*• . ^ - _ SSfffi# feUEBE LIBRARY mlSfflyT HILL, MASS. GOODWINS i Improved Book-Keeping AND BUSINESS MANUAL BY “Goodwin’s Improved Bill Book,” and i « “Goodwin’s Practical Instruction for Business Men.” “No man is so wise, but may easily err, if he will take no other counsel but his own .”—Ben Jonson. BOSTON COLLEGE LIBRARY CHESTNUT Him MASS . 1 ®Locntictl) (Eirition. FIFTY-EIGHTH TO SIXTY-THIRD THOUSAND. J. H. GOODWIN, 1215 Broadway, New York City. 1900 - 1901 . Entered, according to Act of Congress, in the year 1881, By J. H. Goodwin, In the office of the Librarian of Congress, at Washington. All rights reserved 159899 Copyright, 1887, by J. H. Goodwin, All rights reserved. Copyright, 1889, by J. H. Goodwin, All rights reserved. PREFACE. There is no system of book-keeping, however excellent, which cannot, in some particular, be improved—and there is no man, however exalted in the scale of intel¬ ligence, who may not acquire some knowledge from his fellow-man, be the intellectual position of the latter never so lowly ; therefore, let no man think that he is above instruction. When examining into the merits of a new system, we should remember that “man always believes more readily that which he prefers •” consequently, we should strive to put aside not only partiality for our own system but also prejudice against other systems, in order the better to judge of the intrinsic value of the system under consideration. It is the author’s wish that you may thus test the merits of his book. The articles on “Book-keeping of ‘A i’ Houses,” covered in paragraphs 987 to 1111, were written, principally, from points given to the author by the following houses—each house contributing, through its particular system, something towards the whole: Arnold, Constable & Co.; Austin, Nichols & Co.; Calhoun, Robbins & Co.; H. B. Claflin & Co.; Robert K. Davies & Co.; E. J. Denning & Co., successors to A. T. Stewart & Co.; E. S. Jaffray & Co.; J. & C. Johnston ; Francis H. Leggett & Co.; Lesher, Whitman & Co.; Lord & Taylor; R. H. Macy & Co.; James McCreery & Co.; Mills & Gibb; Edward Ridley & Sons; Stern Brothers; Sweetser, Pembrook & Co.; Tefft, Weller & Co.; Frederick Vietor & Achelis. To these great houses, therefore, known as all of them are throughout the Union, and as many of them are throughout the World, the author is indebted for most of the material from which the articles on “A 1” houses were constructed. Pages 58, 72, and 137 to 278 were new in the eighth edition ; pages 279 to the end of the book were new in the tenth edition. It has been the author’s aim to make his articles clear, complete, and brief. Whenever it was not in his power, however, to make an article both brief and clear, he has sacrificed brevity for the sake of clearness. A brief article is of no value un¬ less it is understood. Therefore, first in importance is clearness ; second, complete¬ ness ; and third, brevity. With these few words of introduction this work is brought before the public, in the hope that it may find a place on the desk of every book-keeper and of every business man as a book of reference. THE AUTHOR. Purchasers’ Privileges, E ACH purchaser is given an ORDER NUMBER which will be found on the inside of the back cover of his book. This entitles him to the following privileges : GRATUITOUS ASSISTANCE. I. He is entitled to gratuitous assistance whenever any point of difficulty arises which is not covered in this book. Let the value of this privilege be noted, especially by those who appreciate counsel when perplexed by difficult problems. NEW POINTS. II. Three Dollars will be remitted to the purchaser for any point of value which he has discovered in his own experience ; provided that the point is not covered in this book, has not been previously given to the author, and is not to be found in any other book. BLANK BOOKS. III. One Dollar will be remitted to the purchaser for his first order for Blank Books, the regular price of which is as much as five dollars. (See page 299.) If the purchaser finds that all his valuable points are covered in this book, and that consequently he cannot secure the three dollars offered in Section II., let him place his next order for blank books with the author, and v thereby secure the dollar offered in Section III. [Jggp" When this book is purchased from any person other than from the author, the purchaser is requested to send at once to the undersigned his name and address, order number, and the name of the firm by whom he is employed or of which he is a member. The “ outfit ” which accompanies this book consists of papers numbered A, B, C, D, E, and F. As all of these papers are of considerable importance, the undersigned should be notified when any one of them becomes lost or misplaced, when a new copy will be sent. USgP 3 In all correspondence with the author, the purchaser must give his ORDER NUMBER ; otherwise he will not be entitled to the privileges mentioned on this page. j. H. Goodwin, 1215 Broadway, New York:. INDEX. A i Houses: Book-keeping of - retail, 1043 to mi. wholesale, 987 to 1042. Abbreviation, 295^, 323, 917. Ability, test of— as book-keeper, 1190 to 1285. as clerk, 1068. Abstract — Clerks’, 1068, 1069. Daily Sales, 1006, 1007, 1066. Monthly Sales, 1008, 1067. Sheets, 1012 to 1018. Yearly Sales, 1009. Acceptance—48, 119, 136, 142. accepted by us, 132, 133, 381. accepted by others, 114, 115, 388. discounted, no. endorsed by us, 112. form, 136. interest on, 1131. paid to us, 134, 524. paid by us, 109. See also, “Notes.” Account— 5. current, 897. Sales, 242, 245, 249. Accounts payable, 332a, 849. Addition — 859. Proof of, 911. Additional investments, 50. Addressing envelopes, 332<7, 846, 850. Advanced Double Entry, 321 to 332, 970 to 986. Advertising, 194, 526. Agent’s accounts—see “Traveling Expenses.” Allowances — see “Overcharges.” Alloy, 888. Alphabetical arrangement of— accounts, 1082, n 19. charge tickets, 1071, 1081. credit tickets, 1083. invoices, 309, 401 to 407. towns, 328. Alteration— date on check, 1127. figures, 847, 1073. Alternate — Cash Books, 1028. Register Books, 1073. Sales Books, 853, 992, 998. Sales Journals, 999 to 1005. Ticket Books, 1047. Analysis, Check, mo. Annual — reports by Stock Companies, 1188. statement,—see “Yearly Statement.” Antiquated book-keeping, 986. Apothecaries’ weights, 876. Approval, goods sent on, 983. Assessment, 1154. Assets and Liabilities—20, 21. closing of books, 314, 854, 855. new partner, 316. opening of books, 311, 312. statement of, 812, 1186. Assignment — 265, 1130, 1132. of shares, 1187^. Assistant, 846. Attorneys — 262 to 264, 270, 272, 324, 441, 1265. collection, 504, I28i-2gth. fees, 1283. Authorizing employe to sign, 851. Author’s audit, 1220. Auxiliary books, 22. Averaging accounts, 889 to 910. Avoiding errors, 26 to 28, 292, 305 to 307, 319, 320, 833, 848, 858, 953 to 967, 992, 1029, 1056, 1057, 1059 to 1061, 1070, 1072 to 1075, 1084 to IIII, 1116, 1117. Avoirdupois weights, 877, 878. Back Order Book, 853. Balance Ledger, 1112 to 1115. Balance Sheet — see “Yearly Statements.” 1 Balancing — account, 305 to 308, 321, 913. Cash Book, 857, 858. Sales Ledger, 1019. Bank— account, 8634, 332c, 852. balance, 863^. Balance Ledger, 1119. book, 8634, 212. clerk, 86 } 4 - discounts, 320, 489, 495. liability, 934, 935,* 1127 to 1130, 1132, 1133. notary, 944. notices, 143, 849, 944. stockholders, 1181. teller, 8634, 934, 1119. Bank drafts — 86, 84, 143, 521, 928 to 937. endorsement, 830 to 832. exchange, 945, 947. Bankruptcy, 265, 1130, 1132. Baskets, truck, 1023. Bearer, 829, 928 to 932, 968. Beginners, 141, 291, 305 to 326, 333 to 818, 1190 to 1285. Beginning of business — see “Opening, etc.” Bill Book, 25, 124, 834, 849, 923, 940 to 942, 1030, 1031. Bill clerk, 850, 988, 999, 10x4. Bills — see “Invoices.” Bills Payable, 21, 36, 48, 129 to 143, 324, 629 to 642, 361, 362, 381, 391, 505, 524, 531, 923, 940, 942. Bills Receivable, 20, 35, 48, 107 to 128, 324, 602 to 625, 356 to 360, 369, 373, 388, 542, 418, 422, 467, 488, 489, 495, 923, 940, 941, 1030 to 1033. Bills Receivable and Bills Payable Book—see “Bill Book.” Blank endorsements, 928. Blotter, 23. Blunders, 848. See also, “ Avoiding errors. ” Bonds, 1155, 1156. Bonus, 1161, 1166 to 1168. Book-keeping, 1, 2, 313, 8, 26, 27, 292, 294, 333, 335 - 9 8 4 to 9S6, 1295. Books— sizes of, 883. used, 8, 9, 335, 982, 983. Branch Houses, 223 to 240. Building, 102 to 106. Business — gain, 278, 797, 61, 575; 280, 283, 285, 54. loss, 279, 282, 60; 280, 284, 285, 53. men— see “Hints to business men.” Business Colleges — 321 to 32634, 846, 852, 986. Balance Sheet, 303. Cash account, 75. Business Colleges — Continued. explanation columns, 338, Ex. 602. ledger-headings, 338, Ex. 601. name of, 853. trial balance, 302. Buyer, 331. By, 916. By-laws, 819, 1141, 1177. Calendar, 295 %• Call —949, 1154. clerk, 988, 999, 1023. loan, 1180. Calling off amounts, 914. Canada currency, 863. Canceled — register-numbers, 1072. stock certificates, 1157, 1172. Capacity, measurements of, 873, 874. Capital —56, 318, 319. Stock account, 822, 827. stock decreased, 821, 1169 to 1172. stock increased, 821, 1157, 1158. Cartage — see “Drayage.” Cash —20, 31, 32, 75 to 86 * 4 , 977. account, 13, 47, 75. balance on hand, 13, 76, 8634, 348, 485, 552, 554, 857, 858. check, 1049, 1050, 1055. coupon, 1051. credit slips, 1029, 1084. over, 858. ' paid, 44, 77, 79, 506 to 546, 980, 981. received, 43, 78, 80, 83, 85, 86, 486 to 505, 833, 977 to 979. sales-tickets, 1049. short, 858. Cash Book— 13, 43 to 47, 471 to 554, 977 to 981. daily balance, 857, 1124. examination of, 1125. explanations, 850, 923, 1205. extra columns, 1123, 1249. footings carried forward, 1239. General, 1027, 1084. Individual, 1026, 1084. proof of posting, 957 to 960. 963 to 966. To and By, 916. Cash-Check Book, 1092. Cashier, 858, 1026 to 1029, 1049 to 1053, 1059, to? 1 * Casting out 9s, 911 to 913, 965. Caution, 127, 128, 319, 320, 831, 832, 833, 848, 858, 1106 to 1108, 1125 to 1132. Cents— column, 338, Ex. 602 to 610, 918. posted as dollars, 951. Certificate Book, 1187a. INDEX. Certified — check, 1126, 1133. r statement, 338, Ex. 441. Change— book-keepers around, 1106, 1107. books from single entry to double entry, 312, 3x5,85410856^. clerk from one department to another, 1069. routes of collectors, 1108. Charge — book-keeper, 987. 1 checks, 1053, 1059. department, 1053 to 1064, 1076 to 1082, 1085, 1086, 1093. tickets, 1053. Charges, in Commission business, 249,250, 253 to 258 Charter, 819, 1176, 1177, 1188. Check — 86, 86 ) 4 , 928 to 937, 1299. against errors and falsification — see “Avoid¬ ing errors.” bearer canceled, 829. certified, 1x26. 1133. dated ahead, 1132. drawer, 1127, 1130, 1132, 1133. endorsement on, 830 to 832. give, 79, 82, 544. on Retail Sales Ledgers, 1085 to I III. receive, 80, 81, 489^. Check analysis, 1110, nil. Check Book, 86 ) 4 , 212, 332c, 946, 1296 a. Checking — department, 1059 to 1075, 1085 to 1092, 1094 to nil. invoices, 331. pages, 330. payments on notes, 923. postings, 950. sales-tickets, 1049. settlements, 948, 1029. , statements, 938. Check Register, 1094 to 1101. Check System, 1045 to 1111. Ciphers, 918. Circular, table of, 880. City number, 850. Classification of accounts, 843. Clearing-house, 1119. Clerk, 1044, 1061, 1064, 1068, 1083. See also “ Sal¬ aries.” Clerks’ Abstract Book, 1068, 1069. Clerks’ Sales Book, 1061, 1064. Closing lines, 801 to 805, 338, Ex. 674. Closing of Books — double entry, 287, ij) 4 , 270, 275 to 295, 919, 1218. single entry, 854, 855. to take in new partner, 316. C. O. D. sales, 938, 1055, 1057, 1062. Coinage of gold and silver, 927. Cold Pig, 983. Collateral security, 1180. Collection and Exchange, 209 to 212, 523, 525, 533, 945 to 947 - Collection of— account by agent, 1279. account by attorney, 262 to 264, 1281-29M. note by express company, 832 )4- time bills, 1288. Collector, 1052, 1085, 1x08. Color — books, 983. credit tickets, 1083. ink, 325, 1083, 1119. sales tickets, 1055. Commission — business, 246 to 261. fictitious, 1153, 1163, 1164. on shipments, 241. Salesman’s Book, 1024, 1025. to traveling agents, 219, 220, 1024. Committing Ledger-pages to memory, 329. Comparative — sales, 1066 to 1069. statement, 925, 926. Comparison of— advanced book-keeping and antiquated book¬ keeping, 986. Sales-Journal and Abstract-Sheet systems, 1015 to 1018. sales of one year with those of another, 1066, 1067. Confidence substantiated, 1125. Consideration, nominal, 1166 to 1168, 1174. Consignment — 241 to 261, 1275. number 332c/, 247 to 249. Consignment Book, 249, 254 to 259. Consignor and consignee, 249. Consolidation of different kinds of business, 261, 839. Contingencies, 825, 1x67. Contract, 56, 1149. Contra entry, 847. Copartnership, 311, 347^, 1200, 1250. Copper coin, 887, 888. Copying — items from invoices, 842. letters, 310, 846. Corporations — see “ Stock Companies.” Correspondence, 295 ) 4 , 846, 1287. Cost — ' marks, 853. of goods, 919, 921, 943. of Ledgers, 1113. Counterfeit bills, 833, 1236. Counters, 93, 511. Ill INDEX. Counting, table of, 881. Coupon — bonds, 1156. checks, 1051, 1059, 1071, 1072, 1074. Packer’s, 1057. Credit —15, 19, 27, 30, 38, 42, 852, 1026 to 1038. book-keeper, 1036 to 1038. clerk, 1083, 1089. department, 1083, 1084. man, 1023, 1053, 1055, 1112. slips, 1029. standing, 1112, 1185. Credit Book, 338, Ex. 427, 976, 1035. Credit Ledger, 853, 975 b, 1036. Creditors, 851, 245, 323, 828, 843, 853, 928 to 933, 938 , 939 > 945 . 946 , 968, 975, 1036 to 1038, 1185. Crookedness, discovery of, 300, 1106. Cubic measure, 872. Currency, 862 to 866, 884 to 888, 931. Customers — 851, 304, 323. accounts of 328, 843, 853, 987, J076, 1289. address, 850. credits, 1125. discount, 920 to 922. easy, 845. new, 332, 1053, 1055, 1082. Petty, 327, 736 to 746. protest fees, 835. single entry, 939. Customers’ Ledger, 990. Custom-house charges, 919. Daily balance of accounts, 1112, 1119. Damaged goods, 844. Day-Book, 12, 23, 1054. Days of grace, 143, 907. Dash, 918, 1203. Date of invoices, 1205-377/. Dead accounts, 851. Dealers’ Ledger, 853. Debit, 15, 18, 26, 29, 37, 41, 852. Debit Ledger, 853. Debtor, 851. Decreased capital stock, 1169 to 1172, 1188. Defalcations — see “Embezzlement, Fraud, etc.” Delivery department, 1053, 1057. Department — Charge, 1053 to 1064, 1076 to 1082, 1085, 1086, 10 93 - Checking, 1059 to 1075, io8 5 to 1092, 1094 to mi. C. O. D., 1055, 1057, 1062. columns, 993, 994, 1003 to 1010. Credit, 1083, 1084. credits, 1003, 1004. Department — Continued. Delivery, 1053, 1057, 1072, 1073. letters, 989, 1045. M. O., 1063. sales, 839, 989, 998, 1043. Department Abstract Sheets, 1012 to 1018. Department Book, 994, 996. Department Ledger, 997, 1065. Department Sales Book, 1064, 1068. Deposit, 86K, 212, 332c, 833, 930, 945, 1128, 1129. Desks, 93, 514. Detecting errors in trial balance—296 to 298, 307, 8 4 L 95 L 95 2 > 1218-3 rd - new method of, 950, 1293. Detective, 1106. Diamond ticket, 1050. Diary, 849. Different kinds of business consolidated, 261, 839. Dilatory customers, 845, 441. Directors, 1154, 1188. Discount-clerk, 1129. Discounting notes, 122, 153, 834, 835, 944. Discount off for cash — on goods, 74, 497 and 534, 920 to 922, 943, 1029, 1214 24 th, 1215-26 th, 1284. on notes, 152, 153, 146, 489 and 509, 154, 147. Dividend Receipt Book, 826, 1187^. Dividends — 823 to 826, 1157, 1159, 1179. fictitious, 1167, 1175, 1188-2377/. Dollars posted as cents, 939, 951. Double-Account Balance Ledger, 1112 to 1115. Double-Account Retail Sales Ledger, 1077 to 1082. Double-Account Reverse Ledger, 1116, 1117. Double Entry — 6, 28, 294, 334. Advanced, 970 to 986. Drafts — see “Acceptance,” “Bank Drafts,” “On- demand Drafts,” and “ Sight Drafts.” Dr. and Cr., 326. Drayage, 190, 194, 520, 919, 1261 StA, 1283, 1284. Dr. to, 915, 382. Due bills, 86. Duplicate — sales-tickets, 1056, 1073. summary sheets, 1048. Duty, 919. Each side of the Ledger proved independently of the other, 1120. Easy customers, 845. -Economy — in Journals, 339, 1018, II2I. in labor, 323, 324, 330, 426, 469, 470, 547, 550. 970 to 986. in Ledgers, 322, 1077, 1078, 1112 to 1117. Elimination, 295^. IV INDEX. Embezzlement, Fraud, etc.— 128, 245, 300, 1073, 1085, 1101, 1102, 1105 to 1109, 1125, 1166 to 1168, 1173 to 1175. Employes—see “Salaries.” Enclosing bills, letters, and statements, 850. Endorsers, 320, 830 to 832, 835, 845, 851, 928 to 937 , 1272. Endorsement on stock certificate, 11873. English currency, 864, 884. Entering invoices, 331, 309, 401 to 407, 458 to 463, 74 - Entry clerks, 973, 988, 993, 999, 1014, 1018, 1023, 1076. Equation of payments, 889 to 910. Erasures, 847. Errors—985. cash, 858. invoices, 844, 1231-17///. posting, 847, 848, 1029. single entry, 939. trial balance—see “Detecting, etc.” See also, “Avoiding errors.” Esq., 850. Ex., 338. Exaggerated assets, 1175, 1166 to 1168. Examination of— Cash Book and Journal entries, 1125. sales-tickets, 1049, 1059, 1072, 1073. Examples for practice, 1190 to 1285. Exchange — see “Collection and Exhange ” Executors, 936. Expense, 189 to 197, 295, 320, 351, 506, 507, 518, 839, 1199. Experience, 318, 333. Explanation — 12, 13, 323, 324, 338. columns in Cash Book, 474, 481. columns in Ledger, 556, 560. of Journal columns, Ex. 342 to Ex. 347. of Cash Book columns, Ex. 471 to Ex. 484. of Ledger columns, Ex. 555 to Ex. 562. of Journal entries, Ex. 348 to Ex. 468. of Cash Book entries, Ex. 486 to Ex. 546. of Ledger accounts, Ex. 563 to Ex. 800. Express — see “Freight and Express.” Extensions—988, 993, 1004, 1014, 1025, 1027, 1028, 1032,1035,1037, 1038, 1059, 1061, 1094, 1096. measures of, 867 to 872. Extra columns — 970, 993 to mi. Cash Book, 294, 476, 979, 547, 589; 483, 981, 550, 645 ; 851, 920, 1123, 1249, 1301. Journal, 12, 40^, 294, 339, 340, 342, 384, 385, 469, 586; 347, 384, 385, 470, 590; 839, 851, 972 , 975 '- ure — of bank, 945. of customer, 467, 1278-26 th. Falsification — see “Embezzlement, Fraud, etc.” V Farms, 97 to 101. Fictitious dividends, 1175, 1167, nS8-23rtf. Figure trial-balance, 300 to 302, 808, 809. Figure-wizards, 950-10 th. Figuring-clerks, 1059. Filing — invoices, 309. sales-tickets, 1071. Filled pages, 330. Fire, 1040. Firm name, 56. Fixing salaries, 1068. Fixtures—see “Store and Office Fixtures.” Floor walker, 1083. Fogyism, 75, 321 to 326, 921, 940, 986. Folios, 1042, 1079. Footings on Cash Book carried forward, 1239. Foreign money — value of, 884. Forfeit of stock, 1146. Forgeries, 932 to 935, 937, 1127. Foundation, 29 to 295. Fractional form expressing — date, 1205-3^. discount, 1214-24 th. Freight and Express, 190, 194, 205 to 208, 515, 393, 49f, 520, 501, 844, 919, 1284. French currency, 865, 884. Freshmen, 326. Fuel, 189, 194, 198, 199, 200, 529. Full liability Stock Companies, 828, 1185. Gain, 17, 19, 38, 276, 278, 797, 798, 575, 582, 283; 817, 818, 1134. General — columns — see “ Miscellaneous columns.” Cash Book, 1026 to 1029, 1084. Journal, 1021, 1032, 1033. Ledger, 853. Genuineness of— register-numbers, 1073. signatures, 937, 1133, German currency, 866. Giving checks, 931. Gold coin, 885, 888, 927. Goods—see “Merchandise.” Grace, 143, 907. Grind, 848. Guaranty, 831, 844, 853, 937, 1133. Handles to names, 850. Handling cash, 858. Hand-writing, 23, 850, 973, 1106. Hints to business men, 925, 926, 928 to 937, 943 to 947, 1125 to 1133, 270, 300, 304, 316 to 319, 829 to 833, 835, 841, 845, 968. Horses, 93. INDEX. Identification of— endorser, 935. goods, 1083. 1 Illustration, 333 to 818. Implicit trust, 1109. Improvements, 320, 333. Incorporate, 1158, 1188. Increased capital stock, 1157, 1158, 1188. Index — 320, 327, 332^, 1081, 1300. arrangement of Ledger, 328. cardboard, 329. to transactions, 341. Individual — book-keepers, 987. Cash Books, 1026, 1084. Infallibility, 848, 1109. Inquiries, 1125. Insolvency, 851. Installments, 1146, 1150 to 1154. Insurance, 190, 194, 187, 188, 250, 508, 1040. Interest—144 to 154.— Rule, 861. accrued on notes, 125, 153, 494, 496, 944 ; 532 ; 158, 159, 163. allowed to us for paying our notes before due, 147 , 154 - coupons, 1155. method of averaging accounts, 908 to 910. Payable, 148, 160, 161. rates in the different States, 969, 1131. Receivable, 149, 155 to 159. on account, 122, 151, 3S2, 905, 1021. on bill's payable paid, 144, 532. on bills receivable discounted, 125, 153, 146, 509. 5 12 - on bills receivable paid, 145, 494. on bills receivable renewed, 145, 423, 437. on excess of capital, 319, 1134. on payments, 837. Inventory — 72, 195, 196, 287, 289, 806, 807, 1041. in commission business, 250. in shipping business, 244, 245. Investment, 49, 56, 31 x, 318, 319, 342 to 369, 564, 569 - Invoice Book, 24, 842, 975. Invoices of goods bought — copying, 842. entering, 309, 331, 401 to 407, 839, 1036 to 1038. filing, 309. numbering, 332 d, 1039. paying, 849, 948. posting, 938, 975, 1038. receiving book, 853. Itemized statement, 1076 to 1080. Journal — 12, 39, 40, 40%. -clerks, 1018. common form of, 1121. entries, 348 to 468, 915. examination of entries, 1125. General, 1021, 1032, 1033. Merchandise Returned, 1035. new form of, 339, 340, 972, 973, 975 c, 342 to 470. proof of posting, 954 to 956, 963 to 966. Purchase, 975^, 1036 to 1038. Sales, 1000 to 1005. Summary, 1005. Transfer, 1020. Journalizing— 12, 13, 14, 332, 999 to 1005, 1012 to 1018. Labor — gi. See “ Salaries.” saving, 321 to 332^, 850, 853, 915 to 918, 920, 922 to 924, 938, 940 to 942, 970 to 986, 1017, 1018, 1038, 1053, 1076 to 1082, 1113. Ledger— 15, 41, 42, 294, 295, 321 to 330, 940. altering figures in, 847. Balance, 1112, 1115. Balance Proof, 953 to 967. Bank Balance, 1119. classification of accounts, 843. common form of, 555 to 805, 1078. Credit, 975^. Department, 997, 1038, 1065. explanations, 323, 556, 560, 705, 697, 924, 696. folios, 1042. 1079. Private, I02X. Proof, 1102 to 1105. Proof account. 1120. Purchase, 975^, 1036. Retail Sales, 1077 to 1082, 1085 10 mi. Reverse, 1116, 1117. Sales, 990, 1019, 1053, 1054, 1077,1112 to 1115. Salesman’s, 1024. saving of space, 922, 938. Shipping, 242, 243. single entry, 852. Stock, 827, 11871?. transferring accounts to new Ledger, 840. Transposed Credit Column. 1118. various rulings of, 1112 to 1119. Legal proceedings, 122, 828, 1283. Letters, 846, 849, 850, 1029. L. F., 340, 344, 345, 472, 479. Liabilities, 17, 19, 21, 37, 38, 49, 292. '' Liability of— bankers, 934, 935, 1127 to 1130, 1132, 1133. stockholders, 828, 1181 to 1185, 1188. Limited-liability Stock Companies, 828, 1182 to 1185. VI INDEX. Limit of capital, 821, 1188-11M. Linear measure, 867, 868. Lines on sales-tickets numbered, 1058. Liquid measurement, 873, 874. Live accounts, 851. Loan—166, 176. call, 1180. to stockholders, 1188-18M. Loose-sheet method of recording sales, 853. Loss—16, 18, 37, 197, 275, 279; 284. by fire, 1040. Loss and Gain— 17J4, 18, 19, 275 to 295, 7S9 to 800. single entry, 314, 854, 855. statement of, 813. Stock Company, 823. Lost Accounts and Notes, 265 to 274, 450, 270, 290, 466, 468, 271, 467, 291, 324, 784 to 788. Lost sales tickets, 1056, 1057, 1060, 1070, 1072,1073. Lots, 97 to 101. IVIachinery, 91, 1162. Mail-order department, 1063, 1112. Making up cash balance, 857. Manager of— checking department, 1071. salesmen, 1068. Manufacturing, 87 to 91. Measurements of capacity, 873, 874. Measures of extension, 867 to 872. Memoranda, 23, 295^/3, 849, 949, 1286. Memorandum — accounts, 852. books, 1056. Memory, 848. Merchandise—12, 14, 20, 24, 33, 34. agents’ sales of, 215 to 220. bought, 67, 386, 401 to 407, 519, 943. closing of account, 71, 591, 587, 588. credit-ticket, 1083, 1089. discount for cash, 74, 921, 497 and 534. freight on, 207, 919. inventory, 66, 71 a, 591, 71 d, 588. Returned Journal, 1035. returned to us, 69, 376 to 378, 976, 1034, 1035, 1064, 1083. sent to branch houses, 223, 224. sold, 68, 370, 347, 384, 385, 470, 590; 486, 476, 547 . 589- taken by proprietor for private use, 59, 395, 410. we return, 70, 379. Messrs., 850. Mint marks on gold and silver coins, 927. Miscellaneous columns, 343, 346, 40^ ; 475, 45, 482, 46. Mislaid sales-tickets — see “Lost sales-tickets.” Mistakes—see “Errors.” M. O. D. sales, 1063. Money — 862 to 866, 884 to 888. market, 947. orders, 86, 169, 968. Monotony, 848. Monthly — sales, 1008. statements, 841. 846, 850, 938, 1079, 1080, 1106, 1112. Mortgages, 101, 845, 1155. Mr., 850. Multiplication, 860.— proof ot, 912a. Names for books, 853, 983. Naught—O, 9x4. Need of money, 122, 153. Net proceeds, 242, 245, 249, 253 to 259. New — customers, 332, 1053, 1055. method of detecting errors in trial balances, 950. Sales Ledgers each year, 1019. Nominal capital, 1166 to 1168 Notes—20, 21, 25, 35, 36, 48. collection of, 832 discounted, no, 125, 489, 509, 495, 496, 944. endorsed to us, 112, 116, 117, 369. numbering of, 923. CO hand, 107, 356 to 360, 602 to 606 ; 128, 320. paid to us, 109, 488, 493, 1031. payments endorsed on, 123, 127, 834, 923. protest waived, 835. renewed, 124, 421, 422, 425, 435, 436, 1032. settlement of account by, 845. sold, ill. we endorse, 112, 832. we give, 130, 131, 381, 142, 397, 505, 940, 942. we owe at beginning of business, 129, 361, 362, 633 . 634- we pay, 134, 524, 531, 849, 945, 946. we receive, 108, 113, 373, 3S8, 142, 542, 940, 941, 1030 to 1033. we take up at bank, 126, 530, 532. worthless, 271, 426. Note-teller in bank, 1129. Notices from bank, 143, 849, 944. Numbering-stamp, 1072, 1073. Number — lines on sales-tickets, 1058. of books, 982, 9S3. Numerical reference, 332^, 247, 249, 850, 923, 940 to 942, 948, 1022, 1023, 1039, 1045 to 1111. 0,914. Object in taking notes, 122. Objections to single entry, 939. Vll INDEX. Office — boy, 846. fixtures, 96. Officers of Stock Companies, 1186, 1188. Old fogies— see “ Fogyism.” Omissions, 939, 950-9 th. On — account, 851. sale, 1275. On-demand draft, 143. One — per cent, method of averaging accounts, 909, 910. side of the Ledger proved independently of the other, 1120. Opening of— double entry books, 311, 312, 66, 76, 92, 97, 102, 107, 129, 164, 174, 49, 173, 1S3, 316, 318, 347^ to 369, 1194 to 1205. new Ledger, 328, 1082. Order — Book, 853, 332 d. Pay to the order of, 928 to 932. Organization of Stock Companies, 819. Original entry, 11 to 14, 970, 982, 1053, 1076. Overcharges — in freight, 393, 206, 491, 502, 844. on goods, 844, 1083, 1279. Overdrafts — bank, 332^. Packer, 1053, 1072, 1073, 10S7. Packer’s coupon, 1057. Pads of proof slips, 966. Paging of books, 1042. Paper — table of, 882. Parcel clerk, 1049, 1058, 1059. Parcels, 1023. Partnership — books changed to Stock Company books, 1137, 1139 - contract, 56. liabilities, 1x82. new partner, 316, 317, 159. settlement, 159, 854, 1134, 1135. Partners’ individual statements, 814. Part-payment of— note, 123, 493, 127, 837, 923; 134, 543. subscription to stock, 1148. Past due — accounts, 122, 151, 382, 841, 905, 1112. notes, 126, 530, 532, 262 to 264, 441, 304, 1283. Patent right purchased and paid for in stock, 1160. Payments on — accounts owing to us, 489^, 497, 499, 323, 948, 1019, 1026 to 1029. accounts we owe, 544, 323, 945, 946, 948. Payments on — Continued. discounted notes, 834, 12S1. notes—see “Notes.” subscription to stock, 822, 1148, 1149. Paying-teller in bank, 1119. Pay to the order of, 928 to 932. Penalty for usury, 969. Pencil footings in Ledger, 302, 694, 701, 847, 912, 967 - Pension checks, 86. Penmanship—see “Hand-writing.” Perpetual proof of Ledger balance, 953 to 967. Personal accounts, 4, 15, 164 to 183, 204, 677 to 783, 851, 852, 924, 939. Petty — accounts, 327, 736 to 746, S3S. Cash Book, 1125. Expense Book, 1125. Phonography, 295^. Plant, 1163. Play houses, 326. P. O. Box, 332a. Popular goods, 1068. Postage stamps, 189. Postal notes, 968. Posting — 10, \2 to 14, 24, 294, 325, 328, 329, 332^, 841, 847, 848, 850, 853 -W.j, 918, 922, 93S, 939> 94° to 942, 970, 971, 975 to 982, 986, 991 to 995, 99S, 1000 to 1007, 1012 to 1014, 1017, 1018, 1026 to 1039, 1042, 1053, 1054, 1076 to 1081, 1116, 1117, 1293, 1296. errors in — see “ Avoiding errors.” proof of, 953 to 966, 1014, 10S5 to 1105, 1292. Power of attorney, 851. Practice blanks, 1196. Present of stock, 1161. Pretty pictures, 325. Price books, 853. Prices of goods, 853, 919, 921, 943. Principal books, 9, 12, 13, 14, 15, 23, 24. Private — account, 57 to 65, 571 to 583, 856, 856^. cash drawn for private use, 57, 510, 513, 541. closing of Private account, 64, 286. gain, 62, 574, 52, 565. Ledger, 1021. loss, 63, 583, 51, 567. marks on checks, 933. merchandise taken for private use, 59, 395, 410. Record Book, 303. salary, 58, 204. statement, 814. Profit and Loss — see “ Loss and Gain.” Proof— account, 1120. against errors in posting, 953 to 967, 992, 1014, 10S5 to 1105, 1292. Vlll INDEX. Proof— Continued. against falsification, 10S5 to 1109, Ledger, 1102 to 1105. Slips, 966, 1059, io 7 L 1084. See also, “Proving.” Proportion of gain to sales, 817, 818. Proprietors, 49 to 65, 563 to 583, 204, 286, 303, 814. Protest — 320, 944, 12S1-31J/. waived, 835. Proving — addition and subtraction, 911 to 913. clerks’ sales, 1059 to 1061, 1070, 1072 to 1074. each side of the Ledger independently of the other, 1120. ledger-balances, 913, 1080, 1114, 1119, 1292. Ledgers separately, 992, 995, 1002, 1026 to 1038, 1085 to nil, 1298. Retail Sales Ledgers, 10S5 to tin. sales-tickets, 1070. Purchase — Journal, 975 b, 1036 to 1038. Ledger, 975^, 1036. Purchases and Sales, 1189. Purchases of merchandise, 12, 24, 842, 1065, 1189. Rates of interest in the different States, 969, 1131. Reading columns of figures, 859. Real Estate, 20, 97 to 101. Rebate, 206, 20S, 210, 212. Receipt — 930. for check dated ahead, 1132. Receipting bills and statements, 850, 1132. Receiving Book, 247, 853. Receiving-teller in bank, 1119, 1129. Record Book, 303, 810 to 818, 925, 926. Red ink — promises, 305. use of, 321, 322, 325, 330. Registered bonds, 1156. Register — Book method, 1073, 1074. Check, 1094 to iioi. number, 1023, 1072 to 1074. Sheet method, 1072, 1074. Relief-cashiers, 1052. Remittances, 928 to 932, 945 to 947, 968, 1029. Renewal of note, 124, 421, 422, 425, 435, 436, 1032. Rent, 190, 194, 506. Repairs, 91, 105, 1175. Resources— 16, 18, 20, 348 to 360, 368, 369, 37, 38, 49, 292. and Liabilities — see “Assets and Liabilities.” Retail Sales Ledger— 1077 to 1082. proof of, 1085 to mi. Returns Book, 1089. Reverse Ledger, 1x16, 1117. Revisionary additions, 915 to 924. Risk of stockholders,-1185. Rollers, 1023. Rule-table for averaging accounts, 910. Ruling Ledger-headings, 322, 601, 628. uard against errors — see “Avoiding errors.” Safes, 93, 390. Salaries— 190, 194, 201 to 204, 216 to 222, 336, 516, 522, 337 , 535 , 537 , 539 , 453 to 457. fixing, 1068. of proprietors, 58, 204, 1250, 1283. Sales — Abstract sheets, 1012 to 1018. agents’, 215 to 220. alternate books, 853. check, 1045. C. O. D., 838, 1055, 1057, 1062. copying-book method, 853. Department, 989, 1043, 1065, 1068. Journal, 1000 to 1005, 1015 to 1018. journalized, 332, 337, 408 to 416, 426, 999 to 1005. ladies, 1044. Ledger, 990, 1019, 1059, 1077 to 1082. loose-sheet method, 853. men, 988, 1023, 1024, 1043 to mi. M. O. D., 1063. net, 1223-5 th, 1065, 1189. « no Sales Books—itemized in Journal, 12, 336, 370 , 347 , 384, 385, 470 , 59 °- numbered, 332^, 1022, 1023. Register-Book method, 1073, 1074. Register-Sheet method, 1072, 1074. retail charge, 1076, 1085 to ini. Sheet, 1075. statement, 815, 816, 1006 to ion, 1064, 1066 to 1068. ticket, 1045. Sales Book— 14, 853, 971 to 974. Clerks’, 1061. Commission, 248. common form of, 1122. Department, 991 to 998, 1064. entries, 988. for each salesman, 1025. posting proof, 961, 963 to 966, 991. small, 337, 408 to 416, 426. Salesman’s Commission Book, 1024. Saving of labor — see “Labor.” Scales, 93. Scratcher, 246. Scratching, 847. Security, 101, 835, 845, 968, 1145, 1157, 1272. Services of an office-boy, 846. IX INDEX. Set of— books and examples illustrated and explained, 333 to 8l8 - examples for practice, 1190 to 1285. Settlement of accounts, 845, 889 to 910, 948, 1029. Shareholders — see “Stock Companies.” Shelves, 93. Shipping — Book, 1023. business, 241 to 246, 260. cards, 1022, 1023. clerk, 1023. department, 1023. number, 1023. Shortage, 1105. Short Calculation, 859 to 861, 909, 910. Short-hand, 295^. Sight drafts — 86, 85, 143. drawn on us, we pay, 180, 527, 849. endorsement on, 830. we draw on others, they pay, 170, 492, 836, S38. Signature — 928 to 937. Book in bank, 851. Signing checks, drafts, and notes, 851. Silver coin, 886 to 888, 927. Single Entry —3, 314, 852, 854 to 856^, 970, 971, 975 to 977 - objections to, 939. Single proprietor, 286, 856. Soecial bargains, 1068. Speculation, 1232. Spurious sales-tickets, 1073. Square measure, 870. Statement — Comparative, 925, 926. itemized, 338, Ex. 441, 1076 to 1080, 1291. of account, 323, 841, 845, 846, 850, 938, 1079, 1080, 1106, 1112, 1291. of condition, 316, 1186, 1188-10M, 1188-22W. of daily sales, 1006, 1064, 1066, 1110. of monthly sales, 1008, 1065, 1068, mi. of yearly sales, 1009 to ion. Stationery, 189, 507. Statistical Statement, 925, 926. Statutory points governing Corporations, 1188. Stock — account, 49 to 56, 563 to 570, 311. Books, 1040, 1041. certificates, 1157, 1172. clerks, 853, 1023. dividend, 1157, 1159. holders — see “ Stock Companies.” keeper, 853, 1023, 1040, 1041. Ledger, 827, 1157, 1187^. single proprietor, 856. Stock Companies — 819 to 828, 1136 to 1188. annual reports, 1186, n88-2«rf', 11S8-6M, 11S8- 22 nd. assignment of shares, 1187^. bank stockholders, 1181. bonds, 1155, 1156. by-laws, 819, 1141, 1177. call-loan, 11S0. canceled certificates, 1157, 1172. Capital Stock account, 822, 827. capital stock decreased, 821, 1169 to 1172. capital stock increased, 821, 1157, 1158. charter, 819, 1176, 1*77, 1188. contingencies, 825, 1167. directors, 1154, 1188. Dividend Receipt Book, 826, 11S7 d. dividends, 823 to 826, 1157, 1159, 1179; 1167, 1175, 1188-23r<4 endorsement on stock certificate, liSjb. exaggerated assets, 1175, 1166 to 1168. fictitious dividends, 1167, 1175, Ii88-23>a/. forfeit of stock, 1146. full-liability Companies, 828, 11S5. installments, 1146, 1150 to 1154. liability of stockholders, 82S, 1181 to X185, 1188. limited-liability Companies, 828, 1181 to 1185, 1188. limit of capital, 821, 1188-iiM. loans to stockholders, 11S8-1SM. Loss and Gain, 823. mortgages, 1155. nominal capital, 1166 to 1168, 1174. officers, 1186, 1188. organization, 819. partnership books changed to Stock Company books, 1137, 1139. patent right purchased and paid for in stock, 1160. payments on subscription to stock, 822, 1148, 1149 - plant, 1163. present of stock, 1161. statutory points, 1188. Stock Certificate Book, 1187a. stock certificates, 1157, 1172. stock dividend, 1157, 1159. Stock Ledger, 827, 1187^. Stock Subscription Book, 1147, 1187. Stock Transfer Book, 1187c. surplus fund, 823 to 825, 1157. surrender of stock certificate, 1187^, 1187c, 1187^. transfer of stock, 820, 827, 1179, ii 8 4» 1187^, 1187c. treasury stock, 1137, 1139, 1141 to 1143, 1157, 1160 to 1162, 1166 to .116S, 1171. X INDEX. Stock Companies — Continued. trustees, 1141, 1155, 1187^, 1188. votes of stockholders, 821, 1179. watered stock, 1173, 1174, 1166 to 1168. working capital, 1166. Storage, 246, 249, 253, 1283. Store and Office Fixtures, 20, 92 to 96, 511, 514, Ex. 518, 390. Stoves, 93. Student’s work audited, 1220. Sub-cashiers, 1049 to 1052. Subscription — Book, 1147, 1187. for stock — see “ Stock Companies.” Substitute, 1052, 1129. Subtraction — proof of, 912. Successor as book-keeper, 320. Summary — Check Analysis, IIII. Check Register, 1099 to 1101. Sheet, 1046, 1045, 1048, 1053, 1061. Sundries, 851. Sundry columns— see “ Miscellaneous columns.” Surplus Fund, 823, 824, 825, 1157. Surrender of — note, 124, 422, 436, 1243. stock certificate, 1187*$, 1187*3 1187*?. Surveyor’s measure, 869, 871. Suspense, 274. Tables for reference, 862 to 888. Taking — in a new partner, 316, 347^, 367 to 369, 1250 to 1252. set of books from another book-keeper, 320. Taxes, 184 to 186, 188, 1178, 1284. Teams, 93, 1254-2 nd. Test of ability — as book keeper, 1190 to 1285. as clerk, 1068. Ticket — Cash credit, 1084. Merchandise credit, 1083. Sales, 1045. Time — drafts, 142, 143. See also, “Acceptances.” table of, 879. To, 916, Transaction, 7, 12, 15, 939, 9S2. Transfer — Book, 1187*.-. Journal, 1020. of stock, 820, 827, 1179, 1184, 1187*5, 1187c. tickets, 1098. Transferring — accounts to a new Ledger, 347 j£, 840, 1019. an account to a new page, 308, 1098. Transposed Credit Column Ledger, 1118. Transposition, 952, 1125. Traveling agents — see “Traveling Expenses.” Traveling Expenses, 194, 213 to 222, 1221, 1223-5 1237, 1279. Treasury stock, 1137, 1139, II 4 I to H43, 1157, ”60 to 1162, 1166 to 1168, 1171. Trial Balance — 296 to 307, 316, 320, 330, 848, 1112. cash, 13. change book-keepers around, 1107. commission, 251, 253. errors in, 841, 950 to 952, 1218-3 figure, 808, 809. footings, 1120. names, 810, 811. proof against errors in, 953 to 967. Troy weights, 875. Truck baskets, 1023. Trustees, 936, 1141, 1155, 1187*’, 1188. United States currency, 862, 885 to 888. Units under units, 848. Unlimited-liability Stock Companies, 828, 1185. Unnecessary work, 321 to 326^, 9S6, 1054. Use of money, 151, 152. Usury, 969. Value, 862 to 866. Variety of transactions, 1190, 1285. Votes of stockholders, 821, 1179. Vouchers, 86 y 2 , 933, 1156. \ ages — see “Salaries.” Wagons, 93. Waste of— Journals, 1121. Ledgers, 1078, 1113. Watered stock, 1173, 1174, 1166 to 1168. Wear and tear, 91, 96, 1175. Weights, 875 to 878. Wholesale business, 853, 987 to 1042. Withdrawal of funds on deposit, 1132. Working capital, 1166. Worthless accounts and notes, 265 to 274, 290, 784 to 787, 1278-26 th. Yearly statement — 303, 810 to 818, 925, 926. of department sales, 1009, 1010. statistical, 925, 926. XI SUPPLEMENTARY INDEX Aids to the learning of book-keeping, 1295. Checks, filling out of amount, 1299. Collection of time bills, 1288. Correspondence, 1287. Customers’ accounts, 1289 to 1291. Detection of errors in posting, 1293. Extra columns in Cash Book, 1301. Increase and Decrease statement, 1297. Indexing, 1300. Memoranda, 1286. Posting, 1293, 1296. Proving — postings and Ledger-balances, 1292. several Ledgers separately, 1298. Statement proof of customers’ accounts, 1289 tc 1291. s 1 TO 12 'BOOK-KEEPING. 1. Book-keeping is the science of recording business transactions in a systematic manner. 2. Book-keeping is of two kinds—Single Entry and Double Entry. 3. In Single Entry we make an entry only when a personal account is affected, at which time we simply charge or credit the person—making an entry to only one account—hence, single entry. 4. A personal account is an account with a person, firm or corporation. 5. An account is a collection of items under one heading in the Ledger. 6. In Double Entry we make an entry for every business transaction,— making an entry to two or more accounts, according to the number of ac¬ counts affected by the transaction. Every time we debit an account for a certain amount, we credit some other account for the same amount,— hence, double entry. 7. A business transaction is an exchange of values. 8. BOOKS USED. —There are two kinds of books used in Book-keeping— Principal and Auxiliary or Aid Books. 9. Principal Books are those we post from and use as original books of entry. The Ledger is also a principal book. 10. By posting is meant, to transfer entries from any book to the Ledger. The books from which we usually post are: Journal (or Day Book), Cash Book, and sometimes Sales Book and Invoice Book. 11. An original book of entry is one upon which the business transaction is first recorded. The books used principally as original books of entry are: Blotter, Journal (or Day Book), Cash Book and Sales Book. THE PRINCIPAL BOOKS. 12. The Journal. —Business men have abandoned the use of the inter¬ mediate book called the Journal, and have consolidated it with the Day Book. In the Business College style of book-keeping, merchants enter the business transactions first in the Day-Book and then journalize them by arranging the debits and credits on the Journal, after which they post from the Journal to the Ledger. The business man of to-day can find no use for this unneces¬ sary book, the Journal; it is therefore cast aside, and the posting is done 3 DOUBLE ENTRY BOOK-KEEPING. t 13 TO 14 directly from the Day-Book to the Ledger. The Day Book is used as a detailed record of our business transactions. Having consolidated the two books (Day-Book and Journal), it is essential, in order to have the book complete, that it should partake of the style of both; therefore, when we record a business transaction, we .first make the Journal entry, then write the explanations in as few words as possible, either under or on the same line with the entry. This book may be called either a Day Book or a Journal, but custom having made the title “Journal” preferable, it will be used here¬ after instead of “Day-Book." The Journal should have two extra columns—one for “Merchandise Debit,” and one for “Merchandise Credit,” which renders it unnecessary to post the merchandise oftener than once a month—crediting Merchandise account in the Ledger at the end of the month for the total sales on account, as shown by the Merchandise Credit column, and debiting it for the total merchandise purchases on account, as shown by the Merchandise Debit column. See (342 and 347 ). The left-hand column is the Debit and the right-hand column the Credit. 13. The Cash Book. —The Cash Book is a book used as a detailed record of all cash transactions. Upon the left-hand or Debit side, is recorded all cash received; and on the right-hand or Credit side, all cash paid out ,—the difference in the sums total of the two sides showing, at any time, the exact amount of cash on hand. This book should always be used as a book of original entry; and posting done directly therefrom to the Ledger, as it is wholly unnecessary work and a waste of time to transfer the entries to a Journal before posting. There is no business in which the books can not be correctly kept by posting directly from the Cash Book to the Ledger. In making entries in this book, sufficient explanation should accompany the entries to make them plain. Of course, many entries require no explana¬ tion; for instance, if a person pays us on account, we simply enter his name and the amount on the debit side of the Cash Book. When notes are paid, the name of the makers, date, time, etc., should be entered. All items on the Debit side of the Cash Book should be credited to the several accounts to which they belong in the Ledger, because Cash is debited; and all items on the Credit side of the Cash Book must be debited to the several accounts to which they belong on the Ledger, because Cash is credited. It is unneces¬ sary to keep a Cash account in the Ledger, but, instead, enter in the trial balance, when it is taken, the balance of cash on hand, as shown by the Cash Book, which result proves the same as though such an account were kept. 14. The Sales Book. —The Sales Book is a book in which the merchan¬ dise sales are recorded. It is used principally in the larger establishments, as in the smaller houses the sales on account are all recorded in the Journal. Posting is sometimes done directly from this book to the Ledger; and some¬ times the transactions are first transferred to the Journal before being posted. In posting directly from the Sales Books to the Ledger, the debits are posted to the personal accounts therein charged daily; and the total sales are car- 4 DOUBLE ENTRY BOOK-KEEPING. ] 5 ried forward until the end of the month, when the Merchandise account is credited in one entry from each Sales Book for the total sales for the month in each recorded. 15. The Ledger. —The Ledger is a book used to show the final summing up of all our business transactions, and the standing of all personal and mis¬ cellaneous accounts. The left-hand side of the Ledger is always the Debit, and the right-hand side the Credit 16. When the Debit side of an account in the Ledger is the larger, the amount the Debit side exceeds the Credit is always. either a Resource or a Loss. 17. When the Credit side of an account in the Ledger is the larger, the amount the Credit side exceeds the Debit is always either a Liability or a Gain. lJJ^The two preceding rules (16 and 17) are of the very greatest importance when we close our books, at the end of the year, to find how much has been lost or gained; for we then begin with the first account in the Ledger, and carry all accounts upon which we lose or gain to the Loss & Gain account; therefore, unless we are familiar with these rules, we cannot so readily decide upon which accounts we lose or gain. The way we decide upon which accounts we lose or gain is as follows: 18. Debit. —When we look at an account in the Ledger, the Debit side of which is the larger, we first decide whether or not it is a Resource. If it be anything of value belonging to us, or any note or personal account owing to us, it is a Resource; if not, it must be a Loss, —since all accounts on the Debit side of the Ledger must be either Resources or Losses. If the account be a Resource, we pass it by and do nothing with it; if a Loss, we balance the account and carry the Loss to the Debit side of Loss & Gain account. 19. Credit. —On the other hand, when we look at an account in the Led¬ ger, the Credit side of which is the larger, we first decide whether or not it is a Liability. If it be any note or personal account we owe it is a Liability; if . not, it must be a Gain, —since all accounts on the Credit side of the Ledger must be either Liabilities or Gains. If the account be a Liability, we pass it by and do nothing with it; if a Gain, we balance the account and carry the Gain to the Credit side of Loss & Gain account. RESOURCES. 20. A Resource is anything of value belonging to us, such as: Cash, Mer¬ chandise, Store Fixtures, Real Estate, Notes made by other parties payable to us (Bills Receivable), etc., etc., or any personal account owing to us. LIABILITIES. 21. A Liability is any unpaid note made by us payable to other parties (Bills Payable), or any personal account we owe. 5 f-r- DOUBLE ENTRY BOOK-KEEHNG. THE AUXILIARY OR AID BOOKS. 22. Auxiliary Books are used to classify business transactions; they are also used as an aid to the principal books. 23. The Blotter. — The Blotter is a book used merely as a memorandum book. Many persons improperly call the Day Book (or Journal) a Blotter. Business men wishing only one person’s hand-writing in the principal books, keep a book which they use when this person is absent from his post of duty, in which to make a memorandum of the transactions that occur during his 'absence, and when he returns they will be copied into the proper books. 24. The Invoice Book. — The Invoice Book is a book in which to file invoices, or bills of goods we buy. It may have a single money column at the right margin of the page, in which to carry out the amount of each bill as it is pasted in the book; posting may be done directly from this book to the Ledger,—each bill credited to the account to which it belongs, the total of the money column carried forward until the end of the month, and then posted to the Debit of the Merchandise account in one entry. However, as the book is quite expensive, and as a great amount of time is required in which to paste the invoices therein, the author would recommend the system suggested in paragraph No. 309 . 25. The Bill Book, or Bills Receivable and Bills Payable Book, is u^ed as a memorandum book for Notes and Time Drafts (Acceptances) showing when they become due. A MISTAKE IN BOOK-KEEPING WILL NEVER BE MADE IF THE FOLLOWING RULES ARE AT ALL TIMES STRICTLY ADHERED TO. 26. First . — Debit what we receive. “Why?” Because what we receive costs us something of value. 27. Second .—Credit what we give. “Why?” Because what we give pro¬ duces us something of value. 28. Third .—For every amount entered to the Debit side of an account or accounts in the Ledger, enter a like amount to the credit side of some other account or accounts for tJie same amount. 6 THE FOUNDATION 29 TO 48 UPON WHICH TO BUILD YOUR KNOWLEDGE OF BOOK-KEEPING. THE CORNER STONE. In one side of the Comer Stone we will have cut in large letters the solitary motto—SYSTEM; in the other side we will nave cut our Coat of Arms, interwoven in which will be found “Multum in parvo." This we will call DOUBLE ENTRY BOOK-KEEPING “IN A NUTSHELL.” 29. DEBIT what we RECEIVE. 31, If we receive Cash, debit Cash. 33. “ “ Mdse., “ Mdse. 35. “ “ Note, “ Bills Receivable. 37. Whenever we Debit an item, it is always either to increase our Resources or our Losses, or to decrease the personal accounts or notes we owe (Liabilities). 30. CREDIT what we GIVE. 32 . If we give Cash, credit Cash. 34 . “ “ Mdse., “ Mdse. 36 . “ “ Note, “ Bills Payable. 38 . Whenever we Credit an item, it is always either to increase our Liabilities or our Gains, or to decrease the personal accounts or notes owing to us (Resources). The Jc 39 . All items in the Miscellaneous Debit column are posted to the Debit Side of the Ledger. 40 / 4 * When we have extra columns in the Journal, Debit and Miscellaneous Credit columns during tli total amounts of the Mdse. Dr. and Mdse. Cr. colui )URNAL. 40 . All items in the Miscellaneous Credit column are posted to the Credit Side of the Ledger. we post only the items found in the Miscellaneous e month; and at the end of the month we post the nns to the Merchandise account. (See par. 12.) Th e L 41. On the Debit side of the Ledger, we find nothing but RESOURCES AND LOSSES. When we first enter into business, and immediat year, there are no open accounts in the Ledger exce EDGER. 42 . On the Credit side of the Ledger, we find nothing but LIABILITIES AND GAINS. ely after we have closed the books at the end of the pt those which are either Resources or Liabilities. The Cas 48. Enter on the Debit side all CASH RECEIVED. 45. All items on the Debit side of the Cash Book are posted to the Credit Side of the Ledger. >h Book. 44 . Enter on the Credit side all CASH PAID OUT. 46. All items on the Credit side of the Cash Book are posted to the Debit Side of the Ledger. 4tiJ^.The Cash Book is the Cash Account,—consequently the Cash Account is debited or credited by simply entering an amount on the debit or credit side of the Cash Book. So when Cash is debited, all the accounts on that side of the book must be credited; and when cash is credited, all accounts on that side of the book must be debited. 47. Bank Drafts and Sight Drafts belong to the Cash Account. 48. Nothing but Notes and Time Drafts (or Acceptances) belong to the Bills Receivable and Bills Payable Accounts. THE FOUNDATION. 49 TO 55 J. H. GOODWIN—STOCK ACCOUNT. 49. Open a “Stock account” for each member of the firm, and credit same at commencement of business for net amount by each invested, or net worthy which is found by deduct¬ ing the sum total of his Liabilities from the sum total of his Resources. (See 348 to 366 ; also 315 .) 50. Credit for all additional in¬ vestments. Closing No. i. 52. Credit at the end of the year for net private gain, as shown by his private account, - or - Closing No. 2. 54. Credit at the end of the year for net business gain, as shown by the Loss & Gain account. 55. Directions for closing the Stock Account at the end of the year: — According to Closing No. 1 .—Bring over from the respective Private accounts of each member of the firm the net private loss or net private gain, as the case may be, and debit or credit the respective Stock accounts for such loss or gain. (See 51 and 52 .) b.—According to Closing No. 2 .—Bring over from the Loss & Gain account the share of the net business loss or net business gain, as the case may be, and debit or credit the respective Stock accounts for such loss or gain. (See 53 and 54 .) Then bring over from the Private accounts of the respective members the loss on such accounts, and debit the respective Stock accounts for such losses. (See 53 .) c •—Now find the difference between the two sides of this account, and write on the debit side “To Balance” in red ink; entering this difference, which will make the account balance. d .—Rule the closing lines in red ink, and enter the total amounts be¬ tween these lines. (See 801 to 805 .) e -—Bring down on the credit side of this account, below the closing lines, m black ink , the difference as found in “ 3 d” above, or the present worth of the partner—writing the date beginning the new year, “By Present Worth,” and the amount. Closing No. i. 51. Debit at the end of the year for net private loss, as shown by his private account, -- or - Closing No. 2. 53. Debit at the end of the year for net business loss , as shown by the Loss & Gain account; and for loss on “Private account.” (See 288 .) 8 I THE FOUNDATION. J. H. GOODWIN—STOCK ACCOUNT.— Continued. 56. Explanation. —“Stock” is a title used to represent the amount in¬ vested in the business. There are several methods of treating this account, among which are the following: 1 st.—To call the account “Stock,” and credit it for the entire investment of the firm (regardless of how many members the firm may consist of), and debit it or credit it at the end of the year for the entire net loss or entire net gain of the firm, allowing the partnership con¬ tract to stipulate how much is by each member invested, and what proportion or percentage of the gain or loss each member is to share. 2 d.—Some call the account “Capital,” while others use the firm name instead: as, “J. H. Goodwin & Co.,” treating it the same as “Stock,” described in “ 1 st.” 3 d.— The most common and most practical method, however, is to open a sepa¬ rate Stock account for each member of the firm, and credit each for respective investment, as per system shown in this book. (See 49 .) When there is but a single proprietor in the business, he may with propriety call the account “Stock,” and treat it the same as described in 49 . J. H. GOODWIN—PRIVATE ACCOUNT. 57. Debit for all cash drawn for private use. 59. Debit for all merchandise taken from the store for private use. 60. Closing No. i. Debit, at the end of the year, in black ink, for his share of the net business loss, as shown by the Loss and Gain account. 62. Closing No. 2. If the credit side of this account exceeds the debit, we find the dif¬ ference between the two sides and debit this account, in red ink, “To J. H. Goodwin, Stock account,” for the difference, and transfer that dif¬ ference to the credit side of the J. H. Goodwin Stock account, in black ink. (See 52 .) 58. Credit for salary allowed, if any. 61. Closing No. i. Credit, at the end of the year, in black ink, for his share of the net business gain, as shown by the Loss & Gain account. 63. Closing No. 2. If the debit side of this account exceeds the credit, we find the dif¬ ference between the two sides, and credit this account, in red ink, “By J. H. Goodwin, Stock account,” for the amount lost on his private ac¬ count, and transfer that loss to the debit side of the J. H. Goodwin Stock account, in black ink. (See 5I-) 64. Directions for closing the Private accounts at the end of each year: a Closing No. i. 1 st.—According to Closing No. 1, we bring over from the Loss & Gain account, at the end of the year, the net business loss or 9 : 65 to THE FOUNDATION. 70 J. H. GOODWIN—PRIVATE ACCOUNT.— Continued. net business gain , as the case may be, crediting or debiting the Private account for such gain or loss. b. —We then find the difference between the two sides of this account, and if the credit side be the larger, write on the debit side, in red ink, “To J. H. Goodwin, Stock account,” and enter the amount in the debit column. c. —Now rule the closing lines and bring down the total amounts between the lines. d. — Now carry this difference (the net private gain) to the credit side of the “J. H. Goodwin Stock account,” in black ink. (See 52 and 55 .) e. — If, on the other hand, we find the debit side of this account to be the larger, we write on the credit side, in red ink, “By J. H. Goodwin, Stock account,” and enter the difference in the credit column: then rule the closing lines and carry the difference ( net private loss ) to the “J. H. Goodwin Stock account,” in black ink. (See 51 .) f CLOSING No. 2 .—According to closing No. 2 , we do not bring over from the Loss & Gain account the net business loss or gain at the end of the year; but we simply find the difference between the two sides, and transfer that difference to the “J. H. Goodwin Stock account.” We then proceed to close the account the same as per instructions in 2 d, 3 d, 4 th and 5 th of Clos¬ ing No. 1 , above, except that the phrases “net private gain” and “net private loss,” enclosed in parentheses in 4 th and 5 th, do not apply here; for here it would be either a loss on private account or a credit by private account. 65. Explanation. —We open a Private account in the Ledger for each member of the firm, and treat it as per instructions above. It is the custom of some firms to allow the respective members each a salary, against which each for himself may draw for his personal use. When this is done theyare credited for the salary monthly or yearly, as they prefer; ‘and at the end of the year the account is closed the same as though no salary had been allowed, the business losses showing so much more on account^of this increase in the “Salaries account,” and the “Private account” of each showing so much more private gain; so the business is not in the least affected by so doing. MERCHANDISE. 66. Debit, at commencement of business, “To Inventory” for amount of Mdse, on hand, as shown by the Inventory or Account of Stock. 67. Debit for all Mdse, we buy. 69. Debit for all Mdse, returned to us after we have sold it. 68. Credit for all Mdse, we sell. 70. Credit for all Mdse, we re¬ turn to other parties after we have bought it. IO THE FOUNDATION. MERCHANDISE.— Continued. 71. Directions for closing the Mdse, account at the end of the year: a. —Write on credit side, “By Inventory,” in red ink , for the amount of Mdse, now on hand , as shown by the inventory. b. —Now find the difference between the two sides of this account (In¬ ventory included), and the amount the credit side exceeds the debit will be the gain on Mdse.; after which, write on the debit side of this account, in red ink, “To Loss & Gain,” for amount gained, which will now make the account balance. c. — Rule the closing lines and write the total amounts between the lines. d. —Write on the debit side of this account, belozv the closing lines , in black ink, “To Inventory,” and bring down the amount of Mdse, now on hand for the beginning of the new year. e. —Carry amount gained on Mdse, over to the Loss & Gain account,— writing on the credit side of that account, in black ink, “By Mdse.,” for the amount gained. /This concludes the closing of the Mdse, account. Now go back to the article “The End of the Year,” and see what next to do. (See 289 and 290 .) 72. EXPLANATION. —The object of crediting this account at the end of the year “By Inventory,” is simply to find how much we have gained on the merchandise sold during the year; for, after we have balanced the Mdse, account, we bring down on the debit side of this account the amount of the inventory for the commencement of the new year. Consequently, having credited this account “By Inventory,” and debited it “To Inventory” for the same amount, the balance of the Ledger is not in the least affected; and in transferring the gain on merchandise which was found on the credit side of the Mdse, account, to the same side (credit) of the “Loss & Gain account,” the balance of the Ledger is not in the least affected in the entire closing of the Mdse, account. We debit Mdse, for what it costs ?ts, and credit it for what we sell it for; hence, when we take an account of stock (find the value of the merchandise we have on hand) at the end of the year, and value it at what it would cost to lay it in the house at the time the Inventory is taken, we add the amount sold during the year (credit side of Merchandise account) to this amount on hand, and we find the amount the credit side exceeds the debit must be the amount for which we have sold the merchandise more than it cost us, or the net gain on sales. For example: If we buy 100 barrels flour at $8 per barrel, we debit Merchandise for $ 800 . During the year we sell 60 barrels at $10 per barrel, and credit Merchandise for $ 600 . At the end of the year we take an inventory or account of stock, and find that we have 40 barrels on hand which we must value at what it would cost if we had to buy it then. We will suppose that the price of flour had declined $1 per barrel, and we could therefore buy it at $7 per barrel. Our 40 barrels remaining unsold would then be worth only $ 280 . This amount we add to the amount sold M o THE FOUNDATION. MERCHANDISE.— Continued. during the year ($600), which makes a total of $880. We now find the amount that this—the credit side—exceeds the debit, which gives $80, or our net gain on merchandise. ILLUSTRATION-MERCHANDISE ACCOUNT. I8S0. Feb’y 20 Dec’r 31 Bought 100 brls flour, ' To loss and gain (net gain,) $800 00 1 80 00 1S80. May 10 Dec’r 12 3i Sold 30 brls flour, (t 1 6 i ( t < Inventory (40 brls, $7), $ 3 °° 00 300 00 280 00 • $S8o 00 $SSo 00 73. Another Illustration.— We debit Mdse, at commencement of business for the value of the merchandise then on hand, and we debit it dur¬ ing the year for all the merchandise we buy; at the end of the year we ascer¬ tain how much of this merchandise we have on hand, valuing it at its present worth , or what it would cost to lay it in the store at this present time. We then find the difference between the value of the merchandise we now have on hand, and the total amount of the debit side of the Mdse, account, which will show the present cost value of goods sold; and by referring to the credit side of the Mdse, account, we find how much we have realized for the goods we have sold. We now find the difference between the value of goods sold and the amount for which we sold them, and this difference will be the gain on Mdse. We then transfer that gain to the “Loss & Gain account,” close the Mdse, account “By Balance,” and bring down on the debit side again, the balance of Mdse, now on hand. 74. It is customary among many business houses to allow a discount for cash on bills paid within a certain time. If we are allowed a discount for cash on goods we buy, the simplest way is to deduct the amount of the discount on the bills before entering-them, and pay these bills within the time allowed for discount. If we allow a discount on our bills paid within a certain time, it is the easier way to give the parties credit in the Cash Book when they pay, for the full amount of the bill, apd debit Mdse, (or Discount) on the oppo¬ site side of the Cash Book (credit side) for the discount allowed. (See 497, 498 and 534 -) Some houses keep a “Discount account” for these discounts; but it is the same in effect, and less trouble, to make the entries to the Mdse, account. In reality, we get so much less for the goods than we anticipated when we sold them, consequently we have credited Mdse, for just the amount of that discount too much, and it is now proper to debit the Mdse, account for the amount of that discount. CASH. 75. Since the Cash Book is the Cash account, this account is never kept in the Ledger by the practical business man; but there are a few “old fogies,’ and more business colleges, who still adhere to the antiquated system. The I 2 THE FOUNDATION. re TO 85 CASH. —Continued. account is here given in order to show how it was kept by our forefathers. However, all these rules, forms, etc., may be judiciously used, by applying them to the debit and credit sides of the Cash Book, showing when we enter an amount on the debit side of the Cash Book, and when on the credit side. 76. Debit, at commencement of business, for amount of cash on hand, including the amount on deposit in the bank; for since it is not necessary to keep a bank account, this is also called cash on hand. (See 86^.) 78. Debit for all cash we receive. 80. Debit for all checks we re¬ ceive. 81. Form of check we receive: -- r -! No. i. Chicago, III., Dec.. 4, 1880. FIRST NATIONAL BANK Pay to Goodwin & Emerson, or order, One hundred four — Dollars. 100 $104. G. W. Bennett. 83. Debit for all bank drafts we receive. 84. Form of bank draft we receive: $IOO -° STATE OF IOWA. THE FIRST NATIONAL BANK I OF GRINNELL, Jan. 3, 1SS1. Pay to the order of J. PI. Goodwin & Co. One hundred and ~ Dollars. To Union National Bank, ) C. H. SPENCER, ! No. 3. Chicago, Ill. f Cashier. 85. Debit for all sight drafts we receive. Form of sight draft we receive: $1147; Detroit, Mich., Jan. 6, 1881. At sight, with exchange, pay to the order of J. IP. Goodwin & Co. One hundred and fourteen and — Dollars, value received, and charge same to ac¬ count of S. J. Murphy. To Campbell & Co., Chicago, Ill. 2^0. 4. 77. Credit for all cash we pay out. 79. Credit for all checks we give. 82. Form of check we give: No. 2. Chicago, III., Dec. 30, 1880. UNION NATIONAL BANK Pay to J. K. Armsby & Co., or order, . 94 Twenty-eight — Dollars. $28 Gqodwin & Emerson. 13 86 TO 90 CASH.— Continued. THE FOUNDATION. 86 . Explanation. —Bank Drafts, Sight Drafts, Checks, Pension Checks, Money Orders, Due Bills, and all orders for which we can get cash upon presentation, are called Cash; consequently, when we receive any of these we debit Cash, and when we give any out we credit Cash. The debit side of the Cash account is always the larger, as, of course, it is impossible to pay out more cash than we receive. (See 13 and 43 to 46 .) 86 1-2. Bank Account.— It is unnecessary labor to keep a Bank account in the Ledger. It is now the custom with nearly all practical business men to call the amount on deposit in the bank so much cash on hand, and to keep no account with the bank in their Ledger. Instead of this, they keep their account with the bank on the stub of the check-book in the following man¬ ner: When they begin using a check-book they enter on the stub of the book the amount they have on deposit in the bank, and when they make a deposit they add the amount deposited to the amount they had on deposit; then when they draw checks on the bank they deduct the amounts of such checks from the amount on deposit. This shows, at any time, the amount to their credit in the bank. Of course, besides a check-book, a bank-book is kept, in which the deposits that are made are entered by the bank teller. The checks drawn on the bank are usually entered in the bank book once a month, at which time the bank-book is balanced by the bank-clerk and shows how much is on deposit or to our credit in the bank, which amount should just agree with the amount on deposit, as shown by the stub of our check-book, unless there are checks out that have not yet been presented to the bank for payment. When the banker has “written up” our bank-book he hands us, stamped “Paid,” all the checks that we have drawn on the bank, and these he calls “vouchers returned.” MANUFACTURING. 87. Debit, at commencement of business, for value of manufactured goods on hand, as shown by the Inventory. 89. Debit for all goods returned to us after we have sold them. 88 . Credit for all manufactured goods we sell. 90. Directions for closing the Manufacturing account at the end of the year: a . —Write on the credit side “By Inventory” for the value of the manu¬ factured goods we now have on hand. b. —Close all the accounts we have kept in the Ledger to show the amounts consumed in the different articles of manufacture, and transfer 14 1 91 THE FOUNDATION. MANUFACTURING.— Continued. amount lost on all such accounts to the debit side of this account, designating the accounts upon which such amounts were lost. Also, close the “Labor account,” and transfer amount lost on labor to the debit side of this account. c .—Now proceed with the closing of this account precisely the same as with the closing of the Merchandise account Par. 71 —from 2 d to 5 th, inclu¬ sive—bringing down on the debit side of the Manufacturing account, after it has been closed, the value of the manufactured goods on hand for the beginning of the new year. 91. Explanation. —When we manufacture the goods we sell, we call the account upon which we speculate “Manufacturing,” or “Manufacture,” instead of “Merchandise.” We debit this account when we commence business, if we have any manufactured goods on hand, for the then present worth of those goods. We debit this account at the end of the year for what the goods cost us which we manufactured during the year. We ascertain what the goods cost us in the following-described way: We open separate accounts at the beginning of the year, for all such articles as we are going to buy to use in the manufacture of our goods; and during the year, whenever we buy any¬ thing to use in the manufacture of our goods, we charge the articles to the respective accounts to which they belong. At the end of the year, we take an inventory of each of these articles, to ascertain the value of what remains unused, after which, we credit each of these accounts “By Inventory,” in red ink, for the respective amount on hand; we then find the difference between the two sides of each account, and credit it “By Manufacturing,” in red ink, for that difference—the difference being the amount of that article actually used in the manufacture of the goods. We now close the account and bring down on the debit side, below the closing lines, the amount remaining unused for the beginning of the new year; after which we carry over to the debit side of the “Manufacturing account” the amount used or lost on this “Article account”—all the accounts of articles used in the manufacture of the goods being treated in the same manner. For example: If we were manufacturing woolen goods, we would keep a “Wool account,” an “Oil account,” a “Dye Stuffs Account,” etc., etc. At the end of the year we would ascertain how much of each—wool, oil and dye stuffs—we had on hand still unused, and would close the accounts according to the instructions above,—carrying amounts lost on all such accounts to the debit side of “Manufacturing account,” instead of to “Loss & Gain.” We keep a “Machinery account,” and debit it for the cost of all machinery we buy. During the year we charge this account for all repairs on the machinery for which we have to pay, and at the end of the year we approximate the value of the machinery, allowing something for the “wear and tear,” after which, we close this account the same as we do the others, carrying the amount lost to the debit side of the “Manu¬ facturing account.” We keep a “Labor account,” in order to show the amount 1 5 THE FOUNDATION. 92 TO 95 MANUFACTURING. —Continued. paid our employes for making the goods, which account we also close and carry to the debit of “Manufacturing.” The “Freight and Cartage account” may also with propriety be closed and carried into the “Manufacturing account,” instead of to “Loss & Gain.” After all of these accounts have been carried into the “Manufacturing account,” we credit this account “By Inven¬ tory,” in red ink,” for the presentworth of the manufactured goods we have on hand. The books are then closed precisely the same as in any other busi¬ ness,—the amount gained on the “Manufacturing account” being carried to the “Loss & Gain account,” and all such accounts upon which we have lost or gained, and have not carried to the “Manufacturing account,” being also car¬ ried into the “Loss & Gain account.” STORE AND OFFICE FIXTURES. 92. Debit, at commencement of business, for value of store and office fixtures on hand. 93. Debit for everything we buy for fitting up the store and office, such as counters and shelves, scales, safes, stoves, desks, etc., etc. Teams and wagons are also often charged to this account, but it is customary and the most practical way to open a “Teams and Wagons account.” 94. Credit for anything we sell, for which we charged this account when we bought it. 95. Directions for closing the Store and Office Fixtures account at the end of the year: a. —Write on the credit side “By Inventory,” in red ink, for the value of the store and office fixtures on hand. b . —Find the difference between the two sides of this account (Inventory included), and the amount that the debit side exceeds the credit will be the amount lost on store and office fixtures; after which, write on the credit side of this account, in red ink, “By Loss & Gain” for amount lost, which will now make the account balance. c. —Rule the closing lines and write the total amount between the lines. d. —Write on the debit side of this account, below the closing lines, in black ink, “To Inventory,” and bring down the value of the store and office fixtures now on hand, for the beginning of the new year. e. — Carry amount lost on store and office fixtures over to the “Loss & Gain account,”—writing on the debit side of that account, in black ink, “To Store & Office Fixtures” for the amount lost, which concludes the closing of the Store & Office Fixtures account. 16 THE FOUNDATION. 96 TO 101 STORE AND OFFICE FIXTURES.— Continued. 96. EXPLANATION. —We take an inventory of Store and Office Fixtures at the end of the year the same as of Mdse., valuing them also at the present worth, and not at what they cost us. After having estimated the present value, we close the account according to instructions above given. After having credited the account “By Inventory,” the debit side will be the larger, and the difference between the two sides will be a loss, as there is always more or less “wear and tear” on the fixtures during the year; consequently, they are constantly depreciating in value. If our fixtures are apparently in as good order at the end of the year as they were at the beginning, we call them worth the whole amount for which the account is charged, and allow it to to stand untouched, calling it a Resource. Some houses call the account “Store Fixtures;” others call it “Office Fixtures,” carrying all the store and office fixtures into the same account. REAL ESTATE. 97. Debit, at commencement of business, for value of any Real Es¬ tate we own, as lots and farms. 98, Debit for all lots and farms we buy. 99. Credit for all lots and farms we sell. 100, EXPLANATION. —We allow this account to stand untouched from year to year and call it a Resource, unless the property increases or decreases in value; in such a case we close it the same as we do the Mdse, or Store Fix¬ tures accounts. 101. If we are in a wholesale business, we sometimes have customers who become financially embarassed or “hard up;” and we, in order to get good security for the payment of the amount due us, take from these customers mortgages on any lots or farms which they may own. If these customers cannot pay when these notes become due, we foreclose the mortgages, when, in some States, these lots and farms come into our possession. We can then debit “Real Estate” for such lots and farms; or, open an account for each lot or farm, naming it after the former owner, as: “Fittlefield Farm,” “Johnson Lot,’ etc., with address or location. The latter is recommended as the better method. When these accounts are opened, they are treated the same as the “Real Estate account.” THE FOUNDATION. 102 TO 115 BUILDING. 102. Debit, at commencement of business, for value of any buildings we may own. 103. Debit for cost of any build¬ ings we may build or buy. 105. Debit for all repairs we have made on the building. 104. Credit for any buildings we may sell. 106. This account is closed exactly the same as the Store & Office Fixtures account. (See 95 and 96 .) BILLS RECEIVABLE (NOTES RECEIVABLE). 107. Debit, at commencement of business, for all notes and accept¬ ances (time drafts), we have on hand, made by other parties payable to us. 108. Debit for all notes we receive made by other parties payable to us. 113. Form of Note we receive: $200 ~ Chicago, Ill., Dec. 4, 1S80. • Ninety days after date I_promise to pay to the order of Goodwin & Emerson Two hundred and ~ Dollars. Value received, with interest at rate of 8 per cent, per annum, at First National Bank, Chicago. •vr n f. G. W. Bennett. 109. Credit when those notes and acceptances which we have received from other parties are paid. 110. Credit for all notes and ac¬ ceptances we get discounted. 111. Credit for all notes we sell. 112. Credit for all notes we en¬ dorse over to other parties as a pay¬ ment on an account or a note we owe them. 4 114. Debit for all time drafts we draw on other parties, payable to ourselves, which they accept. 115. Time Draft—illustration of above: $190^ Chicago, Ill., Dec. 8, 1880. Ninety days after .date pqy to the order of ourselves One hundred gine^ and ^Dollars, with interest at i$te gf 8^er feent. per annum, at Union National ~paigk, Chicago. Value received, and cliii'g.fi same 66 account of (S>oriiviN5 & Emerson. To Frank Riohardson, Wilmingtt^jn, 111. No. 7. 18 THE FOUNDATION. BILLS RECEIVABLE (NOTES RECEIVABLE),— Continued. 116. Debit for all notes and time j[ drafts made by one party, payable to another, and endorsed over to us. 117. Note—illustration of above: $1000^ Davenport, la., Nov. 14,1880. j Sixty days after date I promise to pay , Selden A. Emerson, or order, One thousand and ^ Dollars, with interest at 8 per cent, per annum, at FirstNational Bank of Chicago. i Value received. No. 8. Hugo Smith. ' Back of above note endorsed over to us: 116 TO 120 118. Directions for balancing the Bills Receivable account at the end the year : a .—Find the difference between the two sides of this account, then write on the credit side “By Balance,” in red ink, for this difference, which will make the account balance. b. —Now rule the closing lines and write the total amounts between these lines. c. —Write on the debit side of this account, below the closing lines, in black ink, “To Balance,” and the amount of the difference, as found above, which must exactly agree with the notes we have on hand. 119. EXPLANATION. —Bills Receivable account is an account of Notes and Time Drafts (or Acceptances) receivable to us, hence “Bills or Notes Receiv¬ able.” 120. This account is, in effect, in one respect like the Cash Book or Cash Account; for, when we receive a note, w & debit Bills Receivable, and when we give out that note, we credit Bills Receivable. We debit the account for all the notes and acceptances we receive, and credit it whenever we return or give out any of those notes or acceptances; therefore, the difference between the two sides of this account should at any time show the exact amount of notes we have on hand remaining unpaid. The similarity of the 19 THE FOUNDATION. 121 TO 125 BILLS RECEIVABLE (NOTES RECEIVABLE).— Continued. Cash account to the Bills Receivable account arises in this: We debit Cash for the Cash we receive, and credit Cash whenever we give out any,—the difference between the two sides of the account showing, at any time, the exact amount of cash on hand. 121. The Bills Receivable account is, in another respect, like a personal account owing us; for, when a person gives us a note, we give that person credit and transfer the debit which heretofore stood on his account to the debit of Bills Receivable account, which now shows that the Bills Receivable account is owing us instead of the person. Illustrating the account in this way, we will say that this person is responsible for “Mr. Bills Receivable’s” indebtedness, and is obliged to pay it when'it becomes due; so when he pays the note we credit “Mr. Bills Receivable,” and write in the explanation column the name of the maker of the note. 122. The three principal objects in taking notes from our customers are: 1 st.—To have written acknowledgments from the parties of their indebted¬ ness, so that if we were obliged to enter upon legal proceedings in order to collect the amounts, we would not have to prove the indebtedness; whereas, if they were open accounts, we would sometimes be obliged to do so. 2 d.—Another object is,—if we are in need of money, we take these notes and discount them in the bank, getting the money to use in that way. 3 d.— Still another is, in order to get interest on the accounts; for some persons object to paying interest on their accounts after they are past due, but as it is customary to give notes made with interest for accounts past due, they do not object to paying it in this way. 123. When the maker of a note cannot pay its full face when it becomes due, but makes a part payment, we credit “Bills Receivable” for the amount paid, and endorse on the back of the note the amount of the payment, in the plainest possible manner, thus: “January 12 , 1881 , paid $ 50 . 00 .” 121. When the maker of a note cannot pay when it becomes due, but wishes to “renew the note,” the renewal may be recorded in any one of the three following described ways: 1 st.—By simply taking the Bill Book (see 25 ) and writing in the “Remarks” column, opposite the entry for the old note, “Renewed,” and then entering on this same book the new note just received; or, 2 d.—Bydebiting the person and crediting Bills Receivable for the old note surrendered, and then crediting the person and debiting Bills Receivable for the new note received; or, 3 d.—Bydebiting Bills Receivable for the new note received, and crediting Bills Receivable for the old note surrendered. The first and second methods are the most common in use, and are therefore recommended. 125. When we get a note discounted in the bank, the note is paid so far as we are concerned, so we must credit “Bills Receivable” for the full face ol the note on the debit side of the Cash Book, and debit “Interest” on the oppo¬ site side of the Cash Book for the amount of the discount. (See 489 and 509 ; 20 THE FOUNDATION. 126 TO 128 BILLS RECEIVABLE (NOTES RECEIVABLE).— Continued. also 153 .) If, on the other hand, the note is drawing interest, the rate per cent, of which is satisfactory to the bank, and some interest has already accrued at the time we get the note discounted, the bank then pays us the full face of the note plus the accrued interest; we then credit “Bills Receiva¬ ble” for the face of the note, and “Interest” for the amount received for accrued interest. (See 495 and 496 .) 126. If, after our having a note discounted in the bank, the maker should fail to pay when it becomes due, we are then obliged to “take up the note,” i. e., give the bank a check or the money for the face of the note and the interest accrued to date, when the note again becomes our property; there¬ fore, we debit “Bills Receivable Account” for the face of the note, and “Interest Account” for the accrued interest. This note being now called a “past-due note.” 127. When a note is received, which was made by one party payable to another and endorsed over to us, care should be taken to see whether there are any payments endorsed on the note; for, of course, a note is worth only its face less the payments, if any have been made. 128. As the difference between the two sides of the Bills Receivable account should at any and all times exactly agree with the total value of the notes we have on hand, the book-keeper should take the notes as often as once a month, put down the value of each on a piece of paper, and afterward find the total of these amounts to see whether it agrees with the amount required by the Bills Receivable account. As much responsibility rests upon the book-keeper in having the notes on hand agree with the Bills Receivable account, as does in having the cash on hand agree with the Cash Book; for, if the notes on hand do not agree with the Bills Receivable account, it shows “there is a nut loose somewhere.” When we post an amount to the Bills Receivable account, we write in the explanation column the name of the maker of the note; the date and the time may also be added in the explana¬ tion, so that if there be a mistake on the account we may check off from the credit side to the debit the notes that have been paid, and in this way ascer¬ tain where the mistake is. 21 THE FOUNDATION. 129 TO 135 BILLS PAYABLE (NOTES PAYABLE). 134. Debit when we pay the notes and time drafts we owe. 129. Credit, at commencement of business, for all notes and time drafts we owe. 130. Credit for all notes we give to other parties, made by us payable to them. 131. Note we give—illustration of above: 30 $189 - Chicago, Ill., Dec. 8 , 1880. Sixty days after date we promise to pay to . the order of Procter & Gamble, One hundred eighty-nine and -- Dollars, at Second Na¬ tional Bank of Chicago. Value received. No. 9. Goodwin & Emerson. 132. Credit for all time drafts drawn on us by other parties we accept. 133. Time Draft—illustration of above: o 60 $218 - New Yor; a 1880. if- 3. Sixty days aft-^r (^te^. wlthkexchange on New York, {Siyjlop^h^ order? of ourselves, Two hundredg'ef^ht^en^m^ '^Dollars. Value recejyec^ £&dOch|rgg same to ac¬ count of 3 3 ® Ajgte i|:ki.e Bros. ? .00 To Goodwin & EnSsrson, Chicggo.'Sll. ^ O U No. IO. 135. Directions for balancing the Bills Payable accomit at the end of the year: a. -—Find the difference between the two sides of this account, and then write on the debit side, in red ink, “To Balance” for that difference, which will make the account balance. b. — Now rule the closing lines and bring down the total amounts between the lines. c. — Write on the credit side, below the closing lines, “By Balance,” in black ink, for the difference above found, which difference should exactly agree with the notes and acceptances we owe. 22 THE FOUNDATION. 136 TO 142 BILLS PAYABLE (NOTES PAYABLE).— Continued. 136. EXPLANATION. —Bills Payable account is an account of Notes and Acceptances given by us, and consequently payable by us; hence, Bills (or Notes ) Payable. We credit Bills Payable when we give a note or accept a time-draft; and when we pay that note or draft we debit Bills Payable. 137. This account is, in effect, like a personal account we owe; for, when we give a person a note, or accept a time-draft which he draws on us, we debit this person’s account, and transfer the credit which heretofore existed on same to the credit of Bills Payable account; so that, illustrating the account in this manner, we are now owing “Mr. Bills Payable” instead of this person. Now when the amount becomes due, this “Mr. Bills Payable” “comes to us in such a questionable shape,” being in the form of a note , that we must pay him. We then debit “Mr. Bills Payable” in order to show that the debt exists no longer, in so far as that one amount is concerned. 138. The difference between the two sides of this account should at any time exactly agree with the notes and acceptances we have outstanding, or the notes we have given and the time-drafts we have accepted which still remain unpaid. 139. When we make an entry on the Bills Payable account we always write in the explanation column the name of the person to whom we gave the note; the date of the note and time may also be added, so that if there be a mistake in this account, i. e., if at any time the amount of our notes out¬ standing does not agree with the difference between the two sides of this account, we may then check from the debit side to the credit the notes that have been paid, and in this way find the mistake. 140. The reason we give notes and accept time-drafts is, because the parties from whom we buy request us to do so, with the same objects in view which we have when we take notes from our customers. (See 122 .) BILLS RECEIVABLE AND BILLS PAYABLE ACCOUNTS. 1 141. Beginners in the study of book-keeping sometimes get these two accounts confused, but all doubts may at such times be easily and quickly dispelled by soliloquizing in the following way: “Will the money be receivable to, or payable by us when this note is due? If receivable to us, Bills Receivable account is affected, and we must make the entry to the Bills Receivable account; if payable by us, Bills Payable account is affected, and we must make the entry to the Bills Payable account.” 142. Accepting a time-draft which a person draws upon us, is exactly the same in effect as giving that person a note; for, by so doing, we promise to pay him at the expiration of a certain period of time, with or without interest, for value received, a certain amount,—which is neither more nor less than we do when we give a note. When a person accepts and returns to us a time-draft which we made on him, it is, of course, the same in effect as though we received 23 143 . THE FOUNDATION. BILLS RECEIVABLE AND BILLS PAYABLE ACCOUNTS.— Continued. a note from him. Time-Draft and Acceptance are but different names for the same paper. Acceptance is the one most in use, but Time-Draft is the term adopted in this book, as it is more readily comprehended by the pupil — it showing, at once, that a certain time is given in. which to pay the draft. Time-Drafts are of no value whatever, until they have been accepted and returned to the drawers, or the persons who draw the drafts; as, not until then is a written promise to pay made; therefore, no entry is made until the draft has been returned accepted, when the entry is made precisely the same as if a note had been received or given. 143. There are four kinds of drafts, viz.: Bank Drafts, On-Demand Drafts, Sight Drafts and Time Drafts. The first three belong to the Cash account, and the last, as heretofore explained, belongs to the Bills Receivable and Bills Payable accounts. A Bank Draft is a draft drawn by one bank on an¬ other. An On-Demand Draft is a draft drawn by one person upon another, and is payable on demand, or immediately. A Sight Draft is a draft drawn by one person upon another “at sight,” and if accepted by the per¬ son upon whom it is drawn is payable just three days after it is accepted. Drafts are sometimes drawn at “one, three or five days sight,” and made pay¬ able to either a banker or some other person. When they are thus drawn we accept them in the same manner that we would a time draft, but make no entry of it,—simply making a memorandum in lead pencil on their account in the Ledger similar to this: “Acc. St. Draft,” to show that we have accepted such a draft; and when the paper becomes due we pay it and charge the person direct, as we would have done had he drawn a draft “on demand” and we paid it at once. When drafts are drawn in this way, and are accepted by us, the bank to whom the draft is made payable, leaves a “notice” with us showing when the paper falls due, the amount of same, also collection charges, if any. When due, we pay the draft, charge the person and credit Cash, as it is a cash transaction. The object in drawing drafts “at sight,” or “at one, three or five days sight,” is so as not “to take the person by surprise,” but to give him a little time in which to meet the obliga¬ tion; there being thus more certainty of the draft’s being paid. Drafts drawn in this way have three days of grace in addition to the time given. It is not deemed advisable to run the entries through the Bills Payable account when we accept a draft drawn on such short time; but when drawn on ten days or longer time, we call it a Time Draft, and make the entry to the Bills Payable account. In California, Colorado, Connecticut, Delaware, Georgia, Idaho, Illinois, Louisiana, Maryland, New York, New Mexico, Ohio and Pennsylvania—no days of grace are allowed on drafts drawn “at sight.” 24 THE FOUNDATION. 144 TO 151 INTEREST (OR USE OF MONEY). 144. Debit for all cash we pay out for interest on the notes which we have given to other parties. 146. Debit for amount deducted « by the bank from the face of a note which we have had by them dis¬ counted. 148. Debit at the end of the year for the accrued interest to date on the interest-bearing notes we owe. (See 160 and 163 .) 145. Credit for all cash we receive for interest on the notes which we have received from other parties. 147. Credit for discount allowed to us by other parties for paying our notes before due. 149. Credit, at the end of the year, for the accrued interest to date on the interest-bearing notes we hold against other parties. (See 155 and 158 .) 150. Directions for closing the Interest account at the end of the year: a . —Find the difference between the two sides of this account. If the credit side be the larger, the amount the credit exceeds the debit is the gain on Interest; —we then write on the debit side of this account, in red ink, “To Loss & Gain” for amount gained. If the debit side be the larger, the amount the debit exceeds the credit is the loss on Interest; —we then write on the credit side of this account, in red ink, the amount lost, which in either case would make the account balance. b. —Rule the closing fines and write the total amounts between the lines. c. —If there be a gain, carry amount gained over to the “Loss & Gain account,”—writing on the credit side of that account, in black ink, “By Inter¬ est,” for amount of the gain. If a loss, carry amount lost to the debit side,— writing “To Interest” for amount of the loss. 151. EXPLANATION. —Interest is simply a term used for the use of money. When we pay for the use of money, we debit “Interest” for the use of the money which we receive , and credit “Cash” for the cash we give for the use of that money. (See 144 and 146 .) When we are paid for the use of money which we have given, we debit “Cash” for the cash we receive , and credit “Interest” for the use of the money we give. (See 145 and 147 .) Interest does not arise from notes only; for, when we have an account which is past due against a customer of ours, we charge him for interest. When this is done we debit the person and credit “Interest,” as we, in reality, give to that per¬ son the use of the money for the length of time that his account is past due. When we allow an account which we are owing to go past due, we are some¬ times obliged to pay for interest;—we then debit “Interest” and credit the person to whom we owe the account,—as we, in reality, receive from the per¬ son the use of the money which should have been paid when his account was due, from the time when his account was due, up to the present time. 25 fHE FOUNDATION. 152 TO 157 INTEREST (OR USE OF MONEY).— Continued. 152. DISCOUNT. —Discount is another term used for the use of money; therefore, both being the same in effect, it is not necessary to have an account for each, so we call interest and discount the same, and keep onlyone account on the Ledger, namely: “Interest.” 153. When we are in need of money, we take some of the notes which we hold against other parties (Bills Receivable) to the bank and get them “dis¬ counted.” If these notes are not drawing interest, the banker deducts from the face of the note a certain rate per cent, per annum for the time the note has yet to run before due, and hands us the balance in cash. This amount which he deducts from the face of the note is the “discount,” or the amount we pay him for the use of that money which he hands us, for the unexpired time on the note. For example: If we hold a note for $ioo which is made without interest and has yet 6o days to run before due, and we get it dis¬ counted in the bank, the banker, deducting $i for discount, hands us $99; we then debit Cash for $100 and Interest for the discount—$1—and credit Bills Receivable for the full face of the note—$100. (See 125, also 490 and 512.) 154. When a person to whom we give a note allows us a certain amount for paying that note before due, we debit Bills Payable for the full face of the note; and credit “Cash” for the cash we pay, and “Interest” for the discount we are allowed. Some business houses keep a separate account for Discount, but this is not necessary. (See also 74.) INTEREST RECEIVABLE. 155. Debit, at the end of the year, for the accrued interest to date on all the interest-bearing notes and time drafts we hold against other parties, i. e., for the total interest due us to date on our Bills Receiva¬ ble. 156. Credit when the accrued in¬ terest is paid which was charged on opposite side of this account. 157. Directions for closing the Interest Receivable account at the end of the year: a. — Find the difference between the two sides of this account, and then write on the credit side, in red ink, “By Balance” for that difference, which Avill make the account balance. b. — Rule the closing lines and write the total amounts between the lines. c. — Write on debit side of this account, in black ink, below the closing lines, “To Balance” for amount of this difference,—which shows the balance of interest which is still due and receivable to us. 26 THE FOUNDATION. INTEREST RECEIVABLE.— Continued. 158 TO 162 158. Explanation. —At the end of each year, we compute the interest on all the interest-bearing Bills Receivable we have on hand, from the dates of such notes up to the end of the year; excepting those notes the dates of which extend back over one year; these notes we compute the interest on for only one year, because the interest has on these already been computed up to the first of the year and charged to this account. We then debit “Interest Receivable account” for the total amount of interest due us, and credit the “Interest account” proper, for the same amount. Thus it will at once be seen that the “Interest Receivable account” is an account indicating a resource ,—being the amount of interest due us up to the end of the year;— therefore, it is never carried over to the “Loss & Gain account,” the gain on interest being carried to the “Interest account,” as above indicated. 159. The Interest Receivable and Interest Payable accounts are such ■“complicated affairs” that they are seldom used in business, unless one of the partners wishes to withdraw from the business, or unless they wish to take into the business a new partner, at which time they desire to know the exact worth of the firm; and in order to find this they must ascertain how much interest is due to the firm on the notes on hand, and how much interest is owing by the firm on the interest-bearing notes outstanding. The complication in these accounts arises in finding, at the time the interest is paid for, what portion of the interest to enter to Interest Receivable or Interest Payable, and what portion to the Interest proper account; and in making entries to so many accounts, when it would be entirely proper and much less work, to keep only one account instead of the three, namely, “Interest,” and make the entry to that account not until the interest is paid for INTEREST PAYABLE. 161. Debit, when the accrued in¬ terest is paid, which was credited on the opposite side of this account. 160. Credit, at the end of the year, for the accrued interest to date on all the interest-bearing notes and time-drafts we owe, i. e., for the total interest we owe to date on our Bills Payable. 162. Directions for closing the Interest Payable account at the end of the year’. a. —Find the difference between the two sides of this account, and write on the debit side, in red ink, “To Balance” for amount of that difference, which will make the account balance. b. —Rule the closing lines and write the total amounts between the lines. Write on credit side of this account, in black ink, below the closing lines, “By Balance” for amount of this difference,—which difference is the balance of interest we owe for and is payable by us. 2 7 THE FOUNDATION. 163 TO 173 INTEREST PAYABLE.— Continued. 163. Explanation. —At the end of each year, we compute the interest on all the interest-bearing Bills Payable we owe, from the dates of such notes up to the end of the year, with same exceptions as in 158. We then credit “Interest Payable account” for the total amount of such interest due, and debit the Interest account proper for the same amount. It will now be seen that the “Interest Payable account” indicates a liability , being the interest we owe for up to the end of the year—therefore is not carried to the “Loss & Gain account,” but is allowed to stand on our books the same as the “Bills Payable account.” The loss on interest we have to pay for is carried to the Interest account at the time we credit Interest Payable, as indicated above. ACCOUNTS WITH PERSONS TO WHOM WE SELL GOODS OR LOAN MONEY. 167. Credit for all cash they pay us on account. 168. Credit for all merchandise they return to us on account. 169. Credit for all checks, bank drafts, sight drafts, money orders, etc., etc. (called cash), they give, to us on account. 170. Credit for all drafts we draw on them at sight, on demand, or at one, three or five days sight, they pay. (See 143.), 171. Credit for all notes they give to us on account, made by them¬ selves payable to us. (See 108 and H3-) 172. Credit for all time drafts we draw on other parties they accept. (See 114, 115 and 142. 173. Explanation. —When we first enter into business, we open accounts with all persons who are owing us, and debit all such persons for the amounts they owe us. Whenever we sell a person goods and do not receive payment therefor, or whenever we loan money to a person and do not take a note for the amount of that loan, we debit the person; and when these persons to whom we sell the goods or loan the money pay us in any way, or give us a note, or accept a time draft which we draw on them, we credit them. (For remarks on balancing this account at the end of the year see 308 and 321.) 164. Debit, at commencement of j business, for amount they owe us. 165. Debit for all merchandise we sell to them on account. 166. Debit for all cash we loan to them on account, and take no note therefor. 28 THE FOUNDATION. 174 TO 185 ACCOUNTS WITH PERSONS FROM WHOM WE BUY GOODS OR BORROW MONEY. 177. Debit for all cash we pay them on account. 178. Debit for all merchandise we return to them on account. 179. Debit for all checks, bank drafts, sight drafts, money orders, etc. (called cash), we give them on account. 180. Debit for all drafts they draw on us at sight, on demand, or at one, three or five days sight, we pay. (See 143.) 181. Debit for all notes we give them on account, made by us paya¬ ble to them. (See 130 and 131.) 182. Debit for all time drafts they draw on us we accept. (See 132, 133 and 142.) 183. Explanation. —When we commence business, we open accounts with all the persons we are owing, and credit all such persons for the amounts we are owing them. Whenever we buy goods and do not pay the person from whom we buy, or whenever we borrow money and do not give the per¬ son a note for the amount borrowed, we credit the person; and when we pay these persons from whom we bought the goods or borrowed the money, or give them a note, or accept a time draft which they draw on us, we debit them. TAXES. 184. Debit for all cash we pay out for city, county and other taxes. 185. Directions for closing the Taxes account at the end of the year: a. —Write on the credit side, in red ink, “By Inventory,” for approxi¬ mated value of unexpired Taxes. b. —Find the difference between the two sides of this account, and write on the credit side, in red ink, “By Loss & Gain” for amount of this differ¬ ence, which will make the account balance. 174. Credit, at commencement of business, for amount we owe them. 175 . Credit for all merchandise we buy from them on account. 176. Credit for all cash we borrow from them on account. 29 THE FOUNDATION. 186 TO 192 TAXES. —Continued. c. — Rule the closing lines and write the total amounts between these lines. d. —Write on debit side of this account, in black ink, below the closing lines, “To Inventory” for this amount of unexpired Taxes, for beginning of the new year. e. — Write on the debit side of Loss & Gain account, in black ink, “To Taxes” for amount of loss as found in “2d.” 186 . Explanation. —We debit Taxes for all cash we pay out for taxes on our property. At the end of the year we approximate the value of taxes still unexpired, and call that approximated value a Resource; consequently, we close the account as per above directions. INSURANCE. 187 . Debit for all cash we pay out for insurance on goods and build¬ ings. 188 . Closing and Explanation. —The directions for closing the Insur¬ ance account, and also the explanation, are exactly the same as in the Taxes account; consequently, for directions for closing and for explanation, we refer to 185 and 186, and while reading same, substitute “Premiums on Policies” where we find “Taxes.” All business houses do not approximate the value of unexpired Taxes and “Premiums on Policies” at the end of the year, but call the whole amount a loss at once. EXPENSE. 189 . Debit for everything we buy to use ourselves and not sell again, as postage stamps, stationery, fuel, etc. 190 . Debit for all cash we pay out and receive an equivalent in some¬ thing we cannot sell again, as: clerk hire, freight and express charges, insurance, rent, drayage, etc., etc. 191 . Credit for everything we sell for which we debited Expense when the article was bought. 192 . Directions for closing the Expense account at the end of the year: a .—Write on the credit side, in red ink, “By Inventory” for value of the salable articles we have on hand, for which we debited Expense when those articles were bought. 30 THE FOUNDATION. 193 TO 196 EXPEN SE.—Continued. b. —Find the difference between the two sides of this account, and write on the credit side, in red ink, “By Loss & Gain” for that difference, which will make the account balance. c. —Rule the closing lines and write the total amounts between the lines. d. —Bring down on the debit side, below the closing lines, in black ink, “To Inventory” the value of salable articles on hand, as found in “ist,” for beginning of the new year. e. —Write on the debit side of Loss & Gain account, “To Expense” for amount of loss on this account, as found in “2d” above. 193 . Explanation. —In reading over rules 189 and 190, it will at once be seen that no business can be conducted without an expense; it will also be seen that the Expense account is the “foe in the field” against which the business man has to contend. All transactions which result in a loss to us may be carried into the Expense account, or the account may be divided into as many accounts as we wish to keep to represent the losses occasioned in our business. 194 . As it is a matter of gratification to the business man to have a more explicit and comprehensive statement of the expenses at the end of the year, it becomes necessary for him to classify his expenses by opening accounts for the different items of expense; and whenever an amount is expended which would otherwise be debited to Expense, it is debited instead to the account to which it belongs. For example: If the business man wishes to know how much he expends during the year for clerk-hire, he keeps an account called “Salaries,” and debits that account, instead of Expense, whenever anything is expended for clerk-hire; or, if he wishes to know how much is expended for freight and express charges, fuel, rent,- drayage, insurance, advertising, travel¬ ing expenses, etc., etc., he opens an account with each, and whenever amounts are expended which would otherwise be debited to Expense, they are, instead, debited to the respective accounts to which they belong. When we thus divide the account we debit Expense account for all such items of expense as do not come under any of the accounts thus opened. 195 . When we take an inventory at the end of the year we sometimes take an account, or find the value of the unused salable expense articles we have on hand, i. e., articles that were debited to Expense when bought, such as fuel, postage stamps, etc.,—we then close the account according to direc¬ tions on this account. When we do not take an inventory in this way we close the account simply according to “2d, 3d and 5th,” of 192. 196 . All accounts we open in the Ledger, in which to debit articles we buy to consume in the business, i. e ., to use ourselves and not sell again, we close at the end of the year in the same manner in which the Fuel account is closed. (See 200.) These articles must, however, be such as would be of value to anyone else, and consequently, salable articles. \ 31 THE FOUNDATION. 197 TO 203 EXPENSE. —Continued. 197 . All accounts we open in the Ledger, in which to debit amounts that are at once and in entirety a “dead loss,” we close at the end of the year in the same manner in which the Salaries account is closed (see 202), except¬ ing that we write on the Loss & Gain., account the name of the account on which such loss was made. FUEL. 198 . Debit for all fuel we buy to 1 consume in our stoves and furnaces. 99 . Credit for all fuel we sell. 200 . Directions for closing the F?iel account at the end of the year: a. —Write on the credit side, in red ink, “By Inventory” for value of fuel remaining on hand unused. b. —Find the difference between the two sides of this account, and write on the credit side, in red ink, “By Loss & Gain” for this difference, which will make the account balance. The difference thus found will be the amount of fuel we have consumed. c. —Rule the closing lines and write the total amounts between the lines. d. —Write on the debit side, in black ink, below the closing lines, “To Inventory” for the amount of fuel we have on hand for the beginning of the new year. e —Write on the debit side of Loss & Gain account, in black ink, “To Fuel” for amount lost on this account. SALARIES (OR LABOR). 11 201 . Debit for amount we allow or pay our employes for services. 202 . Directions for closnig the Salaries account at the end of the year: a. —If there are any credits on this account, find the difference between the two sides and write on the credit side, in red ink, “By Loss & Gain” for the difference. If there are no credits, simply find the total amount of the debit side, and write on the credit side, in red ink, “By Loss & Gain” for such amount. b. —Rule the closing lines and write the total amounts between the lines. c. —Write on the debit side of Loss & Gain account, in black ink, “To Salaries” for amount lost on this account, as found in “1st” above. 203 . Explanation. —-When we pay our clerks, book-keepers, etc., weekly, semi-monthly or monthly, the total amounts due them, it is not necessary to 32 THE FOUNDATION. 204 TO 208 SALARIES (OR LABOR). —Continued. keep an account with each, but debit the amount paid them directly to the Salaries account. 204. If we do not pay them regularly the amounts due them, but allow them to draw from their salary at pleasure, we then open an account for each of our employes, debiting them whenever they draw any money, or take any merchandise for their private use; and crediting them at the end of each month for their salary for the month. When we do this, on the last day of the month we enter in the Journal “Salaries Dr. to Sundries,” and under this heading, we enter the names of each of our employes, giving each credit for his salary; and after we have the names and amounts all entered, we find the total of these amounts and debit Salaries account for such total amount in one entry. If the members of the firm allow themselves a salary from which to draw, their names are entered with the employes and their private accounts treated the same as the accounts with the employes. The accounts thus formed with our employes are the same as any personal accounts we owe, unless the employe overdraws his account, and then, of course, “the shoe is on the other foot,” being then the same as a personal account owing us. FREIGHT AND EXPRESS. 205. Debit for all cash we pay out for freight and express charges. 206. Credit for all cash we receive from Railroad or Express companies as rebate or overcharge on freight or express. 207. CLOSING. —The Freight & Express account is closed the same as the Salaries account. (See 202.) Some firms, however, carry the amount lost on freight and express to the Merchandise account, instead of to the Loss & Gain account, at the end of the year, reasoning thus: That the merchandise really costs them the.price of the goods plus the freigJit. This is, in fact the case; but the usual custom in practice is to carry the Freight & Express account over to Loss & Gain with the other accounts on which we lose or gain. 208. Explanation. —Some Railroad companies allow those business houses who have large quantities of freight shipped over their lines a “rebate,” or “drawback.” This rebate they usually settle monthly, and when they pay it, we credit Freight & Express account; unless, we open an account with the Railroad company in which to charge such overcharges; we then, of course, credit the Railroad company’s account when they settle for the charges we have against them. These Railroad companies have (they say) a certain rate from which they must not deviate; consequently, all their freight bills 33 THE FOUNDATION. 209 TO 216 FREIGHT AND EXPRESS.— Continued. must be made out (for the same class) at the same rate per ioo lbs.; yet they must recognize the excess of patronage in an extensive establishment over a small house in charges for freight, in the same manner as a wholesale mer¬ chant does one customer over another,, and to do this, the freight company must resort to “rebate.” COLLECTION AND EXCHANGE. 209. Debit for all cash we payout for collection of drafts, notes and checks; and for exchange on bank drafts, postoffice orders, etc. 210. Credit for rebate on ex change, if any. 211. Closing.— The Collection & Exchange account is closed at the end of the year the same as the Salaries account. (See 202 .) 212. EXPLANATION. —Some banks allow their customers who purchase large quantities of exchange a rebate , for the same reason that the railroad companies allow their patrons a rebate on freight. (See 208 .) When they allow us a rebate, and pay or give us credit for same, we then credit Collec¬ tion & Exchange. If the bank simply gives us credit in our bank book, which they usually do, we debit Cash and credit Collection & Exchange; and then enter on the stub of our check book the amount thus credited to us, as though it had been a deposit made by us, consequently increasing our deposit in the bank that amount. TRAVELING EXPENSES. 213. Debit for amount paid to our traveling agents, or exDended by our¬ selves for traveling expenses. __ 1 1 __ 211. CLOSING. —The Traveling Expenses account at the end of the year is closed the same as the Salaries account. (See 202 .) 215. Explanation. —This account is used only in a wholesale house where they employ traveling agents to sell their goods. There are many ways of treating the Traveling Expenses account, principal among which are the following methods: 216. First Method .—Some business houses employ traveling agents, paying them a regular salary and telling them to go out and sell their goods, and they will pay all their expenses, whatever they may be. When this 34 THE FOUNDATION. 217 TO 219 TRAVELING EXPENSES.— Continued. is done the expenses may be charged directly to the Traveling Expenses account; or, an “Agent account” may be opened for each of the traveling agents, and when an amount is reported expended for expenses by an agent, the amount may be charged to this Agent account,—and at the end of each month, or at the end of the year, as we may prefer, this “Agent account” may be balanced by writing on the credit side, in red ink, “By Traveling Expen¬ ses” for the total amount of same, and carrying this amount over to the debit side of Traveling Expenses account,—writing there, in black ink, the name of the agent by whom this amount was expended. When we keep an “Agent account” in this way, it is simply as a matter of satisfaction to us to know how much is expended by each agent. 217. Second Method. —Some business houses pay their traveling agents a regular salary, and allow them besides a certain amount per day, per month, or per year, for traveling expenses. When this is done, an “Agent account” may be opened in the Ledger for each agent, and these accounts debited 'whenever any money is drawn for traveling expenses; then at the end of each month an entry may be made on the Journal thus: “Traveling Expenses Dr. to Sundries,” and under this heading enter the names of all our traveling agents, adding “Agent account” after each name, crediting to the respective Agent accounts the amounts allowed them for expenses. The difference may then be found between the two sides of the respective “Agent accounts,” the Agent account balanced the same as in first method; excepting, that this difference, instead of being carried to the Traveling Expenses account, is carried to the personal account of the agent , i. e., the account upon which is entered his regular salary,—debiting the personal account of the agent, if he has drawn more than allowed by the firm for expenses, or crediting it if he has drawn less. 218. Third Method. —When the traveling agent is allowed a certain amount per day, per month or per year for traveling expenses, instead of opening an “Agent account,” as in Second Method, we may, when an amount is drawn for expenses, charge the amount directly to the personal account of the agent,—thus at the end of each month, make an. entry on the Journal the same as described in Second Method, excepting, instead of adding “Agent account” after each name, and crediting the amounts to the Agent accounts, we credit the amounts allowed for traveling expenses directly to the personal accounts of the agents. 219. Fourth Method. —Some houses, in addition to a regular salary and a certain amount for traveling expenses, pay their traveling agents a certain percentage commission on the sales they make—sometimes on the sales from the beginning, and sometimes not until their sales have reached a certain amount. This is partly done to insure extra efforts on the part of the agent to make large sales, and partly to show their appreciation of his hard work. When this is done, the commission thus allowed may be charged 35 THE FOUNDATION. 220 TO 222 TRAVELING EXPENSES.— Continued. to any one of the three following accounts, viz.: Agents’ Commission, Mer¬ chandise or Traveling Expenses, and credited either to the agent’s personal account or to his “Agent account.” The better way, perhaps, is to open an “Agents’ Commission account” in the Ledger, and at the end of each month make an entry on the Journal thus: “Agents’ Commission Dr. to Sundries,” and under this heading enter the names of all the agents to whom we pay commission on sales, crediting either their “Agent accounts” or their per- sonal accounts for the commission due them, and debiting the “Agents’ Com¬ mission account” for the total amount. 220. Fifth Method .—There are a few business houses who do not pay their agents a regular salary, but simply pay them a certain per cent, com¬ mission on the sales they make, allowing the agents to defray their own expenses. When this is done, the commission thus allowed may be charged to any one of the three accounts as described in Fourth Method, and credited at the end of each month directly to the agent's personal account. This is a method seldom used in business, as there are but few agents who are willing to engage with a house on such terms. 221. Thus it will be seen that the “Agent accounts” are always balanced at the end of each month, and carried either into the Traveling Expenses account or into the personal account of the agent direct,-^consequently, these Agent accounts are simply transient, and remain open only a month at a time. However, there are a few exceptions to this rule, in which the accounts are closed only at the end of the year—these exceptions occurring usually under the First Method. When the “Agent accounts” are closed only at the end of the year, they are then carried into the Traveling Expenses account, and show the amount expended by each agent for the entire year in one entry. 222. The traveling agents’ personal accounts are of course credited for their salaries at the end of each month, the same as the accounts with our other employes, and thereafter treated the same as any other personal account. (See 204 .) 36 THE FOUNDATION. 223 TO 234 BRANCH HOUSES. 228. Credit for all merchandise we buy from them on account. 229. Credit for all merchandise they return to us after they have bought it. 230. Credit for all cash they pay us on account. 231. Credit for all notes, accept¬ ances, etc., they turn over to us. 232. Credit, at the end of the year, for amount reported as the net loss in the business transacted by them during the year. OUR ACCOUNTS WITH THEM. ■ ■' •f' T\ 233. EXPLANATION. —The accounts with our Branch Houses are kept on the same principle as the “Accounts with Persons to whom we Sell Goods’ (See 164 to 173 ), consequently are neither more nor less on our books than simply personal accounts. When we close our books at the end of the year, we allow these accounts to stand on the Ledger untouched, calling the accounts Resources. 234. We debit our Branch Houses whenever we send them any goods from our stock. Some houses charge these goods at their cost , and others charge them at a profit. When we buy goods on account and receive bills therefor, some of which goods were bought for our Branch Houses, we mark on such bills the names of the Branch Houses to which they belong. When we enter our bills, we can adopt either one or the other of two methods, viz.: 1 st.— ( 1 ) To assort the bills, getting those bills together which are for goods for our own stock, and debiting our merchandise account for same, crediting each of the parties from whom we buy; then getting those together which are for the different Branch Houses, and debiting the respective Branch Houses for the bills belong¬ ing to each and crediting the parties from whom we buy; or ( 2 ) to have a “Merchandise” column and a column for each of our Branch Houses, and carry out the amounts in the columns to the debit of the respective accounts to which they belong, crediting the parties from whom we buy for such amounts —the respective Branch Houses accounts and the Merchandise account being debited only at the end of the month for the total purchases for each for the month. The last named is the plan adopted by the larger houses—where they have a book ruled with these extra columns, which book they use exclu¬ sively for entering the bills of their purchases. 2 d.—The second method 223. Debit for all merchandise we send to them from our stock of goods. 224. Debit for all merchandise we buy and have sent direct to them. 225. Debit for all merchandise they buy on account for which we are to pay. 226. Debit for all cash or other values we give them. 227. Debit, at the end of the year, for amount reported as the net gain in the business transacted by them during the year. 37 THE FOUNDATION. 235 TO 237 BRANCH HOUSES.— Continued. is to debit our Merchandise account for all the goods we buy, whether for our own stock or for our Branch Houses, crediting the parties from whom we buy; and then to debit the Branch Houses and credit Merchandise for such goods as were bought for them. This method requires much more work than the first, because we are obliged to copy upon our Sales Books the items on the bills which were sent to the Branch Houses. It is the general custom of the Parent House to assume all thediabilities of the Branch Houses, conse¬ quently, to pay all the bills contracted by them. 235. We credit our Branch Houses whenever we get goods from them with which to replenish our stock on some lines in which we had become short; and for all the cash they send to us on account; and for all notes, acceptances, etc., which they have received from their customers and turn over to us. 236. At the end of the year, when our Branch Houses report the net gain or net loss by each, we debit or credit each of the respective Branch Houses accounts, and debit or credit our Loss & Gain account for the net loss or nee gain by each reported. If A NET GAIN. — If a Branch House reports a net gain in the business, we debit the Branch House account and credit our Loss & Gain account for such gain, writing on the credit side of the Loss & Gain account, as an explanation, the name of the Branch House upon which the gain was made. Having made this entry, the difference between the two sides of our account with the Branch House should show the present worth of that house or the amount they owe us, which amount should just agree with the difference between their total Liabilities and their total Resources (excluding their account with us). If A NET LOSS.— If the Branch House reports a net loss in the business, we credit the Branch House account and debit our Loss & Gain account for such loss, writing on the debit side of the Loss & Gain account, as an explanation, the name of the Branch House upon which the loss was made. Having made this entry, the dif- * erence between the two sides of the Branch House account should show the present worth of that house, or the amount they ought now to have credited to our account on their Ledger, which amount should just agree with the difference between their total Liabilities and their total Resources (excluding their account with us). If the Branch Houses keep a Stock account, in addi¬ tion to the Personal accounts with the Parent House, that, of course, must too be excluded from the Resources and Liabilities and included in the remarks “their account with us” heretofore used. HOW THEIR BOOKS ARE KEPT. 237. Our branch houses each keep a full set of books in the same manner as we keep our books, and precisely the same as books are kept in any busi¬ ness, treating our account on their Ledger the same as they would any other accounts with persons from whom they bought goods on account, with the following two exceptions, viz.: 1st (i), instead of crediting parties from 38 THE FOUNDATION. BRANCH HOUSES —Continued. 238 TO 240 whom they buy goods on account, they turn the bills over to us to pay, debit¬ ing their Merchandise account for the same and crediting their account with us; or ( 2 ) they can debit their Merchandise account and credit the parties; afterward, when they turn over the bills to us to pay, charge the parties and credit us, which amounts to the same but makes more work. It is not neces¬ sary for the Branch Houses to submit the bills to the Parent House, but simply to make an itemized statement of the debts contracted with the different per¬ sons, and from this statement the Parent House can charge the Branch House and credit the different parties. 238. When the Branch Houses are first opened, they open their books in the same way that books are opened in any store or business, excepting that they credit the Parent House for the net investment; and at the end of the year the proceedings for closing the books are the same as in any other busi¬ ness—finally debiting or crediting the Parent House for the net loss or the net gain in the business. 239. Either of two methods may be adopted by the Branch Houses in keeping the accounts with the Parent House, viz.: 1 st.—To each open two accounts with the Parent House — a Stock account and a Personal account — - debiting or crediting the Stock account at the end of the year for the net loss or the net gain, as the case may be; and treating che Personal account as described in 236 . 2 d.—To keep only one account with the Parent House, namely, a Personal account,—entering all transactions with the Parent House during the year into that account, and at the end of the year debiting or crediting that account for the net loss or the net gain. If a Stock account is opened with the Parent House when the Branch first commences business, there can be no entry to this account, for everything belongs to the Parent House and must necessarily be credited to the Personal account of that House, and not to its Stock account; but at the end of the year the net loss or net gain may be carried to the Stock account, and that would be the only item that would appear on that account;—therefore, it is deemed the better method to keep only a Personal account with the Parent House. 240. The Branch Houses render statements to us of all their expenses, their purchases, their sales, etc., daily, weekly or monthly, according to arrangement; and these statements are filed away by us simply as memoran¬ da, no entry being made on our books, unless it be on a record book, which is not often done, as these reports are simply made out for our own satisfac¬ tion, in order that we may know the progress of the business in the different Branches. These Branch Houses at the end of the year each report to the Parent House the net gain or net loss in the business, as the case may be. (See 236 .) 39 THE FOUNDATION. 241 TO 242 SHIPPING BUSINESS. 241. That business in which we engage for the purpose of buying goods and shipping them to others to be sold—the persons to whom we ship the goods charging us for the selling of same a certain percentage on the sales— is called “Shipping Business.” When we first enter into business, the books are opened the same as in a general merchandise business; the books are the same as those used in any other business, with the exception of a book called “The Shipping Ledger,” the use of which will be hereinafter described. The principal books are the Shipping Ledger, the Journal, the Cash Book and the Ledger. A Merchandise account is kept in the Ledger, which is charged for all merchandise we buy and credited for all merchandise we sell. SHIPMENTS. 242. The Shipping Ledger.— The Shipping Ledger is a book used simply as a record book, in which to make a record of the goods we place in the hands of others to be sold. It is used as a book of original entry; i. e., when a shipment is made it is at once recorded in this book. A book ruled in the common Ledger form is suitable for the Shipping Ledger. When we make a shipment, an account is opened in this book with the person to whom we ship. On the deb’t side is entered first the date, then the items, then the cost price of the goods, and under this is entered the charges which we pay for drayage, etc. After a shipment has been thus recorded, the account here opened is allowed to stand until the party to whom we shipped the goods lenders to us an Account-Sales; we then enter on the credit side opposite the charge, the net proceeds of the sales thus reported; after which, we debit the person and credit Merchandise in the Journal, simply entering the person’s name, the amount, and the Shipping Ledger page upon which may be found the record of the sale in detail. An account is then opened in the general Ledger for this person; the amount thus charged to him in the Journal is posted to the debit side of his account here opened, and this account credited when remittance is made for the net proceeds. An extra column maybe kept in the Journal in which to enter the merchandise sales, which will render it unnecessary to post the Merchandise oftener than once a month,—the sales we make directly from our store being entered in this column, as well as the net proceeds of sales reported by the persons to whom we ship. The object of extending the cost of the goods in the Shipping Ledger, when we make a shipment, is in order that we may see whether we lose or gain on the ship¬ ment, and thus ascertain whether it pays to ship goods to that person. On the debit side of this Ledger is found the cost of the goods, and on the credit is found what we realized for them—the difference between the two sides being the amount lost or gained. The goods charged to the different per¬ sons in the Shipping Ledger belong to us until reported sold; consequently, a real charge is not made to the person until the sale is reported. Some ship¬ ping houses keep both a Sales Book and a Shipping Ledger, entering tbe 40 THE FOUNDATION. 24$ TO 245 SHIPPING BUSINESS.— Continued. shipment first on the Sales Book and afterward copying it into the Shipping Ledger; but as it is unnecessary work to thus enter the transaction twice, the Sales Book is dispensed with and the transaction is at once recorded in the Shipping Ledger. There are several forms for the Shipping Ledger in use; but, as heretofore stated, a book ruled in common Ledger form may be used; however, it will be seen that two extra columns—one on the debit side and one on the credit, in which to make a memorandum of the amount lost or the amount gained on the shipments—are very convenient. By having these two extra columns, we may at any time ascertain how much we have gained or lost on the total shipments made to any person, by simply adding the two columns, “Losses” and “Gains,” on his shipment account, and finding the difference between the sums total. In order that the book described may be more fully understood, a form for the same will here be given. 243. FORM FOR SHIPPING LEDGER. Date. Shipments. Explanation in Items. Cost Price. Cost Amount. Losses on Shipments. Date. Tr Sales Reported. A ’ r Net Proceeds. Gains on Shipm’ts. - 1 ‘ ! \ | • , s 11 244. At the end of the year we proceed with the closing of our books in the Shipping Business the same as in a general merchandise business, except¬ ing when the inventory is taken the goods we have belonging to us consist of not only those which we have in our store, but also those which we have charged to the different parties in our Shipping Ledger, and which have not yet been reported sold; therefore, after we have found the value of the goods we have in the store, we must go through our Shipping Ledger and add to the inventory the value of the goods there found still unsold; when we have done this our inventory is complete and we are prepared to close the Merchandise, which is done in the manner described in yi. 245. Another Method.—There is another method of treating shipments, which is very little in use; the reason for its not being in use will be readily understood after having read the following description of the method: Charge the person to whom we ship the goods a certain amount which we think will be about what we will realize for the sale of the goods; then, when this person renders to us an Account-Sales of the consignment, debit or credit his account for the difference between the amount we charged him when we shipped the goods and the amount of the net proceeds as shown in the Account-Sales. If the net proceeds be less than the amount we had charged to him, debit Merchandise and credit his account for the difference; if more , debit his account and credit Merchandise for the difference. When this 41 to THE FOUNDATION. 247 SHIPPING BUSINESS.— Continued. method is adopted, the person to whom we ship the goods is charged at the time the goods are shipped, the same as though we had sold him the goods “out and out;” thus an actual sale is recorded in the books w r hen, in fact, it is only an anticipated sale —hence, a false statement. According to this method, when a shipping merchant is financially embarrassed, and wants, for the satis¬ faction of his creditors, to make a “big showing” on his books, if so disposed he may charge the goods, when shipped, at exorbitant prices, and by so doing show (on consignments not yet reported sold) large amounts owing to him by parties to whom he has sold (?) goods. There are, of course, shipping merchants who are not financially embarrassed, who have no desire that their books should represent them worth more than they really are, and who do not charge the goods at exorbitant prices; yet they keep the accounts with the persons to whom they ship according to this method. But to any reasonable mind it will at once be seen that an untrue statement is made in their books; for the books show, in these accounts, a part of the resources of the firm to be personal accounts owing to them which should in reality be a showing of merchandise belonging to the firm. COMMISSION BUSINESS. 246. That business in which we engage for the purpose of selling goods belonging to others—forthe selling of which goods we are to charge a certain percentage on the sales—is called “Commission Business.” The business of a commission merchant consists in disposing of the goods sent to him by a ship¬ ping merchant; hence, in a strictly commission business none of the goods which the merchant has in his store belong to him; therefore he can have no Merchandise account in his Ledger—the accounts representing the gains in his business being “Commission,” “Storage,” “Labor,” etc. The books used principally in this business are: Receiving Book, Sales Book (by some called a “Scratcher”), Consignment Book (or Consignment Ledger), Journal, Cash Book and Ledger. The Journal, Cash Book and Ledger are of the same form as those used in any other business. The use of the Receiving Book, the Sales Book and the Consignment Book will be described under heading of “Receipts.” It will be seen in the two different kinds of business, Ship¬ ping and Commission, that the one is directly the opposite from the other— the shipping merchant being constantly sending out goods, while the com¬ mission merchant is constantly receiving. Therefore, while the Shipping Business is described under heading of “Shipments,” it is thought best to describe the Commission Business under heading of “Receipts.” RECEIPTS. 247. The Receiving Book.—T he Receiving Book is a book upon which a record of the goods received to be sold on commission is first made. A common Journal ruling is suitable for this book. When goods are received to 42 THE FOUNDATION. 248 TO 249 COMMISSION BUSINESS.— Continued. be sold on commission, we give the person from whom we receive the goods a consignment number on this book, and under or opposite this is entered, first the date, then the person’s name and address, and then the description of articles received; after which, as a memorandum, the charges paid for freight, drayage, etc., together with the name of the Railroad or Steamboat Co. from whom received. As soon as the goods are received we stencil on each package the consignment number given them in this book, and they are thereafter known, while in the store and when sales are made from them, by that consignment number, and not by the name of the person to whom they belong. There are many conveniences which arise from this “consignment- number method,” a few of which being: the packages are marked in this manner much quicker than they could be if the owner’s name was used instead; when any of the goods are sold it is much the quicker way to write a Consignment No. on the Sales Book than to write the owner’s name; the salesman may not know to whom the goods belonged, the owner being simply identified by the Consignment No. 248. The Sales Book. —The Sales Book is a small book (ruled in com¬ mon Journal form) used in which to record the on-account sales. When a sale is made on account, the person to whom we sell is charged in this book in the same manner as though the goods belonged to us, excepting that after having recorded the time upon which the goods were sold (30 days, 60 days, or whatever it may be), we add the Consignment No. to which they belonged in order that we may know to whom the sale must be credited. From this book a sale thus recorded is posted to the debit of the person’s account to whom we sold the goods on the Ledger, and to the credit of the owner (the person from whom we received the goods) on the Consignment Book. 249. The Consignment Book. —The Consignment Book is a book in which is kept the progressive sales accounts with the persons from whom we receive goods to be sold on commission. When the consignment is first received, we open an account with the person from whom we receive the goods in this book, entering on the debit side first the date, then the Consign¬ ment No. given by the Receiving Book, then the name of the owner of the consignment, and, lastly, the number and description of the articles. The entry made thus far on this book is simply a memorandum of the goods received from the person, and as such it ever after remains. The further use of this book is described as follows, viz.: To the debit side is posted, from the Cash Book, all the charges we pay on the consignment for freight, dray- age^tc.; and to the credit side is posted, from the Cash Book and the Sales Book, all the sales. When the goods belonging to a consignment have all been sold, we enter on the debit side of the Consignment Book all of our charges , such as Insurance, Storage, Cooperage, Labor, Commission or what¬ ever they may be; after which, we find the difference between the total charges and the total sales, which difference is the net proceeds. We then close up 43 250 THE FOUNDATION. COMMISSION BUSINESS.— Continued. this consignment and transfer the net proceeds to the Ledger, which is done by entering on the Consignment Book, under the charges, “To Net Proceeds” for the amount, which will make the consignment account balance; then, by opening an account in the Ledger with the person from whom we received the consignment, and crediting this account for the net proceeds—the account here opened being debited when we make remittance for same. Our charges for commission, etc., heretofore referred to, maybe at once entered on the Consignment Book and posted directly from this book to the credit of those accounts on the Ledger. As soon as a consignment is “closed out,” i. e., the goods all sold, an Account-Sales must be made out and rendered to the con- signor, which Account-Sales is an exact copy of his account on the Consign¬ ment Book. The person who ships the goods is called the consignor, and the person to whom the goods are consigned or shipped, is called the consignee. The consignee often sells on time unless he has advice from the consignor to the effect that he must sell for cash. If the consignee sells on time it is understood that he (the consignee) takes all risks in collecting the account of the person to whom he sells. After the goods in a consignment have all been sold and an Account-Sales made out, if there were any time sales made the Account-Sales is then averaged, the date found upon which the net proceeds becomes due, and a note sent or draft accepted for the amount. The consignor often makes sight drafts on the consignee “in round amounts,” on consignments not yet entirely sold out; these drafts are paid by the consignee, and of course charged to his account in the Ledger. The commission merchant often receives several consignments from the same person. Although but one account is opened in the Ledger, a separate account must be opened for each consignment in the Consignment Book, and each consignment has a different number; yet each of these Consignment Nos. is identified as belonging to the same person. As these different con¬ signments are closed out, the net proceeds of each are carried to the same account in the Ledger. The reason for keeping each consignment separate is, because the consignor wishes to know upon each consignment how much is lost or gained. 250. Closing Commission Books at the End of the Year.— Unlike any other business, no Merchandise account being kept, the proceedings for closing the books in the commission business differ only in this one particu¬ lar, viz.: no inventory of merchandise is taken, for the reason that the goods in our store do not belong to us. However, an inventory is made of the store and office fixtures, the insurance unexpired, etc., after which a Loss & Gain account is opened, and all the accounts upon which we lose or gain are closed and carried into this account the same as in any other business. At the end of the year there are consignments which have not yet been entirely sold out, and upon which there are, of course, gains to us for commission, etc;—all 44 THE FOUNDATION. 251 TO 253 COMMISSION BUSINESS.— Continued. these charges thus due to us for commission on sales already made, insurance, storage, etc., may be, at the end of the year, debited to the consignments and credited to the different accounts representing same. But this way of doing necessitates the making of additional charges when the consign¬ ments are closed out; therefore, it is the custom to allow these consignments to remain untouched until then, for the reason that by doing otherwise it makes of them “complicated affairs” similar to that described under “Interest Receivable,” 159 . The commission merchant usually procures an insurance policy of a suffi¬ cient amount “to cover any goods he may at any time have in his store.’ When such a policy is procured, he opens an account in his Ledger and styles it “Insurance Receivable,” or some similar title, and to this account he debits the amount paid for premium on that policy. This is called a resource; for to the consignor he charges a certain percentage for insurance, according to the time the goods remain in his store, this Insurance Receivable account receiv¬ ing credit for such amount. At the end of the year, as heretofore stated, the value of the unexpired premium is approximated; after which the Insurance Receivable account is closed the same as described in 188 . There are some consignors who will not permit us to charge for “Insurance;” but an arrange¬ ment is usually resorted to by the consignee through which he can, in spite of the consignor’s protestations, get in all his petty charges, such as insurance, “ratage,” risks on on-account sales, etc., by charging a certain percentage under “Risks,” “Charges,” or some similar title. 251. Trial Balance. —In taking the trial-balance according to this method, we must not only take the accounts in the Ledger and the cash on hand as shown by the Cash Book; but also, find the difference between the two sides of all the unclosed consignment accounts in the Consignment Book, and include all these accounts as well in the trial-balance. 252. There are several different methods of keeping these consignment accounts, but the one here adopted is thought to be the best; for there is no method by which the work can be lessened—less writing done, less entries made—unless it be a business in which they deal mostly in petty consign¬ ments, i. e., small consignments which they usually dispose of at one sale; then the system and form described in 256 and 257 is recommended. 253. Another Method— Proceed according to method described in 247 to 250 inclusive, with the following exceptions, viz.: 1 st.—When goods are received and charges for freight and drayage paid, instead of posting these charges directly to the consignor’s account in the Consignment Book, an extra column is kept in the Cash Book for “Charges.” Into this column are extended all such charges, and at the end of the day, week or month, when¬ ever the Cash Book is closed, the total of this column is posted to the debit side of a “Charges” account in the Ledger—this account receiving credit for such charges when the consignments are closed out, as will be hereinafter 45 253 THE FOUNDATION. COMMISSION BUSINESS.— Continued. described. The difference between the two sides of this account always shows the amounts owing to us for freight and cartage charges on consignments not yet closed out, and, therefore, is a resource. 2 d.—When sales are made from a consignment on account, in addition to crediting the owner on the Con¬ signment Book, a “Merchandise” column is kept in the Sales Book, and all sales are extended into this column; at the end of each month the total of this column is found, and that amount is posted to the credit of a “Merchan¬ dise” account in the Ledger. An extra column is also kept on the debit side of the Cash Book for Merchandise, in which to extend all of the cash sales of the consignments; and, as in the Sales Book, in addition to crediting the consignments for such sales, the amounts of each are extended into this column, the total of same carried forward until the end of the month, and then posted to the credit of Merchandise in the Ledger. 3 d.—When a con¬ signment is sold out, the total amount of the sales of that consignment is posted to the debit of the Merchandise account in the Ledger; then all the charges, such as freight, drayage, labor, commission, etc., are entered on the debit side of the Consignment Book. The difference between the total of these charges and the total sales is now found, and ’that difference, being the net proceeds of the sales, is posted to the credit of the' consignor’s account in the Ledger; after which, the “Charges” account is credited for the freight and drayage charges, and each of our gain accounts, such as Commission, Labor, Storage, etc., is credited for the amount here entered. The difference between the two sides of the Merchandise account, as here used, is a liability ,—being the amount we owe on consignments not yet closed out. At the end of each month, when we take a trial-balance, we must go through the Consignment Book, and on such consignments as have not yet been closed out, find the total sales of each, and include all such amounts on the debit side of the trial balance—these being amounts we owe to consignors for goods we have sold and not yet rendered Account-Sales for, but which have been credited to Merchandise in the Sales Book. The total of these amounts thus taken from the Commission Book should just agree with the difference between the two sides of the Merchandise account in the Ledger. The following forms will illustrate the different styles of rulings used by different commission merchants. 46 i ! 4 f 1 TIIE FOUNDATION. 254 TO 256 COMMISSION BUSINESS. —Continued. 254. Consignment Book. CONSIGNMENT, Date. Cons’t No. Description. Account of c B rL. Pg. Charges: Freight, Drayage, Storage, Insurance, Commission, Net Proceeds, Date. To whom sold. 255. Consignment Book. receipts. Date. No. of Cons’t. Owner. Articles. j No. o| Description. C. B. o L.Pg. Ch arges. Description. II Amount. Freight, Cartage, Storage, Cooperage, Labor, Insurance, Commission, Net Proceeds. . 256. Consignment Book. PERSONAL DEBIT. Date. To Cash. C. B. Folio. Amount. Cl O I Gr IV ivi E N 1 T Date. Cons’t No. Owner, Address and Articles. Gross. 43 THE FOUNDATION, 254 TO 256 Form No. i. SALES. Quantity. Price. Folio S. B. or C. B. Time. Gross Weight. Tare. Net Weight. Amount. • • ♦ 1 Form No. 2. SALKS. Date of Sale. Articles. Price. Amount. Remarks. No. of Description. S. B. or C.B.Pg. * Form No. 3. CREDIT. 1 CONTSIGNnviENTT DEBIT. PERSONAL CREDIT. Tare. Net W’ght. Price. Sales. Amount. Charges. Total Charges. Net Proceeds Freight. Dray age. Sundry. Commission. ■ 49 THE FOUNDATION. 257 TO 259 COMMISSION BUSINESS.— Continued. 257. When Form No. 3 , above shown, is used, the following described method is adopted, viz.: The books are kept by Single Entry. No record is made on this Consignment Book until the goods belonging to a consignment are all sold; then the full record is here made, consisting of the date upon which the consignment was closed out, the Consignment No., the owner’s name, address, and articles received, with weight, price realized, and the total amount for which sold, which amount is the total “Consignment Credit.” Then the charges for freight and Jrayage an transferred from the Receiving Book into the columns here representing same, and our charges are made in the “Sundry” and “Commission” columns; the total charges are now extended into the column representing same, which amount is the total “Consignment Debit.” The difference is next found between the total charges and the total sales, that difference is extended into the “Net Proceeds” column to the per¬ sonal credit of the consignor, and when remittance is made for the net proceeds thus credited, the consignor is debited under the head of “Personal Debit.” So this book is at once a Consignment Book and a Ledger in one; i. e., instead of an account being opened with the consignor in the Ledger, his account appears here in the “Personal Debit” and “Personal Credit” columns. By adopting this method the totals of our “Sundry” and “Commission” columns may be found, at the end of each month, and the amounts thus gained posted to the credit of those accounts in the general Ledger. When we are receiving several consignments from the same person, a page may be reserved for that person and all his consignments entered thereon; and when¬ ever he makes drafts on us “in round amounts” on his consignment account, he is charged under the “Personal Debit” for such of those drafts as we pay. 258. When the method described in 247 to 251 is adopted, either of the forms 254 or 255 may be used. When an amount is posted to the credit side of the Consignment Book, the Sales Book page or Cash Book page upon which may be found the original entry of the sale is here inserted; and when an amount is posted to the debit side of the Consignment Book, the Cash Book page upon which may be found the original entry for the freight and cartage charges is inserted. This same “folio” column is used in which to enter the Ledger page to which we post the credits for our charges for Com¬ mission, Insurance, etc.; and also the Ledger page to which is posted the net proceeds,—it being thought unnecessary to make an entry on any other book before transferring these amounts to the Ledger, as the entry is perfectly clear to us and does not require any elaboration by way of a “Journal entry” before going into the Ledger. 259. It will be seen, in Form No. 1 , that no column is made on the “Sales” side in which to write the description of the articles—the description being already given under “Consignment;” thus all that is required under “Sales” is simply a column for the quantity of the articles sold. In Form No. 2 it will be seen that no column is made on the “Sales” side in which to write the 5o THE FOUNDATION. 260 TO 261 COMMISSION BUSINESS.— Continued. name of the person to whom sold,— it being thought of no concern to the con¬ signor to whom we sell the goods, as we ourselves take all risk in the collec¬ tion of the accounts,—and, further, we do not want him to know who our customers are. An improvement might be made on both forms by consoli¬ dating the two—having no column for the person to whom sold, and having simply a column for the quantity —not the full description—of the articles; with also a column in which to make a memorandum of goods sold on time, as shown in Form No. I. 260. Shipping merchants very seldom do exclusively a shipping business, but carry on, in connection with same, a merchandise, and sometimes a little commission business. Commission merchants very seldom do exclusively a commission business, but, in connection with the same, buy and sell goods “out and out,” and occa¬ sionally do a little shipping; however, this fact of their doing “a little outside business,” as they call it, they do not advertise to the persons who ship them goods to be sold on commission,—in fact, they sometimes crack, if not break, the ninth commandment, when asked by a commission customer of theirs whether or not they handle any goods of their own. The person who is shipping goods to be sold on commission prefers to not send the goods to a commission merchant who transacts a merchandise business and handles the same kind and class of goods; for it is supposed that “human nature” will assert herself and prompt the merchant to “push the sale of his own goods in preference to all others,” and thereby delay the sale of the commission goods. It often occurs, however, that the commission merchant has an order for a certain kind of goods of which he has not a sufficient quantity remaining in a consignment to fill the order; then, to satisfy his customer, he must go out and purchase a sufficient quantity to fill the order. This transaction is, of course, excusable, business-like and just. 261. When the different kinds of busine’ss—Shipping, Commission and Merchandise—are by a merchant conducted in connection with each other, the shipping business must have its “Shipping Ledger,” or else a portion of the general Ledger be reserved for that purpose; and the commission busi¬ ness must have its “Receiving” and “Consignment Books.” Aside from these, the same set of books maybe used for all the different kinds of business. The Consignment Book is by some called a “Sales Book,” but it should not be so called. <* 5i THE FOUNDATION. 262 TO 270 ACCOUNTS WITH ATTORNEYS. 262. Debit for all notes and ac¬ counts we hand to them for collec¬ tion. 263. Credit for all collections bv them made and turned over to us, on such accounts and notes as we gave them for collection. 264. Explanation. —Whenever we give or send an account or a note to an attorney for collection, we open an account with the attorney and debit him for such note or account; then credit the person’s account, or the Bills Receivable account for the amount,—writing on the credit side of such personal or Bills Receivable account the name of the attorney to whom handed, adding “Att’y” after his name; so that we may know, when we refer to such an account and see that it balances, that it is not balanced by payment, but by being handed to an attorney for collection. At the end of the year we require such attorneys to make a statement of the condition and probable worth of all such of our accounts and notes as they have in their hands, and we adjust the amounts to be carried therefrom to the Lost Accounts & Notes account accordingly. The attorney’s account is not balanced, but is allowed to stand as a resource, the same as any other personal account owing us. LOST ACCOUNTS & NOTES. 265. Debit, during the year, for amounts we lose on accounts and notes by persons going into bank¬ ruptcy, making assignments, etc., etc. 266. Debit, at the end of the year, for approximated loss on worthless and part-worthless accounts and notes. 267. Credit for amounts that are afterwards paid on accounts and notes which we had heretofore called worthless and debited to this account. 268. CLOSING. —This account is closed the same as “Salaries” account. (See 202 .) 269. EXPLANATION. —This account is kept in order to show, at the end of the year, how much we have lost during the year in poor accounts and ' notes. During the year we debit this account for all absolute losses on accounts and notes. 270. Accounts. —At the end of the year, before closing our books, we take the Ledger, and beginning with the first account therein, go through the entire book, carefully examining every account. It is wrong to take in 52 THE FOUNDATION. 271 TO 272 LOST ACCOUNTS & NOTES.— Continued. the trial-balance at the end of the year, as Resources, such accounts as we know to be absolutely worthless, and such accounts for their full face as we know to be worth only a small per cent, on the dollar; therefore, when we come to an account we consider entirely zvorthlcss, we credit that account, in red ink, “By Lost Accounts & Notes” for the entire amount, balance the account thus closed and carry the amount to the debit side of “Lost Accounts & Notes account,”—writing on the debit side of that account the name of the person upon whom the amount was lost. Such accounts as we think not entirely worthless we estimate the value of, credit same, in red ink, “By Lost Accounts & Notes” for amount considered worthless, and carry such amounts over to the debit side of Lost Accounts & Notes account. The accounts in the hands of attorneys are treated in the same manner. 271. NOTES. —Having thus disposed of the accounts in the Ledger, we take the notes on hand (Bills Receivable) and examine them closely. If we find any we know to be worthless, we debit Lost Accounts & Notes account, and, in red ink, credit Bills Receivable account for such amounts,— putting all such notes in an envelope, on which we mark “Worthless Notes.” If we find a note which we think is not worth its full face, we approximate the value thereof, and for the amount considered worthless we debit Lost Accounts & Notes account, and, in red ink, credit Bills Receivable account; after which we may write on a slip of paper, “$. thrown off as worth¬ less,” with date, pin the slip on the note and put it with the notes considered good. 272. When we thus, at the end of the year, carry losses on accounts and notes to this account, we do not transfer the amounts direct, as might be inferred by reading thus far; but we first make a journal entry, with complete explanation accompanying, so that if we ever were obliged to take our books into court to prove these accounts, they would in this entry show what these credits were. The journal entry here referred to may be made in something of this manner: First, write the date at the top of the page, then below this write, “The following amounts on accounts and notes are this day by us considered worthless , and are, in consequence, here charged to Lost Accounts & Notes account.” Under this heading make the journal entry thus: “Lost Accounts & Notes Dr. to Sundries;” after which, first enter the names and amounts of all personal accounts called worthless; then, the amounts called lost on accounts and notes in the hands of attorneys—entering first the attor¬ neys'’ names; then, as an explanation, the names of the persons upon whom the accounts or notes are lost; then the amounts called lost on our Bills Receiva¬ ble—writing first “Bills Receivable,” then, as an explanation, the names of the makers of the notes, with date and time upon which the notes are drawn. We now find the sum total of all these doubtful accounts and notes thus sacrificed, and enter the same in the debit column on the same line with “Lost Accounts & Notes Dr. to Sundries;” after which, we open a Lost 53 THE FOUNDATION. 273 TO 274 LOST ACCOUNTS & NOTES.— Continued. Accounts & Notes account in the Ledger, and, in black ink, either post to the debit side of same the total amount thus lost in one entry, or copy from the Journal each name and amount. The latter is recommended as the better way, as we often have to refer to this account, and it is better to have in the Ledger an itemized record of the amounts lost on accounts and notes. After having thus posted the debit, we proceed to credit each of the accounts here specified, upon which these amounts were lost. We credit the accounts in red ink, so that such entries may be more conspicuous; otherwise, in passing our eyes hastily over such accounts, we might think these amounts were payments. We may write on these accounts, as explanation, either “By Lost Accounts & Notes,” or “Called Lost.” It sometimes occurs that we carry an account along for several years, throwing off little by little at the end of each year, until finally “Patience ceases to be a virtue,” and we “throw it all to the dogs.” 273. PAYMENTS. —If a part of any of the accounts or notes which we had called entirely zvorthless should ever thereafter be paid, we credit the Lost Accounts & Notes account for such payments. When payments are made on any of the accounts or notes we called only part zvorthless , we first credit the personal account or Bills Receivable, whichever it may be, until the amount which we called good is all paid, and afterwards we credit the payments to the Lost Accounts & Notes account. A memorandum may also be made in lead pencil on the accounts, for payments on those which were by us called worthless. 274. This account is finally closed and carried into Loss & Gain account, the same as any other upon which we lose. Most business houses call this account “Suspense,” but the title here used is thought to be more expressive. Some houses balance all the doubtful accounts, whether worthless or only part worthless, and carry the total amounts of such to the Suspense account; afterward debiting Loss & Gain and crediting Suspense for an approximated per cent, of the total amount thus carried to Suspense, and calling the balance of the Suspense a resource, or the amount thought by them collectible. Some of the smaller business houses carry the amounts lost on poor accounts and notes direct to the Loss & Gain account. The system herein recommended is thought to be better than either of these, for the reason that the amounts we know to be entirely worthless, we at once call so and make an entry accordingly; and of those accounts we think to be only part worthless, we carry amount thought worth¬ less to an account representing the loss, and allow the amount called good to remain in the original account; thus, instead of “flooding” our Loss & Gain account by carrying each of these accounts therein, we simply carry to the account the grand total of such loss. 54 THE FOUNDATION. 275 TO 282 LOSS & GAIN. 275. Debit, at the end of the year, for all accounts upon which we have lost during the year—writing here, in black ink, the names of the accounts upon which such losses were sus¬ tained, and the amounts. 276. Credit, at the end of the year, for all accounts upon which we have gained during the year—writing here, in black ink, the names of the accounts upon which such gains were made, and the amounts. 277. Directions for closing the Loss & Gain account at the end of the year: a. —After all the accounts upon which losses and gains have been made are transferred as directed in 275 and 276 , then find the difference between the two sides of this account. 278. Closing No. 1 .—If the credit side be the larger, the amount the credit exceeds the debit is the net gain for the firm, or the net business gain. We then divide this gain among the proprietors, pro rata or equally, accord¬ ing to agreement at commencement of business, and write on the debit side of this account, in red ink , the names of each of said proprietors,—adding “Private account” after each, and extending into the money column the respective shares of the net gain. This having been done, the account will balance. 279. If the debit side be the larger, the amount the debit exceeds the credit is the net loss for the firm, or the net business loss. We then divide this loss among the proprietors pro rata or equally, according to agreement at commencement of business, and write on the credit side of this account, in red ink , the names of each of said proprietors—adding, after each, “Private account,” and extending into the money column their respective shares of the net loss. This account will then balance. 280. Closing No. 2 .—The same as Closing No. 1 in every particular except¬ ing one—that of adding “Stock account” after the names instead of “Private account.” b. —Rule the closing lines and write the total amounts between these lines. 281. c. — Closing No. 1 .—If there be a net business gain , carry over to the credit sides of the respective Private accounts of each member of the firm, the respective shares of such gain (as indicated in red ink on the debit side of this account)—writing on the credit sides of these Private accounts, in black ink, “By Net Gain,” or whatever the proportion may be. (See 61 .) 282. If a net business loss, carry over to the debit sides of the respective Private accounts of each member of the firm the respective shares of such loss (as indicated in red ink on the credit side of this account) — writing on the debit side of these Private accounts, in black ink, “To fi Net Loss,” or whatever the proportion may be. (See 60 .) 55 THE FOUNDATION. 283 TO 290 LOSS & GAIN. —Continued. 283. Closing No. 2. —If there be a net business gain, the respective shares of such gain are carried direct to the credit sides of the respective Stock accounts of the members of the firm, instead of to the Private accounts, as in Closing No. i. (See 54-) 284. If a net business loss, the respective shares of such loss are carried direct to the debit sides of the respective Stock accounts of the members of the firm instead of to the Private accounts, as in Closing No. i. (See 53 .) 285. The difference between Closing No. 1 and Closing No. 2 is as fol¬ lows: In the former we carry from the Private accounts the net private loss or gain to the respective Stock accounts; in the latter, we first carry the net business loss or gain from the Loss & Gain account to the respective Stock accounts, and then we carry to the same (Stock) accounts the amount by each drawn out for private use, as shown by the Private accounts. 286. Single Proprietor. —If there be but a single proprietor in the busi¬ ness, instead of carrying the net business loss or gain to his Private account, the Private account may be closed and carried over to the debit side of Loss & Gain account with the other accounts upon which he loses, then the Loss & Gain account closed and his net private loss or gain, as shown by this account, carried to his Stock account. Otherwise, the account may be closed as described in 277 to 28 ^. _______. 287. Explanation.— Loss & Gain account, or Profit & Loss, as it is sometimes called, is an account kept to show the final summing up of all our losses and gains during the year. Some business houses make several entries to this account during the year, but it is the better way to carry the losses and gains into other accounts until the end of the year, and then to carry these accounts into the Loss & Gain account. (See 275 and 276 .) A business man wants to know as often as once in twelve months, and sometimes oftener, how much he has gained or lost in his business. In order to ascertain this, it becomes necessary, first to take an inventory and then to “close the books.” 288. If the books are closed semi-annually, or oftener, the phrase “at the end of the year,” heretofore used, applies to the time the books are closed, regardless of the actual end of the year. THE END OF THE YEAR. Directions for Closing the Books.— 289. First .—Take an inventory of all the merchandise, store and office fixtures, real estate, buildings, unexpired insurance, unexpired taxes, etc., etc. Then close all these accounts as' per instructions on each. (See 71 , 95 , 100 , 106 , 185 , 188 and 200 .) 290. Second— Sacrifice all the worthless and partly worthless accounts and notes as per instructions in 270 and 271 . 56 THE FOUNDATION. 291 TO 295 THE END OF THE YEAR. —Continued. 291. Third —Close all accounts in the Ledger upon which losses or gains have been made, and transfer such losses and gains to the Loss & Gain account. (See 275 and 276 .) For full instructions read paragraphs 15 to 19 , inclusive. A beginner, in closing books, frequently closes and carries over to the Loss & Gain account, accounts that he should not, and does not close and carry to that account, accounts that he should; but, if he will thoroughly read paragraphs 15 to 19 , and follow the instructions found therein, he will experience no difficulty in this line. We allow the Lost Accounts & Notes account to stand until the last, and finally close that account also and carry it into the Loss & Gain account. 292. In closing the books at the end of the year nothing must be left in the Ledger but Resources and Liabilities; and nothing must be carried into the Loss & Gain account but Losses and Gains. (See Ledger under “The Corner Stone.”) 293. Fourth. —Having thus carried over to the Loss & Gain account all the accounts upon which we have lost or gained, we find the difference between the two sides of this account, which difference is either our net busi¬ ness loss or our net business gain ,—we then dispose of that loss or gain accord¬ ing to instructions found in paragraphs 278 to 284 . 294. When a transaction is posted, the same amount is entered in the debit side of the Ledger that is entered in the credit side (see 28 )—there¬ fore, if no mistakes are made, the two sides of the Ledger, at the end of each month, should exactly agree. I say “at the end of each month,” because there are very few houses who do not reserve the debit and credit to Mer¬ chandise until that time, and then post the total for the month in one entry to that account. They often have several extra columns in their Cash Books and Journals for different accounts, which necessitates but one posting per month to each of these accounts; then, of course, the Ledger would not bal¬ ance until all these totals were posted. By thus having these extra columns, double entry book-keeping is reduced to the simplicity of single entry, with very little additional labor. 295. When we close an account, and carry the amount to some other account, we always carry the amount to the same side of the Ledger on which it was before; therefore, the Ledger is never thrown out of balance by the closing of an account. For example: If the debit side of the Expense account be the larger, we close this account and carry the amount to the debit side of Loss & Gain 'account; if the credit side of Interest account be the larger, we close this account and carry the amount to the credit side of Loss & Gain account. THE FOUNDATION. 295* AND 295| ELIMINATION. 295£. Any abbreviation is, of course, a violation of the set rules of orthography. Such violation, however, may be pardonable in cases of emer¬ gency or necessity. We frequently have occasion to make memoranda, and sometimes to take notes, or “jot down” what another person says. Whenever such is the case, the following mode of abbreviation will be found of great service, inasmuch as it will enable us to write with a much greater degree of rapidity, and con¬ sequently to accomplish our work, and complete what we have to write, in a correspondingly short space of time. Rule: Omit vowels and silent conso¬ nants. Example, the above: “Ny abrvtn s, f crs, a vltn f th st rls f orthgrphy. Sch vltn, hwvr, m b prdnbl n css f emrgncy r ncssty. W frqntly hv occsn t mk mmrnda, nd smtms t tk nts, r ‘jt dwn’ wht anthr prsn ss. Whnvr sch s th cse, th flwng mde f abrvtn wl b fnd f grt srvc, insmch s t wl enbl s t wrt w a mch grtr dgre f rpdty, nd cnsqntly t accmplsh r wrk, nd cmplt wht w hv t wrt, n a crspndgly shrt spc f tm.” It will be seen that sometimes one consonant, or one combination of con¬ sonants, will stand for several words, as, for instance: “t”—it, at, to; “s”—is, as; “f”—if, of, off; “w”—we, with ; “nd”—and, need ; “fnd”—find, found. The words preceding these consonants help to determine which words the consonants stand for, consequently no difficulty is experienced in reading the words thus abbreviated. Not only is there a saving of time in the omission of letters, but also in the dotting of “i’s”; each of the latter being fully equal to the making of a letter. To show that this is not an insignificant i-tem, it is only necessary to add that in the original of the above example there are twenty-nine i’s, while in the illustration there is but one i. After a person has become familiar with this mode of abbreviation, he can better appreciate its value. The same can also be used in either business or private correspondence between any two persons who each possess a copy of this book and have carefully read this article. Nearly the same rule is observed in this style of writing as is observed in advanced phonography or short-hand, namely, that of omitting vowels and silent consonants. Therefore, it will be seen that the principle upon which this mode of abbreviation is based is a practical one. CALENDAR. 295f. On a calendar where the figures are large, instead of erasing the same with a pencil as the days pass, do as follows : cut several square pieces of paper to about the size of the squares in which the figures representing the days of the month are printed; then, each morning, take one of these pieces of paper, and, after putting a little mucilage on it, paste it over the date just passed. This not only more effectually and neatly covers up the tracks of the past, but with more precision and dispatch directs the eye to the present date. V 53 296 TO 298 Double Entry Book-Keeping. THE TRIAD BALANCE. 296. The Trial Balance—the joy and delight (?) of every book-keeper! There is no rule or combination of rules with which a book-keeper can at once locate an error in his trial-balance. I wish there was, and that I were the sole possessor of that rule;—every book-keeper would then agree with me in this one fact; that I had, in the possession of that rule, an independent for¬ tune ; for no book-keeper would be without it, even at a cost of $io. How¬ ever, it may be well to give here a few hints with regard to finding errors. 297. In Round Numbers. —If the difference be in round numbers, as $io, $100 or $iooo, the error may have been made in addition or subtraction. If Divisible by 9 .—If the difference be divisible by 9 , the error may have been made in the transposition of figures. If Divisible by 2 .—if the difference be divisible by 2 , the error may have been made by posting an item representing just one-half the difference to the wrong side of the Ledger. Aside from the above three, there may be “a thousand and one” rules with which to detect errors in Trial Balances, but they are all of no practical use; for if the book-keeper, after having applied them all, still does not find the error, he is obliged finally to resort to the simple method of “checking off;” and he then realizes that all the time spent on those “rules” was time thrown away; so it is better to proceed at once with the COMMON-SENSE METHOD OF DETECTING ERRORS. 298. 1 st.—See whether or not the balance of cash on hand, as shown by the Cash Book, is taken in the Trial Balance. 2 d.—See whether or not, on the Cash Book, Journal and such other books as you post from, every debit and credit is checked as having been posted to the Ledger; i. e., see whether or not for every debit, a credit has been made for a like amount, and for every credit a debit. 3 d.—See whether or not any mistakes have been made in addition, or in carrying forward the totals on the Trial Balance. 4 th.—Take the Ledger, and from the beginning of the same, examine the addition and subtraction of every account, and if there be any accounts which have been balanced and carried forward to a new page, see whether the cor- 5 9 DOUBLE ENTRY BOOK-KEEPING. 299 TO 302 rect amount has oeen transferred; and finally, see whether or not the proper amount is entered in the proper column on the Trial Balance. 5 th. — See whether or not any mistakes have been made in addition, or in carrying forward the totals on the Journal. 6 th and last. — Examine the posting Tor the entire month from the begin ning, — seeing whether or not the proper amounts have been posted to the proper side of the Ledger. In thus examining the posting, it is well to check off in the Ledger, with a hard lead pencil, the items as soon as found to be correct. If the error is not found after the foregoing “program” has been exhausted, there is no other recourse but to go over it again and again until the error is found. It sometimes occurs that a book-keeper will pass over an error several times before discovering it. 299. The Trial Balance is simply a copy of the accounts in the Ledger. If the debit side of an account be the larger, find the difference between the two sides and enter it in the left hand or debit column on the Trial Balance; and if the credit side of an account be the larger, find the difference between the two sides and enter it in the right hand or credit column on the Trial Balance. As the Trial Balance is neither more nor less than merely a copy of the Ledger, in the debit column there must be nothing but Resources and Losses, and in the credit column nothing but Liabilities and Gains. • (See 41 and 42 .) 300. The monthly Trial Balance is taken simply to ascertain whether or not the books balance; therefore, all that is necessary at the end of each month prior to the time when the books are closed, will be merely to take the figures to the Trial Balance, since it is a waste of time to write the names of all the accounts. (See 808 for this form.) Some business men require the book-keeper to write on the Trial Balance the names of all the accounts as well as the amounts, believing that by so doing the book-keeper cannot con¬ ceal any “ways that are dark and tricks that are vain;” but this is a great mistake, for if a book-keeper is disposed to be “crooked,” the most complete Trial Balance that ever was made would never exhibit the “crookedness.” 301. At the end of the year, before the books are closed , the book-keeper ascertains whether his books balance by taking a Trial Balance in figures; and after the books have been closed fie takes a Trial Balance, writing the names of all the accounts, as well as the amounts. So a Trial Balance consisting of the names, as well as the amounts, is made only immediately after the books have been closed. (See 810 for this form.) There are many houses, however, that require such a Trial Balance at the end of every month. 302. In adding the money columns in the Ledger, write the totals in small figures in lead pencil, close under the last amount in the column; by so doing it is never necessary at the end of each month to add back of these amounts, but simply to add the entries for the month, including the lead pencil totals, which amounts to the same as it would by adding the entire column from the top. After the two columns have thus been added, simply 60 DOUBLE ENTRY BOOK-KEEPING. subtract from one side to the other the lesser amount of these totals from the greater, and enter the difference in the explanation, or wide column, on the side upon which is the greater amount, which difference we transfer to the Trial Balance. (See 694 and 701 .) This difference is entered in the explana¬ tion column simply as a memorandum showing the amount carried to the Trial Balance. Business colleges have in their Trial Balances two columns in which they enter the debit and credit total amounts , and two columns in which they enter the debit and credit differences, which makes a double Trial Balance, hence unnecessary work. For these additions and subtractions in the Ledger I would recommend a “Faber HHHH Drawing” pencil, as it is hard and makes a neat, clean mark. 303. After the Trial Balance has been completed, a statement may be made in the firm’s private record book, consisting of the present Assets and Liabilities; the Losses and Gains for the year; each member’s private gain or loss for the year, and his present worth; together with the percentage of the gross gain, as well as the net gain, to the sales for the year. (See 812 to 818 .) This kind of a statement is much more satisfactory to the business man than the elaborate “chromo” gotten up by business colleges' and called by them a “Balance Sheet.” 304. PAST-DUE ACCOUNTS. —To all firms doing only a moderate busi¬ ness, that do not draw for or settle by note their customers’ accounts when due, the author would suggest that the book-keeper prepare, on the first of every month when he takes his Trial Balance, a list of the accounts that are long past due—entering, with the person’s name and the amount he owes, the number of months that this account averages over due. Would recommend a book ruled in Journal form and labeled “Past-Due Accounts,” for this use. This book or list he submits to the firm for examination, when they decide what disposition shall be made of the accounts. By so doing an account can¬ not stand several months past due in the Ledger without the knowledge of the firm; for it is brought before them every month, and many accounts may be saved that otherwise might be lost. It is not necessary for the book¬ keeper to ascertain the exact average, but simply to look over the accounts and approximate the average. 303 TO 305 RED INK PROMISES. 1 305. The red ink entries that are made in the Ledger, will, in this work, be styled, “Red Ink Promises,” the reason for which will be clearly percepti¬ ble to the pupil after having read this article. Beginners in the practice of book-keeping frequently close an account in red ink, and neglect to bring down or carry forward the balance; and for such persons this article is pre¬ pared. With the single exception in par. 270 and 271 , red ink entries are never made in the Ledger except when we wish to balance an account and bring 61 DOUBLE ENTRY BOOK-KEEPING. 306 TO 308 down below the closing lines or carry forward to a new page the amount for a new account; or, to carry the amount to some other account,—or both, as is the case with the closing of the Merchandise account at the end of the year. Therefore, when we balance an account with a red ink entry, we promise that account that after having ruled the_closing lines, we will dispose of its value as indicated in the red ink entry, in one or more of the following ways: 1 st.—If the red ink entry be “By Inventory,” we promise the account that we will, after having closed it, bring down on the debit side below the closing lines the value of that inventory. 2 d.—If the red ink entry be “By Loss & Gain” or “To Loss & Gain,” we promise the account upon which we write this, that we will transfer to the Loss & Gain account the amount here indicated as lost or gained. 3 d.—If the red ink entry be “By Private account” or “Stock account,” or “To Private account” or “Stock account,” we promise the Loss & Gain account that we will transfer the net gain or loss to that account. 4 th.—If the red ink entry be “By Balance” or “To Balance,” we promise the account that we will, after having ruled the closing lines, either bring down below these closing lines, or carry forward to a new page, the difference between the two sides of the account, as indicated in the red ink entry. 306. Plaving closed an account with a red ink entry, we always carry for¬ ward or bring down the amount directly to the opposite side of the Ledger from that upon which the red ink entry was made. 307. If these red ink promises are at all times fulfilled, the balance of the Ledger will never be affected by a red ink entry. On the other hand, any failure on our part to fulfill any of these promises insures for us a punishment when we take our Trial Balance at the- end of the month; for we may then be obliged to spend several hours in finding the account against which we “com¬ mitted the offense.” 308. Balancing an Account. —When an account has filled a page and we wish to transfer it to a new page, we simply find the difference between the two sides and close the account as follows: Credit. —If the credit side be the larger, write on the debit side, in red ink, “To Balance,” for the sum of the difference, which will make the account balance; then rule the closing lines and write the total footings between the lines; after which, open a new page for the account, and write on the credit side of that account, in black ink, “By Balance” for the balance brought for¬ ward—writing on the old the page to, and on the new the page from which the account is transferred. Debit. —If the debit side be the larger, write on the credit side, in red ink, “By Balance” for the sum of the difference, which will make the account balance; then rule the closing lines and write the total footings between the lines; after which, open a new account and write on the debit side of that account, in black ink, “To Balance” for the balance brought forward—writing on the old the page to , and on the new the page from which the account is transferred. 62 DOUBLE ENTRY BOOK-KEEPING. 309 TO 311 ON FILING BILLS. 309. When you enter your invoices only two or three times a month, the author would recommend the following described method of filing them as .the most economical, simple, and very best; because an invoice may be found in this way sooner than in most any other. First arrange the bills in alpha¬ betical order, according to firm names; then each firm's bills in order of date; then enter them on the Journal under the Journal entry heading “Mdse. Dr. to Sundries;” then get an “Emerson’s File and Binder,” letter size, or one similar, place a piece of heavy paper on the bottom about the size of a large sheet of letter-paper, after which file the bills—the last letter in the alphabet first, and so on until you have them all in the file; then file another piece of heavy paper on the top, after which the volume may be taken from the file, and, after fastening, labeled in the following described way: First, “Invoices,” then the month and year, and lastly the Journal No. and Journal page upon which these bills were entered.. For example: Invoices—March, 1879 —A .—124 and 125 . Now, when these bills are posted to the Ledger, and we want to find a certain bill, we refer to the credit side of the firm’s account in the Ledger and find the Journal page upon which the bill was entered; then look for the file of bills which has on it this Journal page, when, as they are arranged in alpha¬ betical order, the bill may be easily found. When there are too many bills to get into one volume, divide and bind them in two or more volumes; but never divide a page—divide the bills according to the Journal pages, and not according to the number of bills. ON COPYING LETTERS. / 310. In copying letters in a letter-book, get a set of good, clean blotters, throwing away the oil-board. A much clearer copy can be made by using blotters, and the copy is never so blurred and blotted that it can scarcely be read, as is often the case when oil-board is used. Use the blotters in the same manner as you used the oil-board. DIRECTIONS FOR OPENING A SET OF DOUBLE ENTRY BOOKS FOR A FIRM JUST STARTING IN BUSINESS. 311. In opening a set of double entry books for a firm just starting in business, a statement of the actual assets and liabilities by each member invested should be made before an entry is made on the books. Then a sepa¬ rate entry should be made in the Journal for each member of the firm for such investment. When two or more persons first enter into a copartnership busi- 63 % 312 DOUBLE ENTRY BOOK-KEEPING. ness, under a certain firm name, the individual assets by each invested become the firin's assets; and, therefore, the assets by each invested are debited to the firm’s accounts representing assets; — and the individual liabilities by each invested become the firms liabilities; therefore, the liabilities by each invested are credited to the firm’s accounts representing liabilities; then the firm becomes indebted to each member of the firm for the amount that the indi¬ vidual assets by each invested exceed the individual liabilities; consequently, each member must be credited for the difference between his total individual liabilities and his total individual assets. When the entries have been made in accordance with the foregoing remarks, the Ledger will balance and we may proceed according to the rules of double entry. (See 49 and 56 .) For a complete illustration, see 347 ^ to 369 . DIRECTIONS FOR CHANGING A SET OE BOOKS FROM SINGLE ENTRY TO DOUBLE ENTRY. 312. The proceedings for changing a set of books from single entry to double entry are as follows, viz.: 1 st.—Take an inventory of all the merchandise, store and office fixtures, fuel, real estate, buildings, unexpired insurance, unexpired taxes, bank or other shares, and whatever other values the firm may have; open an account in the Ledger for each, and debit all such accounts for the total value of each as represented by the inventory. 2 d.—Open a Bills Receivable account in the Ledger and enter on the debit side of that account‘all the unpaid notes (that we call good) held against others. (See 107 .) If the parties from whom we received these notes were not credited for such notes at the time they gave them to us, they should be credited when the Bills Receivable account is opened. 3 d. — Open a Bills Payable account in the Ledger, and enter on the credit side of that account all the unpaid notes we have outstanding, made by us payable to other parties. (See 129 .) If the parties to whom we gave these notes were not charged for such notes at the time they were by us given to them, they should be charged when the Bills Payable account is opened. 4 th-—Open a Cash Book and enter on the debit side the total amount of cash on hand and in the bank; then proceed with this book according to instructions in paragraphs 13 and 75 to 86 . 5 th.—Open such accounts in the Ledger as you wish to keep to show your expenses during the year, such as Expenses, Salaries, Advertising, etc., etc. (See 194 .) 6 th. — Open an Interest account in the Ledger and use it according to instructions in paragraphs 144 to 154 . ' 64 DOUBLE ENTRY BOOK-KEEPING. 7 th.—Now find the actual present worth of the firm by taking a Trial Bal¬ ance, consisting of the names and amounts of all the accounts in the Ledger representing resources and liabilities, including the accounts just opened. In the single entry Ledger, as formerly kept, appear all the personal accounts owing to, and by the firm—which accounts would of course be included in the Trial Balance as a part of the firm’s assets and liabilities. Having thus copied into the Trial Balance all the accounts in the‘Ledger representing resources and liabilities, we find the sums total of the two columns, and the amount the debit column (representing resources) exceeds the credit column (representing liabilities) is the net present worth of the firm — which net pr esent worth should exactly agree with the sum total of the value of all the members’ Stock accounts. 8 th.—Having made the sum total of the members’ Stock accounts agree with the sum of the net present worth of the firm, the Ledger will balance and we may then proceed according to the rules of double entry. 313. Some firms adopt a system of book-keeping which is neither single nor double entry, but “betwixt and between.” It is single entry with a few conveniences borrowed from double entry. For example: Many keep a Cash Book, an Expense account, so that they may see what their expenses have been during the year, and all keep Private accounts for each member of the firm, which they treat as described in paragraphs 57 to 65 . 314. It is quite as easy to ascertain how much is lost or gained by the firm in the business by single entry as by double entry. In single entry the business man knows how much he is worth at the beginning of the year, and by taking an account of all his resources and liabilities at the end of the year, he may ascertain how much he is then worth—the difference between the amount worth at the beginning of the year and the amount worth at the end of the year being the net gain, or the net loss. 315. The phrase “at commencement of business,” used throughout “The Foundation,” may in every instance be applied to the entries made in chang¬ ing a set of books from single entry to double entry. 313 TO 316 1 ON TAKING IN A NEW PARTNER. 316. In taking a new partner into the concern, the strictly proper way to do is to close the books at the time the partner is received, in order that an exact statement of the present condition and worth of the firm may be attained; a Trial Balance exhibiting the same may be made and submitted to the new partner for inspection, in order that there may be no misunder¬ standings. When this is done the Ledger exhibits nothing on its face except¬ ing those accounts which are either Resources or Liabilities; and also shows the present net worth of each of the old partners. The new partner is then 65 317 to DOUBLE ENTRY BOOK-KEEPING. 319 credited with his net investment; after which, the gains and losses of the new firm are shared proportionately according to mutual agreement. In illustra¬ tion of this method see 347 | to 369 . 317. Some firms, in taking in a new partner, simply take an inventory and make a statement of the actual present'standing of the old firm; not closing the books, but allowing all the accounts upon which losses and gains have been made to remain open until the end of the year. The former method is the better one, for the reason that there can afterwards be no dispute among the partners with regard to the relative individual standing of each at the time of the commencement of business under the new copartnership. INVESTMENTS. 318. Investments are made in several different ways, a few desciiptions of which are here given: 1 st.—The partners invest equally, and share equally in the losses and gains. After the partners first enter into business their interests in the firm are constantly changing, so at the end of the first year, when the books are closed, there may be a wide difference between the then present worth of each. The partners who have the larger interest in the business sometimes require those who have the smaller to pay interest to them on the surplus capital; but there are some who are more lenient with their unfortunate (but perhaps extravagant) co-workers, and do not require them to pay interest on the surplus. 2 d.—Capital is sometimes invested against Experience,—the partner investing the money having no experience in the business in which he enters, and the partner having the experience investing no money. All the money invested is of course credited to the party who invests it, the party who has the experience sharing a certain proportion of the gains or losses of the firm. 3 d.—Partners sometimes invest unequally and share the gains and losses pro rata , according to investment. 319. 4 th .—Interest on Surplus Capital .—Partners sometimes invest une¬ qually and share the gains and losses equally,—the partner investing the lesser amount paying the partner investing the greater, interest on his surplus capital. When this is done the partner who has the lesser amount invested, pays to the partner who has the greater interest on only one-half of the dif¬ ference ’, for the reason that it is the same in effect as borrowing so much money; and by borrowing an amount equal to one-half the surplus, lessens the investment of the partner who has the greater amount invested just that amount, and increases the investment of the partner who has the lesser amount invested the same amount, so that they then have an equal interest in the firm. 66 DOUBLE ENTRY BOOK-KEEPING. 320 TO 321 WHAT A BOOK-KEEPER SHOULD DO IN TAKING A SET OF BOOKS FROM ANOTHER BOOK-KEEPER TO KEEP. 320. In taking a set of books from another book-keeper to keep, you should first take a Trial Balance to ascertain whether or not the books bal¬ ance. If they do not, the proprietors should be informed of the fact, and that they must be made to balance before proceeding. The next thing will be to look over the index to the Ledger and find out what other than personal accounts have been kept, so that you may know into what accounts Expense has been divided; for in some houses Expense is divided into several accounts, such as Freight, Insurance, Advertising, Salaries, etc., etc., while in others all expenses are entered under one heading. If you come across an account you never saw before, and which is peculiar to this business only, you must ascer¬ tain for what that account is used. Examine all the books in use, in order to get an idea of the system practiced prior to your taking charge of the books —learning all you can from this system, and noting the points where improvements may be made. After this, ask for the notes held against others (Bills Receivable). Look over these notes and arrange them in order as they become due. If among these notes there are any having indorsers , you should not fail to present them to the makers for payment before three o’clock P. M. on the day they fall due; and if not paid upon presentation, to have them protested immediately before a notary public. Failing to do this, all the indorsers are released, and the firm may look only to the makers for payment, and if they be not able to pay, the notes are simply worthless. In some States, however, it is not necessary to have notes bearing indorsers protested in order to hold the indorsers. The better way is to discount notes in the bank ten or fifteen days before due; then, if they are not properly attended to, the bank is responsible. UNNECESSARY WORK TAUGHT IN THE BUSINESS COLLEGES AND PRACTICED BY MANY EXPERIENCED BOOK-KEEPERS, AND HOW TO AVOID IT. 321. In many business colleges students are taught to balance the Ledger accounts every month and bring down the balances. This idea is absurd; for in some business houses, where they have several thousand accounts, it would require a month’s time for a book-keeper to do this wholly unnecessary work. Excepting at the end of the year, when we close all accounts except those which represent Resources and Liabilities, we never close an account “To Balance” or “By Balance” until the page is full and we wish to transfer the account to a new page (see 308 ); or, unless an account with a person be dis- 67 322 to DOUBLE ENTRY BOOK-KEEPING. 323 continued, and then, as this account balances, we simply rule the closing lines and enter the totals between these lines. 322. It is also unnecessary work to rule Ledger headings, although the Ledger looks a little better thereby, and it might be done when the book¬ keeper has plenty of spare time. When we do not rule Ledger headings for the accounts opened below the top ruling, we simply write the name of the account over the center ruling and proceed on the next line below with the entries. Some Ledgers are ruled for one, two, three and four accounts to the page; but it is better to have one common full-page ruling through the entire book, since by so doing we economize in Ledger paper and have all the accounts together. When we open an account we must calculate about how much space it may require, and allow so much space before opening another on the same page. Some accounts require several pages, while others require but a few lines. 323. Another absurdity that business colleges practice in their system of book-keeping is this: They teach students to write opposite each amount posted to the debit, side of the Ledger, the name of the account which is credited for that amount, as an explanation; and opposite each amount posted to the credit side of the Ledger, the name of the account which is debited for that amount, as an explanation. Think of the time it must require to fill the two explanation columns alone in the Ledger! When we sell a bill of goods we always either give the person a bill, or enter it in an account book which he carries for that purpose; so that when we render to him a statement of his account, he does not need any further explanation of the charge than simply the dates and the amounts. When he makes a payment, either by cash or note, he takes a receipt from us, — so what further explanation does he want of the credits than simply the dates and amounts? On the debit side of our customers’ accounts in the Ledger we seldom charge anything else than Merchandise, and when we do we make the explanation in abbrevi¬ ation, thus: “Frt.,” instead of “To Freight and Cartage;” “Int.,” instead of “To Interest,” etc., etc. On the credit side of our customers’ accounts, when we have any other credit than Cash, we make the explanation the same as on the debit side, in abbreviation, thus: “M.,” instead of “By Merchandise;” “Note, 6o ds.,” instead of “By Bills Receivable,” etc., etc. On the debit side of our creditors’ accounts we seldom make any other charge than Cash; and, on the credit side, any other credit than Merchandise; when we do we make ' the explanation in abbreviation. We very rarely need any further explanation in the Ledger than that which we have explained in the foregoing lines; but if we do, we refer to our Journal, which requires not more than one-thousandth part of the time it takes to write out all the explanations. Instead, therefore, of filling the debit and credit explanation columns in the Ledger, we leave them blank,— simply entering the date, Journal or Cash Book page and amount, when we post. The business man , or thoroughly practical book-keeper , has no time to waste by writing more than one explanatio?i of an entry in his books . 68 DOUBLE ENTRY BOOK-KEEPING. Experience teaches the common-sense book-keeper how to economize work on his books; and he soon learns to dispense with all unnecessary labor. Old “habits” will sometimes cling to him for years, but he finally yields to reason and casts them all aside. There are, however, at this late day, a great many book-keepers who stubbornly cling to their “old fogy ideas,” and still continue to contribute a good share of each day’s work to the filling out of the two explanation columns in the Ledger. 324. There are a few accounts which require explanations written on them for checking purposes, etc.; for example: the Bills Receivable and Bills Payable accounts, the accounts with Attorneys, the Lost Accounts & Notes account, etc., etc. Some book-keepers write the numbers of the months instead of their names in the Ledger when posting; but this is economizing a little too much, as the proprietor might say to the book-keeper that he did not wish, when looking over an account, to be obliged to “count up on his fingers” in order to find the name of the month indicated in figures. 325. More Business College “Pretty Pictures .”-—In most of the business colleges the pupils are taught, when posting, to indicate in the checking columns on the Cash Book and Journal the Ledger page to which the transac¬ tions are posted in red ink. Now this will do very well for play-work in a business college; but if put in practice in a business house where the book¬ keeper posts from morning until night, day after day, at the end of a week’s time, from the constant changing of the red ink and black ink pens, that book¬ keeper’s ear would be like a piece of raw beefsteak; and in a month’s time, even in this little “nonsense,” he would have hurled several golden hours over the rocky precipice into eternity. 326. “Dr. and Cr.” —The “Fresh- men” from the “play-houses” write “Dr.’’ and “Cr.” at the top of all the Ledger pages. The business man who has, in intellect, taken but one step in advance of the beast, already knows that the left-hand side of the Ledger is the Debit, and the right-hand side the Credit,— if, however, there should be one so unfortunate as not to be the possessor of that knowledge, he had better “not sleep another wink” until he has ordered a copy of “Goodwin’s Improved Book-Keeping and Business Manual,” and read paragraph 15 , which paragraph is intended for the edification of those “tender-shoots” who have not yet aspired to the title “Business Man.” 326 1-2. The foregoing facts being known to every business man, is it any wonder that “business colleges have reached such popularity (?) among these men? Business (?) College—golden thought to the “innocent!” How they flock thither! The idea of passing through the “Actual Business Depart¬ ment” of a real, live Business College! The thought of such a thing is enough to intoxicate with delight the young aspirant for business. The “innocent’’ go to the business college, enroll their names, buy a stack of valuable (?) books and stationery (valuable, if measured by the prices required to pay), pass through and throw away, in all, from $300 to $ 1,000 for board, tuition, etc., etc. There are (it is hard to believe, but it is nevertheless true) some 324 TO 326 69 DOUBLE ENTRY BOOK-KEEPING. 327 TO 328 . business colleges who have the presumptuous “cheek” to guarantee to every “victim,” when he enters, a situation, just as soon as he graduates from their institution. Alas! how “crest-fallen” is that poor graduate when he finally awakens to the reality that the promised situation is at the desk of a “castle in the air;” and when he goes out to “battle with the world,” and seek for himself a situation, to meet a friend who “puts a flea in his ear” by whispering: “If you want to get a situation, don’t cut your throat by telling the business man that you are a graduate from a business college.” Of course, not one of the business colleges in existence would have you think, for an instant, that their own is like any other; but, on the contrary, they will at once give you to understand that they have made marked improvements over all other insti¬ tutions; and that theirs is now recognized and acknowledged as the very best in the country. To prove what they say to be true, they invite you up stairs and ask you to step into their Palatial Actual Business Department , that you may see for yourself. They say they know business colleges in general are condemned because of the imposition of a few good-for-nothing institutions. There are, of course, very few good-for-nothing business colleges in the United States,—probably not more than one thousand , while the good ones are as plentiful as hen’s teeth. 327. Petty Accounts. —We sometimes sell small bills of goods on account to city customers—to persons who seldom buy of us except for cash. Not wishing to open an account with such persons, we enter all such names under a Ledger heading in the Ledger called “Petty Accounts.” By so doing, the account takes up one line only. These accounts need not be indexed, but instead we simply index “Petty Accounts;” and anything we do not find in the index we will understand is to be found in the “Petty Accounts.” We keep these Petty Accounts in the following manner: Under this title in the Ledger we post the entries thus: When we charge a person we make the entry on the debit side of the Ledger—writing first the date, next the per¬ son’s name, then the Journal page, then the amount. When he pays this account we write on the same line on the credit side of the Ledger, opposite his name, the date, page and amount. (See 736 to 746 .) 328. Index Arrangement of the Ledger Accounts. —On opening a new Ledger in a wholesale business, it proves a great convenience to arrange the accounts alphabetically according to the towns—leaving, after each town or city, a few blank pages for the new customers we may get, or the extension of the old accounts. When we arrange the Ledger in this way it greatly facilitates posting, since we write the name of the city or town on the outer margin of the top of the page, and by knowing the town in which the cus¬ tomer resides his account is easily found without referring to the index. An index must also be kept in order that we may use it to find a name when we do not remember the town in which the person resides. Some firms index the towns and not the persons’ names. Should we have several accounts on one page, all belonging to the same town, we need only write the name on the top of the page. 70 DOUBLE ENTRY BOOK-KEEPING. In a retail business, the accounts may be arranged alphabetically, accord¬ ing to the names of the persons. 329. On Committing the Pages to Memory. —Some book-keepers who possess good memories commit to memory the account pages of almost the entire Ledger. In order that the pages may be more readily committed to memory, and that an account may be much more quickly found, I would recommend the following system for an index, which may be made from the index proper: Get a piece of heavy white cardboard, and from the index take the names of all such accounts as those to which a great many entries are made during the year,—beginning with “A” in the index, write these names in a bold, plain hand, arranging them in alphabetical form on this card¬ board. Write the names of the accounts in ink, and afterwards add the pages in lead pencil. The object in writing the pages in lead pencil is, that they may be easily changed when the accounts are transferred to new pages. When posting, stand this card on the desk before you, and you will soon become so familiar with the location of the names that you can instantly place your eye upon any name you wish and learn the page upon which the account may be found. 330. Red Chetks. —When a page is filled and closed up, or balanced, in the Ledger, so that no more entries can be made on it, make a red check at the top, immediately over the center ruling and under the name, to indicate that it is dead, “buried in oblivion”—then, in taking the Trial Balance at the end of each month, when we see this red check at the top of a page we may pass it quickly by and not spend any time in examining the page to see whether or not there is anything to be carried to the Trial Balance. Would recommend the use of this red-check system to indicate completion on all books such as Order Books, etc. 331. On Entering Invoices. —Among the smaller business houses very few enter the invoices (bills of goods they buy) oftener than twice a month; and there are a great many who enter them only once a month. When these bills are received, they are first checked to indicate that the goods have been received in good order; then they are checked by the buyer to indicate that the prices are correct; after which, the “figuring” is examined, and if found to be correct they are marked “O. K.;” then put away or filed in a safe place until the middle or end of the month, when they are entered in the manner described in paragraph 309 . (See also 74 and 401 to 407 .) 332. On Transferring Charges from the Sales Books or the Blotters to the Journal. —When entries are transferred from the Sales Books or Blotters to the Journal before posting, the initials as well as the “& Co.” may be omitted when there is but one person by that surname in the Ledger. For example: If you were journalizing an entry for F. B. & S. M. Hubbard, and you had only one “Hubbard” in the Ledger, you would simply write “Hubbard” in the Journal, with the amount and the Sales Book or Blotter page; or, if journaliz¬ ing an entry for Scott, Thompson & Co., and you had no other “Scott” in the Ledger, you would simply write “Scott” in the Journal, and omit the balance 329 TO 332 7i 382a TO DOUBLE ENTRY BOOK-KEEPING. 332d of the name. The object of so doing being to save time in transferring the entries to the Journal; and as the entries are (or ought to be) at once posted to the accounts in the Ledger, it answers the same purpose as though they were written in full. When there is more than one of the same surname, the name should, of course, be written in full ; or, when we get a new customer, at the time the first entry is made his name should also be written in full, together with his address. 332a. U P. 0. Box' ’—When adding the post-office box-number to a super¬ scription on an envelope, you may omit the “P. O.” usually prefixed to the word “Box,” without any fear that the post-master of the town to which your letter is addressed will drop it into a dry-goods box. 332b. Posting. —It is now quite a common practice among book-keepers in the larger houses to take up their indexes and write the ledger-folios in the books from which they are about to post before posting. When this is done, they check the amounts in these books while posting. (See 1081 .) 332c. Overdrafts. —When the bank account is overdrawn, the amount of the overdraft should be written on the stub of the check-book in red ink , preceded by the word “Overdrawn.” That amount should then be credited to the bank in the Cash Book, for it then becomes as truly a debt as any other liability that we have. When an amount sufficiently large to cover, or more than cover, the overdraft is deposited, the amount of the overdraft is then charged to the bank in the Cash Book, thus balancing the bank account in the Ledger. If the amount thus deposited more than covers the amount of the overdraft, the latter should be deducted from the former on the stub of the check-book and the present balance on deposit shown thereon in black ink. It is only in case of an overdraft that a bank account should be opened in the Ledger. (See 86 £.) THE NUMERICAL METHOD OF REFERENCE. 332(1. In no way can a reference be found so quickly as when the thing required bears a number and is arranged in its numerical order. This fact is now so clearly established that the numerical method is rapidly coming into use. In many of the largest houses it is now found that sales are numbered; orders are numbered; shipments are numbered; consignments are num¬ bered; invoices are numbered — and, in fact, it is difficult to find anything which is not numbered. When invoices are numbered, they may be referred to in the Accounts Payable book (see 849 ) by their numbers only — thus saving much time in the writing of names, dates, etc. The benefits derived from this method of reference are more fully treated elsewhere in this book. 7 2 333 TO 336 The Illustration of the Foundation; Or, The Application of the Rules found in the Foundation. 4 • i 333. Although it is frequently said that no two business houses keep their books exactly alike, yet the underlying principles which govern the art of book-keeping are the same in all systems; therefore, when a person has thoroughly mastered book-keeping in one branch of business, he is sufficiently qualified to take full charge of a set of books in any other business. When a business man asks you whether or not you have had any experience in book¬ keeping, he does not care to know whether or not you have ever kept books in his particular branch of business; but simply whether you have had expe¬ rience as a book-keeper. He does not expect, neither does he want you to plunge headlong into the work without first looking over the books, in order to get an idea of the system he has been using; and then, unless you can suggest some improvements which are at once recognized by him as such, he expects you to conform to his ideas, and keep the books according to the old system. 334. The business here chosen to illustrate the art of book-keeping, is that of the Retail Grocery. It is thought this business affords a sufficient variety of transactions to fully illustrate the points set forth in “The Founda¬ tion.” The principles of double entry book-keeping may be as clearly illus¬ trated with a small business, and small amounts, as with an extensive business, and large amounts; therefore, it is thought best to illustrate here the smaller business, and the less cumbersome figures. In order to see the application of the rules in “The Foundation,” the paragraph numbers should be referred to, whenever given throughout “The Illustration.” 335. The books used in this set are: Journal, Cash Book and Ledger. Paragraph Nos. 12 to 21 , inclusive, should now be read, and Nos. 26 to 48 be committed to memory. The beginner should repeat, immediately before mak¬ ing each entry, this sentence: “Debit what we Receive, and Credit what we Give,” and then make the entry accordingly. 336. The First Half of the Month Here Illustrated. —The first two weeks, the books are kept without Sales Books,—all the sales being recorded in the 73 THE ILLUSTRATION. 337 TO 341 Journal. The employes are paid their wages in full at the end of each week, and consequently no accounts are kept with them. (See 203 .) 337. The Last Half of the Month Here Illustrated .—The last two weeks, two Sales Books are kept, and are numbered “ 1 ” and “ 2 ,”—the on-account sales are transferred from these books to the Journal, as illustrated in paragraph Nos. 408 to 416 . In business the sales are, of course, transferred to the Journal daily. (See 14 .) The kind of Sales Books generally used in retail stores is small in size—about 6 x 12 inches and 4 to 6 quires. These books usually lie on the counters during the day, when sales are recorded in them, and at night they are taken by the book-keeper, and all orders which have been filled and not marked “Paid” are transferred to the Journal in the manner illustrated in paragraphs 408 to 416 . In the last half of this month the employes do not draw their wages at the end of each week, but an account is kept with each employe, which is charged whenever any money is drawn, and credited at the end of the month for the salary allowed. (See 204 .) 338. In order that “The Illustration” may be thoroughly understood, an explanation of same will be given to each entry: for the Journal and the Ledger, on the opposite page from “The Illustration”; for the Cash Book, on the pages following same. The “Ex.” prefixed to a paragraph number sig¬ nifies, that what follows is an explanation of that which follows the original paragraph number. 339. The object in having the Journal ruled in the form here shown, instead of having the columns all at the right of the page, is: ( 1 ) By having the debits at the left and the credits at the right of the entries, the book¬ keeper is not so liable to post an item to the wrong side of the Ledger. ( 2 ) When a Journal entry is-made, the debit and credit may both be placed on the same line, and thus economize in paper and make the entries more compact. ( 3 ) The book presents a better appearance in being thus arranged. 340. A Journal ruled in the common form maybe used for this system by either ruling an extra money column on the debit side of the book and two L. F. (Ledger Folio) columns—one on the left side and one on the right; or, by dispensing with the “Mdse. Dr.” column, and simply ruling the two “L. F.” columns; then, by using the column at the left which was originally intended for the date, for a “Miscellaneous Dr.” column, writing the date in the center of the page. If the latter method is adopted, the “Mdse.” debit items must be entered in the “Miscellaneous Dr.” column and posted to the Merchandise account in separate entries, the same as other debits are posted to their respective accounts. 341. In order that the beginner in the practice of book-keeping may know what entry to make, how to make it, and what explanation to write, it is thought advisable to insert here an 74 THE ILLUSTRATION. 341 INDEX TO TRANSACTIONS. Accept Time Draft drawn on us, 380-381. Accept Time Draft drawn on us by a creditor in favor of a third party, 433-434. Borrow money and give note therefor, 505. Buy Bank Shares, 517. Buy Mdse, and pay cash therefor, 519. “ “ on account, 401 to 407. “ “ and give note therefor, 459 and 444. “ “ and accept time draft therefor, 403, 380-381. Buy Produce from farmer for cash, 519. “ “ “ “ on account, 386. Buy Store and Office Fixtures, and pay cash therefor, 511, 514, etc. Buy Store and Office Fixtures, and give note therefor, 390-391. Charge Interest on an account, 382-383. Charge R. R. Co. for overcharge on Freight, 393 - 394 - Compromise for full settlement at a certain per cent, on the dollar, 500, 450 and 451. Discount note bearing interest, 495 and 496. “ “ not bearing interest, 489 and 509. Draw Sight Draft and have same paid by the person upon whom drawn, 492. ■ Draw Time Draft and have same “accepted” by the person upon whom drawn, 403, 380 and 381. Enter Mdse, sales from Sales Books, 408 to 416. “ Employes’ salaries, 453 to 457. , “ total Mdse. Dr. and Cr. at end of month, 469 and 470. Give Attorney an account to collect, 441-442. “ “ a note to collect, 417-418. Give a person a check on account, 544. “ “ note “ 396-397. - x Give a creditor an order on a debtor for goods, 431 - 432 - Give a creditor a sight draft on a debtor, 439- 440. Have carpenter work done on store fixtures, 399- 400. Loan money and receive note therefor, 542. Make payment on our note, 543. Mdse, returned to us on account, 376 to 378. Our customer discounts bill and pays cash, 497 -. 4 —. and 534. A*ay cash for Advertising, 526. Pay our Acceptance (or Time Draft), 524. Pay Bank Collection charges, 523. Partner draws money for private use, 54 °- Pay for Exchange, 533. “ items of Expense, 507, 518, etc. . “ Insurance, 508. Partner takes Mdse, for private use, 395. Pay private bill for partner, 54 1 and 546 - '- Pay Sight Draft drawn on us, 527. Receive cash on account, 499 and 504. “ note on account, 373-374. u- “ a payment on note, 488. „ “ a check on account, 489^2. “ cash for overcharge on freight, 491. “ cash for interest on a note, 494 and 496, Receive cash as part payment on a note, and have balance renewed by taking a new note. 493 and Ex. 493. 1 'Receive new note for renewal of old note, inter¬ est and balance of account, 421 to 425. Receive from commission merchant Account Sales for credit of our customer, 419-420. A Receive new note for renewal of old note and interest, 435 to 437. k Receive Mdse, returned from our customer, 376 to 378. I Return Mdse, to person from whom we bought it on account, 379. 1^" Sell Mdse, and receive cash therefor, 486. “ on account, 370 and 408 to 416. K Sell Mdse, and receive note'therefor, Lyman account and 449. p/ Send Bank Draft on account, 521. --- y Send Bank Draft for our note and interest, 531 and 532. I Take up note which we had discounted in the bank, 530. Time Draft we draw returned to us “accepted” by the person upon whom we made it, 388- 389- 75 THE ILLUSTRATION. 342 TO 384 JOURNAL. 62. Chicago, Ills., December ist, 1880 . Mdse. Miscell. L. 1 L- Miscell. Mdse. Dr. Dr. F. -* F. Cr. Cr. 31 [2. 3 j! 3 . 344 . 345 . 31 6. 3 [ 47 . 347 M J. H. Goodwin and 8. A. Emerson have this day entered into copartnership for the pur- pose of transacting a Retail Grocery Business. The style of the firm is to be “Goodwin & Emerson.” The gains and losses are to be shared equally. The investments are as fol¬ lows : J. H. GOODWIN’S INVESTMENT. Resources. 348 . 500 OO C.B. Cash—Balance on hand. 349 . 3376 40 40 Mdse. —On hand, per Inventory. 350 . 130 OO 41 Store and Office Fixtures, per Inventory. 351 . 20 OO 42 . Expense—Coal on hand. 352 . 3°4 OO 44 G. W. Bennett. 363 . , 162 5 ° 43 Sam. Hurto. 354 . 84 OO 44 F. H. Miller. ' 355 . 187 50 44 Frank Richardson. 35 G. 200 OO 4 i Bills Kec.—Note, Ed. Russell, 11-18-80, 30ds. 357 . IOO OO 4 i “ “ “ “ “ “ 60 ds. 358 . 200 OO 41 “ “ “ “ “ 10-20-80,60 ds. 359 . 24O OO 4 i “ 4 ‘ “ A. T. Porter, 11-20-80,30 ds. 360 . IOO OO 4 i “ " “ S. A. Fisher, 10-12-80,60 ds. Liabilities. 361 . Bills Pay.—Acc., Arbuckle Bros., u-13-80, 30 ds. 41 640 OO 362 . Bills Pay.—Note, Thurber & Co., 10-22-80, 60 ds. 41 500 OO 363 . Catlin Tobacco Co. 45 340 40 364 . Samuel Cupples & Co. 45 344 OO 365 . Baker & Co. 45 280 OO 366 . J. H. Goodwin, Stock acc.— Net invest- ment. 40 3500 OO S. A. EMERSON’S INVESTMENT. 367 . Sundries Dr. to S. A. Emerson, Stock acc’t. 40 3500 OO 368 . 2500 OO C.B. Cash—Balance on hand. 369 . IOOO OO 41 Bills Rec.—l.ote, Hugo Smith, 11-14-80,30 ds. 370 . 4 IO 44 2 . Ed. Russell, Dr. / 5 lbs. Rio Coffee, 20c. 1 00 1 lb.Y.H. Tea, 70c, 8 lbs. A Sugar, 1.00, 1 70 2 cans Peaches, 20c. 40 371 . 1 gal. Syrup, 75c, x Broom, 25c, 1 00 — 4 ic 372 . 12 OO 44 Alex. Dollus, Dr. 4 bbls. Apples, 3 00 12 00 4 - 373 - 374 . 200 OO 41 Bills Receivable Dr. to G. W. Bennett. 44 200 OO Rec’d his note at 90 ds. from 12-4-80. 375 , 0 55 44 Alex. Dollus, Dr. 1 keg Holland Herrings, 1 25 1 sack XX Flour, 1 50 2 doz. Oranges, 40c, 80 — 3 55 5 - 376 . i 45 Mdse. Dr. to Sundries. 377 . Ed. Russell, 1 can Peaches, ret’d, 44 20 378 . Alex. Dollus, 1 keg H. Herrings, ret’d, 44 I 25 379 . 5 OO 46 G. W. Borland & Co., Dr. S kegs Holland Herrings, spoiled, @ 1 00 5 00 S* k- 8 . 380 - 381 . 218 60 46 Arbuckle Bros. Dr. to Bills Payable, 4 1 218 60 Acc. their D’ft at 60 ds. from 12-3-80. 382 - 883 . 2 5 ° 44 Frank Richardson to Interest, 42 2 5 ° Int. on acc’t to date. 384 . i 45 Mdse, forward, 24 65 76 THE EXPLANATION. Ex. 342 TO 351 EXPLANATION OF THE JOURNAL—OPPOSITE PAGE. THE COLUMNS. Ex. 342 and 347.—These are the columns referred to in paragraph 12. In the Mdse. Dr. column is entered all merchandise bought by us and returned to us; and in the Mdse. Cr. column is entered all the merchandise sold by us, and returned by us to other parties. (See 67 to 70.) Ex. 343 and 346.—These are the columns referred to in paragraphs 39 and 40. All debits which are not Mdse, debits are entered in 343 column; and all credits which are not Mdse, credits are entered in the 346 column. In post¬ ing , we post only the items found in these columns. Ex. 344 and 345.—These are the columns referred to in 325 and 340. When we have posted an item to the Ledger, we indicate the page to which it is posted in these columns. So it will hereafter be understood what the figures in these columns'indicate. These figures also show the book-keeper where he ended his posting. Ex. 347^.—In order that the beginner may be prepared to “encounter” any set of books that is presented to him, it is thought best to give here a seemingly complicated example. When partners first enter into business, they usually invest all cash, or cash and note—the entry then is a very simple one, and is made in the manner represented in paragraphs 367, 368 and 369; but, when one of the partners has been engaged in business and takes in a partner, the entry then is more difficult and complicated,—such an example is here presented. Goodwin has been engaged in the Retail Grocery Busi¬ ness, and on the 1st of December, 1880, takes in as a partner S. A. Emerson. The proceedings for opening the books for the new firm, are described in paragraphs 311, 316, 317 and 49. In changing a set of books from single entry to double entry the entry in the Journal would be made in the same manner as the example here illustrated, with the exception of the personal accounts, which amounts would already appear in the Ledger and of course would not require posting unless a new Ledger was opened,—then they would have to be transferred. It is presupposed, in this set, that when the new partner (Emerson) is taken in, a new set of books will be opened; hence all of Goodwin’s old accounts are transferred to the new Ledger. THE ENTRIES. Explanation of Goodwin's Investment. —Ex. 348.—Cash on hand transferred with Emerson’s $2,500 to the Cash Book. (See 485.) Ex. 349.—Goods in store. (See 66.) Posted to 584. Ex. 350.—Counters, shelves, desks, chairs, etc., in store and office. (See 92.) Posted to 592. Ex. 351.—Coal on hand which was debited to Expense account when bought. (See 195.) Posted to 644. 77 THE EXPLANATION. Ex. 352 TO 372 Ex. 352, 3, 4 and 5.—These are personal accounts owing to Goodwin. (See 164 and 173.) Posted to 688, 691, 702 and 704. Ex. 356 to 360.—These are unpaid notes held by Goodwin against these persons,—with the date and time upon which each is drawn affixed. The n-18-80, 30 ds, signifies the note was .made on November 18th, 1880, on 30 days time. It is not necessary to add, in an explanation to an entry, whether or not the note is made with interest, as the Bill Book shows that. Goodwin endorses these notes over to the firm, Goodwin & Emerson. (See 107.) Posted to 602 to 606. Ex. 361.—This is a Time Draft, which was drawn by Arbuckle on Good¬ win, and by Goodwin “accepted,” and being not yet due on December 1st, is still unpaid; therefore, the same in effect as an outstanding note. (See 129.) Posted to 633. Ex. 362.—This is an unpaid note owdng by Goodwin to Thurber & Co. (See 129.) Posted to 634. Ex. 363, 4 and 5.-—These are personal accounts Goodwin owes. (See 174.) Posted to 749, 751 and 753. Ex. 366.—After thus having made a record of all his present Resources and Liabilities, Goodwin now finds the difference between the sums total of each, which difference is found to be $3,500, which amount is his net present worth , and this he credits to his Stock account. (See 49.) Posted to 564. Explanation of S. A. Emersons Investment .—Ex. 368.—He invests cash $2,500, and the amount, together with Goodwin’s $500, is posted to the debit side of the Cash Book. (See 75 and 76; also 485.) Ex. 369.:—Emerson holds a note made by Hugo Smith, payable to him, for $1,000, which note is endorsed by W. Scott, who guarantees the payment. Emerson endorses this note over to the firm—Goodwin & Emerson—when it becomes the firm’s property. (See 107, 116 and 117.) Posted to 607. Ex. 367.—As Emerson has no Liabilities, his Stock account is now credited for the sum total of his Resources—$3,500. (See 49.) Posted to 569 - Ex. 370. — Russell buys goods from us on account, so we debit him in the “Miscellaneous Dr.” column. It is not necessary to make a formal Journal entry, thus: “E. Russell Dr. To Mdse.,” before proceeding to make a record of the goods we sell to him; but proceed in a common-sense manner by simply writing: “E. Russell, Dr.;” then on the next line begin with the items, omit¬ ting the “To” which is by many prefixed to the items. “Red Tape” does very well for the army and navy, but the business man has no use for it. After all the items have thus been entered, the total is found and that amount is extended into column 347 to the credit of the Merchandise account. (See 371, 68 and 165.) The debit to Russell is posted to 707, and the credit to Merchandise is not posted until the end of the month, and then it, with all the other merchandise sales, is posted to the credit of Merchandise account in one entry. (See 470.) Ex. 372.—Same as 370. Posted to 714. 78 THE EXPLANATION. Ex. 373 TO 389 Ex. 373 and 374.—Bennett is owing us $304. He gives us a check on the bank for $ 104, which is entered in the Cash Book; and a note at 90 days for the balance^ which is entered here; Bills Receivable account being debited for the note received and his account credited, with all the explanation that is required following on the next line. (See 108, 113 and 171.) 373 is posted to 608. 374 posted to 696. Remember that nothing is entered in the two outer columns except merchandise items. Ex. 375.—Same as 370. Posted to 715. Ex, 376, 377 and 378.—These parties having found that the goods they bought of us were spoiled, now return them. We give them credit and debit Merchandise in column 342. (See 376.) The credits to Russell and Dollus (377 and 378) are posted to 710 and 719; and the debit to Merchandise is not posted until the end of the month, when it, with all the other Merchandise debits entered in this column, is posted to the debit of the Merchandise account in one entry. (See 69 and 168; also 469.) When goods are returned to us that were sold for cash, and we return the money for same we may either take the money out of the sales drawer, and thus make the sales for the day less, or take it out of our regular cash drawer, and debit the amount returned to Merchandise on the Cash Book. Ex. 379.—When the keg of herrings is returned to us by Dollus, as spoiled, we examine those remaining in our stock, and find there are in all 5 kegs of same spoiled; so we return them to the firm from whom we bought them, G. W. Boreland & Co., charging Boreland and crediting Merchandise. (See 178 and 70.) Posted to 775. Ex. 380 and 381.—We are owing Arbuckle Bros. They draw on us at 60 days from Dec. 3d, 1880; we write “Accepted,” etc., across the face of the draft, and return it to them, and by so doing promise to pay them in 60 days from Dec. 3d, this amount, which is the same in effect as giving them our note; therefore, we debit them and credit Bills Payable. (See 182, 132 and 133.) 380 posted to 754. 381 posted to 635. Ex. 382 and 383.—Richardson is owing us an account which is long past- due, so we charge him interest and draw on him at 90 days for the amount of his account and interest. The interest is charged here, but no entry is made of the draft until it is returned. (See 15 1 and 142.) 382 posted to 705. 383 posted to 664. Ex. 384 and 385.—When a Journal page has been filled, the totals of the Mdse. Dr. and Mdse. Cr. columns are found and carried forward to the follow¬ ing page; and thus the totals are carried forward from page to page until the end of the month. Ex. 386.—Russell is a farmer, and brings produce into market; we buy it from him and give him credit on his account. (See 67 and 175.) Posted to 711. Ex. 387.—Same as 370. Posted to 708. Ex. 388 and 389.—The draft we drew on Richardson December 8th is now returned to us “accepted” by him. This draft having been accepted by him and returned to us, is the same in effect as though he had sent us a note; 79 THE ILLUSTRATION. 385 TO 420 JOURNAL. 63. December 9 th, 1880 . Mdse. Miscell. L. L. Dr. Dr. F. „ * F. 385 . 1 45 Mdse, forward, 380 . 16 OO Mdse. Dr. to Ed. Russell, 44 50 doz. Eggs, 20c, IO OO 20 lbs. Butter, 30c, 6 00 IO. 387 . IO 80 44 Ed. Russell, Dr. 3 bbls. Salt, 2.00, 6 00 1 bbl. Flour, 4 80 388 - 389 . 190 OO 4 i 1 1 . Bills Receivable, Dr. to Frank Richardson, 44 He accepted our D’ft at 90 ds. from 12 d OO CO 390 - 391 . 15° OO 4 1 Store and Office Fixtures, Dr. to Bills Payable, 41 • Gave Hall’s Safe & Lock Co. note at 30 ds.. 12-13-80, for Safe. 392 . 7 35 44 Frank Burgess, Dr. 2 lbs. Cheese, 30c, 1 doz. Eggs, 25c, 55 18 lbs. A Sugar, 2.00, t Broom, 30c, 2 30 1 bbl. Apples, 3.00, 1 sack Flour, 1.50, 4 5 ° 393 - 394 . I OO 45 L. S. & M. S. Ry. Dr. to FFt and Exoress, 42 Ov’rch. on 20 bbls. Sugar at 5c, 12-4. 14. 395 . 2 55 40 S. A. Emerson, Dr. 2 gals. Vinegar, 50c, 5 lbs. Butter, 1.50, 2 OO 3 lbs. Lard, 30c, 1 can B. Powder, 25c, 55 396 - 397 . 189 30 46 Procter & Gamble Dr. to Bills Payable, 41 Sent note at 60 ds. from 12-8-80. ♦ J 5 - 398 . |3 OO 46 G. W. Boreland & Co., Dr. 20 Empty Boxes, 15 399 - 400 . 4 OO 41 Store and Office Fixtures Dr. to F. Burgess, 44 For making new shelves. 401 . 558 51 Mdse. Dr. to Sundries. 14.60 5-25 v 402 . J. K. Armsby & Co. 2 13 46 403 . Arbuckle Bros., 60 ds. 3 46 404 . B. T. Babbitt. 30 ds. 6 46 28.40 17-85 405 . G. W. Boreland & Co. 2 14 46 j 406 . Catlin Tobacco Co., 60 ds. 11-28 45 407 . Sprague, Warner & Co. 7 46 17 - 40 S. Sundries Dr. to Mdse. 409 . 7 23 44 Frank Burgess, !-43 410 . 2 85 40 S. A. Emerson, 44 411 . 9 60 45 R. N. Buck, 44 412 . 42 86 44 Ed. Russell, 44 413 . 22 40 44 Alex. Dollus, 2-51 414 . 6 40 45 H. S. Cole, 2-51 415 . 32 19 44 G. W. Bennett, 56 416 . IOO OO 45 Wm. Dorman, 57 417 - 418 . 1 OO OO 43 H. L. Richardson, Att’y, Dr. to Bills Rec. 41 Gave him for coll. S. A. Fisher’s note of * Oct. 12-80 at 60 ds. \8. 419 - 420 . • 4 60 46 J. K. Armsby & Cot Dr. to Ed. Russell, 44 For Acc’t—Sales of Cheese reported bv Armsby for acc’t of Russell. 575 >6 ■ Forward, Miscell. Cr. 190 189 30 19 218 46 64 89 85 60 00 25 19 62 14 | 60 Mdse. Cr. 24 65 10 80 7 35 2 55 3 00 223 53 271 88 80 THE EXPLANATION. Ex. 390 TO 407 therefore, we debit Bills Receivable and credit Richardson. (See 114, 115 and 172.) 388 posted to 609. 389 posted to 706. Ex. 390 and 391.—We buy a safe from H. S. & L. Co., and give therefor our note at 30 days. Debit Store & Office Fixtures for the safe we receive, and credit Bills Payable for the note we give. (See 93 and 130.) 390 posted to 595- 391 posted to 636. Ex. 392.—Same as 370. Posted to 723. Ex. 393 and 394.—The Railroad company charged us 5 cents per bbl. too much on freight bill of recent date for 20 bbls. Sugar. We are not allowed to deduct the over-charge from the bill and pay the balance; but are obliged to pay the full amount of the bill; then we may make the claim to the Rail¬ road company,—charge them and credit Freight & Express. If they do not allow this claim after we have thus charged it, we are then obliged to debit Freight & Express and credit them—thereby undoing the charge first made. (See 206.) 393 posted to 736. 394 posted to 650. Ex. 395.—Emerson takes goods from the store for his private use. (See 59.) Posted to 577. Ex. 396 and 397.—We are owing P. & G. on account for a bill of goods we bought from them on 60 days. On the 14th of December we write a note and send it to them, dating the note Dec. 8th, 1880,—the date of the bill. (See 181, 130 and 131.) 396 posted to 761. 397 posted to 637. Ex. 398.—This firm buys of us empty boxes, and as the cases or boxes are usually charged to us on the bills of goods we buy, and are consequently entered by us as merchandise, we must now credit Merchandise. Posted to 776. Ex. 399 and 400.—Frank Burgess, our customer, is a carpenter, and we employ him to make for us some new shelving, for which shelving we allow him $4. This amount he wishes credited to his account, so we debit Store & Office Fixtures and credit him. 399 posted to 596. 400 posted to 726. Ex. 401 to 407.—It is now the middle of the month; therefore, we take the invoices which have accumulated since the first, arrange them in alpha¬ betical form, and enter them in the manner here illustrated. The and in paragraph 402, is but an abbreviated way of indicating Dec. 2d, 1880, $14.60, and Dec. 13th, 1880, $5.25—these being the dates and amounts of bills we bought from Armsby. We sometimes enter a great many bills for a firm, and this way of entering them is then found to be a great convenience, as much time and much Journal paper is saved by so doing. (See 460 for a better example.) When there is only one bill, we simply write the day of the month on the end of the line, as in 403, for Dec. 3d',— i. e., if the bill is dated in the present month; but if dated in the previous month, we indicate the month and day as in paragraph 406 for Nov. 28th. If the time on which the goods were sold is given, we add the same after the name, as in paragraph 403, etc. After the bills have all been entered, we find the sum total of them, and enter that amount to the 81 THE ILLUSTRATION. 421 TO 452 JOURNAL. 64. December 21 st, 1880. Mdse. Miscell. L. L. Miscell. Dr. Dr. F. ■; F. Cr. 575 96 Forward, 421. 178 23 Bills Receivable Dr. to Sundries. 422. Bills Rec.—Old note, Ed. Russell, 200.00, paid 50.00, 11-18-80, 30, 41 150 1 00 423. Interest, on above, 4 2 1 | 27 424. Ed. Russell, bal. on acc’t, 44 26 96 425. Rec’d following described notes from Ed. Russell to balance old note, int. and acc’t: Dec. 21-80, 30 ds, $100 00 *' “ ■ 60 ds, 78 23 426. Sundries Dr. to Mdse. 23 12 44 Bennett, 1-58 4 20 45 Adolph Piper. 34 96 44 Dollus. 3 10 45 H. M. Dickinson. 28 45 44 Burgess. 5 6s 45 Benj. Goodwin, Jr. 3 12 40 Emerson, 59 42 OO 45 D. Cameron. h 80 45 W. C. Lyman, 73 Dearborn ave. 60 - 45 12 45 Tom Keene, 320 Mich. ave. 62 427. 2 IO Mdse. Dr. to Sundries. 428. Bennett, C. B.— 36 44 5 ° 429. Lyman, 45 1 00 430. Dollus, 37 2 X 44 60 431-432. 20 OO 46 G. W. Boreland & Co. Dr. to G. W. Bennett, 44 20 OO Gave Boreland order on Bennett for dry goods, dated Dec. 23-80. 433-434. 28 45 46 Sprague, Warner & Co. Dr. to Bills Payable, 4 i 28 45 Acc. their D’ft 30 ds. from 12-20-80, favor of Thompson & Risley. 435. 241 76 41 Bills Receivable Dr. to Sundries. 436. Bills Rec.—Old note A. T. Porter, 30 ds. 11-20-80, 41 240 00 437. Interest, on above. 42 1 76 Rec’d note at 60 ds. from Dec. 23-80, for $241.76, to renew old note and int. 24. 438. Sundries Dr. to Mdse. 11 45 44 Dollus, 2-64 12 OO 45 Keene. 7 14 45 Lyman, 65 439-440. 5 ° OO 46 L K. Armsby & Co. Dr. to Alex. Dollus, 44 50 OO Gave Armsby S’t D’ft on Dollus. 441-442. 100 OO 43 H. L. Richardson, Att’y, Dr. to Wm. Dorman, 45 100 OO Gave him Dorman’s acc’t for; collection. ! # 25- 443. ' Sundries Dr. to Bills Payable, 41 275 69 444. 146 OO 46 Arbuckle Bros.—Sent note 60 ds. 12-18-80. 445. 65 50 46 B. T. Babbitt— “ “ 30 ds. 12-14-80. 446. 64 19 45 Catlin Tobacco Co.—Acc’t D’ft 60 ds. 11-28-80. 1 27. 447. 59 97 41 Bills Receivable Dr. to Sundries. Rec’d following described notes: 448. Frank Burgess —Note 60 ds. 12-25-80, 44 39 03 449. W. C. Lyman—Note 30 ds. 12-27-80, 45 20 94 450-451. 65 OO 47 Lost Acc’ts & Notes Dr. to Sam. Hurto, 43 65 OO Jk Compromised with him for sixty cents on the dollar. His asc’t $162.50. Lost 40 per ct. 28. 452. 60 Mdse. Dr. to G. W. Bennett, 44 60 C. B.—49. 578 66 Forward, 1 Mdse Cr. 271 88 204 51 3 ° 59 506 99 82 LiAt 408 Ex, THE EXPLANATION. TO 425 debit of Merchandise in the “Mdse. Dr.” column. (See 309, 331 and 175.) 402 to 407 posted to 766, 767, 756, 759, 778, 779, 750 and 783. Ex. 408 to 416.—These are charges transferred from Sales Books 1 and 2, referred to in paragraph 337. It is not thought necessary to give, in this work, the form of the Sales Book, as an entry made in this book is made in precisely the same form and manner as in paragraph 370, and when trans¬ ferred to the Journal, simply the amount, person’s name, number of Sales Book and page is taken. When we wish to refer to an original charge, we turn to the Journal and here find the book (Sales Book) and page upon which the sale is recorded. In this example, 409 to 412 are transferred from Sales Book 1, and 413 to 416 from Sales Book 2,—the pages upon which such charges are made being added. (See 14.) Having entered all the charges from the Sales Books, we find the sum-total of them all, and credit Merchan¬ dise in the “Mdse. Cr.” column for the amount. 409 to 416 posted to 724, 578 ) 737 , 709, 716, 738, 692 and 734. Paragraphs 411 and 414 are petty accounts referred to in paragraph 327. Ex. 417 and 418.—Fisher’s note was due on the 14th inst., but he failed to pay it, and, as there seemed to be poor prospect of our collecting the account, we hand it over to our attorney, Richardson, for collection. This note was debited to Bills Receivable account, so we now credit Bills Receivable and debit Richardson. (See 262 and 264.) 417 posted to 684. 418 posted to 621. Ex. 419 and 420.—Russell, the farmer, sent to Armsby, the commission merchant, cheese to be sold on commission, with instructions to pay the proceeds of the sales of same to us. As we are owing Armsby & Co., they render to us an account-sales and request us to give Russell credit for the amount of same. We then debit Armsby and credit Russell. 419 posted to 763. 420 posted to 712. Ex. 421 to 425.—Russell’s note of November 18th, at 30 ds. for $200, is now due. On December 3d he paid $50 on this note. (See 488.) He is now unable to pay the balance, and wishes to give us two new notes for the bal¬ ance of the old ($150), and the interest on same to date ($1.27), and the balance of his account in the Ledger ($26.96). We take from him the new notes (see 425), and surrender to him the old note. 421 posted to 610 and 611. 422 posted to 624. 423 posted to 667. 424 posted to 713. Another way of recording this transaction, would be to debit Russell’s account for the balance due on the old note surrendered and interest, and then credit his account for the new notes he gives us. If this method were adopted, the entry would then be as follows: 151.27 Ed. Russell Dr. to Sundries, Bills Receivable, Interest, 250.00 1.27 Surrendered note of Nov. 18-80—30 ds.— $200. Payment on same, $50. 178.23 Bills Receivable Dr. to E. Russell, 178.23 Rec’d following-described notes: Dec. 21-80—30 ds.—$100.00 “ “ 60 “ 78.23 THE ILLUSTRATION, TO 470 65. JOURNAL. December 31 st, 1880 . Mdse. Dr. Miscell. Dr. L F L. F. Miscell. Cr. Mdse. Cr. 578 66 1 Forward. 506 9 453. 72 50 42 Salaries Dr. to Sundries. For (%) month of Dec., 1880, 454c M. W. Saxton, 43 25 OO 455. Jas. Kinsella, 43 20 OO / 456. F. P. Mast, 43 20 OO 457. Herman Smith, 43 7 5° 458. 493 89 Mdse. Dr. to Sundries. 459. Arbuckle, 60 ds, 18 46 146 OO 460. 60 30 60 Armsby, 20.00 14*30 12.90 15 17 18 46 47 20 5.40 2.79 11.60 6.70 20 23 27 29 26 49 461. Babbitt, 30 ds. 14 46 65 5 ° 462. Boreland, ™ Id? 17 28 46 19 40 463. Procter & Gamble, 60 ds, 8 46 189 30 464. The following amounts, on accounts and notes, are this day by us considered worth¬ less: and are therefore charged to Lost Acc’ts and Notes: ( 465. 78 45 47 Lost Acc’ts & Notes Dr. Sundries. 466. Alex. Dollus, 44 32 5 ' 467. Bills Rec. W. C. Lyman’s note Dec. 27th, ’80, 30 ds, 4 » 20 94 468. H. L. Richardson, Att’y. William - Dorman acc’t, 43 25 OO 469. 1,07a 55 40 Mdse. Dr. Total for Dec., 1880. 470. « « « << 40 jo6 9 THE EXPLANATION. Ex. 426.—Same as 408 to 416. After a customer’s name has become familiar to us, and we have only one person by that surname in our Ledger, we omit the initials, as in this example. (See 332.) It is not necessary to ditto the Sales Book page; but we understand that it is the same as above until changed. Piper, Dickinson, Goodwin and Cameron are petty customers, and these amounts are posted under “Petty Accounts.” Lyman and Keene are new customers, therefore residence is added. It is not thought neces¬ sary to indicate where the amounts in this example are posted, as the student by this time has sufficient knowledge of posting such charges. Ex. 427 to 430.—When goods are frequently returned to us, it is advisable to keep a “Credit Book” in which to enter these credits. When this is done, we simply write in that book the person’s name and a description of the goods returned; then those credits are transferred to the Journal in the manner here indicated,—entering the person’s name, C. B. for Credit Book, the page and amount. 428 posted to 697. 429 posted to 730. 430 posted to 720. Ex. 431 and 432.—We give Boreland, whom we are owing, an order on Bennett (a dry-goods merchant), who is owing us, for dry goods to the amount of $20, with instructions to Bennett to charge the same to our account. This is to us the same in effect as giving Boreland a sight draft on Bennett, so the entry is made the same as in paragraphs 439 and 440,—the explanation only being different. 431 posted to 777. 432 posted to 698. Ex. 433 and 434.—We are owing S. W. & Co., and they are owing Thomp¬ son & Risley. They draw on us at 30 days from Dec. 20th, making the draft payable to T. & R., and we accept it, thereby promising to pay T. & R. in 30 days, for S. W. & Co., $28.45. (See 182 and 132.) 433 posted to 782. 434 posted to 638. Ex. 435, 436 and 437.—Porter cannot pay his note, which is now due, therefore renews it for 60 days, giving us a new note for the amount of the old note and interest. When he gives us the new note we surrender to him the old. This, also, may be treated according to the other method described in Ex. 421 to 425. (See 124.) 435 posted to 613. 436 posted to 625. 437 posted to 668. Ex. 438.—Same as 408 to 416. Ex. 439 and 440.—Dollus is owing us and we are owing Armsby, so we give Armsby a sight draft on Dollus. If sight drafts are not paid when drawn by us on one person payable to another, and are returned to us, we are then obliged to undo the entry we made when the draft was drawn, which would be done by debiting the person on whom we drew, and crediting the person to whom we made the draft payable. (See 179 and 170.) 439 posted to 764. 440 posted to 721. Ex. 441 and 442.—We hear that Dorman is about to fail; therefore, we make a certified statement of his account and hand it to our attorney for col¬ lection. “What is meant by a certified statement?” A certified statement is an itemized statement of a person’s account made out and sworn to by us Ex. 426 TO 442 85 THE EXPLANATION. Ex. 443 TO 470 before a notary public as being “correct, to the best of our knowledge and belief.” (See 262 and 264.) 441 posted to 685. 442 posted to 735. Ex. 443 to 446.—We are owing these different parties. We send Arbucxle and Babbitt notes on 60 and 30 days from the dates of their bills, as indicated in paragraphs 444 and 445; and we accept the draft drawn on us by the Catlin Tobacco Co. at 60 days from Nov. 28th, as indicated in paragraph 446. We then credit Bills Payable for the sum total of all these, as indicated in para¬ graph 443. The entry for these is the same in effect as were the entries in paragraphs 380, 381, and 396, 397, excepting that here we make an entry for several notes, and in those cases, for only one at a time. The items are posted separately on the Bills Payable account for checking purposes. 443 posted to 639, 640 and 641. 444 posted to 755. 445 posted to 758. 446 posted to 748. Ex. 447, 448 and 449.—Some book-keepers hold the notes they receive several days before entering them, and then enter them all together in the manner here illustrated. Each of the parties is then credited, and Bills Receivable account debited for each item separately. 447 posted to 614 and 615. 448 posted to 727. 449 posted to 731. Ex. 450 and 451.—Hurto is insolvent, and compromises with his creditors for a settlement in full for sixty cents on the dollar, i. e., each one of his creditors signs a paper which is presented to them agreeing to accept sixty cents on the dollar in full settlement. Hurto then gives us a check for $97.50, which is 60 per cent, (entered on Cash Book—see 500), and the remainder, $65 (40 per cent.), is of course lost. (See 265.) 450 posted to 784. 451 posted to 690. Ex. 452.—Same as 427 to 430. Posted to 700. Ex. 453 to 457.—For full instructions and explanations see latter part of paragraphs 336 and 337; also 201 and 204. 453 posted to 654. 454, 5, 6 and 7 posted to 677, 679, 681 and 683. Ex. 458 to 463.—Same as 401 to 407. When several bills are bought from a firm on different time, the time on which each is bought is indicated in the manner illustrated in paragraph 460. For example: “2¥.jo” is Dec. 15, $20.00 on 60 days time. Posting same as Ex. 401 to 407. Ex. 464 to 468.—For full instructions and explanations, see paragraphs 266, 270, 271 and 272. Dollus having suddenly “left for parts unknown,” we call his account lost. Lyman having recently failed, his note is considered by us as worthless. Our attorney reports that of the remaining $50 due on Dorman’s account, he believes not more than $25 to be collectible, so we carry $25 to Lost Accounts & Notes. 465 posted to 785, 786 and 787. 466 posted to 722. 467 posted to 626. 468 posted to 687. Ex. 469 and 470.—Having carried forward the Merchandise debit for the entire month, we now post the total amount for the month to debit of the Merchandise account in the Ledger (see 586); and having carried forward the Merchandise credit for the entire month, we now post the total amount for the month to the credit of the Merchandise account in the Ledger. (See 590.) 86 471 TO 554 Dr. THE ILLUSTRATION. Cash. CASH 554. 188 j. Jan.^ i Balance on hand, Miscella- Mdse. Date L. i? (All these items are posted to the Credit side of the Ledger.) " m Cr. Cr. 471 . 472 . 473 . ■ 474 . 47 * j. 47 < 5 . l88o. 485 . Dec. 1 Balance on hand (am’t invested). 486 . 2 8 3 45 25 V 44 4 4 44 49 58 499 . 45 44 H. S. Cole, 6 40 500 . 27 4'3 44 Sam Hurto. Sixty cents on the dollar of claim ($162.50), 97 5 ° 28 V 4 4 Mdse. Sales, 1:4 40 501 . 45 44 L. S. & M. S. R’y 1 OO 502 . 42 44 Fr’t & Exp. O’c. ret’d C. R. I. & P., 55 29 V it Mdse. Sales, 167 45 503 . 45 it B. Goodwin, Jr., 5 65 504 . 43 1 1 H. L. Richardson Atdy. Coll, on W. Dorman’s acc’t, 5 ° OO 30 V 44 Mdse. Sales, 137 80 31 ✓ 44 44 44 152 50 505 . 4 i 44 Bills Payable. Borrowed from W. Teele on note, 30 ds, 12-31-$ >» 250 OO > 547 . 1 4 ° To Mdse. Total for Dec., 1880, \ *.536 ; 19 548 . Total cash rec’d. 549. 1 Total. 4771 3,000 4,268 | 7,268 I 1.776 88 BOOK. THE ILLUSTRATION. Cash. 473 OT 553 Cr. 91. L. Miscella- Expense Date. (All these items are posted to the Debit side of the Ledger.! Total. h— Dr. Dr. 478. 479. 480 . 481 . 482 . 483 . 484. 1880. 406. Dec. 2 V By Expense. Rent of Store to 1-1-81, 75 OO 607. V «< 4 4 Set Blank Books 26.40, Stationery bill 7.20, 33 60 508. 3 42 “ Insurance Policy $3,000, “TEtna,” 1 per cent, 30 00 609. 42 “ Interest. Dis. on E. Russell's note, 10-20-80—60 ds. 85 510. 4 40 “ J. H. Goodwin. On acc’t. IO 00 511. 41 " Store & O. Fixtures. New Counter, 13 50 / “ Expense. Ink 75c, Pens 1.00, Eraser 50c, 2 25 512. 6 42 “ Interest. Dis. on Russell’s note, 11-18—60 ds. I 00 513. 40 “ S. A. Emerson. On acc’t, IS 00 514. 41 “ Store & O. Fixtures. New Desk 30.00, Chair 5.00, 35 00 515. 7 42 “ Fr’t & Exp. L. S. & M. S 12.20, N. Y. C. & H. R. 7.14, 19 34 516. 42 “ Salaries. F. Mast 10.00, H. Smith 3.7s, 13 75 42 4 4 4 4 J. Kinsella 10.00, M. W. Saxton 12.50, 22 5 ° 517. 9 43 “ Union Trust Co. Shares. 5 Shares, 500 OO 518. IO V ** Expense. Sign—"Goodwin & Emerson,” 18 OO 519. 40 “ Mdse. 40 bu. Potatoes 50c, 20 OO 620. II 42 “ Fr’t & Exp. C. R. I. & P. 6.20, Dray 50c, Express 1.00, 7 7 ° 521. 13 45 “ Catlin Tobacco Co. Sent D’ft, 34 ° 40 522. 14 42 “ Salaries. Kinsella 10.00, Saxton 12.50, * 22 5 ° 42 4 4 4 4 Smith 3.75, Mast 10.00, 13 75 523. 42 “ Coll. & Exch. Coll. D’ft on Miller, 25 524. l6 4 i “ Bills Payable. Paid Acc. Arbuckle Bros, of 11-13-80—30 ds, 640 OO 625. 42 “ Coll & Exch. On above. 65 526. 17 43 “ Advertising. 5 M Circulars 4.00, “Tribune” bill 12.00, l6 OO 527. 18 45 “ Baker & Co. Paid D’ft 12-13-80, 280 OO 528. 42 “ Coll. & Exch On above. 30 529. 20 / “ Expense. 5 tons Range Coal 5,00, 25 OO 530. 22 41 “ Bills Receivable Took up in B’k E. Russell’s note of 10-20-80, 60 ds. 200 OO 531. 41 “ Bills Payable. Sent D’ft for note Thurber & Co., 10-22-80, 60 ds, 500 OO ‘ 532. 42 ** Interest. On above note. 5 25 533. 23 42 “ Coll. & Exch. On above d’ft. 5 ° 42 “ Fr’t & Exp. Dray 1.00, C & N -W, 3.20, 4 20 534. 40 “ Mdse. Dis. Bennett 64c, Cameron 84c, I 48 535. 24 1 43 “ F. P. Mast. On acc’t. 12 OO 636. 40 “ S. A. Emerson. On acc’t. 325 OO 537. 43 “ Herman Smith. 4 4 5 OO 41 ‘‘ Store & 0. Fixt. Show Case, 20 OO 538. 27 V ** Expense. 2 M Statements 4.00, Letter & Bill Hds 5.20, 9 20 539. 43 “ Jas. Kinsella. On acc.. 15 OO 540. 1 40 1 “ J. H. Goodwin. f 4 40 OO 541. 28 40 1 44 44 44 Paid bill Shoes, 12 OO 542. 41 “ Bills Receivable. Loaned J. Huggins on note 60 ds, 12-27-81, IOO OO 543. 29 4 i “ Bills Payable. Paid on note Hall’s Safe & Lock Co, 12-13-80 30 ds, 5 ° OO 544. 3 ° 46 “ J. K. Armsby & Co. On acc’t, C k, 28 94 545. 31 V “ Expense. Gas bill G. & E., 5 40 546. 40 “ S. A. Emerson. Gas bill, X 2 OO 550. I 42 “ Expense. Total for the month, 168 45 551. • Total cash paid. 3.492 652. Balance on hand* 3.776 5o3» l 1 1 -| 7,268 3 > 1 ° 8i 89 THE EXPLANATION. Ex. in TO 484 EXPLANATION OF THE CASH BOOK ENTRIES ON THE TWO PRECEDING PAGES. THE COLUMNS. As indicated at the top of the respective columns, 471 and 478 are the “Date” columns; 472 and 479 are the “L. F.,” or “Posting” columns, in which to write the Ledger page to which an item is posted. Ex. 475.—This is the “Miscellaneous,” or “General” column, in which is entered all cash received (except for cash sales of merchandise),—all items entered in this column are credited to the respective accounts indicated under 473. (See 13, 43 and 45.) Ex. 476.—This is an extra column kept in which to enter the merchandise cash sales. The object in thus extending the cash sales into this column is to save labor in posting; for by so doing, it is necessary to post the Merchandise cash sales only once a month,—crediting Mdse, at the end of the month for the total sales for the month, as shown by the total of this column. (See 547 -) When the Cash Book is closed daily, this column cannot be used,— then the cash sales items are entered in the “Miscellaneous” column, and we are obliged to post the same to the Merchandise account daily. Ex/ 477.—This is the “footing,” or “total” column, into which is extended the balance of cash on hand in the morning, and the total received during the day, at night. (See 485 and 548.) Ex. 482.— ihis is the “Miscellaneous,” or “General” column, in which is entered all cash paid out (except for items belonging to the Expense account),—all items entered in this column are debited to the respective accounts indicated under 480. (See 13, 44 and 46.) Ex. 483.—This is an extra column kept, in which to extend all items to be debited to the Expense account. This is kept for the same reason that any extra column is kept—to save labor in posting,—the total of this column being posted to the debit of the Expense account at the end of the month. (See 550.) When the Cash Book is closed daily, it is scarcely advisable to keep this extra column, as there are seldom enough entries to the Expense account to pay for keeping it,—the Expense items are then entered in the column with the miscellaneous items, and posted daily to the Expense account. Ex. 484.—This is the credit “footing” or “total” column, into which is extended, every night, the total amount of cash paid out during the day, and the balance of cash remaining on hand at night. (See 551 and 552.) Ex. 473 and 474.—When we receive cash, we write the name of the account we are going to credit for that amount under 473, and if any explanation be required, we write it in as few words as possible under 474. Ex. 480 and 481.—When we pay out cash, we write the name of the account we are going to debit for that amount under 480; and if any explana¬ tion be required, we write it in as few words as possible under 481. 90 THE EXPLANATION. Ex. 485 TO 494 THE ENTRIES.—DEBIT SIDE. Ex. 485.—When the Cash Book is closed daily, we bring down on the debit side, each morning, the amount of cash on hand for the beginning of the day’s business in the manner here illustrated; always extending the amount into the outer column. Ex. 486 and 487.—No entry is made of the cash sales in the Cash Book until the close of the day, and then Merchandise is credited for the total sales of the day in one entry as here shown. When an extra column is ke.pt, it is advisable to make a check in the “L. F.” column opposite all items for that column, so as to leave no blank lines whereby the eye might be confused in posting. Ex. 488.—Russell pays us $50 on his 30-days note of Nov. 18th, which amount we endorse on the note. (See 109.) Posted to 618. Ex. 489.—If we are in need of money, we take a note to the bank and get it discounted,—the entry is then made in this manner. This note is made without interest, } so the bank deducts 85 cents (see 509) and hands us the bal¬ ance, or gives us credit in our bank book, for the same. They deduct the discount at a certain per cent*, per annum for the time the note has yet to run before due—in this case 8 per cent, for 19 days. We must in all such, cases credit Bills Receivable for the full face of the note, and debit Interest on the opposite side of the Cash Book for the discount. (See no, 125, 146 and 153.) 489 posted to 619. Ex. 4895.—Bennett gives us a check on the bank as part payment for his account. (See 169, 80 and 81.) Posted to 695. Ex. 490 and 512.—Same as 489 and 509. Posted to 620. Ex. 491.—The N. Y. C. & H. R. R’y Co. return this amount of overcharge on a freight bill of recent date. As we made no charge on the Journal at the time we claimed this overcharge, we now credit it to Freight & Express. (See 206.) Posted to 650. Ex. 492.—On the 6th inst. we drew on Miller at sight, through our bank, for the amount of his account. Our bank this day advises us that the draft is paid, and enters in our bank book the amount to our credit. We now add this to the amount we have on deposit in the bank on the stub of our check¬ book, which is the same in effect as making a deposit of that amount. (See 170, 47 and 143.) Posted to 703. ' Ex. 493 and 494.—The note which Smith gave to Emerson on Nov. 14th, at 30 days, for $1,000, and was by Emerson endorsed over to the firm on Dec* 1st, is now due. Smith is unable to pay more than $500 and the interest accrued to date—$7-33; he therefore wishes to renew the remaining $500 for 15 days. He pays $507.33 cash, which is entered in the manner indicated in 493 and 494, and then writes a new note for $500 at 15 days, gets the same person he had on the old note to endorse for him, and hands this note to us; we then surrender the old note. No entry need be made for the new note; but it mav ^e allowed to appear in the books as so much still remaining 91 THE EXPLANATION. Ex. 495 TO 510 unpaid on the old note,—the only record of the renewal being made in the Bills Receivable and Bills Payable Book. (See 124 and 153.) Posted to 622 and 665. The object in taking a new note instead of endorsing the payment on the back and holding the old note, is in order that we may use the new, to get it discounted if we wish. Ex. 495 and 496.—-This note is made with interest , and as the rate per cent, is satisfactory to the bank, instead of deducting a discount, they allow us for the interest which has already accrued on the note to date, and give us credit for the face of the note—$200—and this accrued interest—76 cents. The interest is in this case calculated from the date of the note to the time it is discounted,—from Dec. 3d to Dec. 20th—17 days. (See 125.) Posted to 623 and 666. Ex. 497, 498 and 534.—We sold Bennett and Cameron goods on Dec. 17th and 21st, on terms 60 days, or 2 per cent, off for cash within 6 days. On Dec. 23d, they deduct 2 per cent, from their bills and pay us the balance. We give them credit for the full amount of the bills and debit Merchandise on the opposite page. (See 534 and 74.) 497 and 498 posted to 699 and 746. Ex. 499.—Cole pays us the amount due, and, as his is a petty account, it is treated in the manner described in paragraph 327. Posted to 744. Ex. 500.—This is the amount we received from Hurto when we compro¬ mised with him for a full settlement at 60 cents on the dollar. (See 450, 451.) Posted to 689. Ex. 501. They pay the amount of our claim against them. (See 393*394-) Posted to 743. Ex. 502.—Same as 491. Posted to 650. Ex. 503.—Same as 499. Posted to 745. Ex. 504.—Our attorney makes a collection on Dorman’s account, and hands the same over to us. (See 263.) Posted to 686. Ex. 505.—When we borrow money and immediately give our note for the same, the entry is made in the manner here illustrated. Posted to 642. CREDIT SIDE. Ex. 506.—We give our landlord a check for the month’s rent of our store. A “Rent” account is sometimes kept, so as to show how much has been ex¬ pended during the year for rent; but in this case it is carried into the Expense account. (See 190 and 194.) All items we wish charged to the Expense account we extend into the “Expense Dr.” column, and at the end of the month post the total for the month in one entry. (See Ex. 483.) Ex. 507.—We buy a set of blank books, some letter paper, envelopes, etc. Ex. 508.—We procure $3,000 insurance on our stock of goods and fixtures in the /Etna Insurance Co., and pay 1 per cent, premium on the policy. (See 187 and i88.)„ Posted to 656. Ex. 509.—See Ex. 488. Posted to 660. Ex. 510.—Goodwin draws $10 for his private use. (See 5 7 -) Posted to 57c It is not necessary to add “Private account” after his name, as it is so understood. 92 THE EXPLANATION. Ex. 511 Ex. 511.—We have a new counter made, and pay cash therefor. (See 93.) Posted to 593. Ex. 512.—See Ex. 490. Posted to 661. Ex. 513.—Emerson draws $15 for his private use. (Same as 510.) Posted to 576. Ex. 514.—We buy a new desk and chair for our office use. Posted to 594. Ex. 515.—We pay these freight bills. There is an overcharge on each,— the overcharge on the former we charge on the Journal (see 393); on the latter we simply make a memorandum of the claim, as we are not certain whether or not it will be allowed. It is, however, paid on the 10th inst. (See 491.) Posted to 649. Ex. 516.—It is the end of the week, and we pay our employes the amount due to each. (See latter part of paragraph 336.) Posted to 652. Ex. 517.—We purchase five bank shares of the Union Trust Co. stock. We buy these because we have money to spare, and think it a good invest¬ ment as this bank declares a semi-annual dividend to its shareholders, the per cent, of which amounts to more than our money would bring if put out on interest. When we receive cash on a dividend, we open a “Union Trust Co. Dividend” account, and credit that account for the amount of the dividend; which “Dividend” account is closed at the end of the year and the amount carried to the Loss & Gain account as a Gain. Posted to 676. Ex. 518.—We have a sign made to put up over our door. Some book¬ keepers erroneously charge this to Store Fixtures account. Nothing should be charged to Store Fixtures account except such articles as would be of value to others. Ex. 519.—We buy potatoes from a farmer and pay cash therefor. Every¬ thing we buy for the purpose of selling again, we debit to Merchandise account. Posted to 585. Ex. 520.—We pay for freight and drayage, also for express on a box of goods. (See 205.) A separate account is sometimes kept for Drayage, but in this set it is carried into the Freight & Express account. Posted to 649. Ex. 521.—We go to the bank and buy a draft (bank draft) on New York and send it to the Catlin Tobacco Co. (See 179.) Posted to 747. Ex. 522.—Same as 516. (See 201 and 203.) Posted to 653. In a store where there are but few employes it is not necessary to write the initials, when making the entry. Ex. 523.—The bank charges us 25 cents for collecting our sight draft on F. H. Miller. (See 492 and 209.) Posted to 669. Ex. 524 and 525.—The time draft which Arbuckle Bros, drew on Goodwin Nov. 13th, and was by him accepted, is now due, and is sent by them through the bank for collection. The bank presents it to us for payment, and we pay it, together with 65 cents exchange and collection charges. (See 361 and 134.) Posted to 629 and 670. Ex. 526.—We pay for circulars, and for advertisement in “Tribune,”— desiring to know how much is expended during the year for advertising, we 93 THE EXPLANATION. 527 TO 547 keep an Advertising account and charge the amount to that account. Posted to 674. Ex. 527 and 528.—Baker & Co., of New York, draw on us “at sight,” on Dec. 13th, for the amount of their account, the draft reaches us on the 15th, is “accepted,” and after the three days.of grace is now due. We pay it, together with 30 cents exchange. (See 180 and 143.) Posted to 752 and 671. Ex. 529.—We buy coal for our own use in the store, and as we keep no Fuel account, the amount is charged to Expense. (See 189 and 194.) Ex. 530.—Russell’s note, dated Oct. 20th, at 60 days, is now due and he is unable to pay it. We discounted it in the bank on the 3d inst. (see 489), and we are now obliged to take it up. This note was made without interest; if it had been made with interest, we would be obliged to pay the bank the face of the note plus the interest; we would then debit Bills Receivable for the face of the note and Interest for the amount of accrued interest. (See 126.) Posted to 612. Ex. 531, 532 and 533.—The note Goodwin gave to Thurber & Co., dated Oct. 22d, at 60 days, will be due on the 24th inst., and as it is made payable at their office in New York, we this day buy a bank draft for $505.25, for the face of the note and interest, (the note was made with interest ,) and send it to them so it will reach them on the day the note is due. We pay exchange on the draft, 50 cents. (See 362, 134, 144 and 209.) Posted to 630, 662 and 672. Ex. 534.—See Ex. 497 and 498. Posted to 585. Ex. 535, 537 and 539.—These employes draw money on their accounts. (See 204 and latter part of paragraph 337.) Posted to 680, 682 and 678. Ex. 536 and 540.—Emerson and Goodwin draw money for their private use. Posted to 580 and 572. Ex. 541.—Goodwin instructs the book-keeper to pay for a pair of shoes which the shoe-maker brings in with a bill for same. The shoes are for Goodwin’s private use, therefore the amount is charged to his account- Posted to 573. Ex. 542.—We loan J. Huggins, on his note at 60 days, with interest at 8 per cent., $100. (See 108.) Posted to 616. Ex. 543.—We make a payment of $50 on the note we gave to the H. S. & L. Co. We debit Bills Payable for the amount of that payment, which amount is by them endorsed on the note. (See 134.) Posted to 631. Ex. 544.—We give Armsby a check on our bank for the balance of his account. (See 179.) Posted to 765. Ex. 546.—We pay for Emerson his private gas bill. Posted to 581. CLOSING THE CASH BOOK. Ex. 547.—It is now the end of the month, and we wish to close or balance the Cash Book. First .—Find the total of the “Mdse. Cr.” column, then bring that total into the “Miscellaneous Cr.” column, which amount is the total sales for the month. Posted to 589. 94 THE EXPLANATION, Ex. 548.— Second. —Find the total of the “Miscellaneous Cr.” column, (in¬ cluding the Mdse. Cr. amount) the amount of which is the total cash received during the month, and this amount is then extended into the “Total” column. Ex. 549 -— Third. —Add the amount on hand at the beginning of the month, $3,000, and the total received which gives the total Cash debit. Ex. 550.— Fourth. —Find the total of the “Expense Dr.” column and bring that total into the “Miscellaneous Dr.” column. Posted to 645. Ex. 551.— Fifth. —Find the total of the “Miscellaneous Dr.” column, which amount is the total cash paid out during the month, or total Cash credit. Ex. 552.— Sixth. —Find the difference between the total Cash credit (551), and the total Cash debit (549), which difference is the balance of cash remain¬ ing on hand. Now write, in red ink, “Balance on hand” and extend the amount into the “Total” column under the total amount paid out. Ex. 553.— Seventh. —Add the total paid (551), and the balance now on hand (552), and place the total below (553), which total should just agree with the total on the opposite side of the Cash Book. RULING. —The red lines should first be ruled in the manner here illustrated. The double red lines should always extend across both pages on the same line; therefore we always rule first the page that extends the lowest down, then rule the opposite page to correspond. Ex. 554.—After the Cash Book has thus been balanced, we bring down on the debit side of the book the balance of cash on hand for the beginning of the new month. We then proceed in the same manner as in the preceding month. 547 posted to 589. 550 posted to 645. REMARKS. —When there are a great many entries in the Cash Book every day, it is advisable to balance it daily; then the extra columns, “Mdse. Cr.” and “Expense Dr.” could not be used. When they are not used, there are but two money columns on each side of the Cash Book,—in reality, a common Journal ruling. The items that are here entered in the extra columns would then be entered in the inner, or general column, and the book would be other¬ wise treated the same as though these columns were here stricken out—the Mdse, and Expense items being posted to their respective accounts the same as the other items. THE ILLUSTRATION. 555 TO 591 LEDGER. 40. J. H. Goodwin—Stock Account. 555 . 563 . 1880. Dec. 567 . 568 . 1880. Dec. 1880, 571 . Dec. 57 * 2 . 573 . 674 . 576 . 677 . 678 . 579 . 586 . 681 . 1880. 684 . Dec. 585 . 586 . 587 . i88iT 588 . Jan’y 1880. Dec 3 l 6 14 *7 21 24 3 1 1 10 3 i 3* 656 . To Halance, To S. A. E. Priv’te acc’t; net loss. To Balance. J. H. G 4 27 28 31 Shoes, ToJ. H. Goodwin, Stock acc’t. M. Gas bill, To Inventory, 20.00; 1.48, 23 Journal, i 1.427.2s To Loss & Gain, To Inventory, 40 A. E 40 40 OODWIN 9 1 9 1 9 1 40 S. A. Emerson 9 1 63 63 6 3 9 1 9 1 62 65 47 3-57* 3 .S 7 I > 8 . 3 1 MERSQN 217 3.282 3.500 31 10 40 12 6 2 7 1 *33 31 3 1 2 2 3 325 00 55 85 12 00 00 00 1880. 564 . Dec. 665 . 9 . 566 . 1881. Jan’y Stock Account. 569 . 1880. Dec. 1881. 570 . Jan. RIVATE A 1880. 575 . Dec. 350 52 Merck 3.376 1,072 4,470 785 5.255 2,212 RIVATE A 1880. 5 S 2 . Dec. 583 . NDISE. 589 . 590 . 591 . 1880. Dec. :co 31 Present Worth, UNT. By Yz Net Gain, 3 i 31 3 1 3 i 3* 660 . 561 . Net Investment, | 62 By Net Private Gain, j 46 By Present Worth, Net Investment, CCOUNT. By Y Net Gain, By S. A. Emerson, Stock acc’t, Cash sales. Jour. “ By Inventory, 40 62 40 47 47 40 9° 65 56 3,500 7 1 3 . 57 i 3 . 57 i 3.500 3,500 3,282 00 3 1 TT 3 i 79 133 TJT 3* 133 3* **7 350 52 2.536 506 3,0 4 3 5.255 *9 n 40 is 96 THE ILLUSTRATION. 592 TO 643 LEDGER. 41. Store and Office Fixtures. 1880. — 692 . Dec. I To Inventory 62 130 OO 699 . ’ 88 °- 593 . 4 9 1 13 5° 600 . 1 ec ' 31 By Inventory, 338 OO 694 . 6 91 35 OO 31 By Loss and Gain, 47 14 5 ° 595 . 13 63 150 OO 596 . IS 63 4 OO 597 . 24 9 1 20 ©0 3 5 2 6 0 352 5 ° 352 50 l88l. 1 - - t - - = 698 . Jan’y I To Inventory 338 OO «WT- -- Bills Rj ICEIVABLE. < 1880. 602 . Dec. 603 . 604 . 605 . 606 . 607 . 608 . 600 . 610 . 611 . 612 . 613 . 614 . 615 . 616 . 1881. 617 . Jan’y 628 . 1880. 629 . Dec. l6 630 . 22 631 . 29 632 . 3 * Russell, Porter, Fisher, H. Smith, Bennett, Richardson, Russell, 11-30 11-60 10- 60 11- 30 10-60 Porter, Burgess, Lyman, Huggins, 11- 30 12- 90 90 3° 60 10-60, T. up 12-60 60 3° 30 Bal. Arbuckle, 11-30 Thurber, 10-60 Hall’s S.&L.C0.12-30 Bad. 62 62 62 62 62 62 62 63 64 64 9 1 64 64 64 9 1 41 9 1 9 1 91 4 > 200 100 200 240 100 1000 200 190 100 78 200 241 39 20 100 1 I 3 009 3009 1449 96 Bil LS 640 500 5 ° 1 190 1062 618 . 619 . 620 . 621 . 622 . 623 . 624 . 625 . 626 . 627 . 1880. Dec. 3 3 6 U 20 21 23 3 l 31 00 00 00 00 °4 2252 04 'AYABLE. 633 . 634 . 635 . 636 . 637 . 638 . 639 . 640 . 641 . 642 . 1880. Dec 1881. 643 . Jan’y 1 1 8 13 H 23 25 31 Russell, 11-30, P. “ 10-60 D. “ 11-60. D. Fisher, 10-60, H.L.R. Att’y, H. Smith, 10-60, P. Bennett, 12-90, D. Russell, 11-30, R. Porter, 11-30, R. Lyman’s called lost, By Balance, 90 90 90 63 90 90 64 64 65 4 t Arbuckle, Thurber, Arbuckle, Hall’s S. & Procter & G. Sprague, Arbuckle, Babbitt, Catlin, Teele, Bal. 50 200 100 100 500 200 150 240 1 68 SJ 1449 3009 00 00 00 00 00 00 00 00 94 03 96 11-30 62 64O OO 10-60 62 500 OO 12-60 62 2l8 60 Co. 30 63 150 OO 60 63 189 30 3 ° 64 28 45 60 64 146 OO 3 ° 64 65 50 11-60 64 64 19 12-30 9 ° 250 OO 1062 04 225 2 04 2252 04 41 1062 04 97 THE ILLUSTRATION. 644 TO 673 42. LEDGER. Expense. 1880. 644 . Dec. 645 . 1881. 646 . Jan'y 1880. 649. Dec. 1880. 652 . Dec. 653 . 654 . 656 . 1880. Dec. 1881. 657 . Jan’y 1880. 660 . Dec. 661 . 662 . 663 . 1880. 669 . Dec. 670 . 671 . 672 . To Inventory, To Inventory, 19.34, 7.70, 4.20, 11 23 ‘^Etna,” To Inventory, To Lou and Gain, Freight 20 168 188 188 15 OO 31 31 S 4 LA ilES 36 36 7 2 145 145 30 C 0 L,LECTI 0 AN ) EXPRES 24 24 In SUR 4 NCE. 30 00 27 IkTE 5 7 6 13 50 85 00 25 11 ) 5 * m a 4D Exchange. 62 25 65 3 ° 50 1880. > 47 . Dec. 148 . S. 1880, 650 . Dec. 10 651 . By Inventory, ■' Loss and Gain, 1880. 600. Dec. 31 „ 1880. 608. Dec. 659 . IEST. 1880. 664 . Dec. 665 . 666 . 667 . 668 . 1.24, 1.00, 55c, 13 28 By Loss and Gain By Loss and Gain, By Inventory, •' Loss and Gain, 47 47 47 47 673 . 3 * By Loss and Gain. 47 »5 >73 188 >45 3 ° -nr >3 ♦5 28 ~ 3 1 1 45 00 45 79 45 24- 50 So 5 ° 33 76 27 76 TT 6 a 70 THE EXPLANATION. EXPLANATION OF THE LEDGER. THE COLUMNS. Ex. 555 and 559 -—These are the date columns. The dates entered herein are taken from the Journal and Cash Book, or whatever books we post from. Ex. 556 and 560.—These are the “explanation columns” referred to in 323 and 324. Ex. 557 and 561.—These are the columns in which we indicate the Journal or Cash Book pages from which a transaction is posted or transferred. By thus entering on an account the Journal or Cash Book page upon which a transaction may be found recorded in detail, it is not necessary to write any explanations on this book, excepting the few instances that will be noticed on the accounts herein. Ex. 558 and 562.—These are the debit and credit money columns. Now read Par . 75 to 19; also 321 to 330. THE ACCOUNTS. Ex. 563 to 570.—See 49 to 56. (This set of books is closed according to Closing No. I.) It will be seen that Goodwin has a net private gain, while Emerson has a net private loss: thus illustrating to the student the different ways of treating the Stock accounts in such cases. Ex. 571 to 583.—See 57 to 65. It will be seen in 575 and 582 that each of the partners is credited with equal shares of the net business gain. Goodwin has drawn less (571, 2 and 3) for his private use than his net business gains amounted to, therefore he has a net private gain (See 62). It does not matter whether or not a salary is allowed—the account is treated the same, as will be seen in this case where none is allowed. Emerson has drawn more for his private use than his net business gain amounted to, therefore his is a net private loss. (See 63.) Ex. 584 to 591.—See 66 to 74. Ex. 592 to 600.—Sec 92 to 96. Ex. 601 and 628.—See 322. In business colleges 601 is the style of ruling that is used under the Ledger headings. Some book-keepers also use this; but if any ruling is used the style under “Bills Payable” (628) is recommended, as it requires less time to rule it and is not so “fussy.” These rulings are used here simply to show the different styles. Ex. 602 to 627.—See 107 to 128. Some book-keepers do not insert the two ciphers in the “cents” column in their books when there are no cents, but Lave the column blank as has been done in this Bills Receivable account. When an item is posted to this account, do not write in that formal business- college way “To Ed. Russell” when a note is received, or “By Cash” when it is paid; but simply write as in 602 and 618 the person’s surname (Russell)*' the month in which the note is dated, (1 ith or Nov.) the number of days upon which it is drawn (30), the page (62), and the amount ($200). And when a THE ILLUSTRATION. 674 TO 690 LEDGER. 43. Advertising. 1880. 1880. 674 . Dec. 17 9 1 l6 OO Doc. 04 0* 31 By Loss & Gain, 47 l6 OO _ L Cnk >N Tl 1 US+ Co. SH 7 IRE 5 . 1880. i 676 . Dec. 9 5 Shares, 9 l 500 > 00 M. W . s a XTOI I ' SALARY $ 5 ° Mo.) 1880. 677 . Dec. 31 Mo. Dec., 65 25 OO James Ki 'SELL -A— (^Salary $ 4 ° Mo.) 1880. 1880. 678 . Dec. 27 9 1 ’5 OO 679 . Dec. 31 Mo. Dec., 65 20 OO 6 00 • Frank P. Mas T- {Salary $ 4 ° Mo.) 1880. 1880. 680 . Dec. z 4 9 1 12 OO 681 . Dec. 31 Mo. Dec., 65 20 OO 8 00 Herm AN Smiti •I—( Salary J L 5 Mo.) 1880. 1880. 682 . Dec. 24 9 1 5 OO 683 . Dec. 31 Mo. Dec., 65 7 50 1 2 50 H. L. RlCID ^RD Ion, Atti )RN EY. 1880. 1880. 684 . Dec. 17 S. A. Fisher’s Note, 63 IOO OO G86. Dec. 29 Dorman acc’t, 90 5 ° OO 685 . 24 Wm. Dorman acc’t. 64 100 OO 687 . 3 l " called worthless. 65 •s OO 125 ^0 0 200 00 75 00 Sam Hu ^TO, 198 N. La S \LL E St. 1880. 1880. ' 688 . Dec. I Balance, 62 162 50 689 . Dec. 27 60 per ct. cash, 90 97 50 690 . it Lost A. & N. 40 per ct.. 65 6 S OO 16 } BO 162 50 1 162 — IOO THE ILLUSTRATION, 691 TO 727 LEDGER. 44. George W. Bennett.—212 Prairie Ave. IOI THE ILLUSTRATION, 728 TO 753 LEDGER. 45. W. C. Lyman.— 73 Dearborn Ave: 1 1880. j 1880. 728. Dec. 21 64 14 80 730. Dec. 21 M. 64 I OO 729. 24 64 7 14 731. 27 Note 30 ds, 64 20 94 2 1 94 21 94 21 94 21 94 T. W. Ki ENE.- —3 0 Michic 7AN Ave. 1880. 732. Dec. 2T 64 4 S 12 733. 24 64 12 OO 67 1 2 ' Wh t. I § <£ O IN.4 -64 Pari A VE. 1880. 1880. 734. Dec. 17 63 IOO 00 735. Dec. 28 Acc’t to H. L. Richard- son, Att’y, IOO OO Pett { A ::counts. 1 1880. y 1880. 736. Dec. I 3 L. S. & M. S. R’y, 63 I OO 743. Dec. 28 Paid, 9 ° I OO 737. 17 Buck, R. N., 63 9 60 738. 17 Cole, H. S., 63 6 40 744 . Dec. 25 Paid, • 90 6 40 739. 21 Piper, Adolph, 64 4 20 740. 21 Dickinson, H. M., 64 3 IO 741. 21 Goodwin, B., Jr., 64 5 65 745. Dec. 29 Paid, 9 ° S 65 742. 21 Cameron, D., 64 42 OO 746. Dec. 23 Paid, 90 42 OO Catlin Tc - TO - > O O ) c St. I ou s, Mo. 1880. 1880. 747. Dec. 13 9 1 340 40 749. Dec. I Bal.. 62 34 ° 40 748. 25 Acc’t D’ft, 64 64 19 1 750. IS 11-28, 60, 63 64 19 404 69 404 69 Samuel 3 u: 'PLES & :o.—S t. Lo jis, Mo. 1880. Km "V 751. Dec. I Bah. 62 344 OO B > * — w_ R & Co. —New Y OR* :. 1880. 1880. 762. Dec. 18 9 1 280 OO 753. Dec. I Bal.. 62 280 OO 102 THE ILLUSTRATION, TO 783 LEDGER. Arbuckle Bros.—New York. 1880. | 1880. 754 . Dec. 8 Acc’t D’ft, 62 2l8 60. 756 . Dec. 3 60, 63 218 756 . 25 Note, 64 146 OO 757 . 18 60, 65 I46 364 60 364 B. T j Bab BIT! —New \ r OR K. 1880. - 1880. 758 . Dec. 25 Note, 64 6S 5 ° 759 . Dec. 6 3 °. 63 120 760 . 14 3 °. 65 65 120.00 Proc TEB & C 1 AM !LE.- ClN n 3 NATI. l88o. 1880. 761 . Dec. 14 Note, 63 189 3 ° 762 . Dec. 8 60, 65 189 J K. Arm 5 BY & CC 1. ! 1880. 1880. 763 . Dec. 18 Russell’s Cheese, 63 h 60 766 . Dec. 2 63 14 764 . 24 D’ft on Dollus, 64 5 ° OO 767 . 13 63 5 765 . 30 9 1 28 94 768 . 15 60, 65 20 I 9 3 54 769 . J 7 3 °. 65 14 770 . 18 60, 65 12 771 . 20 65 5 1 772 . 23 65 2 773 . 27 65 II 774 . 29 6s 6 93 c _W W. Bob 5 LAND & Cc 1880. 1880. 775 . Dec. S M. 62 5 OO 778 . Dec. 2 63 28 776 . 15 «< 63 3 OO 779 . 14 63 17 777 . 23 Order on Bennett, 23 20 00 780 . 17 65 12 28 00 781 . 28 65 7 37.65 65 5 PR. 4 .GUE. w. RNER & ^5 p 1880. 1880. 782 . Dec. 23 Acc’t D’ft, 64 28 45 783 . Dec. 7 63 89 6o oo 60 OO 50 30 6 «a 25 00 30 90 40 79 60 70 54 40 85 OO 40 65 61.17 62 THE ILLUSTRATION. 784 TO 805 LEDGER. ✓ 47. Lost Accounts and Notes. l880. 1880. 784. Dec. 27 Sam. Hurto, 64 65 OO 788. I)ec - 3» By Loss and 785. 31 Alex. Dollus, 65 32 5t 788. W. C. Lyman, Note, 65 20 94 787. W. Dorman, Acc’t, 6S 24 OO 143 45 14 ^ Loss AN o Gain. - 1880. 1880. 789. Dec. 31 To Store and O. Fix- 799. Dec. 3 1 By Mdse, tures. 4i *4 5° 790. To Expense, 42 173 45 800. “ Interest, 791. “ Fr’t and Express, 42 28 45 792. “ Salaries, 42 14 s 00 793. “ Insurance, 42 2 5° 794. “ Coll, and Exch., 42 I 70 795. ** Advertising, 43 l6 00 796. “ Lost Accounts and Notes, 47 143 45 ToJ. H. Goodwin, Pri- 797. vate Acc’t, 40 >33 31 To S. A. Emerson, Pri- 798. vate Acc't, 40 >33 3* 02. 79 1 67 801. 803. 47 >43 45 >43 45_ 40 785 >5 42 6 52 804. 79 1 6 7 SS37 I0 4 THE EXPLANATION. payment is made on this note, write on the credit side of the account when the item is posted, the name, month, days, page and amount, the same as on the debit side—adding after the days “P.,” “D.” or “R.,” so that we may know whether “Payment,” “Discounted” or “Renewed.” This is all done simply for checking purposes, in case that the difference between the two sides of the account should not agree with the total value of the notes we actually have on hand. (See 128.) For explanation of 626, see 271. Ex. 629 to 643.—See 129 to 140. The explanation columns are treated in this account in the same manner and for the same purpose that they are treated in the Bills Receivable account,—the names, etc., being entered simply for checking purposes. (See 139.) It is not necessary to ditto the month in the explanation column but allow it to stand until changed as in 635 to 641. The Bills Receivable and Bills Payable accounts are usually balanced in the manner here illustrated only when the page is full and we wish to transfer the account to a new page, excepting at the end of the year, at which time it is customary to close them and bring down the balances in this manner. (See 308.) Ex. 644 to 648.—See 189 to 197. Ex. 649 to 651.— See 205 to 208. Ex. 652 to 655.—See 201 to 204. Ex. 656 to 659.—See 187 and 188. Ex. 660 to 668.—See 144 to 154. Ex. 669 to 673.— See 209 to 212. Ex. 674 and 675.—See Ex. 526 in Cash Book. When we close an account upon which there is but one item, as in this case, the closing lines are ruled in the manner shown under this account. Ex. 676.— See Ex. 517 in Cash Book. These bank shares are by us con¬ sidered worth now, at the end of the year, just what they cost, and as we have them on hand in our safe we call them a Resource, therefore allow the account to stand untouched. (See 18.) Ex. 677 to 683.—These are accounts with our employes, and the balances, $25, $5, $8, and $2.50, are the amounts that are still due them for their services, which they have not yet drawn,—therefore Liabilities to us, the same as any other personal accounts we owe. It is customary to write on each ac¬ count, in the manner here indicated, the salary paid to each. (See latter part of paragraph 337.) Ex. 684 to 687.—See 262 to 264. Ex. 688 to 746.—See 164 to 173; also 327. Ex. 694 and 701.—The small figures in the money columns under the amounts throughout this Ledger are the footings of those columns; and in the explanation columns, are the balances that existed on the accounts before the books were closed; consequently are the balances that are taken in the first Trial Balance. (See 808.) These are intended to illustrate the lead-pencil figures referred to in 302. Ex. 747 to 783.—See 174 to 183. Ex. 629 TO 783 _ io5 THE ILLUSTRATION. 806 TO 809 Ex. 784 to 788.—See 265 to 274. Ex. 789 to 800.—See 275 to 308. Ex. 801 to 805.—These are the “Closing Lines” referred to throughout “The Foundation.” 806 . Inventory of Goodwin and Emerson’s Merchandise, Store and Office Fixtures, etc., etc., —Taken this 1st day of Jan., 1881. Merchandise, Store & Office Fixtures, Expense (Coal), Insurance (Unexpired Premium), $2212 338 IS 2 ? 40 00 5 ° 807 . When an inventory is taken, it is usually made in a book ruled in the common Journal form as above illustrated; and for the Merchandise, of course each item of goods we have in the store is extended into the inner column separately; then the grand total is finally extended into the outer column. The same also with the Store and Office Fixtures, as well as anything else we may have of value on hand belonging to other accounts. 808 . Trial Balance,—T aken Dec. 31st, 1880. 809 . The above is the “figure” Trial Balance referred to in 300 and 301. When we have a great many accounts, we may rule extra columns on the page of the Trial Balance book, so as to have nothing but debit and credit money columns on the book; but this is done simplv to economize. 106 THE ILLUSTRATION. 810 . Trial Balance,— Taken Jan. ist, 1881. 43 H. L. Richardson, Attorney, 125 44 George W. Bennett, 2 02 45 T. W. Keene, 57 12 R. N. Buck, 9 60 Adolph Piper, 4 20 H. M. Dickinson, 3 IO 43 M. W. Saxton, 25 James Kinsella, 5 Frank P. Mast, 8 Herman Smith, 2 5° 45 Sam’l Cupples & Co., 344 46 B. T. Babbitt, 120 Geo. W. Boreland & Co., 37 65 Sprague, Warner & Co., 6l 17 Total Personal Accounts owing us. 20 Z 04 “ ** “ we owe. OO3 32 go Cash, 3776 50 40 Merchandise, 2212 40 1 4i ^Jtore & Office Fixtures, 338 Bills Receivable, 1449 02 Bills Payable, 1062 04 42 Expense (Fuel), 15 Insurance (Unexpired), 27 5 ° 43 Union Trust Co. (Shares), 500 40 J. H. Goodwin—Present Worth, 3571 3i S. A. Emerson— ■' “ 3282 79 8519 46 8519 46 811 . This is the Trial Balance with the names of the accounts, referred to in 301. This kind of a Trial Balance is a sufficient “Balance Sheet” (see latter part of paragraph 303) to satisfy any business man; but as such a Trial Balance is required only once a year, the book-keeper can well afford to spare time enough to make out for the firm a “Yearly Statement” in the manner hereafter illustrated, which cannot help but prove sufficiently clear and plain to satisfy the most fastidious. (See 812 to 818.) In taking the above Trial Balance, it will be seen that the personal accounts from the Ledger are first taken, then the cash balance from the Cash Book, then the remaining accounts in the Ledger,—last of all the partners’ Stock accounts. (See 296, 297 and 298.) After the Trial Balance has been taken the Yearly Statement is then made, the items of which are taken from the Trial Balance for the Assets and Liabilities (see 812), and from the Loss & Gain account in the Ledger lor the Losses and Gains. (See 813.) The Partners’ Individual State¬ ments are made from the Stock and Private accounts of each of the partners. (See 814.) V 810 AND 811 107 THE ILLUSTRATION. 812 TO 814 812 . Yearly Statement—Goodwin & Emerson, —Jan. ist, 1881. Assets. Personal Accounts owing us. Bills Receivable—Notes on hand. Cash on hand. Merchandise on hand (per inventory). Store & Office Fixtures on hand (per inventory), Coal on hand, Insurance (Unexpired), Union Trust Co. (Shares), Liabilities. Personal Accounts we owe, Bills Payable—Notes we owe. Present Worth of Firm, Jan’y ist, 1881, 201 1449 3776 2212 338 15 27 500 1 04 02 So 40 5 ° 603 1062 6854 32 °4 10 1 i 8519 46 8519 46 (See 810.) 813 . Yearly Statement, continued—Goodwin & ist, 1881. Emerson, — Jan Gains. Merchandise, Interest, Losses. Store & Office Fixtures, Expense, Freight & Express, Salaries, Insurance, Collection & Exchange, Advertising, Lost Accounts & Notes, Net Gain for Firm, Jan’y ist, 1881, « m 173 28 *45 2 1 16 143 265 50 45 45 ! 00 50 7 ° 00 45 6a 785 6 15 *2 J 791 67 79 1 67 (See 789 to 800.) 814 . Partners’ Individual Statements, — Jan. 1st, 1881. J. H. Goodwin. Net Worth, Dec. ist, 1880, • One-half Net Gain, Jan. 1st, 1881, Less amount drawn for private use—per private account. • 133 62 31 OO 3500 OO Net Private Gaii\ 7 » 3 1 Present Worth, Jan. ist, 1881, 357 1 3 i (See 563 to 566 and 571 to 575.) ! • S. A. Emerson. Net Worth, Dec. ist, 1880, Amount drawn for private use—per private account, One-half Net Gain, Jan. ist, 1881, 350 133 52 3 1 35 oo oa Not Private Losa, *'7 21 Present Worth, Jan. ist, 1881, 3282 79 (See 567 to 570, and 576 to 583.) 108 THE ILLUSTRATION. 815 TO 818 815 . Sales. January, February, March, 1881 . 1882 . ro OO 00 H 00 00 4 - in 00 00 H 1 1886. . . . 1887 . Total for the year. 816 . In order to present to the firm, in a compact form, a statement of the monthly sales, in such a way that the sales for one month or year may be compared with the sales of another, the above form is recommended. This form is continued in length for the twelve months of the year, and in width for as many years as there can be money columns made on the page; or if be¬ gun on the left-hand page of the book, it may be extended across both pages. When this statement is made, the total sales (cash and on-account) are, at the end of each month, here recorded. A statement of the firm’s Expenses may be made in the same manner; but this requires more labor, as it necessitates the makingf first, of an itemized statement of the expenses. 817 . Proportion of Gain to Sales. Proportion of Gross Gain to Sales, Proportion of Net Gain to Sales, i860. 1881. l882. 1883. 1884. i88 S . 25.8 per cent. 8.76 percent. : 818 . The foregoing is a statement easily made, and proves one of great importance and satisfaction to the business man: since he can therefrom com¬ pare one year with another, the proportion of the gross and of the net gain to the sales. This statement is made only at the end of the year after the books have been closed. The proportion of the gross gain is then found by adding two ciphers to the gain on Merchandise , and dividing this amount by the total Merchandise sales for the year —which in this set of books would be as follows: 3,043.18) 78,515.00 (25 t 8 ¥ per cent. (See 587 and amount in small figures under 590.) The proportion of the net gain is then found by adding two ciphers to the net business gain (found on the Loss & Gain account) and dividing that amount by the total Merchandise sales for the year ,—which in this set is as follows: 304318) 2666200 (8 t W per cent. (See 797, 798 and amount under 590.) i( 109 DOUBLE ENTRY BOOK-KEEPING. 819 TO 822 STOCK COMPANIES. 819 . Organization. —When a stock company is organized, it is done by several persons coming together and making a certificate to the effect that they propose to form a corporation to bear a certain name, for the purpose of transacting a certain kind of business at a certain place; and that they pro¬ pose to issue a certain number of shares^at a certain price per share; that the capital stock of the corporation is to be a certain amount; and the duration of the corporation a certain period of time. This certificate is filed in the office of the Secretary of State, whereupon he issues a License to the persons making such certificate, giving them permission to open books for subscription to the capital stock of such corporation. A subscription book is then opened and the shares of the company are dis¬ posed of by subscription ,—the persons subscribing paying ten per cent, down, and the balance afterward at such times and in such payments as the by-laws, hereafter to be made, may designate. After one-half of the capital stock has been subscribed for, a meeting of the subscribers, is called and by-laws are by them made; a record of the pro¬ ceedings in this meeting is then filed in the office of the Secretary of State, whereupon a certificate is issued by him to the effect that the corporation is fully organized according to the laws of the State. 820 . Stock Holders or Share Holders. —Certificates of Stock are issued to each of the subscribers for the number of shares by each subscribed. These certificates are transferable at the pleasure of the owners, except when the owners are indebted to the corporation, then the transfer cannot be made without the consent of the corporation. 821 . Capital Stock Increased or Diminished. —The capital stock of a cor¬ poration may be increased or diminished by a vote of a majority of the stock¬ holders representing a majority of the stock, a statement of which increase or decrease of stock must be filed with the Secretary of State. The capital stock of a corporation is never allowed to exceed a certain amount,-—that amount being determined by the laws of the State governing “Corporations.” 822 . Book-keeping for a Stock Company. —-A- “Capital Stock” account is opened in the General Ledger, which account is credited whenever capital is paid in, i. e., when payments are made on subscriptions, the Capital .Stock account is credited for the amounts of such payments. When all the shares originally issued by the corporation are sold and paid for, then the Capital Stock account will be credited for just the amount that the certificate origi¬ nally issued and filed with the Secretary of State indicated would be the cap¬ ital stock of the corporation. The amount for which a Capital Stock account is credited is called the “Paid Up Capital” of the Company. After the shares have thus all been issued and paid for, the Capital Stock account is allowed to stand from year to year without an entry being made l IO DOUBLE ENTRY BOOK-KEEPING. thereon, unless the capital stock of the corporation be dimmished or increased, and then this account is debited or credited accordingly. 823 . Gains and Losses and Surplus Fund. —The gains and losses of the corporation are first carried to a Loss & Gain account the same as in any other book-keeping; but afterward when the net gain or the net loss is found, unlike in any other book-keeping, it is carried to a “Surplus Fund” account, and in that account it is allowed to remain until a dividend is declared by the Com¬ pany, at which time this “Surplus Fund” account is debited and a “Dividend” account is credited for the amount of*such dividend. Whenever the dividends are paid to the shareholders, the “Dividend” account is debited for such amounts; therefore, when they have all been paid, the “Dividend” account will just balance. 824 . There is another method of disposing of the net gain, which is to declare a dividend as soon as the net gain is found for a certain portion of that gain; then credit “Dividend” account for the amount of the dividend thus declared, and “Surplus Fund” account for the balance; the former method, however (823), is thought to be the better one. 825 . Dividends. —The dividend is seldom declared for the full amount of the gain, for the reason that the Company wishes to reserve a portion of the amount as a surplus fund, against which they may draw at such times as the net gain is not sufficient to make up the customary rate per cent, of dividend which is at regular intervals declared by the Company. For example: If a Company declares a five per cent, dividend semi-annually, and the number of shares issued by this Company require at this per cent, a dividend to the amount of $15,000 and the net gain of the Company be only $12,000, then the “Surplus Fund” account must be drawn on to the extent of $3,000. If the final result of the Company’s business be a net loss, the entire amount of such loss must be carried from the Loss & Gain account to the debit side of the “Surplus Fund” account. Some Stock Companies declare dividends semi-annually, some quarterly, and a few monthly, while others have no stated times in which to declare them, but do so only at such times as it is the general wish of the stockholders so to do. 826 . Dividend Receipt Book. —This is a book in which are entered in alpha¬ betical order, whenever a dividend is declared, the names of each of the share¬ holders, together with the number and value of shares held, the percentage of dividend and dividend amount, Opposite each of these amounts, whenever the dividends are paid to them, the shareholders sign their names and enter the dates upon which they receive such payment. 827 . Stock Ledger. —The Stock Ledger is a book in which is kept a record of the names of all the shareholders and number and par value of shares held by each. It is a private book, and is in no way connected with the other books of the company. A “Capital Stock” account is opened in this book, which ac¬ count is debited for the total number and par value of the shares issued by the corporation; following this, an account is then opened with each of the share- 82 $ to DOUBLE ENTRY BOOK-KEEPING. 830 holders; then, the “Capital Stock” account is credited for all shares that are disposed of, and each of the persons to whom such shares were sold are debited for the number and par value of same. When the total number of shares issued by the corporation has been disposed of, the “Capital Stock” account here opened will balance, and all the shares will have been debited to share¬ holders; therefore, when this account does not balance, the difference between the two sides always shows the number and par value of shares remaining unsold, or not yet subscribed for. The total of all the accounts in the Stock Ledger (including the difference, if any, between the two sides of the “Capital Stock” account) should always represent just the amount of stock issued by the corporation. When a shareholder transfers shares to another person, the person to whom the shares are transferred must take the certificate of stock to the Company which issues it and have the transfer recorded in the Stock Ledger; which is done by the Company crediting the old shareholder and debiting the new. 828 . “Limited Liability ” and “Full Liability ” Companies .— LIMITED.— When the word “Limited” is affixed to a stock company’s name, it signifies that each shareholder is individually liable to the creditors of the company for only the amount representing the value of shares held by each. If suit is brought against the company for a claim and it is not paid by the company, ac¬ tion may be brought against any one of the shareholders to the extent of the shares held by him; and when claim is by him paid, he may recover from each of the other shareholders the amount paid in proportion to the shares by each held —less his own proportion of such claim. If a“Limited Liability Company”omits to add the word “Limited” after its name wherever and whenever they cause it to appear, a heavy fine is imposed for each omission. FULL. —When the word “Limited” is not affixed to a stock company’s name, it is understood that it is a “Full Liability Company.” In such a company the shareholders are each individually liable to the creditors of same for the total liabilities of the company. However, suit cannot be brought against an individual shareholder until it has first been brought against the company, and then, if not paid, the claimant may institute proceedings against any one of the shareholders of the company for the full amount of the claim; and after same has been paid by the shareholder, he may recover from each of the shareholders proportionately, according to the number of shares held by each, the amount paid—less, of course, his own proportion of such claim. (For further points, see 1136.) SUNDRY INSTRUCTIONS, HINTS, ETC. 829 . Checks , Drafts , Notes , Etc. —When a check is printed “Pay to- or bearer”, a person’s name written on the blank line between, then the word “bearer” erased with a pen, no other than this person can collect. 830 . When you receive a bank draft, sight draft, or check made payable to the order of the party sending it, see whether or not it is endorsed by 11 2 DOUBLE ENTRY BOOK-KEEPING. him. If not endorsed, return it to him for endorsement, as it is of no value to you until so endorsed. 831 . In receiving a check or draft from a person, upon which check or draft the person’s name does not in any place appear, whether made payable to order or to bearer, have this person from whom you receive it endorse it; for if it prove to be worthless, you can then have recourse to this person, as by endorsing his name on the back of it, the payment is by him guaranteed. 832 . When we return a draft, note or check to the maker of same, which draft, note or check we had endorsed, we should always erase our name from the paper by drawing lines through it with the pen. 832 1 - 2 . In handing a note to the bank or express company for collec¬ tion, which note will be due in a few days, some business men simply make a memorandum in full for same, and place the memorandum with the not-yet- due notes—making no entry on the books until the note is collected and the proceeds of same returned,—then the Bills Receivable account is credited, and the memorandum found and destroyed. 833 . On Receiving Cash .—When cash is received examine it closely to see whether or not there are any counterfeits; and if there be a doubtful bill, make a memorandum of it, showing from whom it was received, then try this at the bank in the next deposit. 834 . Payments on Discojmted Notes .—When we receive payments on notes which have been discounted and still remain in the bank, we simply take the money to the bank and see that the amount is by the banker endorsed thereon—no entry being made for same on our books unless it be to make a memorandum of such payments in the Bills Receivable and Bills Payable Book. 835 . Waive Protest .—When there are no endorsers on the notes we receive from our customers, and we wish to discount them in the bank, waive protest by writing on the backs of such notes “Protest Waived,” and thereby save the customers the protest fees that would otherwise be charged if the notes should not be paid when due. Care must be taken not to waive protest on notes having endorsers; for if protest be waived on such notes, the security is, in some States, released. 836 . Sight Draft .—In making a sight draft on a person, if you want it paid upon presentation, leave the “time” blank; i. e., commence it: “Pay to the order of,” etc. It is customary, however, to make the drafts “at sight” or “at three days’ sight” in order not to take the person upon whom drawn by surprise, but to give him a little time to raise the money. 837 . Coynputing Interest on Payments .—In computing interest on pay¬ ments on notes, it is the better plan to compute the interest on the full face of the note up to the present time, and afterward on each payment up to the present time; then the difference maybe found between the sums total of the interest on the payments and the amount of the interest on the full face, which difference will be the net amount of interest due. The total amount 831 TO 837 11 3 838 AND 839 839 . Different Kinds of Business Consolidated. —When a merchant con¬ ducts several different kinds of business in one, and wishes to know his gains on sales for each, the books may be kept in the following manner: The cash sales for each business must be kept separate, and at the close of each day, week or month credited to the respective accounts to which they belong; extra columns may be kept for each business in the Journal, and whenever sales are made on account, the amounts of such sales extended into the respective columns to which they belong, the totals of these columns carried forward until the end of the month, and then the totals for the month cred¬ ited to the respective accounts in the Ledger. For example: If Grocery, Dry Goods, and Boots and Shoes consolidated, on the credit side of the Jour¬ nal would be kept four columns; a “Miscellaneous Cr.,” a “Grocery Cr.,” a “Dry Goods Cr.,” and a “Boots and Shoes Cr.”; then when a sale is recorded, that part of it which belongs to the grocery department is extended into that column, the dry goods into the “Dry Goods” column, etc.; and whenever a credit that belongs to none of the three latter columns, it is extended into the “Miscellaneous Cr.” column. The Invoices are first assorted accord¬ ing to the different kinds of business, after which the Grocery bills are entered, then the Dry Goods, and then the Boots and Shoes. The columns for each of these different kinds of business are treated the same throughout as is the “Merchandise Cr.” column in the Journal of “The Illustration;” the invoices are entered the same as the Mdse, invoices, and the accounts are treated the same as the Merchandise account is treated in “The Illustration.” The books are kept in this manner simply as a matter of satisfaction, that we may know how much has been made on the goods sold ftom each business. There are but very few who keep the expenses for each business separate; but when they do, either a “full set” of expense accounts must be kept for eaqh business, or the expenses incurred in each business must at once be charged directly to the respective business to which it belongs. For exam¬ ple: When a grocery clerk is paid his wages, the amount must at once be debited to the Gfocery account. The expenses may be charged proportionately to the different kinds of business; i. e., when the sum total of the expenses for the entire business is found, a certain per cent, of same may be carried to the debit of the Grocery DOUBLE ENTRY BOOK-KEEPING. due will, of course, be the difference between the sum total of the payments and the sum total of the face of the note plus the interest due. 838 . “C. O. DC Sales, and Sales for which we make Sight Draft as soon as Goods are Shipped. —When we ship goods to the country C. O. D., or ship them and make a sight draft on the person as soon as the goods are shipped, we may enter the person’s name under our “Petty Accounts,” if we have no regular account with him, as it is not advisable to open an account for only one entry. The person must, of course, be charged as soon as the goods are shipped, and credited when the money is, by the express company or bank, collected and returned to us. . 840 DOUBLE ENTRY BOOK-KEEPING. to 844 account, a certain per cent, to the Dry Goods, and a certain per cent, to the Boots and Shoes. 840 . On Transferring Accounts from an Old Ledger to a New. —This is done by balancing the accounts in the old Ledger in the manner described in paragraph 308, following the directions there given in entirety, excepting, while reading those instructions, substitute “to the page opened for this account in the new Ledger” in place of “new page.” 841 . Statements. —It is advisable to make and send out statements of all our customers’ accounts on the first of every month. By so doing an account cannot escape our notice and thereby be allowed to remain on our books until it is long past due without the person having been notified monthly of that fact. Another reason for so doing is, because if any mistakes have been made in posting, by which an item was posted to the wrong account, or to the wrong side of an account, we are then notified by the persons who receive the incor¬ rect statements, and we may then make the corrections in the Ledger. 842 . On Copying Invoices of Goods We Buy. —There are a few firms who keep Invoice Books or Purchase Books into which they copy the items from all the bills of goods they buy. This is an absurd practice and a lavish waste of time; for, after the amount of an invoice has been credited to the person, the invoice is thereafter held as a memorandum for reference; and, if we wish to refer to a purchase we have but to find the invoice, which is done in the manner described in 309. 843 . Classification of Accounts. —When but one Ledger is used, it is advis¬ able to have the miscellaneous accounts in the fore part, and following these, the accounts with persons from whom we buy, reserving the back part of the Ledger for the accounts with our customers; or, we may have our dealer’s accounts in the fore part and our creditors in the back, as we prefer. 844 . Overcharges , etc. — Sometimes persons from whom we buy goods guarantee the freight at a certain rate, i. e., guarantee that the goods will be laid in our store at a certain rate per 100 lbs. or per piece. If the Railroad company charges us more than this rate, we debit the overcharge to the per¬ son from whom we bought the goods. If any overcharge in prices on goods, such overcharge may be deducted from the bills before they are entered. If goods are damaged, we must first ascertain whether they were damaged while in transit, or before they were shipped,—if the former, the Railroad company mustj be debited for the amount of such damages; if the latter, the amount of such damages may either be deducted from the bill before it is entered, or the full face of the bill credited to the person and the amount of the claim for damages afterward debited to his account. If any error in “figuring,” the amount of such error may be deducted from the bill before it is entered. If a claim for overcharge, damaged goods, or error, is made on a bill after it has been entered, the amount of such claim cannot then, of course, be deducted from the bill, but must be debited to the person’s account. Whenever such a 1 1 5 DOUBLE ENTRY BOOK-KEEPING. 845 TO 847 charge is made, the person must, in all cases, be notified of same either by send' ing a bill or writing a letter to that effect. 845 . “ Easy ” Customers .—There are very few firms who have not some customers who “take the world easy” and allow nothing to trouble them—not even their debts; and in consequence of this independence (?) such customers would willingly allow their accounts to pass into the “vale of forgetfulness,” were it not for the fact that somehow or another the owners of such accounts cannot tune their ideas to harmonize with them, and, therefore, there is a discord. We might dun such customers for cash, or for notes to balance their accounts until “doomsday,” and be just as successful at the beginning of our exertions as at the. end. However, if we succeed in getting notes from such persons, there are then some hopes of ultimately collecting the amounts due; for they then realize that they must make some exertion to pay, unless they have become so hardened that not even a note will move them to action. The tougher the customer we have, the sharper the “goad” we seek—if only mod¬ erately dilatory and we think him abundantly able to pay all his debts, we simply ask for a note without security ;- if a little doubtful, we ask him for a note with a good endorser; if altogether doubtful, we endeavor to get notes secured by a mortgage on his stock of goods, his lot, or his farm. There are many customers who, when we send a statement requesting them to send us notes for amount due, will take no notice whatever of our request; but if, when we send the statement, we will fill out and enclose with same notes for them to sign, they then feel in duty bound either to do as we request, or offer some very good excuse for not so doing; therefore this latter method is recom¬ mended. 846 . The Services of an Office Boy .—A smart office boy may, in most cases, be a very great convenience to a book-keeper; so much so, that the services of an assistant book-keeper may be dispensed with. For instance, he may do all such work as making duplicate bills, copying letters, addressing envelopes and enclosing the letters, statements or bills in same, delivering the statements to the city customers on the first of every month, running errands, etc., etc.; forms of business letters may be prepared by the book-keeper, and by using these, the boy may write a great many business letters that would otherwise have to be written by the book-keeper. One day in such a school is better for the boy than a whole month in a business college. 847 . Errors in Posting .—When errors are made in posting, some book¬ keepers make what is called a “contra entry;” i. e., make an entry on the opposite side of the account “By Error” to balance the entry erroneously made,and afterward post the amount as it should first have been posted; and some book-keepers erase with a steel eraser the error, but some business men object to “scratching on the books,” not wanting a figure altered after it has once been placed in the Ledger. A better method than either of the fore¬ going, and one to which no person could object, is to simply draw a red line through the amount of such error and then post the amount as it should have been posted. If, however, the error was made in a previous month, it is then I 16 V DOUBLE ENTRY BOOK-KEEPING. necessary either to make a contra entry, as above described, or if a line drawn through the amount to change the lead-pencil Ledger footings. 848 . On Making Mistakes. —There are some business men who, in a tem¬ porary fit of insanity, forget that they are the only persons who can justly claim “infallibility,” and, in consequence of this little forgetfulness, chastise the book-keeper severely for every little “blunder” he makes. A book r keeper's work is, to say the least, very monotonous, and it is with great diffi¬ culty that he confines his mind to his work from morning until night, day after day. The errors he makes are usually made at such times as his mind is roaming in other fields rather than that in which he is at work—perhaps while he is looking forward to the day when he can give “figures” and “trial- balances” a long vacation. While posting, it is advisable for the book-keeper to “make assurance doubly sure” by comparing the amount carried to the Ledger with the amount on the book from which it is posted, at least twice, noticing at the same time whether posted to the proper side of the account. When cash is received or paid out, it is better not to trust the memory one instant, for it is sometimes very treacherous, but to make the entry on the Cash Book at once; otherwise an hour might be spent in seeking for a little “difficulty” in the cash that might have been avoided if the entry had been made at the proper moment. Units Under Units , Etc. —The utmost care must be taken at all times to place units directly under units, tens directly under tens, etc., etc.; for while adding, if such care ha^s not been taken, it is very easy to make a mistake. Better to spend an hour now in being over-particular on this score, than a week at the end of the month when the trial-balance is taken, in finding an error caused by carelessness in placing tens under hundreds, or something similar. 849 . Invoices, Notes, etc., we have to Pay. —For the invoices, notes, and acceptances for which we have to remit, and the sight drafts for which we have to pay, would recommend the following method of making the daily lists or memoranda: Take a small book and arrange the dates in the form of a diary, omitting the Sundays; then, on the first of each month, from the Bills Payable Book, enter under the respective dates when they become due, on this small book, all the notes and acceptances we have to pay during the month. After which, the sight drafts we accept and the bills for which we wish to remit may, from day to day, be herein entered under the respective dates when due. Enter first the amount; then the firm name, adding the address (if not familiar with same); then, if a note, acceptance, or sight draft, write “Note,” “Acc.,” or “St. D’ft,” adding the date and time of same; and if a bill, or several bills, add date or dates of same. By making the lists in this manner, all the remittance letters may be written from the memoranda here made. The amount to be paid daily may be found by finding the sums total of these lists. If we wish to buy Exchange (bank drafts) to pay for such notes, invoices, etc., as we have in one of these daily lists, or if we wish to pay for such of our notes, acceptances, and sight drafts as are made pay- 117 848 AND 849 850 DOUBLE ENTRY BOOK-KEEPING. able at our bank, we simply find the sum total of the list thus made and give the bank a check for the same, filling out a “Drafts Wanted”'blank for the Exchange we want, and, together with the “notices” we have received from the bank for notes and acceptances due on that day, pin them to the check; after which we receive from the bank, in return for same, the notes and acceptances stamped “Paid,” and the Bank Drafts, which should aggregate an amount equal to the full amount of the check we gave. The following will be given as an illustration of this method—the “17” at the top being the day of the month: —17 - 200.00— M. D. Hesse, Cincinnati—Note—11-16— 60 ds. 300.00—L. O. Brainard—Acc. —12-15—30. 100.00—J. B. Lippencott & Co.—St. Dft. 122.00—D. Appleton & Co. —11-16—12-2. $722.00 850 . Sundry Minute Savings of Time and Labor. —A great saving of time may be realized in the wholesale business, while making bills and state¬ ments, by giving the larger cities in which we have many customers, a city number; then the bill clerk, while making the bills, or the book-keeper, while making the statements, for the convenience of the person who addresses the envelopes for same, simply indicates the addresses of the customers by adding the respective city numbers representing the cities in which they belong—the person addressing the envelopes being also, of course, familiar with the city numbers. While addressing several envelopes, lay the letters, bills or statements to the right and the envelopes to the left; then, after they have all been addressed, they will be found in regular order, and consequently such letters, etc., may be expeditiously folded and enclosed. While posting, it is advisable to use a small slip of colored paper on the money column of the Journal or Cash Book, and always to keep this directly over the amount that is next to be posted, moving the slip downward to the next amount as soon as that amount is posted. By so doing, much time may be saved that would otherwise be spent in tracing the lines out for the amounts; and it is a good way to guard against errors in posting the wrong amounts to the Ledger. It is now rapidly growing into custom among business men to omit all “handles to names,” such as “Mr.,” “Esq.,” “Messrs.,” etc., while addressing envelopes, writing letters, notes, checks, drafts, etc., it being thought to be understood, therefore superfluous. While receipting bills, statements, etc., the simple word “Paid” answers the same purpose as “Received Payment,” and is much more quickly written. It is of course understood by everyone, that the nearer perpendicular the writing, the more there may be written on a line. It is better to have an ex¬ planation of an entry in the Cash Book never take up more space than the line 1 18 DOUBLE ENTRY BOOK-KEEPING. upon which the entry is made; and as some entries require a considerable amount of explanation, it is necessary that the same be made very compact as well as very concise. 851 . Sundry Explanations and Remarks. — The meaning of the word “Sun¬ dries” is “ several .” — For example: when is written “Mdse. Dr. To Sundries,” the meaning is, that Merchandise account is debited for the sum total of an amount for which two or more or several accounts are credited. A debtor is a person who is indebted to or owing us; and a creditor, is a person to whom we are indebted or owing; therefore, the former, one who is debited on our books, and the latter, one who is credited on our books. When goods are sold or bought “on account,” the meaning is that they are not paid for, but are to be debited or credited to the party to whom sold or from whom bought; therefore, when the expression “on account” is used, it indicates that the amount is to be placed to the debit or credit of some per¬ sonal account. Those accounts upon which we think there will never more be entries made, are called “Dead Accounts,” and those accounts which are yet open, and upon which we either frequently or seldom make entries, are called “Live Accounts.” The more frequently the entries are made, the more is the vitality with which the account is infused. ' When there are but one or two “extra columns” in the Cash Book or the Journal, it is not necessary to have printed or to write the names of same at the top of each column; for the uses of same are known to the book-keeper and he is not obliged to refer to the top of the page for the name of the col¬ umn in which to enter an item. However, when several “extra columns” are used, it is necessary to have the book ruled and printed to order. No employe can sign notes, drafts or checks for the firm without first hav¬ ing procured a “Power of Attorney” authorizing him so to do; but he may endorse for deposit in the bank drafts, notes, checks, etc., made payable to the order of the firm, by simply getting a written order from them to the cashier of the bank authorizing him to do so. When the latter is done, the signature of the employe so authorized is recorded in the bank’s “Signature Book,” and the firm’s written order is taken by the cashier of the bank and filed away, so as to insure against any accidents, etc., that might occur through the careless¬ ness or negligence of such employe. When a merchant’s Liabilities exceed his Resources, he is then insolvent; and the difference between the sum total of his Resources and the sum total of his Liabilities is his net insolvency , which difference will appear on the debit side of his Stock account instead of on the credit, as is the case when the Re¬ sources exceed the Liabilities and the difference is known as a net worth. 852 SINGLE ENTRY BOOK-KEEPING. SINGLE ENTRY BOOK-KEEPING. 852 . The difference between Single Entry book-keeping and Double Entry book-keeping is explained in paragraphs 3 and 6. Any person who is the possessor of as much as a thimble full of brains, may already, without in¬ struction, justly and honestly claim a knowledge of Single Entry book-keep¬ ing; for the boy but five years of age (unless he be a son of a business college professor) knows full well that if he buys something and does not pay for it that he owes the person from whom the article was bought, and thereupon he con¬ ceives the idea of credit; and when he pays for this article, he knows full well that the debt exists no longer, and thereupon he conceives the idea of a debit to balance that credit;—when he sells an article and does not receive payment therefor, he knows that the person to whom he sold the article is indebted to him for same, and thereupon the idea of debit is conceived; and when this person cancels the obligation by paying for the marbles or taffy, the boy knows full well that his comrade to whom he sold the same owes him no longer, and thereupon, an idea is conceived for a credit to balance that debit—this is all that Single Entry book-keeping consists of—simply debiting persons when we sell them goods on account in the manner and form illustrated in paragraph 370 and crediting them when they pay for same;—and crediting persons when we buy goods from them on account in the manner illustrated in paragraphs 401 to 407, and debiting them when we pay for same. It will be seen that in strictly Single Entry book-keeping there are no ac¬ counts in the Ledger but accounts with persons; therefore, Single Entry, unlike Double Entry, does not exhibit a statement of the business done, but is simply a record of the amounts owing to us and by us on account. (See 3.) In posting an item in Single Entry, if the person is debited , we simply post the amount to the debit of his account in the Ledger, and make no credit whatever; if the person is credited , we simply'post the amount to the credit of his account in the Ledger, and make no debit whatsoever for same. Whenever there are any other than personal accounts in the Single Entry Ledger, there has been just so much borrowed from Double Entry book-keeping. (See 313 and 314.) There are a great many firms who keep a Merchandise account and an Ex¬ pense account in the Ledger simply as memorandum accounts,—to the Mer¬ chandise account they post at the end of each month, the same as in Double Entry, the total sales for the month; and to the Expense account they post all items of expense, of whatsoever kind. These accounts are kept just as a matter of gratification that they may see what their total sales for the year are and what their total expenses. They also keep a Cash Book which they treat in the same manner as the book illustrated in this work. There are some houses who keep a Bank account—crediting the bank on the debit side of the Cash Book when checks are drawh, and debiting the accounts for which such checks are given on the credit side of the Cash Book;—and debiting the bank on the credit side of the Cash Book whenever deposits are made; but the system recommended in 86^ is the one most in use 1 20 DOUBLE ENTRY BOOK KEEPING. 853 ADDITIONAL BOOKS USED IN A WHOLESALE BUSINESS. 853 . The books used in a wholesale business in addition to those already explained and illustrated heretofore in this work are as follows: Back Orders. —A book in which are entered orders for goods we have not in stock, but have ordered or intend to order. Such orders are allowed to remain in this book until the goods arrive, then they are filled and the charges transferred' from this book to the Journal, the same as from the Sales Books to the Journal. Debit Ledger or Dealer s Ledger. —A book in which are kept exclusively accounts with our customers. Credit Ledger or General Ledger. —A book in which are kept accounts with persons from whom we buy goods; also all other accounts that do not belong in the Debit or Dealer’s Ledger. Eastern Order Book. —A book in which is made a record of the goods we order, whether through agent or by mail, with prices and terms affixed which were guaranteed by agent or quoted by mail. Nearly all large wholesale houses have a Stock-Keeper, whose duty it is to keep posted on the stock of goods in the store, and to report whenever the stock is running down in any particular line; then a memorandum is made in this book and the goods are ordered. Receiving Book. —This is a book in which is made a record of goods we receive from the parties from whom we bought. The record is made just as soon as the goods are placed in the store. The invoices are checked off from this book to indicate that the goods have been received. Change Book. —It is customary with most manufactories and large whole¬ sale houses to notify their customers of any changes in prices of the goods they handle; and when we receive such advice we make a memorandum of the present price in this book. Our traveling agents are then all advised of such changes,—if not of much consequence, by letter, and of great importance, by telegram. We use our cost mark in this book instead of the figures to prevent the “curious” from becoming enlightened should they at any time find this book lying open on the desk. Price Books.- —These are small books carried by each of the salesmen and proprietors of the firm, in which is arranged in alphabetical form a list of all the goods in the store with both the cost and the selling prices attached. Whenever a memorandum is made in the Change Book for a change in the price of any particular line of goods, the change is at once made on each of the Price Books to correspond with same. Sales Books. —In some of the largest wholesale houses a very nice system of keeping Sales Books is adopted, which will be described as' follows: They have labeled on one, “Monday, Wednesday, Friday;” on the other, “Tuesday, Thursday, Saturday.” The sales for each of the different days of the week, are recorded in the respective book upon which is labeled the day. While entries are being made on Tuesday in the “Tuesday” book, the entries I 2 I 854 DOUBLE ENTRY BOOK-KEEPING. that were made on the previous day are being posted from the “Monday” book; therefore the “Monday” book is handed in to the book-keeper by the entry clerk on every Monday night, and the “Tuesday” book is by the book¬ keeper handed to the entry clerk on every Tuesday morning and so on through the week. By so doing the book-keeper _is never interrupted while posting these books. Sales—Another Method .—There is another method which will be described as follows: To have loose sheets ruled in regular Sales Book form, and num¬ bered from “i” forward. The sales are recorded on these sheets the same as they would be if recorded in a book; when a sheet is filled it is passed to the book-keeper who posts all the entries on it, and afterward files it in a safe place until he has a certain number of pages or of months, when he has them bound in book form. The total is posted to the credit of -Mdse, account monthly from this book. Sales—Another Method .—There is another method which is much in use because of its simplicity and labor-saving, which will be described as follows: Write the invoices of goods we sell in copying ink and copy them in a copy¬ ing book used expressly for that purpose; post the charges to the personal direct from this copying book to the Ledger, carry forward the sales from page to page until the end of the month, and then post the total for the month to the credit of Merchandise. Some firms adopt a method of number¬ ing the bills, and when posting to refer in the Ledger to the bill number, instead of to the page upon which the bill is copied. The Different Books Used .—The books used in a business depend entirely upon the nature and style of the business, although a person will often find books exactly alike in nature and uses, but as unlike in names as “Business College” is (in name) unlike “Fools’ Resort.” DIRECTIONS FOR CLOSING A SET OF BOOKS FOR A BUSINESS WHICH HAS BEEN RUNNING FOR SEVERAL YEARS—THE BOOKS HAVING BEEN KEPT BY SINGLE ENTRY. 854 . 1st.—Take an inventory of all the merchandise, store fixtures, etc., etc., belonging to the firm. 2d.—Make a statement of all the Resources and Liabilities of the firm. (See 20 and 21.) Make this statement in the form of the Trial Balance illus¬ trated in paragraphs Sioand 812,—entering the Resources in the debit column and the Liabilities in the credit. Include the private accounts of each of the partners in this statement, the same as- any personal accounts. 3d.—Find the difference between the sum total of the Liabilities and the sum total of the Resources, and this difference will be the present gross worth of the firm. 122 DOUBLE ENTRY BOOK-KEEPING. 4th.—Find the net worth of the firm at commencement of business (the sum total of all the partners’ original investments), then, find the difference between the now present gross worth and the then present net worth of same, —which difference will be the net business gain or net business loss ior the firm—if worth more now than then, of course a gain; and if worth less now than then, a loss. 5th.—If a net business gain, credit each partner’s Stock account for his share of such gain; if a net business loss, debit each partner’s Stock account for his share of such loss. 6th.—Close each partner’s Private account and carry the balance of same to their respective Stock accounts. If the debit side of a Private account be the larger, the difference between the two sides is carried to the debit side of the Stock account; if the credit side be the larger, the difference between the two sides is carried to the credit side of the Stock account. 7th.-—The difference between the two sides of the respective Stock ac¬ counts is now found, which difference is the present net worth of each—and this is the object in view in closing the books—to find the present net worth op each of the partners. This concludes the closing of the books. 855 . Remarks. —There are some firms that keep their books by Single Entry and allow the same to run several years without closing them,—either not wanting to take the trouble to find out how much lost or gained by closing the books, or worse still, not knowing the proceedings for doing so, and they thus allow them to run from year to year, until finally, there is “a death in the family,” or one of the members of the firm wishes to withdraw, and then it becomes necessary to close the books to find the present net worth of each; which closing is done according to instructions given in this article. In making a statement of the Resources and Liabilities, the Private ac¬ counts of all the members must be included, in order to ascertain the net business gain or net business loss of the firm; and, afterwards, these Private accounts must finally be closed and carried into the respective Stock accounts of each of the members in order to find the present net worth of each. The present gross worth.oi the firm is found by finding the difference be¬ tween the sum total of its Liabilities and the sum total of its Resources, Private accounts included. The present net worth of the firm is found by finding the sum total of all the amounts credited to each of its members as his present net worth, i. e., after such accounts have been closed as per instructions in “7th” of this article. 856 . When there is but a single proprietor, there are some who do not keep a Stock account, and a few who keep neither a Stock nor a Private ac¬ count, but charge amounts drawn for private use to no account—simply writing “Private use,” or something similar, on the Cash Book; this is, however, a very loose system of book-keeping, affording no satisfaction whatever to the bus¬ iness man other than merely showing him the personal accounts owing to and by him. When no Private account has been kept, there is no way of finding how much has been expended for private use, unless an account had been kept 123 855 AND 856 DOUBLE ENTRY BOOK-KEEPING. ' 856 TO 858 called “Private Expenses;” neither can the amount gained or lost in the bus¬ iness be ascertained, for the reason that the amount drawn for private use has been taken from the business and no account made thereof. 856 1 - 2 . If other than personal accounts have been kept, such as Expense, Merchandise, etc., the balances from such accounts must not be carried forward to the new double entry books or accounts, but such old accounts or old bal¬ ances must be dropped, abandoned, for the reason that they were kept in Single Entry simply as memorandum accounts, in order that the firm might know what their expenses and sales were. ON “MAKING THE CASH.” 857 . It is best to balance the Cash Book every day, although some firms balance it only once a month. Whether we balance the book every day or not, we should every night see whether the balapce on hand as shown by the Cash Book agrees with the amount we actually have on hand. Would recommend the following described and illustrated method of finding whether or not the cash balances: Take a slip of paper and put down in figures at the left, as illustrated below, first, the balance we had on hand in the morning, and under this the total cash received during the day;, add these amounts together; then under this sum just found, enter the total cash paid out during the day, which amount subtract from the sum above it which will give the amount of cash we ought to have on hand. Then put down in figures at the right on the slip, as illustrated below, first, the balance in the bank as shown by the Check Book, then the amounts of all checks, drafts, etc. (called cash), and the cash we have in the cash drawer, after which find the amount of cash on hand we actually have by finding the total of these amounts, the sum of which total should just agree with the balance on hand as shown by the Cash Book and indicated in the figures at the left on the slip. (See below; also, in the Cash Book, 485, 548, 551 and 552.) $3,240 80 bank $3,000 00 4,268 81 104 00 22 30 86 40 5 00 7,268 81 3 > 49 2 3 1 318 go cuirency no other person should be permitted to handle it,—then if any errors occur by which the Cash Book and cash do not agree, he may justly be held account¬ able for same. If, on the other hand, everybody in the store is allowed to go to the cash drawer to make change and pay out and receive cash, it is then impossible, if an error be made, to know by whom it was made. 124 DOUBLE ENTRY BOOK-KEEPING. 859 If the balance called for by the Cash Book does not agree with the cash actually on hand, and the cashier after diligent search does not find the error, he may make it agree in the following described manner: If Cash IS Over.— If the cash is over, i. e., more cash on hand than is called for by the Cash Book, the amount over may be credited to the Merchandise account by writing on the debit side of the Cash Book, “To Mdse.—Cash over could not account for,” and the amount, and this will make them agree; afterward, if the error is found for this amount, the proper account may be credited and Merchandise debited. If CASH IS SHORT. —If the cash is short, i. e., less cash on hand than is called for by the Cash Book, the thoroughly conscientious cashier will charge the amount short to his own account, by writing his name on the credit side of the Cash Book, adding, “Cash short could not account for;” and afterward if the error be found, will debit the amount to the proper account and credit his account for the same—this is not done, however, until after he has made diligent and thorough search and is finally obliged to “give - up in despair.” The reasons why he should do so are: He might have made the error in making change; or, in paying an account and not charging the person; or, in paying a person more than he charged them. SHORT CALCULATION. ADDITION. 859 . In adding a column of figures you should learn to do it without men¬ tal labor; and, this may be acquired by any one with a little practice. The art is acquired by learning to read a column of figures as you would a sentence in prose. By practice you have become so familiar with letters that when you see a group of them together it is not necessary for you to stop and separate the letters, but you can tell at a glance what the word is. By practice you may become so familiar with figures that when you see a group of them you can tell at a glance what the sum of the'm is. In practicing the reading of a column of figures in this way, do not let your brain work at all, but simply pass your eyes over the figures as if you were reading a sentence, not reading too slowly, and you will yourself be surprised to find how readily you may ac¬ quire the art. First, begin with practicing on two figures, then on three, four, five and so on, until finally you will become able to write the sum total of a whole column without once having thought of an amount until you have the entire product. For example: When you see, one above the other, the following figures, 9, 9, 5 > 5 > y° Ll know at a glance that the sum is 28. The reading of a column of figures, as in the reading of a sentence, is done by dividing a large group of figures into smaller groups, and from group to group reading through a column the same as from word to w r ord we read through a sentence. Another example: 9, 6, 4, 2, 8,—in this, we group the last four figures, and by taking them all into our eye at once, we see that the sum of them is 20, then we have but to say 20-9 or 29. The expert in addition, will skip around “here, there 125 86(1 DOUBLE ENTRY BOOK-KEEPING. and everywhere” in order to do this grouping, and will sometimes go back to the beginning of a column to pick up a stray figure that he had left behind. In finding the sum total of several long columns of figures, it is well to set down, one under the other, the total of each column; then, after the sum total of the last column at the left has been found, the grand total or product will be the sum total of the extreme left hand column, with the unit figure of each of the preceding totals affixed—one after the other, reading upward. For ex' ample: We will suppose the following amounts to be the sums total of certain columns of figures in an example, and that they come in order, one under the other, as here placed, 98, 120, 65, 24,—the sum total is 24508. In putting down the sum total of each column in this manner, the amount to be carried to the next column is the figures to the left of the unit number—in the first above, it is 9; in the second, 12, and so on. The object in putting down the totals in this manner is, that if in going over the addition a second time, the second addition does not agree with the first, we are not obliged to commence again from the beginning, but may commence with the figures to the left of the unit number in the column preceding and “try it again.” MULTIPLICATION. 860. To multiply by any number between 10 and 20, multiply by the unit figure; set the product thus found one place to the right, under the multipli¬ cand, and add. The sum will be the answer. For example: In multiplying 324 by 17, we simply multiply by 7 in the manner above indicated, thus : 324 2268 5508 In order to give an idea of rapid calculation in multiplication a few exam¬ ples will here be given, and from these others may be created without limit by any one: 35 yards cloth @ $2.50. Add one cipher and divide by 4. Answer, S774 or $87.50. 432 216 “ “ @$2.25. Multiply 2^$ by setting down the amounts thus: 54 $486 48 “ “ @$2.1274. Multiply by 274$ in same manner as by 27f$. 55 “ “ @ $1.95. Move decimal point in price two places to the right, divide 195 by 2 and add yy- thus : 97-5° 9-75 $107.25 324 162 yards cloth @ $1.80. Multiply by 2 and deduct _l__ thus • 3 2 -4° $291.60 „ . 72 36 “ “ @ $1.75. Multiply by 2 and deduct 74> thus: 9 N $63 v 29 29 “ “ @"$1.6274. Add 74 and 74 to the whole, thus: *4-50 3-6274 $47.12 114.50 11474 yards cloth @ $1.50. Add J4> thus: 57.25 SUi.75 I 26 > 801 DOUBLE ENTRY BOOK-KEEPING. 37 y yards cloth @ $1*25. Add y, thus: 37-75 9-44 $47.19 83 «£ @ $1.20. , 83 Add g, thus: 16.60 $99.60 50 ** it @ $1.18. Find J 4 of $iiS=$59- 75 £ £ @ $1.14. Deduct from $114, y of that amount, thus: 114 28.50 $85.50 24 “ £ £ @ 95 c- Deduct ^ from $24, thus : 24 1.20 $22.80 tS'yi “ £ £ @ 75 c. 68.50 Deduct-^, thus : 17.12 $ 5 i -38 46 “ £ £ @ 55 c- Find ]/ z and add to same yg-, 23 thus: 2.30 $25.30 16 <>■7 £ £ J 2 £ £ @ 45 c -. Find 1/2. and deduct yy, thus : 1.60 $14.40 96 “ £ £ @ 25c. Find y of $96=524. The reasons for making the computations in this manner will at once be apparent, from the fact that when the price is either more or less than $1, the fractional part of a dollar is either taken from, or added to, the amount that the sum would be if @ $1 per yard. It is sometimes more convenient to call the number of yards the price, and the price the number of yards, in order to make the computation, as in the example above; 5° yards @ $1.18 would be the same as 118 yards @ 50c.; or to say, if 100 yards @ $1.18 would be $118, 50 yards would be half of that amount, or $59. In the first example we say, if 35 yards @ $10 per yard would be $350, at $2.50 per yard it would be one- fourth of that amount, or $87.50. INTEREST. 861 . To find the interest on any amount, at any rate per cent., for any length of time: First. Reduce time to run on interest to months and tenths of a month. To find the number of tenths of a month, divide the number of days over a month by three , then add to the number of months the tenths, in decimal form. Second. Move the decimal point between dollars and cents in the prin¬ cipal two places to the left, divide this amount by twelve and multiply by the rate per cent.; multiply this amount by the number of months, as found above, and the product will be the answer. Example..—$ 360.oo@7 ^ cent, for 2 years, 5 months and iS days. Solution.— 2 years, 5 months and 18 days equals 29.6 months. 12)3.60 (Move decimal point two places to the left, which gives int. for I yr. @ 1 %.) .30 (Divide by 12, which gives int. for 1 mo. (a) i%.) 7 (Multiply by the rate per cent.) 2. lo=Interest on principal for one month. If $2.10 for one month, for 29.6 months it would be 29.6 times $2.10, or $62.16—Answer. I 27 862 DOUBLE ENTRY BOOK-KEEPING. AT TEN PER CENT. First. Find the number of months and tenths of a month as on preceding page. Second. Move decimal point between dollars and cents in principal one place to the left, divide by twelve , then multiply this amount by the number of months, as found in “first,” and the product will be the answer. Example. — $6oo.oo@io cent., from August 7, 1877, to January 28, 1879. Solution. —From August 7, 1877, to January 28, 1879, is 1 year, 5 months and 21 days, which equals 17.7 months. 12)60.00 (Move decimal point one place to the left.) 5. (Divide by twelve.') Which equals interest on the principal for one month. If $5 for one month, for 17.7 months it would be 17.7 times $5, which equals $88.50—Answer. Other Examples. —Required, the interest on a note for $267.50, running 93 days at 10 cent.; 93 days equals 3.1 months. 12)26.75 2.23 3-1 223 669 $6.913—Answer. Required, the interest on a note for $182.39, running 7 months and 7 days; 7 months and 7 days equals 7.23 months. 12)18.24 1-52 7-23 45 6 304 1064 $ 10.9896—Answer. If the number of days over a month are not divisible by three, continue the decimal one or two places. In many examples, both multiplier and mul¬ tiplicand, i. e. months and rate per month, can be calculated in the head. VALUE. UNITED STATES. 862 . The term “currency” is applied to money of all kinds employed in trade, both coin and paper. TABLE. 10 mills (m.) make I cent.. 10 cents “ 1 dime. 10 dimes “ 1 dollar 10 dollars “ 1 eagle. ct. . d. E. 128 DOUBLE ENTRY BOOK-KEEPING. 863 TO 869 CANADA. 863 . The currency of Canada since 1859 has been decimal, and the denom¬ inations the same as those of the United States. 864 . ENGLISH. TABLE. 4 farthings (far. or qr.) make I penny.. . .. ,d 12 pence “ i shilling r.s. 20 shillings “ i pound, or sdvereign. .. or sov. FRENCH. 865 . The unit is the Silver Franc. TABLE. 10 millimes make I centime.ct. 10 centimes “ i decime.dc. 10 decimes “ i franc.fr. A franc is equal to $. 193 United States currency. GERMAN EMPIRE. 866. The unit is the “Mark,” equal to 23.85 cents United States money. The coins are: Gold —the 20, 10, and the 5-mark pieces; Silver —the 2 and the 1-mark, and the 20-penny pieces; Nickel — the 10 and the 5-penny, and pieces of less value. MEASURES OF EXTENSION. 867 . LINEAR. TABLE. 12 inches (in.) make I foot.ft. 3 feet “ 1 yard.yd. 5^ yards, or i6_^ feet, “ I rod.rd. 40 rods “ I furlong .fur. 8 furlongs, or 320 rods, “ I statute mile.mi. 868. The following denominations are also in use: 3 barleycorns make I inch; used by shoemakers in measuring the length of the foot. 4 inches make I hand; used in measuring the height of horses directly over the fore feet. 6 feet make I fathom; used in measuring depths at sea. 1.15 statute miles make i geographic mile; used in measuring distances at sea. 3 geographic miles make I league. 6° geographic miles make I degiee ( latitude on a meridian or of longitude on the equator. 69.16 statute “ “ “ ) 360 degrees make the circumference of the earth. 869 . surveyor’s long. TABLE. 7.92 inches (in.) make I link. 25 links «C I rod. .rd. 4 rods, or 66 feet, u i chain. 80 chains • c i mile. I 29 DOUBLE ENTRY BOOK-KEEPING. 870 TO 874 870 . SQUARE. TABLE. 144 square inches (sq. in.) make 1 square foot, marked sq. ft. 9 square feet “ I square yard, « < sq. yd. 3 °X square yards “ 1 square rod, (< sq. rd. 40 square rods “ "* I rood, << R. 4 *-oods 1 acre. (4 A. 640 acres *• 1 square mile, t < sq. mi. SURVEYOR’S SQUARE. 871 '. Used in computing - the area or contents of land. TABLE. 625 square links (sq. 1 .) make I pole.P. 16 poles “ 1 square chain.sq. ch. 10 square chains “ 1 acre. A. 640 acres “ 1 square mile.sq. mi. 36 square miles (6 miles square) “ I township.Tp. A square mile of land is also called a section. / CUBIC. 872 . Used in estimating - the contents of solids, as timber, wood, etc. TABLE. 1728 cubic inches (cu. in.) make 1 cubic foot. ,. cu. ft. 27 cubic feet 1 cubic yard. cu. yd. 16 cubic feet “ I cord foot. ,cd. ft. 8 128 cord feet, or ) cubic feet, ) “ I cord of wood. 24^ cubic feet “ 1 perch of stone or masonry. ...pch. A load of earth is one cubic yard. A pile of wood 8 feet long, 4 feet wide and 4 feet high is a cord. A perch of stone or of masonry is i 6)4 feet long, I y 2 feet wide and I foot high. MEASUREMENTS OF CAPACITY. 873 . LIQUID. TABLE. 4 gills (gi.) make 1 pint.pt 2 pints “ 1 quart.qt 4 quarts “ I gallon.gal 31^ gallons “ 1 barrel.bbl 2 barrels, or 63 gallons, “ 1 hogshead.hhd 874 . The following dimensions are also in use: TABLE. 36 gallons v make 54 gallons, or 1)4 barrels, “ 42 gallons “ 2 hogsheads, or 120 gallons, “ 2 pipes, or 4 hogsheads, “ 1 barrel of beer. 1 hogshead of beer. 1 tierce. I pipe or butt. 1 tun. 130 DOUBLE ENTRY BOOK-KEEPING. 875 TO 879 WEIGHTS. TROY. 875 . Used in weighing gold, silver, and jewels, etc. TABLE. 24 grains (gr.) make 1 pennyweight.pwt. or dwt. 20 pennyweights “ I ounce.oz. 12 ounces “ I pound.lb. 175 pounds troy =144 pounds avoirdupois. APOTHECARIES. 876 . Used by apothecaries and physicians in compounding medicines. TABLE. 20 grains (gr.) make 1 scruple.sc. 3 scruples “ dram.dr. 8 drams / “ ounce.oz. 12 ounces “ pound.lb. or lb. AVOIRDUPOIS. 877 . Used for general purposes of weighing. TABLE. 16 drams (dr.) make 1 ounce.oz. 16 ounces “ 1 pound.lb. too pounds “ 1 hundred weight.. .cwt. 20 cwt., or 2000 bis., '‘ 1 ton.T. LONG TON TABLE. 28 pounds make 1 quarter. ..marked.. .qr. 4 quarters—112 lbs. “ 1 hundred weight.. .cwt. 20 cwt.—2240 lbs. “ 1 ton.T 878 . The following denominations are also in use: TABLE. IOO pounds of grain or flour make I centnal. IOO ' t( dry fish <; 1 quintal. IOO it nails << I keg. 196 l C flour i i 1 barrel. 200 a pork or beef t€ 1 barrel. 24O 200. . 39 “ 2.60 Feb’y 7, 140. .91 “ 4-25 May 9, 110 “ 5 . 290. .4 days, •39 (See 902) 1090 H.71 49 ° 6.21 9 )6o | 0 20 JS.'So 20 42 CO OO Jan’y 8 90 days. 46 24O OO 23 a a 59 150 OO Feb. IO Cash 20 IOO OO 490 00 Cr. (See 89S.) April 8, $240. . 3 U $2.48 “ 23, 150. .16, .80 Feb’y 10, IOO. .88, 2.93 49 ° 6.21 (See 900 and 901). (See 903). 135 DOUBLE ENTRY BOOK-KEEPING. 905 TO 909 This gives 42 days to count backward from the “basis” (May 9th) to find the date upon which the account is due by equation, or the average date of payment, which is March 28th. 905 . On averaging a past-due account, for the purpose of finding the interest due, the average date when the account was due is first found, after which we compute the interest on the account from that date up to the pres¬ ent at whatever rate per cent, agreed upon; then, if it be an account owing us, we charge the same for the interest thus found; or if it be an account we owe, we credit the same for the interest. 906 . On averaging an account not yet due, for the purpose of settling by note or acceptance, the average date when the account will be due is first found; then the note is either dated backward from that date the number of days we wish the note to run, or dated on the present date, and made to read in such a manner that it will fall due on the average date due. 907 . The three days of grace is not added when averaging an account; but it may be added after the average date is found, if we wish to do so. 908 . Explanation of the “Interest Method" of Averaging Accounts. —We find the bill latest due, and taking this as a basis or foundation upon which to work, suppose all amounts prior to that to run from their respective dates due up to this “basis” date before they are paid, and thereupon we charge or credit, as the case may be, interest on such amounts for the time they thus run past due. After we have thus found the total interest due, we find the interest on the amount of the account for one day. Now we see by paying the sum total of all the bills just one day backward from this “basis” date, there will be due the interest for one day less, and consequently, we ascertain how many days backward from this “basis” date we will have to pay the total amount of the bills in order to consume all the interest, so that there would be interest neither owing to nor by us, by dividing the total interest due by the interest on the whole for one day. 909 . On Computing Interest at 1 per cent, per Month or 12 per cent, per Annum. —We call a month thirty days; therefore at this rate per cent, the principal earns 1 per cent, every 30 days, and percent, every 3 days; con¬ sequently, to find the interest for 30 days, we simply move the decimal point between dollars and cents tzuo places to the left , and for 3 days we move it three places to the left. With a very little practice, interest may be very rapidly computed at this rate per cent. In the example under 904, we first find the interest for 30 days on $350, which is $3.50; for 60 days it is twice that amount, or $7.00; and for 3 days, 35c.; and 1 day, ^ of 35c., which is 12c. Then we add 60 days, $7.00; 3 days, 35c.; 1 day, 12c.; total 64 days, $7.47. Then $2.00,30 days; and for 3 days,20c.; 9 days, three times 3 days, and conse¬ quently three times 20c., or 60c. Then we add 30 days, $2.00; 9 days, 60c.; total 39 days, $2.60. Then if $1.40 for 30 days, for 90 days it is three times that amount, or $4.20; and if 14c. for 3 days, it is ^ of that amount for 1 day, or 5c.; total 9 i days, $4.25. 136 DOUBLE ENTRY BOOK-KEEPING. 910 $290 for 3 days, 29c. “ 1 day, add ]/ 3 of amount for 3 days, 10 39 c - $240 for 30 days, $2 .40 “ 3 days 24c.; for 1 day l / 3 of 24c. 8 $2.48 $150 for 30 days, $1.50; for 15 days, y z of $1.50, or 75c. “ 3 days, 15c-; for 1 day, */ 3 of 15c., 5 80 $100 for 30 days, $1 00; for 90 days, $3.00 “ 3 days, ioc.; for 2 days, z / 3 of 10c., 7 $2.93 The foregoing illustration is deemed sufficient to make perfectly clear to the mind the 1 per cent, method of figuring interest, and when by continued practice the method has been thoroughly mastered, the old torture of averag¬ ing accounts is rendered, on the contrary, a pleasure. RULE-TABLE FOR AVERAGING ACCOUNTS. 910 . In some cases interest may be more expeditiously computed by first finding the interest for 1 day and then multiplying this amount by the number of days. To find the interest for 1 day (at 1 per cent, per month), move the decimal point between dollars and cents in principal three places to the left and divide by 3. (1) Principal Divisible by 3. — When the principal is divisible by 3 without a remainder, find the interest for 1 day and then multiply this amount by the number of days. Example: $240 for 31 days. .24^- 3 = 8 or 8c; .8 x 31 = 2.48, or $2.48, Ans. (2) Days Divisible by j.—When the days are divisible by 3, reduce the same to months and tenths of a month (see 861), then move the decimal point between dollars and cents in the principal two places to the left and multiply. Example: $200 for 39 days. 39 days=i.3 months; decimal point moved two places in principal gives $2 ; 1.3 x 2 = 2.6 or $2.60, Ans. (3) When one knows the way, ’tis better to go through the wood than around it; therefore, since there may be a few paths that have not as yet been discovered by my brother huntsmen, I will here endeavor to direct them to the same : To find the interest on — $1, $10, $100, $1000.—Add two ciphers to days, divide by 3, then — for $1, point off 5 places; $10, 4 pi.; $100, 3 pi.; $1000, 2 pi. Example: $100 for 88 days. 8800^3=2933; 3 places pointed off for interest on $100 gives 2.933 or $2.93. $1.20, $12, $120, $1200.—Multiply days by 4, then — for $1.20, point off 4 pi.; $12, 3 pi.; $120, 2 pi.; $1200, 1 pi. Example: $1.20 for 325 days. 325 X 4 = 1300; 4 pi. off gives .1300 or 13c, Ans. 9 137 910 DOUBLE ENTRY BOOK-KEEPING. $1.50, $15. $ I 5 °. —Add two ciphers to days, divide by 2, then — for $1.50, point off 5 pi.; $15, 4 pi.; $150, 3 pi.; $1500, 2 pi. Example: 'j 150 for 16 ds. $ 1600 h- 2 = 800 ; 3 pi. off gives .800 or 80c, Ans. $1.80, $18, $180, $1800.—Multiply days by 6* then — for $1.80, point off 4 pi.; $18, 3 pi.; $180, 2 pi.; $180071 pi. Example: $18 for 207 ds. 207x6=1242; 3 pi. off gives 1.242 or $1.24, Ans. $2, $20, $200, $2000.—Add two ciphers to days, divide by 3, subtract, then— for $2, point off 5 pi.; $20, 4 pi.; $200, 3 pi.; $2000, 2 pi. Example: $200 for 39 ds. 3900 -h 3 = 1300; 3900-1300 = 2600; 3 pi. off gives 2.600 or $2.60, A.ns. $2.10, $21, $210, $2100.—Multiply days by 7, then—for $2.10 point off 4 pi.; $21, 3 pi.; $210, 2 pi.; $2100, 1 pi. Example: $2100 for 38 days. 38 X 7 = 266 ; 1 pi. off gives 26.6 or $26.60, Ans. $2.25, $22.50, $225, $2250.-—Add two ciphers to days, divide by 4, subtract, then — for $2.25 point off 5 pi.; $22.50, 4 pi.; $225, 3 pi.; $2250, 2 pi. Example: $2250 for 47 days. 4700-^4 = 1175; 4700-1175=3525; 2 pi. off gives 35.25 or $35.25, Ans. $2.40, $24, $240, $2400. —Multiply days by 8, then—for $2.40, point off 4 pi.; $24, 3 pi.; $240, 2 pi.; $2400, 1 pi. Example: $240 for 31 ds. 31 x 8 = 248; 2 pi. off gives 2.48 or $2.48, Ans. $2.50, $25, $250, $2500.—Add two ciphers to days, divide by 12, then — for $2.50, point off 4 pi.; $25, 3 pi.; $250, 2 pi.; $2500, 1 pi. $2.62^, $26.25, $262.50, $2625.— Add two ciphers to days, divide by 8, subtract, then — for $2.62^, point off 5 pi.; $26.25, 4 pi-; $262.50, 3 pi.; $2625, 2 pi. $2.66|, $26.67, $266.67, $2666.67.—Add two ciphers to days, divide by 9, subtract, then — for $2.66|, point off 5 pi.; $26.67, 4 pi-» $266.67, 3 pl-J $2666.67, 2 pi. $2.70, $27, $270, $2700. —Multiply days by 9, then — for $2.70, point off 4 pi.; $27, 3 pi.; $270, 2 pi.; $2700, 1 pi. $2.75, $27.50, $275, $2750.—Add two ciphers to days, divide by 12, subtract, then — for $2.75, point off 5 pi.; $27.50, 4 pi.; $275, 3 pi.; $2750, 2 pi. $ 3 > $ 3 °> $ 3 °°> $3000.—Add two ciphers to days, then — for $3, point off 5 pi.; $30, 4 pi.; $300, 3 pi.; $3000, 2 pi. $3.25, $32.50, $325, $3250.—Add two ciphers to days, divide by 12, add, then —for $3.25, point off 5 pi.; $32.50, 4 pi.; $325, 3 pi.; $3250, 2 pi. $ 3 - 3 °. $ 33 . $330, $ 330 °-—Multiply days by n,then — for $3.30, point off 4 pi.; $33, 3 pi.; $330, 2 pi.; $3300, 1 pi. 138 DOUBLE ENTRY BOOK-KEEPING. 910 $ 3 - 33 s> $ 33 - 33 . $ 333 - 33 . $3333-33-—Add two ciphers to days, divide by 9. then —for $3.33^, point off 4 pi.; $33.33, 3 pi.; $333-33, 2 pi.; $3333-33, 1 pi. $ 3 - 37 |. $ 33 - 75 , $ 337 - 5 °. $ 3375 -—Add two ciphers to days, divide by 8, add, then —for 3.37^, point off 5 pi.; $33.75, 4 pi.; $337.50, 3 pi.; $3375, 2 pi. Example: $3^.75 for 42 ds. 4200^8 = 525; 4200 + 525=4725; 4 pi. off gives .4725 or 47c, Ans. $ 3 - 5 °, $ 35 , $ 35 °, $ 35 °°-—Add two ciphers to days, divide by 6, add, then — for $3.50, point off 5 pi-;' $35, 4 pl-5 $35°, 3 pl-5 $35°°, 2 pi. $3.60, $36, $360, $3600.—Multiply days by 12, then—for $3.60, point off 4 pi.; $36, 3 pi.; $360, 2 pi.; $3600, 1 pi. $3-75, $37-5°, $375, $375°-—Add two ciphers to days, divide by 8, then— for $3.75, point off 4 pi.; $37.50, 3 pi.; $375, 2 pi.; $3750, 1 pi. » $4, $40, $400, $4000.—Add two ciphers to days, divide by 3, add, then—for $4, point off 5 pi.; $40, 4 pi.; $400, 3 pi.; $4000, 2 pi. $4.50, $45, $450, $ 45 °°-—Add two ciphers to days, divide by 2, add, then—for $4.50, point off 5 pi.; $45, 4 pi.; $450, 3 pi.; $4500, 2 pi. $5, $50, $500, $5000.—Add two ciphers to days, divide by 6, then—for $5, point off 4 pi.; $50, 3 pi.; $500, 2 pi.; $5000, 1 pi. $6, $60, $600, $6000.—Add two ciphers to days, multiply by 2, then—for $6, point off 5 pi.; $60, 4 pi.; $600, 3 pi.; $6000, 2 pi. $7.50, $75, $750, $7500.—Add two ciphers to days, divide by 4, then—for $7.50, point off 4 pi.; $75, 3 pi.; $750, 2 pi.; $75°°, 1 pi. $9, $90, $900, $9000.— Add two ciphers to days, multiply by 3, then—for $9, point off 5 ph; $9°, 4 pi.; $900, 3 pi.; $9000, 2 pi. In order to become familiar with these various “short-cuts” in computing interest, it will be well, when averaging accounts, to place this list before you ; then, whenever an amount occurs which is covered in the above examples, apply the rule following same to ascertain the interest. The use of this list is recommended only as a discipline in familiarizing one with the general rules governing the one-per-cent method of computing interest ; for, after having become thoroughly acquainted with the method, it is best to discontinue referring to the list, since looking for the amounts necessarily consumes much time. (4) Principal for Days , Days for Principal. —The figures in the forego¬ ing examples are capable of a double application : whenever an amount occurs which is not covered in this list, the days and dollars may be trans¬ posed. If the new-created amount is then found in the list, the rule following same may be applied to ascertain the interest. 139 911 DOUBLE ENTRY BOOK-KEEPING. Whenever this transposition is made, if the original amount consisted of dollars and cents , when transposed it consists of days and hundredths of a day ; therefore, in such cases, whenever a rule directs you to add two ciphers, instead of doing so cast out the decimal point, and then proceed as directed in the rule ; when the rule directs you to multiply, cast out the decimal point and, after the multiplication, point off two more places than you are directed to do. Examples in Transposition of Principal and Days: $290 for 4 ds., transposed gives $4 for 290 ds. 29000-7-3=9667; 29000 + 9667=38667; 5 pi. off gives .38667 or 39c, Ans. $216.36 for 225 ds., transposed gives $225 for 216.36 ds. 21636-^4=5409; 21636—5409 = 16227; 3 pi. off gives 16.227 or $16.23, Ans. $52.34 for 27 ds., transposed gives $27 for 52.34 ds. 5234x9=47106; 5 pi. off gives .47106 or 47c, Ans. ON PROVING ADDITION AND SUBTRACTION. 911 . ADDITION. —To prove addition, proceed as follows: (1) Cast out, or pass over, all 9s, and all combinations of figures that make 9, 18, 27, or 36. When all the figures in the example have been passed over in this way, note the number that remains after the last 9 has been cast out. (2) In the same manner cast the 9s out of the sum, or total, and note the number that remains. (3) If the remainder in the example and the remainder in the sum agree, the addition is proved correct. Example: 7266 6492 35*4 3765 21107 7 2 9 Process : Beginning at the top line in the example and proceeding downward In the Example. 6 9 4 5 6 24 6 3 18 9 9 9 8 6 3 5 7 18 11 9 2 remainder. In the Sum. 7 2 1 1 9 2 remainder. Example: 266 492 5 8 4 765 2107 Process : Beginning at the top line of the example and proceeding downward— In the Example. In the Sum. 2 2 5 (left from 6) 7 1 6 8 5 2 6 7 — — — i 1 (from 6) 10 9 1 remainder. — 9 18 18 — 1 remainder. The 9 in the second line, also the 5 and 4 in the third line, are “ skipped over,” because these are at once seen to be 9s. I40 DOUBLE ENTRY BOOK-KEEPING. This process of casting out 9s is merely one of addition and subtrac¬ tion. We add until we come to a sum that is divisible by 9, and then drop, or cast out, this sum, when we begin anew with the next figure — and so on through the entire example. It is advisable not to make a practice of adding beyond 36 or 45. Better progress can be made by casting out the smaller sums, as 9s, 18s, and 27s. Sometimes it is convenient to “skip around” a little in order to make up these divisible-by-9 sums. When a sum has thus been made up and dropped, we go back and pick up the figure or figures we skipped over. When we lack only 1 of having enough to make up one of these divisible-by-9 sums, it is well to borrow 1 from the next figure, drop the sum, and go on with the remainder to make up another sum. When we have 1 more than enough to make one of these divisible-by-9 sums, we drop the sum and carry 1 to the next figure. * It will be seen that in this process no regard is paid to the position of the figures—whether units, tens, hundreds, or thousands; but each figure stands independently of the other and is picked up, and thrown away regardless of its position value. Great care must be taken not to pass over any 9s in the original addition, for such errors would not be discovered in proving by this process. A mis¬ take of 9 in addition, rarely, if ever, occurs. There is no person, who, after thirty minutes’ practice, will not appreciate the value of this process of proving addition. (See 859.) 912 . SUBTRACTION. —To prove subtraction, cast out all 9s, first from the minuend, and note the number that remains; then, from the subtrahend and remainder, and note the number that remains. If these two numbers, or remainders, agree, the subtraction is proved correct. Example: 52836 36512 16324 Process: In minuend. In subtrahend and remainder. 5 6 3 5 6 2 2 6 1 3 4 8 — 2 -— — 18 6—remainder. 9 1 9 9 6 —remainder. This method can be used to the greatest advantage in the Ledger, when you wish to prove the balance of an account, that is, the amount obtained by subtracting the footing of the lesser side from that of the greater. 912 a. Multiplication. —To prove multiplication, (1) cast the 9s from the multiplicand and note the remainder, (2) cast the 9s from the multiplier and note the remainder, (3) multiply the above remainders, cast out the 9s — and set down the remainder; (4) cast the 9s from the anszver — and set down the remainder. The two last-mentioned remainders must agree. It is understood, of course, that this process of proving addition, subtrac¬ tion, and multiplication, is performed mentally — the only figures set down being the final remainders. 913-914 DOUBLE ENTRY BOOK-KEEPING. 913 . The Balance of an Account.—T he addition of both the debit and the credit sides of an account, as well as the present subtraction of one side from the other, can be proved in the following manner: By casting out the 9s on the lesser side from the old footing, from the new amounts entered since, and from the present balance — noting the number that remains; then, by casting out the 9s on the greater side from the old footing and from the new amounts entered since — also noting the number that remains. If these remainders agree, the present “balance” is proved correct. Example : Old footing, New items: 125 30 7 25 1 28 3.42 Present footing, Present balance, ) , or difference, j ' ' * • 137-25 Old footing, 60.25 New items: 5 10 2-75 Present footing, 68.10 Process: Greater side. (Being 125.30, 7.25, 1.28 and 3.42.) 123 2 5 4 5 1 2 3 2 ~ 7 8 9—o remainder. 18 18 Lesser side. (Being 60.25, 5 - IO > 2.75—and bal. 69.15.) 6 1 2 2 5 7 5 5 — 6 18 1 5 27—0 remainder. There is no book-keeper who cannot well afford to spend an hour in the practice of this method of proving addition and subtraction ; for the mastery of a system by which these results may so easily and quickly be attained, is, with all book-keepers, “a consummation devoutly to be wished.” NAUGHT—0. 914 . Nearly every one when calling off an amount in which occurs a cipher in the tens column, calls it off as “aught” when he ought to say “naught.” The meaning of the former is anything, which he does not mean; while the meaning of the latter is nothing , which he does mean. Since “naught” is a somewhat difficult word to pronounce distinctly, the use of the letter “O” will be suggested instead. What this letter loses in meaning when Webster iS consulted, it gains in suggestiveness when its shape is taken into consideration. Examples: 509.85. Instead of saying “Five-naught- nine, eighty-five,” say “Five-O-nine, eighty-five”; 10.06, “Ten-naught-six,” say “Ten-O-six.” 142 915-919 DOUBLE ENTRY BOOK-KEEPING. REVISIONARY ADDITIONS. 915 . “Dr. TO” IN Journal. —When making a Journal entry, it is just as well to omit the “Dr.” and write simply “to” between the account to be debited and the account to be credited. Write the former to the extreme left and the latter to the extreme right, placing the “to” midway between. (For example see 382.) 916 . “To” and “By” in Cash Book. —When making an entry on the debit side of the Cash Book, the word “To”, usually prefixed to the account to be credited, may as well be omitted, since it is universally understood that Cash is Dr. to this account ; also, when making an entry on the credit side of the Cash Book, omit the word “By”, which is usually placed before the account to be debited to indicate that Cash is credited by that account. Both these words are superfluous. 917 . ABBREVIATIONS. —-The following abbreviations are now much in use when making Journal and Cash Book entries: Sunds. for Sundries, Bills Rec. for Bills Receivable, Bills Pay. for Bills Payable, Int. for N Interest, Ins. for Insurance, PVt for Freight, M’f’g for Manufacturing, etc., etc. 918 . Ciphers, Dashes. —When an amount consisting of dollars and no cents is to be extended into an amount column, it is a saving of time in writing and of confusion in adding, to make a dash in the cents column instead of two ciphers. The eye can pass over dashes with more rapidity than it can over ciphers. Some persons omit both dash and ciphers, leaving the column blank. “On a pinch” this may be permissible in the Ledger, but it is a very bad practice to adopt in any other book because of the liability to post dollars as cents. 919 . Freight, Cartage, and Express Charges.— Freight, cartage, and express charges should all be charged to Merchandise ; if not at the time such are paid, they should be so charged at the end of the year, by closing these accounts and transferring the net amount of each to the debit side of the Merchandise account. The reason why such should be done, is because Merchandise gets credit therefor through a certain percentage added to the invoice-prices—the cost-prices being marked on the goods, or recorded in the price books, not according to the prices given on the invoices, but such, plus the freight or express charges. Duty and custom-house charges on imported goods should also be charged to the Merchandise account, for these, of course, add to the cost of the goods, and the cost-prices of the latter are advanced accordingly. 143 920-922 DOUBLE ENTRY' BOOK-KEEPING. 920 . Discount Column. —If a great many of our bills are discounted, that is, if we allow our customers a discount for cash on goods we sell them, and they pay for the same within the specified time allowed for such dis¬ count, instead of making the entry as it is made in paragraphs 497 and 534 in this book, much time and labor may be saved by placing a “Discount Debit” column on the debit side of the Cash Book and imme'diately after the column in which are extended the credits to customers. Then, whenever a customer deducts a certain amount from a bill as a discount for cash, and pays the remainder, enter the full amount of the bill in the “Miscellaneous,” or “Sundry,” column, and, on the line therewith, extend the amount of the discount into the “Dis. Dr.” column. At the end of the month, the total of this latter column is found and the same entered on the opposite, or credit, side of the Cash Book, as so much having been paid for discount and, conse¬ quently, to be debited to the Discount account. 921 . Discount Debited to Mercpiandise. —The Discount account, when such is kept, should be closed at the end of the year and carried into the Merchandise account. Of all the old “established customs,” this will probably be one of the last to be put aside for reason and common sense. For many years yet to come, the “old timers” will doubtless continue to argue that the Discount account should be carried directly to the “Profit and Loss account” instead of to the Merchandise account—“just because /” The fact is, you have several conditional prices for your goods, that is, at the time you sell certain goods, you virtually name several prices, and then leave it to your customer to choose which of these he will accept —your condition being, that he will pay for the goods at a time which will be in accordance with the price given. For example: Suppose your terms are, “ 6 | 10 , ^ 4 j 00 , 3 | 90 , or 4 mos. net;” you sell a certain quantity of goods the four-months-net price of which is $100, and, since you cannot know at the time the goods are sold when the same will be paid for, this is the amount for which you credit Merchandise — supposing, as is customary, in order to enter some amount to the credit of this account, that the four-months-net price will be chosen. Now, by writing your terms upon the bill, you say, in effect: “If you wait four months before you pay for these goods, my price for.them will then be $100; if ninety days, $97; if sixty days, $96; if thirty days, $95 ; and if only ten days, $94.” Here are given five different conditional prices. This being the case, whenever a bill is paid, the Merchandise account should be adjusted in accordance with the amount actually received for the goods, which adjustment can be made by debiting this account for the amount of the dis¬ count deducted from the four-months-net price. When the Merchandise account is not debited for such discounts,'it shows for this account at the end of the year, when it is closed, a fictitious and incorrect gain. 922 . Cash and Discount Posted Separately.— In some houses, the cash and discount credits are posted separately instead of in total, but this confuses rather than makes clear, and it also causes just twice the labor in 144 923—924 DOUBLE ENTRY BOOK-KEEPING. posting. When a customer’s bill is paid, but little, if any, after-satisfaction can be derived by looking at his account and learning therefrom that we allowed him to deduct, when such was paid, a discount of say one, two, three, four, or five per cent.; therefore, it is always the better way to credit the person in one amount for the sum of both cash and discount; then you will save the making of an extra entry, and show clearly, in the amount credited, which bill was paid. 923 . Bills Receivable and Bills Payable Accounts.—A new mode of treating the Bills Receivable and Bills Payable accounts will be described as follows : Number all notes received and given in the order in which they are received and given ; keep a Bills Receivable and Bills Payable Book ; in the left-hand margin of this book, under “No.,” number the lines consecutively. Bills Receivable .—In the Bills Receivable part of this book, enter the notes in the order in which they are received, and at the same time write upon each note the number given it in this book. After the note has been fully explained here, this explanation will ever after suffice; therefore, instead of explaining a note after a Journal entry as in paragraph 373-374, “Rec’d his note at 90 ds. from 12-4-80;” or, in the explanation column in the Ledger as in paragraph 608, “Bennett, 12-90,” write, both after the Journal entry and in the explana¬ tion column of the Ledger, simply the number of the note, thus: “No. 7,” Bennett’s being the seventh note in the Bills Receivable account. Then, if at any time the full particulars regarding any note are desired, the same may be learned by referring to its number in the Bills Receivable Book. Bills Payable .—This system of numbering and explaining is applied to the Bills Payable Book and Bills Payable account in the same manner as to the Bills Receivable Book and Bills Receivable account. This rule, of giving simply the number in explanation, applies also to the Cash Book entries. When this method is adopted, the numbers will follow in regular order on the debit side of the Bills Receivable account, and on the credit side of the Bills Payable account; therefore, it will be seen that in this arrangement the finding of a note will be greatly facilitated while checking off payments. If a distinction is desired between the numbers of notes received and notes given, the letter “R” may follow the numbers on the Bills Receivable, and the letter “P”, the numbers on the Bills Payable; or any other private mark will answer as well. Part Payments .—When a note is only partly paid, write after the number, “prt;” when the balance thereof is paid, write after the number, “bal.” Whenever the term “note” is used in this article it must be understood to embrace “acceptance,” as these two papers are the same in effect. (See 142.) 924 . It is well to add, in the explanation column on a person’s account, after the note-number, the date the note falls due ; as this is a more satis¬ factory memorandum than would be one of simply the number of days or months the note had to run. 145 925 DOUBLE ENTRY BOOK-KEEPING 925 . COMPARATIVE STATEMENT. - ASSETS. - Personal Accounts owing us Bills Rec.— Notes on hand Cash on hand Merchandise (per Inventory) Store and Office Fixtures (per Inventory) Expense — Coal (per Inventory) Insurance — (Unexpired) Union Trust Co. Shares Total Assets - LIABILITIES. - Personal Accounts we owe Bills Pay. — Notes we owe Total Liabilities Present Worth of Firm In Balance with Total Assets (above) _ GAINS. - Merchandise Interest Total Gains Net Loss for Firm. In Balance with Total Losses (below) - LOSSES. - Store and Office Fixtures Expense Freight and Express Salaries Insurance Collection and Exchange Advertising Lost Accounts and Notes Total Losses Net Gain for Firm In Balance with Total Gains (above) - J. H. GOODWIN. - One-half Net Business Gain One-half Net Business Loss Amount drawn for Private Use Net Private Gain Net Private Loss Present Net Worth—Night of Dec. 31st - S. A. EMERSON. - One-half Net Business Gain One-half Net Business Loss Amount drawn for Private Use Net Private Gain Net Private Loss Present Net Worth—Night of Dec. 31st - SALES. January February March April May June July August September October November December *• Total Sales for the Year PROPORTION OF GAIN TO SALES. Of Cross Gain to Sales Of Net Gain to Sales 1880 1881 ; 201 04 1449 02 3776 5° 2212 40 338 — 15 — 27 50 500 — 8519 46 603 32 1062 04 1665 36 6854 10 8519 46 785 15 6 52 79 1 6? 14 5° 173 45 28 45 US — 2 5° I 70 l6 — 143 45 525 °5 266 62 79 1 t>7 i33 3i 62 — 71 31 357i 31 i33 3i 35° 52 217 21 3282 79 3Q43 . 18 3°43 18 25.8 per cent 18.76 per cent 1882 I46 926-927 DOUBLE ENTRY BOOK-KEEPING. 926 . This is an age of statistics. The business man wishes to know at the end of each year not only the present condition of his business, but also, at the same time, for the sake of comparison, the condition of his business at the end of each preceding year. When a statement illustrating the same can be presented in a compact form on a single page, it will be found of greater interest to him than it would be were it scattered over several pages with only one year represented on each page ; for in the former case com¬ parison is easy, while in the latter it is difficult. The form illustrated on the opposite page possesses all the good qualities of the forms illustrated in paragraphs 812 to 817, with the additional advan¬ tages of being more compact and more complete. Since but one year’s busi¬ ness is represented in this book, the illustration cannot be so complete and satisfactory to the understanding as it would be if instead several years were represented. The merits of this form cannot fail to be appreciated, how¬ ever, when it is understood that the statement can be extended in width for as many years as two pages will accommodate money-columns, and that for as many years the condition of any particular branch of the business, or class of accounts, can be compared, one year with another, during all the years the firm has been in business. The making of this statement is rendered very easy, too, because after the first year the book-keeper has simply to insert the amounts. The sales can be filled in from month to month during the year. A few extra lines should be left under the Assets, the Gains, and the Losses, in case new accounts should be opened that would come under these headings. This statement may be divided into four, when the firm’s Record Book is not sufficiently long to accommodate it on one page. In such a case the Assets and Liabilities would be placed on the first left-hand or even page, the Gains and Losses next, the Partner’s Individual Statements next, and the Sales and Proportion of Gain to Sales next—each being started on the left- hand page and extended across both that and the opposite page. MINT MARKS ON GOLD AND SILVER COINS. 927 . The small letter found immediately over the denomination on gold and silver coins of the United States, indicates the place where such were minted, or coined. All coins bearing the letter C. were minted at Charlotte, N. C. ; C. C., at Carson City, Nev. ; D., at Dahlonega, Ga. ; O., at New Orleans ; S., at San Francisco ; no letter, at Philadelphia. The Phila¬ delphia mint, which is the oldest, was established in 1792. The Charlotte and Dahlonega mints ceased to exist at the close of the war of the Rebellion. ft 147 DOUBLE ENTRY BOOK-KEEPING. but that the account is such an one as is here described ; instead of posting these invoices as they are posted in paragraphs 768 to 774, we would post thus—Dec. 29, 7 b, 65, $73.69. (“7 b” is an abbreviation of 7 bills. Invoices are commonly called bills, because the latter is the shorter word.) When this creditor renders a statement of our account at the end of the month, we compare the same with his account in our Ledger. If they do not agree we turn to the page in the Journal, where we find the amounts of the invoices entered separately: from this Journal-entry we check the items on his statement. This method applies only to such accounts as are settled monthly, and not to invoices upon which time is given. OBJECTIONS TO SINGLE ENTRY. 939 . The chief objection to Single Entry book-keeping is that of having no proof against errors and omissions. If you should sell goods to a person on account and omit to post the amount of the sale to the debit of the person’s account in the Ledger, that sum would be forever lost—unless the person were honest enough to notify you of the omission ; or if, worse still, you should post the amount of the sale to the wrong side of the person’s account, that is, give him credit when you should have debited him, your loss would be just twice the amount of the sale ; or, should you post a debit of dollars as so many cents, your loss would be that number of dollars less as many cents ; or, if you should send a remittance to a creditor and omit to post the amount to the debit of the person’s account, the latter would show that you still owed this amount and you might pay it again, thereby tempting your creditor to say, “So much in !” Such errors in Single Entry would never be discovered unless you accidentally stumbled over them, while in Double Entry they would throw the books out of balance and necessitate an imme¬ diate search for the under-debit or over-credit, as the case might be. When such errors are shown to exist and their locations subsequently discovered, the business man should “thank his lucky stars” that his system of book¬ keeping is not Single Entry—but Double Entry. Another objection to Single Entry is the fact of its being an incomplete record of business transactions. Double Entry book-keeping gives us a detailed record of all our transactions, cash and credit, and consequently enables us to possess such information as is given in paragraphs 925 and 926. This information cannot be obtained in Single Entry, for the reason that no record other than that of transactions pertaining to personal accounts has been kept. When all these facts are known to a business man, and he still persists in keeping his books by Single Entry, you may safely come to the conclusion that his real reason for doing so is because he does hot understand Double Entry. DOUBLE ENTRY BOOK-KEEPING. 940-942 THE BILL BOOK. 940 . In the same manner as the Cash account is taken out of the Ledger and put into a Cash Book, may the Bills Receivable and Bills Payable accounts be taken out of the Ledger and put into a Bills Receivable and Bills Payable Book—commonly called the Bill Book. Disregarding established customs and stereotyped, old-fogy phrases, such as, “No, I want all my accounts to show up in the Ledger, where they belong!” or, “We have always done this way and I guess we will not make a change now,” business men of the present progressive age are rapidly doing away with all unnecessary work, of what¬ soever kind. Therefore, since the Bills Receivable and Bills Payable accounts can be done away with by keeping a Bills Receivable and Bills Payable book, and entering all notes received and given directly in that book as an original book of entry, this method will here be explained : A book of the common form can be utilized by ruling a ledger-folio column to the left of the “Maker” column in the Bills Receivable part, and to the left of the “To Whom Payable” column in the Bills Payable part. However, should the form illustrated in the back of this work be preferred, in which these columns, together with several other advantageous features, are given, this book will be furnished upon appli¬ cation. Number the lines and notes consecutively, same as in paragraph 923. 941 . Bills Receivable. —When a note is received, enter it at once in the Bills Receivable part as a Debit, and write upon the note its number. Then turn to the person’s account in the Ledger and give him credit for the note, writing in the explanation column of the Ledger the number thereof. After which, turn back to the Bill Book and indicate in the “L. P\” column the page of the Ledger to which the credit was posted. Payments .—When a payment is made on this note, enter it first in the Cash Book, giving the number of the note in explanation; then post the payment to the “Payment” column in the Bills Receivable Book. When the note is discounted at the bank, treat it in the same manner as if it were paid. Trial Balance .—When the trial-balance is made, take this book and find the difference between the total debits and the total credits or payments, then carry that difference to the debit side of the trial-balance. This difference should exactly agree with the sum total of the notes held against others. 942 . BILLS Payable. —When a note is given, enter it at once in the Bills Payable part as a Credit, and write upon the note the number given it. Then turn to the person’s account in the Ledger and debit him with the note, writing in the explanation column simply the number of the note. After which,, indicate in the “L. F.” column of the Bills Payable Book the page of the Ledger to which the debit was posted. Payme?its .—When payments are made, enter them first in the Cash Book, then post them to the “Payment” column in the Bills Payable Book. Trial Balance .—When the trial-balance is taken, find the difference between the total credits and the total debits, or payments, then carry that difference to the credit side of the trial-balance- This difference should indicate the sum total of the notes we owe. I5i DOUBLE ENTRY BOOK-KEEPING. but that the account is such an one as is here described ; instead of posting these invoices as they are posted in paragraphs 768 to 774, we would post thus—Dec. 29, 7 b, 65, $73.69. (“7 b” is an abbreviation of 7 bills. Invoices are commonly called bills, because the latter is the shorter word.) When this creditor renders a statement of our account at the end of the month, we compare the same with his account in our Ledger. If they do not agree we turn to the page in the Journal, where we find the amounts of the invoices entered separately: from this Journal-entry we check the items on his statement. This method applies only to such accounts as are settled monthly, and not to invoices upon which time is given. OBJECTIONS TO SINGLE ENTRY. 939 . The chief objection to Single Entry book-keeping is that of having no proof against errors and omissions. If you should sell goods to a person on account and omit to post the amount of the sale to the debit of the person’s account in the Ledger, that sum would be forever lost—unless the person were honest enough to notify you of the omission ; or if, worse still, you should post the amount of the sale to the wrong side of the person’s account, that is, give him credit when you should have debited him, your loss would be just twice the amount of the sale ; or, should you post a debit of dollars as so many cents, your loss would be that number of dollars less as many cents ; or, if you should send a remittance to a creditor and omit to post the amount to the debit of the person’s account, the latter would show that you still owed this amount and you might pay it again, thereby tempting your creditor to say, “So much in !” Such errors in Single Entry would never be discovered unless you accidentally stumbled over them, while in Double Entry they would throw the books out of balance and necessitate an imme¬ diate search for the under-debit or over-credit, as the case might be. When such errors are shown to exist and their locations subsequently discovered, the business man should “thank his lucky stars” that his system of book¬ keeping is not Single Entry —but Double Entry. Another objection to Single Entry is the fact of its being an incomplete record of business transactions. Double Entry book-keeping gives us a detailed record of all our transactions, cash and credit, and consequently enables us to possess such information as is given in paragraphs 925 and 926. This information cannot be obtained in Single Entry, for the reason that no record other than that of transactions pertaining to personal accounts has been kept. When all these facts are known to a business man, and he still persists in keeping his books by Single Entry, you may safely come to the conclusion that his real reason for doing so is because he does hot understand Double Entry. DOUBLE ENTRY BOOK-KEEPING. 940-942 THE BILL BOOK. 940. In the same manner as the Cash account is taken out of the Ledger and put into a Cash Book, may the Bills Receivable and Bills Payable accounts be taken out of the Ledger and put into a Bills Receivable and Bills Payable Book — commonly called the Bill Book. Disregarding established customs and stereotyped, old-fogy phrases, such as, “No, I want all my accounts to show up in the Ledger, where they belong!” or, “We have always done this way and I guess we will not make a change now,” business men of the present progressive age are rapidly doing away with all unnecessary work, of what¬ soever kind. Therefore, since the Bills Receivable and Bills Payable accounts can be done away with by keeping a Bills Receivable and Bills Payable book , and entering all notes received and given directly in that book as an original book of entry, this method will here be explained : A book of the common form can be utilized by ruling a ledger-folio column to the left of the “Maker” column in the Bills Receivable part, and to the left of the “To Whom Payable” column in the Bills Payable part. However, should the form illustrated in the back of this work be preferred, in which these columns, together with several other advantageous features, are given, this book will be furnished upon appli¬ cation. Number the lines and notes consecutively, same as in paragraph 923. 941. BILLS Receivable. —When a note is received, enter it at once in the Bills Receivable part as a Debit, and write upon the note its number. Then turn to the person’s account in the Ledger and give him credit for the note, writing in the explanation column of the Ledger the number thereof. After which, turn back to the Bill Book and indicate in the “L. P\” column the page of the Ledger to which the credit was posted. Payments . — When a payment is made on this note, enter it first in the Cash Book, giving the number of the note in explanation ; then post the payment to the “Payment” column in the Bills Receivable Book. When the note is discounted at the bank, treat it in the same manner as if it were paid. Trial Balance .-—When the trial-balance is made, take this book and find the difference between the total debits and the total credits or payments, then carry that difference to the debit side of the trial-balance. This difference should exactly agree with the sum total of the notes held against others. 942. BILLS Payable. —When a note is given, enter it at once in the Bills Payable part as a Credit, and write upon the note the number given it. Then turn to the person’s account in the Ledger and debit him with the note, writing in the explanation column simply the number of the note. After which,.indicate in the “L. F.” column of the Bills Payable Book the page of the Ledger to which the debit was posted. Payments .—When payments are made, enter them first in the Cash Book, then post them to the “Payment” column in the Bills Payable Book. Trial Balance .—When the trial-balance is taken, find the difference between the total credits and the total debits, or payments, then carry that difference to the credit side of the trial-balance- This difference should indicate the sum total of the notes we owe. 151 943-947 DOUBLE ENTRY BOOK-KEEPING. GOODS, DISCOUNT; NOTES, INTEREST; DRAFTS, EXCHANGE. 943. When your cash balance will permit, take advantage of all discounts offered for cash on goods bought, for by so doing you reduce the cost of the latter. \ 944. Hold all the interest-bearing notes you get until about ten or fifteen days before due; then discount them at your bank and take credit for the accrued interest. When you do this, your Interest account reports a profit. The reason for not holding a note until it becomes due, is that the maker of same would not regard a notice from you of its falling due on a certain date of so much importance as he would such a notice from your banker. When his note is held by the bank, and a notice is sent to him stating the date upon which it will fall due, it is unnecessary to add : If your note is not promptly paid on the day above mentioned, it will go to protest. The banker’s notary is not slow in getting to work after the little card “Bank Closed” goes up, for ’tis then that he makes all his charges for protest fees! 945. When your banker charges exchange on the drafts you buy from him, keep out of your deposits all checks and drafts on Eastern banks. When you wish to make a payment of an Eastern bill or note, endorse over to the order of the person to whom you wish to make such payment out of such checks and drafts, a sum sufficient to as nearly as possible cover the amount of the bill, or note. Should the aggregate of these endorsed checks and drafts fall short of the amount you wish to send, buy a draft, or, if the same be very small, enclose currency and stamps for the difference. Do not hold such drafts and checks too long, because one of the banks upon which the same were drawn might, in the meantime, become insolvent. In such a case, if it could be proved that you held the paper beyond a reasonable length of time, you would have to suffer the loss. ♦ 946. When you receive many checks and drafts on Eastern banks, it is a good plan to open an account with some bank in Chicago or New York. When you do this, endorse all such checks and drafts over to the Cashier of this bank, and forward them by mail to be placed to your credit, at the same time requesting him to send you a check-book. This procured, you can draw a check on your Eastern bank whenever you have an Eastern bill or note to pay. 947. New York City is America’s money-market; therefore, a draft on New York is at par in any city or town in the Union. However, some Western bankers, in order that they may swell the credit sides of their Collection and Exchange accounts, would have their customers believe the contrary. Chicago exchange is at par in St. Louis; but St. Louis exchange is not at par in Chicago. 152 948-949 DOUBLE ENTRY BOOK-KEEPING. CHECKING SETTLEMENTS. 948. Whenever a payment is made on an account, or a settlement is made by note, which payment or settlement just covers the sum total of several bills, it is advisable to turn to the person’s account in the Ledger and check the items covered in such settlement. This facilitates not only in showing which bills are still unpaid, but also in locating the “difference” whenever a person’s account in our Ledger does not 'agree with our account in his Ledger. i When we wish to show on an account the items covered in each settle¬ ment, the following method may be adopted: In the margin of the column opposite the amount of the first settlement, make a small “a”; then, on the opposite side of the account, to the extreme left of each item covered in the settlement, write the same letter; the payment and the items covered in the next settlement mark “b”, and so on through the alphabet until a settlement in full is made, and the account balanced, when you may again begin with “a.” Another method is as follows: Beginning at the top of the page on an account, number each bill; then, whenever payments are made, write in the explanation column, on the line therewith, the number of each bill included in that payment. Whenever you pay several bills at one time, and have each of them receipted, it is well to summarize upon the back of the bill of latest date, as a memorandum, the amounts of the bills included in that settlement. MEMORANDA. 949. If you are accustomed to making memoranda for use when you go “down street,” “down town,” or “up town,” instead of making the same in a book, as is usually done, ’tis a better plan to make them on separate slips of waste paper — using one slip for each place you wish to visit. A sheet of note-paper folded twice makes three slips of about the proper size. The memoranda should be made across the ends of same. An envelope properly inscribed should be kept in a convenient place in which to enclose these slips as they accumulate from time to time. When you get ready to go “down town,” take these slips out of the envelope, arrange them in the order in which you wish to make your calls, and put a rubber band around them. As you conclude the calls destroy the slips. When one word is sufficient for a comprehensive memorandum, do not write two or more. When you wish to make a memorandum of the date of the purchase of an article, for the purpose of ascertaining at any future time how long you have had it, or of knowing how long it has lasted — as, for instance, a box of pens, a bottle of ink, a book, or a certain quantity of note-heads — a brief way of doing so is thus: 986 —for September, 1886 . 153 950 DOUBLE ENTRY BOOK-KEEPING. A NEW METHOD OF DETECTING ERRORS IN TRIAL-BALANCES. 950. [i] Instead of checking in the Ledger each item posted therein, take a sheet of paper and rule thereon several money-columns, heading the same “Debit” and “Credit,” alternately. Then, if convenient, have an assist¬ ant to write the amounts in these columns as you call them off. [ 2 ] Take the Ledger and, beginning with the first account, go through the entire book, calling off therefrom each item posted therein during the last month; first, call the items on the debit side of an account, and then the items on the credit side — calling out to the person assisting simply “Debit” or “Credit,” as the case may be, and the amount; he, at the same time, writing in the proper money-column the amount called off. [ 3 ] To the extreme left in these money-columns let the assistant occa¬ sionally write the Ledger page for reference. [ 4 ] After all the items posted to the Ledger in the last month have been called off and placed in these money-columns, take the balance from the Cash Book and place it in the debit money-column. If the Bills Receivable and Bills Payable accounts are kept in a separate book, according to the method described in paragraphs 940 to 942 , take the balance from the Bills Receivable Book and place it in the debit money-column, then the balance from the Bills Payable Book and place it in the credit money-column. Take from the above-mentioned books the balances of the first of the month and place them in the money-columns opposite to the present balances. • [ 5 ] Then find the sum total of all the Debit money-columns, also the sum total of all the Credit money-columns. [ 6 ] If these sums total agree , the mistake in the trial-balance will be found in the Ledger: in the addition of some column; or in the subtraction of one side from the other on some account; or else in the carrying forward of the balance on some account from an old page to a new one. [ 7 ] If these sums total do not agree, find the difference between them. [ 8 ] If the difference thus found agrees with the difference in the trial- balance, the error in the latter will be found in the books from which the postings were made: in the footing of some column ; in the carrying forward of some footing from the bottom of one page to the top of the next; or, in the addition of some “sundries” entry in the Journal. [ 9 ] If the difference thus found does not agree with the difference in the trial-balance, then, either some item has been overlooked in the Ledger while you were calling off therefrom the items for these money-columns, or there has been a mistake in posting—to find either or both of which proceed as fol¬ lows: Take the Journal, Cash Book, and such other books as you may have posted from, and, beginning with the first of the month, have the assistant call off therefrom, first, all the Debit items, and then all the Credit items — calling first, the page, as indicated in the “L. F.” column, and then simply the amount; while you, at the same time, find, in the left-hand margin of the proper money-column, the page nearest the one he calls off (see “ 3 ” above), and look 154 DOUBLE ENTRY BOOK-KEEPING. 951 near thereto for the amount. When the latter is found, check it. Proceed in this manner with all the items in all the books from which postings were made. While checking in this way, the omissions, if any, and the errors in posting will be found. If any items are found in the Ledger which were overlooked when you were calling off from this book, they should, when found, be placed in these money-columns. When errors in posting are found, they should be corrected first in the Ledger and then in these money-columns. After all such corrections have been made, and after all the items in these money- columns have been checked, the sum total of all the debit columns should exactly agree with the sum total of all the credit columns. [io] After all the foregoing tests have been made, should the trial-balance be still out of balance, the error will be found in the Ledger: in the omission of some account; in the footing of some column; in the subtraction of one side from the other on some account; or in the carrying forward of some balance from an old page to a new one. First of all, of course, the addition of the trial-balance should be verified. At first, this method of checking may not seem practical, because of the time required to transfer the amounts from the Ledger to these money-columns; but, upon trial, it will be found to require less time and also to be infinitely more accurate than the old method. With this method, when an item is called off, that particular amount must be found before it can be checked; therefore, if an error is made in posting, it cannot be passed over. Under the old method of checking in the Ledger, it is no exaggeration to say that there is no book¬ keeper who has not, in his experience, several times passed over some simple error which his eye seemed to have cherished a passing fondness for on account of his familiarity with its outline; therefore, it is not so often for a quick, as for a sure way of finding the mistake in his trial-balance that the book-keeper sighs. How preposterous are the pedantic proclamations of one or two would-be figure-wizards who claim to possess rules “by which a book-keeper can, at once , locate the errors in his trial-balance for which he has been seeking weeks, nay, even months!” Such rules do not exist, and it is unques¬ tionably safe to say that such never will exist. DOLLARS POSTED AS CENTS; OR CENTS, AS DOLLARS. 951. If the difference in the Trial Balance be a sum consisting of dollars and cents which, when added together, make 99 , cut off the cents, add 1 to the dollars, and this sum will be found posted as dollars where it should have been posted as cents, or vice versa. For example: $ 61 . 38 . 61+38 = 99 ; cutting off the cents and adding 1 to the dollars gives 62 . $62 will be found posted as 62 c.; or, 62 c. as $ 62 . 155 952-955 DOUBLE ENTRY BOOK-KEEPING. TRANSPOSITION. 952 . When the difference in the Trial Balance is 72, either 19 or 91 has been transposed. When the difference is 63, one of the following amounts has been transposed: 18, 81, 29, or 92. This applies as well when any number of ciphers are affixed, as, for example, $7.20, $72.00, $720.00, etc. Further than this, to know that the difference in the Trial Balance probably consists of a transposition of figures is of no practical benefit, because of the necessity for carrying so many figures in the head while looking for the error. In order to prove that it is impossible to ascertain from the figures con¬ stituting the error exactly what figures have been transposed, it is only necessary to call attention to the fact that where the difference is 9, any one of the following sixteen different amounts may have been transposed, viz.: 12, 21, 23, 32, 34, 43, 45, 54, 56, 65, 67, 76, 78, 87, 89, and 98. PERPETUAL PROOF OF LEDGER BALANCE. 953. When we are sure that on the books from which postings are made, all the additions and carryings-forward are correct, and that all items entered in such books are correctly posted to the Ledger, we know positively that the latter is in balance. By doing a little extra work while posting, the book-keeper can have, in the adoption of the following described method, daily, nay, hourly proof of his Ledger Balance: 954. Ledger Balance Proof. —Get a small book about 4x12 inches, containing two money-columns on a page, and label it “Ledger Balance Proof.” For the purpose of abbreviation throughout this article, this book will be called the “L. B. P.”— meaning the Ledger Balance Proof. 955. JOURNAL. —Before beginning the posting of a page in the Journal, write at the top of the two columns in the L. B. P., “J” (for Journal), and the page from which you are about to post; as, for example, “J 63.” Place this book, the L. B. P., at the right of, and near the Ledger, while posting; then, whenever you post an amount from the Journal to the debit side of an account in the Ledger, transfer that amount from the Ledger into the left-hand or debit column of the L. B. P.; and, whenever you post an amount from the Journal to the credit side of an account in the Ledger, transfer the same from the Ledger into the right-hand or credit column of the L. B. P. After all the items on this page of the Journal have been posted, if there are “extra” columns on the debit side, take the amounts brought forward at the top of this page, in such columns, from the amounts carried forward to the top of the next page, and place the differences thus found in the debit column of the L. B. P. Then, if there be “extra” columns on the credit side of the Journal, take the amounts brought forward at the top of this page, in such columns, from the amounts carried forward to the top of the next page, and place the differences thus found in the credit column of the L. B. P. 156 \ 956—957 DOUBLE ENTRY BOOK-KEEPING. Then, add the columns in the L. B. P., and if they agree, the Ledger Balance for the posting of this page is proved. If they do not agree, there has been a mistake made, to find which proceed as follows: First , compare the amounts on the debit side of the Journal with the amounts in the debit column of the L. B. P., then, the amounts on the credit side of the Journal with the amounts in the credit column of the L. B. P.; second , examine the additions of all “sundries” entries on the page; third , see if any amount is extended into an “extra” column when it should have been placed in the “general” column; fourth , examine the additions of the “extra” columns and then see whether the totals thereof have been correctly carried forward. Through these examinations the error, or errors, will be discovered. Proceed in this manner throughout the month and you will have positive assurance at the completion of the posting of each page that no mistakes have been made as far as your Journal is concerned. 956 . ILLUSTRATION.— See paragraphs 385 to 420 i in this book. LEDGER BALANCE PROOF. J 63. IO 80 l6 _ 190 — 190 — 150 — •5° — 7 35 I — I — 189 3° 2 55 4 - 189 30 l 9 85 3 — 2l8 60 4 — 120 — 7 23 46 25 2 85 64 J 9 9 60 89 62 42 86 IOO — 22 40 14 60 6 40 32 *9 Par. 420% Cr. $271 88 IOO — 247 23 “ 385 “ 24 65 IOO — 14 60 Par. 420% Dr. 8575 96 “ 385 “ 1 45 574 51 Proof, $1470 64 $1470 64 Proof. 957 . Cash Book, Debit Side. —Before beginning the posting of a page on the debit side of the Cash Book, write at the top of a credit column in the L. B. P., “C” (for Cash) and the page from which you are about to post; as, for example, “C90.” Then, whenever you post an amount from the debit side of the Cash Book to the credit side of the Ledger, transfer that amount from the Ledger into this column in the L. B. P. After this page of the Cash Book has been filled, and all items in the Miscellaneous column have J>een posted, find the sum total of this Miscel¬ laneous column and deduct therefrom the amount brought forward at the top of the column, if there be any such amount; then, find the sum total of the column in the L. B. P. If the latter agrees with the net sum of the former, both the addition and the posting are proved correct. If these sums do not agree, compare the amounts in the two columns. 157 958-961 DOUBLE ENTRY BOOK-KEEPING. 958 . The End of the Month. —At the end of the month, when you wish to prove the correctness of all carryings-forward of footings, and of all addi¬ tions of “extra” columns on the debit side of the Cash Book, write at the top of a debit column in the L. B. P., “C”, and also the debit pages for the first and the last of the month; as, for example, “C 76-90.” Then, place in this column, first, the balance of cash on hand at the beginning of the month; second, the totals of all the “C-^380 25 Amount posted to the Ledger from Sales Book page 56, 263 40 (( 44 44 44 <4 It 44 (4(4 i 75 90 44 44 44 44 44 44 44 44 44 420 55 Present footing in the L. B. P., 6,240 10 Amount posted to the Ledger from Sales Book page 57, 325 85 44 44 44 44 44 44 44 44 44 And so on. bo 45 It will be understood, of course, that no writing is placed upon the L. B. P. other than the figures of postings and footings ; the above words being pre¬ fixed merely for the purpose of explaining the method. Whenever there are only a few amounts to be posted from each page, as in the above example, the adding of the column in the L. B. P. may be deferred until two, three, or several pages have been posted, then the total ascertained and compared with the footing in the Sales Book. If these foot¬ ings do not agree, an error has been made, which may be discovered either by comparing the amounts in the L. B. P. with the amounts in the Sales Book; or by examining the footings in the Sales Book and the L. B. P. The postings from the Miscellaneous columns in the Cash Book may be proved in the manner above described, instead of in the manner described in paragraphs 957 to 960. 962 . In the same manner as that described in the preceding paragraphs the correctness of the work done on, and from, any other book from which postings are made can be proved. 963 . Before transferring an amount from the Ledger to the L. B. P., always observe upon which side, of the Ledger it appears, and then, while pronouncing the word “Debit” or “Credit,” as the case may be, transfer the amount to the corresponding column in the L. B. P. If it appears on the debit side of the Ledger, be sure you place it in the debit column of the L. B. P.; if on the credit side, in the credit column. This method consists of keeping an account of the work done as you progress, and of proving its correctness, not at the end of each month, but in sections, that is, from page to page. The correctness of this work is proved by comparing the aggregate of the work which was to be done with the aggregate of the work now done —the former results being found in the books from which postings were made; and the latter, in the L. B. P. 159 964—965 DOUBLE ENTRY BOOK-KEEPING. 964 . It will be seen that we cannot have this daily, or sectional, proof of the Ledger Balance without doing a little extra work, nor can any system be devised by means of which these results can be acquired without extra labor. The book-keeper whose trial-balance “always comes out to a cent!", or who seldom makes any other than a certain kind of mistake, and “always knows just where to find the same,” will probably think this method not worthy even of consideration. But if, on the contrary, the footings of his trial- balance rarely, if ever, agree the first time trying, and he is frequently obliged to spend three or four days, and sometimes as many weeks, in looking for the errors, before he can discover them, he will find it advisable to, at least, give this method a trial. 965 . By Casting OUT 9 S. —Another method of proving the Ledger Balance can be adopted in the casting out of 9s in the manner described in paragraph 911 (which see). When this is done, instead of having two money columns in the L. B. P., have two columns, each wide enough for a single figure only, then proceed in exactly the same manner as heretofore described, with this exception : instead of transferring the several amoiints from the Ledger to money-columns in the L. B. P., cast out the 9s and transfer the several remainders to these single-figure columns in the L. B. P.; and finally, cast the 9s out of each of these single-figure columns. If the remainders from the latter agree, the correctness of the work is proved —provided no transpositions have been made, and no dollars have been posted as cents. Example, see par. 385 to 420| ; or, the results thereof in par. 956. LEDGER BALANCE PROOF BY CASTING OUT 9s. J-63. Instead of $ 10 So, 0 7 Instead of $ 16 — “ “ I9O -, 1 1 “ “ I9O - “ “ 150 — 6 6 150 — “ “ 7 35 . 6 1 1 — 4 < t< j - 1 1 3 “ ‘ 189 30 “ “ 2 55 . 3 4 4 — “ “ 189 30, 3 5 “ “ 19 85 “ “ 3 — 3 8 ■■ “ 218 60 4 —. 4 3 “ “ 120 OO “ “ 7 23. 3 8 •' •* 46 25 “ “ 2 85, 6 2 “ ‘ 64 19 “ “ 9 60, 6 7 “ “ 89 62 “ 11 42 86, 2 I “ “ IOO - ** * k 22 40, 8 2 “ “ 14 60 ** “ 6 4 °, I O “ “ 247 23 “ ■* 3219- 6 “ “ 100 —, 1 ** “ 100 —, 1 “ “ 14 60, 2 “ ■ 574 51. 4 “ “ $1470 64, 4 11 4 Instead of $1470 64 Instead of keeping this L. B. P. book, a figuring-block can be placed at the side of the Ledger while posting, and either a horizontal or a perpendic¬ ular line drawn through the center thereof, to separate debits from credits, after which, while posting, place the figures in a horizontal line, or in several horizontal lines-, and not in a perpendicular column under each other, as in the example above shown ; thus, for example : Debit, o 1 6 6 1 66281' 3 3 3 4 3 6 1 i 2 4-4 Credit, 71613458382712 o-4 160 DOUBLE ENTRY BOOK-KEEPING. 966-967 This method of casting out 9s, requires only about one-third as much extra labor as is required in the other of writing the amounts; and, unless the book-keeper seldom makes mistakes in transposition, or in posting dollars as cents, is, in consequence of these two exceptions, probably of proportion¬ ately less value. If, on the contrary, he frequently makes errors of this kind, the other method had better be adopted, since that is proof against errors of all kinds, including even these. 966 . PROOF Slips. —In some cases, where the Ledgers are large and cumbrous, slips of paper would be more convenient to handle than books, and in such cases it is here suggested that Proof Slips be used instead of, but in the same manner as, the book described in paragraph 954. The proper size for these slips is about 3x8 inches. They should be ruled thus: a heavy line running lengthwise, or perpendicularly, through the center, with a money- column on each side ; then, faint-lines across from side to side, or horizontally, at a distance of three-sixteenths of an inch apart. In order to obtain a good, solid surface upon which to write the figures, these slips should be made into pads. These pads may then be held in the hand while posting, and, whenever an amount is posted to the Ledger, this amount may be placed upon the Proof Slip. When posting from the Journal, the two money-columns on this slip are known as debit and credit, respectively; but when posting from any other book, they lose this identity and are known simply as money-columns — both columns being utilized for all debits or all credits, as the case may require ; as, for instance, when posting from the Sales Book, whence all items are posted to the debit side of the Ledger, or when posting from the Miscel¬ laneous column on the debit side of the Cash Book, whence all items are posted to the credit side of the Ledger. 967 . Ledger Balance: Ledger Balances. —In the adoption of the method described in the preceding paragraphs, the Ledger balance may be proved; but not the Ledger balances. That is, although the Ledger is, in fact, proved to be in balance, the balances-—ascertained by adding both sides of each account in the Ledger, and then subtracting the footing of the lesser side from that of the greater — may, in one or more cases, be incorrect. For instance, suppose a mistake of ten dollars had been made in the addition of one side of a certain account in the Ledger — this would not change the fact of the Ledger’s being in balance ; but would, in consequence of this error, throw the trial-balance out of balance. Then, since all work other than this of addition and subtraction on the Ledger accounts had been proved, the book-keeper would know that in his “Ledger Balances” the error wo*uld be found; consequently he would not waste time in seeking for it elsewhere. 161 I 968—969 DOUBLE ENTRY BOOK-KEEPING. POSTAL NOTES. 968 . Is it generally understood that the sending of a Postal Note through the mail is no more surety against loss than is the sending of currency? It would seem not, from the fact that quite a large percentage of the remittances in amounts from one to five dollars received through the mails are in Postal Notes. Postal Notes, like Treasury and National Bank Notes, are payable to bearer. No record is made in the post-office of the name of either the sender or the person to whom the Postal Note is to be sent; and, “If lost or destroyed no duplicate can be issued.” Postal Notes are intended as a convenience in sending sums under five dollars containing odd cents or fractional parts of a dollar, and not as a surety against loss. There¬ fore, when you wish to send through the mail any sum under five dollars, and are not particularly anxious regarding its delivery, it is just as safe to send currency. But when you wish to have its safety insured , be generous with “Uncle Sam” and hand him five cents instead of three, when he will give you a Money Order positively insuring you against loss. INTEREST RATES IN THE DIFFERENT STATES. 969 . When the rate per cent, is not specified in any contract the legal rate is understood. In the following tabular statement, the States marked with an asterisk (*) permit an unlimited rate per cent, if it is agreed upon by the parties in writing: State. Per Ct. 1 State. Per Ct. State. Per Ct. Legal Limit Legal Limit Legal Limit Alabama. 8 8 Kentucky. 6 6 Ohio. 6 8 Arkansas. 6 IO Louisiana. c 8 Oregon.. 8 IO Arizona. IO * Maine. D 6 * Pennsylvania. 6 6 California. 7 * Maryland. 6 6 Rhode Island .... 6 * Colorado. IO * Massachusetts. 6 * South Carolina. 7 IO Connecticut. 6 * Michigan. 7 IO Tennessee.. . 6 6 Dakota. 7 12 Minnesota. 7 IO Texas. 8 12 Delaware. 6 6 Mississippi. 6 IO Utah .... IO * District of Columbia. . 6 IO Missouri. 6 IO Vermont. 6 6 Florida. 8 * Montana. . IO X Virginia. . . . 6 Georgia. 7 8 Nebraska . 7 IO Washington Territory. IO * Idaho. IO 24 Nevada. IO * West Virginia.. . 6 .... Illinois. 6 8 New Hampshire. 6 6 Wisconsin.. 7 IO Indiana. 6 8 New Jersey. 6 6 Wyoming. 12 * Iowa. 6 IO New York . 6 6 Kansas. 7 12 North Carolina. 6 8 In California interest cannot be collected on open accounts. In Arizona, California, and Wisconsin interest may be compounded when agreed upon by the parties in writing. Penalty for Usury .— In Alabama, District of Columbia, Illinois, Iowa, Mississippi, Missouri, Nebraska, New Jersey, North Carolina, South Carolina, Vermont, and Wisconsin--forfeiture of all the interest; in Idaho and New Hampshire—forfeiture of three times the amount of the interest; in Arkansas, Minnesota, and New York—forfeiture of both interest and principal. 162 DOUBLE ENTRY BOOK-KEEPING. 970-973 ADVANCED DOUBLE ENTRY BOOK-KEEPING. 970 . Advanced Double Entry Book-keeping consists, first , in posting direct from the books of original entry to the Ledger ; and second , in so classifying our business transactions by the use of special books and extra columns as to require only a single posting for each of the transactions apper¬ taining to personal accounts; and, as far as possible, only a single monthly posting for the aggregate of each class of transactions appertaining to other than personal accounts. When a system of book-keeping is thus organized, it requires but little extra labor over the simplest system of Single Entry, and is, at the same time, the most advanced system of Double Entry. 971 . Sales .—By keeping a Sales Book and posting directly therefrom to the Ledger, we reduce that portion of our book-keeping to Single Entry— because we simply post the amounts of the sales recorded therein to the debit of the respective personal accounts, and, at that time, post no credit whatever. All such amounts are, however, extended into the outer column in the Sales Book and the footings thereof are carried forward from page to page until the end of the month, when the aggregate of all the amounts which were during the month posted to the debit of our customers’ accounts, is pbsted direct from this book to the credit of the Merchandise account. By thus posting a credit to balance all the debits, we transform Single Entry hito Double Entry. 972 . The same result is acquired by recording the sales directly in the Journal and having an extra or “Mdse. Credit” column therein in which to extend the amounts of such sales. When this is done, we treat that column in the same manner as the outer column in the Sales Book is treated. (See 12& 347, 470 and 590.) 973 . In many cases the itemized recording of the sales in the Journal would be impracticable, for the following reasons: in some of the largest houses as many as from ten to twenty entry-clerks are required, and for each entry-clerk two Sales Books — thereby necessitating the use of books exclu¬ sively for sales (see 853 h); in smaller houses they require perhaps only one or two Sales Books, but have sufficient work on them to keep one entry-clerk busy all the time, hence the sales could not be recorded in the Journal, which latter book is always in use by the book-keeper; in still smaller houses where they employ a book-keeper but no entry-clerk, and the sales are entered by “nobody in particular but everybody in general”, a Sales Book is required in order that the book-keeper may preserve a uniform style of penmanship in the book to which is usually attached more respect, the Journal. Some houses prefer having their sales kept in a separate book for the simple and only reason that they do not wish them mixed with the other transactions. 163 974-975 DOUBLE ENTRY BOOK-KEEPING. 974 . When sales are recorded in a Journal in the manner illustrated in this book, the total of each sale requires to be written twice — once for the debit (see 370) and once for the credit (see 371); when the sales are recorded in a Sales Book, the amount or total of each sale is written only once. Whether the time saved in the writing of such amounts twice instead of once would more than compensate for the time lost in the handling of two or more books instead of one, is a question which can only be answered after the nature of the transactions that arise in one’s own particular business has been considered. Where the miscellaneous entries are frequent and the sales entries few, as in the set illustrated in this book, it is advisable to record the sales in a Journal ruled with a special column for “Sales” or “Mdse. Cr.”; but where the contrary is the case, it is better to have Sales Books in which to record the sales. 975 . Invoices .—There are three ways of reducing the entries for goods bought on account to Single Entry, namely:— a. By pasting the bills in an Invoice Book and posting the amounts direct therefrom to the credit of the respective personal accounts. When this method is adopted, great care should be exercised in the preservation of our invoices, because they in themselves then constitute the original entry. When we have several bills from a certain creditor, they are first arranged in order of their dates, and then, in the same order, pasted in this book. The amounts thereof may be summarized in this book as a memorandum and the total of all bills, instead of the 1 amount of each bill, posted to the person’s credit. (See 938.) b. By keeping a Purchase Journal in which to enter, daily or periodically, credits for goods purchased,—writing simply the names of the creditors, terms, dates, and amounts of the invoices; thence, posting such amounts direct to the credit of the respective creditors’ accounts. In some of the largest houses where the work is minutely subdivided, the creditors’ accounts are kept in a special book called the Purchase Ledger, or the Credit Ledger. c. By having an extra or “Mdse. Debit” column in the Journal in which to extend the totals of the purchases, and posting the credits for such pur¬ chases direct therefrom to the credit of the accounts of the persons from whom the goods were bought. (See 12^, 342, 469 and 586.) In any one of these ways, only a single posting is required for each item or bill — the amount thereof being extended into a money-column and the foot¬ ings of the latter carried forward from page to page until the end of the month, when the aggregate of all the credits that were during the month posted to the credit of our creditors’ accounts is posted to the debit of the Merchandise account. After a debit has thus been posted to offset the sum total of the credits, Double Entry is evolved out of what was, before the end of the month, merely Single Entry. 164 976—982 DOUBLE ENTRY BOOK-KEEPING. 976 . Goods Returned. —When a special or Credit Book is kept in which to enter credits for goods returned to us, such entries are reduced to Single Entry — because we credit our customers at the time the goods are returned, and do not debit Merchandise until thfe end of the month, when the aggregate of all goods returned is found and debited to the Mdse, account,— thus making it, finally, Double Entry. 977 . Cash. —Nearly all cash transactions are reduced to Single Entry by keeping a Cash Book and posting direct therefrom to the Ledger. The Cash Book is not only the cash account but it is also the book of original entry,—being at once, in so far as Cash is concerned, both the beginning and the end of transactions. 978 . When cash is received on a personal account, we at once write the person’s name, together with the amount received, on the debit side of the Cash Book: this act “kills two birds with one stone”, for it both records the transaction and debits Cash. Then, Cash being debited, all we have to do is to make a single entry, or post the amount to the person’s credit, when we have Double Entry,—Cash debited in the Cash Book, and the person credited in the Ledger. 979 . When cash is received on other than personal accounts, we can reduce nearly all entries for such to a single monthly posting for each class of transactions, by having on the debit side of the Cash Book an “extra” column for each, as, “Mdse.”, “Interest”, etc.— posting therefrom, at the end of the month, to the credit of these accounts in the Ledger, only the totals of these columns. (See 476.) 980 . When cash is paid on a personal account, we at once write the person’s name and the amount paid on the credit side of the Cash Book, which act, in itself, both records the transaction and credits Cash. Then, Cash being credited, all that remains to be done, in order to have the posting complete, is simply to post the amount to the person’s debit, when we have Double Entry—Cash credited in the Cash Book, and the person debited in the Ledger. 981 . When cash is paid on other than personal accounts, we can reduce nearly all entries for such to a single monthly posting for each class of transactions, by having, on the credit side of the Cash Book, representative columns in which to extend such amounts as are to be charged to these accounts; as, “ Expense”, “Interest”, “Salaries”, etc. At the end of the month the totals of such columns are posted to the debit of the respective accounts in the Ledger. 982 . The more books a transaction passes through before it reaches the Ledger, the more our labor is increased,—the fewer books it passes through, the more our labor is diminished; therefore, in order to accomplish our work with as little writing as possible, all transactions should be posted direct from the book of original entry to the Ledger. 165 983—985 DOUBLE ENTRY BOOK-KEEPING. -No one should fall into the error of supposing, however, that by increas¬ ing the number of our books we necessarily increase our labor, or that by decreasing the same we necessarily decrease our labor; for the fact is nearly the reverse — as will be clearly seen in the saving of labor which is effected by adding: a Sales Book (see 971 and 974) ; a Purchase Journal (see 975 b) ; a Cash Book (see 977 to 981); and a Bill Book (see 940 to 942)—posting from each direct to the Ledger. 983 . In some of the largest houses they have so many different kinds of books that they cannot find appropriate names for them all. In such cases they generally let their blank-book maker help them out of the difficulty by covering each nameless book with cloth of a different color, and thereafter those books are known as — the blue book, the green book, the black book, the red book, and so on. There is no custom in naming books other than in finding names as appropriate as possible to express the use for which they are designed. To show that in this particular every man suits his own fancy, it is only necessary to add that in a certain dry-goods house (one of the largest in the world) there is a book which is called the “Cold Pig!” This book is kept for the purpose of indicating when a part or the whole of certain goods which were sent out on approval have been returned, as well as the shipping- number and the book and folio on which the memorandum charge for such goods is to be found. Therefore, when you read about a certain book in this work and then look in your office, or elsewhere, for a book bearing precisely the same name, do not be discouraged if you do not at once find it; for, as “a rose by any other name would smell as sweet,” so that “Cold Pig” would, were it not a “Cold Pig” called, serve the purpose for which it was designed, under any other title. 984 . If our book-keepers would only employ a few minutes occasionally in calculating the loss and gain of Time which would accrue through the eliminating of work whereby losses are occasioned and the pursuit of methods wherein gains are made, they would do much towards placing book¬ keeping on a still higher plane of excellence than that upon which it now stands; for it is through such “figuring” only that the science is advanced. 985 . By reducing labor we lessen the liability to commit errors. We also enhance the value of our services as book-keepers, for we accomplish more work, and thereby save to our employers the salaries of additional book-keepers. Moreover, we have the satisfaction of knowing that no part of our time is wasted in doing unnecessary work. The best book-keeper is certainly he whose work can be neither curtailed nor simplified. 166 986 DOUBLE ENTRY BOOK-KEEPING. ADVANCED BOOK-KEEPING CONTRASTED WITH ANTIQUATED BOOK-KEEPING. 986 . In order that the difference between the advanced style of book¬ keeping- and the antiquated style may be more readily understood, an example illustrating each will here be given : Example: We receive on December 23d from G. W. Bennett $32.19 cash, in full payment of his account. ADVANCED STYLE. (Copied from paragraphs 497 and 699 in this book.) In the Cash Book : 23, 44, G. W. Bennett, 32.19 In the Ledger—Bennett’s Account: 23 90, 32.19 ANTIQUATED STYLE. (Copied from a popular business-college text-book published less than ten years ago.) In the Day Book : -23- Received Cash of G. W. Bennett, in full of account, 32.19 In the Cash Book : 23, To G. W. Bennett—Received in full of account, 32.19 In the Journal: -23- 41, Cash Dr. 32.19 44 To G. W. Bennett, 32.19 In the Ledger—Cash Account : 23, To G. W. Bennett, 64, 32.19 In the Ledger—Bennett’s Account: 23, By Cash, 64, 32.19 In the former style there are only twenty-five letters and figures — in the latter, one hundred and thirty-eight; consequently, in the latter, five and a half times as much writing as in the former; therefore, an advanced book¬ keeper of the present time can accomplish almost as much in a day as a book-keeper of “y e olden time” could accomplish in a week! Strange to say, there are a few fossilized ancients who still cling to the old method of journalizing all cash transactions. Well, humor their second-childishness (if you can afford to do so), for they are in the seventh age of man and soon will have passed away. 167 987—988 Book-Keeping of “A i” Houses. WHOLESALE. DEBITS. / 987 . Charge Book-keepers. —In some of the largest houses where they have a great many customers, they require several charge book-keepers c or book-keepers whose duty it is to keep the accounts of the customers. Such accounts are subdivided alphabetically according to the names of the customers, and then distributed in about equal proportions among the said charge book-keepers. For example: in a house where three such book¬ keepers are required, one will have control of all customers’ accounts whose names begin with any letter from A to G, inclusive; another, all those from H to N; and the other, all those from O to Z. Some houses have only two such book-keepers, while others require as many as ten or twelve, according to the number of customers they have and sales they make. Throughout this article, for the purpose of illustration, it will be supposed that three charge book-keepers are required, and, that the business is Dry-Goods. 988 . Entry and Bill Clerks. —The duty of an entry-clerk is to record sales in a Sales Book, while that of a bill-clerk, whose position is at the same desk, and by the side of the entry-clerk, is to make out bills. These clerks get their work indirectly from the salesmen, and directly from the call-clerk. When a sale has been made the goods are collected and placed upon a table in front of the entry-clerk. The call-clerk then gives the customer’s name and address, the terms upon which the goods were sold, and the sales¬ man’s name; after which he calls off the articles and the prices. While he is thus calling off, the entry-clerk records the sale in the Sales Book, and the bill-clerk, at the same time, makes out a bill on a bill-head. These clerks make the extensions as they proceed, and, should the call-clerk have a glib tongue, there are but few entry and bill clerks who will not claim theirs to be the hardest work of any in the house. After all the items have been called off, and the extensions made, the footings of the latter are ascertained—-'on the Sales Book by the entry-clerk, and on the bill by the bill-clerk. If these footings agree, all the extensions are considered correct; should they not agree, the extensions are compared and the error corrected. 168 989—993 DOUBLE ENTRY BOOK-KEEPING. 989. Department Sales. —In most of the large houses they wish to know the profits on the sales of the different classes of goods handled. In order to learn this, it becomes necessary to make a division of the stock. Such divisions of stock are then known as “departments.” The departments are generally designated by letters instead of by their names; as, “A” for Silks, “B” for Laces, “C” for Notions, “D” for Dress Goods, etc. The reason for doing this, is, that a single letter can be much more quickly written than the full name of a department, and, the former occupies less space on the book. 990. “Sales Ledger.” —The proper name for the book in which is kept the accounts of our customers, is, “Customers’ Ledger;” but since this is a more cumbrous name than “Sales Ledger,” and since the latter is as appro¬ priate a name for this book as is “Purchase Ledger” for our creditors’accounts, the name “Sales Ledger” will be used throughout this work. POSTING FROM SALES BOOKS. 991. There are a few houses which claim that it is impossible to post the sales direct from the Sales Books to the Ledger, and have at the same time a degree of proof against error equal to that which could be obtained by first journalizing and then posting from the Journal. This is an erroneous idea, for where proof of correctness could be had from a “go-between” book, it could be had with equal if not more absolute certainty from the original book of entry. 992. When posting is done directly from the Sales Books, and when there is more than one Sales Ledger, in order to prove each Sales Ledger separately, two or more Sales Books are required for each Sales Ledger. In order that there may be about two or three Sales Books in the entering- room at a time, and two or three in the hands of the charge book-keeper to post from, it is better to have four or five Sales Books for each Sales Ledger. 993. The following form is suggested for a Sales Book from which the debits to customers may be posted direct to the Sales Ledger, and the credits to departments transferred to the Department Book: sales BOOK — No. 85 — PI to N. DEPARTMENT. L. F. To Whom Sold, and Articles. Extensions. Dep. Credit. CHARGE. Brought forward. 720 Lord & Taylor, City 200 yds Black Silk 1.00 100 “ Colored Velvet 1.25 200 -- 125 - _ A 325 450 " Cashmere 1.00 100 " Henrietta Cloth 1.50 450 _I5Q — D V 600 9*5 r--- Carried forward, 169 994—996 DOUBLE ENTRY BOOK-KEEPING. When a sale has been made, the goods from the several departments are kept separate as they are placed upon the table before an entry-clerk. The goods from each department are then called off separately and entered in the same manner in one of the Sales Books representing the Sales Ledger in which is kept the customer’s account. The amount of each item is extended into the “Extensions” column, and when all the items from a certain depart¬ ment have been entered, a line is drawn under the last amount in this column and the total for this department is ascertained and extended into the “ Department ” column, preceded, in the “ Dep.” column, by the representative department-letter. Then, the items from another department are entered in the same manner, and so on, until all the items constituting the sale have been entered; after which, a line is drawn under the last amount in the “Department” column, the amounts therein are added together, and the total for all departments, thus found, is extended into the “Charge” column. This latter sum must agree with the footing of the bill. Thus, the departments and the amounts to be credited thereto are shown in the “Department” column, and the amount to be charged to the customer is shown in the “Charge” column. 994. The amounts in the “Department” column in the Sales Books are posted to their respective columns in the Department Book. (This book will be hereinafter described.) When an amount has been posted into the Depart¬ ment Book a “is made in the “Department” column of the Sales Book to indicate that fact. 995. The amounts extended into the “Charge” column of the Sales Book are posted direct to the debit of the customers’ accounts in the Sales Ledger, and the footing of this column is carried forward from page to page until the end of the month. At the end of the month the aggregate of the footings of the “Charge” columns in the several Sales Books for this Sales Ledger (see 992 ) is found, and this must agree with the total amount of sales posted to that Ledger during the month: thus, each Sales Ledger is proved independ¬ ently of the others. The aggregate footings of the “Charge” columns in all the Sales Books should at the close of each day, as well as at the end of each month, agree with the aggregate footings of the several department-columns in the Depart¬ ment Book. 996. DEPARTMENT Book. —This is a book which is required, when the sales are not journalized, in which to post, from the Sales Books, the credits to departments; therefore, it takes the place of, and is of the same form as, the credit side of the Sales Journal. (See 1003 .) At the end of each day, as well as of each month, the footings of the several columns in the Department Book and the aggregate thereof are found. This aggregate must agree with the aggregate footings of the “Charge” columns in the several Sales Books. At the end of the month, the footing of each column in the Department Book is posted to the credit of its proper account in the Department Ledger. 170 DOUBLE ENTRY BOOK-KEEPING. 997—1000 997. Department Ledger. —This book is what its title indicates, namely, one in which are kept only the department accounts — showing in each, the purchases, sales, returns, and finally, at the end of the year, the net gain. Each account is debited for goods bought for and placed in its depart¬ ment, and credited for goods taken out of, or sold from, the same. (See 1065 .) 998. A Sales Book for each Department. — The “Department” column in the Sales Book, as well as the keeping of a Department Book, is rendered unnecessary when a Sales Book is kept for each department, because then the amount to be credited to each department at the end of each month is shown in the footing of the “Charge” column in its representative Sales Book, and this footing is posted direct to its corresponding account in the Department Ledger. When two Sales Books are kept in each department (for alternation) the department-account is credited from these books for the total amount of sales recorded in both books combined. (See 853 A) • SALES JOURNALIZED. 999. In many of the large houses they claim that for various reasons their business requires the journalizing of the sales. Some of these reasons are as follows: ( 1 ) it is only necessary to employ as many entry and bill clerks as they can keep .constantly at work; ( 2 ) when goods are sold to a customer from several departments, they may be collected and placed upon the table before any entry-clerk who is not at that time busy; then, the goods may be called off and entered in his Sales Book, those from the several departments being kept together — thus making the entry complete in one Sales Book, instead of having it scattered through several such books, as it would be were a Sales Book kept for each department and the sales from same recorded therein — as in the preceding paragraph; ( 3 ) a complete bill can be made from the entry in this Sales Book, while if the sale were recorded in several Sales Books, either a bill would have to be made in each department for the goods sold therefrom, or a long bill-head passed from one department to another, and the sales from each added thereto; ( 4 ) there is no fixed time for passing these books in to the office to be journalized, two books being required for each entry-clerk, they may be alternated with the Journal-clerk two or three times a day, according to the number of entries made. All these advan¬ tages are acquired in the method described in 991 to 997 . The only plausible excuse for journalizing the sales is—Journals are more convenient for refer¬ ence than Sales Books. 1000. Sales Journal. —When posting is not done directly from the Sales Books to the Sales Ledgers, but the sales are journalized instead, and when a separate Sales Book is not kept for each department, a Journal, ruled with an extra column for each charge book-keeper, and for each department, is used. A form for this Journal is illustrated on the following pages: 171 1001—1002 DOUBLE ENTRY BOOK-KEEPING. LEFT-HAND PAGE OF SALES JOURNAL. 1001. Tuesday , s. B. Salesman. L. F Name. Terms A to G H to N O to Z Total No. Page. 84 265 Stuart 48 Arnold,Constable&Co 4 m. 642 5 ° 267 Campbell 3 H Wanamaker, John 60 d. 780 35 268 Lewis 76 Lehmann, E. J. II 976 40 271 Pope 265 Houghton & Dutton 4 m. 1212 80 j 1 ^ 312 Powell 312 Zion’s Co-op. Mer. In. 60 d. 2260 45 j 3i7 Jordan 426 Crawford, D. & Co. •• 1530 25 321 Bailey 313 Ladd, H. W. & Co. 30 d. 427 3° 2172 73 2616 50 3040 80 7I30 °5 1002. Sales Journal, Debit Side. — On the debit or left-hand side will be found four money-columns, into the first three of which the amounts to be posted to the respective Sales Ledgers are placed; into the last column, the aggregate for the day is extended. When the Journal is thus ruled, each charge book-keeper can prove his work independently of the others, because the items to be posted to his Ledger are all extended into a special column. Another benefit to be derived from having the Journal thus ruled, is, that each book-keeper is not obliged to look carefully over all the names in order to pick out such as belong to his Ledger,— as is the case when there is only one such column and all the amounts are extended therein; the Journal- clerk, while journalizing, places the amounts in the respective columns to which they belong, and then all that each charge book-keeper has to do, is to look for and post only such items as he finds extended into his special column. One charge book-keeper posts all the items found in his special column, and then passes the Journal to the next, who does likewise. In this manner it is passed from one book-keeper to another, until all the items in each of the special columns have been posted. At the close of each day’s business, the footings of the charge book¬ keepers’ special columns are found, and the sum total thereof (being the total sales for the day) is extended into the “Total” column. The left-hand side of the Sales Journal represents the debits to customers , while the right-hand side represents the credits to departments. DOUBLE ENTRY BOOK-KEEPING. 1003—1004 RIGHT-HAND PAGE OF SALES JOURNAL. 1003. May 2 5 , 1886 . A B 1 C D E F G 11 TotaL 120 - 35 , 60 I . ms 3° 84 5° 186 45 7° 65 240 64 20 70 ”4 20 I 285 8S Il8 96 86 35 210 40 140 80 195 35 270 3° 73 20 62 IO IO4 20 312 40 307 90 302 5° 123 70 426 80 105 45 273 15 450 75 357 55 430 °3 216 72 217 54 55' 20 85 40 145 06 412 70 614 35 90 25 122 5° 78 45 . 92 90 43 20 1181 58 279 L. 940 95 1326 l6 1 1559 35 1896 53 -T o^ 1 L * 43 : 7S30 °5 1004. Sales Journal, Credit Side.— When the sales are journalized they are entered in the Sales Books promiscuously, that is, without regard to the recording of the sales for certain Sales Ledgers in certain Sales Books, as is done in the method described in 993 . The amounts extended into the “Charge” column in the Sales Book, together with the other particulars of the sales, are entered on the opposite, or debit, side of the Sales Journal; while the amounts extended into the “Department” column in the Sales Book are entered under their proper headings on this, the credit, side of the Sales Journal. At the close of each day’s business, the total of each department-column in the Sales Journal is ascertained, and, finally, the sum total of the footings of all the department-columns. This latter sum is then extended into the outer, or “Total,” column. Should the same agree with the amount extended into the “Total” column on the debit side, all the footings and extensions in this book are proved to be correct. One “Total” column, that on the debit side, will answer for both the debit and the credit sides — since the totals of these sides must agree. Owing to limited space, this form and the succeeding forms admit of only seven department-columns, though in many houses from twenty to forty such columns are required in their Sales Journals, because they have from twenty to forty departments. In the above form, the department-letters are printed in the headings of the columns instead of the names of the departments ; but in some of the succeeding forms, for the purpose of varied illustration, the names of the departments will be used, for these are thought to make the forms more comprehensive. 1005-1007 DOUBLE ENTRY BOOK-KEEPING. 1005. In some houses, instead of having only one Sales Journal, they have two or more such books, and distribute the entries therein in about equal proportions; that is, after a number of sales have been journalized in one Journal, this book is handed to the charge book-keepers, and then the journalizing is continued in another Journal, and another and so on until all the sales have been journalized and all the Journals passed to the charge book-keepers. This is for the purpose of obviating, to some extent, the necessity of one book-keeper waiting for another to complete his posting, before he can get the Journal from which to post,—as is the case where only one Sales Journal is used. In other houses, a Sales Journal is kept for each Sales Ledger. The objection to this method, if any there be, is the scattering of the results of the sales in the several departments through several books, instead of having them in a compact form in one book. By thus subdividing the Journal entries, the sales from the several departments must be summarized in a “Summary” Journal, for the purpose of finding the respective totals of each department for each day. 1006. Abstract of Daily Sales. —This is a book ruled in the same manner as the right-hand page of the Sales Journal, but with an extra column placed at the left of the department-columns in which to enter the date. Into this book the daily totals from the department-columns of the Sales Journal are posted, or transferred. This serves the double purpose of neces¬ sitating only one posting per month to each of the department-accounts in the Department Ledger, and of being a convenient book for reference when the members of the firm wish to compare the department and total sales of one day with those of another. The following is an illustration of the form above referred to — the same being understood, of course, to extend in length according to the number of business days in the month: ABSTRACT OF DAILY SALES. May, 1886 . Day. Dress Goods. Hosiery. Laces. i Linens. Silks. White Goods. Woolens. Total. 1 2 3 4 5 Total for Month, k - / 1007. At the close of each month, the general book-keeper takes this book and posts therefrom the footings of the several department-columns to the credit of the respective department-accounts in the Department Ledger. *74 DOUBLE ENTRY BOOK-KEEPING. 1008—1009 He also, at the same time, fills out the line for the corresponding month in the form following this, that is, in the Abstract of Monthly Sales. 1008. Abstract of Monthly and Yearly Sales. —This is a book kept exclusively for the gratification of the members of the firm. One or two pages are reserved either in the fore part or in the latter part of this book for the statement of yearly sales, and the remainder is used for the statements of monthly sales. The portion of the book used for the latter is ruled and printed as follows: ABSTRACT OF MONTHLY SALES. 1886 . Months. Dress Goods. Hosiery. Laces. Linens. Jl Silks. White Goods. Woolens. — Total. January, February, March, April, May, June, July. August, September, October, November, December, * ■ I 1 Total for Year, 1 1 1009. That portion of the book which is reserved for the statement of yearly sales, is ruled and printed as follows : ABSTRACT OF YEARLY SALES. 1 Departments. 1884. 1885.- 1886. OO OO 1888. Dress Goods, Hosiery, , Laces, Linens, Silks, White Goods, Woolens, — Total Yearly Sales for all Departments, 175 1010-1014 DOUBLE ENTRY BOOK-KEEPING. 1010. At the close of each year’s business, the general book-keeper finds the sum total of each of the different department-columns in the Abstract of Monthly Sales and transfers the several totals to the respective lines to which they belong in the preceding form. This form is extended in length, of course, according to the number of departments, and in width for as many years as the page will accommodate money-columns. 1011. A great many book-keepers do not wish to go to the trouble of gratifying their employers by making for them the foregoing statements, but whenever they do exert themselves to this extent, they may rest assured that in a large majority of cases their efforts will be appreciated,— and some¬ times rewarded by an increase of salary ! ABSTRACT SHEETS. 1012. Instead of posting from the Sales Books, or from Sales Journals, as is done in the two methods described in the foregoing paragraphs, there is still another method which can be adopted. This may be described as follows: Each department has a separate Sales Book. The entry-clerk is supplied with a quantity of Abstract Sheets. These sheets are ruled and printed to order, and usually contain from twenty to thirty lines. A certain number of them is printed for each Sales Ledger; as, A to G, H to N, and O to Z. The dates, and usually the names of the departments, are filled in with a pen. The following form illustrates the use of a SALES ABSTRACT SHEET. A TO G. 1013. Dress Goods Department, June j, 1886 . Sales Book. Salesman. [ L. F. Name. Terms Amount. Total. \ No. Page. Brought Forward, 3842 15 75 220 Mitchell 76 Daniels & Fisher, 30 d. 320 40 222 Morton 285 Bernei, S. & Son, 60 d. 160 25 228 Gluckler 140 Brown, Thomson & Co., 44 4"S 50. 236 Vilanova 243 Campbell & Dick, 4 m. 212 35 245 Chandler 228 Cook, Taylor & Co., 60 d. 175 80 1284 30 i- Carried Forward, 5126 45 1014. In most houses where this method is adopted, these sheets are filled out by the entry-clerks, who do this work at odd moments during the 176 DOUBLE ENTRY BOOK-KEEPING. 1014- day, and finish it at the close of the day’s business. The items therefor are, of course, taken from the Sales Books, ancf placed on the respective sheets to which they belong. The bill-clerks sometimes assist the entry-clerks in making up these Abstract Sheets by taking the Sales Books and calling off therefrom the particulars of each sale,— as, page, salesman, customer’s name, terms, and amount. At the close of the day the footing of the “Amount” column on each Abstract Sheet is found and extended into the “Total” column. This footing is then added to the amount brought forward from the preceding day, and the sum thus found is carried forward to the top of an Abstract Sheet for the beginning of the next day. An Abstract Sheet for each Sales Ledger is then started for the next day by writing at the top of the sheet the name of the department, the date, and the present footing of the total column. These sheets for the day just past are then handed to the charge book-keepers, who post therefrom direct to the debit of the customers’ accounts in their respective Sales Ledgers. After a charge book-keeper has posted the day’s Abstract Sheets from all the different departments, he fastens them together with a pin or paper- fastener and files them away, thus keeping together the sheets for each day’s business. He requires a sheet from each department, whether any sales have been made therefrom or not, for then he knows that no sheets are missing, nor sales overlooked. The posting from these sheets may be proved in the same manner as the posting from the special columns in the Sales Journal. The total footings of the sales in each department are brought and carried forward on these Abstract Sheets from day to day and from sheet to sheet until the end of the month, when the final totals are posted from the last sheets directly to the credit of the respective department-accounts in the Department Ledger. The footings of the Sales Books are in each depart¬ ment carried forward from page to page until the end of the month. The same should at the close of each day agree with the aggregate of the footings of the “Total” columns on the department’s Abstract Sheets. For example: the sales in the Dress Goods department up to the night of June 3d, 1886, prove as f allows : Sales Books. Abstract Sheets. No. 75, $8822.60 “ 76, 6183.55 15,006.15 A to G, $5126.45 H to N, 4514.50 O to Z, 5365-20 15,006.15 This not only proves the Abstract Sheets to be correct, but likewise the additions and amounts carried forward on the Sales Books. Summaries of the daily, monthly, and yearly sales can be made from these Abstract Sheets as readily as from the Sales Journal, and the same forms answer as well for one method as for the other. (See 1006 to 1010.) 1 77 1015—1018 DOUBLE ENTRY BOOK-KEEPING. THE SALES-JOURNAL SYSTEM COMPARED WITH THE ABSTRACT-SHEET SYSTEM. 1015. The Abstract Sheets take the place of the special columns on the debit side of the Sales Journal, by means of a set of department sheets for each Sales Ledger; they take the place of the department columns on the credit side of the Sales Journal, by means of a set of Sales-Ledger sheets for each department. 1016. For the Abstract Sheet; Against the Sales Journal. —In the Sales- Journal system the debits to customers are extended into special columns for the several charge book-keepers, and, where only one Sales Journal is used, one book-keeper is obliged to wait until the others complete their posting before he can have the Journal from which to post his entries; in the Abstract-Sheet system each book-keeper has his entries all on special sheets of his own, and can post therefrom at his convenience. 1017. For the Sales Journal; Against the Abstract Sheet. —In the Sales- Journal system the credits to departments are extended into special columns kept for that purpose, while in the Abstract-Sheet system the credits to departments are entered on special sheets, of which there is one sheet in each department for each Sales Ledger. Whenever a sale is made from several different departments, the former system has an advantage over the latter, inasmuch as in the Sales-Journal system the charge to the customer can be posted complete, in one amount, for the entire sale; while in the Abstract-Sheet system there are as many different charges as there are departments from which the goods were sold, and such charges are entered on separate Abstract Sheets,— each charge requiring a separate posting to the customer’s account. 1C18. For the Abstract Sheet; Against the Sales Journal. —The Abstract- Sheet system possesses an advantage over the Sales-Journal system inasmuch as the expense of a Journal-clerk required in the latter, is avoided by requir¬ ing each entry-clerk to make, on Abstract Sheets, a daily abstract of the sales recorded in his Sales Book. From these sheets the posting is done direct to the Sales Ledgers. It is quite an item of work to carry forward from page to page the footings of so many columns in the Sales Journal: all this work is avoided (by the book-keeper) through the use of Abstract Sheets. Further, these large, many-columned Sales Journals are very expensive, as well as cumbrous to handle and inconvenient to post from; while the Abstract Sheets are com¬ paratively inexpensive, as well as easy to handle and convenient to post from. Some houses object to these Abstract Sheets on account of their liability to become lost or misplaced, but in such cases a duplicate can easily be made from the Sales Book. 178 DOUBLE ENTRY BOOK-KEEPING. 1019-1021 NEW SALES LEDGERS EACH YEAR. 1019. In some houses they open new Sales Ledgers at the beginning of each year. When they do this, all goods sold on and after the first day of the new year are posted into the new Ledgers, and all payments received on old accounts, that is, for goods sold before the first day of the new year are posted into the old Ledgers. Thus it will be seen that the accounts in the old Ledgers are allowed to remain open until they are balanced by payment, or otherwise settled, when they are ruled off and closed up. In this way, the two or three weeks’ loss of time occasioned by transferring the balances from an old Ledger into a new one, is avoided. Some book-keepers, however, object to this plan, because of the necessity for keeping two Ledgers on the desk at a time; but this is not obviated by transferring the balances into the new Ledger, for the old Ledger is required to be kept on the desk anyway, because it must be referred to whenever payments are received on old accounts, in order to learn which bills are covered by such payments. TRANSFER JOURNAL. 1020. A Transfer Journal is sometimes kept (where they have several Sales Ledgers) in which to make entries for the correction of errors, such as the posting of items to the wrong accounts, or in the wrong Ledgers. For example: A debit is posted into Ledger O to Z as Henry Wilson & Co., when it should have been posted into Ledger H to N as Henry, Wilson & Co. An entry correcting the error would be made in the Transfer Journal thus: Henry, Wilson & Co.—H to N. To Henry Wilson & Co.—O to Z. Book-keeper H to N posts the debit to the former, and book-keeper O to Z posts the credit to the latter — thus transferring the entry to its proper Ledger. INTEREST CHARGES. 1021. All debits for interest on past-due accounts are usually made through the General Journal, and posted therefrom to the respective Sales Ledgers. The credits for such are, of course, carried to the Interest account in the General, or Private, Ledger. In this latter book are kept all accounts such as do not properly belong in the other Ledgers, as Stock, Interest Expense, Loss and Gain, etc., etc. DOUBLE ENTRY BOOK-KEEPING. SALE- NUMBERS AND SHIPPING CARDS. 1022. In many of the largest houses, in order to facilitate reference and save writing, they number each sale, beginning the numbers anew on the first of each year. Where this is done, shipping-cards numbered in consecutive order are used. The following is the form of a Sale No.. 56395 {Time of TRecorD. Date, SPUPPING CARD. Dec. 7 , 1386. :20 TRecorOcO hg. Terms. y. w. As Jan. 25 th. o o sx o o 0 ) QC a HOW TO SHIP, &c. B. & 0. R. R. ANY PACKAGES TO COME IN? BILL. DUPLICATE. D. B. Fisk & Co. Mail Their City Office a INITIALS OF CREDIT MAN. A O s <"0 o £ £ $ o s A A j rt o 'O >-> A H °o •v, Oj A _C "2 c Z a o 9 M A o u t- 9 ) 0 . v A IT. rt PG >• A V A O O rt •C v, I* M -C 4> *. A 11 X 12 1 1 i a 2 1 2 % J 3 3 J 4 4 the Ledger, the sum total of which footings must, of course, agree with each other; ( 3 ) open a “Proof Account” in the Ledger, and debit and credit it for the respective debit and credit footings of the trial-balance; ( 4 ) at the end of the month, post to the debit side of this Proof account, the footings of the credit columns in all the books from which you have been posting; as likewise to the credit side thereof, the footings of the debit columns in all the books from which you have been posting; ( 5 ) then, find the footing of each side of this account, and if these footings agree, the footings of all the columns in the books from which the postings were made are proved to be correct; if the Proof account footings do not agree, an error has been made, to find which, the additions of all these columns must be examined ; ( 6 ) after the footings of the Proof account agree, take a trial-balance of the Ledger account-footings, including all the unclosed (unruled) accounts which balance, and then find the sum total of these foot¬ ings ; ( 7 ) if these sums total agree with their corresponding footings on the Proof account, each side of the Ledger is proved to be correct; if these sums total do not agree with the Proof account footings, a mistake has been made in tJie Ledger , to find which it is only necessary to examine that side of the Ledger the trial-balance footing of which does not agree with its corre¬ sponding footing of the Proof account. The Proof account shows what the footings of the trial-balance should be; therefore, if the footing of one side of the trial-balance does not agree with the footing on its corresponding side of the Proof account, it can be ascertained whether there has been too much, or not enough, posted to that side of the Ledger — and what that excess, or shortage, as the case may be, is. To ascertain this, we find the difference between the footing .of that side of the Proof account and the sum total of that side of the trial-balance. The error will then be found either in an incorrect posting of an amount to that side of the Ledger, or else in taking off the footing of that side of some account in the Ledger—-and consequently, no time need be wasted in looking for the error elsewhere. When this method is used, the debit and credit Miscellaneous columns in the Journal must be footed and the footings thereof carried forward from page to page until the end of the month, in order that these amounts may then be posted to the Proof account in the Ledger. Further, when an account bal¬ ances, it must not be ruled off and closed up until the end of the year, at which time all the accounts which balance are closed, a new trial-balance taken, and a new Proof account opened, in the manner described in “ 1 ,” “ 2 ,” and “ 3 ” of this article. 220 1121 DOUBLE ENTRY BOOK-KEEPING. However — it is always better to have a safeguard against the committing of errors, by adopting some method of proving the work as you proceed (see 953 to 967 ), than it is to seek for a quick way of approximately locating the mistakes after you have made them. OLD-STYLE JOURNAL-RULING. 1121. Where the old form of Journal is in use, a Sales Book is usually kept and all sales are recorded therein — no sales being recorded in the Journal. In order that the features of the new form of ruling (see 342 to 384 ) may be more readily compared with those of the old, it is thought best to illustrate the latter here, and to show, at the same time, the old form of Journal-entries. The following is the form of an OLD-STYLE JOURNAL. December 4, J880. L. F. Debit. Credit. 4 * Bills Rec. 200 — 44 To G. W. Bennett 200 Note 90 ds., 12-4-80. i (For comparison, see 373 * 374 *) 5 - 40 Mdse. to Sunds. I 45 44 Ed. Russell—i can Peaches, ret’d 20 44 Alex. Dollus—i keg H. Herrings, ret’d I 25 (For comparison, see 376 to 378.) • 8. 46 Arbuckle Bros. 218 60 4 i To Bills Pay. 218 60 Acc. 60 ds., 12-3-80. (For comparison, see 380-381.) In this form of Journal-ruling it will at once be seen, when comparing it with the form illustrated in paragraphs 342 to 384 of this book, that one line is wasted for each entry that is made ; therefore, you can calculate how many lines are wasted on each page of your book (if you have this form of Journal) by counting the number of entries thereon. Further, in this form of ruling, all the Mdse, debits have to be posted separately, while in the improved form the aggregate of all such debits is posted in one entry at the end of each month. (See 469 .) 221 1122 DOUBLE ENTRY BOOK-KEEPING. SALES BOOK, COMMON FORM. 1122. The following- is the common form of Sales-Book ruling: December 2, 1880. 18 Ed. Russell lbs. Rio Coffee 70 1.00 lb. Y. H. Tea 8 lbs. A Sugar cans Peaches 75 gal. Syrup 25 1 Broom Alex. Dollus bbls. Apples Alex. Dollus keg Holland Herrings sack XX Flour doz. Oranges Ed. Russell bbls. Salt bbl. Flour IO. i3- Frank Burgess 30 25 lbs. Cheese 1 doz. Eggs 2.00 30 “ A Sugar 1 Broom 3.00 1.50 bbl. Apples 1 sack Flour Forward 3.00 40 70 40 1 25 1 5 ° 80 6 — 4 80 55 2 30 -A- J°_ 37 55 * 80 J5_ 80 (For above examples, see paragraphs 370 , 371 , 375 , 387 and 392 .) When posting is done directly from this book, the ledger-folio is written, after an item has been posted, in the left-hand margin of the book, usually in the manner above shown. (See “^ 44 /”.) The footing of the outside column is carried forward from page to page until the end of the month, when the last footing, being the sum total of the charge sales for the month, is posted to the credit of the Merchandise account. 222 DOUBLE ENTRY BOOK-KEEPING. 1123-1124 ON CLOSING A CASH BOOK WHICH HAS SEVERAL 1123. COLUMNS. CASH. “EXTRA” CR. Date. L. F 1880 Dec. I / 7 Expense.—Rent 26.40 7.20 " —Set B. B. Sta. 3 7 Interest.—Dis. Russell’s note 4 7 •75 1- - 5 ° Expense.—Ink Pens Eraser 6 7 Interest.—Dis. Russell’s note 7 7 to- 3 75 Salaries.—Mast Smith 7 IO. 12.50 “ —Kinsella Saxton IO 7 Expense.—Sign, G. & E. 14 7 IO. IO. Salaries.—Kinsella Mast 7 12.50 3.75 ** —Saxton Smith 20 7 Expense.—5 tons Coal 22 7 Interest.—On Thurber note 2 7 7 4. 5.80 Expense.—2 M Stat. L.andB.H. 3 1 ! 7 “ —Gas bill Miscell. items omitted 3 i Expense.—Total for month Salaries.— “ ‘‘ “ Interest.— “ “ “ Dal on hand 1 1 Miscell. Dr. Expense Dr. Salaries Dr. Interest Dr. 75 — 33 60 85 2 25 13 75 I — 22 50 18 - 20 - l6 25 25 — % ! 5 25 9 20 5 4 ° 3244 26 1 1 168 45 1 72 5 7 10 168 45 7 2 50 7 10 377 * 5 ° 7,268 81 i ! | : 1 • 1 i (For above examples, see 506 to 553 , in which, however, the “Miscellane¬ ous” items are omitted.) When a Cash Book has several “extra” columns on one side, that side may be ruled and closed in the simplest manner as above. Thus it will be seen that the “Total” columns illustrated in 477 and 484 may be dispensed with, or else used for “extra” columns; as, for example, 477 might be used for “Interest,” and 484 , for “Salaries.” 1124. Instead of ruling off and closing the Cash Book daily , all the columns are simply footed in pencil at the close of each day and the balance shown in the ‘Explanation” space on the left-hand side of the book, in the same manner as the balance of an unclosed account is shown on the Ledger. For example, see “ 3 , 723.51 ” after paragraph 491 . 223 1125-112? DOUBLE ENTRY BOOK-KEEPING. SUNDRY HINTS TO BUSINESS MEN. 1125. However little the business man may know of book-keeping, he should ,at least learn this much, namely: to make a practice of adding the money-columns in his Cash Book, and to examine the items in them which are sometimes entered in bulk and at other times singly, or separately. It is owing to this latter practice that some houses have arrived at the conclusion that the saving of space in the General Cash Book by means of a Petty Cash Book or Petty Expense Book, “does not pay!”—and it is owing to the former practice that some houses have almost concluded that even the keeping of a book-keeper “does not pay!” While adding the columns of the Cash Book, the business man should also see whether the same footings are brought forward to the top of one page as are at the bottom of .its corresponding preceding page — being very careful, at the same time, not to allow any transposition of figures to escape his notice. He should also occasionally glance over the Journal entries wherein appear credits to his customers, for perhaps by so doing he may learn that his book-keeper ought to have entered some of the amounts found there —in his Cash Book. It is furthermore a good plan to occasionally go through, say, two months’ entries on the credit side of the Cash Book and take off on a slip of paper the amounts charged to the book-keeper, then to turn to the book¬ keeper’s personal account in the Ledger and check off therefrom, on the said slip, the amounts found posted to that account. Probably, when he con¬ cludes the “examination,” all the items on the slip will have been checked. Should he wish to continue his “inquiries” still further, he may verify the footings and balances of those accounts in his Ledger which are other than those of customers and creditors ; as, for instance, the following — Expense, Merchandise, Interest, Bills Receivable, etc., etc. “A word to the wise is sufficient.” So long as he is not interfered with in his work, the honest book-keeper does not care how often his employer substantiates his confidence in him. There is certainly no person in the house who has a better right to become “well acquainted” with the books of the concern than the book-keeper’s employer, and it ought to be the delight of every good book-keeper to explain to his employer his books, his entries, and his methods ; in fact he should invite his employer to familiarity with his books, and thus demonstrate to him that there is nothing in them for him to “discover,”—unless it be, perhaps, some little error in his trial-balance for which he has been seeking persistently two or three months ! 1120. You cannot stop payment on a check which has been “certified.” 1127. After a check has been made any alteration thereon invalidates it as regards the bank ; for instance, altering its date is, in effect, as truly a forgery as that of imitating the drawer’s signature. If a banker pays such a check, he can be made to pay the amount to the drawer. 224 1128—1133 DOUBLE ENTRY BOOK-KEEPING; 1128. If anything be deposited with a banker merely for safe keeping, as, for instance, a watch, a thousand-dollar bill, or a government bond, and that identical article is to be returned to the depositor, and it is understood that the banker is to receive no compensation for the keeping thereof—if that article be stolen , the depositor cannot recover its value from the banker, even though it were stolen by one of the banker’s employes. 1129. If at the bank you should hand your deposit to any other person than to him who is regularly authorized to receive deposits, as, for instance, to the note-teller, or to the discount-clerk, and that person should abscond with your money before it was credited to your account, you would have to suffer the loss — unless it could be proved that that person frequently filled the position of receiving-teller as a substitute. 1130. If a banker pays a check after he has been notified that the drawer thereof is dead, he makes himself liable to the legal representatives of the deceased depositor for the amount of the check. If he pays a check after he has learned that the drawer has either become a bankrupt or made an assign¬ ment, he must make this amount good to the assignees and then take his place in the ranks of the depositor’s creditors, with the amount of this check as a claim against the estate. 1131. When a person while a resident of one state draws a time-draft with interest at a certain rate per cent, which is legal in his state , upon a person who is a resident of another state where the aforesaid interest is usurious, and the draft is by the latter accepted, the drawer can compel the acceptor to pay the interest called for on the draft, even though the latter were made payable in the state where the rate thereon specified is usurious. The law of the state wherein the paper is dated governs all the stipulations thereof. 1132. In taking a check which is dated ahead, it should be remembered that the drawer thereof may, before that date , withdraw all his funds from the bank upon which it is drawn ; or, he may die ; or, he may become a bankrupt; or, he may make an assignment — in any of which cases the banker could not be held for the amount of the check. In the first-mentioned case, the holder could look only to the drawer for payment; in the last three, to no one — because, in law, all papers are supposed to have been written on the day upon which they are dated. Therefore, in giving a receipt for a check which is dated ahead, you should specify therein the particulars respecting both the number and the date of the check. 1133. A banker cannot be held responsible for a loss which may be occasioned through his having paid a check which has been “raised,” that is, a check which was originally drawn for a certain amount and afterward fraud¬ ulently increased to a larger amount. Neither can he be held responsible, even though the check was “certified” for the larger amount. His responsibility ceases when he guarantees the genuineness of the signature and the sufficiency of funds on deposit to cover the amount of the check. 225 1134 DOUBLE ENTRY BOOK-KEEPING. f • The only person to whom the drawer of the check can have recourse in such a case is the last endorser of it. However — if the “raising” were unskillfully done, that is, done in such a manner that had the banker exercised a reasonable degree of caution he would have discovered that the amount had, in all probability, been “raised,” he can, in such a case, be held responsible for the amount paid in excess of the original amount. \ _ PARTNERSHIP SETTLEMENTS. EXAMPLE No. i. 1134 .—The Books Have Been Kept by Single Entry; The Partners Invested Unequal Amounts and Drew out of the Business for Their Private Use Unequal Amounts; The Partner Who Invested the Smaller Amount Pays to the Partner Who Invested The Greater Amount Interest on One- Half of the Difference Between Their Investments. (See 31Q and 834 .) R. Leslie and Hugo Smith entered into the grocery business January 1, 1886, with the following ASSETS. Cash invested by R. Leslie.$2,000 00 Notes invested by R. Leslie. 1,000 00 -$3,000 00 Cash invested by Hugo Smith...$1,000 00 Merchandise invested by Hugo Smith. 500 00 - 1,500 00 Total investment of firm. $4,500 00 The partnership agreement was that Smith was to pay to Leslie 10 per cent, interest on one-half of the difference between their investments, the gains or losses to be shared equally. Having been in business one year, that is, on January 1, 1887, they now wish to ascertain the present worth of each partner, which they proceed to do thus: They take an inventory (account of stock) and find that they have merchandise on hand, $1,373.48 ; the Ledger shows good accounts due, $1,987.10; notes on hand from other parties, $862.30; cash on hand and in bank, $1,735.18; horse and wagon, $280.00; store fixtures (counters, shelves, desks, safe, etc.), $450.00; five bank shares, $500.00. 226 1134 DOUBLE ENTRY BOOK-KEEPING. They owe, on account, $1,736.20; on notes, $400.00. R. Leslie has drawn for his private use, during the year, $672.00 ; Hugo Smith, $741.00. They now make a statement of the assets and liabilities, thus : ASSETS. Personal accounts due to us.$1,987 10 Bills Receivable — Notes owing to us. 862 30 Merchandise on hand.’. 1,373 48 Cash on hand. 1,735 18 Horse and wagon. 280 00 Store fixtures. 450 00 First National Bank Shares. 500 00 Total assets. $7,18806 LIABILITIES. Personal accounts we owe. $1,736 20 Bills Payable — Notes we owe.. 40000 Total liabilities. Present worth of firm, January 1, 1887. Amount drawn for private use by R. Leslie. Amount drawn for private use by H. Smith. Worth of firm January I, 1886... Gross gain. R. Leslie’s one-half of gross gain H. Smith’s one-half of gross gain $2,136 20 $S)° 5 I 86 672 00 74 i 00 $6,464 86 4 . 5 °° 00 $1,964 86 $982 43 982 43 The amounts drawn for private use by each of the partners are not in¬ cluded in the above “ personal accounts due to us,” for the private accounts are not assets of the firm, although we might add them to the assets in order to ascertain the gross gain, the effect being the same, as may be seen in the next example of “ partnership settlements.” Having found the present worth of the firm to be $5,051.86, we add to this sum the amount drawn for private use, as shown by each partner’s private account, in order to find the gross gain of the firm. The reason for so doing is obvious, from the fact that, if they were worth $4,500 at the beginning of business, and their assets now exceed their liabilities by $5,051.86, the gross gain for the year must have been $5,051.86 plus the amount drawn within the year by the partners for their private use. After finding the gross gain of the firm as above, we divide the same equally between the partners, giving each partner’s stock account credit for the amount. But since Smith was to pay Leslie interest on one-half of the •0 22 7 1134 DOUBLE ENTRY BOOK-KEEPING. V difference between their investments, which is $75, we now charge Smith’s stock account and credit Leslie’s stock account with this amount ; after which we balance the private accounts of each partner and transfer the amounts to their respective stock accounts. We now balance these stock accounts in order to find the present worth of each partner, as well as how much each has gained during the year. The partners’ accounts then appear as follows : R. LESLIE. Credit —Net worth January i, 1S86. $3,000 00 One-half gross gain, January I, 1887. 982 43 Interest on one-half of difference between investments. 75 00 Total credit. $4,057 43 Debit —Less amount drawn for private use. 672 00 R. Leslie’s present worth, January 1, 1887. $3,385 43 HUGO SMITH. Credit —Net worth January 1, 1886. $1,500 00 One-half gross gain, January I, 1887. 982 43 Total credit. $2,482 43 Debit —Less amount drawn for private use. $741 00 Less interest on one-half of difference between investments.. . 75 00 Total debit. $816 00 816 00 Hugo Smith’s present worth, January 1, 1887..$1,666 43 Net worth of firm, January I, 1887. $5,051 86 The amount gained by each partner may easily be found by deducting the amount of .his worth at the opening of the business from the amount of his present worth, which, for Leslie is $385.43, and for Smith, $166.43, If they continue in business, Smith will have to pay Leslie interest on one-half of the difference between $3,385.43 and $1,666.43, which difference is $1,719, and which interest-bearing amount is, therefore, $859.50. 228 tf 1135 DOUBLE ENTRY BOOK-KEEPING. EXAMPLE No. 2. f 1135 . —The Partners Invested Unequal Amounts ; Made Additional Invest¬ ments After Having Entered Into Business ; Drew Out of the Business for Their Private Use Unequal Amounts, and Are to Divide Gains or Losses Pro-Rata According to Investment at Beginning of Business— The Partner Having the Lesser Amount Invested Not Paying to the Other Partner Interest on the Difference of Capital. S. A. Emerson and J. H. Goodwin enter into the dry-goods business Jan¬ uary 1, 1885, investing as follows: 1 January 1, 1885, S. A. Emerson invests. $2,387 40 January I, 1885, J. II. Goodwin invests. 1,922 85 Total investment of firm. $4,310 25 Within the year 1885 S. A. Emerson draws out for private use, over addi¬ tional investments made, $786.30; J. H. Goodwin draws out, over addi¬ tional investments made, $ 1,005.73. In the year 1886 S. A. Emerson makes additional investments, from private resources, over and above the amount drawn for private use, $1,126.97; J. H. Goodwin also invests over the amount drawn for his private use, $473.26. At the end of the year 1886 they make a statement of their assets and liabilities, as follows : ASSETS. Merchandise on hand. Cash on hand. Personal accounts due to us. Notes on hand. Real Estate. J. H. Goodwin owes firm, on private account Total assets. $2,786 00 1,024 60 1, A 3 5 43 1,645 20 1,000 00 53 2 47 - $8,223 7° LIABILITIES. Personal accounts we owe. $2,048 00 Notes we owe. I >^55 34 Firm owes S. A. Emerson on private account. 340 67 Total liabilities. 4,°44 01 Present worth of firm, including private accounts.... $4,179 69 229 1135 DOUBLE ENTRY BOOK-KEEPING. Solution: The total investment of the firm January i, 1885, was $4,310.25. S. A. Emerson’s share of the investment was $2,387.40, which equals .55, or 55 per cent. J. H. Goodwin’s investment was $1,922.85, which equals • 45 , or 45 per cent. Consequently, S. A. Emerson's share of the net gain or net loss must be .55 of the whole, and-J. H. Goodwin’s share .45. We find the decimal fraction or percentage in the following way: Divide Emerson’s share by the total investment, thus : 43 io ) 2 3874°(.55 21550 23240 21550 1690 The remaining .45 is, of course, Goodwin’s share. (When there are more than two partners, we divide each partner’s investment by the total invest¬ ment, to get his fractional part or percentage.) Worth of firm, January i, 1885. $4,310 25 Worth of firm, January 1, 1887, including private accounts. 4,179 69 Net loss of firm. $130 56 S. A. Emerson’s share of the net loss is .55, and J. H. Goodwin’s is .45, which we find in the following way : Multiply the total loss by .55 to find Emerson’s share, thus : 130.56 _ _ -_SS 65280 65280 $71.8080 The remainder of the $130.56, after deducting the $71.81, must be Good¬ win’s share, which is $58.75. We now charge each partner’s stock account with its respective share of the net loss (Emerson’s, $71.81 ; Goodwin’s, $58.75). We then transfer the partner’s private accounts to their stock accounts and balance the latter. The stock accounts will then show the present net worth of each partner. ILLUSTRATION OF THE PRIVATE AND STOCK ACCOUNTS. 5 . A. Emerson , Private Account. Dec. 31, 1885. — Drawn out during the year, o\ter the amount in¬ vested. $786 30 340 67 Dec. 31, 1886. —Invested during the year, over amount drawn out. $1,126 97 Dec. 31, 1886—To Stock acct. $1,126 97 $1,126 97 1135 DOUBLE ENTRY BOOK-KEEPING. J. H. Goodwin , Private Accomit. Dec. 31, 1885.—Drawn out during Dec. 31, 1886. —Invested during the year, over the amount in- the year, over amount drawn vested. $1,005 73 out. $■473 26 Dec. 31, 1886.—By Stock acct. 53 2 47 8 Ln GJ $1,005 73 5 . A. Emerson , Stock Account. Dec. 31, 1886.—Share of net loss. CO Jan. 1, 1885.—Net worth. $2,387 40 Jan. 1, 1887.—Present net worth. 2,656 26 Dec. 31, 1886.—By Private account 340 67 $2,728 07 $2,728 07 Jan. I, 1887.—Net worth. $2,656 26 y. H. Goodwin , Stock Account. Dec. 31, 18S6. — Share of net loss. $ 58 75 Jan. x, 1885—Net worth. $1,922 85 Dec. 31, 1886.—To Private account. .. . 53 2 47 Jan. X, 1887. — Present net worth. L 33 1 63 $1,922 85 $1,922 85 Jan. i, 18S7.—Net worth. $1,331 63 We find that S. A. Emerson’s private account is credited in the year 1886, with additional investments, over and above the amount drawn for his private use, $1,126.97, and debited in the year 1885 with $786.30 over and above the additional investments made in that year. The difference between the two sides of Emerson’s private account shows a balance to his credit of $340.67, which amount we transfer to the credit side of his stock account. J. H. Goodwin’s private account is debited in the year 1885, over and above the additional investments made, with $1,005.73, and credited in the year 1886, over and above the amount drawn for his private use, with $473.26. The difference between the two sides of this account shows a balance to its debit of $532.47, which amount we transfer to the debit side of Goodwin’s stock account. We balance the private accounts when we transfer the amounts to the stock accounts. The stock accounts are now balanced to show the present worth of each partner. S. A. Emerson is credited at the opening of business with $2,387.40 and at the end of the year 1886 with $340.67, or the amount invested during the two years in business over and above the amount drawn for his private use. He is debited with $71.81, his share of the net loss of the firm. The difference between the two sides of Emerson’s stock account now shows his 231 1135 DOUBLE ENTRY BOOK-KEEPING. present worth, or present interest in the concern, which is $2,656.26. J. H. Goodwin is credited at the opening of business with $1,922.85 and debited at the end of the year 1886 with $532.47, or the amount drawn during the two years in business over and above the additional investments made. He is also debited with $58.75,' his share of the net loss of the firm. The difference between the two sides of Goodwin’s stock account now shows his present worth, or present interest in the concern, which is $1,331.63. The interest of each partner in the concern is, therefore, as follows : S. A. Emerson’s p'resent worth. $2,656 26 J. H. Goodwin’s present worth. 1,331 63 Present net worth of firm, Jan. 1, 1S87.... $3,987 89 Each partner’s present worth should stand in proportion to the net worth of the firm on January 1, 1887, as it stood at the opening of business. S. A. Emerson’s interest was then . 55 - 1 b order, therefore, to find what it should be now, we multiply the net worth of the firm, $3,987.89, by .55, which gives $2,193.34, which amount is $462.92 less than the amount he actually has now in the business. J. IT Goodwin’s interest in the concern should be .45, which is found in the same way as that in which Emerson’s interest was ascertained, and which is $1,794.55, or $462.92 more than he actually has now in the business. If they continue in business, Emerson is entitled to draw out $462.92, while Goodwin should pay in from his private resources the same amount. Then their interests would be the same as when they began business — Emerson’s .55 and Goodwin’s .45. If Goodwin wishes to make up for his deficiency from private resources, so that his account will be .45 (while Emerson’s is .55 at his present worth, $2,656.26), we divide $2,656.26 by .55 to find what the whole investment of the firm must be, which gives $4,829.56. If the whole investment required is $4,829.56, Goodwin’s investment must be .45 of this amount, which equals this amount multiplied by .45, or $2,173.30. Inasmuch as he has now in business only $1,331.63, he must pay in from private resources the difference between $2,173.30 and this amount, which is $841.67. After this payment has been made, Goodwin’s account will stand credited with $2,173.30 and Emerson’s with $2,656.26—total, $4,829.56, or the net worth of the firm. If Emerson wishes to withdraw from the business an amount sufficient to reduce his account so that it will now be .55 (while Goodwin’s is .45 at his present worth, $1,331.63), we divide $1,331.63 by .45 to find what the whole investment of the firm must be, which gives $2,959.18. Consequently, if this is to be the whole investment of the firm, Emerson’s share must be .55 of this amount—which we find by multiplying the $2,959.18 by .55, which gives $1,627.55 ; or, we can ascertain what Emerson’s share is by simply deducting Goodwin’s share, $1,331.63, from the whole investment, $2,959.18, which remainder is $1,627.55, or Emerson’s share. Hence, as Goodwin has 232 DOUBLE ENTRY BOOK-KEEPING. 1135 now invested in the business only $1,331.63, and the stock accounts of the firm must stand in the same proportion to each other as at the opening- of business, Emerson’s account should be only $1,627.55. Now since Emerson has to his credit on his stock account $2,656.26, he is entitled to withdraw from the business the difference between this amount and the amount .which he is required to have — which difference is $1,028.71. After withdrawing this amount his account would stand credited with $1,627.55, and Goodwin’s, with $ 1,331.63—total, $2,959.18. Emerson’s interest would then be .55, and Goodwin’s, .45. If they continue in business, allowing the accounts to stand as they are, and agree that Goodwin shall pay to Emerson interest on one-half of the difference between their respective investments, Goodwin will have to pay interest on $514.36, thus, in effect, borrowing that amount from Emerson. (See 319.) If they wish to sell out the business, the percentage which each would have is ascertained in the following way: Since Emerson’s present worth is $2,656.26, and Goodwin’s, is $1,331.63, and the total worth of the firm is $3,987.89, we find what Emerson’s percentage would be by dividing his interest by the total worth of the firm, thus : 3988)2656.26 (.666 23928 . 26346 23928 24180 23928 - \ 252 As shown above, this gives .666, or 66| per cent. If 66| per cent, be Emerson’s share, Goodwin’s share must be the remaining .334, or 33^ per cent. If they sell out, the proceeds of the sale must be divided according to their respective interests — Emerson’s, 66| per cent., or §; and Goodwin’s, 33s per cent, or I ? 233 1136—1137 DOUBLE ENTRY BOOK-KEEPING. STOCK COMPANIES. i (continuation of article begun in 819 TO 828.) 1136 . It is thought advisable here to extend the article on Stock Com¬ panies, by giving several propositions which have arisen during the past five years, and which have reached the author through letters received from the officers and book-keepers of Stock Companies. Contrary to the usual custom, which is explained in paragraph 822, some Stock Companies wish their Capital Stock accounts to have a credit upon the opening of the books for the full amount of their authorized capital, regard¬ less of the amount of their paid-up capital. In order that a Stock Company’s books may be not less clear and unmysterious than are the books of a plain partnership, the author still claims that the Capital Stock account should have credit for the paid-up capital only. However, since this is one of the points upon which a book-keeper cannot use his discretion, but must obey his employer’s instructions, the following propositions, together with the author’s solutions of them, will here be given. In each of these propositions the Capital Stock account is credited upon the opening of the books for the full authorized capital. PARTNERSHIP BOOKS CHANGED TO STOCK COMPANY BOOKS. 1137 . A concern which has heretofore been conducted as a partnership is incorporated as a Stock Company, with 1,000 shares at $100 each, $100,000. The net worth of the old firm, at the closing of the books, was $75,000, the summary of which was made as follows : ASSETS. Accounts Receivable. $ 4,500 Bills Receivable. 3,000 Real Estate. 20,000 Merchandise. 22,000 Machinery and Tools. 12,000 Cash. 0 .. 13,500 LIABILITIES. Horace Cook, Stock Account.... $40,000 F. J. Knox, Stock Account... 35,000 234 1138—1139 DOUBLE ENTRY BOOK-KEEPING. Cook subscribes for and takes 400 shares in the new Company for his in¬ terest in the concern, and Knox subscribes for and takes 350 shares for his interest in the concern. Of the remaining" 250 shares E. D. King subscribes for 90, P. F. Broydrick, 60, and 100 shares are to be held as treasury stock until they are sold. 1138 . The entries for the closing of the partnership books are as follows : First Entry. The Cook M’f’g Co., Limited, to Sundries. $75,000 Accounts Receivable. $ 4,500 Bills Receivable. 3,000 Real Estate. 20,000 Merchandise. 22,000 Machinery and Tools. 12,000 Cash. 13,500 The above entry balances all the resource accounts on the old books and opens an account in the old Ledger for the new concern, showing that the old concern’s resources have been transferred to the Stock Company. Second Entry. Sundries to The Cook M’f’g Co., Limited. \ .. . . $75,000 Horace Cook, Stock Account. $40,000 F. J. Knox, Stock Account. 35.000 Upon the transfer of the resources of the old concern to the new, the lat¬ ter issues paid-up certificates to the members who constituted the old firm to the full value of those resources, each member receiving a sufficient number of shares to cover the amount of his net investment at the time the transfer is made. 1139 . The entries for the opening of the Stock Company books are as follows : First Entry. Sundries to Capital Stock. Subscription. Horace Cook, 400 shares. . F. J. Knox, 350 shares... . E. D. King, 90 shares. ... P. F. Broydrick, 60 shares Treasury Stock. 100 shares to be sold. $100,000 $90,000 $40,000 35> 000 9,000 6,000 $90,000 10,000 235 1140-1144 DOUBLE ENTRY BOOK-KEEPING. Second Entry. Sundries to Subscription. $75,000 Accounts Receivable (the several personal accounts). $ 4,500 Bills Receivable (notes on hand). 3,000 Real Estate (building). 20,000 Merchandise (manufactured goods on hand). 22,000 Machinery and Tools. 12,000 Cash (in bank). 13.500 The above assets are transferred from the books of Cook & Knox to those of The Cook Manufacturing Co., Limited. After the above entries have been made, the Subscription account will have a debit balance of $15,000, which account will be balanced by a credit of this amount from the Cash Book when King and Broydriclc pay for their stock; the Treasury Stock account will have a debit of $10,000, which ac¬ count will be credited and the Subscription account debited whenever any more of the Company’s stock is subscribed for. When all the Company’s stock is subscribed for , the Treasury Stock ac¬ count will balance ; when all the Company’s stock has been paid for , the Subscription account will balance. 1140 . On the debit side of the Subscription account are written the names of all the stockholders, together with their certificate-numbers and the amounts of their subscriptions. When these subscriptions are paid, the Sub¬ scription account is credited opposite to the respective names of the stock¬ holders who pay them, in the same manner as the Petty accounts are credited in 743 to 746. When any stock remains unpaid for, this account shows by whom the amounts are owing. 1141 . Fifty shares of the treasury stock mentioned in 1137 and 1159 are placed in the hands of trustees to be sold. What entry? Trustees.$5,000 To Treasury Stock.$5,000 There is usually a clause in the Company’s by-laws empowering the trus¬ tees to dispose of its stock under certain conditions. 1142 . A stockholder retires and his stock is purchased by the Company, which gives notes therefor and holds the shares for sale. What entry? Treasury Stock to Bills Payable. 1143 . Sidney Griffin subscribes for five shares of the treasury stock (see 1139) and gives his note therefor. What entry? Jh, Bills Receivable to Treasury Stock. * - /■ 1144 . P. F. Broydrick pays $5,000 cash and gives his note at 30 days for $1,000 in settlement of his subscription for 6o shares. What entry? 236 1145-1151 DOUBLE ENTRY BOOK-KEEPING. \ ' Subscription account is credited from the Cash Book for $5,000, and the following' entry is made on the Journal for the note for $1,000 : Bills Receivable to Subscription. 1145 . When notes are received for stock, the latter is generally held as collateral security until the notes are paid. There are some exceptions to this rule, however, as, for instance, where the notes are made by an officer of the Company. 1146 . Stock is always sold upon certain conditions, a few of which may be enumerated as follows: It is either to be paid for in full upon organiza¬ tion of the Company, or in a certain number of installments ; if not paid for within a certain time the stock is declared forfeited, as likewise the amount which may have been paid thereon — each stockholder signing an agree¬ ment to this effect. 1147 . When a person enters his name upon the Subscription Book of a Stock Company for a certain number of shares, he enters into an agreement to pay certain amounts at certain times then stipulated or to be thereafter stipulated. If the subscriber does not conform to this agreement, he can be sued in the same manner as though he had given his note for the balance due. 1148 . When a stockholder makes a part payment on his subscription, merely an ordinary receipt is given to him, stating, in addition to the date, name, and amount, “as payment on account of subscription to Capital Stock.” 1149 . In a case where a stockholder has made, say, only one payment on his subscription, has been sued for the balance and has failed to pay, should any officer of the Company without the consent of all the other stock¬ holders return to him the amount which he has paid, the latter by reason of this act are released from the contract with the Company as regards their several subscriptions. INSTALLMENTS. 1150 . A Company is organized with the understanding that the shares are to be paid for in four equal installments ; there are to be 2,000 shares at $100 each; the payments are to be $25 cash upon organization, $25 in three months, $25 in six months, and $25 in nine months. What entry? There are two ways of disposing of this proposition: 1151 . First .—Make the entry upon opening the books the same as in paragraphs 1139 and 1140; leave four lines after each subscriber’s name on the Subscription account in the Ledger—one for each installment. Then, as each subscriber pays his installment, post the credit to the Subscription account opposite to the subscriber’s name, and on the proper installment line. After the last installment has been paid in full the Subscription account will balance. 237 1152—1155 DOUBLE ENTRY BOOK-KEEPING. 1152. Second .—The other way is to open four Installment accounts. The object in doing this is to show after each installment is due, the amount, if any, which is unpaid thereon. When this method is adopted, the entry upon opening the books will be : Sundries to Capital Stock. Installment No. I, due March I, 1887 $200,000 $50,000 50,000 50,000 50,000 2, “ June 1, “ 4, “ Dec. I, In order to make the above entry, all the stock must have been sub¬ scribed for ; then the names of all the stockholders, together with one-quarter of the amount subscribed for, will be written on the debit side of each Installment account, which account will be credited with the amount of each subscriber’s installment when it is paid. 1153. Suppose that after the third installment has been paid, the stock¬ holders vote to issue full paid-up certificates for what is already paid up, namely, 75 P er cent, of $200,000, or $75 on each share of the nominal value of $100. What entry to dispose of the remaining installment ? Commission. $50,000 To Installment No. 4. $50,000 Each share is then worth only 75 per cent, of its face value. (See 1164.) 1154. Some Companies organize with the understanding that a certain percentage of the nominal value of the shares is to be paid at the time of subscribing, and that future payments are to be made at such times and in such amounts as the Company may require. Until all the subscriptions have been paid in full, the stockholders of such Companies are assessed whenever money is needed with which to pay debts or transact business. When a Company is in need of funds its directors meet and decide what percentage of his subscription each stockholder shall pay, and upon what day he shall pay it. Each stockholder is then notified of this fact, and this is called “a call,” or “an assessment,” that is, each stockholder is called upon for a certain amount of money, which amount is determined by the aggregate face value of all the shares held by him. BONDS. 1155. When a Company wishes to procure money for the purpose of paying its debts, or of extending its business, it may do so by obtaining the written consent of the holders of two-thirds of the stock of the Company to mortgage its real estate or other property for the purpose of securing the payment of a certain number of bonds , of a certain amount each, dated on such a date, payable on such a date, and bearing interest at a certain rate per cent, per annum payable semi-annually. In accordance with this consent 238 1156—1157 DOUBLE ENTRY BOOK-KEEPING. * I the Company then executes a mortgage to trustees and has its bonds en¬ graved. These bonds are then held for sale. Whenever any of them are sold (and they are sold for cash only), Bonds Payable account is credited. These, like some government bonds, have interest-coupons attached to them. Every six months one of these coupons falls due, when it should be detached and presented to the Company for payment. Coupons which are not pre¬ sented to the Company for payment when due do not draw interest. An ac¬ count is usually opened for Bond Interest and debited when these coupons are paid, or the amounts paid on them may instead be debited to the general Interest account. The Bonds Payable account is of the same nature as the Bills Payable ac¬ count, and it stands as a liability on the Company’s books until all the bonds have been redeemed or paid, when it will balance. When the bonds are first obtained no entry is made on the general books ; it is not until some of them are sold that an entry is made, and then the Bonds Payable account is cred¬ ited, as previously stated. 1156. Registered bonds are recorded in the same manner as deeds, and consequently are not transferable without re-registry; while coupon bonds are not recorded and are, therefore, transferable. Interest on the former is usually paid by checks, while on the latter it is usually paid in currency— the canceled checks in the former case being returned as vouchers for the interest paid on the registered bonds, and the coupons being held as vouchers for the interest paid on the coupon bonds. CAPITAL STOCK INCREASED AND STOCK DIVIDEND DECLARED. 1157. A Company has a paid-up capital of $100,000, which is the full amount for which it was incorporated. After having been in business two years, during which time no dividends have been declared, its Surplus Fund account stands credited with $6o,ooo. The Company now obtains authority from the Secretary of State to increase its capital stock to $200,000, which increase it makes. It also declares a “ stock dividend” of $50,000, that is, a dividend which is to be paid to the stockholders in shares, instead of in cash. What entries? First Entry: Treasury Stock... $100,000 To Capital Stock. $100,000 For the amount of the increase of capital. Second Entry : $50,000 Surplus Fund. To Stock Dividend 239 $50,000 1158-1159 DOUBLE ENTRY BOOK-KEEPING. For the amount of the stock dividend, leaving a balance of $10,000 to the credit of the Surplus Fund account for future contingencies. Third Entry: Stock Dividend. To Treasury Stock Writing on the credit side of the Treasury Stock account the names of the stockholders to whom the dividend shares are issued, together with the amounts. There is $50,000 worth of new stock in the treasury, after the dividend stock has been issued to the old stockholders. When any of this new stock is subscribed for, the entry for such subscription will be : $50,000 $50,000 Subscription to Treasury Stock. Whenever the capital stock of a Company is increased and a stock divi¬ dend is declared, the stockholders surrender their old stock and new stock is issued to them in proportion to the number of shares of the old stock which was held by them. The accounts in the Stock Ledger are all balanced when the old stock is surrendered, and opened again when the new stock is issued— each stockholder’s account in this Ledger showing just 50 per cent, more shares than it showed before the stock dividend was declared. This, however, is not always done, for the reason that sometimes it is not possible to at once obtain all the old stock certificates; as, for instance, in the case where a stockholder has borrowed money, given his certificate as collateral security, and, being unable to substitute other securities, cannot produce it. In such a case, at the meeting called to increase the Capital Stock and declare a stock dividend, the stockholder in question would propose that the old certificates be retained and new ones issued for the increase. If this proposition were carried, entries would be made in the Stock Ledger merely for the additional shares issued to the stockholders as their respective dividends. The objection to this manner of increase is that the old certificates would not indicate the new capital of the Company, unless the latter were stamped upon the old certificates. This would require the presentation of each certificate at the Company’s office. The special advantage arising from the declaring of a “stock dividend” is that the Company retains for use the cash which otherwise it would have to pay out were a “cash dividend” declared. 1158. No Stock Company has authority to issue shares until it is incor¬ porated under the laws of the State in which it is located ; neither can any Company increase its capital stock without authority from the Secretary of State to do so. 1159. When a dividend is declared it is sometimes for a certain percent¬ age on the full authorized capital, but more frequently on the paid-up capital, 240 1160-1162 DOUBLE ENTRY BOOK-KEEPING. the reason being that the larger percentage-figures make (apparently) a bet¬ ter showing to the stockholders. In effect, there is no difference in the sum each stockholder will receive, whether the dividend is declared upon the former or upon the latter. PATENT RIGHT PURCHASED AND PAID FOR IN STOCK. 1160 . A Company is organized for the purpose of manufacturing a cer¬ tain patented article—a churn. The style of the concern is to be “The Excel¬ sior Churn Company” The authorized capital is $75,000, divided into 1,500 shares at $50 each. The Company issues to Edwin F. Johnson, the patentee of the churn, 1,000 shares as payment for his patent. Additional shares to the number of 400 are subscribed for upon organization. The entries for the opening of the books are as follows: First Entry: Sundries to Capital Stock. . $75,000 Subscription. $70,000 Edwin F. Johnson, 1000 shares. $50,000 Wm. H. Gross, 200 “ 10,000 F. S. Caldwell, 100 “ . 5,000 J. W. Matthews, 100 “ 5,000 , $70,000 Treasury Stock. 5,000 100 shares to be sold. Seco?id Entry: Patent Right. $50,000 To Subscription. $50,000 For 1,000 shares issued to Johnson for his patent. 1161 . Three months after organization, the patentee returns to the Com¬ pany as a bonus, or present, 200 shares of his stock. What entry? Treasury Stock. $10,000 To Patent Right. $10,000 This entry reduces the cost of the patent to $40,000. 1162 . Machinery to the value of $3,000 is bought and paid for in shares. What entries ? First Entry: Subscription. $ 3 , 000 To Treasury Stock. $3,000 Pittsburg Manufacturing Co., 60 shares. Second Entry: Machinery. $ 3 > 000 To Subscription. $3,000 For 60 shares issued to The Pittsburg Manufacturing Co. as payment for machinery. 241 1163 DOUBLE ENTRY BOOK-KEEPING. “COMMISSION” AND PLANT. 1163 . E. J. Davison is proprietor of The Sterling Gas Works. He, to¬ gether with T. H. Merriam, W. H. Harrison and Geo. A. Dougall, organizes a stock company under the style of The Sterling Gas Company, with 2,000 shares at $25 a share. The actual value of his plant (machinery, tools, etc.,) is $18,000. .The agreement upon organization is that full paid-up certificates are to be issued upon payment of 60 per cent, of their nominal value, that is, upon payment of $15 for each share. The Company thereupon issues to E. J. Davison 1,200 shares for his plant. The remaining shares are subscribed for and are to be at once paid for. What entries ? First Entry: Subscription. To Capital Stock. E. J. Davison, 1200 shares.$30,000 T. H. Merriam, 300 “ . 7,500 W. H. Harrison, 300 “ . 7 500 Geo. A. Dougall,200 “ 5,000 $50,000 $50,000 Second Entry: $50,000 Plant. To Subscription $18,000 $iS,ooo For value of The Sterling Gas Works plant, formerly owned by E. J. Davison. Third Entry: Commission.. $20,000 To Subscription. $20,000 E. J. Davison, 40$ dis. 0 n 1200 shares @ $25. T. H. Merriam, “ 300 “ “ W. H. Harrison, “ O O CO Geo. A. Dougall, “ 200 “ “ For 40 per cent, discount on nominal value of 2,000 shares at $25 a share, paid-up certificates being issued upon payment of 60 per cent, of the face value of the shares, as previously stated. Forty per cent, of $25 is $ 10; therefore, the Subscription account is credited opposite to each stockholder’s name with $10 a share for all the shares held by him, as above. The difference between this amount credited and the amount debited is the amount which has to be paid for the stock. When the subscriptions have all been paid the Subscription account will balance; the difference between the Commission and the Capital Stock accounts will represent the paid-up capital, or exactly what the Company is worth. In this example the difference between these two accounts is $30,000. When Merriam, Harrison and Dougall have paid their subscriptions, the assets to cover this amount will consist of: Plant, $18,000; Cash, $12,000. 242 1164—1166 DOUBLE ENTRY BOOK-KEEPING. 1164. The Commission account is allowed to stand in the books as a resource until^the Company has a surplus sufficiently large to cover it, when it may be “wiped out” by the following entry: Surplus Fund. $20,000 To Commission... $20,000 After this entry has been made, the Capital Stock account will represent not the nominal capital but the real capital, and the shares held by the stock¬ holders will be worth their full face value. The term “Commission” is in more general use than any other for the reason that the real nature of the account so named is, to some extent, con¬ cealed in its name. If the account were called “Stock Discount” it might arouse suspicion, because this title would suggest that the Company’s stock was at a discount. 1165. No one can tell from the face of a stock certificate what the cer¬ tificate is worth, because the nominal value only is expressed thereon. It is usually specified upon the face of a stock certificate by whom it is to be signed and countersigned. NOMINAL CAPITAL. 1166. A Company is organized for the purpose of purchasing and oper¬ ating a Coal Mine at present owned by Henry Fox. The organizers are Henry Fox, Henry Soper, B. E. Ellison and C. A. Brady. The authorized capital is $200,000, divided into 10,000 shares at $20 a share. The private understanding among the organizers is as follows : (1) fully paid-up certifi¬ cates are to be issued upon payment of fifty per cent, of the face value of the shares, or $10 a share ; (2) it is to be made to appear on the Company’s books that the Company has assets to the value of $200,000, that is, the full amount for which it is incorporated; (3) all the stock is to be at once sub¬ scribed for as follows,—Henry Soper, 750 shares, B. E. Ellison, 500 shares C. A. Brady, 500 shares — all to be paid for in cash at their full face value; and Henry Fox, 8250 shares as payment for his Mine — with the understand¬ ing that he is to keep 1-500 shares as actual payment for it, to give or transfer one share to each of the other subscribers (Soper, Ellison, and Brady) for every share subscribed for by them, and to return to the Company to be sold as “treasury stock,” 5000 shares — total, 10,000 shares. Thus, the fact that the organizers obtained their stock for less than its full face value is concealed on the Company’s books. In addition to the above “private understanding” there is an open statement in the Prospectus that 12J per cent, of tlie authorized capital is to be reserved for working capital and that this amount ($25,000; is to be taken out of the cash $35,000 (paid by Soper, Ellison, and Brady) for that purpose. What entries ? 243 1167—1168 DOUBLE ENTRY BOOK-KEEPING. First Entry: . Subscription to Sundries. Henry Fox, 8,250 shares.$165,000 Henry Soper, 750 “ I 5 >°°° B. E. Ellison, 500 “ 10,000 C. A. Brady, 500 “ 10,000 $200,000 10,000 “ ..$200,000 Capital Stock.. . Working Capital. $175,000 25,000 Second Entry: Mine. To Subscription. Issued to Henry Fox, 8,250 shares @ $20 for his mine. $165,000 $165,000 When Soper, Ellison and Brady pay for their stock the subscription account will be credited for the $35,000 paid by them —thus balancing this account. The assets of the Company will then appear on the books as fol¬ lows : Mine, $165,000 (8250 shares to Fox @ $20); Cash, $35,000 (received from Soper for 750 shares @ $20, $15,000; from Ellison for 500 shares @$20, $10,000; from Brady for 500 shares @ $20, $10,000)—total, $200,000. Of this latter sum $175,000 are credited to Capital Stock and the remaining $25,000 to Working Capital. The accounts in the Stock Ledger upon the opening of the books appear as follows: Fox, 8,250 shares ; Soper, 750 shares ; Ellison, 500 shares ; and Brady, 500 shares — total, 10,000 shares. The accounts in the Stock Ledger after the “private understanding” has been carried out appear as follows: Fox, 1,500 shares; Soper, 1,500 shares; Ellison, 1,000 shares; Brady, 1,000 shares; Treasury Stock, 5,000 shares,— total, 10,000 shares. When the 6,750 shares are thus transferred from Fox to Soper, Ellison, Brady, and the Com¬ pany, each gives Fox the sum of one dollar as consideration in order to make the transfer legal. 1167 . No entry is made on the general books for the 5,000 shares trans¬ ferred by Fox to the Company at the time that they are transferred, but, like Bonds (see 1155), entries are made only as they are sold, when the proceeds of the sales (and the shares are sold to outsiders for their full face value) are credited as a gain (!) to one of the following accounts: Contingencies, Com¬ mission, Mine, or Loss and Gain. Thus, owing to the sale of these 5,000 shares, the Company is enabled to declare (during the first year of its exist¬ ence, at least!) dividends which are very satisfactory to the organizers, and quite satisfactory to the new stockholders. 1168 . The nominal capital is $200,000; the actual, $50,000. Fox sells his mine to the Company for the nominal consideration of $165,000; for the actual consideration of $15,000. No one can ascertain from the General Ledger how much the actual capital is, nor how much the actual considera¬ tion for the mine was ; nor can any one ascertain either from the general books or from the Stock Ledger how much Soper, Ellison and Brady paid to Fox for the shares transferred to them. 244 / DOUBLE ENTRY BOOK-KEEPING. 1169—1173 CAPITAL STOCK DECREASED. 1169 . Paid-Up CAPITAL. —A Company having a full paid-up capital oi $75,000 has been in business three years, during which time there has been a loss of $25,000. This latter amount stands debited on the Surplus Fund ac¬ count. Wishing to clear off this “eye-sore” and start anew, the Company decreases its capital stock to $50,000. What entry of the $25,000 ? Capital Stock to Surplus Fund. 1170 .. Subscription. —A Company has an authorized capital of $200,000, all of the stock representing which is subscribed for. At the end of two years only $100,000 have been paid on the subscriptions and consequently there remain $100,000 due. The Company now calls a meeting of the stockholders at which it is concluded to decrease the capital stock to $100,000. What entry for this decrease ? Capital Stock to Subscription. 1171 . TREASURY Stock.—A Company having an authorized capital of $150,000, has stock to the value of $100,000 subscribed for and paid up. At the end of two years, the remaining $50,000 worth of stock in the treasury not having been sold, the Company decreases its capital stock to $100,000, in order to have a full paid-up capital. What entry of the $50,000? Capital Stock to Treasury Stock. 1172 . When capital stock is decreased, the old stock is surrendered by the stockholders and new stock is issued to them in a number of shares de¬ creased in the same proportion as the capital stock is decreased. The old accounts in the Stock Ledger are balanced, and then the entries for the new stock are made therein, showing the number of shares of such stock held by each stockholder. “WATERED STOCK.” 1173 . In some States, certain kinds of Companies are required to pay to the State all excess of profit over a certain rate per cent. Whenever a rail¬ way or other Company, in order to evade this obligation, increases its capital stock to a sum sufficiently large to reduce its percentage of profit to the rate limited by its charter, it is “watering its stock.” For example: The L. & A. Railway Company has a paid-up capital of $1,000,000; the State wherein the charter for this Company is granted requires railway Companies to pay to it all excess of profit over 6 per cent, per annum; it is foreseen that this Company, with its present capital, will earn during the coming year at least 12 per cent, net profit, that is $60,000 for itself and $60,000 which should, according to its charter, be paid to the State. Now, in order to defraud 245 s 1174—1175 DOUBLE ENTRY BOOK-KEEPING. the State of these $60,000, the Company increases its capital stock to $2,000,000 — thus making the percentage of profit 6 per cent, on $2,000,000 instead of 12 per cent, on $1,000,000, and thereby retaining $120,000 for itself and paying to the State nothing. 1174. Another example: A gas company with a capital stock of $1,000,000, is, owing to its high rates of service, making a profit of 25 per cent, per annum. This Company increases its capital stock to $5,000,000, its object being to make its percentage of profit 5 per cent, on $5,000,000 instead of 25 per cent, on $1,000,000. Thus the Company continues to keep the public in the light as to its rates but in the dark as to its profits. Now, a consumer on seeing this Company’s statement will say: “What, only 5 per cent, profit! It is useless to ask for a reduction of rates.” When stock is thus “watered,” the new stock is usually distributed among the old stockholders for merely a nominal consideration. FICTITIOUS DIVIDENDS. 1 • 1175. A Company wishes to lead its stockholders to believe that it is in a prosperous condition, when the fact is the reverse. In order to do this it fraudulently exaggerates its resources whenever its books are closed, and actually declares dividends out of capital when its shareholders understand that they are declared out of profits. Consequently, these deluded stock¬ holders are, in fact, withdrawing the moneys which they invested and thus rendering themselves liable to be sued, eventually, for the Company’s debts. For instance: At the beginning of the year the “Building” account stood debited with $50,000; during the year $2,000 have been expended for repairs on it, which amount has been debited to Building account; at the end of the year the Building account is taken as a resource at $52,000, or $2,000 more than the building cost when new — no allowance having been made for the “wear and tear” which necessitated the repairs. Thus, this item of $2,000 is kept out of the Loss and Gain account, and, in consequence, the dividend is, by so much, falsely increased. (See 96.) A great many accounts are “ma¬ nipulated” in the same manner; as, for instance: Plant, Machinery and Tools, Supplies, Office Fixtures, and Construction. Another form of misrepresenting resources is the willful overvaluation of such property as Real Estate, Fatent Rights, Coal Mines and Oil Wells. When such property is overvalued the dividends are, by this means, increased to the extent of the overvaluation, hence they are — fictitious dividends. \ 246 ♦ 1176—1184 DOUBLE ENTRY BOOK-KEEPING. SUNDRY POINTS. • 1176 . When a charter is issued to a Stock Company one of its condi¬ tions is that a certain percentage of the authorized capital must be paid within a certain specified time, failing which, the charter becomes null and void. 1177 . When drafting its by-laws a Stock Company must pay special re¬ gard to consistency with the subject-matter of its charter, for the latter is the foundation of the Company’s existence and all other documents must conform thereto. 1178 . When the stockholders of a Company are taxed for the shares held by them, the Company is exempt from taxation on its real and personal property, because the shares represent the Company’s assets and the State cannot collect twice on the same property. 1179 . The reason why nearly all Companies require transfers of stock to be made through the treasurer of the Company, and those transfers to be at once recorded on the Company’s books, is because they wish at all times to know who the stockholders are ; otherwise they would not know by whom votes were to be cast or to whom dividends were to be paid. Some Companies have to make so large a number of transfers that they are obliged to employ a person for the special purpose of keeping the Trans¬ fer Book. The person thus employed is called a Transfer Clerk. 1180 . A “call loan” is a loan which is made to a person who gives col¬ lateral security in a sum which is often as much as 20 per cent, in excess of the amount of the loan, and who promises to pay at any time the lender may demand payment. When the lender wishes the money on his loan he “calls it in,” together with the interest which has accrued thereon, and, upon payment of both loan and interest, the securities are returned. Money thus lent is usually charged to a “Loan” account. 1181 . Each stockholder in a National Bank is liable for twice the nominal value of the shares held by him, while in banks other than National Banks, each stockholder is liable for only the nominal value of his shares. 1182 . A limited-liability Company is always good for liabilities to the extent of its full authorized capital, while a partnership concern may not be good for io per cent, of'the sum which it is supposed to be worth. 1183 . When a limited-liability Company fails, and is sued, it is not a question as to how much of the capital stock has been paid 2ip, Iput as to how much has been subscribed for , and the total subscription is the sum for which the Company, or its stockholders, can be held liable. 1184 . A stockholder in a limited-liability Company is always liable to the creditors of his Company for the full nominal or face value of the shares held by him, regardless of the amount which he may have been required to pay for them, and this liability continues as long as his name remains on the books of the Company as a stockholder. In some States this liability contin- 247 1185—1187 DOUBLE ENTRY BOOK-KEEPING. ' ues for six months after he ceases to be a stockholder. This is one of the reasons why Stock Companies require that all transfers of their stock be im¬ mediately recorded upon their books. / 1185 . The only advantage that an unlimited-liability Company possesses over a limited-liability Company, to compensate for the extra risk which the stockholders of the former incur by each becoming surety for the full liability of the Company, consists of the higher standing of the unlimited Company respecting its credit. If a limited-liability Company with a capital of $100,- ' ooo should contract liabilities to the extent of $200,000 and then fail, its creditors could collect from its stockholders only $100,000—collecting from each stockholder only the nominal value of the shares held by him. If an unlimited-liability Company should fail, its creditors could collect from any stockholder who might be able to pay it, the total amount of the Company’s liabilities,—hence the greater degree of credit attaching to an unlimited- liability Company. 1186 . Officers of Stock Companies are required to file with the Secretary of State, as also, in some States, with the Town Clerk, and in others, with the County Clerk, reports or “statements of condition,” giving particulars as to paid-up capital, assets and liabilities, surplus, and dividends. The officers by whom, and the officers with whom, as well as the dates within which these reports are required to be filed vary according to the laws of different States. In some States the publishing of these reports in a local newspaper is also required. SUNDRY FORMS. STOCK SUBSCRIPTION BOOK. 1187 . We, the undersigned, do hereby agree to take the number of shares set opposite to our several names: y Date. Name. Address. No. of Shares. Amount in Dollars. \ L k > 1 1187a. STOCK CERTIFICATE BOOK. 1187a DOUBLE ENTRY BOOK-KEEPING. 249 1187 b— 1187(1 DOUBLE ENTRY BOOK-KEEPING. 1187 b. Printed across the back of each Stock Certificate is the following form, which is filled in whenever a part or the whole of the shares represented by the Certificate are sold. For value received , . hereby assign and transfer unto ..... .. . . . share. . of the Capital Stock represented by the within Certificate , and do hereby constitute and appoint . Attorney, to transfer the said stock on the books of the within named Company, with full power of substitution in the premises. Date , . 18 . Signed in the presence of 1187 c. STOCK TRANSFER BOOK. Certificate Number . '..... for . shares transferred to .. Transfer Number. .... For value received. . hereby assign and transfer unto ... all ... right , title and interest in . shares of the Capital Stock of. . nozv standing on its books in . name. Dated this . day of .. 18 . Surrender and Re-Issue Entries made on pages. 1187 ( 1 . DIVIDEND RECEIPT BOOK. Dividend Number .. of .%, Declared ... 18 Check Number. Names of Stockholders. No. of Shares. Amount of Dividend. * Date of Payment. Signatures of Stockholders. • • 250 H87e DOUBLE ENTRY BOOK-KEEPING. 118?e. STOCK LEDGER. Horace Cook. Date. Certificate Number. Transfer Number. To Whom Transferred. No. of Shares Issued. No. of Shares Transferred. Balance of Shares Held 1 1887 Jan. 2 I 400 400 May 16 IO 3 B. F. Ellison 75 325 This Ledger is kept upon the same principle as the Balance-Ledger illustrated and described in 1112. Since the special design of the Stock Ledger is to show the number of shares held by each stockholder , the issuing and transferring of shares is hardly a matter of debit and credit, but rather a matter of the increase and decrease of the number of shares held by each stockholder; therefore, the form given above will be found to answer the purpose of a Stock Ledger better than the old form of Ledger with debit and credit sides. The figures on the last line in the “Balance of-Shares Held” column always show the number of shares held by the stockholder. This renders it unnecessary to add the figures in the “Issued” and “Transferred” columns separately and to subtract the footing of the one from the other, as is required in the common form of Ledger. When this transfer of 75 shares has been made to Ellison, an account is opened with him in the same manner as the account with Cook was opened. When only a part of the shares represented on a stock certificate are sold it is unnecessary for the holder of such certificate to appear at the Company’s office to surrender it, but he may endorse on the back of it the number of' shares sold, and appoint the Transfer Clerk his attorney to make the transfer on the Company’s books and to obtain for the purchaser a new certificate for the number of shares sold to him. The old certificate is then canceled and a new one issued to the old stockholder for the number of shares still held by him. In this case, therefore, Ellison’s certificate is number 9, while that of Cook’s re-issue is number 10. When all the shares represented in a stockholder’s certificate are sold it is not necessary for him to appear at the Company’s office, but he may assign and transfer his certificate to another person by endorsing it in the manner shown in 1187^. The purchaser of the certificate thus endorsed, can take it, at his convenience, to the Company whose stock it represents, surrender it and get a new certificate in his own name. When the purchaser thus sur- 251 1188 DOUBLE ENTRY BOOK-KEEPING. renders his certificate, the blank form shown in 1187*: is filled up and signed by him. He also signs the stub of 1187# for the new certificate issued to him. It is now considered unnecessary to indicate in the Stock Ledger the par value of the shares. (See 827.) Some Companies place all their stock in the hands of a trustee who trans¬ fers it to the subscribers. In such a case, the first account to be opened in the Stock Ledger is in the name of the trustee. The trustee’s account is then treated in the same manner as that of a stockholder. When all the stock is issued to subscribers the trustee’s account will be closed. VARIOUS STATUTORY POINTS. 1188 . There are many special features governing corporations to be found in the statutes of the different States, a few of which may be men¬ tioned as follows: (1.) In Alabama, subscription of half the proposed capital, payment of at least twenty per cent, of subscription, and security for the remainder of subscription are required before any Company is allowed to do business. (2.) In CONNECTICUT, when an insolvent Company has omitted to file its annual report for two successive years, it may be dissolved and its affairs wound up on the application of any stockholder or creditor; in MASSACHU¬ SETTS, on the application of the Commissioner of Corporations. (3.) In IDAHO, each stockholder is personally liable for his proportionate share of the debts of the Company which were contracted while he held its stock. (4.) In ILLINOIS, when a Company fails and any stockholder is insolvent, his share is borne pro rata by the solvent stockholders. (5.) In Indiana, the capital stock of manufacturing Companies must be fully paid up within eighteen months after the granting of the charter. This capital may be increased or diminished without application to the Secretary of State; but, in case of an increase, a certificate to that effect must be filed within thirty days with the Circuit Court clerk, and, in the case of a decrease, with both the Circuit Court clerk and the Secretary of State. (6.) In Maine, each Company is required to send to the Secretary of State an annual list of its new stockholders. (7.) In MASSACHUSETTS, no Company is allowed to do business until its capital stock is fully paid up. (8.) In MISSISSIPPI, officers of a Company who assent to the taking of a note from a stockholder in payment for stock are personally liable to its cred¬ itors for the amount of such note., (9.) In MISSISSIPPI, the liability of stockholders continues for one year after the sale or transfer of their stock ; in SOUTH CAROLINA, for two years. (10.) In MISSOURI, Stock Companies are required to make a statement of condition only when they apply for an increase or a decrease of their capital stock. 252 1188 DOUBLE ENTRY BOOK-KEEPING. (n.) In New Hampshire, the capital stock of a Company must not be less than $1,000, nor more than $1,000,000; in VERMONT, not less than $500, nor more than $1,000,000. (12.) In New YORK, one-half of the capital stock of a Company must be paid within one year after the granting- of the charter and the other half within two years after its granting, failing which, the Company will be dissolved. Every Company is required to keep open for the inspection of stockholders and creditors, a book showing the names of its stockholders alphabetically arranged, the number of shares held by each, and the amount paid thereon. (13.) In Ohio, each stockholder is liable for twice the face value of the shares held by him; in SOUTH CAROLINA, for the face value and ten per cent, in addition. (14.) In VERMONT, no Company is allowed to contract debts until half of its capital stock is paid up. (15.) In Idaho, Illinois, Massachusetts and New York, directors, trustees, or other officers who assent to an excess of debt over the paid up capital, are jointly and severally liable to the creditors of their Company for the whole of such excess; in New Hampshire, officers who assent to an excess of debt over one-half of the paid up capital are liable for such excess; in VERMONT, those who assent to an excess of debt over two-thirds of the paid-up capital are liable for such excess. (16.) In KANSAS and Mississippi, stockholders are liable for the face value of the stock held by them plus the amounts of their unpaid subscrip¬ tions. (17.) In Massachusetts, Michigan and New Hampshire, the name of each stockholder as well as the number of shares held by him is required to be shown in the annual statement. (18.) In Massachusetts, Mississippi, Missouri and Montana, direct¬ ors assenting to a loan to a stockholder are liable to the creditors of their Company for the amount of that loan in addition to their other liabilities. (19.) In MONTANA, New York and Oregon, no fewer than three per¬ sons can incorporate a Company. (20.) In New Hampshire and Rhode Island, each stockholder of a Company is liable for_all its debts until the capital stock is fully paid up; in New York and Vermont, for the face value of his shares only. (21.) In Alabama, Connecticut, Delaware, Indiana, Kentucky, Louisiana, Maine, Maryland, Missouri, Montana, Oregon, Texas, Utah, Virginia and West Virginia, each stockholder is liable for only the unpaid part of his subscription. (22.) In Alabama, Delaware, Idaho, Illinois, Kentucky, Louisiana, Maine, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Utah, Virginia, West Virginia and Wisconsin, no statements of condi¬ tion are required to be filed or published. 2 .S3 1189 DOUBLE ENTRY BOOK-KEEPING. (23.) In Connecticut, Florida. Indiana, Maryland, Massachu¬ setts, Michigan, Montana, New Hampshire, New York and Tennessee, if directors with the knowledge that their Company is insolvent, or that the declaration and payment of a dividend will render it insolvent, declare and pay such dividend, the directors assenting thereto are jointly and severally liable for all debts then existing as well as for all those which may subsequently be contracted while they continue in office. Since the laws of the various States differ so widely from each other, officers of every Stock Company, in order to conform to the laws of their State, should possess a copy of the statutes covering “Corporations.” PURCHASES AND SALES. 1189 . In order to ascertain what the exact net purchases and the exact net sales are, it is necessary to keep the purchases and sales in separate accounts. When this is required, it is here suggested that three accounts be kept, namely: Merchandise, Purchases, and Sales. Merchandise: debit “Merchandise” at the beginning of the year with the amount of the inventory. Purchases: debit “Purchases” during the year for all goods purchased by us; credit it for all goods returned by us, for all allowances to us for overcharge, and for all discounts for cash; balance either monthly or yearly “By Mdse.,” and carry the net purchases, thus ascertained, to the debit side of the Mer¬ chandise account. Sales: credit “Sales” during the year for all goods sold by us ; debit it for all goods returned to us, for all allowances made to cus¬ tomers for overcharges on goods sold to them, and for all discounts for cash on the same; balance either monthly or yearly “To Mdse.,” and carry the net sales, thus ascertained, to the credit side of the Merchandise account. Merchandise: Now, the amounts entered on the Merchandise account show the actual net purchases and the actual net sales. Su’ch items as goods returned, allowances for overcharges, errors in bills, and discounts for cash on goods purchased have been deducted from the purchases and not added to the sales; such items as the above mentioned on goods sold have been deducted from the sales and not added to the purchases. This manner of thus subdividing the Merchandise account does not, of course, alter the general result of the net gain on Merchandise ; but it does afford the means of ascertaining the exact percentage of profit on sales, which cannot be ascer¬ tained when only a Merchandise account is kept. 254 1190-1194 • DOUBLE ENTRY BOOK-KEEPING. SET OF EXAMPLES FOR PRACTICE. 1190. Purchasers of this book who desire to have examples upon which to practice the system herein illustrated, and with which to test their knowl¬ edge of book-keeping as acquired from this book, will find that the following set of examples contain a sufficient number and variety of transactions to answer the purpose. The student who writes up this “set” and succeeds in obtaining the proper result, should have no hesitation in taking charge of any set of books which may be offered to him. 1191. It will be seen in the examples which follow that, instead of saying, for instance, We receive a note, or, We give a note, the form of the note is given, and that from this the student must make the proper entry. He thus becomes at once familiar with the different forms of papers which are used. Each “form” here given is preceded by a paragraph-number, so that when any paper is stated to be paid, it may be referred to by this number instead of by repeating the form. Whenever any such paper is paid it is not said whether we pay it or they pay it, but simply that it is paid ,— thus putting the student to a more thorough test of his ability by requiring him to judge from the reading of the paper whether we pay it or they pay it, and then to make the entry accordingly. In the following set the name of the firm will be Boyer & Lundie. The student should imagine himself to be the book-keeper for this firm, and always bear this in mind, so that whenever he has any transaction arising from one of the papers above referred to he will be able to determine whether it is payable by his firm or to his firm. All signatures to these papers will be printed in italics , for the purpose of distinguishing the drawers and endorsers of them from the persons to whom they are made payable or upon whom they are drawn. In order to economize space, the complete forms of such papers are not given in these examples, but such terms as “per annum,” and “value received;” as likewise the amounts in letters, as, for instance, “two thousand dollars,” are omitted. 1192. Checks, bank drafts, etc., are, like notes and acceptances, preceded by paragraph-numbers; for, if they were not, the student would thus have clearly pointed out to him which papers belong to the Bills Receivable and Bills Payable accounts. 1193. Wherever the name, “J. H. Goodwin” appears throughout this set, the student should substitute his own name. 1194. The place of business is Denver, Colorado, and the year is 1883 . The business is that of a retail grocery. The months, January, February, and March are supposed each to represent a year, but only, however, in so far as the closing of the books is concerned ; therefore, the books should be closed at the end of each month in the same manner as though it were the end of a year. In order that the student may know whether his work is correct before 255 ¥ 1195—1200 DOUBLE ENTRY BOOK-KEEPING. he closes the Loss and Gain, Private and Stock accounts, the net-result figures for each closing of the books will be given at the end of each “year.” 1195 . When the student is not certain as to what entry to make for any transaction, he should refer to the Index of this book and follow up all the references pertaining to the subject. He will then, in all probability, find a way out of his difficulty. 1196 . -In order to have paper which is ruled according to the system illustrated in this book, upon which to write up this set, the student should procure “ Goodwin’s Practice Blanks.” (See page 299.) In order that he may allow the proper number of lines to each account in the Ledger, the names of the accounts which he should open will be given, together with the number of the page and also of the line upon which each should be written. The first figure after the name of an account indicates the page, and the second figure the number of lines below the head-line upon which the name of the account is to be written. When “top” follows a page-figure, the name of the account should be written on the blue line above the red head-line. 1197 . The accounts to be opened for January are as follows: W. D. Boyer, Stock, 1—top; C. M. Lundie, Stock, I —-17; W. D. Boyer, Private, 2—top; C. M. Lundie, Private, 2—19; Merchandise, 3—top; Store & Office Fixtures, 3 — 26; Expense, 5 —top; Freight & Express, 5 —15; Salaries, 5 — 35; Interest,6 — top, Advertising, 6—14; Insurance, 6 — 24; Loss & Gain, 11—top; Bills Receivable, 12—top; Bills Payable, 13 — top; Charles Daven¬ port, City, 14 — top; Paul Philip, City, 14—9; Wm. Dougherty, Golden, Colo., 14— 17; Wm. S. Farley, City, 16—41; Sprague, Warner & Co., City, 17 — top; B. Cornforth, City, 17—17; J. S. Brown & Bro., City, 17 — 29; J. K. Armsby 6 Co., Chicago, 17 — 36; B. T. Babbitt, New York, 18 — top; Catlin Tobacco Co., St. Louis, 18—9; Thatchers & Baxter, Pueblo, Colo., 18 — 21. 1198 . Whenever an account is opened in the Ledger, its name and page should be written in the Index in the manner shown in “Goodwin’s Ledger Practice Blank” under “A” and “B”. 1199 . Whenever a transaction consists of an item of expense, the student should refer to the Index in his Ledger to ascertain whether an account has not been opened for that particular branch of expense to which the item belongs. If such an account has been opened this item should be charged thereto. (See 193 to 197.) JANUARY, 1883. 1200 . During this “year” all charge sales are itemized in the Journal, no Sales Books being kept. Employes are paid their salaries weekly; conse¬ quently, no accounts are kept with them. There are two employes, — yourself as book-keeper, at a salary of $12 a week, and Frank Cook as clerk, at $8 a week. 1st. — W. D. Boyer and C. M. Lundie have this day entered into copart¬ nership for the purpose of transacting a Retail Grocery Business. The style 256 1201—1205 DOUBLE ENTRY BOOK-KEEPING. of the firm is to be “ Boyer & Lundie.” The gains and losses are to be shared equally. W. D. Boyer invests as follows: currency, $1500; gold, $ 35 °; groceries on hand, per inventory, $1550; desks, chairs and stove, $100. C. M. Lundie, invests as follows: 1201. Denver, Colo., Jan. !, 18S3. FIRST NATIONAL BANK Pay to Boyer & Lundie or order $2000. C. M. Lundie. 1202. Denver, Colo., Dec. 25, 18S2. Thirty days after date I promise to pay to the order of C. M. Lundie $400, with interest at 10 per cent. Arthur Borden. - Endorsement on above: “ Pay order of Boyer & Lundie. C. M. Lundie 1203 . Whenever a dash follows a form, as after “Arthur Borden” above, it indicates that the transaction is not complete without the words which follow it. 1204 . Denver, Colo., Dec. 25, 18S2. Forty-five days after date I promise to pay to the order of C. M. Lundie $600, with interest at 10 per cent. Arthur Borden. - Endorsement on above: “ Pay order of Boyer & Lundie. C. M. Lundie 1205 . Golden, Colo., Dec. 25, 1882. Sixty days after date I promise to pay to the order of C. M. Lundie $500, with interest at 10 per cent. , Geo. A. Turner. - Endorsement on above: “Pay order of Boyer & Lundie. C. M. Lundie.” We pay for rent of store to Feb. 1, $ 75 ; for note, bill and letter heads, $9; for 2 desks, $40; for 4 chairs, $10. (Always make the entries and explan¬ ations in the Cash Book as concise as possible—never extending an explana¬ tion on to a second line.) 2d.—We pay for advertisement in “News,” $7; for 2 tons coal, $9; for bill of stationery, $5.50. 3d.—We buy goods on account from Sprague, Warner & Co., 1 /2 (this fractional form indicates the date of the bill, which is the 1st month and 2d day, or, Jan. 2), $1234; J. S. Brown & Bro., 1/2, $428.75; B. Cornforth, 1/3, $ 1 37.25—total, $1800. 25 7 1206—1210 DOUBLE ENTRY BOOK-KEEPING. 4th.—We pay for sign, “Boyer & Lundie, Grocers,” $30; for set of blank books, $27.50. W. D. Boyer draws for private use, $15. 5th.—On this day we throw open our doors for trade, and the result at night is, cash sales, $57. We pay for a policy in the Hartford Insurance Co., 1 per cent on $2500, $25; for subscription to “The Denver Republican” one month, $ 1. 6th.—We sell to Chas. Davenport on account, 1 bag No. 6 Coffee, 132 lbs. @ 22^c., $29.70; i bbl. XX Flour, $8; 1 Cheese, 60 lbs. @ 13c., $7.80—total, $45.50. 8th.—Cash sales, $92.80. (Cash sales are made, of course, every day, but owing to the number of lines on the Cash Book which these would take up if they were given for every day in this set of examples, they will be given only occasionally, when the sales for several days will be included in the amounts stated.) C. M. Lundie draws for private use, $20. You draw your salary for the week as book-keeper, $12; Frank Cook is paid his salary for the week, $8. (See 203.) 9th. — We sell to Chas. Davenport on account, 10 bbls. Salt @ $2.50, $25; 5 bbls. Apples @ $3, $15 — total, $40. 1206 . 1207 . 120 S. Denver, Colo., Jan. 9, 18S3. COLORADO NATIONAL BANK Pay to the order of Sprague, Warner & Co. $234. Boyer 0 ° Lundie. Denver, Colo., Jan. 9, 1883. Sixty days after date we promise to pay to the order of Sprague, Warner & Co. $450. Boy^er & Lundie. Denver, Colo., Jan. 9, 1883. Seventy-five days after date we promise to pay to the order of Sprague, Warner & Co. $550. Boyer 6° Lundie. 1209 . Wherever there is nothing either preceding or following a paper to indicate for what purpose the paper is issued, it will be understood that the amount of it is to be applied on account. ioth. — Cash sales, $106.50. Wm. S. Farley (carpenter) makes for us, on account, some new counters and shelves, $75. We return to B. Cornforth 3 bbls. Apples which are spoiled and which were charged to us in his bill of Jan. 3 @ $2.25, $6.75. nth.—We buy from E. Hall a safe, and give him for it the following paper: 1210. Denver, Colo., Jan. 11, 1883. Seventy-five days after date we promise to pay to the order of E. Hall $150. Boyer cr 1 Lundie. Cash sales, $137. 258 DOUBLE ENTRY BOOK-KEEPING. 1211-1214 1211 . Denver, Colo., Jan. n, 1883. COLORADO NATIONAL BANK Pay to the order of B. Cornforth $130.50. Boyer 5 boxes Standard Soap @ $4, $20—total $97.50. We buy goods on account from Catlin Tobacco Co., 1/20, $135.60; 1/23, $46.10; B. Corn- forth, 1/29, $306 — total, $487.70. We pay freight, D. & N. O., $5.80; dray, 50c.— total, $6.30. 1217. 3 1 st. Golden, Colo., Jan. 30, 1883. BANK OF GOLDEN Pay to Boyer & Lundie or order $73 50. IVm. Dougherty. - This paper is to pay for our bill of Jan. 29, $75, less 2 per cent, off for cash in 5 days, $1.50. (See 497, 534 and 921.) Cash sales, $145.50. THE END OF THE YEAR. 1218 . For the closing of the books the following general directions as to the order in which the several particulars of the process are to follow each other may not be amiss: (1.) See whether the balance of cash on hand is correct. If it is not correct either some cash item has been omitted, or some Journal item has been entered in the Cash Book. To find this item, go over the entries for the month and see whether only such and all such amounts as are connected with one of the words, “pay,” “paid,” “cash” or “draws’’are entered in the Cash Book, and also whether such amounts are entered on the proper side of this book. (See 857.) (2.) When the balance of cash on hand is found to be correct, balance the Cash Book. (See 547 to 554.) (3.) Take a “ figure trial-balance,” for the purpose of ascertaining whether the books balance. (See 299 to 302; also, 694, 701 and 808.) If the books do not balance, to find the error follow the directions in 298. To those direc¬ tions it is thought advisable to here add the following: See whether any amounts are placed in a “Miscellaneous” column which should be placed in an “extra” column, and vice versa; also, see whether the footings of all the “extra” columns are posted. (See 469, 470, 547 and 550.) If the error is not found after the foregoing examination has been made, try the method de¬ scribed in 950. (4.) After the books are found to balance, close them according to the directions given in 270 to 295. (5.) After the books have been closed, make a trial-balance consisting of the names and amounts of all the accounts as they appear at the beginning of the new year. (See 301, 303, 810 and 81 t.) (6.) Make a yearly statement. (See 812 to 818.) TPIE FIGURES FOR THE CLOSING OF THE BOOKS. 1219 . CASH BOOK. — Footing of “Mdse.” column, $1,951.55 (see 476 and 547); footing of “Expense” column, $167.25 (see 483 and 550); total cash 261 1220-1221 DOUBLE ENTRY BOOK-KEEPING. received, $2,451.87 (see 548); total cash paid, $1,439.75 (see 55 1 ) ; balance of cash on hand, $4,862.12 (see 552 and 554). JOURNAL. — Total of “ Mdse. Dr.” column, $3,827.40 (see 469); total of “Mdse. Cr.” column, $290.05 (see 470). LEDGER. — Footing of figure trial-balance, $10,180.02. (See 808 and 809.) INVENTORY. — Groceries on hand, ,$3,800; fixtures on hand, $450; Unex¬ pired Insurance, $22.50. (See 289, 806, 807, 71, 95, 96, and 188.) Sundry Losses and Gains. — Close all the other accounts upon which losses or gains have been made. (See 287, 288, 290, 270, 271, 291, 275, 276, 15 to 19, 292, 293 and 277.) LOSS and Gain Account. — The net gain for the firm is $325.77; of which, give Boyer $162.88, and Lundie, $162,89. (See 278 and 280 a.) Private Accounts. —(See 281, 61, 64 a, 575 and 582.) W. D. Boyer’s net private gain is $119.88; C. M. Lundie’s, $121.39. (See 64 b , 574, and 64 c.) STOCK Accounts. — (See 64 d, 52, 55 a, and 565.) W. D. Boyer’s present worth (Feb. 1) is $3,619.88; C. M. Lundie’s, $3,621.39. (See 55 c , 55 d , 55 e, 563, and 566.) TRIAL Balance. — Footing of trial-balance taken after books are closed, $10,417.62. (See 810 and 811.) Beginners when taking a trial-balance should be very careful not to place in it any amount which appears above the closing-lines of an account. Yearly Statement. — Make a yearly statement like that illustrated in 812, 813, 814, 817 and 818. 1220 . Student’s Work Audited. — If the student will send his Yearly Statement to the author, together with postage stamps sufficient for its return, it will be examined and returned to him with the author’s “audit.” FEBRUARY, 1883. 1221 . Our book-keeper’s services were so satisfactory during the past year that his salary is now increased to $60 a month. Frank Cook’s salary is for the same reason increased to $35 a month. We now change our business to that of a wholesale and retail grocery, and employ two traveling salesmen to go out “on the road” and sell goods for us. Their names and salaries are as follows: PM. Sloan, $60 a month; E. D. Wright, $50 a month. We pay all their expenses. (See 216.) We keep personal accounts with all the employes this year, charging them during each month for all money drawn on account and crediting them at the end of each month for their respective salaries. (See 204.) The traveling men also have “agent” accounts, which are charged with all moneys drawn by them for traveling expenses. We shall discontinue itemizing our sales on the Journal and shall keep two Sales Books instead (see 1122), which books will be numbered 1 and 2 respectively. Our sales as recorded in these books will be journalized. Instead of naming the articles which we sell, as was done last year (January), 262 1222—1223 DOUBLE ENTRY BOOK-KEEPING. in order to save space here, only the total amount of each sale, together with the time (if any) and the Sales Book number and page, will be given. From this the student may imagine that the Sales Book entries have been made and make the journal-entry as in 408 to 416. 1222. The additional accounts to be opened this year are as follows: Colorado National Bank Shares, 4—top; Little Giant Mining Shares, 4—8; T. & B. Flour, 4 —16; Rent, 6—39; Warehouse Rent, 7—top; Drayage, 7—11; Collection & Exchange, 7—27; Taxes, 7—41; Ed. Sloan, Agent, 8—top; E. D. Wright, Agent, 8—12 ; TravelingExpenses, 8—25 ; J. H. Goodwin, $60 a month (the student should substitute his own name instead), 10—top; Ed. Sloan, Personal, $60 a month, 10—9; E. D. Wright, Personal, $50 a month, 10—16; Frank Cook, $35 a month, 10—24; Berlin & Co., Boulder, Colo., 14— 28; C. R. Welch, Fort Collins, Colo., 14—41; Clark & Tweed, Leadville, Colo., 15—top; Nichols & Long; Colorado Springs, Colo., 15 —11; I. R. Morrison, Georgetown, Colo., 15—22; E. W. Lawrence, Idaho Springs, Colo., 15— 30; George A. Turner, City, 16—top; J. P. Williams, City, 16--8; Union Pacific Railway Co., City, 16 —15; The Denver Republican, 16—22; Procter & Gamble, Cincinnati, 18 — 29. 1st.—We pay for February rent of store, $ 75 ; for rent of a warehouse in which to store some of our goods, $25. We wish to know our expenses for each, and therefore keep an account for each—Rent and Warehouse Rent. We pay our gas bill, $8; also, C. M. Lundie’s private gas bill, $3. Cash sales, $ 135 - 50 . 2d.—We discount J. S. Brown & Bro.’s bill of Jan. 2, $428.75, less 1 per cent, for cash, $4.29, net $424.46, as follows: 1223. Denver, Colo., Feb. 2, 1883. COLORADO NATIONAL BANK Pay to the order of J. S. Brown & Bro. $424.46. Boyer Lundie. C. M. Lundie draws $20. We buy 5 shares of the Colorado National Bank stock @ $110 and give our check therefor. 3d.—We pay express charges on a package from Chicago for Mr. Boyer, $2.50. J. H. Goodwin (the book-keeper) draws $5 on account. (An account is kept with each employe this month—see 204.) We receive a bill from “The Denver Republican” dated Feb. 1, 1883, for one month’s advertising, $15, which we do not pay, but which we enter. Cash sales, $162.30. 5th. — We pay for a thousand-mile ticket over the D. & R. G. R’y for Ed. Sloan (one of our traveling agents), $25. (We shall keep an “Agent account” for each traveling agent according to the method described in 216; therefore, all money expended for and by Ed. Sloan for traveling expenses will be charged to “Ed. Sloan, Agent.” The same rule applies, of course, to our other agent, E. D. Wright.) 263 1224—1226 DOUBLE ENTRY BOOK-KEEPING. We sell goods on account to Wm. Dougherty, net (the meaning of “net” is, “no discount off for cash”), book I, page I, $185; Berlin & Co., Boulder, Colo., 90 ds. net, book 1, page 3, $220.50; Clark & Tweed, Leadville, Colo., 30 ds. or 1/ 10, book 2, page 2, $324.50; Nichols & Long, Colorado Springs, Colo., 60 ds. or 2/ 10, book 2, page 4, $286.30 —total, $1016.30. (See 408 to 416.) Cash sales, $128. 6th.—Ed. Sloan draws on his account for private use (not for traveling expenses), $10; W. D. Boyer, $25; Frank Cook, $5. 1224 . Denver, Colo., Feb. 6, 1883. Pay to the order of Boyer & Lundie $91. Wm. B. Berger , Cashier Colorado National Bank. To Northwestern National Bank, )_ Chicago, Ills. J Endorsement on above: “ Pay order of J. K. Armsby & Co.,. Boyer Lundie .”- We send the above paper to J. K. Armsby & Co. and give our bank (The Colorado National) in payment therefor the following: 1225 . Denver, Colo., Feb. 6, 1883. COLORADO NATIONAL BANK Pay to I lie order of Draft $91.25. Boyer 6° Lundie. - The 25c. is the bank’s charge for exchange. (We keep a Collection and Exchange account.) We deposit in our bank and receive credit therefor in our bank book, the following: 1226 . Denver, Colo., Feb. 6, 1883. Thirty days after date we promise to pay to the order of The Colorado National Bank $1,000, with interest @ 10 per cent. Boyer < 5 r Lundie. 7th.—We buy goods on account from J. K. Armsby & Co., 1 /26, $178.30; 1/31, $285.60; B. T. Babbitt, 1/24, $220.50; Catlin Tobacco Co., 1/26, $360.40; Procter & Gamble, Cincinnati, 60 days, 1 /24, $380; Sprague, War¬ ner & Co, 2/2, $460; 2/5, $129.60—total, $2,014.40. We pay freight: B. & M. R., $16.30; U. P., $12.40 — total, $28.70; drayage (O’Brien), $1.50. (We keep a Drayage account.) 8th. — We pay express charges on goods from St. Louis, $3. The U. P. R. R. Co. charged us 6c. a case too much on 20 cases of Canned Peaches in the bill paid yesterday. We now make an entrv for this $1.20. The paper in paragraph 1213 is paid, $123.40. 264 1227—1232 DOUBLE ENTRY BOOK-KEEPING. 1227 . Denver, Colo., Feb. 8, 1883. Thirty days after date we promise to pay to the order of H. C. Frost $8oo, with interest at 10 per cent. Boyer & Lundie. - This paper is for 20 shares of the “Little Giant” mining stock @ $40. 9th. — Our bank enters in our bank book as a deposit $184.65, being the proceeds of the following paper which was drawn on Feb. 6 and is now paid— 35c. having been deducted as collection charges: 1228 . Denver, Colo., Feb. 6, 1883. At sight pay to the orderof Colorado National Bank $185, ’ and charge the same to account of Boyer & Lundie . To \Ym. Dougherty, ) Golden, Colo. \ Berlin & Co. claim an overcharge of 50c. on Coffee charged in our bill of Feb. 5, which claim we allow and make an entry therefor. f 1229 . Boulder, Colo., Feb. 5, 1883. Ninety days after date we promise to pay to the order of Boyer & Lundie $220. Berlin 6° Co. Cash sales, $180. ioth. — We pay E. D. Wright’s traveling expenses to date, $22.60. 1230 . Denver, Colo., Feb. 10, 1883. Fifteen days after date I promise to pay to the order of Boyer & Lundie $ 608, with interest at 10 per cent. Arthur Borden. - This is for the paper in paragraph 1204, $600, and interest thereon to date, $8. 1231 . Denver, Colo., Feb. 10, 1883. Thirty days after date we promise to pay to the order of Sprague, Warner & Co. $399, with interest at 10 per cent. Boyer dr 3 Lundie . We sell for cash ^ ton coal, $1.50. Cash sales, $130. 1232 . 12th.—We-have this day bought from Thatchers & Baxter, of Pueblo, IOO bbls. of “Super X” flour, and, wishing to know how much we make or lose on it, we open an account for “ T. & B. Flour,” which account we shall charge with the cost of the flour and all expenses thereon, and credit .with all proceeds from sales. We pay Mr. Boyer’s expenses to and from Pueblo, whither he went solely for the purpose of purchasing this flour, $4. C. M. Lundie takes groceries from the store for his private use, book 1, page '4, $12.60. We sell goods on account to Berlin & Co., book 1, page 5, $ 188.50; Clark & Tweed, book 1, page 9, $270; Nichols & Long, book 2, page 8, $345.50; Wm. Dougherty, book 2, page 11, $225 — total, $1,041.60. 265 123:}—1235 DOUBLE ENTRY BOOK-KEEPING. 13th. — We receive from Thatchers & Baxter 100 bbls. “Super X” Flour @ $5, $500; time, 30 ds. (days) or 1/10 from Feb. 12. We pay on this flour, freight, D. & N. O., $22.50; dray, $2.50. Cash sales, $65. 14th. — Our bank enters in our bank book as a deposit, $608, this being for the paper in paragraph 1230, which is now deposited and consequently bears this endorsement: “ Boyer Lundie . ” Since this paper bears a rate of interest which is satisfactory to the bank, no discount is deducted. 1233 . New York, N. Y.., Jan. 24, 1883. ( Sixty days after date pay to the order of myself $220.50, and charge the same to account of To Boyer & Lundie, Denver, Colo. B. T. Babbitt. Written across the face of above in red ink is: “ Accepted 2/14/83. Boyer (S- 5 Lundied W. D. Boyer draws $15; J. H. Goodwin, $10. 15th. — We have the “Super X” Flour insured for $500, paying ^ per cent, premium in the “ ./Etna,” $2.50. We give to E. D. Wright for personal use, $20; for traveling expenses, $25. We sell to Berlin & Co. on account, time 30 ds. net, 50 bbls. “ Super X ” Flour @ $6, $300. 1234 . 16th. Colorado Springs, Colo., Feb. 5, 1883. Sixty days after date vve promise to pay to the order of Boyer & Lundie $286.30. Nichols dr 5 Long 1235 . Leadville, Colo., Feb. 15, 1883. At sight of this first of exchange (second unpaid) pay to the order of Clark & Tweed $321.25. John C. Mitchell , Cashier Carbonate Bank. To Kountze Bros., Bankers, |_ New York City, j" Endorsement on above: “Pay order of Boyer & Lundie. Clark Tweed." This is for our bill of Feb. 5, $324.50, less 1 per cent, for cash in 10 days, $3.25. Cash sales, $260.20. 17th. — Berlin & Co. write us that there is an error of $1 in the addition of our bill of Feb. 12—$188.50 should be $187.50. Upon examination of the entry on the Sales Book we find this to be the case and therefore make an entry for this $1. 2 66 1236—1239 DOUBLE ENTRY BOOK-KEEPING. We pay F. Keppler’s bill for drayage to date, $26. 19th.—We send to Catlin Tobacco Co. a bank draft for $181.70, for which we give to our bank a check for $182.20—the 50c. extra being for exchange. This is the same kind of a transaction as that in paragraphs 1224 and 1225. We pay taxes: City, $12; County, $10; total, $22. We keep a Taxes account. We sell for cash 10 bbls. “Super.X” Flour @ $6.25, $62.50. Cash sales, $ 168.50. 1236 . When counting the sales money at night we discover therein a counterfeit five dollar bill, which we deposit—in the stove. When making the entry for this bill, bear in mind that the blame rests upon the man who took it in and not upon Merchandise. Since both the employers as well as both the employes made cash sales during the day, and since each of the four is very positive that he did not take in the bill, the firm will have to bear the loss. (See lines 3 to 6 in paragraph 287.) 20th.—We send to Thatchers & Baxter a check for $495 to pay for their Flour bill of Feb. 12; the bill being $500 from which we deduct 1 per cent, for cash in 10 days, $5. We pay the city scale inspector $2 for examining our scales. We give Ed. Sloan for traveling expenses, $27.50. 1237 . 2ist.—We exchange the routes of our traveling agents, placing Ed. Sloan on E. D. Wright’s route, and vice versa. Sloan has used up 600 miles of his 1,000-mile ticket over the D. & R. G. R’y, and we now transfer the remainder of the ticket, representing 400 miles, which at 2^c. a mile is worth $10, from Sloan to Wright. We receive a check from Wm. Dougherty for $222.75, being in payment of our bill of Feb. 12, $225, less 1 per cent, for cash in 10 days, $2.25. 1238 . Leadville, Colo., Feb. 12, 1883. Thirty days after date we promise to pay to the order of Boyer & Lundie $270. Clark &= Tweed. 22d.—We pay for postage stamps, $10. Frank Cook draws $20. Cash sales, $126.50. 1239 . Now since page 5 of the Cash Book is filled, rule a single red line across all the money-columns on both the debit and the credit sides on the same line with the last entry on the credit side, that is, on the line with the $20 charged to Frank Cook. Now add all the columns in this book and place the totals thereof on the-line below the single red line, writing in the space preceding these amounts, that is, in the “Explanation” space (see 474 and 481), the following words: “Am’ts Carried Forward.” Simply the word “ Forward ” is, however, sufficient. The footings of the several columns should be as follows: Miscel. Cr., $2,411.50; Mdse. Cr., $1,360.29; Total, $4,862.12; Miscel. Dr., $2,329.75 ; Expense Dr., $25. Next, rule directly below these footings a double red line across all the money columns, and then carry for¬ ward these footings to the top of their proper columns on pages 6 and 7, writing the following words in the “Explanation” columns: “Am’ts Brought Forward.” After having thus brought forward the footings from pages 4 and 267 1240—1244 DOUBLE ENTRY BOOK-KEEPING. 5 make the new cash entries on pages 6 and 7. In this manner, whenever a page is filled, the footings of the columns in the Cash Book are carried for¬ ward from page to page until the end of the month. 23d. — We pay for C. M. Lundie insurance on his household goods, $8. • We pay Mr. Boyd’s expenses to and from Chicago in the interest of our business, $80. We lend J. F. Chatard $100 cash on the following paper: 1240 . Denver, Colo., Feb. 23, 1883. Thirty days after date I promise pay to the order ot Boyer & Lundie $100. y. F. Ckatard. We sell goods on account to C. R. Welch, Fort Collins, Colo., 30 days, net, book 1, page 12, $28.60; I. R. Morrison, Georgetown, Colo., 10 days, net, book 1, page 14, $76.20; E. W. Lawrence, Idaho Springs, Colo., 30 days, net, book 2, page 13, $120.62; Berlin & Co., 60 days or 2/10, book 2, page 17, $340.20; Geo. A. Turner, City, 30 days, net, book 2, page 20, $278; Nichols & Long, 30 days or 1/ 10, book 2, page 23, $260 — total, $1,103.62. We sell for cash, postage stamps, $1.75. 1241 . Denver, Colo., Feb. 23, 1883. COLORADO NATIONAL BANK Pay to the order of B. Cornforth $318.90. Boyer Lundie. 1242 . Denver, Colo., Feb. 23, 1883. Thirty days after date we promise to pay to the order of B. Cornforth $200, with interest at 10 per cent. Boyer dr 1 Lundie. 24th. — We sell for cash 5 shares of the Little Giant mining stock @ $45, $225. We are on this day notified by the U. P. R’y Co. that they will not allow our claim of overcharge made on Feb. 8, $1.20. Cash sales, $137.50. 26th.—The paper in paragraph 1205 is now due. Mr. Turner pays $200 cash on it, leaving a balance of $300, plus the interest to date, $8.75. now owes us in addition to these $308.75, $278 on account, making a total of $586.75, for which latter amount he gives us the following paper: 1243 . Denver, Colo., Feb. 26, 1883. Thirty days after date I promise to pay to the order of Boyer and Lundie $586.75, with interest at 10 per cent. Geo. A. Turner. - Upon receipt of the above paper and the $200 cash, we surrender to Mr. Turner the paper in paragraph 1205, and give to him a receipt for the amount of his account. We give to the First National Bank a check for $361.15—75c. of which is for collection charges and exchange and the remaining $360.40 is for the following paper: 1244 . Sr. Louis, Mo., Feb. 23, 1883. At sight with exchange pay to the order of Cashier First National Bank $360.40, and charge the same to account of Catlin Tobacco Co. To Boyer & Lundie, ) Denver, Colo. J 268 DOUBLE ENTRY BOOK-KEEPING. 1245-1247 Cash sales, $142.60. 27th.—We pay for rent of post-office box for 3 months, $2. We sell to J. P. Williams, City, on account, 10 bbls. “ Super X ” Flour @ $6.50, $65. We buy goods on account from B. T. Babbitt, 30 ds., 2/ 10, $212.65; B. Corn- forth, 2/ 17, $312.30; 2/26, $43.05; Procter & Gamble, 60 ds., 2/ 12, $146.80; Sprague, Warner & Co., 2/19, $83.20; 2/21, $10.60—total, $808.60. We pay freight, U. P., $17.50. 1245. Chicago, Ills., Feb. 25, 1883. Thirty days after date pay to the order of ourselves $178.30, and charge the same to account of J. K. Arnisbv Co. To Boyer & Lundie, Denver, Colo. Written across the face of above in red ink is: “ Accepted, 2/27/83. Boyer Lundie." 28th.—We pay Pat. O'Brien’s bill for drayage to date, $11. draws $25; C. M. Lundie, $30. 1246. Denver, Colo., Feb. 23, 1883. Thirty days after date pay to the order of ourselves $260, and charge the same to account of Boyer Lr Lundie. To Nichols & Long, ) Colorado Springs, Colo. \ W. D. Boyer Written across the face of above in red ink is: “ Accepted, 2/27/83. Nichols Long." Cash sales, $115.30. The salaries for the past month are as follows: Frank Cook, $35; E. D. Wright, $50; Ed. Sloan, $60; J. H. Goodwin, $60. (See 204.) THE END OF THE YEAR. 1247. The figures for the closing of the books this “year” are as follows: CASH Book. — Footing of “Mdse.” column, $1,755.69; footing of “Expense” column, $107; total cash received, $4,593.94; total cash paid, $3,308.30; balance of cash on hand, $6,147.76; grand total of Cash Book footings (in “Total” columns), $9,456.06. JOURNAL. — Total of “Mdse. Dr.” column, $2,824.50; total of “ Mdse. Cr.” column, $3,161.52. LEDGER. —Footing of figure trial-balance, $13,703.22. Inventory. — Groceries on hand, $2,500; Little Giant Mining Shares, $600; T. & B. “Super X” Flour, $150; Insurance Unexpired, $20. The Store & Office Fixtures and the Colorado National Bank Shares are valued at just what their respective accounts now represent; therefore, these accounts are this year allowed to stand as resources. The other accounts included in the* Inventory are closed according to the directions in 71, 95 and 188. 269 1248—1252 / DOUBLE ENTRY BOOK-KEEPING. LOSS AND GAIN Account. — The net gain for the firm is $242.06, to be divided equally between the partners. Private Accounts. — W. D. Boyer’s net private gain, $53.53; C. M. Lundie’s, $47.43. STOCK Accounts. —W. D. Boyer’s-present worth (Mch. 1) is, $3,673.41; C. M. Lundie’s, $3,668.82. Trial Balance. — Totals of trial-balance taken after the books are closed, $13,787.43. Statistical Statement. —Make a statistical statement like that illus¬ trated in 925, prefixing the statistics of the preceding year to those of the present year. MARCH, 1883. 1248 . The additional accounts to be opened this year are as follows: G. H. Atwood, Stock, 1—34; G. H. Atwood, Private, 2—40; Lot & Building, 4—31; Horses & Wagons, 4—38; Discount, 9—Top; Bank Shares Dividend, 9—9; Attorney Fees, 9—17; Lost Accounts and Notes, 9—25; Fritz Krause, Truckman, 10—33; Austin, Reynolds & Co., City, 10—40; S. E. Rogers, Golden, Colo., 15 — 38; R. J. Gluckler, Attorney, Georgetown, Colo., 16—29; Wm. H. Austin, City, 16—37; Long Bros., Kansas City, Mo., 18—37. 1249 . Cash Book for this Year. — During this year we will have two “extra” columns on each side of the Cash Book, as follows: On the Debit side write at the top of the columns,—“ Miscel. Cr.,” “ Mdse. Cr.,” and “Interest Cr.;” on the Credit side,—“Miscel. Dr.,” “Expense Dr.,” and “Interest Dr.,”—reserving no “Total” columns. Care must be taken to extend all items for Merchandise, Interest, and Expense into their proper columns. The Cash Book should be closed at the end of the month after the manner illustrated and described in 1123 and 1124. 1250 . 1st.—We have this day taken into partnership Mr. G. H. Atwood. The style of the firm now is to be, “Boyer, Lundie & Co.” Each partner is to be paid a salary of $75 a month. (See 65.) The gains and losses are tp be shared pro rata according to investment at the beginning of each year. G. H. Atwood this day invests as follows: 1251 . Denver, Colo., Mch. 1, 1883. GERMAN NATIONAL BANK Pay to Boyer, Lundie & Co. or order $3,000. G. H. Atwood. » 1252 . Denver, Colo., Feb. 26, 1883. Thirty days after date I promise to pay to the order of G. H. Atwood, $2,000, with interest at 10 percent. M. E. Buddee. - Endorsement on above: “Pay order of Boyer, Lundie & Co. G. H. Atwood . ” 270 DOUBLE ENTRY BOOK-KEEPING. 1253—1257 We pay for C. M. Lundie’s rent of his private house, $25; for rent of ware¬ house, $25; gas bill for store, $7.30; C. M. Lundie’s gas bill, $2.75. Cash sales, $118.30. We buy from Wm. H. Austin the lot and building on the S. W. cor. of 16th and Champa streets: lot, $3,000; building, $4,000. We give in settlement therefor the following papers: 1253. 1254. Denver, Colo., Mch. 1, 1883. COLORADO NATIONAL BANK Pay to the order of Wm. H. Austin $4,500. Boyer , Lundie cSh Co. Denver, Colo., Mch. 1, 1883. Four months after date we promise to pay to the order of Wm. H. Austin $2,500. Boyer, Lundie Co. 2d.—J. H. Goodwin draws $35; Ed. Sloan, $25. We buy for cash from David K. Wall, 3 horses: “Lucy,” $100; “John,” $125; “Dick,” $110 — total, $ 335 - 1255. Denver, Colo., Mch. 2, 1883. Thirty days after date we promise to pay to the order of David K. Wall $235. Boyer , Lundie Co. This paper is for I Truck, $135; 1 Delivery Wagon, $100. (We keep a Horses & Wagons account.) 1256. Denver, Colo., Mch. 2, 1883. COLORADO NATIONAL BANK Pay to the order of H. C. Frost $500. Boyer , Lundie Co. - This is for a payment on the paper in paragraph 1227. 3d.—Our building consists of three stories and a basement. We let the two floors over our store to C. S. Robbins and receive for the month of March, $65. C. M. Lundie draws $60. We pay for a new Sales Book, $8. We give “The Denver Republican” a check for $15, the amount due. 1257. Denver, Colo., Mch. 3, 1883. On demand pay to the order of Wm. S. Farley $75, and charge the same to account of Boyer , Lundie total of “Miscel. Cr.” column, including the two preceding amounts and the balance on hand March 1 ($6,147.76), $15,103.80; footing of “Expense Dr.” column, $46.80; of “Interest Dr.” column, $26.76; total of “Miscel. Dr.” column after the two preceding amounts have been placed therein, $10,071.37; balance of cash on hand, $5,032.43. JOURNAL. —Total of “Mdse. Dr.” column, $4,484.35; total of “Mdse. Cr.” column, $3,102. LEDGER. —Footing of figure trial-balance, $21,753.59. INVENTORY. — Groceries on hand, $2,500 (see below); Fixtures, $430; Horses and Wagons, $600 ; Colorado National Bank Shares, $330; Little Giant Mining Shares, $600; Insurance Unexpired, $17.50.- Before closing the Merchandise account this year, balance the Discount, Drayage, and Freight and Express accounts and carry the amounts lost thereon to the Merchandise account. (See 74 and 207.) 278 1285 - 128 ? DOUBLE ENTRY BOOK-KEEPING. The remainder of Long Bros.’ apples are included in the Mdse, inventory, therefore, nothing will be done with their account until all the apples are disposed of. The unexpired taxes might be included in the inventory, but since this is seldom done, the entire amount paid therefor will be at once treated as lost. (See 188 and 185.) LOSS AND GAIN Account. —The net loss for the firm is, $240.26, which sum is shared pro rata according to the several investments as they stood on March 1. Private and Stock Accounts. —The figures for these accounts will not be given here, because it is thought best to allow the student to “try his hand on” the figuring out of each partner’s share of this loss, which he may do according to the method given in 1135. Trial Balance. — Totals of trial-balance taken after the books are closed, $21,335.58. Statistical Statement. —Continue the statistical statement begun last year by adding this year’s figures to it. The present worth of the firm at the beginning of the new year (April 1) is $12,059.22. 1285 . In the foregoing examples there is a greater variety of transac¬ tions than nine out of ten book-keepers meet with during ten years of service; therefore, let no student who aspires to the profession of book-keeping be discouraged when he encounters this set in which many difficult exam¬ ples are inserted merely to test his ability as a book-keeper, and which, while they possibly may occur, probably will not be met with during an ordinary experience. MEMORANDA. 1286 . You may at some future time have occasion to remember with regret paragraph 1286 of this book—if you omit to write on some important memorandum at least the month and the day of the month upon which it was made. Memoranda of any importance whatsoever should bear the date of their making in figures thus, 3/ I2 CORRESPONDENCE. 128 ?. When writing a business letter upon several subjects, it is well to number each paragraph and introduce each subject briefly at its opening, as 1. Agency, 2. Discount, 3. Blank Books. 279 1288 DOUBLE ENTRY BOOK-KEEPING. COLLECTION OF TIME BILLS. 1288 . In a house where goods are sold on time, and where it is desired that bills shall have prompt attention as they fall due, the following method will be found useful. {a ).—Have a Collection Book ruled with sixteen single columns on a page; reserve a double page for each month, writing in its upper left and right hand corners the name of the month ; at the top of the columns have printed or written the figures for the days of the month—in the same manner as shown in the Bill Book form at the end of this book. (Instead of having a book made to order for the purpose, this Bill Book may be used as a Collection Book.) (b) .—After the posting is done, take the book from which the sales were posted—the Sales Book or t^e Journal, as the case may be—and from it, enter in the Collection Book under the respective date when each bill falls due, the folio of the Ledger to which it was posted, and the folio of the book from which the posting was made. For example: on the page of this Collection Book reserved for March, 1889, in the column under “ 10” we place, 2l8 / 42Q —to indicate that on the 10th of March, 1889, we should refer to Ledger page 218, and, with the finger on the folio column of the debit side of that page, run down until we come to “420 ” and there we will find a bill which falls due on that date. (c) .—An ordinary diary will answer the purpose of a Collection Book, but it is not so convenient as a book ruled in the way above described, because of the necessity of having to turn backward and forward from date to date. (d) .—Where one of the methods of checking paid bills referred to in para¬ graphs 948 and 1029 is used, the bills which have been entered in this Collec¬ tion Book and subsequently paid will be clearly indicated on the accounts in the Ledger by the “ settlement checks.” (d ).—Every day this Collection Book is taken up and the Ledger folios indi¬ cated in the column under the current day are referred to. When it is ascer¬ tained that a bill has been paid, the folio-figures therefor are cancelled in red ink in this book. Then, for the bills which have not been paid, statements are sent out or sight drafts made, as the case ma}/ require. {/).—When all the bills under a certain date are paid, a large red check should be made at the top of the column over that date to indicate the fact. ( g ).—Past due bills may be cancelled in this book at the time of their pay¬ ment, or at subsequent periodical examinations when it is learned that they have been paid. v (//).—Bills which are long past due should be entered in a book, with the name, amount, and due date. This book may be labelled “ Bills Long Past Due,” or with some similar title, and it should be submitted to the firm for advice as to what disposition to make of the several past due bills. 280 1289 DOUBLE ENTRY BOOK-KEEPING. STATEMENT PROOF OF CUSTOMERS’ ACCOUNTS. 1289 . In retail houses where charge and credit tickets are used instead of Sales Books and Journals, and where they are satisfied with the entries on such tickets as their only record of charges and credits, much time and expense may be saved by the following method: (a ).—Use the following form of Sales Ledger in the manner illustrated, having double-account ruling as in paragraphs 1112 and 1113. SALES LEDGER. 1 Date. Clerk No. Ticket No. Debit. Credit. Balance, j I 1889. 1 Feb'y. 28 20 50 March 7 14 28 7 75 12 12 62 2 80 M 12 7 I 60 20 1 14 IO 12 40 23 27 84 3° 25 i 27 27 16 2 20 28 22 65 4 75 • 57 95 ■ 78 45 3 80 1 1 ■ l 1 74 65 Post from the charge and credit tickets direct to this Ledger as above, placing on such tickets in the upper left-hand corners—either before or after posting—the Ledger-folios of the respective accounts. (b ).—Have statements ruled with three money-columns—the first, for the extensions or the separate debit items of each charge for the current month ; the second and third columns to correspond in use with the second and third money-columns of the Sales Ledger. (V).—On the first of the month start a statement or itemized bill for each account in the Ledger which has been affected by the day’s charges or credits, by writing in the upper right-hand corner of the statement the folio of the Ledger. The customer’s name and the date which the statement should bear when sent out, are, of course, also written on each new statement. After having left one blank line below the headline for the balance of the preceding month, enter the items of all the charge and credit tickets for the day directly from the tickets on to the respective statements to which they belong, as 281 1290 DOUBLE ENTRY BOOK-KEEPING. indicated by the Ledger-folios written on the tickets, extending the amounts into the first and second columns of the statement, as in paragraph 1077. The old balance is usually left until the end of the month, for the reason that sometimes a customer comes in during the month to settle in full of account for the preceding month’s statement, in which case the balance then paid is not brought forward on to the new statement. ( d ) .—After all the charge and credit tickets for the day have been entered on the statement, tie them up in a bundle and write on it the date—then put the bundle in the safe or vault; because these tickets are the only records of the sales which are preserved. ( e ) .—At the end of the month let such old balances as have not been set¬ tled during the month be placed at the top of the new statements and extended into the third or balance column. Then let the book-keeper foot the first and second columns in the Sales Ledger,‘while the statement-clerk foots the first and second columns of the statements. As they proceed with these additions, let them compare footings. When the debit footings on Sales Ledger and statement agree, let the extensions be made into the third column, and this footing or aggregate sum be added to the old debit balance; then, let the 'footings of the credit columns of Sales Ledger and statement be compared, and if they agree, be extended into the third column and deducted from the amount above. The remainder will be the present balance. When the Sales Ledger balance for a certain account agrees with the state¬ ment balance, that account is supposed to be correct. ( f ) .—Should the Ledger and statement balances fail to agree on any account, the total of each charge on the statement is ascertained and the same is compared with the separate items on that account in the Ledger. When the item causing the difference is found, the ticket therefor is procured and the difficulty adjusted by correction of the Ledger, statement, or ticket, as the case may be. (^•).—That they may be easy of access and quickly found, the statement- blanks should be all of the same length, kept in a box, and placed upon end, with their heads projecting about two inches. ANOTHER METHOD. 1290 . By adding another column to the form illustrated in paragraph 1077 the preceding method of proving the Sales Ledger and statements may be applied to the method described in paragraphs 1076 to 1084. In order that the method described in paragraph 1289 a to g may be the more fully appreciated, it is considered advisable here to indicate its specific advantage, which is, the reduction in the number of book-keepers required, and the consequent lessening of expenditure in salaries. In the use of the method described in paragraphs 1076 to 1084, additional book-keepers are required to copy the charge and credit items from the tickets in the Ledger. 282 DOUBLE ENTRY BOOK-KEEPING. 1291—1292 while in the use of the method described in paragraph 1289 a to g the extra labor required for the copying of those items is avoided. The additional expense attending the extra precautions in the safe keep¬ ing of the tickets, and the slight risk of losing a ticket or two during the year, as weighed against the increased expenditure in salaries—is the matter for con¬ sideration here suggested to business men who are economically inclined. To ihe latter it may also be remarked that much money may be saved' in the employment of a boy or girl statement-clerk for the making out of. statements, instead of allowing the book-keeper (at a salary of two or three times as much as would have to be paid to the statement-clerk) to use time for the making out of statements which could otherwise be spent on his Ledger. , ANOTHER METHOD. 1291. In houses where proof of the correctness of the work is considered unnecessary, much additional time and labor may be saved by adopting the method described in paragraph 1289 a to ^—excepting that portion of it which relates to the Sales Ledger, in which, by this method, no posting is made to the Sales Ledger until the end of the month, at which time merely the debit aggregate, credit aggregate, and present balance of each statement are posted to the statement’s corresponding account in the Sales Ledger. PROVING POSTINGS AND LEDGER-BALANCES. 1292. In any house where monthly statements are rendered, the following method may be adopted, with but very little additional work, to prove all the postings and all the Ledger-balances. (a ).—Start a statement for not only each customer’s account, but for every open account in the Ledger, as Mdse., Expense, Salaries, etc.—after the man¬ ner described in paragraph 1289 b and c. {b ).—After having posted to the Ledger, post from the same books (Jour¬ nal, Cash Book, Sales Book, etc.) direct to the statements. When there is more than one account on any page in the Ledger, indicate that fact by letters in the Ledger, in the folio-column of the book from which the posting is made, and on the statement. For example, “287 a ,” “ 287 b,” and so on. (c) .—Same as paragraph 1289_/"and g. Statements for other than customers’ accounts need not be started anew for the first of each month, but may be allowed to remain in the box until they are full of entries. ( d ) .—The only things which this method does not prove are the additions and forwardings on the books from which postings are made, so that when the trial-balance does not “ come out,” these are the only things to be examined in order to discover the error. \ 283 1293 DOUBLE ENTRY BOOK-KEEPING. DETECTION OF ERRORS IN POSTING. 1293. To detect an error in posting— (a). —Take a sheet of paper and write on it the Ledger-folios of all the live accounts, one below the other, in columns about two inches apart, ruling a perpendicular line at the right of each of these columns of figures. (b.) —Name mentally the position of the first single figure at the left of the sum in the trial-balance error—thus : if the error be $24.85, say the error affects the tens of dollars; if $4.85, say it affects the units of dollars; if 85 cents, say it affects the tens of cents; if 5 cents, say it affects the units of cents. if ).—Turn to the books from which the postings were made and take off therefrom only the figures found in the position mentally named (as above), placing each of such figures on the sheet after its proper Ledger-folio. ILLUSTRATION. (d). —Suppose the error in the trial-balance to be $24.85. For example, to illustrate the method, see page 80, this book. According to “b” above, the only figures we would take from this page of the Journal would be the follow¬ ing: (DR. SIDE.) (CR. SIDE.) L.F. Tens of Dollars. L.F. Tens of Dollars. 40 40 4 i 9 5 4 i 53 42 42 43 43 44 1423 44 1 9 1 45 45 6 46 8 1 46 11248 (c).—After having begun at the first 'of the month and gone entirely through it with all the books from which postings were made (which was not done, of course, in the illustration above given), turn to the pages of the Ledger which have had entries made upon them, as indicated by such folios as have figures opposite them on the right of the perpendicular line, and com¬ pare those figures with the figures in the same position (tens of dollars) in the Ledger; when these figures agree, draw a line through the “ tens figures ” on this proof-sheet ; when they do not agree, turn back to the folio of the book from which the posting was made, as shown in the folio-column of the Ledger opposite to that incorrect “ tens figure,” and the error will be found. (/).—In the foregoing illustration, the figures 9 and 5 after folio 41 are to be found in the “tens figures” of paragraphs 609 and 595; the figures 1, 4, 2, and 3 after folio 44, in the “tens figures” of paragraphs 708, 709, 716, and 692—and so on. ( g ).—In applying this method, examine first the debits, then, if the error is not found, the credits. 284 DOUBLE ENTRY BOOK-KEEPING. 1291—1295 The object in naming the figure at the left in the trial-balance error instead of that at the right , is because there will be fewer postings to examine in v order to locate the error than there would be if the units of cents were named. It is consequently obvious that the more figures there are involved in the error the easier it will be to locate it. {li). —(Sheets specially prepared for this method, ruled and printed for 1000 folios, will be sent upon receipt of io cents for each sheet.) TAKING OFF TRIAL-BALANCES. 1294. Much time may be saved in taking off trial-balances by the adop¬ tion of the following method : (a) .—Take one of the sheets mentioned in paragraph 1293 //, turn to the books from which the postings were made during the month and cancel on this sheet, from the folio-columns of such books, all the Ledger-folio numbers therein found. - (b) .—Take the trial-balance of the preceding month (upon which, in order to use this method, the Ledger-folios should be written), and with this sheet by the side of the new trial-balance, copy from the old trial-balance on to the new all the amounts in the old trial-balance which are opposite to the folios corresponding with the ^//cancelled numbers on this sheet, referring to the Ledger whenever you come to a cancelled number for the present balance of the account indicated by that number. 0 ).—Thus, the time of turning over the Ledger leaves and of looking up the balances which have not been changed during the month will be saved— only such accounts being referred to as have had entries made on them during the month. Care must be exercised in the cancelling of the folio-numbers to see that ail such as are written in the folio-columns are cancelled on this sheet. By this method when there is an error in the trial-balance the only accounts which will have to be examined are those indicated by the cancelled numbers on this proof-sheet. (By using Raymond’s Labor-Saving Trial Balance book the folios, men¬ tioned in “ b ” above, have to be written only once a year.) AIDS TO THE LEARNING OF BOOK-KEEPING. 1295 . The following forms, when kept constantly before the beginner, will tend greatly to facilitate his acquisition of the science of book-keeping. 285 1295 DOUBLE ENTRY BOOK-KEEPING. DEBIT CREDIT WHAT WE WHAT WE RECEIVE. GIVE. When we receive Nothing, we debit The Person with whom we are transacting the business. When we give Nothing, we credit The Person with whom we are transacting the business. Resources and Losses Liabilities and Gains ARE ALWAYS ARE ALWAYS DEBITED. CREDITED. AMOUNTS FOR ACCOUNTS DEBITED. PAR. NOS. FOR DR. JOURNAL ENTRIES. 1 Account to be Debited. Account to be Credited. Bills Receivable ^ , S. W. Bennett PAR. NOS. FOR CR. AMOUNTS FOR ACCOUNTS CREDITED. 200 — 708 777 200 — .Dr. to. .Dr. to. .Dr. to. CASH TRANSACTIONS. Dr. Cash. Cash. Cr. CASH RECEIVED. CASH IS DEBITED by simply making the entry on this, the Debit side of the Cash Book ; therefore, in order to make the Double Entry, we write here in the first space, the name of the ACCOUNT TO BE CREDITED; and, in the second space, the Explanation of the Transaction. O O m as cn < u CASH PAID OUT. CASH IS CREDITED by simply making the entry on this, the Credit side of the Cash Book ; therefore, in order to make the Double Entry, we write here in the first space, the name of the ACCOUNT TO BE DEBITED; and, in the second space, the Explanation of the Transaction. (First Space m Cash Book.) Account to be Credited. AMOUNT. • U. O U1 K h 2 W u (First Space in Cash Book.) Account to be Debited. AMOUNT. • 286 1290 . DOUBLE ENTRY BOOK-KEEPING. The forms on preceding page should be referred to for every entry and especially whenever a transaction comes up which puzzles the student. (In order that he may the more readily learn how to make Journal and Cash Book entries, slips like the forms on preceding page have been printed and made into pads. These pads will be sent postpaid to such persons as may require them at 20 cents each, or 40 cents for the two. These procured, the student should first make his entries on the pads and afterward in the Journal or Cash Book, as the case may be. Before writing on a pad, the student should carefully read the matter at the top of it, when he will at once realize its value and importance as an aid to his study. Where ’tis thought that it will be sufficient, an exact copy of the preced¬ ing page printed on a heavy card will be sent upon receipt of 10 cents. This procured, the student can stand it upon end before him on the desk while studying or at work.) The columns “ Par. Nos. for Dr.” and “ Par. Nos. for Cr.” on the Journal slip are for the paragraph numbers for the rules given in “The Foundation ” for the debiting and crediting of the accounts for which you, on this slip, write the debit and the credit. For example, see “ 200—108 Bills Receivable Dr. to G. W. Bennett 171—200” on the Journal slip (opposite page), and para¬ graphs 373 and 108, and 374 and 171 of this book. POSTING. 1296 . (a ).—Where many checks are given, much time may be saved by posting direct from the Check Book to the Ledger. Where this is done the only entries that are made in the Cash Book for checks given are such as are made at the close of each day, when the total amount of all the checks given during the day is written on the credit side of the Cash Book, thus: “Check Nos.to ....” and the aggregate amount of those checks. When posting thus, the Ledger-folio should be placed on the stub of the Check Book. (b ).—In order to save time some book-keepers when posting omit to enter on the Ledger the folio of the book from which they have posted the transac¬ tion, believing that the date is a sufficient guide to the location of the original entry. (e ).—Some book-keepers argue that the carrying forward of the footings of the extra columns in the books from which the postings are made requires as much time as it does to post the footings of each separate page. Since, there fore, errors may occur in these forwardings, they prefer to post the footings of each page separately. 287 1297 DOUBLE ENTRY BOOK-KEEPING. INCREASE AND DECREASE STATEMENT. 1297 . The following will be found to be a good form of statement to show whence arise the losses and gains in a business, as affecting its Resources and Liabilities. INCREASE AND DECREASE STATEMENT. ASSETS AND LIABILITIES. LOSSES AND GAINS. Accounts. Dec. 1 1880. Jan. 1 1881. Jan. 1, i88t. Assets. Total. Assets. Total. Losses. Gains. Per. Accounts Rec., 738 — 201 04 536 96 Bills Receivable, 1840 — 1449 02 39 ° 98 • Cash, 3000 — 3776 5 ° 776 5 ° Mdse., 3376 40 2212 40 1164 — S. & O. Fix., 130 - 338 — 208 Fuel, 20 — 15 — 5 — Insurance, 27 5 ° 27 So U. T. Co. Shares, 500 — 500 — Total, 9 io 4 40 8519 46 Liabilities. Liabilities. Per. Accounts Pay., 964 40 603 32 1 361 08 Bills Payable, ZI4O — 1062 04 77 96 Total, 2:04 40 1665 3 6 Net Worth, 12/1/80, 7000 — “ “ 1/1/81, - 6854 ' IO 6854 IO Net Loss, M 5 90 — — Total Losses, 2096 94 — — “ Gains, 1951 04 I 9 S I 04 Net Loss, 1 J »45 go , See paragraphs 348 to 369 for Dec. 1, 1880, Assets and Liabilities, and paragraphs 812 and 925 for Jan. 1, 1881, Assets and Liabilities. In the “ Losses” column of the above form we place all the DECREASES IN RESOURCES and INCREASES IN LIABILITIES. In the “ Gains ” column of the above form we place all the INCREASES IN RESOURCES and DECREASES IN LIABILITIES. 288 DOUBLE ENTRY BOOK-KEEPING. 1298 The “increases” and “decreases” on preceding page are ascertained by finding the difference between the several items of the present Resources and Liabilities and the corresponding items of the Resources and Liabilities of the preceding statement or closing of the books. PROVING SEVERAL LEDGERS SEPARATELY. 1298 . In a business which requires several Sales Ledgers and other Ledg¬ ers, each of such Ledgers may be proved independently of the others in the following manner: First. —Open an account in the General Ledger for each of the other Ledgers, and debit or credit the same, as the case may be, for the debit or credit balance of the aggregate of all the accounts in the particular Ledger which the account thus opened represents. Second .—Have a special column for each of the Ledgers in all the books from which posting is done ; carry forward from page to page until the end of the month the footings of such columns, and enter the aggregate footings of each of such columns in the General Journal—by so doing either debiting or crediting, as the case may be, the proper Ledger, and at the same time, debiting or crediting the proper accounts in the General Ledger, as Merchandise, Cash, Interest, Bills Receivable or Bills Payable—for the same amount. ILLUSTRATION. a Sundries to Mdse. $ 79 , 877 . 00 . b $ 32 , 780 . 00 . .A to G Ledger. (From A to G Journal.) c 23 , 245 . 20 .. H to N “ ( “ H to N “ .) d 23 , 764 . 35.-0 to Z “ ( “ O to Z “ .) e 87 . 45 . .Purchase “ (Mdse, returned to creditors.) (See paragraphs 1001, 1002, 1005, an( f : 78.) / g h i j k $70,211.15. .Cash to Sundries. A to G Ledger $22,420.15. H to N “ 23,165.40. O to Z “ 22,934.65. Purchase “ 45.20. General “ 1,645.75. (Above items are from their respective columns in the Cash Book. See paragraphs 1027 and 1028—also 1026.) 289 1298 DOUBLE ENTRY BOOK-KEEPING. / $67,628.40. .Mdse, to Sundries. m Purchase Ledger $67,545.83. (From Purchase Journal.) n A to G " 25.60. ( Mdse. Ret. “ .) 0 H to N “ 42.12. ( “ “ “ “ .) p O to Z 14.85. ( “ “ “ “ .) (See paragraphs 1034 to 1038.) q Sundries to Cash, $65,608.81. r $55,042.15. .Purchase Ledger. s 34.20. .A to G “ t 114.62.. H to N “ u 17.84..O to Z “ v 3,400.—’..General “ w 7,000.—..Private “ (Above items are from their respective columns in the Cash Book: r —paid to creditors; .f, t, a —refunded to customers; v —general expenses, cash pur¬ chases of merchandise, etc.; w —salaries, amount drawn by members of the firm, etc.) X Sundries to Sundries. V $6,000. —. .Bills Rec. (Notes received from customers.) z 5.18.. Mdse. (Allowance on an A to G Ledger account.) aa 215.69. .Interest. (On creditors’ accounts.) ab 460.85. .A to G Ledger. (Transfer to H to N.) ac 45.75..H to N (Transfer to 0 to Z, $24.76 and Int. $20.99.) ad 22.14. .O to Z “ (Transfer to A to G.) ae 20,410. —.. Purchase “ (Notes given to creditors.) af To Bills Pay., $20,410.— (Notes given to creditors.) a S “ Interest, 20.99 (On H to N accounts.) ah “ A to G Ledger, 2,027.32 (Notes, $2,000 ; transfer, $22.14 al., $5.18.) ai “ H to N “ 2.460.85 (Notes $2,000 ; transfer, $460.85.) aj “ 0 to Z 2,024.76 (Notes, $2,000 ; transfer, $24.76.) ak “ Purchase “ 215.69 (Int. on creditors’ accounts.) (Above items have been entered in the General Journal from time to time during the month—those which belong to the special or extra Ledgers having been extended into their respective columns, and those which belong to the accounts in the General Ledger having been extended into the “ General Ledger ” column.) Transfer Journals and Bill Books are sometimes kept and posting done directly from them, but in the above illustration all the transfers and entries for notes received and given were made in the General Journal.—See para¬ graphs 1020 and 1030 to 1033. 290 1298 DOUBLE ENTRY BOOK-KEEPING. ( al) When the preceding entries have been posted to the General Ledger, the several Ledger-accounts and balances thereof in the General Ledger will appear as follows: A to G Ledger. Mch 1, 1889. “ 30,1889. “ 30,1889. “ 3°) 1889. Supposed Dr. Bal.) b s ab 114,386.20 32,780.— 34.20 460.85 Mch. 30, 1889. “ 30,1889. “ 3 °, i88 9 > “ 3 °, i88 9 - £ n ah Dr. Bal. 22,420.15 25.60 2,027.32 123,188.18 147,661.25 147,661.25 Apr. 1,1889. Bal. 123,188.18 H to N Ledger. Mch. 1, 1889. (Supposed Dr. Bal.) “ 30, 1889. c “ 30, 1889. t “ 30, 1889. ac 87,416.35 23,245.2° 114.62 45-75 Mch. 30, 1889. “ 30, 1889. “ 3 °, i88 9 - “ 30, 1889. k 0 ai Dr. Bal. 23,165.40 42.12 2,460.85 85,153-55 110,821.92 110,821.92 Apr. 1, 1889. Bal. 8 5 , 153-55 O TO Z Ledger. Mch. 1, 1889. (Supposed Dr. Bal.) 11 30, 1889. d “ 30,1889. u “ 30, 1889. ad 128,325.40 23,764-35 17.84 22.14 1 Mch. 30, 1889. “ 3 °, i88 9 - “ 30, 1889. “ 30, 1889. i p aj Dr. Bal. 22,934.65 14.85 2,024.76 , 27 , I 55-47 152,129.73 152,129.73 Apr. j, 1889. Bal. 127,155.47 Purchase Ledger. Mch. 30, 1889. “ 30, 1889. “ 3 °i i88 9 - “ 3 °, ,88 9 - e r ae Cr. Bal. 87.45 55,042.15 20,410.— 70.627.36 Mch. 1,1889. “ 3 °, 1889. “ 30, 1889. “ 3 °, i88 9 . (Supposed Cr. Bal.) j m ak 78,360.24 45.20 67 , 545.83 215.69 146,166.96 146,166.96 Apr. i, 1889. Bal. 70,627.36 Private Ledger. Mch. 30, 1889. “ 3 °> l83 9 - w Cr Bal. 7,000.— 333,260.45 Mch. 1, 1889. (Supposed Cr. Bal.) 340,260.45 340,260.45 340,260.45 Apr. 1,1889. Bal. 333,260.45 291 1298 DOUBLE ENTRY BOOK-KEEPING. The items posted to other accounts in the General Ledger are as follows • General Ledger.' Debit. Mch. 1, 1889. (Supposed Dr. Bal. of accounts other than the five “Ledger accounts”), 88,492 74 Mch. 30, 1889. / (Posted to Dr. of Cash account), 70,211 15 Mch. 30, 1889. / (Posted to Dr. of Merchandise account), 67,928 40 Mch. 30, 1889. v (Posted to Dr. of Expense and other accounts), 3.400 — Mch. 30, 1889. y (Posted to Dr. of Bills Rec. account), 6,000 — Mch. 30, 1889. z (Posted to Dr. of Merchandise account), 5 18 Mch. 30, 1889. aa (Posted to Dr. of Interest account), 215 69 Credit. ) Mch. 30, 1889. a (Posted to Cr. of Merchandise account), 79.877 — Mch. 30, 1889. k (Posted to Cr. of Merchandise account, Interest, etc.), 1.645 75 Mch. 30,1889. g (Posted to Cr. of Cash account), 65,608 81 Mch. 30, 1889. af (Posted to Cr. of Bills Pay. account), ' 20,410 — Mch. 3c, 1889. ag (Posted to Cr. of Interest account), 20 99 Mch. 30, 1889. Debit Bal. of accounts other than the five ‘ Ledger accounts " in the General Ledger, 68,390 6> * 35.953 16 235.953 16 Trial Balance of General Ledger, March 30, 1889. A to G Ledger, 123,188 18 H to N Ledger, 85.153 55 O to Z Ledger, 127,155 47 Purchase Ledger, 70,627 36 Private Ledger, 333,260 45 Aggregate Debit Balance of the several other accounts in the General Ledger, 68,390 6l ) 403,887 81 403,887 81 The debit or credit balance, as the case may be, of each of the above-men¬ tioned Ledgers, should agree with their debit or credit balances, as shown by their accounts in the General Ledger. 292 1299—1301 DOUBLE ENTRY BOOK-KEEPING. CHECKS. * 1299 . In filling out checks the words comprising the written amount should be begun at the extreme left of the line—so as to preclude the possi¬ bility of the “ raising ” of the check by the writing of such words as, for example, “ nine hundred and ” to the left of the sum originally written, and by some person other than the owner of the bank account which the check represents. INDEXING. j - ' * 1300 . When indexing it is a good plan to place such parts of a name as Van, Von, M c , Mac, O’, De, and so on, after the initials, thus: Horn, J. W. Van ; Brien, John O’; Carthy, Wm. M c . The names will thus be more evenly distributed throughout the Index. A memorandum to this effect should be made on the fly-leaf of the index, or else a reference be made to paragraph 1300 of this book. EXTRA COLUMNS IN CASH BOOK. 1301 . When making entries in the Cash Book of items the amounts of which are to be extended into extra columns, it is unnecessary to write the name of the account. Simply write in the “ Explanation ” column the par¬ ticulars of the receipt or expenditure, as the case may be, and extend the amount into its proper column. Thus, for example, Mdse. Cr. Expense Dr. Sales 184.30 Set of Goodwin’s Blank Books 10 00 THE END. 293 GOODWIN’S IMPROVED The Bills Receivable and Bills Payable Accounts. — The Bills Receivable and Bills Payable accounts in the Ledger can be done away with by keeping a Bill Book of the form shown above and by entering in it all note transactions in a man¬ ner similar to that of entering cash transactions in the Cash Book. (See 923, 924 and 940*.) Bills Receivable. —(2) Notes Received .—When a note is received we enter it at once in this book after the manner illustrated in number 7 above, thereby debiting Bills Receivable ; we then turn to Bennett’s account in the Ledger and give him credit for the note (see 696*); after which, we indicate in the ledger-folio column of this book the page of Bennett’s account. Thus, Bills Receivable account is debited, a complete record of all the particulars of the note is made, and the date upon which it falls due is clearly indicated in this book; and Bennett’s account is credited in the Ledger. (3) When a person endorses his bills receivable over to us, as in No. 6 above, we write first the name of the maker preceded by “sig” (signature) BILL BOOK .— BY J. H. GOODWIN. BILLS RECEIVABLE. Copyright, 1887, by J. n. Goodwin. All rights reserved. BILLS PAYABLE. Copyright, 1887, by J. H. Goodwin. All rights reserved. Int. Time. WHEN DUE. Rate and then the name of the person wc are to credit preceded by“Cr.” (4) When Due .— On the right-hand side of the book the figures under “When Due” indicate the days of the month. After having ascertained the date upon which a note falls due, that is, its last day of grace, we write under the figure indicating the day of the month the name of the month in which it falls due. If it falls due in a future year, we also write the year, as under “7” above. Now in order to ascertain whether there are any notes falling due on a certain day it is only necessary to glance at the column under that date and look for the month in which the note falls due. For example: Suppose this is the nth of March, 1881 ; we glance at the column under “11” and there find Mch. ’81 ; following the line along to the left, we ascertain that note No. 8 is due to-day. (In the old form of Bill Book it is necessary to look through all the days of the month in order to learn what notes fall due on a certain day of the month.) (5) In the forms shown above only three lines are given by way of illustration, while in my regular size books there are ten lines on a page. and in my extra-size books there are twenty-three lines on a page. (6) When a page has been filled it is a good plan to rule a heavy red line across all the date fig¬ ures which have no entries under them. In the foregoing example (Bills Receivable) this line would extend across all the dates except the 7th, nth and 17th. Thus, when we see a canceled date we know that its column is blank. When a note is paid, the date at the top of its column should be canceled in the same manner, provided that there are no other entries in the same column. (7) When all the dates on a page have been canceled we make a large check on the upper right-hand corner of that page and on the upper left-hand corner of the opposite page to indicate that all the notes on the double-folio have been disposed of. Past Due Notes. —(8) W’hen notes remaining in our possession are not paid or renewed when due, a red ink circle may be made around the “month” in the “When Due” column to draw special attention to that fact; or (9) A portion of the back part of the “Bills Receivable” may be reserved for past due notes and this line at once closed and re-opened in the “Past Due Notes” portion of the book. A memorandum of the transfer is then made in the “Remarks”.column. Payments and Discounts. — (10) When payments are received on our bills receivable or the latter are discounted in our bank, the entries for such are, of course, made in the Cash Book, whence they are posted direct to “Bills Receivable Credit” in this book. (11) We make a check under “C” to indicate that the folio given is that of the Cash Book; (12) under “P” to show that the amount credited is for a Payment; (13) under “D” to show that the note was Discounted. (14) All the explanation required in the Cash Book is simply the number of the note and whether it was paid or discounted ; as, for example, “Payment on No. 6,” and, “No. 7 Disc’t’d.” (15) Five lines under “Bills Receiva¬ ble Credit” are allowed to each note for payments, etc. When a note is not paid in full in the fifth payment, the balance due on it may be transferred to a new line and a new No. given to the note—the new No. being given in the “Remarks” column on the old line and the old No. in the “Remarks” column on the new line. Renewals .— (16) When notes are renewed we enter the new note on a new line and write on this line “ Cr. No-” (here give the old No.)', then in the “Folio” column of the old line we write the new No., make a check under “B” to show that the figures under “Folio” indicate the note number in the Bill Book under which the note is renewed, and make a check under “R” to indicate that the note has been renewed. (17) Whenever there is a complicated entry requiring considerable explanation, like, for instance, that in 421 to 425*, it is better to make a Journal entry and post to the Bill Book, writing on the latter the Journal folio and making a check under “J.” (18) In Full. —When a note is paid in full, discounted, or renewed, we make a large check in the “In Full” column : then the blank spaces in this column indicate that the notes on those lines are not so disposed of. Trial Balance. —(19) We find the balance of each page separately and carry it to the trial-balance, unless the latter be a trial-balance with the names of the accounts. (20) In the latter case we make a summary of the balances on the several pages and enter the aggregate in the trial- balance. (21) The object in having the alternate lines in different colors is to guide the eye along the line or down the column. Bills Payable. —(22) The Bills Payable part of this book is kept upon precisely the same method as the Bills Receivable part. (23) When we wish to charge an account other than that of the person in whose favor the note is made payable, we make the entry in this book in the manner shown on the line after No. 2 on the pre¬ ceding page. (See 942*.) Collection or Remittance.— (24) When any bill receivable has to be sent out of the city for collection, or any bill payable has to be paid in a distant city, we write the month under the date when we should in the former case send the note for collection or in the latter case remit for our note, and simply make a check under the date when the note falls due. Monthly Bill Book.—(25) This book can be used as a Monthly Bill Book by simply writing the month and year in the upper right and left-hand corners of the pages, by reserving a certain page or certain pages for each month of the year, and by entering those notes which fall due in certain months on their respective pages. When this is done it is only necessary to make a check in the column under the date on which a note falls due instead of writing therein the name of the month in which it falls due. (26) When this method is adopted, the notes must be numbered according to the pages upon which they are entered, and not in the order in which they are received or given. For example, suppose pages 1 and 2 are reserved for December, ’80, and pages 3 and 4 for January, ’81, and the first two notes we receive are from Ed. Russell. One falls due in December, is entered on page 1, and is num¬ bered 11 ; the other falls due in January, is entered on page 3, and is numbered 31. The first figure in this number [31] indicates the page [3], and the second figure [1], the number of the line on that page upon which the note is entered, the first. Since there are ten lines on a page, in order to keep up this method of numbering, the tenth line must be numbered “x.” For example, the note entered on the tenth line of page 3 will be numbered “3X.” Saving of Labor. —(27) The saving of labor which is effected by the use of this book is as follows: The writing of the words “ Bills Receivable Dr. to” for every bills receivable entry; of the entire debit side of the Bills Receivable account; of the “Explanation” column on the credit side of the Bills Receivable account; of the words “Dr. to Bills Payable” for every bills payable entry; of the entire credit side of the Bills Payable account; of the “Explanation” column on the debit side of the Bills Payable account; and of the name, date and time in every entry that is made in the Cash Book,— all this writing is avoided. The full extent of this sav¬ ing of labor cannot be appreciated until this Bill Book is used. Transfer from the Ledger.— (28) In order to transfer the Bills Receiva¬ ble and Bills Payable accounts from the Ledger to this Bill Book, it is not necessary to wait until the end of the year, or even until the end of the month , for those accounts may be closed at once and only the entries for the unpaid notes transferred to this book. (29) For examples of the illustrations in this book, see 369, 116, 493, 373, 113, 495> 388, 115; 362, 531, 381, 133, 391, and 543-* Accounts Receivable and Accounts Payable.— (30) An extra copy of this book can be used for the purpose of showing when certain invoices for which we wish our customers to settle promptly (goods sold), or for which we wish to settle promptly (goods bought) fall due. SIZES AND PRICES. SIZE No. x.—Regular (io lines to a page) ; 28 inches across both pages, 8 % inches long ; bound in paper sides and leather back ; “ Scotch Linen ” x8-lb. paper ; Bills Receivable, 270 lines ; Bills Payable, 70 lines : by express, $1.70 ; by mail, $1.85. SIZE No. 2.—Regular, same as size No. 1 except the fol¬ lowing : Bills Receivable, 540 lines ; Bills Payable, 140 lines: by express, $2.40; by mail, $2.65. SIZE No. 3.—Regular, same as size No. 1 except the fol¬ lowing : Bound in cloth sides and leather back ; Bills Receivable, 1080 lines ; Bills Payable, 280 lines : by express, $3.40 (too heavy to be sent by mail). SPECIAL PROPORTIONS.—Persons desiring their Bills Receivable and Bills Payable apportioned other¬ wise than above, can have them as desired by sending 35 cents extra. When books are sent by express the charges are not pre¬ paid ; when sent by mail, they are not registered un¬ less eight cents extra have been sent for that purpose. Any of the above sizes will be sent upon receipt of the price. Sample pages will be sent upon application. Copyright, 1887, by J. H. Goodwin. All rights reserved. * These are paragraph numbers in “ Goodwin’s Improved Book-Keeping and Business Manual.” Address Orders (accompanied by cash) to J. H. GOODWIN, 1215 Broadway, New York. CONTENTS OF a (^oodwin’s^Eractical instruction for ebusiness 9TC en, V OF WHICH BOOK 16,100 Copies were Sold in Two Years, Entirely by Means of Circulars Sent to Business Men. % Detecting Counterfeit Money. A Comprehensive and Valuable Article on Detecting Counterfeit Money. Genuine bills possess six characteristics by any one of which they are at once known to be genuine: counterfeit bills possess seven characteristics by any one of which they are at once known to be counterfeit. These peculiarities are so thoroughly explained that a person who masters this article can detect counterfeit bills at sight. The article contains a list of ioo banks whose bills have been counterfeited, and also the denominations of the counterfeits which number 135 different bills. The peculiarities of many of these bills are minutely explained. Rules are also given for the detection of counterfeit “greenbacks,” of counterfeit silver pieces, and of the “raising” of notes. Experts charge $10 for instruction not so complete as that to be gained through the study of this article. Clearing Houses. An Article fully describing the Management and Operation of Clearing Houses. A Clearing House is a place where representatives of the different banks of a city meet every day to make exchanges and adjust balances. In New York City there are how (June, 1887) sixty-three banks which make their exchanges through the Clearing House. Their aggregate “clearings” average one hundred and ten millions of dollars a day. The exchange of this enormous sum of money is accomplished within fifteen minutes! This article describes how these exchanges and the settlements for them are made. In it is illustrated the elongated desk or “office” which is to be found only in Clearing Houses. The forms of the different kinds of “blanks” used are also given. This article will prove of great interest to all persons who have any dealings with banks or bank paper. Business Law. Covering the following important subjects : Contracts; Partnerships; Bills of Exchange ; Promissory Notes; Checks; Lim¬ itations; Carriage of Goods; Receipts and Releases. Bound in pamphlet Form, 72 pagep. price, $1.00. fc. Sent Postpaid to Purchasers of “Goodwin's Improved Book-Keeping and Business Manual'' upon receipt of 50 Cents. J. H. GOODWIN, Author. O INCE the publication of the first edition of “Goodwin’s Improved Book-Keeping and Business Manual” there has been an ever-increasing demand for blank books ruled in the manner therein illustrated. In order to supply this demand the author has added to his business a department for the manufacture of blank books, and his aim has been to furnish such as are at once high in quality and low in price. That this aim has been realized cannot be questioned when it is stated that the author’s list of regular customers for blank books now embraces the names of business men in every state, territory, and province of North America, and that, as soon as their books are filled, customers re-order. The following is a list of a few of the customers referred to — the entire number already exceeding seven hundred. HALIFAX, NOVA SCOTIA.— Kelley & Glassey. HONOLULU, SANDWICH ISLANDS.— George W. Smith. EUSTIS, FLORIDA.— Jackson & Shepherd. VICTORIA, BRITISH COLUMBIA.— Hutcheson, Young & Co, DUCKPORT, LOUISIANA.— W. T. Jefferies. BRANDON, MANITOBA. —Strome & Whitelaw. ATLANTA, ARKANSAS.—C. M. Iomby & Co. CROOICSTON, MINNESOTA.— Cowing Bros. BOSTON, MASSACHUSETTS.— Ellis, Coney & Co. BAKER CITY, OREGON.— S. B. McCord. CONCORD, NORTH CAROLINA.— W. M. Smith. ELLENDALE, DAKOTA. —Martin, Strane & Walker, SCRANTON, PENNSYLVANIA.— Miller, Coleman & Co. DENVER, COLORADO.— Graham & Weber. TORONTO, ONTARIO. — H. S. Howland, Sons & Co. BLAIR, NEBRASKA.— Crowell Lumber & Grain Co. SOUTH RYEGATE, VERMONT.— Ryegate Granite Works, ALBION, IDAHO.— W. G. Child & Son. , * We are very much pleased with our Journal and Cash Book. They »r s very / ine , indeed Your blank books are far better than those made here and they cost only about half as much. HALL & BEILER, Wholesale Grocers. Sedalia, Mo., Feb. 22, 1887. PRACTICE BLANKS. —Persons desiring to practice upon the set of examples given in paragraphs 1190 to 1285, can procure a set of Practice Blanks consisting of Journal, Cash Book, and Ledger specially made for that purpose, by sending 75 cents to the author. FORMS ILLUSTRATED IN THIS BOOK.— When blank books of any of the forms illustrated in this work are required, it will be found that the author can supply them cheaper than anybody else can, because such books are made up by him in large quantities. BLANK BOOKS TO ORDER. —When a book of any special style is required, upon receipt of a copy of the ruling and other particulars, the author will send an estimate for the making of it together with a sample of the paper used in the manufacture of his books. ONE DOLLAR REFUNDED. — One dollar will be refunded to the purchaser for his first order for blank books which amounts to as much as five dollars. J3pThe author trusts that ere long he may add your name to his list of regular customers. : ' • ■ . . - ' .■ • ■ •< ' CHESTNUT HILL, MASS. Books may be kept for two weeks and may be renewed for the same period, unless reserved. Two cents a day is charged for each book kept overtime. If you cannot find what you want, ask the Librarian who will be glad to help you. The borrower is responsible for books drawn on his card and for all fines accruing on the same. (f)