, Sales, and Cash on Hand agree with teacher's amounts each month ; also Expense, Interest and Dis- count, Profit and Loss, Bills Receivable, Bills Payable, etc. 9. See that "explanatory columns" in Cash Book and Journal are ruled two inches from and parallel to the date line. 10. See that full explanation of each entry is given in Cash Book, Journal, and Sales Book. each fully both bal- 34 Ledger, McKINLEY& BRYAN SET. Dr. W. H. McKINLEY STOCK. Cr. 19 Jan. 1 To Sundries + 42 350 1,655 00 00 19 Jan. 1 1 By Sundries ''^Cash 1 40 1,765 250 00 " Balance* 00 (*red Ink.) ToW.H.McK.p.act. " Cash 2,015 00 By bal.(p8. worth) " P. and L 2,015 00 19 Apr. 1 L.P.37 41 25 1,725 1,750 25 21 46 19 Apr. 1 1 L.P.35 J. 43 1,665 85 00 46 1,750 46 W . J. BRYAN STOCK„ 19 Apr. 1 ToW.J.B. pri.act. " Cash L.P.35 41 25 1,725 25 20 1 19 LOSS. 19 Apr. 1 1 1 To Expense " Int. and Dis " Freight " Sundf. Stock L.P.35 L.P.36 L.P.36 J. 43 273 2 68 170 514 00 59 00 91 50 19 Apr. 1 By Mdse « Stocks&Bonds L.P.35 L.P.36 509 5 50 00 514 50 (Bought.) MERCHANDISE. {Sold.) 19 Jan. 1 2 4 1 14 14 30 1 To McK. stock " Cash " Sundries 42 40 42 42 42 42 43 l.p.35 1,500 1,680 40 20 320 1,690 509 00 00 00 00 00 00 00 50 19...... Jan. Feb. Mar. Apr. 6 8 12 31 81 1 4 14 28 1 5 15 30 30 1 By H., M. & Co... '' Cash 42 40 40 40 44 40 40 40 44 40 40 40 40 44 10 40 30 160 339 50 240 936 583 250 450 85 120 1,071 1,400 5,764 00 00 li tt 00 Feb, " Bills Rec. 00 '* John Jones " Time Sales « Cash 00 00 Mar. li n u 4° 00 Apr. " P. and L.* (*red Ink.) To Inventory " Time Sales " Cash 00 50 00 u u 00 U (( 00 (( u 00 " Time Sales " Inventory* (*red Ink.) By Cash 00 00 5,764 50 50 19 Apr. 1 1,400 00 19...... Apr. 1 41 1,400 00 ' 1 EXPENSE. To Cash It K " " !!!!!!....!.!!!!!. " Tom Watson, bk " Cash " " !-!!!!!.'.'."!! *' Tom Watson, bk " Cash 19 40 50 00 Jan. 11 40 2 00 Apr. 1 40 10 00 42 50 00 40 50 00 40 10 00 40 2 00 40 4 00 42 50 00 40 10 00 40 5 00 40 6 00 40 25 00 274 00 By Cash , ''^ P. and L.*.. (*red ink.) 40 l.p.35 1 273 274 f Column for page of book posted from. L. P., Ledger page posted to or posted from. Notice, — All ruling by students must be done with red ink. In using black-face type in table matter, such as "April 1 . By Inventory, $1 ,400," we want to impress upon the student that such entries should be made in red ink. 36 . Ledger, McKINLEY & BRYAN SET. Dr. INTEREST AND DISCOUNT. Cr. 19 Feb. 1 5 To Bills Rec f 42 43 5 5 00 49 19 Feb. Mar. Apr. 4 15 30 1 By G. B. Gro. Co. '' H., M. & Co... '' G. B. Gro. Co. " Sunds + 42 43 43 43 l.p.35 4 1 2 2 10 20 Mar. '' John Smith 20 00 FiO " P. and L*........ (*red Ink.) 59 10 49 49 FREIGHT. 19 Jan. 4 1 To Cash 40 40 60 8 00 00 19 Apr. 1 By P. and L.* (*red ink.) l.p.35 68 00 Mar. U ii 68 00 68 00 STOCKS AND BONDS. 19 Jan. Feb. 1 4 1 To 1 Shi- C.S.B. stk.. '' " C.S.B. stk.. " P. and L* (*red ink.) To Inventory J. 42 J. 42 l.p.35 110 110 5 00 00 00 19 Feb. Apr. 4 1 BylshrCS.B.stk (sold) J. 42 115 110 00 Apr. nn (*red Ink.) BylshrCS.B.stk (sold) - 225 00 225 00 19 Apr. 1 no 00 19 Apr. 1 C.41 110 00 TOM WATSON, BOOKKEEPER. 19 31 1 To Cash 40 41 25 75 00 00 19 Jan. Feb. 31 28 By Jan. Salary.... " Feb. Salary.... J. 42 J. 42 50 50 00 Apr. u u 00 100 UO 100 00 BILLS RECEIVABLE. 19 1 4 J. 42 J. 42 50 10 00 00 00 ]9 Feb. Apr. 1 1 1 By J. Jones C.40 J. 42 C.41 5 45 10 00 Feb. " B. Harrison 00 " B. Harrison.... 00 60 60 00 BILLS PAYABLE. 19 Mar. 20 ToH.,M. &Co J. 43 60 00 19 Mar. 1 By H., M. & Co... J. 43 60 00 1 FIRST NATIONAL BANK, NASHVILLE. -19.:.... Mar. 1 To Cash .. 40 75 00 19 Mar. Apr. 20 1 By Bills Pay " Cash J. 43 41 60 15 00 00 75 00 75 00 JOHN N. STEWART. 19 1 14 15 J. 42 44 44 44 50 75 6 30 00 00' 10 00 19 Mar. Apr. 5 1 By Cash 4(? 41 6 155 10 " Mdse 00 Feb. H il Mar. (( (( 161 10 161 10 J. Posted from Journal page. 0. Posted from Cash Book page. 36 L. P. Ledger page. Ledger, McKINLEY & BRYAN SET. Dr. A. M. PIKE. Ck. 19 Jan. 1 9 To (old business).... " Mdse T J. 42 44 25 21 00 00 19 Jan. Feb. 12 14 14 By H.,M. &Co... " Cash T 42 40 42 25 20 1 00 00 " John Jones oo 46 00 46 00 JOHN SMITH, 127 NORTH HIGH STREET. 19 Jan. 1 31 28 20 To (old business).... '^ Mdse J. 42 44 44 44 30 243 31. 840 00 00 40 nn 19 Mar. Apr. 15 1 By Cash 40 43 41 268 5 870 91 '' Int. and Dis... " Cash 49 Feb. u u 00 Mar. (I il 1,144 40 1,144 40 1 W. H. McKINLEY, PRIVATE ACCOUNT. 19 Feb. 1 80 To Cash 40 43 25 00 25 19 Apr. 1 By W.H.McK.Stk.*. ('■red ink.) I.p.35 25 25 Mar. " Int. and Dis 25 25 25 25 W. J. BRYAN, PRIVATE ACCOUNT. 19 Feb. 1 SO To Cash 40 43 25 00 25 19 Apr. 1 ByW. J. B. Stk.*... (■red ink.) i.p.35 25 OR Mar. " Int. and Dis 25 25 25 25 JOHN JONES. 19 Feb. To Cash '^ A. M. Pike -' Mdse 19 40 9 00 Feb. 14 42 1 00 44 10 00 20 00 Mdse. 42 GROVER CLEVELAND. 19 Feb. 4 To Mdse 44 230 00 19 Feb. Apr. 4 1 By Sunds.. 42 41 120 110 00 " Cash 00 230 00 230 00 T. C. SKEEN. 19 Feb. 16 30 To Mdse 44 44 306 201 00 00 19 Mar. Apr. 30 1 By Cash 40 41 306 201 00 Mar. hi it 00 507 00 507 00 CLOSING BOOKS. As stated elsewhere, business firms usually declare profits once each year, if not semiannually, while some declare profits monthly. To do this it is not necessary, if your books have been kept "Double Entry," to make entries to all of your different accounts, such as Customers, Bills Receivable, etc., unless you consider some of those accounts worthless. Such accounts as are affected in declaring profits are those which make the proprietor worth more or less. For explanation on declaring profits, which we call closing our books, see page 26. 37 Ledger, McKINLEY & BRYAN SET. HOUSTON, MEEKS & CO., ST. LOUIS, MO. Jan. 6 12 1 4 1 15 1 To Mdse. 42 42 40 42 43 40 43 41 10 25 350 115 60 118 1 670 00 00 00 00 00 80 20 00 19 Jan. Feb. Mar. 1 1 3 8 By (old business). " Mdse. (bill 28th ult.) ... . " Mdse J. 42 42 42 42 200 360 120 670 00 FeB. " A. M. Pike. " Cash 00 '' Stocks & Bonds. " Bills Pay 00 Mar. i( ii 00 " Cash ^^ Apr. " Int. and Dis " Cash 1,350 00 1,3.50 00 1 ORR, JACKSON & CO., NASHVILLE, TENN. 19 Apr. To Cash 41 19. 150 00 Jan. 1 By (old business). J. 42 00 GREELEY-B. GRO. CO., ST. LOUIS, MO. 19 Feb. 4 4 Mar. 15 Apr. 1 To Cash " Int. and Dis. " Cash " Int. and Uis. " Cash 19 40 415 80 Jan. 1 42 4 20 Feb. 12 40 198 00 Mar. 12 43 2 00 41 390 00 1,010 00 By Mdse. 390 WICKHAM & PENDLETON, ST. LOUIS, MO. 19 Feb. 14 1 To Cash 4t H 40 41 600 630 00 00 19 Jan. Mar. 3 22 By Mdse 42 43 600 630 00 Apr. « n. 00 1,230 00 1,230 00 JOHN L ADAMS & CO., NEW ORLEANS, LA. 19 Mar. 30 To Cash 40 300 00 19 Jan. 3 By Mdse 42 300 00 (Form of check drawn by McKinley & Bryan, favor Houston, Meeks & Co.) J^o. 2it9. /fa^h-ville, Tenru, jam,. 6, 19....... FIRST NATIONAL BKNK Tray to /. ^ /.. or order ^ :^>» 50.50 ^^pJimi^ 9p y^l^ (let ^. 38 TRIAL BALANCE BOOK. TRIAL BALANCE, McKINLEY & BRYAN, JANUARY 1, 19.... Dr. Cr. L. P. Cash (from Casli Book) 1,915 1,500 110 50 50 25 30 00 00 00 00 00 00 00 L. P. 35 35 38 38 W. H. McKinley, stock 1,665 1,665 200 150 no 35 Merchandise 00 36 Stocks and Bomls Houston, M & Co 00 3(5 Bills Receivable 00 36 37 A. M. Pike 37 John Smith 3,680 00 3,680 00 TRIAL BALANCE, McKINLEY & BRYAN, JANUARY 31, 19. Cash Merchandise Expense Freiglit Stocks and Bonds Bills Receivable.. J. N. Stewart A.M. Pike John Smith 1,994 00 35 2,606 00 35 111 00 36 60 00 38 110 00 38 50 00 38 125 00 88 21 00 38 273 00 5,350 00 W. H. McKinley, stock.... W. J. Bryan, stock Tom Watson, bookkeeper Houston, MeeUs & Co Orr, Jackson & Co Greeley-B. Grocery Co.... Wickham & Pendleton.... John I. Adams & Co TRIAL BALANCE, McKINLEY & BRYAN, FEBRUARY 38, 19. Cash Merchandise Expense Interest and Discount Freight - Stocks and Bonds Bills Receivable John N. Stewart John Smith W. H. McKinley,Private account. W. J. Bryan, Private account G rover Cleveland T. C. Skeen 1,7.54 20 35 1,176 50 35 227 00 36 80 38 60 00 38 105 00 38 10 00 38 131 10 304 40 25 rx) 25 00 110 00 306 00 4,235 00 W. H. McKinley, stock.... W. J. Bryan, stock Tom Watson, bookkeeper Houston, Meeks & Co Orr, Jackson & Co Greeley-B. Grocei-y Co.... John I. Adams & Co TRIAL BALANCE, McKINLEY & BRYAN, MARCH 30, 19.... Cash , 2,494 890 273 2 68 105 870 10 15 155. 25 25 110 201 41 50 00 59 00 00 00 00 00 00 25 25 00 00 35 35 36 38 38 38 88 W. H McKinlev stock 1,665 1,665 75 670 150 390 630 00 35 Merchandise W. J. Bryan, stock. 35 Expense '. Tom Watson, bookkeeper...!....... 00 36 Interest and Discount 00 36 Freight OiT Jackson & Co 00 36 Stocks and Bonds 00 37 Wickham & Pendleton Bills Receivable 36 36 First National Bank J. N. Stewart 37 37 37 W. H. McKinley, Private account. W. J. Bryan, Private account Grover Cleveland 37 T. C. Skeen 5,245 00 5,245 00 TRIAL BALANCE, McKINLEY & BRYAN, APRIL 1, 19. Cash Merchandise Stocks and Bonds Bills Receivable First National Bank J. N. Stewart John Smith W. H. McKinley, Private account W. J. Bryan, Private account Grover Cleveland T. C. Skeen 2,494 41 35 1,400 00 35 110 00 35 10 00 36 15 00 38 155 00 38 870 00 38 25 25 38 25 25 110 00 201 00 5,415 91 W. H. McKinley, stock W. J. Bryan, stock Profit and Loss Tom Watson, bookkeeper Houston, Meeks & Co Orr, Jackson & Co Greeley-B. Grocery Co. Wickham & Pendleton 39 'S'-'S^S ;§§§ ooooo; O O O >.-: «^ o\>t^ OC'^ u,ig„ *» sq (>< as ai-i' +3 o fcc CO a-r; •y, o y. u '• y ^ : ^1 : <9 ooooo ooooo S ooooo ooooo (TJOO — 0000 ■* O O CC »o X cc o w 10 10 00 ;o o (M t~ (M -^ (M CO f-H if 1 1 i .laquin^ --KM eOrJtKSO CO^WJOI;^ §5g58ESg?S§^ .i93|taT: ^s • ^si^s? 1 CO CO CO CO CO «M^Mcoco»5 II 5- S * rToO e8 es J OS' O S'S 08- : O -a : a §io2 8 c3 C3 :; O OJ o]: OC.S c-5§ii cc, »-5 00 r 00 o ^ CS 03 :Hx3-ej3 O eS >>cs c3 ci HOMOShO JO fl o Hog JOOCC ^-3 e8^(SX:^ 03^ _ CO _ (O 00 O c3- fl cS 2 c3 03 HO Ooooo 2.2 c ^ V <£> .2-. aS^ eJ0H ITS ©-j OJ .0) SpqS-=^S a> © p o £ 00 QQ Qj CO fi f «#^ = O fl c S^ G 22«S=dJ^ © cj-S ©-5 © 2*^ :© 40 • 08 25 1^ o o a E o c o O o o CO O o oo o m( t- o Si so t- I SDrHCOO ss CI o CS S asm - ^ 1 : 3, 2^ 3^ -ggooggogl:; ' - LI SSrH i 1.1 «' CO II 1 1 1 q;iS^5;^^5§3 ^^i?ofe?s§g 1 :o« : : i : :■« : ceo • • ! • • O O S3 . too -• fl fi o o5 S.5 •I J -"H : s% W W»!fi»»»»!Jilfiiffi»!ii!fi»>fUli!fiili!fi»lii!fi!fi!iiW»!fi!fi 41 Journal, McKINLEY& BRYAN SET. JANUARY, 19.... O C Explanatory Column. II r Dr. Cr. 1 1 1 Sundries... To: (Part of McKinley's Investment.) W. H. McKinlev's Stock 35 35 36 36 87 37 36 35 38 88 1,500 50 50 25 30 110 350 2,115 00 00 00 00 00 00 00 00 1,765 150 200 2,115 00 Bills Receivable J . Jones's note, dated Dec. 24, 19..., 30 daj s. A. M. Pike 11 4( (.k :: John Smith a li w 11 Stocks and Bonds 1 share C. S. Bank Stock on hand ?, W.H.McKinleyStock.To: Orr, Jackson & Co (New firm assumes old accounts.) Sundries 00 Houston, Meeks & Co n " n tt 00 00 JANUARY, 19.... B 4 6 12 31 Merchandise ..To: Houston, Meeks & Co Greeley-B. Grocery Co.... Wickham & Pendleton... John 1. Adams & Co Houston, Meeks & C0..T0: Merchandise Sundries 35 38 38 38 38 38 35 38 37 35 36 1,680 10 25 50 00 00 00 00 360 420 600 300 10 25 50 Bill 28th ult 00 " 1st inst 00 " 3d " 00 4( H ti 00 4 Returned to them 2 bbls. flour, @ |5 each.. Sent H., M. & Co. draft on Pike 00 5 Houston, Meeks & C0..T0: A. M. Pike 00 6 Expense To: Tom Watson, bookkeeper 1 month's salary. 00 1,765 00 1,765 00 FEBRUARY, 19. Sundries To: Merchandise Interest and Discount Houston, Meeks & C0..T0: Stocks and Bonds Sundries To: Bills Receivable Stoclcs and Bonds Greeley-B. Gro. Co To: Interest and Discount Merchandise To: John Jones , John Jones To: A. M. Pike Merchandise To: Houston, Meeks & Co Greeley-B. Grocery Co . Expense. Tom Watson, bookkeeper Bills Receivable c Sold John Jones's note to H., M. & Co. ) < at $5 discount, and received in pay- > ( ment cash $5, balance in merchandise ) Sold to H., M. & Co.on act. 1 sh.C.S.bk.stk, Grover Cleveland , Harrison order from C 1 sh. C. S. Bank Stock from C 1 per cent discount on |420 Received butter and eggs of him Transferred as requested by Jones Sundries Bill 3d inst " 12th " 1 month's salary 42 40 00 5 00 115 10 110 4 20 1 320 50 675 20 50 00 00 20 Journal, McKINLEY & BRYAN SET. MARCH, 19.... Explanatory Column.